/raid1/www/Hosts/bankrupt/TCR_Public/040803.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Tuesday, August 3, 2004, Vol. 8, No. 161
Headlines
ADELPHIA: Wants to Extend Claims Objection Deadline to Oct. 6
ADELPHIA: Lenders Agree to Amend Extended $1 Billion DIP Financing
AES IRONWOOD: S&P Says Project Rating is Tied to Williams' Rating
AES RED OAK: S&P Says Outlook Stable After Williams' Rating Change
AIR CANADA: Mark Hill Resigns Post as WestJet's Vice-President
AIRGAS INC: Closes $175 Mil Purchase of BOC Group US Gas Business
APM INC: Gets Court Nod to Hire Wilke Fleury as Special Counsel
ATA AIRLINES: Flight Attendants Defeat Attempts to Amend Agreement
BANC OF AMERICA: Two Certificate Classes Get Fitch's Low B-Ratings
CANTAB MOTORS: Case Summary & 20 Largest Unsecured Creditors
CATHOLIC CHURCH: Asks Court to Okay AICCO Insurance Financing Pact
CATHOLIC CHURCH: Wants to Hire Miller Nash LLP as Legal Counsel
CELL-BIO SYSTEMS: Cell Source Cancels Sub-License Agreement
CELL-BIO SYSTEMS: Dismisses Drakeford & Drakeford as Auditors
CELL-BIO SYSTEMS: Grants 25 Mil. Shares to Franklin Scientific
CHOICE ONE: Gets Creditors Nod on Fin'l Restructuring Plan
CINEMARK USA: Will Redeem $10.8M Outstanding Sr. Debt on Aug. 27
COEUR D'ALENE: Wheaton Responds to Silver Wheaton Transaction
CWMBS INC: Fitch Rates Mortgage Pass-Through Certificates BB & B
DAVITA: S&P Affirms BB Corporate Credit & Sr. Secured Debt Rating
DB COMPANIES: Committee Hires Morris Nichols as Local Counsel
DEXTERITY SURGICAL: Panel Hires Arent Fox as Bankruptcy Counsel
DII/KBR: Judge McVerry Affirms Halliburton's Prepackaged Plan
DRESSER INC: Makes Voluntary $10 Million Debt Prepayment
EDISON MISSION: Agrees to Sell Power Generation Biz for $2.3B
EMAGIN CORPORATION: Delivers Equity Registration Statement to SEC
ENRON CORP: Objects to 92 Secured Claims Aggregating $1 Billion
ENRON: Spinnaker Exploration Wants Its $3.6 Million Claim Allowed
FAIRPOINT COMMS: Noteholders Agree to Amend Debt Indentures
FEDERAL-MOGUL: DeVlieg Wants $260K Administrative Claim Paid Now
FINOVA CAPITAL: Thaxton Objects to FINOVA's Document Demands
FLAGSHIP HOTEL: Voluntary Chapter 11 Case Summary
FLEMING COS: Court Okays Settlement Agreement with Wisconsin DWD
FRESH CHOICE: U.S. Trustee Names 4-Member Creditors' Committee
HAMILTON SHEET: Voluntary Chapter 11 Case Summary
HOLLINGER: Delaware Sup. Ct. Upholds Chancery Court Ruling
INVISION TECH: Discloses Internal Investigation to SEC & USDOJ
JEAN COUTU: Completes $112 Mil. Acquisition of Eckerd Drugstores
JEUNIQUE INT'L: Gets Nod to Employ Sulmeyer Kupets as Attorneys
JOURNAL REGISTER: S&P Rates Planned $1.05B Credit Facilities BB+
LANTIS EYEWEAR: Wants to Retain CB Richard as Real Estate Broker
LOEWS CINEPLEX: Onex & Oaktree Complete $2 Bil. Sale to Carlyle
MASTR ALTERNATIVE: Fitch Gives Low B-Ratings to Two Classes
MERCURY AIR: Opens $30,000,000 Line of Credit With Bank of America
NEW WEATHERVANE: Panel Brings-In Trenwith Securities as Bankers
NEW WORLD PASTA: Wants to Employ AP Services as Crisis Managers
NORTHWOOD RETIREMENT: Case Summary & Largest Unsecured Creditors
NYLIM STRATFORD: Fitch Assigns BB- Rating to Preference Shares
OMNICARE INC: Extends NeighborCare Tender Offer to August 31
ORION REFINING: Deadline to File Rejection Claims is August 6
OWENS CORNING: Court Okays New Retention Program for 270 Employees
OWENS CORNING: CSFB Wants Solicitation Period Limited to Oct. 31
PACIFIC ENERGY: Names John Kers & Dominic Ferrari Vice-Presidents
PACIFIC GAS: Agrees to Allow $5.4 Million Set-Off of Mirant Claim
PEGASUS SATELLITE: DirecTV Buys Assets & Settles Litigation
PER-SE TECH: Relocates to New Corporate Home in Alpharetta, Ga.
PG&E NATIONAL: Inks Pact Resolving New Hampshire & Vermont Claims
RECYCLING SOLUTIONS: U.S. Trustee Will Meet with Creditors Today
SEITEL INC: Ernst & Young Resigns as Independent Accountants
SONTRA MEDICAL: Demands Halt of Trading from Berlin Stock Exchange
SPIEGEL INC: Court Okays $665,000 Microsoft Break-Up Fee
STANDARD AERO: S&P Assigns B+ Rating to Proposed $260M Bank Loan
STRUCTURED ADJUSTABLE: Fitch Assigns Low B-Ratings to 2 Classes
STRUCTURED ASSET: Fitch Gives Low B-Ratings to 2 SAMI Cert Classes
SUNNY DELIGHT: Narrow Product Portfolio Prompts S&P's B+ Rating
TRIAD HOSPITALS: Fitch Assigns Low B-Ratings to Senior Notes
UNITED AIRLINES: Files 4th Reorganization Status Report
US AIRWAYS: Wants Bankruptcy Court to Decide Boston Tax Dispute
WEIRTON STEEL: US Trustee Appoints Fluharty as Chapter 7 Trustee
WESCORP ENERGY: Completes Acquisition of 100% of Flowstar's Shares
WILLIAMS COMPANIES: S&P Affirms B+ Corporate Credit Rating
* Large Companies with Insolvent Balance Sheets
*********
ADELPHIA: Wants to Extend Claims Objection Deadline to Oct. 6
-------------------------------------------------------------
Judy G.Z. Liu, Esq., at Weil Gotshal & Manges, in New York,
reports that as part of the claims reconciliation process,
Telcove, Inc., formerly known as Adelphia Business Solutions,
Inc., and certain of its direct and indirect subsidiaries
identified categories of claims that must be targeted for
disallowance and expungement. Currently, the Reorganized ABIZ
Debtors are reconciling the scheduled claim amounts with the
amounts asserted in the corresponding claims. To avoid possible
improper recoveries by claimants and eliminate invalid claims,
the Reorganized ABIZ Debtors filed omnibus objections to various
categories of claims. The Reorganized ABIZ Debtors intend to
file additional objections.
As of July 24, 2004, the Reorganized ABIZ Debtors filed
objections addressing:
-- claims not reflected in their books and records;
-- multiple Debtor claims;
-- duplicate claims;
-- amended claims;
-- equity interest claims;
-- late-filed claims; and
-- claims pertaining to Adelphia Communications Corp.
Pursuant to their confirmed Third Amended Reorganization Plan,
the ABIZ Debtors have until August 7, 2004 to object to claims.
The Reorganized ABIZ Debtors believe that the claims resolution
process is nearly, if not entirely, complete. But out of an
abundance of caution, the Reorganized ABIZ Debtors ask the Court
to extend the time within which they may object to claims,
through and including October 6, 2004.
Pursuant to Rule 9019 of the Federal Rules of Bankruptcy
Procedure, the Reorganized ABIZ Debtors resolved by stipulation
or settlement more than $8 billion in disputed claims. According
to Ms. Liu, the Reorganized ABIZ Debtors made substantial
progress in the resolution process and need the additional time
to ensure that any remaining disputed claims are not
inadvertently overlooked. Ms. Liu assures the Court that the
extension is not sought for improper dilatory purposes, and will
not unduly prejudice the claimants.
Headquartered in Coudersport, Pa., Adelphia Business Solutions,
Inc., now known as TelCove -- http://www.adelphia-abs.com/-- is a
leading provider of facilities-based integrated communications
services to businesses, governmental customers, educational end
users and other communications services providers throughout the
United States. The Company filed for Chapter 11 protection on
March March 27, 2002 (Bankr. S.D.N.Y. Case No. 02-11389) and
emerged under a chapter 11 plan on April 7, 2004. Harvey R.
Miller, Esq., Judy G.Z. Liu, Esq., Weil, Gotshal & Manges LLP
represent the Debtors in their restructuring efforts. When the
Company filed for protection from its creditors, it listed $
2,126,334,000 in assets and $1,654,343,000 in debts. (Adelphia
Bankruptcy News, Issue No. 65; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
ADELPHIA: Lenders Agree to Amend Extended $1 Billion DIP Financing
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In a regulatory filing with the Securities and Exchange
Commission on July 26, 2004, Adelphia Communications Corporation
discloses that the lenders under the $1,000,000,000 extended DIP
facility agreed to certain amendments and waivers.
Pursuant to Amendment No. 1 and Waiver to Second and Amended and
Restated Credit and Guaranty Agreement, the DIP Lenders agree to
revise the definition of EBITDAR, as defined in the Extended DIP
Facility, to permit the inclusion of the historical EBITDAR
attributable to the Competitive Local Exchange Carriers business
that was transferred by ACOM to TelCove for purposes of
determining compliance by the joint and several borrowing group
with the financial covenants provided in the Extended DIP
Facility. The historical EBITDAR of the CLEC business will be
included for purposes of the financial covenants provided in the
Extended DIP Facility notwithstanding that the CLEC business is
reflected as discontinued operations in the accompanying
unaudited consolidated financial statements.
The DIP Lenders further agreed to waive certain provisions of the
Extended DIP Facility to permit the loan parties to:
(i) make certain prepetition payments which, in the
aggregate, cannot exceed certain specified amounts; and
(ii) consummate certain asset sales which would have
otherwise been prohibited under the terms of the
Extended DIP Facility.
A full-text copy of the Amendment is available for free at:
http://www.sec.gov/Archives/edgar/data/796486/000104746904024296/a2140775zex-10_1.htm#toc_de2199_1
ACOM Senior Vice President and Chief Accounting Officer, Scott
Macdonald, reports that on June 29, 2004, certain loan parties
made mandatory prepayments of principal on the Extended DIP
Facility in connection with the consummation of certain asset
sales. As a result, the total commitment for the entire Extended
DIP Facility was reduced to $998,951,000, with the total
commitment of the Tranche A Loan being reduced to $799,055,000 and
the total commitment of the Tranche B Loan being reduced to
$199,896,000.
As of June 30, 2004, $292,805,000 under the Tranche A Loan has
been drawn and letters of credit totaling $114,550,000 have been
issued under the Tranche A Loan, leaving availability of
$391,700,000 under the Tranche A Loan. Furthermore, as of June
30, 2004, $199,896,000 under the Tranche B Loan has been drawn.
Adelphia Communications Corporation and its more than 200
affiliates filed for Chapter 11 protection in the Southern
District of New York on June 25, 2002. Those cases are jointly
administered under case number 02-41729. Willkie Farr & Gallagher
represents the ACOM Debtors. (Adelphia Bankruptcy News, Issue No.
65; Bankruptcy Creditors' Service, Inc., 215/945-7000)
AES IRONWOOD: S&P Says Project Rating is Tied to Williams' Rating
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Standard & Poor's Ratings Services changed the outlook on AES
Ironwood LLC's $308.5 million senior secured bonds (currently
$298.6 million outstanding) to stable from negative, following the
change of outlook by Standard & Poor's on the ratings of The
Williams Companies (B+/Stable/--) to stable from negative.
AES Ironwood is a 705-MW, combined-cycle, natural gas-fired
generating station located in South Lebanon Township,
Pennsylvania, that sells capacity and energy to Williams Power Co.
Inc. (formerly known as Williams Energy Trading and Marketing
Co.), a subsidiary of The Williams Companies Inc., through a 20-
year power purchase agreement (PPA). The Williams Companies Inc.
unconditionally and fully guarantees the obligations of Williams
Power under the PPA. The project achieved commercial operation on
Dec. 28, 2001, and granted final acceptance to Siemens
Westinghouse, the engineering, procurement, and construction (EPC)
contractor, on March 12, 2003. The AES Corp. (B+/Stable/--)
indirectly owns 100% of AES Ironwood LLC.
The stable outlook reflects the stabilization of The Williams
Companies' credit risk. The project rating will be tied to the
rating of The Williams Companies as long as the tolling agreement
with Williams Power remains the primary source of revenue and the
market conditions do not allow the project to generate adequate
cash flow to cover its debt service obligations at adequate levels
without the benefit of a PPA.
The 'B+' rating on AES Ironwood's senior secured bonds reflects
The
Williams Companies' credit risk as well as Standard & Poor's view
of the plant's market price risk under a merchant scenario
analysis. Standard & Poor's concluded that, with revised market
price assumptions given the prolonged depression in electricity
markets, the project would not be able to meet debt service
requirements under a pure merchant scenario in current market
conditions and depends entirely on revenues from Williams Power's
PPA to cover debt service fully.
AES RED OAK: S&P Says Outlook Stable After Williams' Rating Change
------------------------------------------------------------------
Standard & Poor's Ratings Services changed its outlook on AES Red
Oak LLC's $384 million senior secured bonds (currently
approximately $374.6 million outstanding) to stable from negative,
following the change of outlook by Standard & Poor's on the
ratings of The Williams Companies (B+/Stable/--) to stable from
negative.
AES Red Oak is a combined-cycle, natural gas-fired generating
station located in Middlesex County, New Jersey with a plate
capacity of 830 MW. AES Red Oak is 100% indirectly owned by The
AES Corporation
(B+/Stable/--). The project currently has a 20-year power
purchase agreement (PPA) with Williams Power Company Inc.
(formerly known as Williams Energy Trading and Marketing Co),
whose obligations under the PPA are guaranteed by Williams
Companies Inc.
The stable outlook reflects the stabilization of The Williams
Companies' credit risk. The project rating will be tied to the
rating of The Williams Companies as long as the tolling agreement
with Williams Power remains as the primary source of revenue and
the market conditions do not allow the project to generate
adequate cash flow to cover its debt service obligations at
adequate levels without the benefit of a PPA.
The B+ rating on AES Red Oak's senior secured bonds reflects The
Williams Companies' credit risk and Standard & Poor's view of the
plant's market price risk under a merchant scenario analysis.
Standard & Poor's concluded that, with revised market price
assumptions given the prolonged depression in electricity markets,
the project would not be able to meet debt service requirements
under a pure merchant scenario in current market conditions and
depends entirely on the revenues under the Williams' PPA to cover
debt service fully.
AIR CANADA: Mark Hill Resigns Post as WestJet's Vice-President
--------------------------------------------------------------
WestJet reported that Mr. Mark Hill has resigned from his position
as the Vice President of Strategic Planning for WestJet, effective
immediately.
In view of the ongoing scrutiny of Mr. Hill's actions in relation
to the current lawsuit between Air Canada and WestJet, Mr. Hill
decided it was in WestJet's interest and his own interest that he
resign from his position. WestJet is adamant that the information
Mr. Hill obtained from Air Canada's Web site was neither
confidential nor useful to WestJet in any respect. However, in
view of the current circumstances, WestJet has accepted Mr. Hill's
resignation.
As this matter is currently before the courts, WestJet cannot
provide further details at this time.
As previously reported, WestJet and Mr. Hill are defendants in a
litigation brought by Air Canada and ZIP for breach of corporate
security. The Applicants accuse WestJet, and in particular Mr.
Hill, of accessing confidential information through Air Canada's
employee travel Web site. The Applicants allege that under Mr.
Hill's direction, WestJet obtained through Jeffrey Lafond, a
former employee of Canadian Airlines International, Ltd., and
misused on a massive scale, Air Canada's flight load and load
factor information and booking information. WestJet purportedly
used Mr. Lafond's PIN to improperly access the site.
WestJet Denies Allegations
WestJet denies illegally accessing the Applicants' confidential
information. At all relevant times, there was nothing on the Web
site stating it was confidential.
Mr. Hill denies that the Web site contains Load and Load factor
information. Mr. Hill explains that the Load and Load factor for
a flight cannot be determined from the information on the Web
site. However, the number of seats that have been booked on a
future flight between the cities noted, as of a particular date,
can be calculated.
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. 42; Bankruptcy Creditors' Service, Inc., 215/945-7000)
AIRGAS INC: Closes $175 Mil Purchase of BOC Group US Gas Business
-----------------------------------------------------------------
Airgas, Inc. (NYSE: ARG) has completed the acquisition of the U.S.
packaged gas business of The BOC Group, Inc. (NYSE: BOX) for about
$175 million cash, plus up to $25 million to be paid on or about
November 15, 2005. About $7 million of the purchase price was paid
by National Welders Supply Company, Inc., a joint venture between
Airgas and the Turner family of Charlotte, NC. The acquisition was
first announced as a letter of intent on January 27, 2004, with an
asset purchase agreement announced on April 2, 2004.
"Since announcing this landmark acquisition earlier this year,
teams of people at both Airgas and BOC have worked to make this
transition a smooth one for customers and employees," said Airgas
Chairman and Chief Executive Officer Peter McCausland. "We are
very pleased that the transition has gone extremely well and is
closing on schedule. We welcome more than 1,000 BOC associates,
who I am sure will fit in well and contribute to the Airgas
culture."
The acquisition includes more than 120 retail stores, warehouses,
fill plants and other operations in 21 states involved in
distributing packaged industrial, specialty and medical gases, as
well as welding equipment and supplies. The acquired business
generated approximately $240 million in revenue in BOC's most
recent fiscal year ended September 30, 2003. Approximately 65
percent of the revenues were from gas sales and cylinder rent,
with the remainder from welding hardgoods and supplies.
"This is a strategic opportunity that enhances our strong and
stable platform and adds momentum to our growth initiatives," said
McCausland. "It adds sites that will help us continue to grow our
core business, branch by branch, especially in key markets in the
Midwest, Northeast, Southeast and Hawaii. It also enhances our
position in two key product lines, specialty and medical gases."
Airgas previously announced that it expects the acquired business
to be $0.02-$0.04 accretive to EPS in the first 12 months, with up
to $0.02 per share toward the end of FY05 and the balance in early
FY06.
Most of the people and locations are being integrated into 12
existing Airgas regional companies. The acquired operations in
Hawaii will form the newest regional company, Airgas Gaspro. Two
branches in southern Virginia employing about 40 employees have
been sold to National Welders Supply Company, Inc. For more
information on the sites acquired and the new alignments, go to
http://www.airgas.com/documents/pdf/BOCalignedsites.PDF
Airgas will own the assets at the close of business Friday, July
30, 2004 and will begin operating the acquired sites as Airgas on
Saturday, July 31, 2004.
The transaction excludes packaged electronic gases, helium and
hydrogen delivered in tube trailer or in liquid form, and bulk
gases, including bulk medical and bulk gases supplied to BOC's
distributors. The transaction also will not affect BOC's merchant
liquid and tonnage/on-site business in North America and its
packaged gases businesses in other parts of the world.
In addition to the acquisition, BOC and Airgas signed reciprocal
long-term supply agreements. Airgas will become the supplier for a
substantial portion of BOC's resale packaged gas needs. BOC will
supply liquid bulk gases to support the operations it is selling
to Airgas.
About BOC
The BOC Group (NYSE:BOX), the worldwide industrial gases, vacuum
technologies and distribution services company, serves two million
customers in more than 50 countries. It employs 44,500 people and
had annual sales of over $7 billion in 2003. Further information
about The BOC Group may be obtained on the Internet at
http://www.boc.com/
About Airgas, Inc.
Airgas, Inc. (NYSE: ARG) (S&P, BB Corporate Credit Rating,
Positive) is the largest U.S. distributor of industrial, medical
and specialty gases, welding, safety and related products. Its
integrated network of nearly 800 locations includes branches,
retail stores, gas fill plants, specialty gas labs, production
facilities and distribution centers. Airgas also distributes its
products and services through eBusiness, catalog and telesales
channels. Its national scale and strong local presence offer a
competitive edge to its diversified customer base. For more
information, visit http://www.airgas.com/
APM INC: Gets Court Nod to Hire Wilke Fleury as Special Counsel
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of California
gave its stamp of approval to APM, Inc.'s application to employ
Wilke, Fleury, Hoffelt, Gould & Birney as its Special Counsel.
Wilke Fleury is expected to investigate, analyze and prosecute an
action to recover damages incurred by APM as a result of an
alleged breach of contract by Bruni Glass Packaging, Inc. APM and
Bruni are parties to two agreements:
(1) an Agreement for Purchase and Sale of Assets between the
Debtor and VB Acquisition Corp., dated April 6, 2004; and
(2) a Service Agreement between the Debtor and Bruni Glass.
Daniel L. Egan, Esq., reports that Wilke Fleury professionals
charge $140 to $300 per hour for their services.
Headquartered in Los Altos, California, APM Inc., distributes and
markets wine bottles, capsules and corks to the international wine
industry. The Company filed for chapter 11 protection on July 27,
2004 (Bankr. E.D. Calif. Case No. 04-27694). George C. Hollister,
Esq., represents the Debtor in its restructuring efforts. When
the Company filed for protection from its creditors, it listed
over $10 in estimated debts and over $1 million in estimated
assets.
ATA AIRLINES: Flight Attendants Defeat Attempts to Amend Agreement
------------------------------------------------------------------
The Association of Flight Attendants (AFA) informed ATA Airlines,
Inc. (Nasdaq: ATAH) that its membership narrowly defeated Letters
of Agreement to amend the existing collective bargaining
agreement, which would have resulted in savings of several million
dollars to the Company over the next two years.
"This was a very close decision. Apparently, only 69 percent of
those eligible voted and, within that group, 51 percent voted
against the proposal. We are very disappointed. The Company
needs to reduce its labor costs in order to make it through this
difficult period for ATA and the industry," said Richard Meyer,
Jr., Vice President of Labor Relations.
The Company was seeking the assistance package in an effort to cut
costs during recent economic difficulties in the airline industry.
ATA Holdings Corporation, parent company of ATA, announced on July
14 that it does not expect to earn a profit in 2004. This updated
guidance was a result of rising jet fuel costs and weak revenues
caused by aggressive pricing in the industry. ATA Holdings
Corporation has been implementing cost-cutting measures to reduce
the expected 2004 loss.
Now celebrating its 31st year of operation, ATA -- whose March 31,
2004 balance sheet shows a shareholders' deficit of $168,426,000
-- is the nation's 10th largest passenger carrier (based on
revenue passenger miles) and one of the nation's largest low-fare
carriers. ATA has the youngest, most fuel-efficient fleet among
the major carriers, featuring 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
Company's parent company, ATA Holdings Corp., is traded on the
Nasdaq Stock Exchange under the symbol "ATAH." For more
information, visit http://www.ata.com/
BANC OF AMERICA: Two Certificate Classes Get Fitch's Low B-Ratings
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Banc of America Mortgage Securities, Inc., (BoAMSI) series 2004-G
mortgage pass-through certificates, is rated by Fitch Ratings as
follows:
-- $981,205,100 classes 1-A-1, 1-A-R, 1-A-MR, 1-A-LR, 2-A-1
through 2-A-7, 2-A-IO, 3-A-1, 3-A-2 and 4-A-1,
(senior certificates) 'AAA';
-- $12,673,000 class B-1 'AA';
-- $8,616,000 class B-2 'A';
-- $2,027,000 class B-4 'BB';
-- $1,521,000 class B-5 'B'.
The $4,561,000 class B-3 certificates are not rated by Fitch.
The 'AAA' rating on the senior certificates reflects the 3.20%
subordination provided by the 1.25% class B-1, the 0.85% class
B-2, the 0.45% class B-3, the 0.20% privately offered class B-4,
the 0.15% privately offered class B-5, and the 0.30% privately
offered class B-6. The ratings on class B-1, B-2, B-4 and B-5
certificates reflect each certificates' respective level of
subordination.
The ratings also reflect the quality of the underlying mortgage
collateral, the primary servicing capabilities of Bank of America
Mortgage, Inc., (rated 'RPS1' by Fitch) and Fitch's confidence in
the integrity of the legal and financial structure of the
transaction.
Fitch ratings do not address whether a class of auction
certificates will receive its par price on the auction
distribution date.
The transaction consists of four groups of adjustable interest
rate, fully amortizing mortgage loans, secured by first liens on
one- to four-family properties, with a total of 2,492 loans and an
aggregate principal balance of $1,013,644,196, as of July 1, 2004
(cut-off date). The four loan groups are cross-collateralized.
The group 1 collateral consists of 3/1 hybrid ARM mortgage loans.
After the initial fixed interest rate period of three years, the
interest rate will adjust annually based on the sum of One-Year
LIBOR index and a gross margin specified in the applicable
mortgage note. As of the cut-off date, the group has an aggregate
principal balance of approximately $129,213,120 and an average
balance of $502,775. The weighted average original loan-to-value
ratio (OLTV) for the mortgage loans is approximately 71.51%. The
weighted average remaining term to maturity is 356 months and the
weighted average FICO credit score for the group is 734. Second
homes and investor-occupied properties comprise 9.17% and 1.25% of
the loans in group 1, respectively. Rate/Term and cashout
refinances account for 28.58% and 19.61% of the loans in group 1,
respectively. The states that represent the largest geographic
concentration of mortgaged properties are California (65.04%),
Illinois (5.37%) and Florida (5.21%). All other states represent
less than 5% of the outstanding balance of the group.
The group 2 collateral consists of 5/1 hybrid ARM mortgage loans.
After the initial fixed interest rate period of five years, the
interest rate will adjust annually based on the sum of One-Year
LIBOR index and a gross margin specified in the applicable
mortgage note. Approximately 61.07% of group 2 loans are Net 5
mortgage loans, which require interest-only payments until the
month following the first adjustment date. As of the cut-off
date, the group has an aggregate principal balance of
approximately $631,543,065 and an average balance of $537,483.
The weighted average OLTV for the mortgage loans is approximately
70.88%. The weighted average remaining term to maturity is 357
months and the weighted average FICO credit score for the group is
734. Second homes and investor-occupied properties comprise 10.17%
and 1.18% of the loans in group 2, respectively. Rate/Term and
cashout refinances account for 25.26% and 16.55% of the loans in
group 2, respectively. The states that represent the largest
geographic concentration of mortgaged properties are California
(60.39%) and Florida (8.16%). All other states represent less
than 5% of the outstanding balance of the pool.
The group 3 collateral consists of 5/1 hybrid ARM mortgage loans.
After the initial fixed interest rate period of five years, the
interest rate will adjust annually based on the sum of One-Year
LIBOR index and a gross margin specified in the applicable
mortgage note. All of the group 3 loans are Net 5 mortgage loans,
which require interest-only payments until the month following the
first adjustment date. As of the cut-off date, the group has an
aggregate principal balance of approximately $208,702,441.07 and
an average balance of $214,274. The weighted average OLTV for the
mortgage loans is approximately 71.41%. The weighted average
remaining term to maturity is 359 months and the weighted average
FICO credit score for the group is 734. Second homes and investor-
occupied properties comprise 13.33% and 4.80% of the loans in
group 3, respectively. Rate/Term and cashout refinances account
for 23.47% and 23.03% of the loans in group 3, respectively. The
states that represent the largest geographic concentration of
mortgaged properties are California (36.91%), Florida (15.25%),
Virginia (6.43%), Nevada (5.66%) and Georgia (5.47%). All other
states represent less than 5% of the outstanding balance of the
pool.
The group 4 collateral consists of 7/1 hybrid ARM mortgage loans.
After the initial fixed interest rate period of seven years, the
interest rate will adjust annually based on the sum of One-Year
LIBOR index and a gross margin specified in the applicable
mortgage note. As of the cut-off date, the group has an aggregate
principal balance of approximately $44,185,569.71 and an average
balance of $513,786. The weighted average OLTV for the mortgage
loans is approximately 68.80%. The weighted average remaining term
to maturity is 357 months and the weighted average FICO credit
score for the group is 739. Second homes and investor-occupied
properties comprise 1.80% and 2.70% of the loans in group 4,
respectively. Rate/Term and cashout refinances account for 23.38%
and 19.94% of the loans in group 4, respectively. The states that
represent the largest geographic concentration of mortgaged
properties are California (39.66%), Virginia (8.08%), Florida
(7.21%), Illinois (6.09%) and Texas (6.04%). All other states
represent less than 5% of the outstanding balance of the pool.
Approximately 67.10%, 55.15%, 51.55%, and 63.44% of the groups 1,
2, 3 and 4 mortgage loans, respectively, were originated under the
Accelerated Processing Programs. Loans in the Accelerated
Processing Programs, which may include the All-Ready Home and Rate
Reduction Refinance programs, are subject to less stringent
documentation requirements.
None of the mortgage loans are 'high cost' loans as defined under
any local, state or federal laws.
Banc of America Mortgage Securities, Inc. deposited the loans in
the trust, which issued the certificates, representing undivided
beneficial ownership in the trust. For federal income tax
purposes, elections will be made to treat the trust as three
separate real estate mortgage investment conduits (REMICs).
Wachovia Bank, National Association will act as trustee, and Wells
Fargo Bank, National Association will act as Securities
Administrator.
CANTAB MOTORS: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: Cantab Motors, Ltd.
37251 East Richardson Lane
Purcellville, Virginia 20132
Bankruptcy Case No.: 04-13216
Type of Business: The Debtor is an automotive dealer.
See http://www.cantab-motors.com/
Chapter 11 Petition Date: July 30, 2004
Court: Eastern District of Virginia (Alexandria)
Judge: Robert G. Mayer
Debtor's Counsel: Thomas P. Gorman, Esq.
Tyler, Bartl, Gorman & Ramsdell, PLC
206 North Washington Street, Suite 200
Alexandria, VA 22314
Tel: 703-549-5000
Fax: 703-549-5011
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
------ --------------- ------------
Morgan Motor Compnay $1,422,200
Pickersleigh Road
Malvern Link. Worcs.
WR14 2LL UK
Win & Ruth Sharples $128,351
Ruth Sharples Line of Credit $112,765
Ruth Sharples Loan to Cantab $55,774
Land Rover Financial $31,142
Services
Internal Revenue Service $24,000
John Vickersmith $22,000
Advanta MasterCard $20,000
Charles Butts $18,190
American Express $9,435
Frankford Plating $8,480
American Express $6,435
Biebier Deposit on auto $6,000
Gorsham Deposit on auto $5,000
Sweedler Deposit on auto $5,000
Erie Insurance Group $4,874
James Goldrick $4,000
Cornerstone Capital Group Lease agreement for $3,918
Marlin Leasing
Griffin Radiator $3,280
Samuel Shapiro & Co. $3,071
CATHOLIC CHURCH: Asks Court to Okay AICCO Insurance Financing Pact
------------------------------------------------------------------
The Archdiocese of Portland in Oregon asks the U.S. Bankruptcy
Court for authority to enter into a secured insurance premium
finance agreement with A.I. Credit Corp., or its subsidiary,
AICCO, Inc. The Archdiocese of Portland Debtor needs to pay
premiums for various insurance policies, including property,
general liability and workers' compensation. The Archdiocese
wants to stretch those premium payments over time to avoid
depleting its available cash resources.
Susan S. Ford, Esq., at Sussman Shank, LLP, in Portland, Oregon,
relates that the Debtor pays for its insurance, including
premiums, by requiring ratable contributions from parishes and
other entities covered by the Policies. The Debtor began
financing premiums two years ago because was unable to negotiate
unsecured credit or payment terms with the insurance carriers in
past years. Financing the premiums under a centralized
arrangement also permitted the Debtor to make one monthly
payment, as opposed to multiple payments on varying dates,
thereby equalizing the Debtor's cash flow.
The salient terms of the Premium Finance Agreement are:
Total Premium: $1,381,665
Cash Down Payment Required: 425,139
Amount Financed (Amount of Credit
Provided to Insured or on its
behalf): 956,526
Finance Charge (Dollar amount
Credit will Cost): 15,305
Total Payments (Amounts Which will
have been Paid After making all
Scheduled Payments): 971,832
Pursuant to the Premium Finance Agreement, monthly installment
payments for $121,479 are due on the first day of each month,
with the final payment due under the Premium Finance Agreement on
March 1, 2005. The annual percentage rate is 4.25%.
The first monthly installment payment is due August 1, 2004. The
Debtor intends to make the down payment and first monthly
installment immediately after the Court approves the request.
To secure the Debtor's obligations to AICCO under the Premium
Finance Agreement, the Debtor further seeks the Court's authority
to enter into a security agreement that grants AICCO a security
interest in the Policies, including all postpetition unearned
premiums payable in the event of cancellation of the policy,
dividends payable on the policy, or payment on account of a loss
that reduces the unearned premiums subject to any loss payee.
The Premium Finance Agreement will permit AICCO to cancel the
financed Policies and obtain a return of any Unearned Premiums
in the event of a payment default by the Debtor.
The Office of the United States Trustee requires the Debtor to
"maintain adequate insurance coverage on estate assets." The
Debtor is also required by law to maintain worker's compensation
insurance.
Absent AICCO's financing, Ms. Ford tells Judge Perris that the
Debtor is at risk of cancellation of some or all of the insurance
-- which the Debtor is required to maintain by law -- as well as
serious disruption or depletion of cash flow.
Ms. Ford also notes that, requiring the Debtor to pay cash for
its insurance coverage, rather than finance the premiums through
AICCO, would result in serious adverse financial impacts. The
Debtor would be required to pay $1,381,665 immediately, rather
than the initial $425,139 down payment and first monthly
installment payment sought by AICCO.
"This large cash outlay would have an immediate negative effect
on the Debtor's cash flow and reserves," Ms. Ford explains.
"Inability to maintain insurance and cash reserves will disrupt
the Debtor's ministries and adversely affect the estate."
Ms. Ford assures the Court that the down payment and first
monthly installment payments are reasonable and necessary when
viewed in the context of:
(i) the requirement to maintain insurance;
(ii) the importance of maintaining cash reserves;
(iii) the low cost of the credit sought; and
(iv) the harm to the Debtor and the estate if the amounts
are not paid and the coverage is [dis]continued.
The Archdiocese of Portland in Oregon filed for chapter 11
protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004. Thomas
W. Stilley, Esq. and William N. Stiles, Esq. of Sussman Shank LLP
represent the debtor in its restructuring efforts. When the debtor
filed for chapter 11 protection, it listed estimated assets of
$10,000,000 to $50,000,000 and estimated debts of $25,000,000 to
$50,000,000. (Catholic Church Bankruptcy News, Issue No. 3;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
CATHOLIC CHURCH: Wants to Hire Miller Nash LLP as Legal Counsel
---------------------------------------------------------------
Thomas W. Stilley, Esq., at Sussman Shank, LLP, in Portland,
Oregon, tells Judge Perris that the Archdiocese of Portland in
Oregon needs the assistance and advice of a special legal counsel
with respect to insurance matters, especially regarding the
Debtor's insurers' failure and refusal to provide coverage for
sexual abuse claims. Miller Nash, LLP, Mr. Stiller continues, is
very familiar with these matters since it has represented the
Debtor since February 21, 2000 as counsel in the Debtor's claims
against its insurers.
For this reason, the Archdiocese of Portland Debtor asks the Court
to employ Miller Nash as special counsel for this limited purpose,
effective as of the Petition Date.
The Miller Nash professionals expected to perform services in
connection with the assignment, and their standard hourly billing
rates, are:
Jerry Hodson $290
Tom Sand 340
James Phillips 300
Teresa H. Pearson 230
Kieran Curley 155
Mr. Stilley discloses that the Debtor owed $91,768 to Miller Nash
for the firm's prepetition legal services. The amount, however,
has been paid in full in the ordinary course of the Debtor's
business before the Petition Date.
Thomas C. Sand, Esq., the managing partner at Miller Nash,
assures the Court that the firm and its professionals are
"disinterested persons" within the meaning of Section 101(14) of
the Bankruptcy Code and as required under Section 327.
The Archdiocese of Portland in Oregon filed for chapter 11
protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004. Thomas
W. Stilley, Esq. and William N. Stiles, Esq. of Sussman Shank LLP
represent the debtor in its restructuring efforts. When the debtor
filed for chapter 11 protection, it listed estimated assets of
$10,000,000 to $50,000,000 and estimated debts of $25,000,000 to
$50,000,000. (Catholic Church Bankruptcy News, Issue No. 3;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
CELL-BIO SYSTEMS: Cell Source Cancels Sub-License Agreement
-----------------------------------------------------------
On March 22, 2004, Cell Source Research, Inc. canceled Cell-Bio
Systems Inc.'s Sub-License Agreement relating to certain
intellectual property, including two patents to manufacture,
market and sell disposable cannulae and other instruments used in
tissue management procedures. In addition, the Company returned to
Cell Source Research Inc. substantially all assets related to the
licensed technology and the sum of $30,000. This occurred in
compliance with an agreement entered into by the Company on
February 18, 2004, between the Company and Cell Source Research,
Inc. As this transaction resulted in the disposition of
substantially all of Cell-Bio Systems' operating assets, the
Company's Board of Directors is currently seeking to enter into a
business combination with an operating company.
Liquidity and Financial Resources
In its Form 10-KSB for the fiscal year ending September 31, 2003,
filed with the Securities and Exchange Commission, Cell Bio-
Systems reports:
"As shown in the financial statements, the Company incurred a net
loss of $105,100 during the year ended September 30, 2000.
Subsequently, it has entered a new business that remains in the
development stage, producing no revenues and earnings. At
September 30, 2003, current liabilities equaled current assets
yielding $-0- working capital. Current assets, in cash and cash
equivalents, had increased from nil at September 30, 2003 to
$135,000.
Going Concern Doubt
"These factors raise substantial doubt about the Company's ability
to continue as a going concern. It is the intention of the
Company's management to improve profitability by commencing
planned principal operation and raising additional investment
capital to provide for continued operating funds. The ultimate
success of these measures is not reasonably determinable at this
time."
CELL-BIO SYSTEMS: Dismisses Drakeford & Drakeford as Auditors
-------------------------------------------------------------
On or about January 29, 2004, Cell Bio-Systems, Inc. (n/k/a,
Franklin Scientific, Inc.) dismissed its auditors, Drakeford &
Drakeford, LLC of Royston, Georgia effective immediately. D&D was
the auditor for the Company for the fiscal year ended September
30, 2003. The Company previously reported a change in auditor from
AAron Stein to D&D on December 9, 2003.
The accountant's report on the financial statements for the past
two years contained a going concern opinion expressing substantial
doubt about the ability of the Company to continue as a going
concern.
During the Company's two most recent reported fiscal years (ended
September 30, 2003 and 2002) there were no disagreements with the
Company's auditors on any matter of accounting principles or
practices, financial disclosure, or auditing scope or procedure
with the exception of the rendering by D&D of a going concern
opinion expressing substantial doubt about the ability of the
Company to continue as a going concern.
CELL-BIO SYSTEMS: Grants 25 Mil. Shares to Franklin Scientific
--------------------------------------------------------------
On April 27, 2004, Cell-Bio System's Board of Directors adopted a
resolution to amend the Company's Certificate of Incorporation
changing the name of the Company to Franklin Scientific, Inc.
This Amendment was approved with the written consent of the
holders of a majority of the Company's common shares entitled to
vote thereon.
On May 9, 2004, Franklin Scientific Executive Compensation Plan
was granted beneficial ownership of 25,095,401 shares of Cell-Bio
Systems Inc. This amounts to 48% of the outstanding common shares
of Cell-Bio Systems. David Koos, Bombadier Pacific Trust, Venture
Bridge Advisors and Venture Bridge, Inc. transferred 3,001,750
shares, 8,600,000 shares, 5,385,750 shares and 8,107,901 shares to
the Plan respectively. All transfers were gifted to the Plan for
no consideration.
Liquidity and Financial Resources
In its Form 10-KSB for the fiscal year ending September 31, 2003,
filed with the Securities and Exchange Commission, Cell Bio-
Systems reports:
"As shown in the financial statements, the Company incurred a net
loss of $105,100 during the year ended September 30, 2000.
Subsequently, it has entered a new business that remains in the
development stage, producing no revenues and earnings. At
September 30, 2003, current liabilities equaled current assets
yielding $-0- working capital. Current assets, in cash and cash
equivalents, had increased from nil at September 30, 2003 to
$135,000.
"These factors raise substantial doubt about the Company's ability
to continue as a going concern. It is the intention of the
Company's management to improve profitability by commencing
planned principal operation and raising additional investment
capital to provide for continued operating funds. The ultimate
success of these measures is not reasonably determinable at this
time."
CHOICE ONE: Gets Creditors Nod on Fin'l Restructuring Plan
----------------------------------------------------------
Choice One Communications (OTCBB: CWON), an Integrated
Communications Provider offering facilities-based voice and data
telecommunications services, including Internet solutions, to
clients in 29 Northeast and Midwest markets, has reached an
agreement in principle with ad hoc committees of its senior and
subordinated lenders to restructure and substantially reduce the
Company's debt, strengthen its balance sheet, and increase its
liquidity.
"Choice One is strategically focused and operationally strong,"
said Steve Dubnik, Chairman and Chief Executive Officer. "But our
debt level today is out of line with our current business model.
We need to fix that, and that is what this financial restructuring
is intended to do. It will enhance our ability to meet the needs
of our clients and continue to execute our strategy."
The Company expects to continue normal operations throughout the
restructuring process. All services provided to clients are
expected to continue on a "business as usual" basis.
In addition to debt reduction, the proposed restructuring--which
has the support of ad hoc committees of the Company's senior and
subordinated lenders--will increase the Company's liquidity.
It is currently anticipated that:
(i) the Company's approximately $404 million of outstanding
senior debt would be converted into $175 million of new
senior secured term notes payable over six years and 90% of
the common stock of the reorganized Company;
(ii) the Company's approximately $252 million of outstanding
subordinated debt would be converted into the other 10% of
such common stock and into two series of seven-year
warrants to purchase additional shares of common stock from
the reorganized Company; and
(iii) upon completion of the restructuring, the Company would
obtain a revolving credit facility of up to $25 million
from a subset of its senior lenders to provide for ongoing
working capital requirements.
It is anticipated that the restructuring would be implemented
through a so-called "prepackaged" or prearranged chapter 11
proceeding, which is designed to be completed promptly with
minimal disruption to the Company's business and without affecting
the provision of the Company's services to its clients. To ensure
the continued stability of the Company's management, certain
restricted stock and/or stock option grants would be made in
amounts and subject to conditions thereon to be determined. It is
expected that the Company's existing preferred and common
stockholders would not receive any recovery.
To facilitate the negotiation of the financial restructuring, the
requisite majority of both its senior and subordinated lenders
have agreed to standstill agreements, subject to certain
conditions, pursuant to which they will not take any action before
August 30, 2004 with respect to the Company's failure to make
certain payments on the senior debt that were due on July 30,
2004. This will provide the Company with the flexibility to
postpone its interest and amortization payments until August 30,
2004, and thereby with additional short-term liquidity. There can
be no assurance that the Company's financial restructuring will be
successfully completed.
Mr. Dubnik said: "This agreement in principle is an important
first step in the financial restructuring of the Company. With a
strengthened balance sheet, increased liquidity, $320 million in
recurring revenue, and more than 100,000 clients on our network,
Choice One will be well-positioned to be a leading communications
company in the markets we serve."
About Choice One Communications
Headquartered in Rochester, New York, Choice One Communications
Inc. (OTCBB: CWON) is a leading Integrated Communications Provider
offering voice and data services including Internet solutions, to
businesses in 29 metropolitan areas (markets) across 12 Northeast
and Midwest states. Choice One reported $323 million of revenue in
2003, has more than 100,000 clients and employs approximately
1,400 colleagues.
At March 31,2004, Choice One Communications' balance sheet shows a
stockholders' deficit of $684,402,000 compared to the $644,995,000
deficit at December 31, 2003.
CINEMARK USA: Will Redeem $10.8M Outstanding Sr. Debt on Aug. 27
----------------------------------------------------------------
On July 28, 2004, Cinemark USA, Inc. has provided notice to its
holders of 8-1/2% Series B Senior Subordinated Notes due 2008 of
its election to redeem all of the outstanding Notes on Aug. 27,
2004, at the redemption price of 102.833% of the principal amount
of the Notes plus any accrued and unpaid interest up to the
Redemption Date. As of the Notice Date, approximately $10.8
million in aggregate principal amount of the Notes remained
outstanding.
* * *
As reported in the Troubled Company Reporter's March 29, 2004
edition, Standard & Poor's Ratings Services assigned a 'BB-'
rating and a recovery rating of '1' to Cinemark USA Inc.'s
proposed $370 million senior secured bank facility, indicating
high expectations for a full recovery of principal in a default
scenario.
In addition, Standard & Poor's affirmed its 'B+' corporate credit
rating on Cinemark USA. At the same time, Standard & Poor's
assigned a 'B+' corporate credit rating to parent holding company,
Cinemark Inc. Both companies are analyzed on a consolidated basis.
Standard & Poor's also assigned a 'B-' rating to the proposed Rule
144A $360 million senior discount notes due 2014 to be issued by
Cinemark Inc. The outlook is negative.
COEUR D'ALENE: Wheaton Responds to Silver Wheaton Transaction
-------------------------------------------------------------
Wheaton River Minerals Ltd. (AMEX:WHT)(TSX:WRM) has sent the
following letter to Dennis Wheeler, Chairman and CEO of Coeur
d'Alene Mines Corporation.
July 30, 2004
Mr. Dennis E. Wheeler
Chairman and Chief Executive Officer
Coeur d'Alene Mines Corporation
505 Front Avenue, P.O. Box 1
Coeur d'Alene, Idaho 83816-0316
Dear Mr. Wheeler:
Our response to your letter of July 19, 2004 is as follows:
1. Your suggestions that the Silver Wheaton transaction is
intended as a take-over defense are disingenuous at best. You
were aware of Wheaton's plans to undertake a Silver Wheaton
transaction prior to Wheaton's announcement on July 14, 2004.
In fact, your Canadian lawyers were engaged by GMP Securities
Ltd. to assist in the completion of the Silver Wheaton
transaction long before Coeur made its initial proposals to
Wheaton. Your Canadian financial advisors were also aware of
the proposed Silver Wheaton transaction before Coeur made any
proposal to acquire Wheaton.
2. You have established August 27, 2004 as the expiry date for
your tender offer. The closing of the Silver Wheaton
transaction has been scheduled to occur on September 9, 2004,
two weeks following the expiry date of your take-over bid. You
will have at least ten days following the expiry date of your
offer to take-up and pay for all of the Wheaton shares
tendered to your offer. Under Canadian law, you are required
to take up and pay for all securities tendered to a take-over
bid within 10 days of expiry of the offer. As a result, your
offer should be concluded prior to the scheduled closing date
of the Silver Wheaton transaction. If you are successful in
acquiring 66-2/3% of the outstanding Wheaton shares prior to
September 9, 2004, Wheaton will not, without Coeur's consent,
proceed with the Silver Wheaton transaction.
This letter is being sent to you by the undersigned at the request
of the board of directors and the special committee.
We trust the foregoing is satisfactory.
/s/ Ian Telfer
Ian Telfer
Chairman and CEO
As previously announced, the equity financing to be completed by
Chap Mercantile Inc. to fund the Cdn$46 million cash payment
payable to Wheaton in connection with the Silver Wheaton
transaction is scheduled to close on August 5, 2004. The Silver
Wheaton transaction is scheduled to close on September 9, 2004. On
July 14, 2004, Wheaton and Chap entered into a letter of intent to
complete the Silver Wheaton transaction. Closing of all of the
transactions is subject to execution of definitive agreements,
including, but not limited to, agreements relating to the purchase
of silver by a subsidiary of Chap from a subsidiary of Wheaton,
completion of satisfactory due diligence, approval by shareholders
of Chap and receipt of all regulatory approvals and third-party
consents, including acceptance by the TSX Venture Exchange.
On July 30, 2004, the Toronto Stock Exchange accepted notice of
the Silver Wheaton transaction, subject to the filing of
definitive documentation following closing.
* * *
As reported in the Troubled Company Reporter's June 3, 2004
edition, Standard & Poor's Ratings Services placed its B-
corporate credit and senior unsecured debt ratings on Coeur
D'Alene Mines Corp. on CreditWatch with positive implications
following the company's announcement that it intends to acquire
precious metals mining company Wheaton River Minerals Ltd. in a
stock and cash transaction valued at approximately $1.8
billion.
"The CreditWatch action reflects what is likely to be a
meaningful improvement in Coeur's business and financial profile
upon the successful acquisition of lower-cost producer Wheaton,"
said Standard & Poor's credit analyst Paul Vastola. Standard &
Poor's expects that its ratings on Coeur would likely be raised
several notches. Standard & Poor's will continue to monitor the
transaction for any potential revisions to the deal. The deal
remains subject to several conditions and is expected to close
by Sept. 30, 2004.
CWMBS INC: Fitch Rates Mortgage Pass-Through Certificates BB & B
----------------------------------------------------------------
CWMBS, Inc.'s (CWMBS) mortgage pass-through certificates series
2004-J6, CHL Mortgage Pass-Through Trust 2004-J6, are rated by
Fitch Ratings as follows:
-- $142.2 million classes 1-A-1, 1-A-2, 1-X, 2-A-1,
2-X, 3-A-1, 3-X, PO and A-R (senior certificates) 'AAA';
-- $1,154,500 class M 'AA';
-- $288,600 class B-1 'A';
-- $216,500 class B-2 'BBB';
-- $144,300 privately offered class B-3 'BB';
-- $144,300 privately offered class B-4 'B'.
The 'AAA' rating on the senior certificates reflects the 1.45%
subordination provided by the 0.80% class M, the 0.20% class B-1,
the 0.15% class B-2, the 0.10% class B-3, the 0.10% class B-4, and
the 0.10% class B-5 (not rated by Fitch). Fitch believes the
above credit enhancement will be adequate to support mortgagor
defaults as well as bankruptcy, fraud and special hazard losses in
limited amounts. In addition, the ratings also reflect the quality
of the underlying mortgage collateral, strength of the legal and
financial structures and the master servicing capabilities of
Countrywide Home Loans Servicing LP (Countrywide Servicing), a
direct wholly owned subsidiary of Countrywide Home Loans, Inc.
(CHL). Countrywide Servicing is rated an 'RMS2+' for master
servicing and 'RPS1' for primary servicing by Fitch.
The senior certificates are collateralized primarily by a pool of
conventional, fully amortizing, 20-year, 15-year, and 10-year
fixed-rate mortgage loans secured by first liens on one- to four-
family residential properties.
In loan group 1, as of the cut-off date (July 1, 2004), the
aggregate pool balance totaled $51,364,599. The weighted-average
original loan-to-value ratio (OLTV) was 62.00%. Cash-out and
rate/term refinance loans represent 22.75% and 69.61% of the
mortgage pool, respectively. Second homes account for 2.14% of the
pool. The average loan balance is $480,043. The weighted average
FICO credit score is approximately 740. The three states that
represent the largest portion of mortgage loans are California
(49.20%), New Jersey (5.48%) and Virginia (4.86%).
In loan group 2, as of the cut-off date, the aggregate pool
balance totaled $16,354,298. The weighted-average original loan-
to-value ratio (OLTV) was 50.29%. Cash-out and rate/term refinance
loans represent 18.53% and 69.44% of the mortgage pool,
respectively. Second homes account for 8.12% of the pool. The
average loan balance is $454,286. The weighted average FICO credit
score is approximately 742. The three states that represent the
largest portion of mortgage loans are California (39.06%), Texas
(16.08%) and Maryland (5.85%).
In loan group 3, as of the cut-off date, the aggregate pool
balance totaled $76,596,278. The weighted-average original loan-
to-value ratio (OLTV) was 60.52%. Cash-out and rate/term refinance
loans represent 28.29% and 41.47% of the mortgage pool. Second
homes account for 5.85% of the pool. The average loan balance is
$584,704. The weighted average FICO credit score is approximately
748. The three states that represent the largest portion of
mortgage loans are California (49.98%), Florida (8.01%) and Texas
(5.36%).
None of the mortgage loans are 'high cost' loans as defined under
any local, state or federal laws.
Countrywide Servicing will directly service all of the mortgage
loans in loan group 1. Countrywide Servicing and Bank United, FSB
will directly service 98.17% and 1.83%, respectively, of the
mortgage loans in loan group 2.
Countrywide Servicing, Bank United, FSB, and HSBC Bank will
directly service 94.55%, 4.91%, and 0.54% respectively, of the
mortgage loans in loan group 3.
CWMBS purchased the mortgage loans from CHL and deposited the
loans in the trust, which issued the certificates, representing
undivided beneficial ownership in the trust. For federal income
tax purposes, an election will be made to treat the trust fund as
multiple real estate mortgage investment conduits (REMICs). The
Bank of New York will act as Trustee.
DAVITA: S&P Affirms BB Corporate Credit & Sr. Secured Debt Rating
-----------------------------------------------------------------
Standard & Poor's Ratings affirmed its 'BB' corporate credit
rating on dialysis services provider DaVita, Inc., as well as the
'BB' rating on DaVita's existing senior secured debt. At the same
time, Standard & Poor's assigned its 'BB' senior secured debt
rating to the company's proposed $250 million senior secured term
loan C due in 2010. Standard & Poor's expects DaVita to use $150
million of the proceeds from the proposed term loan C to purchase
Physicians Dialysis Inc. The acquisition will add 24 dialysis
centers and about $75 million in annual revenue.
Standard & Poor's assigned its '4' recovery rating to the proposed
term loan C, as well as to DaVita's $115 million senior secured
revolving credit facility due in 2007, its $101 million senior
secured term loan A due in 2007, and its $1,030 million term loan
B due in 2010. A '4' recovery rating indicates that Standard &
Poor's expects a marginal recovery of principal (25%-50%) in the
event of default.
The outlook is stable.
"The speculative-grade ratings on DaVita Inc. reflect its
dependence on the treatment of a single disease state," said
Standard & Poor's credit analyst David Peknay. "The ratings also
reflect the company's vulnerability to cuts or insufficient
increases in third-party reimbursement rates, its cost-management
challenges, and its moderate financial policies. These factors
are partly offset by the stabilizing effects of a recurring
revenue stream, a large clinic network with the No. 2 U.S. market
position, and the company's attractive growth prospects."
Pro forma for the Physicians Dialysis transaction, El Segundo,
California-based DaVita will operate more than 600 outpatient
dialysis centers throughout the U.S. that provide mainly
outpatient hemodialysis and ancillary services to patients
suffering from chronic kidney failure. DaVita also provides acute
inpatient dialysis services at approximately 320 hospitals and
conducts clinical trials on renal devices and drugs for
pharmaceutical and medical-device firms.
In September 2003, DaVita announced that its CFO would retire, and
an interim CFO has since been named. Standard & Poor's expects no
changes in operating strategy to result.
Following a period of rapid expansion that strained DaVita's
administrative and operating capabilities, the new management team
has focused on strengthening the company's internal systems; its
billing and collections infrastructure; its treatment volumes; and
costs. This focus is critical, given the company's vulnerability
to third-party reimbursement and drug cost trends and the risks of
the Physicians Dialysis purchase.
DB COMPANIES: Committee Hires Morris Nichols as Local Counsel
-------------------------------------------------------------
The Official Unsecured Creditors Committee appointed in DB
Companies, Inc., and its debtor-affiliates' chapter 11 cases asks
the U.S. Bankruptcy Court for the District of Delaware for
permission to hire and retain Morris, Nichols, Arsht & Tunnel as
its local counsel.
The Committee anticipates that Morris Nichols will:
a) advise the Committee with respect to its rights, duties
and powers in these cases;
b) assist and advise the Committee in its consultations with
the Debtors relative to the administration of these cases;
c) assist the Committee in analyzing the claims of the
Debtors' creditors and in negotiating with such creditors;
d) assist with the Committee's investigation of the acts,
conduct, assets, liabilities and financial condition of
the Debtors and of the operation of the Debtors'
businesses;
e) assist the Committee in its analysis of, and negotiations
with, the Debtors or their creditors concerning matters
related to, among other things, the terms of a plan or
plans of reorganization for the Debtors;
f) assist and advise the Committee with respect to its
communications with the general creditor body regarding
significant matters in these cases;
g) represent the Committee at all hearings and other
proceedings;
h) review and analyze all applications, orders, statements of
operations and schedules filed with the Court and advise
the Committee as to their propriety;
i) assist the Committee in preparing pleadings and
applications as may be necessary in furtherance of the
Committee's interests and objectives; and
j) perform other legal services as may be required and
are deemed to be in the interests of the Committee in
accordance with the Committee's powers and duties as set
forth in the Bankruptcy Code.
The current hourly rates of attorneys and paraprofessionals
expected to be chiefly responsible for the Committee's
representation are:
Professional Position Billing Rate
------------ -------- ------------
Robert J. Dehney Partner $495 per hour
Derek C. Abbott Partner $425 per hour
Jonathan C. Strauss Associate $240 per hour
Alicia B. Kelly Associate $220 per hour
Rene Fusco Paralegal $115 per hour
Headquartered in Pawtucket, Rhode Island, DB Companies, Inc. --
http://www.dbmarts.com/-- operates and franchises a regional
Chain of DB Mart convenience stores in Connecticut, Massachusetts,
Rhode Island, and the Hudson Valley region of New York. The
Company filed for chapter 11 protection on June 2, 2004 (Bankr.
Del. Case No. 04-11618). William E. Chipman Jr., Esq., at
Greenberg Traurig, LLP represents the Debtors in their
restructuring efforts. When the Company filed for protection from
their creditors, they listed estimated assets of over $50 million
and debts of approximately $65 million.
DEXTERITY SURGICAL: Panel Hires Arent Fox as Bankruptcy Counsel
---------------------------------------------------------------
The Official Unsecured Creditors Committee appointed in Dexterity
Surgical, Inc.'s chapter 11 case asks the U.S. Bankruptcy Court
for the Southern District of Texas, Houston Division, for
permission to retain Arent Fox PLLC as its counsel.
Schuyler Carrol, Esq., will be primarily responsible for Arent
Fox's representation of the Committee. Mr. Carroll regularly
represents creditors' committees, as well as troubled companies,
trade creditors and other clients in the healthcare industry in
out-of-court restructurings and workouts, bankruptcy and
insolvency proceedings and related state and federal court
litigation including foreclosures, recovery and collection
actions, enforcement proceedings, loan participation and inter-
creditor disputes.
In this engagement, Arent Fox is expected to:
a) assist, advise and represent the Committee in its
consultation with the Debtor relative to the
administration of this Chapter 11 case;
b) assist, advise and represent the Committee in analyzing
the Debtor's assets and liabilities, investigating the
extent and validity of liens and participating in and
reviewing any proposed asset sales or dispositions;
c) attend meetings and negotiate with the representatives of
the Debtor and secured creditors;
d) assist and advise the Committee in its examination and
analysis of the conduct of the Debtor's affairs;
e) assist the Committee in the review, analysis and
negotiation of any plan(s) of reorganization that maybe
filed and to assist the Committee in the review, analysis
and negotiation of the disclosure statement accompanying
any plan(s) of reorganization;
f) assist the Committee in the review, analysis, and
negotiation of any financing or funding agreements;
g) take all necessary action to protect and preserve the
interests of the Committee, including, without limitation,
the prosecution of actions on its behalf, negotiations
concerning all litigation in which the Debtor is involved,
and review and analysis of all claims filed against the
Debtor's estate;
h) generally prepare on behalf of the Committee all necessary
motions, applications, answers, orders, reports and papers
in support of positions taken by the Committee;
i) appear, as appropriate, before this Court, the Appellate
Courts, and other Courts in which matters may be heard and
to protect the interests of the Committee before said
Courts and the United States Trustee; and
j) perform all other necessary legal services in these cases.
Arent Fox professionals currently bill:
Designation Billing Rate
----------- ------------
Members $340 - $590 per hour
Of Counsel $340 - $580 per hour
Associates $175 - $395 per hour
Legal Assistants $165 - $190 per hour
Headquartered in Houston, Texas, Dexterity Surgical, Inc., is
engaged in the distribution of instruments, equipment and surgical
supplies, primarily used in hand-assisted laproscopic surgery. The
Company filed for chapter 11 protection on April 19, 2004 (Bankr.
S.D. Tex. Case No. 04-35817). Robert Andrew Black, Esq., at
Fulbright & Jaworski represents the Debtor in its restructuring
efforts. When the Company filed for protection from its
creditors, it listed $3,639,923 in total assets and $8,715,167 in
total debts.
DII/KBR: Judge McVerry Affirms Halliburton's Prepackaged Plan
-------------------------------------------------------------
Halliburton (NYSE: HAL) announced that on Monday, July 26, 2004,
the Honorable Terrence F. McVerry of the United States District
Court for the Western District of Pennsylvania issued an order
affirming the Bankruptcy Court's order confirming the plan of
reorganization filed by DII Industries, Kellogg Brown & Root (KBR)
and various other Halliburton subsidiaries to implement the
companies' proposed global asbestos and silica settlement. The
Bankruptcy Court confirmed the subsidiaries' plan of
reorganization on July 16, 2004.
"This is good news for all Halliburton stakeholders and we
are pleased the Judge acted so quickly. This is a continuation
of the momentum that has been building toward a final resolution
of Halliburton's asbestos and silica liabilities," said Dave
Lesar, chairman, president and chief executive officer
of Halliburton. "We have excellent employees, a strong asset
base, and a premiere position in the industry. The resolution of
the company's asbestos and silica liabilities will allow us to
concentrate our resources on serving our customers and further
growing the business."
Until previously announced settlement agreements with the
insurance companies are finalized and approved by the Bankruptcy
Court, Halliburton anticipates that the insurance companies will
file motions for reconsideration with the United States District
Court or file appeals to protect their appeal rights. However,
assuming the settlement agreements are finalized and receive
Bankruptcy Court approval, Halliburton expects the insurance
companies will withdraw their appeals and permit the plan of
reorganization to become effective. Assuming the settlements
with the insurance companies are finalized in the near future and
the plan of reorganization becomes effective, Halliburton expects
that its debtor subsidiaries would fund the trusts for asbestos
and silica claimants under the plan of reorganization in the
fourth quarter of 2004.
Headquartered in Houston, Texas, Kellogg, Brown & Root is engaged
in the engineering and construction business, providing a wide
range of services to energy and industrial customers and
government entities in over 100 countries. DII has no business
operations. The Company filed for chapter 11 protection on
December 16, 2003 (Bankr. W.D. Pa. Case No. 02-12152). Jeffrey N.
Rich, Esq., Michael G. Zanic, Esq., and Eric T. Moser, Esq., at
Kirkpatrick & Lockhart LLP, represent the Debtors in their
restructuring efforts. (DII & KBR Bankruptcy News, Issue No. 17;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
DRESSER INC: Makes Voluntary $10 Million Debt Prepayment
--------------------------------------------------------
Dresser, Inc., made an optional debt prepayment in the amount of
$10 million, which was applied to its senior secured term loan C.
As a result of the optional prepayment, no mandatory principal
payments are due on its senior secured term loan C until March 31,
2006. In 2004, Dresser has made a total of $35 million in optional
prepayments on senior secured term debt.
Headquartered in Dallas, Dresser, Inc. is a worldwide leader in
the design, manufacture and marketing of highly engineered
equipment and services sold primarily to customers in the flow
control, measurement systems, and compression and power systems
segments of the energy industry. Dresser has a widely distributed
global presence, with over 8,000 employees and a sales presence in
over 100 countries worldwide. The company's website can be
accessed at http://www.dresser.com/
* * *
As reported in the Troubled Company Reporter's June 4, 2004
edition, Standard & Poor's Ratings Services affirmed its 'BB-'
corporate credit rating on Dresser Inc. and, at the same time,
revised its outlook on the company to negative from stable.
Standard & Poor's also assigned its 'BB-' rating to Dresser's $175
million term loan C add-on, which has the same terms and
conditions as the existing 'BB-' rated $235 million senior secured
credit facility.
The outlook revision is based on Dresser's weaker credit measures
that are likely in the near term, due to the company's debt-
financed acquisition of the distribution business of Nuovo Pignone
S.p.A., a subsidiary of General Electric Co., for approximately
$175 million.
"Dresser's credit measures are weak for the rating, and the
company is vulnerable to a downgrade if financial performance and
credit measures do not materially improve on a sequential basis
throughout 2004," said Standard & Poor's credit analyst Andrew
Watt.
EDISON MISSION: Agrees to Sell Power Generation Biz for $2.3B
-------------------------------------------------------------
Edison Mission Energy (EME) and its parent Edison International
(NYSE: EIX) discloses that EME has entered into an agreement to
sell its remaining 5,381 MW (net) international power generation
portfolio, owned by a Dutch holding company which EME refers to as
the "BV", to a consortium comprised of International Power plc
(70%) and Mitsui & Co., Ltd. (30%). The purchase price is $2.3
billion, subject to certain purchase price adjustments prior to
closing resulting in an expected net purchase price of
approximately $2.2 billion.
The BV sale agreement is an important step toward EME achieving
its previously announced intention to sell its entire
international portfolio of generation assets in Europe, Asia
Pacific and Puerto Rico. Closing of the BV transaction is subject
to approval by International Power's shareholders, and to a number
of regulatory approvals and project level consents. The sale is
expected to close in the fourth quarter of 2004.
This transaction follows EME's recently reported sale of its 51.2%
holding in Contact Energy Ltd. to Origin Energy Limited for
approximately $750 million. Together, these two transactions
represent an aggregate equity purchase price of $3.05 billion,
which is expected to yield proceeds of approximately $2.5 billion
to EME after taxes and transaction expenses.
Upon closing, these transactions will complete the third step in
EME's four step restructuring plan announced in November 2003.
These transactions combined with the tax benefits from the
decommissioning of the Collins Power Station in Illinois will
generate approximately $2.8 billion of cash from restructuring
activities. EME plans to use this cash to begin the fourth and
final delevering step of its restructuring plan by paying down an
$800 million bridge loan of Mission Energy Holdings International,
Inc, a direct subsidiary of EME.
After completion of the BV and Contact sales, a financially
healthier EME will be focused on its domestic operations, which
include approximately 7,500 MW of low cost, coal-fired generation
and just under 1,100 MW of contracted gas-fired generation located
predominantly in California.
International Power plc is a global independent electricity
generating company with 11,210MW (net) in operation and 1,655MW
(net) under construction. International Power has power plants in
operation or under construction in Australia, the United States,
the United Kingdom, the Czech Republic, Portugal, Turkey, the UAE,
Oman, Saudi Arabia, Malaysia, Pakistan and Thailand.
Mitsui & Co., Ltd. is a major Japanese trading company engaged in
a number of worldwide commodity businesses, including power and
energy-related products, iron & steel, non-ferrous metals,
machinery, electronics, chemicals, food products, textiles,
general merchandise and real estate. Mitsui's other businesses
include industrial project management, information technology,
biotechnology and financial services.
Lehman Brothers and Credit Suisse First Boston are acting as
financial advisors to EME on the sale of its international assets.
Based in Rosemead, California, Edison International (S&P, 'B'
corporate credit ratings) (NYSE: EIX) is the parent company of
Southern California Edison, Edison Mission Energy, and Edison
Capital.
EMAGIN CORPORATION: Delivers Equity Registration Statement to SEC
-----------------------------------------------------------------
eMagin Corporation delivered a Registration Statement to the
United States Securities and Exchange Commission in order to, from
time to time, offer to the public $50,000,000 in common stock,
Preferred Stock and Warrants, plus 52,089,060 shares of common
stock offered by selling stockholders.
The aggregate initial offering price of all securities sold by
eMagin under its prospectus will not exceed $50,000,000. eMagin's
common stock is listed on the American Stock Exchange under the
symbol "EMA." The reported sales price per share of eMagin's
common stock as reported by the American Stock Exchange on April
29, 2004, was $2.45.
In addition, the Company's prospectus relates to the resale by the
selling stockholders of up to:
(i) 2,600,000 shares of Company common stock, 2,500,000 of
which are issuable upon the exercise of common stock
purchase warrants issued to former note holders, and
(ii) 49,489,060 shares of common stock that were previously
issued and registered in July 2003.
The selling stockholders may sell common stock from time to time
in the principal market on which the stock is traded at the
prevailing market price or in negotiated transactions. The selling
stockholders may be deemed underwriters of the shares of common
stock, which they are offering. eMagin will pay the expenses of
registering these shares.
* * *
In its Form 10-QSB for the quarterly period ended March 31, 2004
filed with the Securities and Exchange Commission, eMagin
Corporation reports:
Liquidity and Capital Resources
"We have total liabilities and contractual obligations of
$1,217,593 as of March 31, 2004. We currently anticipate that we
will continue to experience significant growth in our operating
expenses for the foreseeable future and that our operating
expenses will be the principal use of our cash. In particular, we
expect that salaries for employees engaged in production
operations, purchase of inventory and expenses of increased sales
and marketing efforts would be the principle uses of cash. We
expect that our cash requirements over the next 12 months will be
met by a combination of cash on hand which as of May 13 was
approximately $4.5 million, additional financing, exercising of
outstanding options and warrants, and revenues generated by
operations. We expect to continue to devote substantial resources
to manufacturing, marketing and selling our products."
Risks Related To Financial Results
"If we do not obtain additional cash to operate our business, we
may not be able to execute our business plan and may not achieve
profitability.
"In the event that cash flow from operations is less than
anticipated and we are unable to secure additional funding to
cover these added losses, in order to preserve cash, we would be
required to further reduce expenditures and effect further
reductions in our corporate infrastructure, either of which could
have a material adverse effect on our ability to continue or
increase our current level of operations. To the extent that
operating expenses increase or we need additional funds to make
acquisitions, develop new technologies or acquire strategic
assets, the need for additional funding may be accelerated and
there can be no assurances that any such additional funding can be
obtained on terms acceptable to us, if at all. If we are not able
to generate sufficient capital, either from operations or through
additional financing, to fund our current operations, we may not
be able to continue as a going concern. If we are unable to
continue as a going concern, we may be forced to significantly
reduce or cease our current operations. This could significantly
reduce the value of our securities, which could result in our de-
listing from the American Stock Exchange and cause investment
losses for our shareholders.
ENRON CORP: Objects to 92 Secured Claims Aggregating $1 Billion
---------------------------------------------------------------
Enron and its debtor-affiliates object to the classification of 92
Claims. The Debtors have reviewed each of the claims and have
concluded that to the extent that they are valid, the Claims are
not secured by a lien on property in which the Debtors' estates
have an interest. Moreover, the claimants failed to assert that
the Claims are subject to setoff under Section 553 of the
Bankruptcy Code. Many of the claimants also failed to provide any
information regarding their claim against the Debtors, including
failing to:
(a) identify the lien, security interest or right of setoff
giving rise to their alleged secured claim;
(b) identify the collateral securing the claim; or
(c) attach any supporting documentation.
Accordingly, the Debtors ask the Court to reclassify the 92
Claims, aggregating $1,074,440,226, as general unsecured Claims.
Among the Claims to be reclassified are:
Claimant Claim No. Amount
-------- --------- ------
American Home Assurance Company 10788 $125,877,601
10789 125,877,601
10790 125,877,601
Arizona State Retirement System 9170 16,975,536
Bayerische Hypo-Und Vereinsbank 8708 56,861,121
British Gas, Plc 5335 13,867,618
Connecticut Resources Recovery 11189 221,284,716
11190 221,284,716
Cornerstone Propane, LP 12842 10,803,316
Enterprise Products Operating, LP 19407 10,398,838
Portland General Electric Company 22920 78,469,017
Samedan Oil Corporation 12652 11,810,190
Toronto Dominion (Texas), Inc. 19061 26,785,308
(Enron Bankruptcy News, Issue No. 119; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
ENRON: Spinnaker Exploration Wants Its $3.6 Million Claim Allowed
-----------------------------------------------------------------
Spinnaker Exploration Company, LLC, asks the Court to allow its
proof of claim filed on June 1, 2004 against, Enron Corporation as
timely filed.
Aaron R. Cahn, Esq., at Carter Ledyard & Milburn, LLP, in New
York, relates that Spinnaker timely filed a Proof of Claim
against Enron North America Corporation. The ENA Claim consisted
of:
(i) a $1,660,165 claim for physical sales of gas; and
(ii) a $2,092,810 claim for amounts due for commodity swaps
under an ISDA Master Agreement.
Attached to the ISDA Master Agreement was an unexecuted form
whereby Enron agreed to guaranty ENA's obligations. Mr. Cahn
explains that normally, Enron would have been expected to execute
the Guaranty as part of the ISDA transaction. However, Spinnaker
could not confirm that was so prior to the Claims Bar Date.
Mr. Cahn informs Judge Gonzalez that Spinnaker conducted an
extensive search of its files to locate an executed copy of
the Guaranty. Spinnaker checked with Enron to confirm whether
Enron had executed the Guaranty. Enron refused to give Spinnaker
a confirmation. Spinnaker could not sign a Proof of Claim
against Enron under penalty of perjury if Spinnaker did not know
whether Enron had executed the Guaranty. Accordingly, Spinnaker
did not file a Proof of Claim against Enron in the Guaranty.
Spinnaker timely filed its Proof of Claim against ENA for the
physical sales and the $2,092,810 owed on the ISDA Master
Agreement.
Spinnaker has recently located an executed Corporate Guaranty of
Enron.
Mr. Cahn contends that the Claim should be allowed. If Enron had
confirmed that the Guaranty had been executed when asked,
Spinnaker would have timely filed its Proof of Claim. Not to
allow the Claim as timely filed would reward Enron's
intransigence. Likewise, if Enron had properly scheduled the
Guaranty claim, this would not be an issue. "The Debtors should
not be rewarded for failure to properly schedule claims and
failure to respond to straightforward requests for information,"
Mr. Cahn remarks.
Mr. Cahn assures the Court that Spinnaker acted in good faith.
At most, Spinnaker's failure to timely file a proof of claim
against Enron was caused by excusable neglect. Allowing
Spinnaker's Claim will not significantly impact these judicial
proceedings. (Enron Bankruptcy News, Issue No. 119; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
FAIRPOINT COMMS: Noteholders Agree to Amend Debt Indentures
-----------------------------------------------------------
As of 5:00 p.m., New York City time, on July 29, 2004, Fairpoint
Communications, Inc. had received the tenders and consents
required to effect the proposed amendments to the indentures
governing the Notes representing approximately:
-- 95.92% of the 9-1/2% Senior Subordinated Notes Due 2008,
-- 89.87% of the Floating Rate Callable Securities Due 2008,
-- 98.81% of the 12-1/2% Senior Subordinated Notes Due 2010
and,
-- 94.91% of the 11-7/8% Senior Notes Due 2010.
Supplemental indentures effecting the proposed amendments have
been executed, and such amendments will become operative on the
date that validly tendered Notes are accepted for purchase and
payment by FairPoint. Accordingly, in accordance with the terms of
each Offer to Purchase and Consent Solicitation Statement,
tendered Notes may no longer be withdrawn and consents may not be
revoked, unless FairPoint reduces the amount of the applicable
purchase price, the early consent premium or the principal amount
of Notes subject to the Tender Offers or is otherwise required by
law to permit withdrawal.
In addition, FairPoint announced that it has extended the
expiration date of each of the Tender Offers under each Offer to
Purchase and Consent Solicitation Statement to 5:00 p.m., New York
City time, on September 20, 2004 and that it has also extended the
period of time in which holders of Notes may tender their Notes
and receive the early consent premium under each Offer to Purchase
and Consent Solicitation Statement to 5:00 p.m., New York City
time, on August 20, 2004.
The purchase price for the 2008 Notes that are validly tendered
and accepted for payment on or prior to the Expiration Date will
be equal to $1,015.42 per $1,000 principal amount of 9-1/2% Notes
and $982.50 per $1,000 principal amount of Floating Rate Notes,
plus any accrued and unpaid interest on the 2008 Notes up to, but
not including, the payment date for such notes.
The purchase price for each $1,000 in principal amount of the
12-1/2% Notes that are validly tendered and accepted for payment
on or prior to the Expiration Date will be equal to:
(i) the present value on the payment date for the 12-1/2% Notes of
$1,062.50 per $1,000 principal amount of the 12-1/2% Notes
(the amount payable on the first optional redemption date of
the 12-1/2% Notes) and all scheduled interest payments on the
12-1/2% Notes from the payment date to May 1, 2005, discounted
at a rate equal to the sum of:
(x) the yield on the 1.625% U.S. Treasury Note due April 30,
2005 and
(y) a fixed spread of 50 basis points, minus accrued and
unpaid interest up to, but not including, the payment
date, minus
(ii) an amount equal to the early consent premium. In addition,
accrued and unpaid interest will be paid on the tendered
12-1/2% Notes up to, but not including, the payment date for
such notes.
The purchase price for each $1,000 in principal amount of the
11-7/8% Notes that are validly tendered and accepted for payment
on or prior to the Expiration Date will be equal to:
(i) the sum of:
(a) 35% of $1,118.75 per $1,000 principal amount of the
11-7/8% Notes (which is the equity claw-back for the
11-7/8% Notes under the indenture governing the 11-7/8%
Notes) plus
(b) 65% of the present value on the payment date for the
11-7/8% Notes of $1,059.38 per $1,000 principal amount
of the 11-7/8% Notes (the amount payable on the first
optional redemption date of the 11-7/8% Notes) and all
scheduled interest payments on the 11-7/8% Notes from
the payment date to March 1, 2007, discounted at a rate
equal to the sum of:
(x) the yield on the 2.25% U.S. Treasury Note due
February 15, 2007 and
(y) a fixed spread of 50 basis points, minus accrued
and unpaid interest up to, but not including, the
payment date, minus
(ii) an amount equal to the early consent premium. In addition,
accrued and unpaid interest will be paid on the tendered
11-7/8% Notes up to, but not including, the payment date
for such notes.
In addition to the purchase prices set forth above, an early
consent premium of $20.00 will be paid for each $1,000 in
principal amount of the Notes to holders who tender their Notes
and provide their consents to the proposed amendments to the
indentures governing the Notes at or prior to the Early Consent
Date. Holders of Notes tendered after the Early Consent Date will
not receive an early consent premium.
The Tender Offers are subject to several conditions, including,
among other things, FairPoint's completion of its proposed Income
Deposit Securities offering and senior subordinated note offering
and obtaining a new senior secured credit facility; and a minimum
tender condition. FairPoint currently expects to complete the
Income Deposit Securities offering and senior subordinated note
offering and obtain a new senior secured credit facility on or
prior to the Expiration Date. FairPoint may amend, extend or
terminate one or more of the Tender Offers in its sole discretion.
This press release is neither an offer to purchase nor a
solicitation of an offer to sell the Notes. The offer and consent
solicitation is being made pursuant to each Offer to Purchase and
Consent Solicitation Statement and related materials, copies of
which will be delivered to all noteholders. Persons with questions
regarding the Tender Offers or the related consent solicitations
should contact Citigroup, the Dealer Manager and Solicitation
Agent, at (800) 558-3745 or (212) 723-6106, or Global Bondholder
Services Corporation, the Information Agent, at (212) 430-3774.
FairPoint is one of the leading providers of telecommunications
services in rural communities across the country. Incorporated in
1991, FairPoint's mission is to operate and acquire
telecommunications companies that set the standard of excellence
for the delivery of service to rural communities. Today, FairPoint
owns and operates 26 rural local exchange companies located in 17
states. FairPoint serves customers with approximately 267,790
access line equivalents (including voice access lines and digital
subscriber lines) and offers an array of services including local
voice, long distance, data, Internet and broadband product
offerings.
* * *
As reported in the Troubled Company Reporter's June 8, 2004
edition, Standard & Poor's Ratings Services said that it affirmed
the 'B+' corporate credit rating and other ratings of Charlotte,
North Carolina-based incumbent rural local exchange carrier
FairPoint Communications Inc. The ratings have also been removed
from CreditWatch, where they were placed May 5, 2004. The
CreditWatch listing reflected concerns that the company's proposed
offering of $750 million in income deposit securities, along with
the anticipated high common dividend payout associated with these
issues, would reduce the company's financial flexibility.
The outlook is negative.
Standard & Poor's has assigned a 'CCC+' rating to the company's
proposed senior subordinated notes due 2019, a major portion of
which would be issued under the IDS structure and a small portion
outside. Although the specific mix of debt and equity to be
issued under the IDS has yet to be determined, the final amount of
the senior subordinated notes will not affect FairPoint's
corporate credit rating, nor the rating on these notes.
Proceeds from a proposed $450 million secured bank credit
facility, from the subordinated notes, and from the common equity
component of the IDS will be used to refinance essentially all of
FairPoint's existing debt and redeem the company's series A
preferred stock. FairPoint had total debt of about $920 million,
which includes about $101 million of preferred shares subject to
mandatory redemption, at March 31, 2004. Given that the IDS
offering will likely contain a significant common equity
component, total debt is expected to be lower after the
refinancing.
"While the issuance of the income deposit securities would
incrementally weaken FairPoint's financial risk profile, the
magnitude is not sufficient to warrant a downgrade," said
Standard & Poor's credit analyst Michael Tsao. "However, the
reduced financial flexibility underpins the negative outlook."
FEDERAL-MOGUL: DeVlieg Wants $260K Administrative Claim Paid Now
----------------------------------------------------------------
James E. Huggett, Esq., at Flaster/Greenberg, P.C., in
Wilmington, Delaware, tells the Court that on July 25, 2003,
DeVlieg-Bullard II, Inc., sent a proposal to build for Federal-
Mogul and its debtor-affiliates four custom industrial machines.
The Proposal contains the terms and conditions of sale, including
a provision stating that the last day for the Debtors to cancel
the order would be 120 days prior to the expected delivery date,
which was December 31, 2003. Thus, the last day to cancel the
order was September 3, 2003.
Mr. Huggett relates that the Debtors sent back a purchase order
on July 31, 2003. The Purchase Order required the Debtors to pay
$600,000 in exchange for the machines. DeVlieg-Bullard confirmed
the transaction on August 20, 2003 and began the work on the
machines.
On October 30, 2003, without prior notice, the Debtors amended
their Purchase Order from four to two machines, thereby canceling
the other two. By this time, DeVlieg-Bullard had built the
machines in whole or in substantial part, and already incurred
$260,000 in total value.
Mr. Huggett points out that both Purchase Orders provide that the
Debtors may cancel an order at its convenience, provided that in
the event of cancellation, the Debtors will pay DeVlieg-Bullard's
reasonable costs to the date of cancellation.
Therefore, the Debtors owe DeVlieg-Bullard $260,000 for its
reasonable costs incurred in preparing the two extra machines up
to the Cancellation Date.
By this motion, DeVlieg-Bullard asks the Court to:
(a) allow its administrative expense priority claim for
$260,000; and
(b) compel the Debtors to pay the claim.
Mr. Huggett contends that DeVlieg-Bullard is entitled to the
Claim. Under the Third Circuit test, DeVlieg-Bullard provided
services to the Debtors that "directly and materially
contributed" to their operation and reorganization. The
contracted machinery was to be used in the Debtor's daily
business operations. The contract thus resulted in a
corresponding benefit to the Debtors' estate, which is sufficient
to give DeVlieg-Bullard's claim an administrative expense
priority.
Debtors Object
On the Debtors' behalf, James E. O'Neill, Esq., at Pachulski,
Stang, Ziehl, Young, Jones & Weintraub, P.C., asserts that the
DeVlieg Motion should be denied outright because, under the
correct interpretation of the parties' contractual relationship,
DeVlieg is not entitled to payment of any claimed costs for a
purchase order cancelled in part by Federal-Mogul Products, Inc.
Pursuant to the Debtors' standard terms and conditions, which
governed the parties' business relationship, Federal-Mogul
Products had the unequivocal right to cancel the purchase order,
in whole or in part -- without payment of costs to DeVlieg -- if,
in Federal-Mogul Products' reasonable judgment, DeVlieg was in
danger of failing to perform under its agreement with Federal-
Mogul Products. Based on DeVlieg's inability to either deliver
properly functioning equipment or timely repair those non-
functioning equipment in connection to with prior order with
Federal-Mogul Products, the reasonableness of Federal-Mogul
Products' decision to invoke its right of cancellation cannot be
sensibly questioned.
Although the DeVlieg Motion is directed against all the Debtors,
only Federal-Mogul Products, Inc., and Federal-Mogul Ignition
Company were party to the transactions currently in dispute and
DeVlieg has alleged no basis on which any of the other Debtors
could be liable. Therefore, the DeVlieg Motion should be
dismissed as to the remaining Debtors.
"Even if DeVlieg could assert a claim for damages under the
agreement -- which it cannot -- it is not entitled to recover any
amounts from [Federal-Mogul Products]," Mr. O'Neill says. First,
Federal-Mogul Products is advised that DeVlieg sold the
undelivered equipment to a third party thereby mitigating its
damages. Second, DeVlieg has caused monetary damage to Federal-
Mogul Products in the form of lost sales resulting from DeVlieg's
delivery of, and inability to repair, the non-functioning
equipment, in the approximate amount of $480,000. Third, DeVlieg
remains in possession of a down payment of $119,000 paid by
Federal-Mogul Products in connection with a rebuild of machines
that DeVlieg has not performed. In sum, Federal-Mogul Products
and Federal-Mogul Ignition Company believe that DeVlieg owes them
$600,000. Accordingly, Federal-Mogul Products and Federal-Mogul
Ignition Company assert several affirmative claims against
DeVlieg, including a request for payment of damages amounting to
$600,000.
In addition, Mr. O'Neill continues, DeVlieg has failed to
demonstrate how payment for two non-delivered pieces of
equipment, which were never utilized by Federal-Mogul Products in
its production process, could be construed to be an "actual,
necessary cost and expense of preserving the estate" as required
by Section 503(b) of the Bankruptcy Code. Given that Federal-
Mogul Products has suffered damages, validly cancelled the
purchase order for the two pieces of equipment and had to
purchase replacement equipment in order to meet its production
requirements, the benefit to the estate is impossible to fathom.
In fact, DeVlieg's request for payment of its alleged costs as an
administrative claim is even more inappropriate because DeVlieg
has retained physical possession of equipment that it was
contracted to repair belonging to one of the other Debtors --
Federal-Mogul Ignition Company. DeVlieg has refused to perform
under that contract by rejecting Federal-Mogul Ignition Company's
requests that DeVlieg complete the repairs or return the
equipment so that repairs can be made by an alternative source.
Mr. O'Neill notes that DeVlieg has remained in possession of the
equipment without any justification in a naked attempt to gain
leverage in its dispute with Federal-Mogul Products with regard
to the cancelled purchase order. Accordingly, Federal-Mogul
Ignition Company asserts an additional affirmative claim against
DeVlieg to enforce the automatic stay and require DeVlieg to
complete the repairs and turn over the withheld equipment under
Section 542.
While Federal-Mogul Products and Federal-Mogul Ignition Company
believe that ample grounds currently exist for the Court to deny
the DeVlieg Motion, they will serve DeVlieg shortly with requests
for discovery in the event the Court determines that a full
evidentiary hearing is required.
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 Oct. 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.
61; Bankruptcy Creditors' Service, Inc., 215/945-7000)
FINOVA CAPITAL: Thaxton Objects to FINOVA's Document Demands
------------------------------------------------------------
FINOVA Capital Corporation asks Judge Walsh, the bankruptcy judge
handling The Thaxton Group, Inc.'s Chapter 11 proceedings, to
compel Thaxton to produce documents and other discovery requests
in connection the hearing on substantive consolidation issues
scheduled for September 14 and 15, 2004.
FINOVA Capital sent its first set of discovery to Thaxton and its
Official Committee of Unsecured Creditors on June 15, 2004.
FINOVA Capital sent its second set of discovery to Thaxton and
the Committee on June 23.
On June 30, 2004, FINOVA Capital sent a letter to other parties
seeking a date by which discovery responses would be received.
FINOVA Capital wanted to receive the discovery responses at the
earliest possible time, and proposed a deposition schedule for
mid-August 2004.
Subsequent to the June 30, 2004 letter, Thaxton informed FINOVA
Capital that the Thaxton Committee was in possession of the same
universe of documents that it was being asked to produce. Given
this, FINOVA Capital agreed that Thaxton would produce documents
after the Thaxton Committee's production, and would produce only
responsive documents in its possession that were over and above
those produced by the Thaxton Committee.
After confirming that the Thaxton Committee would produce
documents on July 14, 2004, FINOVA Capital contacted Thaxton to
set a schedule for their document production, and finalize the
deposition schedule. However, Thaxton refused to propose a date
in which it would produce documents, serve written discovery
responses, or set a schedule for their witnesses to be deposed.
Mark D. Collins, Esq., at Richards, Layton & Finger, PA, in
Wilmington, Delaware, explains that further delay of the
responsive documents will prejudice FINOVA Capital's ability to
prepare for the September hearing. Given the rapidly approaching
hearing and the substantial delay that has already occurred,
FINOVA Capital believes that it is important for the discovery
issues to be addressed by the Thaxton Court as soon as reasonably
possible.
Accordingly, FINOVA Capital asks Judge Walsh to:
(1) require Thaxton to produce responsive documents and
interrogatory responses without further delay;
(2) compel Thaxton to abide by the deposition schedule
as set out in FINOVA Capital's June 30, 2004 letter; and
(3) schedule a telephonic hearing as soon as the Court's
schedule will allow.
Thaxton Objects
Thomas R. Hunt, Esq., at Morris, Nichols, Arsht & Tunnell, in
Wilmington, Delaware, tells the Thaxton Court that most of FINOVA
Capital's request is entirely without merit and was brought about
despite Thaxton's expressed willingness to cooperate to develop a
reasonable discovery schedule. Mr. Hunt notes that since FINOVA
Capital's document request seeks documents related to the Thaxton
Committee's proposal to substantially consolidate all of the
Thaxton entities, the document request should be more
appropriately directed to the Thaxton Committee. Nonetheless,
Thaxton committed to provide documents and information to FINOVA
Capital not otherwise produced by the Committee.
Contrary to FINOVA Capital's assertions, Thaxton did not refuse
to propose dates for scheduling the depositions. Rather, Thaxton
indicated that they are working to secure dates for the
depositions, Mr. Hunt clarifies. Despite the voluminous
discovery served on them, Thaxton consistently agreed to work
with FINOVA Capital on a reasonable discovery schedule. Thaxton
remains willing to work with FINOVA Capital to develop a
reasonable schedule by which they will produce the documents, if
any, and make their officers and directors available for
depositions.
Thaxton asks Judge Walsh to deny FINOVA Capital's request.
Headquartered in Scottsdale, Arizona, The Finova Group, Inc.,
provides commercial financing to small and midsized businesses;
other services include factoring, accounts receivable management,
and equipment leasing. The firm has three segments: Commercial
Finance, Specialty Finance, and Capital Markets. FINOVA targets
such markets as transportation, wholesaling, communication, health
care, and manufacturing. Loan write-offs had put the firm on shaky
ground. FINOVA has since emerged from Chapter 11 bankruptcy.
Financial giants Berkshire Hathaway and Leucadia National
Corporation (together doing business as Berkadia) own FINOVA
through the almost $6 billion lent to the commercial finance
company. FINOVA and its debtor-affiliates and subsidiaries filed
for Chapter 11 protection on March 7, 2001 (Bankr. Del. 01-00697).
Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, P.A.,
represents the Debtors. (Finova Bankruptcy News, Issue No. 49;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
Headquartered in Lancaster, South Carolina, The Thaxton Group,
Inc., is a diversified consumer financial services company. The
Company filed for Chapter 11 protection on October 17, 2003
(Bankr. Del. Case No. 03-13183). Thaxton is represented by
Michael G. Busenkell, Esq., and Robert J. Dehney, Esq., at Morris,
Nichols, Arsht & Tunnell.
FLAGSHIP HOTEL: Voluntary Chapter 11 Case Summary
-------------------------------------------------
Debtor: Flagship Hotel, Ltd.
2501 Seawall Boulevard
Galveston, Texas 77550
Bankruptcy Case No.: 04-81356
Chapter 11 Petition Date: July 30, 2004
Court: Southern District of Texas (Galveston)
Judge: Letitia Z. Clark
Debtor's Counsel: Marilee A. Madan, Esq.
Russell and Madan
4265 San Felipe, Suite 250
Houston, TX 77027
Tel: 713-355-3333
Fax: 713-355-3303
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
The Debtor did not file a list of its 20-largest creditors.
FLEMING COS: Court Okays Settlement Agreement with Wisconsin DWD
----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware approves
the Settlement Agreement between Fleming Companies, and its
debtor-affiliates and Wisconsin Department of Workforce
Development.
The primary terms of the settlement are:
-- The Prepetition Closing Settlement
(1) The Debtors consent to all of the DWD determinations
with respect to the Locations closed or sold before
the Petition Date;
(2) The DWD agrees to waive any surcharges, claims for
increased wages under Wisconsin law, interest,
attorney's fees, or like charges it has assessed or
has authority to seek or assess as to the prepetition
Locations;
(3) The stipulated prepetition Location determinations by
the DWD will entitle it to (i) a secured claim for
$200,000, which the Debtors will pay to the Employees
on the Effective Date of the Plan, and (ii) an
allowed, general, unsecured claim for $443,989.94, in
settlement of any remaining amounts due;
(4) The DWD will vote its unsecured claim to accept the
Plan and will receive distributions on the claim as
provided in the Plan;
As previously reported in the Troubled Company Reporter's July 1,
2004 edition, the Fleming Companies, Inc. Debtors sold or closed
certain operations in the State of Wisconsin located in Antigo,
Wauwatosa, Brookfield, Kenosha (18th Street), and Waukesha before
the Petition Date, and closed other Wisconsin operations located
in Marshfield, Superior, Racine, Pewaukee, Kenosha (52nd Street),
Wausau, Greenfield (S. 76th and South 27th Street), Menomonee
Falls, and Brown Deer after the Petition Date.
The Wisconsin Department of Workforce Development asserts
authority to represent persons employed by Wisconsin employers to
recover wages and benefits owed but unpaid to those employees as
a result of the plant closures in Wisconsin. The DWD received
complaints from some former employees of the closed Fleming
locations that the Debtors owed them wages and other amounts as a
result of the sale or closure of the Locations. The DWD
investigated and, in June of 2003, filed a Notice of Wage Lien
with the Wisconsin Department of Financial Institutions, as well
as with the Waukesha County Clerk of Circuit Court, and served
the Debtors' Wisconsin agent. The DWD alleges that these actions
perfect a lien for the owed wages on all of Fleming's real and
personal property in Wisconsin. The DWD asserts that its lien is
senior to all claims and liens except the liens of the Debtors'
secured lenders.
In September 2003, the DWD filed a proof of claim for
approximately $10 million, unspecified portions of which were
secured, priority, and unsecured claims. The Debtors dispute the
amount of the DWD claim as well as the validity, priority and
extent of the DWD lien. The Debtors contend that the DWD lien is
valueless because, after satisfying the claims of their senior
secured lenders, there is no value left in the Debtors' Wisconsin
properties to secure the DWD lien under the terms of the
Bankruptcy Code. The Debtors also asserted defenses to liability
under the Wisconsin Business Closing Statute. The Debtors argued
that proper notice had in fact been given to the employees --
which the DWD disputes -- and that unforeseen circumstances, such
as a loss of a major customer or failure of a purchaser to employ
the former employees at the sold locations, or the faltering
business exception, excused the failure to give greater notice to
the employees than that which Fleming provided.
The DWD is represented by Richard E. Braun, Esq., Assistant
Attorney General in Madison, Wisconsin, and the Fleming Debtors,
through Rebecca A. Roof, Interim Chief Financial Officer, and
represented by Scotta E. McFarland, Esq., at Pachulski Stang
Ziehl Young Jones & Weintraub, PC, in Wilmington, Delaware.
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. 40; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
FRESH CHOICE: U.S. Trustee Names 4-Member Creditors' Committee
--------------------------------------------------------
The United States Trustee for Region 17 appointed four creditors
to serve on an Official Committee of Unsecured Creditors in Fresh
Choice, Inc.'s Chapter 11 case:
1. U.S. Foodservice, Inc.
Attn: Mark Speiser
10410 S. 50th Place
Phoenix, Arizona 85044
Phone: (480) 606-5666 and Fax: (480) 606-5666
mark.speiser@usfood.com
2. CNL APF Partners, LLP
Attn: Kenneth R. Heimlich
450 South Orange Avenue
Orlando, Florida 32801
Phone: (407) 540-2282 and Fax: (407) 540-2210
kheimlich@cnlonline.com
3. Northgate Mall Partnership
c/o Simon Property Group LLP
Attn: Ronald M. Tucker
115 W. Washington St.
Indianapolis, Indiana 46204
Phone: (317) 263-2346 and Fax: (317) 263-7901
rtucker@simon.com
4. Oxnard Redhill Partners
Attn: Kate Carson
1096 Coast Village Road, Suite B
Santa Barbara, California 93108
Phone: (805) 565-6969 and Fax: (805) 565-6970
Carson@LagunaPac.com or Bierig@LagunaPac.com
Official creditors' committees have the right to employ legal and
accounting professionals and financial advisors, at the Debtors'
expense. They may investigate the Debtors' business and financial
affairs. Importantly, official committees serve as fiduciaries to
the general population of creditors they represent. Those
committees will also attempt to negotiate the terms of a
consensual chapter 11 plan -- almost always subject to the terms
of strict confidentiality agreements with the Debtors and other
core parties-in-interest. If negotiations break down, the
Committee may ask the Bankruptcy Court to replace management with
an independent trustee. If the Committee concludes reorganization
of the Debtors is impossible, the Committee will urge the
Bankruptcy Court to convert the Chapter 11 cases to a liquidation
proceeding.
Headquartered in Morgan Hill, California, Fresh Choice --
http://www.freshchoice.com/-- owns and operates a chain of more
than 40 salad bar eateries, mostly located in California. The
Company filed for chapter 11 protection on July 12, 2004 (Bankr.
N.D. Calif. Case No. 04-54318). Debra I. Grassgreen, Esq., at
Pachulski, Stang, Ziehl, Young and Jones represents the Debtor in
its restructuring efforts. When the Company filed for protection
from its creditors, it listed $29,651,000 in total assets and
$14,348,000 in total debts. The Debtor's Chapter 11 Plan and
Disclosure Statement are due on November 9, 2004.
HAMILTON SHEET: Voluntary Chapter 11 Case Summary
-------------------------------------------------
Debtor: Hamilton Sheet Metal, LLC
97 Eddy Road
Manchester, New Hampshire 03102
Bankruptcy Case No.: 04-12711
Type of Business: The Debtor fabricates and installs sheet metal
for HVAC systems.
See http://www.hamiltonsheetmetal.com/
Chapter 11 Petition Date: July 30, 2004
Court: District of New Hampshire (Manchester)
Judge: J. Michael Deasy
Debtor's Counsel: Grenville Clark, Esq.
Gray, Wendell & Clark, PC
The Center of NH
650 Elm Street
Manchester, NH 03101
Tel: 603-625-4100
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
The Debtor did not file a list of its 20-largest creditors.
HOLLINGER: Delaware Sup. Ct. Upholds Chancery Court Ruling
----------------------------------------------------------
The Delaware Supreme Court denied Hollinger Inc.'s (TSX:HLG.C)
(TSX:HLG.PR.B) appeal of the ruling issued on July 29 by the
Delaware Chancery Court regarding the sale of Hollinger
International Inc.'s U.K. assets. As publicly disclosed earlier
Friday, Hollinger International Inc. completed the sale of the
Telegraph Group, whose assets include The Daily Telegraph, The
Sunday Telegraph and The Spectator and Apollo magazines in Great
Britain, to a company controlled by the Barclay brothers.
Hollinger Co-Chief Operating Officer, Peter G. White, said, "While
we are disappointed that the Courts failed to provide Hollinger
International shareholders the opportunity to determine if a sale
of the Telegraph was in their best interest, we wish the new
owners of the Telegraph Group well in their stewardship of these
world-class media properties. The Barclays recognized the
substantial value that Lord Black and his management team created
over the years at the Telegraph Group by paying a price
approximately 30 times what the Telegraph was purchased for in
1986. We are confident that the Barclays will continue to
successfully build on that legacy in their leadership of the
Telegraph properties."
Hollinger, as do all other shareholders of Hollinger
International, looks forward to the decision of Hollinger
International's board as to its plans for the proceeds of the sale
as soon as possible.
Hollinger's principal asset is its approximately 68.0% voting and
18.2% equity interest in Hollinger International. Hollinger
International is an international newspaper publisher with
English-language newspapers in the United States and Israel. Its
assets include the Chicago Sun-Times and a large number of
community newspapers in the Chicago area, The Jerusalem Post and
The International Jerusalem Post in Israel, a portfolio of new
media investments and a variety of other assets.
* * *
As reported in the Troubled Company Reporter's March 17, 2004
edition, Hollinger International Inc. (NYSE: HLR) announced that
primarily as a result of the ongoing investigation being conducted
by the Special Committee of the Company's Board of Directors, as
well as the disruption of management services provided to the
Company arising from its ongoing dispute with Ravelston
Corporation Limited, the Company is not able to complete its
financial reporting process and its audited financial statements
for inclusion in the Annual Report on Form 10-K for fiscal year
2003 by the filing deadline. The Company intends to complete its
financial reporting process as soon as practicable after the
completion of the investigation by the Special Committee, and then
promptly file the 10-K.
The company's September 30, 2003, balance sheet shows a working
capital deficit of about $293 million.
INVISION TECH: Discloses Internal Investigation to SEC & USDOJ
--------------------------------------------------------------
InVision Technologies, Inc. (Nasdaq:INVN) has made a voluntary
disclosure to the U.S. Department of Justice and the Securities
and Exchange Commission of an InVision internal investigation.
On July 29, 2004, InVision met with the Department of Justice and
the Securities and Exchange Commission concerning its voluntary
disclosure of an internal investigation of certain possible offers
of improper payments by distributors in connection with foreign
sales activities. InVision has been informed that the Department
of Justice and the Securities and Exchange Commission may commence
an investigation of InVision with respect to these matters,
including with respect to possible violations of the Foreign
Corrupt Practices Act. InVision's internal investigation has been
conducted in consultation with General Electric (NYSE:GE), which
has agreed to acquire InVision in a cash merger. InVision intends
to cooperate fully with any governmental investigation of these
matters.
The internal investigation and any related investigation by the
Department of Justice and/or the Securities and Exchange
Commission may not be completed by October 31, 2004. Completion of
the acquisition of InVision by GE remains subject to the closing
conditions in the merger agreement, including regulatory
approvals. If the acquisition is not completed by October 31,
2004, either InVision or GE may be entitled to terminate the
merger agreement.
GE agreed on March 15, 2004 to acquire InVision Technologies Inc.
in a cash merger.
Since this matter is before the U.S. Department of Justice and the
SEC, GE will not be making any further comments at this time on
the investigation.
GE continues to want to conclude the acquisition and is hopeful
that this matter will be resolved.
About InVision
InVision Technologies, Inc. and its subsidiaries develop,
manufacture, market and support explosives detection systems based
on advanced computed tomography technology, X-ray diffraction and
quadrupole resonance. The company is the leading supplier of
explosives detection systems to the U.S. government for civil
aviation security. InVision is headquartered in Newark, CA.
Additional information about the company can be found at
http://www.invision-tech.com/
* * *
Liquidity and Capital Resources
In its Form 10-Q for the quarterly period ended March 28, 2004,
InVision Technologies Inc. reports:
"At March 28, 2004, we had $284.6 million in cash, cash
equivalents and short-term investments, compared to $276.9
million at December 31, 2003.
"Net cash provided by operating activities was $7.2 million in
the first quarter of 2004, compared to cash used in operating
activities of $35.2 million in the first quarter of 2003. Cash
provided by operating activities in the first quarter of 2004
primarily resulted from net income of $5.2 million, enhanced by
the non-cash effects of $2.6 million of depreciation and
amortization expense, and $3.5 million in tax benefits from
employee stock transactions. Another contributing factor was a
$3.2 million decrease in inventory due to a reduction in lead
time to procure certain inventory materials from suppliers. In
addition, there was a $5.0 million increase in accounts payable
and a $4.4 million increase in deferred revenue. Partially
offsetting these increases to net cash provided by operating
activities was a $17.5 million increase in accounts receivable.
This increase was primarily due to billings to the TSA and other
customers for units shipped near the end of the first quarter of
2004.
"We believe that existing cash and cash equivalents, available
borrowings under our lines of credit and funds expected to be
generated from operations will be sufficient to finance our
working capital and capital expenditure requirements for at least
the next twelve months. However, if we fail to meet required
financial covenants in our credit agreement, or our receivables
do not support the upper limits of the credit agreement, then we
may not be able to have access to further funds under our credit
agreement. In addition, if we are unable to deliver EDS units in
a timely manner under orders from the TSA, the TSA may cancel its
orders or not place additional orders. If any of these events
occur, our capital resources would be significantly impaired."
JEAN COUTU: Completes $112 Mil. Acquisition of Eckerd Drugstores
----------------------------------------------------------------
The Jean Coutu Group (PJC) Inc. completed the acquisition of
approximately 1,549 Eckerd drugstores and support facilities
located in 13 states of the Northeast, mid-Atlantic and
Southeastern United States for an acquisition price of US$2.375
billion, together with closing adjustments of US$112 million. The
Jean Coutu Group is now the fourth largest drugstore chain in
North America, with a combined network of 2,204 stores. The
acquired drugstores will continue to operate under the Eckerd
name.
"We are proud to welcome the 36,800 Eckerd associates to our
Company. Together, we will make Brooks and Eckerd pharmacies a
quality destination in the United States for health and beauty
needs, providing our customers with the highest level of personal
and professional service", explained Michel Coutu, President and
Chief Executive Officer of The Jean Coutu Group (PJC) USA, Inc.
"This is a great acquisition for us as the Eckerd drugstores fit
in perfectly with our existing network. With these new
drugstores, we are now in an excellent position to bring the
Company to higher levels of performance," said Fran?ois J. Coutu,
President and Chief Executive Officer of The Jean Coutu Group.
The acquisition price, together with the transaction costs and
existing debts repayments, has been financed through:
-- Debt financing consisting of committed credit facilities in
the amount of US$1.7 billion;
-- US$1.2 billion Notes Offering comprised of an amount of
US$350 million of Senior Notes, bearing interest at 7.625 %
and maturing on August 1st, 2012 and an amount of US$850
million of Senior Subordinated Notes, bearing interest at
8.50 % and maturing on August 1st, 2014.
-- Previously announced public offering in Canada and private
placement in the United States of 33,350,000 Subscription
Receipts, issued for gross proceeds of CAN$581,957,500,
will be exchanged for Class A Subordinate Voting Shares of
The Jean Coutu Group on a one-to-one basis.
About The Jean Coutu Group
The Jean Coutu Group (PJC) Inc. is now the fourth largest
drugstore chain in North America and the second largest in both
the eastern United States and Canada. The Company and its
combined network of 2,204 corporate and affiliated drugstores
(under the banners of Eckerd, Brooks, PJC Jean Coutu, PJC Clinique
and PJC Sante Beaute) employ more than 59,600 people. The Group's
United States operations employ over 45,600 persons and comprises
1,549 Eckerd and 336 Brooks drugstores, all corporate owned stores
located in 18 states of the Northeast, mid-Atlantic and
Southeastern United States.
The Group's Canadian operations and the drugstores affiliated to
its network employ over 14,000 persons and comprises 277 PJC Jean
Coutu drugstores, 40 PJC Clinic and 2 PJC Sant, Beaut,, all
franchised, in Quebec, New Brunswick and Ontario.
* * *
As reported in the Troubled Company Reporter, July 21, 2004
edition, Standard & Poor's Ratings Services rated Jean Coutu Group
Inc.'s US$250 million senior unsecured notes 'B'. The new notes
will replace a like amount of the company's initially proposed
US$1.2 billion senior subordinated notes, to be reduced to
US$950 million. The 'BB' bank loan ratings and the '1' recovery
rating indicate that lenders can expect full recovery of principal
in the event of a default. The outlook is negative.
"The ratings on Jean Coutu reflect the company's very high lease-
adjusted pro forma leverage resulting from the acquisition; its
integration risk associated with the Eckerd stores; and the
challenge to enhance their profitability, particularly in the
front-end; and somewhat constrained liquidity," said Standard &
Poor's credit analyst Don Povilaitis. These factors are partially
offset by management's track record of successful drugstore
integration in both the U.S. and Canada, the scale of the
acquisition, which will allow the company to become the fourth-
largest drugstore chain operator in North America, and favorable
long-term industry dynamics.
JEUNIQUE INT'L: Gets Nod to Employ Sulmeyer Kupets as Attorneys
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Central District of California,
Los Angeles Division, gave its stamp of approval to Jeunique
International, Inc.'s request to hire Sulmeyer Kupets, PC as its
general bankruptcy counsel.
Before filing for bankruptcy protection, the Debtor retained
Sulmeyer Kupets with respect to insolvency matters. The Firm's
continued services may include:
a) the examination of claims of creditors in order to
determine their validity;
b) giving advice and counsel to the Debtor in connection with
legal issues, include the use, sale or lease of property
of the estate, obtaining credit, assumption or rejection
of unexpired leases and executory contracts, requests for
security interests, relief from the automatic stay,
special treatment, payment of prepetition obligations,
etc.;
c) negotiating with creditors holding secured and unsecured
claims for a plan of reorganization;
d) drafting a plan of reorganization and disclosure
statement;
e) objecting to claims as appropriate; and
f) in general, acting on behalf of the Debtor in any and all
bankruptcy law matters which may arise in the course of
this case.
SulmeyerKupetz professional hourly rates are:
Attorneys Billing Rate
--------- ------------
Baumann, Richard G. $500 per hour
Sahn, Victoria A. $495 per hour
Saperstein, Israel $425 per hour
Tippie, Allan G. $495 per hour
Wainess, Steven R. $450 per hour
Ehrenberg, Howard M. $495 per hour
Kupetz, David S. $495 per hour
Zerunyan, Frank V. $375 per hour
Horoupian, Mark S. $400 per hour
Miller, Elissa D. $400 per hour
Sulmeyer, Irving $600 per hour
Kupetz, Arnold L. $575 per hour
Gordon, Ronald E. $500 per hour
Rallis, Dean G. $450 per hour
Lev, Daniel A. $425 per hour
Abrams, Janis G. $375 per hour
Davis, Jay R. $400 per hour
Pomerance, Jeffrey M. $400 per hour
Stanfield, Dianne C. $400 per hour
Alliotts, Christopher $375 per hour
Headquartered in City of Industry, California, Jeunique
International Inc. -- http://www.jeunique.com/-- a direct selling
company, filed for chapter 11 protection on June 1, 2004 (Bankr.
C.D. Calif. Case No. 04-22300). Mark S. Horoupian, Esq., at
Sulmeyer Kupetz A P.C., represents the Debtor in its restructuring
efforts. When the Company filed for protection from its
creditors, it listed estimated assets of over $10 million and
estimated debts of more than $50 million.
JOURNAL REGISTER: S&P Rates Planned $1.05B Credit Facilities BB+
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB+' ratings and
recovery ratings of '4' to Journal Register Co.'s planned $1.05
billion senior secured credit facilities, indicating a marginal
recovery (25%-50%) of principal in the event of a default.
The credit facilities consist of a $425 million 7.25-year
revolving credit facility, $275 million 7.25-year tranche A term
facility, and $350 million 8-year tranche B term facility. The
'BB+' ratings are the same as the corporate credit rating.
Proceeds from the new credit facilities will be used to fund the
planned $415 million acquisition of 21st Century Newspapers Inc.
and to refinance the existing senior secured credit facilities.
In addition, Standard & Poor's affirmed its 'BB+' corporate credit
and senior secured debt ratings on the company. The outlook is
negative.
Headquartered in Trenton, New Jersey, newspaper publisher is
expected to have about $820 million of debt outstanding following
the acquisition.
"The ratings may be lowered if Journal Register does not make
significant progress in strengthening its financial profile over
the next couple of years through a combination of debt reduction
and cash flow growth," said Standard & Poor's credit analyst
Donald Wong.
LANTIS EYEWEAR: Wants to Retain CB Richard as Real Estate Broker
----------------------------------------------------------------
Lantis Eyewear Corporation asks the U.S. Bankruptcy Court for the
Southern District of New York for permission to retain CB Richard
Ellis as its real estate broker.
CB Richard will:
a) assist the Debtor in analyzing and disposing of the
Debtor's right, title, and interest in the Secaucus
Property Lease;
b) provide consulting services in connection with
successfully negotiating one or more advantageous sales
agreements to the Secaucus Property Lease;
c) develop and implement a strategic plan to market the
Property in order to maximize the value of the Secaucus
Property Lease and the highest return to the Debtor;
d) coordinate and organize the bidding procedures and sale
process in order to maximize the attendance of all
interested bidders for the sale of the Secaucus Property
Lease;
e) at the Debtor's direction and subject to the Debtor's
approval, negotiate the terms of the purchase agreements
for the sale of the Secaucus Property Lease;
f) coordinate with the Debtor's legal counsel in preparing
agreements and other documents as a result of negotiation;
and
g) testify at hearings to approve the sale of the Secaucus
Property Lease, to the extent necessary.
CB Richard will be paid a $15,000 retainer and is also entitled to
an additional 6% of the proceeds from the sale or the assignment
of the Secaucus Property Lease.
William R. Waxman, assures the Court that CB Richard is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
Headquartered in New York, New York, Lantis Eyewear Corporation --
http://lantiseyewear.com/-- is a leading designer, marketer and
distributor of sunglasses, optical frames and related eyewear
accessories throughout the United States. The Company filed for
chapter 11 protection on May 25, 2004 (Bankr. S.D.N.Y. Case No.
04-13589). Jeffrey M. Sponder, Esq., at Riker, Danzig, Scherer,
Hyland & Perretti, LLP represents the Debtor in its restructuring
efforts. When the Debtor filed for protection from its creditors,
it listed $39,052,000 in total assets and $132,072,000 in total
debts.
LOEWS CINEPLEX: Onex & Oaktree Complete $2 Bil. Sale to Carlyle
---------------------------------------------------------------
Onex Corporation (TSX:OCX) and Oaktree Capital Management, LLC,
its partner in Loews Cineplex Entertainment Corporation and Grupo
Cinemex, have completed their sale of Loews to a corporation
formed by Bain Capital, The Carlyle Group and Spectrum Equity
Investors. The sale was completed for $2 billion on the terms
announced on June 21, 2004.
Loews' interest in Cineplex Galaxy was not sold and is being
retained by Onex and Oaktree. Cineplex Galaxy operates theatres in
Canada under the Cineplex Odeon and Galaxy brands, and trades on
the Toronto Stock Exchange under the symbol CGX.UN.
Onex Corporation -- http://www.onex.com/-- is a diversified
company with annual consolidated revenues of approximately $16
billion and consolidated assets of approximately $14 billion. Onex
is one of Canada's largest companies with global operations in
service, manufacturing and technology industries. Its operating
companies include Celestica Inc., Magellan Health Services, Inc.,
ClientLogic Corporation, Cineplex Galaxy, J.L. French Automotive
Castings, Inc., Commercial Vehicle Group, Inc., InsLogic
Corporation, Performance Logistics Group, Inc. and Radian
Communication Services Corporation. Onex shares trade on the
Toronto Stock Exchange under the stock symbol OCX.
* * *
As reported in the Troubled Company Reporter's July 26, 2004
edition, Standard & Poor's Ratings Services assigned its 'B'
rating and a recovery rating of '3' to Loews Cineplex
Entertainment Corp.'s proposed $100 million senior secured
delayed-draw bank term loan, indicating a meaningful recovery of
principal (50%-80%) in a default scenario.
At the same time, Standard & Poor's affirmed its ratings on Loews,
including its 'B' corporate credit rating, following a revision in
its proposed debt structure. The outlook remains positive. Total
lease adjusted debt for the New York, N.Y.-based theater chain
remains unchanged at about $2 billion pro forma as of March 31,
2004.
Loews' revised pro forma debt structure increases the bank term B
loan to $630 million from $620 million, adds a $100 million
delayed-draw bank term loan option, reduces the subordinated notes
due 2014 to $315 million from $415 million, and rolls over about
$90 million in secured Mexican peso debt at its Cinemex subsidiary
that was to be refinanced. The $100 million bank revolving credit
facility remains unchanged. The delayed-draw term loan will be
available to refinance the Mexican debt within six months of
closing. The term loan and subordinated debt proceeds together
with cash of $102 million, the rollover of a total of $114 million
of existing debt, and a $447 million common equity investment will
be used to repay existing debt and fund the sale of the company to
Bain Capital (38% ownership), The Carlyle Group (38%), and
Spectrum Equity Investors (24%).
"Loews' revised capital structure does not materially change its
credit profile, although it will reduce interest expense and
improve cash flow somewhat," according to Standard & Poor's credit
analyst Steve Wilkinson. He added, "The larger amount of secured
debt in the amended structure will place additional strain on
lender recovery rates in a default scenario, but Standard & Poor's
still believes that such a recovery would remain meaningful in the
50% to 80% range due to the loan's good collateral package, senior
position in the capital structure, and the prospect for a gradual
prepayment of bank debt with the company's solid cash flow."
MASTR ALTERNATIVE: Fitch Gives Low B-Ratings to Two Classes
-----------------------------------------------------------
MASTR Alternative Loan Trust 2004-7 is rated by Fitch Ratings as
follows:
-- $526.6 million classes 1-A-1, 2-A-1 through 5-A-1, 6-A-1,
6-A-2, 7-A-1 through 10-A-1, 15-PO, 30-PO, AX-1, AX-2,
AX-3, A-LR, and A-R (senior certificates) 'AAA';
-- $10,222,000 class B-1 'AA';
-- $5,802,000 class B-2 'A';
-- $3,316,000 class B-3 'BBB';
-- $2,486,000 privately offered class B-4 'BB';
-- $1,658,000 class B-5 'B'.
The 'AAA' rating on the senior certificates reflects the 4.70%
subordination provided by the 1.85% class B-1, the 1.05% class B-
2, the 0.60% class B-3, the 0.45% privately offered class B-4, the
0.30% privately offered class B-5 and the 0.45% privately offered
class B-6 certificates. The ratings on the class B-1, B-2, B-3, B-
4, and B-5 certificates are based on their respective
subordination.
Fitch Ratings believes the credit enhancement will be adequate to
support mortgagor defaults as well as bankruptcy, fraud and
special hazard losses in limited amounts. In addition, the
ratings also reflect the quality of the underlying mortgage
collateral, strength of the legal and financial structures and the
master servicing capabilities of Wells Fargo Bank Minnesota, N.A.,
which is rated 'RMS1' by Fitch Ratings.
The mortgage loans are separated into ten cross-collateralized
mortgage loan groups. Each group's senior certificates will
receive interest and principal from its respective mortgage loan
group. In certain very limited circumstances when a pool
experiences either rapid prepayments or disproportionately high
realized losses, principal and interest collected from the other
pools may be applied to pay principal or interest, or both, to the
senior certificates of the pool that is experiencing such
conditions. The subordinate certificates will support all ten
groups and will receive interest and principal from available
funds collected in the aggregate from all mortgage pools.
The ten groups in aggregate contain 4,214 conventional, fully
amortizing 15- to 30-year fixed-rate mortgage loans secured by
first liens on one- to four-family residential properties with an
aggregate scheduled principal balance of $552,569,689. The
average unpaid principal balance of the aggregate pool as of the
cut-off date (July 1, 2004) is $131,766. The weighted average
original loan-to-value ratio (LTV) is 69.20%. The weighted
average credit score of the borrowers is 717. Approximately 25.55%
of the pool was originated under a reduced (non Full/Alternative)
documentation program. Investor properties comprise 82.05% of the
loans. The weighted average mortgage interest rate is 5.828% and
the weighted average remaining term to maturity is 300 months.
The states that represent the largest portion of the aggregate
mortgage loans are California (22.21%), Florida (8.77%), New York
(7.83%). All other states represent less than 5% of the pool 1
pool balance as of the cut-off date.
None of the mortgage loans are 'high cost' loans as defined under
any local, state or federal laws. MASTR, a special purpose
corporation, deposited the loans into the trust, which issued the
certificates. U.S. Bank National Association will act as trustee.
For federal income tax purposes, elections will be made to treat
the trust fund as multiple real estate mortgage investment
conduits (REMICs).
MERCURY AIR: Opens $30,000,000 Line of Credit With Bank of America
------------------------------------------------------------------
Mercury Air Group, Inc. (AMEX: MAX) discloses the opening of a
$30,000,000 working capital line of credit with Bank of America,
N.A., subject to customary terms and conditions on availability.
The line of credit is in the form of a revolving secured loan with
a three-year term.
"As fuel prices rise, this line of credit will provide Mercury
with the financial flexibility necessary to meet the needs of our
customers and suppliers," said Joseph A. Czyzyk, President and
Chief Executive Officer of Mercury Air Group, Inc. "The
arrangement with one of the largest and strongest banks in the
nation affirms our strategic focus to grow our business while
becoming stronger, better and more competitive in the
marketplace."
About Mercury Air Group
Los Angeles-based Mercury Air Group (Amex: MAX) provides aviation
petroleum products, air cargo services and transportation, and
support services for international and domestic commercial
airlines, general and government aircraft and specialized contract
services for the United States government. Mercury Air Group
operates three business segments worldwide: MercFuel, Inc., Maytag
Aircraft Corporation and Mercury Air Cargo, Inc. For more
information, please visit http://www.mercuryairgroup.com.
* * *
In its Form 10-Q for the quarterly period ended March 31, 2004,
filed with the Securities and Exchange Commission, Mercury Air
Group reports:
Liquidity and Capital Resources
"As of March 31, 2004, the Company's cash and cash equivalents
were $1.8 million, a decrease of $1.0 million as compared to cash
and cash equivalents of $2.8 million as of June 30, 2003.
"Petroleum product prices, including aviation fuel prices, have
risen to historically high levels due primarily to an increase in
world-wide petroleum product consumption and instability in the
Middle East. The increased aviation fuel prices have resulted in
an increase in the Company's trade receivables for many of the
Company's customers. If aviation fuel prices maintain these recent
high levels for an extended period of time and the Company's
customers are unable to pass on the increased fuel costs to their
customers, the Company may experience longer collection periods
and/or higher uncollectible amounts from certain customers. This
would result in reduced cash availability adversely affecting the
Company's ability to pay its fuel suppliers on a timely basis.
"The Company is currently evaluating new credit facilities to
support the Company's expansion of its remaining three business
lines and to support the Company's Letters of Credit requirements
thereby releasing the cash collateral of approximately $16 million
to be used for working capital requirements and general corporate
purposes."
NEW WEATHERVANE: Panel Brings-In Trenwith Securities as Bankers
---------------------------------------------------------------
The Official Unsecured Creditors Committee appointed in New
Weathervane Retail Corp.'s chapter 11 cases asks the U.S.
Bankruptcy Court for the District of Delaware for permission to
hire Trenwith Securities, LLC as its investment bankers.
The Committee tells the Court that an investment banker will
provide timely and objective advice regarding its options and the
strategic implications of pursuing particular course of action.
Trenwith Securities' services are expected to include:
a. identifying and contacting persons or entities who are, or
may become, interested in bidding on the Debtors and/or
its assets, and/or who are, or may become interested in
making an investment in the Debtors at the Auction,;
b. distributing marketing materials to Potential Bidders,
whether solicited or not;
c. assisting to coordinate the due diligence process with
Potential Bidders;
d. assisting and advising the Committee regarding the
relative merits of alternative sales, other transactions
and bids or proposals submitted by Potential Bidders or
otherwise in connection with the Sale of Assets; and
e. providing testimony in court on behalf of the Committee,
if necessary.
Ron E. Ainsworth, President and Managing Director of Trenwith
Securities, reports that the firm's current hourly rates range
from:
Designation Billing Rate
----------- ------------
Senior/Managing Directors $335 to $675 per hour
Senior Vice President $230 to $510 per hour
Vice President $210 to $395 per hour
Associate $150 to $295 per hour
Support Staff $ 95 to $195 per hour
Headquartered in New Britain, Connecticut, New Weathervane Retail
Corporation -- http://www.wvane.com/-- is a Women's specialty
retailer. The Company filed for chapter 11 protection on June 3,
2004 (Bankr. Del. Case No. 04-11649). William R. Firth, III,
Esq., at Pepper Hamilton LLP, represents the Debtors in their
restructuring efforts. When the Company filed for protection from
their creditors, they listed $28,710,000 in total assets and
$24,576,000 in total debts.
NEW WORLD PASTA: Wants to Employ AP Services as Crisis Managers
---------------------------------------------------------------
New World Pasta Company and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Middle District of Pennsylvania for
permission to employ AP Services, LLC, as their crisis managers.
As agreed, AP Services will provide Lisa Donahue as its
representative to serve as the Debtors' Chief Executive Officer.
In this capacity, Ms. Donahue will
(i) assist the Debtors in their operations with an objective
of restructuring the Debtors;
(ii) manage the Debtors' restructuring efforts, including
negotiating with parties-in-interest; and
(iii) coordinate with the "working group" of the Debtors'
employees and external professionals who are assisting
the Debtors in the restructuring.
AP Services will also provide temporary employees at various
levels whose hourly rates are:
Designation Billing Rate
----------- ------------
Principals $540 to $690 per hour
Senior Associates $430 to $520 per hour
Associates $300 to $400 per hour
Accountants and Consultants $225 to $280 per hour
Analysts $150 to $190 per hour
AP Services, formerly known as JA&A Services is established by Jay
Alix & Associates to adhere to a certain protocol for the
furnishing of temporary employees to perform crisis management and
interim management services to companies undergoing chapter 11
reorganization.
Headquartered in Harrisburg, Pennsylvania, New World Pasta Company
-- http://www.nwpasta.com/-- is the leading dry pasta
manufacturer in the United States. The Company filed for chapter
11 protection on May 10, 2004 (Bankr. M.D. Pa. Case No. 04-02817).
Eric L. Brossman, Esq., at Saul Ewing LLP represents the Debtors
in their restructuring efforts. When the Company filed for
protection from its creditors, they listed both estimated debts
and assets of over $100 million.
NORTHWOOD RETIREMENT: Case Summary & Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Northwood Retirement Community Inc.
dba Fox Ridge Manor
3377 Fox Run Road
Dover, Pennsylvania 17319
Bankruptcy Case No.: 04-04619
Type of Business: The Debtor operates an assisted living
facilities.
Chapter 11 Petition Date: July 30, 2004
Court: Middle District of Pennsylvania (Harrisburg)
Judge: Mary D. France
Debtor's Counsel: Robert E. Chernicoff, Esq.
Cunningham & Chernicoff PC
2320 North Second Street
P.O. Box 60457
Harrisburg, PA 17106-0457
Tel: 717-238-6570
Fax: 717-238-4809
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
------ --------------- ------------
Crosskeys Retirement Inc. Trade Debt $105,000
Advantage Comp. Trade Debt $23,061
Keener, Kristine Trade Debt $20,745
Verizon North Trade Debt $15,471
Restorecore Trade Debt $6,382
Direct Supply Healthcare Trade Debt $5,209
Equip.
SA Comunale Co. Inc. Trade Debt $4,932
US Food Service Trade Debt $3,603
Engle Publishing Co. Trade Debt $3,326
Dover Township Sewer Sewer $2,609
Purchase Power Trade Debt $2,417
Staples Trade Debt $1,750
On Line Publishers Trade Debt $1,714
AI Credit Corp. Trade Debt $1,602
Clark Food Service Trade Debt $1,533
Utilitech Inc. Trade Debt $1,000
Ken Weaver Meats Inc. Trade Debt $833
CBIZ Trade Debt $750
Keeney Cooling Heating Trade Debt $713
Quaker City Paper Trade Debt $632
NYLIM STRATFORD: Fitch Assigns BB- Rating to Preference Shares
--------------------------------------------------------------
Fitch Ratings places three classes of notes issued by NYLIM
Stratford CDO 2001-1, Ltd. (NYLIM) on Rating Watch Negative as
follows:
-- $30,351,623 class C notes rated 'BBB-';
-- $16,000,000 preference shares rated 'BB-'.
NYLIM is a collateralized debt obligation (CDO) managed by New
York Life Investment Management, LLC, which closed April 12, 2001.
NYLIM is composed of 32.2% residential mortgage-backed securities
(RMBS), 26.4% real estate investment trusts (REITs), 19.3% asset-
backed securities (ABS), 10.0% corporate debt, 9.4% commercial
mortgage-backed securities (CMBS), and 2.7% CDOs.
Since closing, the collateral has deteriorated. The class A/B
overcollateralization (OC) ratio and class C OC ratio have
decreased from 113.9% and 104.4%, respectively, to 108.4% and
99.8% as of the most recent trustee report dated July 19, 2004.
The class A/B OC ratio is passing its test level of 107% while the
class C OC ratio is failing its test level of 100.25%. Assets
rated 'BB+' or lower represented approximately 13.3% and assets
rated 'B+' or lower represented approximately 5.2% as of the most
recent trustee report.
The deteriorating credit quality of the portfolio has increased
the credit risk of this transaction to the point the risk may no
longer be consistent with the ratings.
OMNICARE INC: Extends NeighborCare Tender Offer to August 31
------------------------------------------------------------
Omnicare, Inc. (NYSE: OCR) has extended its offer for all of the
outstanding shares of NeighborCare, Inc. (NASDAQ: NCRX) common
stock for $30.00 per share in cash. The offer, which was scheduled
to expire Friday, July 30, at 5:00 p.m., New York City time, has
been extended until 5:00 p.m., New York City time, on Tuesday,
August 31, 2004, unless further extended.
As previously announced, Omnicare commenced a tender offer on
June 4, 2004 for all of the outstanding shares of NeighborCare
common stock for $30 per share in cash. This price represents a
70% premium over NeighborCare's closing stock price on May 21, the
last day of trading before the offer was made public on May 24. It
is also a 40% premium over the 30-day trading average prior to the
announcement of the offer, a 30% premium to Wall Street's median
price target for NeighborCare's stock over the next 12 months(1)
and $4.00 more than NeighborCare's previous all-time high.
As of the close of business on July 30, 2004, a total of
20,202,423 shares of NeighborCare common stock had been tendered.
This represents approximately 46.3% of NeighborCare's outstanding
shares (or approximately 45.4% of NeighborCare's outstanding
shares, calculated on a fully diluted basis).
Dewey Ballantine LLP is acting as legal counsel to Omnicare and
Lehman Brothers and Lazard are acting as financial advisors.
Innisfree M&A Incorporated is acting as information agent for
Omnicare's offer.
About Omnicare, Inc.
Omnicare, Inc. (NYSE:OCR), a Fortune 500 company based in
Covington, Kentucky, is a leading provider of pharmaceutical care
for the elderly. Omnicare serves residents in long-term care
facilities comprising approximately 1,054,000 beds in 47 states
and the District of Columbia, making it the nation's largest
provider of professional pharmacy, related consulting and data
management services for skilled nursing, assisted living and other
institutional healthcare providers. Omnicare also provides
clinical research services for the pharmaceutical and
biotechnology industries in 29 countries worldwide.
* * *
As reported in the Troubled Company Reporter's May 26, 2004
edition, Standard & Poor's Ratings Services placed its ratings on
Omnicare Inc., including the 'BBB-' corporate credit ratings, on
CreditWatch with negative implications after the long-term care
pharmacy provider disclosed an all-cash offer to purchase
competitor NeighborCare Inc.
At the same time, the ratings on NeighborCare, including the 'BB-'
corporate credit rating, were also placed on CreditWatch with
negative implications, as the pro forma combination is likely to
have a markedly weaker financial profile than NeighborCare. The
purchase price of $1.5 billion includes the assumption or
repayment of a $250 million NeighborCare debt issue. Estimating
the effect of additional debt and not assuming any cost savings,
total debt to EBITDA is expected to rise to over 4x, while funds
from operations to total debt will fall to less than 15%.
"We expect to meet with Omnicare management to determine what cash
flow benefits can be realized and the ultimate nature of the
financial structure of the combined company before resolving the
CreditWatch listing," said Standard & Poor's credit analyst David
Lugg.
ORION REFINING: Deadline to File Rejection Claims is August 6
-------------------------------------------------------------
Pursuant to the terms of the confirmed Amended Plan of Liquidation
of Orion Refining Corporation, each executory contract or
unexpired lease that has not been rejected by prior orders by the
United States Bankruptcy Court for the District of Delaware is
deemed rejected pursuant to Section 365 of the Bankruptcy Code.
To receive a distribution under the Plan on account of a claim
arising from the rejection of any executory contract or unexpired
lease, a party must file a proof of claim so as to be received by
5:00 p.m., New York time, on August 6, 2004. Claim forms must be
delivered to:
* if by U.S. Mail:
Bankruptcy Services, LLC
P.O. Box 5011, FDR Station
New York, New York
Attn: Orion Refining Corporation Claims
* if by Hand Delivery, Courier or Overnight Service:
Orion Refining Corporation Claims
c/o Bankruptcy Services, LLC
757 Third Avenue, 3rd Floor
New York, New York
Tel: (646) 282-2500
A copy of the proof of claim must also be served on:
* ORC Distribution Trust Representative
Cypress Associates, LLC
52 Vanderbilt Avenue, Ste. 902
New York, New York
Attn: J.T. Atkins
With a copy to:
Morris, Nichols, Arsht & Tunnell
1201 N. Market Street, P.O. Box
1347 Wilmington, Delaware
Attn: Robert J. Dehney, Esq.
* Liquidation Trust Representative
Woodway Associates, LLC
5835 Candlewood Lane
Houston, Texas
Attn: James Boles
With a copy to:
Warner Stevens & Doby, LLP
1700 City Center Tower II
301 Commerce Street
Fort Worth, Texas
Michael D. Warner, Esq.
Orion Refining Corporation filed for chapter 11 protection (Bankr.
Del. Case No. 03-11483) on May 13, 2003. The Debtors' lawyers are
Daniel B. Butz, Esq., Gregory Thomas Donilon, Esq. and Gregory W.
Werkheiser, Esq. at Morris, Nichols, Arsht & Tunnell.
OWENS CORNING: Court Okays New Retention Program for 270 Employees
------------------------------------------------------------------
As previously reported, Owens Corning and its debtor-affiliates
agreed to defer for a short period their request for approval of
the New Retention Program as related to the Tier 1 Participants to
obtain prompt approval of the Program for the 270 participants
other than the Debtors' top five most senior managers. Subsequent
to Judge Wolin's recusal, the Debtors' financial advisor contacted
the financial advisor and counsel of the Bank Debt Holders,
seeking consent to the proposed New Retention Program for the Tier
1 Participants. Unfortunately, the Bank Debt Holders do not
believe that a retention program for Tier 1 Participants is
necessary.
Presently, the Debtors have decided to implement the New
Retention Program with regard to Tier 1 Participants to provide:
-- ample opportunity for discovery, if necessary; and
-- discussion prior to the September 1 hearing date, in the
hope that the Bank Debt Holders will reconsider their
punitive position.
Mark Minuti, Esq., at Saul Ewing, LLP, in Wilmington, Delaware,
tells Judge Fitzgerald that the top five senior managers are
critical to the Debtors' continued successful operations because
of their substantial business experience and expertise,
institutional knowledge, and business relationships. The top
five senior managers are the management team responsible for
Debtors' profitable operations and outstanding performance
throughout the Debtors' Chapter 11 cases, and their continued
retention is critical to the Debtors' reorganization.
The Commercial Committee and Bank Debt Holders have consistently
endorsed for almost four years the merits of an employee
retention program by their consent to:
* the original Employee Retention Program for Tier 1, 2, 3 and
4 participants;
* the Supplemental Retention Program for Tier 1, 2, 3 and 4
participants; and
* the New Retention Program for Tier 2, 3 and 4 participants.
Thus, Mr. Minuti says, the Bank Debt Holders cannot argue that
the 270 top managers and employees in Tier 2, 3 and 4 are
entitled to a retention program, but not the top five senior
managers. Without doubt, the Tier 1 Participants, like the Tier
2, 3 and 4 participants, must be included in the New Retention
Program.
Mr. Minuti points out that the Debtors' senior managers are very
qualified and marketable. Absent a retention program, the
Debtors' competitors and prospective employers in other
industries may target the Debtors' five most qualified senior
managers and offer them new career opportunities.
Mr. Minuti emphasizes that the Debtors' request is intended to
minimize any turnover of the top five senior managers by
providing incentives for these employees to remain in the
Debtors' employ.
* * *
Judge Fitzgerald authorizes the Debtors to implement the New
Retention Program for Tier 2, 3 and 4 Participants. Any payment
to which an employee is entitled under the Retention Program will
be deemed an allowed administrative expense of the Debtors'
estates under Section 203(b)(1)(A) of the Bankruptcy Code.
The Court also rules that the Debtors may adopt employee
retention plans during the pendency of their bankruptcy cases
even without the Court's approval. However, the Debtors are
required to advise the counsel to the Official Committee of
Unsecured Creditors, the Official Committee of Asbestos Claimants
and the Legal Representative for Future Asbestos Claimants of
their annual proposed employee retention plan and the criteria as
soon as possible after December 1 in any given year, but under no
circumstances later than December 15.
In the event the Committees and the Futures Representative do not
consent to the Debtors' proposed employee retention plan,
objections must be received within 30 days after receipt of the
proposed retention plan.
Headquartered in Toledo, Ohio, Owens Corning --
http://www.owenscorning.com-- manufactures fiberglass insulation,
roofing materials, vinyl windows and siding, patio doors, rain
gutters and downspouts. The Company filed for chapter 11
protection on October 5, 2000 (Bankr. Del. Case. No. 00-03837).
Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meagher & Flom
represents the Debtors in their restructuring efforts. On Jun 30,
2001, the Debtors listed $6,875,000,000 in assets and
$8,281,000,000 in debts. (Owens Corning Bankruptcy News, Issue No.
80 Bankruptcy Creditors' Service, Inc., 215/945-7000)
OWENS CORNING: CSFB Wants Solicitation Period Limited to Oct. 31
----------------------------------------------------------------
Credit Suisse First Boston, as agent for the prepetition bank
lenders to Owens Corning and its debtor-affiliates under a Credit
Agreement dated June 27, 1997, asks the Bankruptcy Court to limit
any extension of the Debtors' exclusive solicitation period to
October 31, 2004.
Richard S. Cobb, Esq., at Landis, Rath & Cobb, LLP, in
Wilmington, Delaware, reminds Judge Fitzgerald that until the
District Court issues an order resolving the Debtors' request for
substantive consolidation, there is no point in amending the plan
of reorganization to accommodate the recently announced
Bondholder Term Sheet. The denial of the Substantive
Consolidation Motion will foreclose any restructuring plan based
on substantive consolidation.
The parties are working on a stipulated schedule for post-trial
briefs. As currently proposed, the schedule will result in the
completion of briefing by mid-September 2004, and CSFB expects
that Judge Fullam will be in a position to issue his decision
promptly after that.
"If Judge Fullam denies substantive consolidation, as he should,
or grants only partial consolidation, the current plan of
reorganization will be unconfirmable on its face, because it
relies on complete substantive consolidation," Mr. Cobb says.
At that time, Mr. Cobb continues, it will be appropriate to re-
examine whether the Debtors should continue to enjoy exclusivity
to propose a substitute plan of reorganization or whether
creditors should be allowed to put forward their own plan. If
Judge Fullam either has not rendered a decision or grants
substantive consolidation, the Debtors will be free to apply for
a further exclusivity extension before the end of October.
Headquartered in Toledo, Ohio, Owens Corning --
http://www.owenscorning.com-- manufactures fiberglass insulation,
roofing materials, vinyl windows and siding, patio doors, rain
gutters and downspouts. The Company filed for chapter 11
protection on October 5, 2000 (Bankr. Del. Case. No. 00-03837).
Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meagher & Flom
represents the Debtors in their restructuring efforts. On Jun 30,
2001, the Debtors listed $6,875,000,000 in assets and
$8,281,000,000 in debts. (Owens Corning Bankruptcy News, Issue No.
80 Bankruptcy Creditors' Service, Inc., 215/945-7000)
PACIFIC ENERGY: Names John Kers & Dominic Ferrari Vice-Presidents
-----------------------------------------------------------------
Pacific Energy Partners, L.P.'s (NYSE:PPX) general partner
appointed John Kers as Vice President, Operations and Technical
Services - Canada, and Dominic Ferrari as Vice President,
Corporate Development, both effective August 2, 2004. Mr. Kers
will be located in Calgary, Alberta, where Pacific Energy has its
Canadian headquarters, and Mr. Ferrari will continue to be located
at the Partnership's corporate headquarters in Long Beach,
California.
Mr. Kers brings with him a breadth of experience in pipeline and
terminal operations, storage and blending activities, and related
engineering and construction. He previously served as Director and
Vice President, Operations for Plains Marketing Canada, L.P. from
2001 to 2004. Prior to joining Plains, Mr. Kers served in
progressive managerial assignments at Murphy Oil Company, Ltd from
1980 to 2001, including Manager of Engineering. Mr. Kers received
his Bachelor of Science degree from the University of Calgary and
is a registered professional engineer in Canada.
Mr. Ferrari has been with Pacific Energy since 2001, serving most
recently as Senior Director, Corporate Development. Prior to
joining Pacific Energy, Mr. Ferrari was with Unocal Pipeline
Company from 1975 to 2001. While at Unocal, he held various
positions including Vice President & Manager of Joint Ventures,
Project Manager - SPR Project, and Coordinator--Joint Ventures.
Mr. Ferrari received his Bachelor of Science degree from the
University of California, Berkeley.
"We are very pleased to announce the appointment of these seasoned
executives as officers of the company," said Irvin Toole, Jr.,
President and CEO. "Mr. Kers' experience and knowledge in pipeline
operations and engineering will be a valuable asset to our
Canadian operations as we integrate and expand our recent
acquisitions. Mr. Ferrari has made significant contributions to
the rapid growth of Pacific Energy through his coordination of our
recent acquisitions and corporate development projects."
Pacific Energy Partners, L.P. (Moody's, Ba2 Corporate Credit
Rating) is a Delaware limited partnership headquartered in Long
Beach, California. Pacific Energy Partners is engaged principally
in the business of gathering, transporting, storing and
distributing crude oil and other related products in California
and the Rocky Mountain region. Pacific Energy Partners generates
revenues primarily by charging tariff rates for transporting
crude oil on its pipelines and by leasing capacity in its
storage facilities. Pacific Energy Partners also buys, blends and
sells crude oil, activities that are complimentary to its
pipeline transportation business.
PACIFIC GAS: Agrees to Allow $5.4 Million Set-Off of Mirant Claim
-----------------------------------------------------------------
On September 5, 2001, Mirant Americas Energy Marketing, LP, filed
Claim No. 8872 in Pacific Gas and Electric Company's Chapter 11
case. The Claim is for $8,876,214 in gas deliveries made by
Mirant to PG&E pursuant to a master gas purchase and sale
agreement, dated September 1, 1997.
Mirant and its affiliated entities commenced proceedings under
Chapter 11 in the United States Bankruptcy Court for the Northern
District of Texas, Fort Worth Division, on July 14, 2003. On
December 15, 2003, PG&E filed a $5,486,600 claim in Mirant's
Chapter 11 case for amounts due under the Master Gas Agreement.
To resolve the dispute and avoid further litigation, PG&E and
Mirant agree that:
(a) The Mirant Gas Claim will be allowed for $8,876,214 in
PG&E's Chapter 11 case;
(b) The PG&E Gas Claim will be allowed for $5,486,600 in
Mirant's Chapter 11 case;
(c) The automatic stay is modified in Mirant's Chapter 11
case to allow the parties to set off the Allowed PG&E Gas
Claim against the Allowed Mirant Gas Claim;
(d) The Allowed Mirant Gas Claim will be deemed satisfied to
the extent of $5,486,600 pursuant to the Set-off, leaving
a $3,389,614 balance. The balance will be satisfied like
other allowed general unsecured claims in PG&E's
Chapter 11 case;
(e) The Allowed PG&E Gas Claim in Mirant's Chapter 11 case
will be considered fully satisfied pursuant to the
Set-off. PG&E will assert no further set-off rights
against the $3,389,614 balance, but reserves its rights to
assert other set-offs against any other claim of Mirant or
its affiliates;
(f) The parties represent that no portion of their Claims
has been assigned or transferred; and
(g) The settlement will not affect any portion of the Claim
filed by Mirant other than the Mirant Gas Claim. Mirant
reserves all of its rights with respect the Claim and any
other claims it filed in PG&E's Chapter 11 case. PG&E
reserves all rights it has to object to any component
of the Claim other than the Mirant Gas Claim, and to
assert any defenses with respect the Claim. Mirant
reserves all of its rights to object to any and all claims
filed by PG&E in Mirant's Chapter 11 case other than the
PG&E Gas Claim, including, without limitation, any secured
claims.
Headquartered in San Francisco, California, Pacific Gas and
Electric Company -- http://www.pge.com/-- a wholly-owned
subsidiary of PG&E Corporation (NYSE:PCG), is one of the largest
combination natural gas and electric utilities in the United
States. The Company filed for Chapter 11 protection on April 6,
2001 (Bankr. N.D. Calif. Case No. 01-30923). James L. Lopes,
Esq., William J. Lafferty, Esq., and Jeffrey L. Schaffer, Esq., at
Howard, Rice, Nemerovski, Canady, Falk & Rabkin represent the
Debtors in their restructuring efforts. On June 30, 2001, the
Company listed $23,216,000,000 in assets and $22,152,000,000 in
debts. (Pacific Gas Bankruptcy News, Issue No. 80; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
PEGASUS SATELLITE: DirecTV Buys Assets & Settles Litigation
-----------------------------------------------------------
Pegasus Satellite Communications, Inc. (Pegasus Satellite), a
subsidiary of Pegasus Communications Corporation (NASDAQ: PGTV),
and/or its subsidiaries have entered into agreements with DIRECTV,
Inc., the National Rural Telecommunications Cooperative (NRTC),
the official committee of unsecured creditors of Pegasus Satellite
(the Committee) and Pegasus Communications that provide for:
(1) the sale of Pegasus Satellite's satellite television assets
to DIRECTV, Inc. for a purchase price of $938 million,
including $875 million cash, plus certain adjustments to be
made at closing;
(2) cooperation between Pegasus Satellite and DIRECTV to assure
uninterrupted delivery of DIRECTV programming to Pegasus
Satellite's subscribers; and
(3) a dismissal of all litigation concerning Pegasus
Satellite's distribution of DIRECTV services and Pegasus
Satellite's bankruptcy. In addition, Pegasus Communications
and the Committee have reached an agreement in principle on
the sale of the broadcast television stations owned by
Pegasus Satellite to Pegasus Communications, subject to
higher and better offers. The sale of the satellite
television assets and the settlement with DIRECTV as well
as the sale of the broadcast television stations are
subject to bankruptcy court approval and applicable
antitrust filings and approvals.
Marshall W. Pagon, Pegasus Satellite's Chief Executive Officer,
said "These agreements enable a final resolution to five years of
litigation between Pegasus Satellite, DIRECTV and the NRTC
concerning Pegasus's right to distribute DIRECTV, through a sale
of Pegasus Satellite's satellite television assets to DIRECTV for
$938 million. They also reflect a consensus between Pegasus
Satellite and its creditors on the disposition of Pegasus
Satellite's broadcast television stations to Pegasus
Communications. We believe that this will allow Pegasus
Satellite's bankruptcy to be resolved quickly and with the least
continued risk to creditors. Most importantly, these agreements
assure that Pegasus Satellite Television's over 1 million
subscribers throughout the U.S. will continue to receive
uninterrupted delivery of DIRECTV programming and that the sale to
DIRECTV will be managed smoothly and without disruption of their
satellite service. I would also like to thank our employees and
management for their hard work. In little over 10 years, and in
defiance of widespread skepticism that satellite television could
ever successfully compete with cable, they built a sound and
successful business serving over 1 million rural subscribers in 41
states."
Pegasus Communications Corporation intends to file as soon as
practicable a Form 8-K that includes copies of the key agreements
relating to the transactions referenced above.
The agreement has been approved by the creditors' committee in
Pegasus' Chapter 11 proceedings. The transaction is expected to be
completed within the next four to six weeks, subject to the
approval of the U.S. Bankruptcy Court in Portland, Maine. DIRECTV
expects that the bankruptcy court hearing to approve the
transaction will be held in late August. DIRECTV also expects to
complete the migration of Pegasus customers to DIRECTV within 30
to 45 days thereafter. Pegasus had approximately 1.08 million
customers as of June 1, 2004.
Chase Carey, president and CEO of The DIRECTV Group, said, "This
agreement gives DIRECTV a true ability to reach every home in
America. DIRECTV will have unencumbered access to an additional 10
million households and will be able to offer consumers in those
rural markets the full benefits of DIRECTVr programming, pricing
and service. The number of subscribers to DIRECTV services in
rural areas has steadily declined in the last few years and this
will enable us to reverse that trend and grow our subscriber base
in these areas going forward. This transaction also has
significant financial benefits including significant increased
short-term cash flow and long-term value from both increased
subscribers and cash flow."
DIRECTV and Pegasus have agreed to work together upon close of the
transaction to ensure a seamless migration of Pegasus customers to
DIRECTV, and DIRECTV customers in Pegasus territories will
continue to receive uninterrupted service during this transition
process. "The transition will be seamless and there will be
communications with Pegasus customers to provide them with
information about this transaction, as well as the planned
migration process," said Carey.
Pegasus provides DIRECTV programming to rural areas in 41 states
nationwide.
The DIRECTV Group, Inc. (NYSE: DTV) is a world-leading provider of
digital multichannel television entertainment, broadband satellite
networks and services, and global video and data broadcasting. The
DIRECTV Group is 34 percent owned by Fox Entertainment Group,
which is approximately 82 percent owned by News Corporation Ltd.
Headquartered in Bala Cynwyd, Pennsylvania, Pegasus Satellite
Communications, Inc. -- http://www.pgtv.com/-- is a leading
independent provider of direct broadcast satellite (DBS)
television. The Company, along with its affiliates, filed for
chapter 11 protection (Bankr. D. Me. Lead Case No. 04-20889) on
June 2, 2004. Leonard M. Gulino, Esq., and Robert J. Keach, Esq.,
at Bernstein, Shur, Sawyer & Nelson, represent the Debtors in
their restructuring efforts. When the Debtors filed for protection
from their creditors, they listed $1,762,883,000 in assets and
$1,878,195,000 in liabilities.
PER-SE TECH: Relocates to New Corporate Home in Alpharetta, Ga.
---------------------------------------------------------------
Per-Se Technologies (Nasdaq: PSTI), the leader in Connective
Healthcare that helps physicians and hospitals realize their
financial goals, relocated its corporate headquarters from Atlanta
to Alpharetta, Ga., a northern suburb of Atlanta, effective
Monday, August 2, 2004.
Per-Se's new corporate address is 1145 Sanctuary Parkway, Suite
200, Alpharetta, Ga. 30004. While the Company will maintain its
current toll-free numbers, all local Georgia numbers for the
office will change. The main local number for Per-Se's new
corporate office is 770/237-4300.
The new office location provides employees with an improved office
environment at a lower cost for the Company.
About Per-Se Technologies
Per-Se Technologies (Nasdaq:PSTI) is the leader in Connective
Healthcare. Connective Healthcare solutions from Per-Se enable
physicians and hospitals to achieve their income potential by
creating an environment that streamlines and simplifies the
complex administrative burden of providing healthcare. Per-Se's
Connective Healthcare solutions help reduce administrative
expenses, increase revenue and accelerate the movement of funds
to benefit providers, payers and patients. More information is
available at http://www.per-se.com/
At March 31, 2004, Per-Se Technologies' balance sheet shows
a $14,084,000 stockholders' deficit, compared to a deficit of
$17,612,000 at December 31, 2003.
PG&E NATIONAL: Inks Pact Resolving New Hampshire & Vermont Claims
-----------------------------------------------------------------
USGen New England, Inc., owns and operates the Fifteen Miles
Falls Project on the Upper Connecticut River pursuant to a
license issued by the Federal Energy Regulatory Commission.
Pursuant to a settlement agreement dated as of August 14, 1997,
USGen is obligated to make certain annual payments to the Upper
Connecticut River Mitigation and Enhancement Fund, which, among
other things, are based on 10% of USGen's annual revenues from
the Project in excess of a base amount. Furthermore, the
payments to the Fund are consistent with the FERC License.
The New Hampshire Charitable Foundation and the Vermont Community
Foundation are the administrators of the Fund. The Foundations,
on behalf of the Fund, filed identical proofs of claim -- Claim
Nos. 335 and 336 -- which, among other things, assert that the
Foundations' general unsecured claims against the estate could
aggregate to $13,387,500 if USGen is permitted to reject the
Settlement Agreement which the Foundations maintain is not
permissible.
Subsequently, the parties reconciled their records concerning the
Claims. In a Court-approved stipulation, USGen and the
Foundations agree that:
(a) USGen is current on all payment obligations owed to the
Fund pursuant to the Settlement Agreement;
(b) So long as USGen is current on its payment obligations to
the Fund as set forth in the Settlement Agreement, no
breach of its obligations occurred and no action is taken
by USGen or other parties to disavow or reject the
Settlement Agreement, neither the Fund nor the Foundations
will have an administrative expense claim entitled to
priority or a prepetition general unsecured claim against
USGen's estate or be entitled to vote on a Chapter 11
plan;
(c) The Foundations reserve all of their rights and remedies,
including, without limitation, the right to:
(i) amend the Claims at any time in the future or to
assert any additional claims of any kind or nature
including, without limitation, asserting
administrative expense claims entitled to priority,
whether or not accrued, if USGen breaches any of its
obligations to the Fund or USGen's case converts to
a case under Chapter 7 of the Bankruptcy Code;
(ii) contest USGen's or any other party's assertion
that the Settlement Agreement is an executory
contract that may be rejected; and
(iii) assert that if the Settlement Agreement is an
executory contract it has been assumed; and
(d) In the event of a conversion to Chapter 7, the stipulation
will be binding on the Chapter 7 trustee.
Headquartered in Bethesda, Maryland, PG&E National Energy Group,
Inc. -- http://www.pge.com/-- develops, builds, owns and operates
electric generating and natural gas pipeline facilities and
provides energy trading, marketing and risk-management services.
The Company filed for Chapter 11 protection on July 8, 2003
(Bankr. D. Md. Case No. 03-30459). Matthew A. Feldman, Esq.,
Shelley C. Chapman, Esq., and Carollynn H.G. Callari, Esq., at
Willkie Farr & Gallagher represent the Debtors in their
restructuring efforts. When the Company filed for protection from
its creditors, it listed $7,613,000,000 in assets and
$9,062,000,000 in debts. (PG&E National Bankruptcy News, Issue No.
25; Bankruptcy Creditors' Service, Inc., 215/945-7000)
RECYCLING SOLUTIONS: U.S. Trustee Will Meet with Creditors Today
----------------------------------------------------------------
The United States Trustee will convene a meeting of Recycling
Solutions, Inc.'s creditors at 2:00 p.m., today, August 3, 2004,
in Room 200 at Federal Building, Cain St, Entrance, Decatur,
Alabama 35601. 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 Madison, Alabama, Recycling Solutions, Inc., is a
waste systems company with services like recycling waste and
improving material handling efficiencies. The Company filed for
chapter 11 protection on July 2, 2004 (Bankr. N.D. Ala. Case No.
04-83052). When the Company filed for protection from its
creditors, it listed $5,064,689 in total assets and $1,248,775 in
total debts.
SEITEL INC: Ernst & Young Resigns as Independent Accountants
------------------------------------------------------------
Seitel, Inc. (OTC Bulletin Board: SELA) clarified its press
release regarding a change in its certifying accountants.
Ernst & Young LLP, who has served as independent accountants and
has audited the consolidated financial statements of Seitel, Inc.,
a Delaware corporation, for each of the four years ended December
31, 2003, informed Seitel that it would resign as independent
accountants for Seitel after the filing of Seitel's Quarterly
Report on Form 10-Q for the fiscal quarter ended June 30, 2004.
E&Y will review the June 30 10-Q prior to resigning. E&Y's
decision was a result of E&Y's annual review of E&Y's audit client
portfolio. E&Y did not advise Seitel that its decision was related
to an evaluation of Seitel's customer portfolio. In advising
Seitel of its decision, E&Y did not advise Seitel that any
questions existed or that it was aware of any issues with respect
to the financial statements which E&Y audited and reported on or
interim financial statements which Seitel has filed or that E&Y
was aware of any existing deficiency in Seitel's internal
financial controls not previously reported and corrected.
E&Y did not consult with Seitel's audit committee regarding the
foregoing and, therefore, Seitel's audit committee did not
recommend or approve E&Y's decision to so advise Seitel. Seitel's
audit committee has commenced an immediate search for a new
independent accountant.
In connection with the audits of Seitel's consolidated financial
statements for the two most recent fiscal years ended December 31,
2003 and the subsequent interim period through July 26, 2004,
there were no disagreements with E&Y on any matter of accounting
principles or practices, financial statement disclosure, or
auditing scope or procedures, which disagreement(s), if not
resolved to the satisfaction of E&Y, would have caused it to make
reference to the subject matter of the disagreement(s) in
connection with its report. Other than a qualification as to
uncertainty as a going concern, the aforementioned audit reports
of E&Y did not contain any adverse opinion or disclaimer of
opinion, nor were they qualified or modified as to audit scope or
accounting principles.
SONTRA MEDICAL: Demands Halt of Trading from Berlin Stock Exchange
------------------------------------------------------------------
Sontra Medical Corporation (Nasdaq: SONT) has sent a cease and
desist letter to the Berlin-Bremen Stock Exchange demanding an
immediate halt of trading and the delisting of Sontra Medical
Corporation. The Company's common stock is currently listed on the
Berlin-Bremen Stock Exchange without the Company's prior request,
approval or consent.
Sontra Medical Corporation is one of numerous US companies that
have been added to the Berlin-Bremen Stock Exchange without
permission. These listings may be part of an effort by stock
traders to avoid recently enacted SEC restrictions prohibiting
"naked short selling". Such practices may allow for market
manipulation by selling non-existent shares of a stock in an
effort to force the price down.
Thomas W. Davison, PhD, Sontra's CEO said, "We believe that this
unauthorized listing on the Berlin-Bremen Stock Exchange may have
contributed to the recent decline in our share price. We have no
interest in having our stock trade on any exchange that may
subject Sontra's common stock to price manipulation. Sontra has
authorized only the NASDAQ Small Cap Exchange to trade our shares
which is required by federal securities laws to have rules and
regulations in place to prevent fraudulent and manipulative
practices, to promote just and equitable principles of trade, and
to protect investors. We want our stock price to reflect only the
intrinsic value of our business".
About Sontra Medical Corporation
Sontra Medical Corporation is the pioneer of SonoPrep, a non-
invasive ultrasound-mediated skin permeation technology that
enables transdermal diagnosis and drug delivery. Sontra's products
under development include: a continuous non-invasive glucose
monitor developed in collaboration with Bayer Diagnostics; a rapid
onset (less than 5 minutes) topical anesthetic delivery system and
the use of SonoPrep for the transdermal delivery of large molecule
drugs and biopharmaceuticals. For additional information, please
visit the Company's website at http://www.sontra.com/
* * *
In its Form 10-KSB for the fiscal year ended December 31, 2003,
filed with the Securities and Exchange Commission, Sontra Medical
Corporation reports:
"We have a history of operating losses, and we expect our
operating losses to continue for the foreseeable future.
"We have generated limited revenues and have had operating losses
since our inception. Our historical accumulated deficit was
approximately $18,022,000 as of December 31, 2003. It is possible
that the Company will never generate any additional revenue or
generate enough additional revenue to achieve and sustain
profitability. Even if the Company reaches profitability, it may
not be able to sustain or increase profitability. We expect our
operating losses to continue for the foreseeable future as we
continue to expend substantial resources to conduct research and
development, feasibility and clinical studies, obtain regulatory
approvals for specific use applications of our SonoPrep
technology, identify and secure collaborative partnerships, and
manage and execute our obligations in strategic collaborations.
"If we fail to raise additional capital, we will be unable to
continue our development efforts and operations."
SPIEGEL INC: Court Okays $665,000 Microsoft Break-Up Fee
--------------------------------------------------------
In recognition of and to induce Microsoft Corporation's
expenditure of time, energy and resources, and the benefits to
Eddie Bauer, Inc.'s estate of securing a "stalking horse" or
minimum bid, Eddie Bauer sought and obtained the Court's
authority to pay Microsoft a Break-up Fee in the event that
Microsoft is not the Successful Bidder at the Auction this week
for Eddie Bauer's property located in Redmond, Washington.
Judge Blackshear approved Eddie Bauer's request to pay Microsoft
an Expense Reimbursement in the event that Eddie Bauer withdraws
its request to sell the Property and Microsoft is not in material
breach of the Purchase Agreement, provided that Microsoft will
have no right to receive the Expense Reimbursement if it becomes
entitled to payment of the Break-up Fee.
Pursuant to the Purchase Agreement, Eddie Bauer will provide
Microsoft a Break-up Fee, in cash, equal to $665,000, or 1.75% of
the Purchase Price, payable in the event that:
(a) the Court approves a bid other than that submitted by
Microsoft;
(b) the Closing of a sale to a Successful Bidder has occurred
in that Eddie Bauer receives the Purchase Price; and
(c) Microsoft is not in material breach of the Purchase
Agreement.
The Break-up Fee would be payable within five business days of
the closing of the sale to the Successful Bidder.
In the event that on the Sale Closing Date Eddie Bauer is unable
to perform its obligations or to satisfy any condition applicable
to it under the Purchase Agreement, Microsoft will be entitled to
a return of the Earnest Money Deposit and the parties will
jointly instruct the escrowee, First American Title Insurance
Company, to promptly return to Microsoft the Earnest Money
Deposit, together with any accrued interest. Except as may be
circumscribed by the terms of the Purchase Agreement, if Eddie
Bauer breaches or defaults under the Purchase Agreement,
Microsoft will have the right to specific performance of the
Purchase Agreement.
In addition, if Eddie Bauer becomes obligated to pay Microsoft
the Break-up Fee or the Expense Reimbursement, as provided for in
the Purchase Agreement, that obligation will survive termination
of the Purchase Agreement and, until indefeasibly paid in full in
cash, pursuant to Section 503(b) of the Bankruptcy Code, will
constitute an administrative expense of Eddie Bauer's bankruptcy
estate ranking pari passu with all other administrative expenses
of the kind specified in Sections 503(b) and 507(a)(1).
Eddie Bauer believes that the Break-up Fee and the Expense
Reimbursement provided for in the Purchase Agreement are fair and
reasonable, and were negotiated by the parties in good faith and
at arm's length. Unless it agreed to the protections, Eddie
Bauer would not have achieved a contract as favorable to the
estate as is the Purchase Agreement.
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. 29;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
STANDARD AERO: S&P Assigns B+ Rating to Proposed $260M Bank Loan
----------------------------------------------------------------
Standard and Poor's Ratings assigned its 'B+' long-term corporate
credit rating to Standard Aero Holdings, Inc., a leading provider
of maintenance and repair to aerospace engines.
At the same time, Standard & Poor's assigned its 'B+' rating to
Standard Aero's proposed US$260 million eight-year senior secured
term loan B and its US$50 million six-year senior secured
revolving credit facility. The 'B+' bank loan rating and the '2'
recovery rating indicates an expectation of recovery of 80%-100%
of principal in the event of a default.
Standard & Poor's also assigned its 'B-' rating to Standard Aero's
US$265 million senior subordinated notes. The outlook is stable.
Proceeds will be used to finance the acquisition of Standard Aero
and its subsidiaries for US$746 million.
"The ratings on Standard Aero reflect the high leverage of the
borrower following the acquisition, competition provided by engine
manufacturers, the reliance on a few key contracts, and the
execution risk surrounding the company's plan to expand its
commercial business," said Standard & Poor's credit analyst Kenton
Freitag. These factors are partially offset by Standard Aero's
solid service reputation, its success with existing military
contracts, and the stability provided by its military division.
Standard Aero is currently part of Dunlop Standard Aerospace
Holdings plc (B/Watch Pos/--). Dunlop Standard is to be sold to
U.K.-based Meggitt plc, with Standard Aero to be subsequently sold
to the Carlyle Group. Standard Aero is a U.S.-based holding
company headquartered in Winnipeg, Man. The company's primary
operations are in the U.S. and Canada, with smaller facilities in
Europe, Australia, and Singapore. Approximately 90% of its sales
are in the U.S. and Canada
Standard Aero's annual revenues are approximately US$750 million,
and are split about evenly between its military and commercial
divisions (servicing predominantly business and regional aircraft
operators). The military business is currently more profitable
and is largely based on the company's position as the sole
provider of depot-level MROs of T-56 engines, which power most of
the U.S. C-130 Hercules military fleet. The commercial business
is largely based on Standard Aero's ability to service the engines
that power the most popular regional aircraft in service. Margins
are currently lower than in the military division, but there is
greater potential for near-term growth of this division that
should drive margin expansion.
Standard Aero's primary risks are maintaining its margins through
continued productivity, performing well under contracts, and
maintaining its reputation as a reliable service provider. To
this extent, Standard Aero's long track record in this business
and its recent record of improving margins provide reasonable
assurance.
The stable outlook reflects the expectation that stable demand
from the military division and development of new commercial
business will allow for modest free cash flow generation, debt
reduction, and the maintenance of current levels of liquidity.
STRUCTURED ADJUSTABLE: Fitch Assigns Low B-Ratings to 2 Classes
---------------------------------------------------------------
Structured Adjustable Rate Mortgage Loan Trust (SARM) pass-through
certificates, series 2004-11 are rated by Fitch as follows:
-- $230,660,100 classes A and R (senior certificates) 'AAA';
-- Class B1 ($4,784,000) 'AA';
-- Class B2 ($3,558,000) 'A';
-- Class B3 ($2,576,000) certificates 'BBB'.
-- Privately offered class B4 ($1,226,000) 'BB';
-- Privately offered class B5 ($1,349,000) certificates 'B'.
The 'AAA' rating on the senior certificates reflects the 6.00%
total credit enhancement provided by the subordinate class B
certificates. Fitch believes the above credit enhancement will be
adequate to support mortgagor defaults as well as bankruptcy,
fraud, and special hazard losses in limited amounts. In addition,
the ratings also reflect the quality of the underlying mortgage
collateral, strength of the legal and financial structures, and
the master servicing capabilities of Aurora Loan Services, Inc.
(Aurora), which is currently rated 'RMS2+' as a master servicer by
Fitch.
As of the cut-off date, July 1, 2004, the mortgage pool consists
of adjustable rate, conventional, fully amortizing residential
mortgage loans, and substantially all of which have original terms
to stated maturity of 30 years. The mortgage loans provide for an
interest rate adjustment of every six-month or one-month period,
based on the six-month LIBOR index or the one-month LIBOR index.
Approximately 93.66% of the mortgage loans provide for interest-
only payments and have an interest-only period for the first five
to 10 years after origination. The mortgage pool has an aggregate
principal balance of approximately $245,383,051, a weighted
average original loan-to-value ratio (OLTV) of 71.45%, a weighted
average coupon (WAC) of 4.12%, a weighted average remaining term
(WAM) of 358 months, and an average balance of $331,151. The
mortgaged properties are primarily located in California (38.52%),
Florida (9.61%), and Georgia (7.14%).
No mortgage loan is 'high cost,' 'high-cost home,' 'covered,'
'high-risk home,' or 'predatory' loan under any applicable
federal, state, or local predatory or abusive lending law (or a
similarly classified loan using different terminology under a law
imposing heightened regulatory scrutiny or additional legal
liability for residential mortgage loans having high interest
rates, points, and/or fees).
Structured Asset Securities Corporation, a special purpose
corporation, deposited the loans in the trust, which issued the
certificates. For federal income tax purposes, an election will be
made to treat the trust fund as one or more real estate mortgage
investment conduits (REMICs).
STRUCTURED ASSET: Fitch Gives Low B-Ratings to 2 SAMI Cert Classes
------------------------------------------------------------------
Structured Asset Mortgage Investments II Inc. (SAMI) Prime
Mortgage Trust, mortgage pass-through certificates, series 2004-1
is rated by Fitch Ratings as follows:
-- $289,048,997 classes I-A-1 through I-A-8, I-PO, II-A-1
through II-A-3, II-PO, II-X-1 and R-I through R-III (senior
certificates) 'AAA';
-- $2,943,000 class B-1 'AA';
-- $884,000 class B-2 'A';
-- $588,000 class B-3 'BBB';
-- $295,000 privately offered class B-4 'BB';
-- $441,000 privately offered class B-5 'B'.
The 'AAA' rating on the senior certificates reflects the 1.80%
subordination provided by the 1.00% class B-1, the 0.30% class B-
2, the 0.20% class B-3, the 0.10% privately offered class B-4, the
0.15% privately offered class B-5 and the 0.05% privately offered
class B-6 (not rated by Fitch). Classes B-1, B-2, B-3, B-4 and B-5
are rated 'AA', 'A', 'BBB', 'BB' and 'B' based on their respective
subordination only.
Fitch believes the credit enhancement will be adequate to support
mortgagor defaults as well as bankruptcy, fraud and special hazard
losses in limited amounts. In addition, the ratings also reflect
the quality of the underlying mortgage collateral, strength of the
legal and financial structures and the servicing capabilities of
EMC Mortgage Corporation, rated 'RPS1' by Fitch. Wells Fargo
Bank, National Association, rated 'RMS1' by Fitch, will act as
master servicer.
The certificates represent an ownership interest in two groups of
fixed-rate mortgage loans secured by first liens on one- to four-
family residential properties. Loan group 1 consists of 30-year
fixed-rate mortgage loan totaling $136,404,967, as of the cut-off
date, July 1, 2004, secured by first liens on one- to four-family
residential properties. The mortgage pool demonstrates an
approximate weighted-average loan-to-value ratio (OLTV) of 67.14%.
The weighted average FICO credit score is approximately 758. Cash-
out refinance loans represent 22.46% of the mortgage pool and
second homes 2.34%. The average loan balance is $460,828. The
three states that represent the largest portion of mortgage loans
are California (28.90%), Virginia (14.15%) and Maryland (12.64%).
Loan group 2 consists of 15-year fixed-rate mortgage loan totaling
$157,942,780, as of the cut-off date, secured by first liens on
one- to four-family residential properties. The mortgage pool
demonstrates an approximate weighted-average OLTV of 57.73%. The
weighted average FICO credit score is approximately 741. Cash-out
refinance loans represent 23.48% of the mortgage pool and second
homes 4.34%. The average loan balance is $470,068. The three
states that represent the largest portion of mortgage loans are
Maryland (16.75%), California (15.08%) and Texas (13.78%).
None of the mortgage loans are 'high cost' loans as defined under
any local, state or federal laws.
SAMI deposited the loans in the trust, which issued the
certificates, representing undivided beneficial ownership in the
trust. For federal income tax purposes, an election will be made
to treat the trust as three separate real estate mortgage
investment conduits (REMICs). U.S. Bank National Association will
act as trustee.
SUNNY DELIGHT: Narrow Product Portfolio Prompts S&P's B+ Rating
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B+' corporate
credit rating to newly formed juice drink producer Sunny Delight
Beverages Company. The company was formed by the combination of
two former juice drink businesses (Sunny Delight and Punica) of
Procter & Gamble Co. (P&G; AA-/Stable/A-1+) that were purchased by
financial sponsor JW Childs.
At the same time, Standard & Poor's assigned its 'B+' bank loan
ratings and '2' recovery ratings to Sunny Delight's proposed $170
million first-lien term loan due 2010 and to its $40 million five-
year revolving credit facility. These are rated the same as the
corporate credit rating. This and the '2' recovery rating
indicate that lenders can expect substantial (80%-100%) recovery
of principal in the event of a default or bankruptcy.
Standard & Poor's also assigned its 'B-' bank loan rating and its
'5' recovery rating to the company's proposed $85 million second-
lien senior secured bank loan due 2010. The second-lien bank loan
is rated two notches below the corporate credit rating; this and
the '5' recovery rating indicate that lenders can expect
negligible (0-25%) recovery of principal in the event of a default
or bankruptcy. The ratings are based on preliminary documentation
and subject to review upon receipt of final documentation.
Proceeds from the new bank loans will be used to fund JW Childs'
purchase of the Sunny Delight and Punica juice drink businesses
from P&G. Upon closing of the transaction, Childs will own most
of the new company and P&G will retain a minority interest.
The outlook is negative. Standard & Poor's estimates that Sunny
Delight Beverages Company will have about $255 million of total
debt outstanding at closing.
"The ratings on Sunny Delight reflect its narrow product portfolio
within the highly competitive and somewhat fragmented global juice
industry," said Standard & Poor's credit analyst Nicole Delz
Lynch. "The ratings also reflect the company's limited size, the
ongoing turnaround of the Sunny D brand in both the U.S. and parts
of Europe, the integration risk after the merging of the two
businesses, and new entity's leveraged financial profile."
Somewhat mitigating these factors is the company's strong position
in the value juice drink category in North America, its
geographical diversification, and its growth potential. With the
Sunny Delight and Punica brand names, Sunny Delight Beverages
Company will be an important global manufacturer and distributor
of juice drinks and sports beverages. Still, the company is a
relatively small participant in the growing global juice and
sports drink industry. It holds an estimated 28% value share in
the roughly $900 million U.S. chilled juice drink market, however,
it faces larger and financially stronger competitors in the juice,
juice drink, and sports drink sectors, including Kraft Foods
Inc.'s Capri Sun brand, The Coca-Cola Co.'s Minute Maid brand, and
PepsiCo's Gatorade brand, in addition to many smaller
participants.
TRIAD HOSPITALS: Fitch Assigns Low B-Ratings to Senior Notes
------------------------------------------------------------
Fitch Ratings has assigned the following ratings to Triad
Hospitals, Inc. (Triad):
-- senior secured bank facility, 'BB+';
-- senior unsecured notes, 'BB-';
-- senior subordinated notes, 'B+'.
The Rating Outlook is Stable. The ratings were initiated by Fitch
as service to users of its ratings and are based on public
information.
Triad's high speculative-grade ratings reflect the sustainability
and successful execution of the company's business model, offset
by modestly high leverage. Triad emphasizes a collaborative model
with regards to acquisitions, which tend to be mostly financed
with cash flow. As such, Fitch anticipates debt levels will
generally remain stable or decrease slightly with scheduled
amortizations. However, the potential for modest increases in
leverage tied to acquisitions are considered in Fitch's rating. A
two notch rating on the bank facility reflects strong collateral
coverage for the secured facility.
Total debt at June 30, 2004 was approximately $1.7 billion. Fitch
anticipates that fiscal year 2004 coverage (EBITDA/interest) will
be between 4.8 times (x) and 5.2x and leverage (total debt/EBITDA)
will range between 2.7x and 3.4x, with Triad generating over $300
million in net cash from operating activities. Primary liquidity
is provided by cash from operations and the company's $400 million
revolving credit facility (offset by $28.4 million in outstanding
LOC's).
Triad management contends that its collaborative approach allows
the company to generate margins that are more sustainable over a
longer period of time and position individual hospitals to better
respond to market forces given the collaborative relationships
with medical staffs and community leaders. Triad has fared
somewhat better than its peers with regards to volume and bad debt
trends currently impacting the hospital management sector
partially due to the markets in which it operates (small cities
and selected urban markets) as well as divesting some facilities
that may have hampered performance.
Costs trends should remain fairly stable over the next year with
slight acceleration in supplies anticipated, owing to expected
increases in drug-eluting coronary stent penetration and expanded
use of other costly technologies. Bad debt trends will continue
to be monitored to gauge performance versus management
expectations. Labor rates, which have moderated dramatically since
2001, should continue to remain at acceptable levels. Pricing
should remain generally favorable for at least the next 18 months.
Triad reports a large percentage of 2005 managed care contracts
have been signed with rate increases averaging between 5%-7%.
Medicare rates are expected to remain relatively favorable as
hospitals are slated to receive full market basket increases in
2005 and 2006 (subject to legislative review). Fitch anticipates
that the company will remain an active acquirer, as noted above,
and selected divestitures are possible. The threat posed by
specialty hospitals and competing ambulatory surgery centers
(ASCs) is somewhat mitigated by the markets Triad serves, and
Fitch intends to monitor their competitive impact in Triad
markets. Other concerns include industry-wide issues such as bad
debt expense and slower-than-expected volume trends, the
sustainability of private-pay rate increases, the highly regulated
nature of the industry and acquisition-associated risks.
With a portfolio of 51 general acute care hospitals (including one
under construction) and 14 ambulatory surgery centers, Triad
Hospitals, Inc. is one of the largest publicly owned hospital
management companies in the U.S. Triad concentrates it operations
(hospitals and ambulatory surgery centers) in small cities and
selected urban markets primarily in the southern, mid-western and
western U.S.
UNITED AIRLINES: Files 4th Reorganization Status Report
-------------------------------------------------------
UAL Corp. and its debtor-affiliates, having "created a foundation
of dramatic cost reductions, now have initiated even further
restructuring and cost cutting initiatives to attract the
financing necessary to exit from bankruptcy, while continuing to
provide a superior travel experience for United's customers,"
James H.M. Sprayregen, Esq., at Kirkland & Ellis, reports.
Some of the Debtors' most significant costs are their obligations
to fund four defined benefit pension plans over the next several
years. For the remainder of 2004, the Debtors' pension funding
obligations consist of $404,000,000 due September 15, 2004 and
$92,000,000 due on October 15. The Debtors deferred a
$72,000,000 payment on July 15.
The Debtors received commitments from their current lenders,
including JPMorganChase, Citigroup, CIT and GE Capital, for
$1,000,000,000 in DIP Financing, a $500,000,000 increase over the
existing Facility. Maturity will be extended until June 30,
2005. The new DIP Facility will provide the Debtors with
additional time to complete restructuring efforts and formulate a
business plan "without having to rush prematurely towards exit."
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. 55; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
US AIRWAYS: Wants Bankruptcy Court to Decide Boston Tax Dispute
---------------------------------------------------------------
Pursuant to Section 505(a) of the Bankruptcy Code, the
Reorganized US Airways Debtors ask Judge Mitchell to find that the
Bankruptcy Court has jurisdiction to determine the proper amount
of tax claims filed by the City of Boston, Massachusetts.
Background
During the 1980s, a coalition of airlines, including the
predecessors to US Airways, Inc., sued the City of Boston in the
Superior Court for Suffolk County, Massachusetts, Case No. 84216.
The airline plaintiffs alleged that:
(1) Boston was taxing aircraft while exempting other types of
manufacturing property, in violation of a federal statute
requiring that airline property be taxed in a non-
discriminatory manner; and
(2) Boston had no statutory authority to tax aircraft that
were not permanently situated in Boston but flew into and
out of Boston in interstate commerce.
Lawrence E. Rifkin, Esq., at McGuireWoods, in McLean, Virginia,
relates that the lawsuit was settled in 1989 after the
Massachusetts General Assembly authorized the taxation of
aircraft that moved in interstate commerce. The settlement
established that tax calculations would be based on the time that
the aircraft spent on the ground within geographic boundaries of
the taxing authority. The settlement, memorialized in a Consent
Decree, authorized a refund of past taxes.
In 1997, the original Consent Decree was amended to extend its
duration through 2010, and to allow tax authorities to levy taxes
on aircraft financed with long-term leases.
Mr. Rifkin says that, under the Consent Decree, the first step in
calculating the tax due is to determine the fair cash value of
personal property. Ground property like baggage trucks is valued
at "fair market value." By contrast, aircraft is valued at the
original cost of the aircraft less straight-line depreciation.
Straight-line depreciation consists of reducing the aircraft
value each tax year from original cost, in equal steps over a 12-
year period, utilizing a salvage value of 20% of the original
cost.
The Current Dispute
Boston filed Claim No. 5464 for $2,068,288 against US Airways
Group, Inc., and Claim No. 4925 for $4,510 against Allegheny
Airlines, Inc. Both Claims were filed as priority tax claims for
prepetition personal property taxes for the fiscal 2002-2003 tax
year. In reviewing the Claims, the Reorganized Debtors concluded
that the downturn in the airline industry, resulting in large
part from the September 11, 2001 terrorist attacks, had likely
resulted in the tax calculations yielding values as of January 1,
2002 that were in excess of fair market value. The Reorganized
Debtors asserted that Boston's valuation of the aircraft was
excessive. Consequently, the Reorganized Debtors objected to
Boston's Claims as unsubstantiated, and Boston responded.
Mr. Rifkin argues that the Bankruptcy Court has jurisdiction to
decide how much the Debtors owe Boston in taxes. Within that
jurisdiction, the taxes should be calculated using the fair
market value of assets. Boston contends that the Consent Decree
deprives the Bankruptcy Court of jurisdiction to allow the Claims
in any amount other than the filed amount. Boston insists that
the Reorganized Debtors' aircraft must be valued in all tax years
through 2010 based on original cost less straight-line
depreciation.
According to Mr. Rifkin, Boston is wrong. The Massachusetts tax
statutes require the use of fair market value and the Supreme
Judicial Court of Massachusetts has held that contracts between
taxpayers and taxing authorities that alter this statutory
valuation standard are unenforceable. Thus, the provisions of
the Consent Decree do not bind the Bankruptcy Court.
Despite the Consent Decree, Section 505(a)(1) grants the
Bankruptcy Court jurisdiction to determine the amounts of tax
claims. The Consent Decree did not establish the amount of tax
owing for fiscal year 2002 to 2003, the tax year that is the
subject of the Claims. The methodology for valuing the aircraft
of US Airways was never contested before the state court that
entered the Consent Decree. The valuation methodology that
Boston proposes is unlawful under Massachusetts law, which
requires the fair market value standard for valuing property for
purposes of taxation.
Section 505(a) authorizes bankruptcy courts to determine tax
liabilities, even in situations where the tax was the subject of
prior litigation:
". . . the [bankruptcy] court may determine the amount
or legality of any tax, any fine or penalty relating to a
tax, or any addition to tax, whether or not previously
assessed, whether or not paid, and whether or not contested
before and adjudicated by a judicial or administrative
tribunal of competent jurisdiction."
Thus, Section 505 provides a broad grant of authority to decide
tax issues, with a narrow exception that applies when (1) the
"legality" or "amount" of the tax was (2) "contested before" and
(3) "adjudicated by" (4) a tribunal of competent jurisdiction (5)
prior to the filing of the bankruptcy case.
Boston also alleges that the deadline for the Reorganized Debtors
to contest the amount of the tax claim was February 1, 2003, the
state law tax appeals deadline. However, Mr. Rifkin argues that
under Section 505(a)(2), state procedural deadlines are not
controlling in the claims resolution process. The Reorganized
Debtors timely filed their objection in May 2003, well before the
March 31, 2004 claims objection deadline in their cases.
(US Airways Bankruptcy News, Issue No. 59; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
WEIRTON STEEL: US Trustee Appoints Fluharty as Chapter 7 Trustee
----------------------------------------------------------------
The United States Trustee for Region 4 has designated Thomas H.
Fluharty as the trustee in the Chapter 7 cases of F.W. Holdings,
Inc., and Weirton Venture Holdings.
The Court orders the interim trustee to post a bond in an amount
to be determined by the U.S. Trustee.
Furthermore, each of FW Holdings and Weirton Venture has until
August 20, 2004 to file with the Court and serve on the U.S.
Trustee and the Chapter 7 trustee a final report and account of
the status of its case pursuant to Section 704(9) of the
Bankruptcy Code and Rule 1019(5) of the Federal Rules of
Bankruptcy Procedure.
The Court directs the counsel for FW Holdings and Weirton Venture
to submit any fee applications for Chapter 11 administrative
expenses on or before September 20, 2004. Failure to file any
fee application will result in the Chapter 11 administrative
expenses being denied. (Weirton Bankruptcy News, Issue No. 32;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
WESCORP ENERGY: Completes Acquisition of 100% of Flowstar's Shares
------------------------------------------------------------------
On March 31, 2004, Wescorp Energy Inc., through its Alberta
subsidiary 1049265 Alberta Ltd., completed the acquisition of 100%
of the outstanding shares of Flowstar Technologies Inc. and
Flowray Inc. in consideration of cash payments to the selling
shareholders totaling CDN$550,000 pursuant to the share purchase
and subscription agreement dated June 9, 2003 as amended,
effective January 14, 2004.
Related Agreements to Acquire 100% of Vasjar Trading Ltd.
In connection with the acquisition of Flowstar and Flowray,
Wescorp has also entered into share purchase agreements dated
effective January 14, 2004 pursuant to which Wescorp's 100% owned
subsidiary, 1049265 Alberta Ltd. will acquire 100% of the
outstanding shares of Vasjar Trading Ltd., a British Virgin
Islands corporation, Vasjar in turn owns 100% of the
outstanding shares of Quadra International Inc. and Flowstar
International, Inc. (f/k/a Penta Energy Products Inc.), both of
which are Barbados corporations. Pursuant to an agreement dated as
effective August 30, 2003, Flowray had transferred to Quadra
Products all of its intellectual property rights, including rights
to the technology related to the DCR 900 system described below,
in consideration of a promissory note in the principal amount of
CDN$600,000 without interest. The promissory note is now the sole
asset of Flowray.
The acquisition of Vasjar was expected to contractually conclude
on June 2004; the exchange of shares (and thus actual ownership of
and consolidation with Wescorp) may however be delayed. This is
due to issues related to the Company's ability to issue SEC
registered shares to the Vasjar shareholders in a timely
manner. On April 29, 2004, Wescorp tendered and delivered to each
of the shareholders of Vasjar 1,200,000 restricted (unregistered)
shares of common stock, for a total of 2,400,000 shares. The
shares were tendered under Regulation S. These shares have not yet
been accepted in lieu of registered shares and the resolution of
this issue was still open. The shares of Vasjar, which were to be
transferred and delivered upon delivery of the Wescorp shares,
have not been delivered to Wescorp. These issues were under
discussion between Management and Vasjar principals.
In consideration of the purchase of all the outstanding shares of
Vasjar from two shareholder entities (in which the selling
shareholders of Flowstar/Flowray have interests), Wescorp will
issue shares to the shareholders of Vasjar each as to 50% as
follows:
(a) an aggregate 2,400,000 shares of common stock of the Company
on or before April 30, 2004 (subject to a penalty of 10%
additional shares if the shares are issued after that due
date); and,
(b) up to an aggregate 2,600,000 additional shares of common
stock of the Company to be issued in stages as follows:
-- Stage One. On or before April 1, 2005, Wescorp will issue
from 480,000 to 600,000 additional shares based on sales
achieved in the 2004 calendar year; the lower figure being
if sales are less than $3,000,000, and the upper figure
being if sales are more than $3,750,000. Shares are required
to be registered at delivery.
-- Stage Two. On or before April 1, 2006, Wescorp will issue
from 800,000 to 1,000,000 additional shares based on sales
achieved in the 2005 calendar year; the lower figure being
if sales are less than $4,500,000 and the upper figure being
if sales are more than $7,500,000. Shares are required to be
registered at delivery.
-- Stage Three. On or before April 1, 2007, Wescorp will issue
from 800,000 to 1,000,000 additional shares based on sales
achieved in the 2006 calendar year; the lower figure being
if sales are less than $6,000,000 and the upper figure being
if sales are more than $11,250,000. Shares are required to
be registered at delivery.
Any Wescorp shares not earned in a particular calendar
year because the sales did not achieve the upper sales target will
be carried over and added to the shares to be issued in the next
calendar year, subject to achievement of the next year's
escalating sales volumes. If Wescorp fails to deliver any of the
Stage 2 shares, Wescorp will be subject to a penalty of 10%
additional shares to be issued to the Vasjar shareholders each
month of delay, with a cumulative provision. If any of the Wescorp
shares to be issued to the Vasjar shareholders have not been
delivered for a period of 182 days after the applicable due date,
the Vasjar shareholders may, at their option, terminate the share
purchase agreements, without notice or prior opportunity to cure.
Wescorp has agreed to pledge to the Vasjar shareholders all the
Vasjar shares as security to guarantee Wescorp's performance under
the share purchase agreements.
If Wescorp sells any of its Vasjar shares to any third party, all
shares of Wescorp due to and to be due to the Vasjar shareholders
must be issued by Wescorp.
Business and Assets of Flowstar Group
Flowray and Flowstar are private companies incorporated
in Alberta, Canada. Since inception, Flowray has been developing a
new system for measuring the flow of gas at the wellhead. This
system is known as the Digital Chart Recorder or `"DCR-900". The
DCR-900 system consists of a turbine based flow measurement signal
generating device, temperature and pressure probes and a flow
computer, which performs all of the corrected flow calculations.
In 2003, this system received approval from the Canadian Standards
Association (CSA) and also received independent verification of
accuracy from Southwest Research Institute in Houston Texas.
Flowstar successfully field-tested the product in 2003. Units were
commercially sold in the 2003 year, and were installed in various
customer applications. By License Agreement dated December 6,
2001, Flowray granted Flowstar the non-exclusive worldwide license
to use Flowray's technology relating to certain flow meters and to
manufacture, market and sell products derived from the technology,
including three major product lines used in measuring and
recording natural gas flow. Flowstar has secured the license in
exchange for a 10% royalty on sales to be paid to Flowray.
Flowstar also represents and distributes independent third party
products, and seeks to position itself to be a leading supplier of
flow measurement equipment to the petroleum industry. Flowstar and
Flowray are now wholly owned subsidiaries of Wescorp.
Flowray and Flowstar currently have no significant
tangible assets. Flowray transferred all of its intellectual
property rights and technology to Quadra as discussed above. As a
result, Flowstar will now need to secure an agreement with Quadra
or an affirmation of the agreement with Flowray to utilize its
Flowray license. Upon completion of the Vasjar acquisition,
Quadra will become a wholly owned subsidiary of Wescorp.
Management intends to secure the appropriate licenses in the next
several weeks, whether or not the acquisition closes as scheduled
in April, 2004, or some later date. The intellectual
property assets include a US provisional patent application filed
on or about March 3, 2003 for the technology used in the DCR-900
system. Quadra also holds the intellectual property for liquid
based totalizers, burner igniters, and windows based gas flow
calculation software, all of which Flowstar markets. Flowstar also
markets a line of liquid turbines for which there is no
intellectual property, as the patents expired long ago.
Flowray has, pursuant to a Letter of Intent, given a private
Canadian company, a right of first refusal to engineer, supply or
manufacture the DCR-900 product according to Flowray's
specifications. This company has agreed to manufacture the DCR 900
for the material costs plus labor costs plus a management fee
(adjusted for inflation annually). An additional fee is payable by
Flowstar to this company for each unit sold using the technology,
wherever it is made. This company provides a technology which is
incorporated in the design of Flowray's DCR-900 system. Details of
this company's technology will be provided to a mutually
agreeable trust agent, to be held in escrow and not disclosed to
Flowray, except in certain specific circumstances, designed to
protect Flowray.
Flowray has also granted this company an irrevocable, exclusive
license to use Flowray's technology related to differential
pressure orifice plate system flow measurement, in oil field
production well testing. The license will permit this company
to manufacture, market, and sell flow measurement products, or
sub-license or assign these rights, in markets other than turbine
based flow measurement. The term of this license will continue for
the life of Flowray's patent. If Flowray fails to purchase a
minimum number of 100 units for the first two years, 200 units in
year three and 300 units per year thereafter, then this
company's license to use Flowray's technology will be extended to
its entire subject matter without any restriction on the market.
If Flowray is declared bankrupt, Flowray has agreed to assign to
this company all its rights to the flow measurement technology,
including patents and patent applications. If either of these
two conditions should occur, Flowray would lose all rights to use
the technology granted to this company and the Flowstar/Flowray
business unit would likely cease. Flowray also granted this
company a non-exclusive distributorship for the DCR-900 product.
Quadra has no other assets aside from the intellectual property
transferred to Quadra by Flowray. When the acquisition of Vasjar
is concluded, Wescorp will own all the proprietary technology
originally owned by Flowray related to the DCR 900 system and
other products. Quadra is planning to grant Flowstar
International a license to use the technology and to manufacture,
market and sell products derived from the technology, including
the DCR 900 system, in all jurisdictions worldwide except Canada.
As a result of the proposed Vasjar acquisition, Wescorp will
become the parent company of Flowstar USA, which will hold the
rights to manufacture, market and sell the DCR 900 system in the
United States.
Flowstar's current worldwide license is to be amended so that
Flowstar will retain the rights to manufacture, market and sell
the DCR 900 system only in Canada. The timing and execution of
these plans will depend on the resolution of issues related to the
registrations rights applicable to Wescorp shares delivered and to
be delivered to the Vasjar shareholders, or an acceptable interim
license arrangement.
The acquisition of Flowstar and Flowray represents an initial step
by Wescorp in implementing its new corporate direction to become a
consolidator and acquirer of leading edge technologies with global
applications for the energy service sector. Wescorp continues to
evaluate numerous technologies that are at or near the
commercialization stage.
Original Terms of Acquisition of Flowstar and Flowray
The Company had originally agreed to acquire up to 51% of the
shares of Flowstar and Flowray by way of transfer of previously
issued shares from the shareholders and by purchase of shares from
the treasury of Flowray. The consideration originally to be paid
by the Company pursuant to the acquisition included:
1. the issuance on the first closing of an aggregate 750,000
shares of common stock of the Company to the Flowstar
shareholders at a deemed price of $0.13 per share in
exchange for the transfer of 51% of the outstanding
shares of Flow star;
2. the payment by the Company of an aggregate CDN$750,000
cash to Flowray in consideration of the issuance of
treasury shares to the Company;
3. the payment by the Company of an aggregate CDN$1,000,000
cash to the Flowray shareholders in consideration of
the transfer of certain of their shares of Flowray; and
4. the issuance on or before January 15, 2004 to the Flowray
shareholders of such number of additional shares
of common stock of the Company equal in value to
CDN$500,000 calculated at the average market price for
two months prior to the date of issuance and discounted
by 20%.
The acquisition of 51% of Flowstar and Flowray was to complete in
stages, with each stage being subject to fulfillment of certain
closing conditions. The Company was required to make cash payments
in installments on, or before, certain deadlines over the period
ending January 15, 2004. All shares of common stock to be issued
to the shareholders were to be registered or qualified for
sale under applicable securities laws within 120 days of the date
of issuance.
The Company had also agreed to advance to Flowstar and Flowray up
to CDN$1,500,000 by way of loan. All loan advances are secured by
a general security agreement signed by the borrowers in favor of
the Company and bear interest at 5% per annum. The loan was to be
repaid depending upon the cash flow of Flowstar and Flowray and at
the discretion of their Boards of Directors.
Pursuant to the terms of the original share purchase agreement
prior to amendment, upon the Company acquiring 51% of the issued
shares of Flowstar and Flowray, the Company had the right and
option to purchase the remaining 49% of the issued shares of
Flowstar and Flowray from the shareholders at the fair market
value, based on a valuation prepared by an independent certified
business valuator. The Company's option to purchase the remaining
49% was exercisable at any time without an expiry date. If the
shareholders received an offer from a third party to purchase
their remaining 49% interest in Flowstar or Flowray, the Company
had the right of first refusal to purchase the 49%interest on
the same terms as the offer.
The amendment to the share purchase agreement provided for the
purchase by the Company of 100% rather than only 51% of the
outstanding shares of Flowstar and Flowray. All share issuances to
the shareholders proposed as part of the original consideration
for 51% of Flowstar and Flowray were eliminated under the
amendment to the Share Purchase Agreement and the consideration
changed to cash only. The Company acquired all the issued and
outstanding shares of Flowstar and Flowray for a total of
CDN$550,000 cash, which represents a reduction of CDN$1,200,000
from the original cash component of the purchase price for only
51%. Part of the reason for amending and reducing the purchase
price paid by Wescorp for the acquisition of Flowstar and Flowray
was that Wescorp will acquire, in a separate acquisition to close
on or before April 30, 2004, the technology originally owned by
Flowray and now owned by Quadra (a subsidiary of Vasjar), as
described above.
All funds paid by Wescorp in excess of the final reduced
purchaseprice of CDN$550,000 for 100% of Flowstar and Flowray will
remain a loan repayable to Wescorp on terms described below.
Loan Advances to Flowstar and Flowray
Terms and Conditions of Loan and Promissory Notes
Wescorp entered into a Memorandum of Agreement dated March
27, 2003 with Flowray Inc. and Flowstar Technologies Inc. under
which Wescorp advanced $2,360,000 Canadian dollars (approximately
$1,708,991 using the historical exchange rates at the times the
advances were made) by way of a loan to Flowray and Flowstar for
operating purposes. Approximately CDN$2,160,000 (approximately
$1,648,296) plus US$195,000 was owed at March 31, 2004.
Flowray and Flowstar, as borrowers, have provided the Company with
a promissory note for each advance. The borrowers had originally
agreed to pay Wescorp interest on the promissory notes at the rate
of 5% per annum, calculated monthly on the last day of each month,
not in advance, from the date of each promissory note on the
outstanding balance. The promissory notes were originally due as
follows: 25% of the outstanding balance of the promissory notes on
March 30, 2004, a further 25% on September 30, 2004, a further
25% on March 30, 2005, and the balance together with all accrued
interest on September 30, 2005.
As security for the repayment of the promissory notes,
Flowstar and Flowray have provided the Company with a general
security agreement dated March 27, 2003, which grants the Company
a security interest in all of the present and after-acquired
personal property of the borrowers. The Company's security
interest has been registered under the Personal Property Security
Act (Alberta) as a first charge and lien on all of the borrowers'
personal property. The President, director and one of the selling
shareholders of Flowstar and Flowray has agreed to postpone his
rights as holder of security interests and security agreements on
the personal property of Flowstar and Flowray to all rights and
security interests of the Company.
As of January 14, 2004 the Company and Flowstar and Flowray
amended the Memorandum of Agreement dated March 27, 2003. The
promissory notes now accrue interest starting six months from the
date the funds were advanced at the rate of 5% per annum,
calculated monthly on the last day of the month, not in advance,
on the outstanding balance owing on the promissory notes until the
full amount owing on the promissory notes, including interest, is
paid in full. However, upon amendment to the terms of the loan
agreement effective January 14, 2004, Management decided to
forgive the interest on the notes for the 2003 year. Interest
accrued in 2004 will be payable quarterly commencing September 30,
2004. The original due date of the promissory notes has been
extended such that the notes are now due and payable five years
from the date each promissory note was or is signed. If the
parties fail to agree on the due date, then the promissory notes
will be due and payable five years from January 14, 2004. In the
event of the sale or disposition of all the shares of either of
Flowstar and Flowray to an unrelated third party, then the
promissory notes will become due and payable forthwith on demand.
Upon the amendment to the Memorandum of Agreement regarding the
loan effective January 14, 2004, $1,310,709 ($1,810,000 CDN) of
the existing $1,708,991 ($2,360,000 CDN) loan to Flowray and
Flowstar remained as a loan. The balance of the loan, or $398,282
($550,000 CDN) as at January 14, 2004, was applied to the purchase
price for the acquisition of Flowray shares. In addition to the
loan of $1,310,709, Wescorp expects to fund the growing operations
of Flowstar into the future until Flowstar is self-sufficient. The
exact amount of the anticipated future funding needed for Flowstar
is not known at this time. All past advances are, and any future
advances will be, secured by the general security agreement
already signed by the borrowers and will bear interest at 5% per
annum. The interest may be waived at the discretion of the Board
of Directors. The loan may be repaid depending upon the cash flow
of Flowray and Flowstar and at the discretion of the Boards of
Directors of the borrowers. There are limited assets in Flowstar
and Flowray with which to repay loans made by Wescorp. Flowstar
will depend on profits from its sales as a source for repayment,
and Flowray from such amounts as it may collect on its $600,000
promissory note received from Quadra. Quadra will become Wescorp's
indirectly controlled and indirectly wholly owned subsidiary when
the Vasjar transaction is fully effected (see the discussion
above).
Source of Proceeds to Company for Loans
Made to Flowray and Flowstar
Wescorp obtained the funds that were advanced to Flowray and
Flowstar through equity financings and a loan from AHC Holdings
Inc., a private Alberta company wholly owned by Comeau Industries
Ltd., of which Mr. Alfred Comeau, a director of Wescorp, is the
majority shareholder. Under the terms of a loan agreement, AHC
agreed to make available up to $2,000,000 Canadian dollars or
approximately $1,370,000. This was fully funded in the 2003
fiscal year and $150,000 was repaid to AHC during the first
quarter of 2004. All advances under the loan are secured by
promissory notes. Wescorp has agreed to pay interest to AHC at the
rate of 15% per annum, compounded semi-annually, and paid
annually on or before March 31. The principal and all accrued and
unpaid interest are due on December 31, 2005. As a bonus for the
loan, Wescorp issued AHC a warrant to purchase up to 1,000,000
shares of its common stock exercisable at a price of $0.15 per
share until March 6, 2006. The Company also issued a warrant to
Terry Mereniuk, of Edmonton, Alberta, for his services to the
Company in facilitating the loan from AHC. The warrant entitles
Terry Mereniuk to purchase up to 500,000 shares of Wescorp common
stock exercisable at a price of $0.15 per share until March
6, 2006.
In its Form 10-QSB for the quarterly period ended March 31, 2004,
filed with the Securities and Exchange Commission, Wescorp Energy
reports:
Liquidity and Capital Resources
2004 Compared to 2003
Since inception to the beginning of this quarter, Wescorp has been
dependent on investment capital and debt financing from its
shareholders as its primary source of liquidity. To December 31,
2003, Wescorp had not generated any revenue or income from
operations. Wescorp had an accumulated deficit at December 31,
2003 of $6,776,667. Wescorp suffered an operating loss for the
first quarter of 2004, which increased our deficit to $7,207,821.
During the first quarter of 2004, Wescorp's cash position
increased to $1,054,419 from $113,886. Wescorp had cash used in
operations of $338,646 in the first three months of fiscal 2004
compared to a deficit of $96,941 in the same period of fiscal
2003. Wescorp also had a net receipt of cash of $61,878 from
investing activities in the first quarter of 2004, which consisted
of cash balances received of $111,878 in Flowstar and Flowray on
the purchase of their shares, net of the purchase of $50,000 in
shares of Ellycrack. The net cash used in operating and investing
activities was financed by $1,218,535 from financing activities,
resulting in a net increase in Wescorp's cash position for the
period of $941,767. The cash flow from financing activities is
primarily a result of the issuance of some common stock shares.
During the first three months of this year Wescorp did not issue
any stock in settlement of notes payable.
The Company had $2,026,044 in total liabilities at March 31, 2004
compared to $1,936,412 at the end of March 2003. The increase is
a result of increased trade accounts payable for operations. There
was a repayment of $150,000 on the note payable from a related
party. This loan was originally used to fund working capital
requirements of the Company as well as to fund the advances to
Flowstar and to purchase Ellycrack shares.
Wescorp is situated in Edmonton near the geographic center of
North America's oil and gas reserves, sharing the same time zone,
language and ethic as the continent's other dominant energy
capitals - Houston, Dallas and Calgary. Strongly networked within
this culture and a major shareholder of energy holdings itself,
Wescorp has the long-established relationships and financial
resource necessary to bring new energy solutions to market.
WILLIAMS COMPANIES: S&P Affirms B+ Corporate Credit Rating
----------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B+' corporate
credit rating on The Williams Cos. Inc. and its subsidiaries,
Northwest Pipeline Corp., Transcontinental Gas Pipeline Corp.,
Williams Production RMT Co., and revised the outlook to stable
from negative.
"The stable outlook on Williams reflects the expectation that the
company's financial ratios will improve in 2004 as a result of the
significant debt reduction, much of which occurred in the first
and second quarter of 2004," said Standard & Poor's credit analyst
Jeffrey Wolinsky.
"If Williams continues to reduce debt in line with forecasts, the
rating could improve over the three-year time horizon of the
outlook," continued Mr. Wolinsky. "However, if cash usage at its
power segment is considerably higher than expectations or
financial ratios fall considerably below expectations, the outlook
and or the rating could change."
The 'B+' rating on Williams reflects the company's highly
leveraged financial condition, the uncertain financial performance
of its power subsidiary (formerly known as Energy Marketing and
Trading), and the consolidated creditworthiness of its own
operations and those of its subsidiaries.
The risks are partially offset by a substantial debt reduction
plan, an improving liquidity profile, and the stability of its
FERC-regulated natural gas pipeline business.
Williams' ongoing business segments include gas pipeline,
exploration and production, midstream, and power. Most of the
business risk centers around its power segment.
* Large Companies with Insolvent Balance Sheets
-----------------------------------------------
Total
Shareholders Total Working
Equity Assets Capital
Company Ticker ($MM) ($MM) ($MM)
------- ------ ------------ ------- --------
Airgate PCS PCSA (377) 291 13
Alliance Imaging AIQ (68) 628 20
Akamai Technologies AKAM (175) 279 140
Amazon.com AMZN (1,036) 2,162 568
Bally Total Fitness BFT (158) 1,453 (284)
Blount International BLT (397) 400 83
Cell Therapeutic CTIC (83) 146 72
Centennial Comm CYCL (579) 1,447 (99)
Choice Hotels CHH (118) 267 (42)
Cincinnati Bell CBB (640) 2,074 (47)
Compass Minerals CMP (144) 687 106
Cubist Pharmaceuticals CBST (18) 223 91
Delta Air Lines DAL (384) 26,356 (1,657)
Deluxe Corp DLX (298) 563 (309)
Domino Pizza DPZ (718) 448 (1)
Echostar Comm DISH (1,033) 7,585 1,601
WR Grace & Co GRA (184) 2,874 658
Graftech International GTI (97) 967 94
Hawaian Holdings HA (143) 256 (114)
Idenix Pharm IDIX (28) 67 30
Imax Corporation IMAX (52) 250 47
Kinetic Concepts KCI (246) 665 228
Lodgenet Entertainment LNET (129) 283 (6)
Lucent Technologies LU (3,371) 15,765 2,818
Maxxam INC MXM (602) 1,061 127
Memberworks Inc. MBRS (20) 249 (89)
Milacron Inc. MZ (34) 712 17
Millennium Chem. MCH (46) 2,398 637
McDermott International MDR (363) 1,249 (24)
McMoRan Exploration MMR (54) 169 83
Northwest Airlines NWAC (1,775) 14,154 (297)
Nextel Partner NXTP (13) 1,889 277
ON Semiconductor ONNN (499) 1,161 213
Paxson Comm. PAX (406) 1,284 67
Pinnacle Airline PNCL (48) 128 13
Per-Se Tech Inc. PSTI (18) 172 41
Qwest Communications Q (1,016) 26,216 (1,132)
Quality Distributors QLTY (19) 372 7
Sepracor Inc SEPR (619) 1,020 256
St. John Knits Int'l SJKI (65) 234 69
Syntroleum Corp. SYNM (12) 67 11
Triton PCS TPC (180) 1,519 52
UST Inc. UST (115) 1,726 727
Vector Group Ltd. VGR (3) 628 142
Valence Tech. VLNC (52) 21 (5)
Western Wireless WWCA (225) 2,522 15
*********
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
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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
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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
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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
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Metzler, Emi Rose S.R. Parcon, Bernadette C. de Roda, Rizande B.
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Sabijon and Peter A. Chapman, Editors.
Copyright 2004. All rights reserved. ISSN: 1520-9474.
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