/raid1/www/Hosts/bankrupt/TCR_Public/040811.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Wednesday, August 11, 2004, Vol. 8, No. 168
Headlines
AAIPHARMA INC: Athlon Pharma Amends Lawsuit to Include Fraud Claim
ADELPHIA COMMS: Plans to Settle Copyright Spat for $7.6 Million
ADELPHIA COMMS: Millions in Fees Available to UBS and Allen & Co.
AEMM PROPERTIES: Case Summary & 8 Largest Unsecured Creditors
AIR CANADA: Union Members to Vote on CCAA Plan on Aug. 17 by Proxy
AIR CANADA: Attorney General Appeals Claims Procedure Order
ALLIANT RESOURCES: Moody's Rates Senior Bank Credit Facility B2
ALLIANT TECHSYSTEMS: S&P Gives Planned $180 Mil. Notes B Rating
ALLIANT TECHSYSTEMS: Moody's Rates Planned $180M Notes at B2
ALPHARMA INC: S&P Junks Subordinated Debt & Says Outlook Negative
ANALYTICAL SURVEYS: Hires Pannell Kerr Forster as New Auditors
AT&T CORP: S&P Lowers Ratings on Various Synthetic Transactions
ATNG INC: Demands Immediate Delisting from Berlin Stock Exchange
BALLY TOTAL: Expects Postponed 2nd Quarter Release to Show a Loss
BAYTEX ENERGY: Incurs $15.5 Million Half-Year Net Loss
BLOCKBUSTER: Fitch Expects to Rate Unsecured Sub. Notes at B+
BLOCKBUSTER INC: Moody's Assigns B1 Rating to New $300M Debt Issue
BLOUNT INC: Strengthened Capital Structure Prompts S&P B+ Rating
BOUNDLESS MOTOR: Dismisses BDO Seidman as Independent Auditors
BURLINGTON INDUSTRIES: Franchise Tax Board Claim Allowed for $200K
BUSH IND: Z-Line Gets Prelim. Injunction Against Top Executives
CAL WESTERN: Section 341(a) Meeting Scheduled for August 26
CAPTEC FRANCHISE: Moody's Cuts Restaurant Franchise Trust Ratings
CENTURY ALUMINUM: S&P Assigns BB- Rating to $250M Sr. Unsec. Notes
CNH GLOBAL: Fiat's Troubles Prompt Negative Outlook from S&P
COLLINS & AIKMAN: S&P Puts B- Rating on Planned $400M Senior Notes
COMMITTEE BAY: Discloses Summer Drill Program Assay Results
CONNECTICUT VALLEY: Fitch Affirms $32M Preference Shares BB Rating
CONSECO: Enters into Settlement with SEC & N.Y. Attorney General
CONSECO INC: Moody's Upgrades Bank Debt Rating to B2
COVANTA ENERGY: Hires Peter Bynoe as Independent Director
DIRECTVIEW INC: London Investment Company Buys 47.5 Million Shares
ENRON CORP: Insurers Want to Give Proceeds to Tittle Plaintiffs
ENTERPRISE PRODUCTS: Sells 2.25 Million Additional Common Units
ENVIROTECH SYSTEMS: Case Summary & 19 Largest Unsecured Creditors
EUROGAS INC: Equity Deficit Tops $11 Million at March 31, 2004
FALCON NEST: Voluntary Chapter 11 Case Summary
FLEMING COMPANIES: Ask Court to Approve Rothmans Settlement
GERMANTOWN GROUP: Voluntary Chapter 11 Case Summary
GLOBAL CROSSING: Will Pay British Telecom GBP123,006
GLOBALSTAR CAPITAL: Administrative Claims Are Due by Aug. 13
HAMILTON SHEET: List of 20 Largest Unsecured Creditors
HIGH VOLTAGE: Emerges from Chapter 11 Reorganization
IMAX CORP: Inks Multiple Theatre Deal with National Amusements
INFOUSA: Prepays $5MM of Bank Debt & Reiterates Guidance for 2005
JILLIAN'S ENTERTAINMENT: Auctioning Assets on September 21
KAISER: Hearing on Aug. 23 to Ratify 7th DIP Financing Amendment
KMART CORP: Gator Entities Filed Counterclaims against Kmart
KROLL INC: Subsidiary Acquires Leading U.K. Employee Screening Co.
LEHMAN BROTHERS: S&P Affirms B+ Rating on Class F Certificates
MIRANT: Perryville Asks Court to Lift Stay to Arbitrate Claim
MQ ASSOCIATES: S&P Assigns B+ Corporate Credit & B- Debt Ratings
MQ ASSOCIATES: Moody's Junks Proposed Senior Discount Notes
NATIONAL CENTURY: Trust Wants Documents from Bankers Trust Company
NRG ENERGY: Asks Court to Compel CFTC to Withdraw Minnesota Action
ODYSSEY: Attempts to Secure Funds to Solve Liquidity Problems
ONSITE TECHNOLOGY: Files for Chapter 11 Protection in S.D. Texas
ONSITE TECHNOLOGY: Voluntary Chapter 11 Case Summary
OWENS CORNING: Allows D.L. Peterson Trust's $1,432,308 Claim
PACIFIC GAS: Wants Court to Enforce Confirmation Order
PARK PLACE: Fitch Rates $15.65 Million Class M-9 Certificate BB+
PARMALAT GROUP: Farmland Needs Colliers Help to Sell N.J. Property
PEGASUS SATELLITE: Committee Retains Akin Gump as Lead Counsel
PEGASUS SATELLITE: Committee Hires Pierce Atwood as Local Counsel
PILLOWTEX CORPORATION: Hires Bell Davis as Special Tax Counsel
QUESTERRE ENERGY: Files Plan of Arrangement under CCAA
R.H. DONNELLEY: S&P Assigns BB to Proposed $1.5B Credit Facilities
REPTRON ELECTRONICS: Inks Multi-Million Dollar Deal with Clear-Com
ROMAX FINANCE CORP: Voluntary Chapter 11 Case Summary
SIX FLAGS: Reports $356.4 Million 2nd Quarter Revenues & Losses
SK GLOBAL AMERICA: Judge Blackshear Approves Disclosure Statement
SOLUTIA INC: Trade Creditors Sell 26 Claims Aggregating $1.9 Mil.
SR TELECOM: Gets First Purchase Order for $35 Mil. Frame Contract
TERRA INDUSTRIES: Fitch Affirms Low B-Ratings for Facility & Notes
TRAVIS COUNTY: Moody's Junks Sub. Debt & Lowers Sr. Debt Rating
TRUMP HOTELS: Expects to File Prepackaged Chapter 11 in September
TRUMP HOTELS: NYSE Suspends Equity Trading & Will Delist Shares
UNIFIED HOUSING: Proofs of Claim Must Be Filed by December 7
US RESTAURANT: Planned CNL Merger Prompts Moody's Review
VERITAS DGC: Board Appoints Mark Baldwin as CFO & Treasurer
VOEGELE MECHANICAL: First Creditors Meeting Slated for Sept 16
WASTECORP. INTERNATIONAL: Issues Default Status Report
WORLDCOM INC: Asks Court to Approve ERISA Class Action Settlement
* Upcoming Meetings, Conferences and Seminars
*********
AAIPHARMA INC: Athlon Pharma Amends Lawsuit to Include Fraud Claim
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Athlon Pharmaceuticals, Inc., amended its $36 million counterclaim
against aaiPharma, Inc. to include a claim for fraud.
In that claim, Athlon alleges that aaiPharma misrepresented its
contingent and other liabilities by failing to disclose that it
had placed excessive quantities of Darvocet N100 and other
aaiPharma products into the distribution channels during 2003. It
was this type of "channel stuffing" activity, among other issues,
that caused aaiPharma recently to restate its earnings. In
connection with its tort claim, Athlon also seeks punitive
damages.
Athlon has also filed a separate lawsuit against aaiPharma for
breach of the parties' Asset Purchase Agreement pursuant to which
aaiPharma purchased an analgesic compound currently marketed under
the name Darvocet A500. In that suit, Athlon seeks damages for
non-payment of royalties, an accounting and attorney's fees in
addition to other relief.
About Athlon Pharmaceuticals
Athlon Pharmaceuticals -- http://www.athlonpharm.com/is a
specialty branded pharmaceutical company that focuses its business
strategies on under-promoted products in the areas of pain
management and respiratory illnesses. Established in 2001, Athlon
Pharmaceuticals is a privately held entity with a presence in over
25 states. The company continues to seek new busin
About aaiPharma Inc.
aaiPharma Inc. is a science-based pharmaceutical Company focused
on pain management, with corporate headquarters in Wilmington,
North Carolina. With more than 24 years of drug development
expertise, the Company is focused on developing, acquiring, and
marketing branded medicines in its targeted therapeutic areas.
aaiPharma's development efforts are focused on developing
improved medicines from established molecules through its
significant research and development capabilities.
* * *
As reported in the Troubled Company Reporter's April 29, 2004
edition, Standard & Poor's Ratings Services affirmed its 'CCC'
corporate credit and 'CC' subordinated debt ratings on aaiPharma
Inc. At the same time, Standard & Poor's removed the ratings on
the Wilmington, North Carolina-based specialty pharmaceutical
company from CreditWatch.
The outlook on aaiPharma is negative.
"The low speculative-grade ratings reflect the company's improved
but still limited liquidity given the lack of visibility of
aaiPharma's profitability and cash flow generation," said
Standard & Poor's credit analyst Arthur Wong.
For more information on the Company, including its product
development organization AAI Development Services, visit
aaiPharma's website at http://www.aaipharma.com/
ADELPHIA COMMS: Plans to Settle Copyright Spat for $7.6 Million
---------------------------------------------------------------
Marc Abrams, Esq., at Willkie Farr & Gallagher, in New York,
relates that on December 2, 2003, 85 copyright owners commenced an
adversary proceeding against 10 Adelphia Communications Debtors:
-- Adelphia Communications Corp.,
-- Frontiervision Operating Partners,
-- Yuma Cablevision, Inc.,
-- Adelphia Cleveland, LLC,
-- Parnassos, LP,
-- Mountain Cable Company, LP,
-- Century Huntington Company,
-- Century Virginia Corporation,
-- Century Colorado Springs Partnership, and
-- Century-TCI California, LP
A complete list of the Copyright Owners is available for free at:
http://bankrupt.com/misc/Copyright_Owners_List.pdf
The Copyright Owners:
(i) alleged copyright infringement based on the ACOM Debtors'
retransmission of television broadcast signals containing
the Owners' copyrighted works over the ACOM Debtors' cable
television systems to subscribers, without payment of the
royalty fee for the compulsory license pursuant to
17 U.S.C. Section 111 for the accounting period covering
January 1, 2002 through June 30, 2002;
(ii) alleged that the ACOM Debtors forfeited rights under the
Compulsory License for accounting periods subsequent to
the First Half of 2002 due to the infringement; and
(iii) sought, inter alia, actual damages equal to the ACOM
Debtors' gross profits from all retransmissions of the
Copyrighted Works from June 26, 2002 to date, and an
injunction prohibiting the ACOM Debtors from further
retransmissions of television broadcast signals containing
any of the Copyrighted Works.
The District Court Action
Also on December 2, 2003, the Copyright Owners commenced an action
in the U.S. District Court for the Southern District of New York
against these ACOM Officers and Directors:
-- Erland E. Kailbourne,
-- Dennis P. Coyle,
-- Pete J. Metros,
-- Leslie J. Gelber,
-- Rod Cornelius,
-- Anthony Kronman,
-- Christopher T. Dunstan,
-- Steven B. Teuscher,
-- Jeffrey Abbas,
-- Michael Brady, and
-- Randall Fisher
The Copyright Owners sought damages for copyright infringement
based on the ACOM Debtors' Public Performance of the Copyrighted
Works without payment of the January to June 2002 Compulsory
License royalty fees and the alleged forfeiture of the protections
of the Compulsory License.
The 93 Claims
On January 8, 2004, the Copyright Owners filed 93 claims against
the ACOM Debtors. The Claims reiterated the allegations and
claims asserted in the Adversary Complaint and sought $500,000,000
in damages.
In response to the Adversary Proceeding, the ACOM Debtors argued
that the Bankruptcy Code prevents their payment of the January to
June 2002 Compulsory License Fee. The ACOM Officers and Directors
also asserted various defenses to the District Court Action,
including that they did not cause the ACOM Debtors to directly
infringe and they cannot be found liable for vicarious
or contributory infringement.
The Settlement Agreement
To resolve their dispute, the ACOM Debtors, the 85 Copyright
Owners and the ACOM Directors and Officer agree that:
(a) The ACOM Debtors will make a $7,671,759 lump sum payment
to the United States Copyright Office, representing the
January to June 2002 Compulsory License Fee, plus interest
at the rate set by the Copyright Office's regulations;
(b) The payment of the Settlement Amount cures any default
under the Compulsory License for failure to pay the
Compulsory License royalty fee for the January through
June 2002 accounting period and all subsequent periods to
the extent the default was based on the failure to pay the
Compulsory License Fee for that accounting period;
(c) After the payment of the Settlement Amount, the Copyright
Owners will dismiss with prejudice the Adversary
Proceeding and the District Court Action, and will
withdraw the 93 Claims;
(d) To the extent that the Compulsory License is deemed to be
an executory contract within the meaning of Section 365 of
the Bankruptcy Code, the payment of the Settlement Amount
will be treated as a cure payment, and the Compulsory
License will be deemed to have been assumed by the ACOM
Debtors;
(e) Upon full payment of the Settlement Amount and the Court's
approval of the Settlement Agreement:
* the Copyright Owners will be deemed to have released
the ACOM Debtors and their Officers and Directors
from all claims asserted in the Adversary Proceeding,
the District Court Action, the 93 Claims, or those
relating to the Compulsory License Fee for the
January through June 2002 period; and
* the ACOM Debtors and their Officers and Directors
will be deemed to have released the Copyright Owners
from all claims asserted or defenses in the Adversary
Proceeding, the District Court Action, the 93 Claims,
or otherwise relating to the Compulsory License Fee
for the January through June 2002 period;
(f) The ACOM Debtors represent that no avoidance actions
pursuant to Chapter 5 of the Bankruptcy Code has been
initiated against the Copyright Office, the Register of
Copyrights, the Library of Congress or the Librarian of
Congress in connection with the Compulsory License fees
for the January through June 2002 period or the Compulsory
License fees for any prior accounting period, and the time
to commence any action has not been tolled and has
expired; and
(g) No avoidance actions are being released pursuant to the
Settlement Agreement.
By entering into the Settlement, Mr. Abrams tells the United
States Bankruptcy Court for the Southern District of New York
that:
-- the ACOM Debtors will be relieved of the burden of:
(i) further litigating the Adversary Proceeding;
(ii) over $1,000,000,000 in potential postpetition
damages; and
(iii) an injunction that could threaten their ability to
reorganize;
-- the ACOM Officers and Directors will be freed from all
liability in the District Court Action and the ACOM Debtors
will, accordingly, be relieved of any potential indemnity
claims from the Officers and Directors;
-- the ACOM Debtors will be freed from the 93 Claims, each
alleging up to $500,000,000 in damages; and
-- the ACOM Debtors and their Officers and Directors will be
released from any future potential claims arising out of
the non-payment of the January to June 2002 Compulsory
License Fees.
Accordingly, the ACOM Debtors ask the Court to approve their
Settlement Agreement with the Copyright Owners.
Headquartered in Coudersport, Pennsylvania, Adelphia
Communications Corporation (OTC: ADELQ) is the fifth-largest cable
television company in the country. Adelphia serves customers in
30 states and Puerto Rico, and offers analog and digital video
services, high-speed Internet access and other advanced services
over its broadband networks. The Company 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.
66; Bankruptcy Creditors' Service, Inc., 215/945-7000)
ADELPHIA COMMS: Millions in Fees Available to UBS and Allen & Co.
-----------------------------------------------------------------
Adelphia Communications Corporation and its debtor-affiliates
delivered copies of their engagement letters with UBS Securities,
LLC, and Allen & Company, LLC, to the United States Bankruptcy
Court in Manhattan, asking the Court to ratify and approve the
retentions.
Adelphia Communications selected UBS Securities, LLC, and Allen &
Company, LLC, to serve as its merger and acquisition financial
advisors with respect to the potential sale of substantially all
of their assets. The ACOM Debtors seek the permission of the
United States Bankruptcy Court for the Southern District of New
York to employ UBS Securities and Allen, nunc pro tunc to July 14,
2004.
UBS Securities is one of the world's leading financial advisory
firms experienced in providing investment banking, mergers and
acquisition and restructuring advisory services to companies
throughout many industries. A United States registered broker
dealer, UBS Securities has 25 offices throughout the country and
over 3,000 employees.
Allen is a privately held investment banking firm that provides a
broad range of corporate advisory services, capital market
capabilities, asset management and principal investing. Allen has
extensive experience advising companies regarding strategic
options including mergers and acquisitions, private and public
funding and other relationships.
Marc Abrams, Esq., at Willkie Farr & Gallagher, in New York, tells
the Court that as financial advisors, UBS Securities and
Allen will:
(a) assist in developing an overall sale process;
(b) assist in developing bidding procedures;
(c) assist in identifying appropriate asset packages to
attract potential acquirors;
(d) assist in identifying and evaluating a list of potential
acquirors;
(e) at the ACOM Debtors' request, contact and meet with
potential acquirors;
(f) assist in the preparation of marketing materials
describing the ACOM Debtors and their business operations
for distribution to potential acquirors;
(g) assist in making management presentations to potential
acquirors;
(h) assist in coordinating due diligence by potential
acquirors, including assist in the preparation and
coordination of a data room;
(i) evaluate the financial aspects of any proposed ACOM Sale
Transaction and assist the ACOM Debtors in their
evaluation of the financial aspects of any proposed ACOM
Sale Transaction with the potential acquirors;
(j) advise the ACOM Debtors as to the financial implications
of the structure and form of any proposed ACOM Sale
Transaction and any plan of reorganization through which
an ACOM Sale Transaction may be implemented;
(k) advise the ACOM Debtors in developing a negotiating
strategy with each potential acquiror and, if appropriate
and requested by the ACOM Debtors, participate in those
negotiations;
(l) make presentations to the ACOM Debtors' Board of Directors
and assist the ACOM Debtors in making their presentations
to the Board with regards to the negotiating strategy;
(m) assist the ACOM Debtors in periodically reporting to the
Court, the Committees, other sale protocol participants
and other parties-in-interest, any potential ACOM Sale
Transaction;
(n) provide appropriate representatives as may be reasonably
requested by the ACOM Debtors to provide testimony on a
timely basis in connection with:
(i) the value of the consideration received by the ACOM
Debtors or their stakeholders in any ACOM Sale
Transaction;
(ii) the nature, details and results of any processes
used by the ACOM Debtors or UBS Securities to
identify and evaluate any ACOM Sale Transaction or
acquiror; and
(iii) other matters as may relate to any potential ACOM
Sale Transaction;
(o) provide reports or opinions as may from time to time be
reasonably requested by the ACOM Debtors and of a type and
nature as would be customary in connection with the
potential ACOM Sale Transaction. The reports will include
analyses or other documents that would customarily support
a fairness determination; and
(p) render other financial advisory and investment banking
services as may from time to time be reasonably requested
by the ACOM Debtors in connection with any potential ACOM
Sale Transaction.
The ACOM Debtors propose different forms of fees as compensation
for the Financial Advisors. These fees will be paid in cash, with
the 65% payable to UBS Securities and the remaining 35% payable to
Allen:
A. Monthly Retainer
A $250,000 monthly retainer fee to be credited against any
other fees payable under the engagement.
B. Qualified Sale Transaction Fee
For an ACOM Sale Transaction by itself or in combination with
other Sale Transactions or Topping Transactions involving a
minimum of 2,440,000 of the ACOM Debtors' attributable basic
subscribers, the Financial Advisors will be entitled to a
Transaction Fee ranging from 0.11% to 0.20% of the transaction
value.
If the ACOM Debtors receive a Bona Fide Offer for all of their
assets and the ACOM Debtors reject the Bona Fide Offer in
favor of a Qualified Sale Transaction with a lower value, the
fees attributable to the Financial Advisors will be calculated
based on a transaction value equal to the transaction value of
the Qualified Sale Transaction, plus the lesser of:
(i) The bid value of the Bona Fide Offer attributable to
each "non-sold" subscriber; and
(ii) The sum of the value of each "non-sold" subscriber.
A "Topping Transaction" is an alternative transaction
involving substantially all the assets included in the Sale
Transaction that would qualify as a Sale Transaction but for
the absence of approval of or recommendation by the Board.
A "Bona Fide Offer" is a fully financed written offer for a
Sale Transaction that is reasonably capable of being
consummated and that has an average sales price per subscriber
of at least 106% of the average value per subscriber included
in the Sale Transaction under the most-recent stand alone plan
valuation prepared for the Board by the ACOM Debtors'
reorganization financial advisor.
C. Partial Sale Transaction Fee
For a Sale Transaction involving by itself or in combination
with other Sale Transactions and Topping Transactions, less
than 2,440,000 of the ACOM Debtors' attributable basic
subscribers, the aggregate Transaction Fee will range from a
$6,000,000 minimum aggregate fee to 0.11% of the transaction
value.
D. Alternative Transaction Fee
If (a) the ACOM Debtors receive a Bona Fide Offer, and (b)
the ACOM Debtors pursue a stand alone plan of reorganization
instead, the Financial Advisors will be entitled to an
aggregate Alternative Transaction Fee equal to 25% of the
applicable Transaction Fee that would have been paid if
the Sale Transaction had been consummated. The Alternative
Transaction Fee will be credited against any other fees
payable under the engagement. If the ACOM Debtors receive the
Bona Fide Offer prior to the termination of the Financial
Advisors' services, the Financial Advisors will be entitled to
an Alternative Transaction Fee on the consummation of a stand-
alone plan of reorganization occurring after termination.
E. Termination Fee
The Financial Advisors will be entitled to a $2,300,000
Termination Fee on the earlier of:
* The date the ACOM Debtors inform the Financial Advisors
in writing of their determination not to continue to
pursue a strategy of implementing a Sale Transaction; and
* The consummation of a plan of reorganization proposed or
supported by the ACOM Debtors that does not implement a
Sale Transaction.
The Termination Fee will be credited against any other fees
payable under the engagement.
F. Topper Fee
The Financial Advisors will be entitled to an aggregate Topper
Fee equal to the Transaction Fee that would be payable if the
Topping Transaction were a Sale Transaction, when:
* A Sale Transaction exists but has not been effected;
* A Topping Transaction is approved by the Court; and
* The Topping Transaction is consummated.
G. Value Generation Fee
The Financial Advisors will be entitled to a Value Generation
Fee equal to 50% of the Transaction Fee that would have been
payable had a Sale Transaction been consummated, if:
* The Financial Advisors have been engaged for at least six
months;
* The ACOM Debtors have lost the exclusive right to
file and solicit acceptances of a plan of reorganization;
* Within six months of the date the ACOM Debtors lost that
exclusive right, the Court approves a transaction, other
than a Topping Transaction, with any acquiror which had
substantial involvement in the bidding process;
* The transaction does not require the approval of the
Board;
* The transaction would qualify as a Sale Transaction but
for the absence of the recommendation by the Board; and
* The transaction is consummated.
H. Bonus Fee
The ACOM Debtors may pay the Financial Advisors an aggregate
bonus fee of up to $5,000,000, in the amount and in the
proportion as determined in the absolute discretion of the
Board, if the ACOM Debtors consummate a Sale Transaction with
a Transaction Value equal to the lesser of:
* $18,000,000,000; and
* 115% of the sum of the value of each subscriber included
in the Sale Transaction.
I. Discretionary Fee
If the ACOM Debtors conclude that the Financial Advisors have
performed exceptionally or have achieved an extraordinary
result, the ACOM Debtors will support the firms' application
to the Court for a supplemental success fee.
Whether or not any Sale Transaction is consummated, the ACOM
Debtors will reimburse UBS Securities of all reasonable expenses
it incurs in performing its services. Reimbursement will include
the reasonable fees, disbursements and other charges of the
Financial Advisors' legal counsel, provided that legal counsel
fees will not exceed $100,000 in the aggregate, without the ACOM
Debtors' consent or the Court's approval.
Tail Fee Provisions
The Financial Advisors will also be entitled to a tail fee. A
Financial Advisor will be entitled to its proportionate share of
the Transaction Fee, Topper Fee or Value Generation Fee if they
resign for "cause," or the ACOM Debtors terminate their services
other than for "cause" and, within 12 months after the resignation
or termination, the ACOM Debtors will enter into:
(1) An agreement or a reorganization plan which is confirmed,
that specifically contemplates a Sale Transaction or Value
Generation Transaction after the confirmation that will
result, within two years of entering into the agreement or
confirmation of the plan, in the consummation of a Sale
Transaction, Topping Transaction or Value Generation
Transaction; or
(2) A Sale Transaction, Topping Transaction or Value
Generation Transaction, in any case with any acquiror,
which prior to the termination of the Financial Advisor's
services, had substantial involvement in the bidding
process, including substantial involvement with the
Financial Advisor.
Indemnification Agreement
The ACOM Debtors agree to indemnify the Financial Advisors from
any losses, claims and damages in accordance with provisions
provided in an Indemnification Agreement, subject to certain
permitted exceptions.
UBS Securities' Disinterestedness
After checking potential conflicts of interest in UBS Securities'
client database, UBS Securities executive director, J. Soren
Reynertson, discloses that the firm has or had relationships with
certain Interested Parties but in matters unrelated to the ACOM
Debtors or their Chapter 11 cases:
-- As at July 8, 2004, UBS Securities' high yield trading desk
held for its account $35,000,000 in net face amount of
certain ACOM and Century Communications Corp. Senior Notes
and less than $1,000,000 worth of ACOM's Series B, E and F
Preferred Stock. However, prior to July 26, 2004, UBS
Securities sold all the Notes and Preferred Stock, and
sales have closed or are scheduled to close in accordance
with customary settlement procedures.
-- As at July 8, 2004, UBS Securities parent, UBS AG, held
a $77,000,000 participation as lender to Century Cable
Holdings, LLC, under the Century Cable Holdings Term Loan B
due June 30, 2009. Prior to July 26, 2004, UBS AG has sold
its participation in the credit facility, and the sale has
closed or scheduled to close.
-- As at July 8, 2004, UBS Securities held $70,000,000 in face
amount of notes issued by certain of the ACOM Debtors in
connection with a series of total return swap agreements
with various counterparties. Pursuant to the Swap
Agreements, UBS Securities purchased Swap Notes and holds
these for the benefit of the counterparties. The Swap
Agreements expire on various dates between 2004 and 2007,
and provide contractual costs if, upon default of a
counterparty, UBS Securities sells the Swap Notes prior to
the expiration of the term of the Swap Agreements. UBS
Securities will waive any discretionary right it possesses
under the Swap Agreements in connection with any
redemption, amendment, waiver, modification, or exchange of
the Swap Notes. UBS Securities is not at risk of loss and,
other than for the LIBOR-based fee, does not benefit by
virtue of holding the Swap Notes under the Swap Agreements.
None of the UBS Securities professionals who manage the
Swap Agreements will be advising the ACOM Debtors.
-- UBS Securities and UBS AG are presently working with a
private equity firm to potentially provide a financing
proposal for a possible outside investment in or
acquisition of all or part of the assets of Century-ML
Cable Venture. None of the UBS Securities professionals
assisting the private equity in connection with Century-ML
will be advising the ACOM Debtors.
-- ABIZ paid UBS Securities $525,000 for financial advisory
services it provided to ABIZ prior to March 27, 2002. ABIZ
requested a refund in August 2003, which refund UBS
Securities did not return. ABIZ and UBS Securities
resolved their conflicts pursuant to a Court-approved
settlement.
-- UBS Securities, in the ordinary course, receives cable
services from certain of the ACOM Debtors.
Mr. Reynertson attests that UBS Securities does not hold or
represent an interest adverse to the ACOM Debtors' estates.
Accordingly, Mr. Reynertson believes that UBS Securities is a
"disinterested person," as defined in Section 101(14) of the
Bankruptcy Code.
Allen's Disinterestedness
Allen's Chief Compliance Officer and Secretary, Rosemary Fanelli,
assures the Court that Allen does not hold or represent an
interest adverse to the estate and is a "disinterested person"
within the meaning of Section 101(14). Allen may have represented
potential parties-in-interest but none of those representations
conflict with the firm's ability to fulfill its obligation to the
ACOM Debtors, Ms. Fanelli adds.
Headquartered in Coudersport, Pennsylvania, Adelphia
Communications Corporation (OTC: ADELQ) is the fifth-largest cable
television company in the country. Adelphia serves customers in
30 states and Puerto Rico, and offers analog and digital video
services, high-speed Internet access and other advanced services
over its broadband networks. The Company 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.
66; Bankruptcy Creditors' Service, Inc., 215/945-7000)
AEMM PROPERTIES: Case Summary & 8 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: A.E.M.M. Properties
aka AEMM Properties
aka AEMM Properties,Inc.
21700 Miles Road
North Randall, Ohio 44128
Bankruptcy Case No.: 04-20142
Chapter 11 Petition Date: August 9, 2004
Court: Northern District of Ohio (Cleveland)
Judge: Arthur I. Harris
Debtor's Counsel: John J. Sheehan, Jr., Esq.
Sheehan & Sheehan
1422 Euclid Avenue
Hanna Building, #1648
Cleveland, OH 44115
Tel: 216-696-8860
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 8 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Cash Processing $250,000
Cuyahoga County Treasurer $242,207
Sylvester Robertson $106,797
City of Cleveland (Water and Sewer) $15,371
A-1 Bonding Don Shury $10,000
GLS Capital-Cuyahoga, Inc. $6,412
The Illuminating Company $2,981
Dominion East Ohio Gas $2,695
AIR CANADA: Union Members to Vote on CCAA Plan on Aug. 17 by Proxy
------------------------------------------------------------------
Air Canada will conduct a meeting of Affected Unsecured Creditors
on August 17, 2004, in Montreal, Quebec to consider and, if deemed
advisable, pass, with or without variation, a resolution to
approve the Plan of Compromise and Arrangement they filed with the
Ontario Superior Court of Justice. The Applicants and Ernst &
Young, Inc., the Court-appointed Monitor, have mailed the
materials to be used at the meeting to all Affected Unsecured
Creditors with Voting Claims.
The Applicants have over 35,000 unionized employees, represented
by five domestic unions, which hold Voting Claims. To provide an
efficient process for the voting of the unionized employees'
Voting Claims, the Applicants ask Mr. Justice Farley to authorize
the domestic unions to vote the Voting Claims of each of the
unions' members, as proxyholder at the Creditors' Meeting.
Non-Union Representatives Join In
The Non-Union and ACPA Retiree Representatives also seek the CCAA
Court's authority to vote the claims, if any, of those they
represent.
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. 44; Bankruptcy Creditors' Service, Inc., 215/945-7000)
AIR CANADA: Attorney General Appeals Claims Procedure Order
-----------------------------------------------------------
The Attorney General of Canada asks the Court of Appeal for
Ontario to review Mr. Justice Farley's decision to dismiss its
request to preclude claims asserted by non-unionized employees
under Part III of the Canadian Labour Code from compromise under
Air Canada's CCAA plan of arrangement and compromise.
The Attorney General asks the Court of Appeal to find that Mr.
Justice Farley erred in ordering that the Part III complaints be
(i) quantified by the Applicants' Claims Officers under an
expedited claims procedure process and (ii) compromised under the
Plan of Arrangement. The Attorney General contends that Mr.
Justice Farley erred in law by disregarding the Parliament's clear
and unequivocal direction in Part III of the Canadian Labour Code
that the prescribed minimum employment standards and the
complainants' remedy against the Applicants' directors are to
prevail "notwithstanding any other law or custom, contract or
judgment."
According to the Attorney General, Mr. Justice Farley also erred
in finding that the substantive minimum employment standards in
Part III and the right to claim against the Applicants' directors
for up to six months of wages, once qualified, are "spent" or
"exhausted" resulting in the complainant having only the right to
make a claim similar to a judgment debt that can be compromised
under the employer company's CCAA plan of arrangement.
Mr. Justice Farley's decision may lead to the absurd result that
Part III complainants receive less from the Applicants and the
Directors under a restructuring than they would receive in a
bankruptcy.
The Attorney General notes that the Companies' Creditors
Arrangement Act does not contain any paramountcy language to
overrule the clear and unequivocal paramountcy language contained
in the Canadian Labour Code. Mr. Justice Farley erred in
effectively creating an exception from the paramountcy of Part III
of the Canada Labour Code for companies under CCAA court
protection, which the Parliament never intended and the clear
wording of the Canadian Labour Code does not permit.
The Attorney General asserts that the appeal will not hinder the
progress of the Applicants' CCAA proceedings. Only two wage
recovery complaints and nine unjust dismissed complaints remain at
issue.
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. 43; Bankruptcy Creditors' Service, Inc., 215/945-7000)
ALLIANT RESOURCES: Moody's Rates Senior Bank Credit Facility B2
---------------------------------------------------------------
Moody's Investors Service has assigned a B2 rating to the
$205 million senior secured bank credit facility of Alliant
Resources Group. The facility consists of a $30 million five-year
revolving credit facility and a $175 million seven-year term loan.
The proceeds from the transaction are expected to be used to
refinance existing indebtedness, pay dividends on preferred and
common stock and for other general corporate purposes. The outlook
for the rating is stable.
Moody's noted that the rating reflects Alliant Resources' position
as the 14th largest domestic US insurance brokerage firm following
its formation through a series of acquisitions beginning in 2000,
and its presence in several, unique customer niches, including
Indian Nations, law firms and public entities. The rating also
considers the company's historical profitability, its healthy
organic growth, as well as its selective and controlled
acquisition strategy. Moody's believes that support exists among
carriers for mid-sized brokerage firms, particularly in the small
to middle market account arena.
Offsetting these positive factors are the company's short
operating history, modest scale and relatively less established
franchise, very high financial leverage and weak interest and cash
flow metrics relative to total debt. The rating agency also noted
that the company's financial flexibility will remain constrained
over the near to medium term by its restrictive bank covenants and
scheduled cash earn out payments, which are likely to arise from
its recent acquisitions. Given its limited operating history,
Moody's believes that retention of key talent (both managerial
level and producers) at key entities may also be a challenge
following the completion of the potential earn out payments.
Currently, Alliant Resources gives its acquired companies a
significant amount of operating autonomy, which reflects its
current strategy. However, difficulties with this strategy may
arise over the medium to long term as the company completes
further acquisitions and the need for integration of people,
processes and systems increases.
The rating outlook is stable and reflects Moody's expectations for
stronger operating earnings, higher levels of fixed charge
coverage, and lower financial leverage. Specifically, the rating
agency expects EBIT margins in the low to mid-twenties, and debt
to EBITDA to moderate to approximately three times over the near
term. Moody's also expects interest coverage, which was 4.3 times
in 2003 and 3.2 times in 2002 to be at least in the one to two
times range. Also contemplated in the current rating is that the
company will generate organic growth in the mid to low single
digit range and continue its disciplined acquisition strategy.
Alliant Resources Group, headquartered in Stamford, Connecticut,
is the 14th largest insurance broker in the United States and
distributes property and casualty insurance, employee health and
welfare and asset management products to small and mid-sized
businesses. In 2003, the company reported $158 million in
revenues and $15 million in net income. Shareholders' equity at
December 31, 2003 was $74 million.
ALLIANT TECHSYSTEMS: S&P Gives Planned $180 Mil. Notes B Rating
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' rating to
Alliant Techsystems Inc.'s proposed $180 million convertible
senior subordinated notes due 2024 that are offered under Rule
144a with registration rights. At the same time, Standard &
Poor's affirmed its other ratings, including the 'BB-' corporate
credit rating, on the propulsion and ammunition supplier. The
outlook is stable.
"The ratings on Edina, Minnesota-based Alliant reflect a somewhat
aggressively leveraged balance sheet and active acquisition
program, but benefit from leading market positions and increases
in defense spending," said Standard & Poor's credit analyst
Christopher DeNicolo. The proceeds from the convertible notes
will be used to fund the acquisition of PSI Group for an
undisclosed amount. PSI is a leading manufacturer of satellite
components and propellant tanks. An additional $20 million of
notes could be sold at the option of the initial purchaser.
Although debt to capital will increase somewhat due to the sale of
the convertible notes, the earnings and cash flow contribution
from PSI and other recent acquisitions, as well as satisfactory
performance in existing operations, is likely to offset higher
debt levels. As a result, other credit protection measures are
expected to remain fairly stable and somewhat above average for
the rating.
Alliant is the leading manufacturer of solid rocket motors for
space launch vehicles and strategic missiles and is second in the
market for tactical missiles. In addition, the company is the
largest provider of small-caliber ammunition to the U.S. military
and has strong positions in tank and other types of ammunition.
Alliant's revenues have more than doubled since 2000 due mostly to
a series of acquisitions, which have also improved product and
program diversity. Recent acquisitions have focused on the high-
priority precision-guided munitions area, resulting in Alliant
being awarded a $223 million development contract for the Navy's
Advanced Anti-Radiation Guided Missile. This contract is
significant as it is the first time Alliant was named the prime
contractor for a major missile system. In addition, Alliant
acquired Mission Research Corporation in March 2004 to bolster its
R&D efforts, especially in the areas of directed energy, electro-
optical and infrared sensors, and aircraft sensor integration. The
company's ammunition business is benefiting from government
funding to replenish stocks used in Iraq and Afghanistan and
increased training. The firm's long-lived programs and healthy
contracted backlogs ($3.6 billion at July 4, 2004) provide a high
level of predictability to revenues and profits.
Alliant also manufactures the Reusable Solid Rocket Motors for the
Space Shuttle program (16% of sales), production of which has been
slowed due to the Columbia accident in February 2003.
Satisfactory profitability and cash flows from existing programs
and the contributions from recent acquisitions are expected to
enable Alliant to maintain an overall credit profile consistent
with current ratings despite somewhat higher leverage.
ALLIANT TECHSYSTEMS: Moody's Rates Planned $180M Notes at B2
------------------------------------------------------------
Moody's Investors Service assigned a B2 rating to Alliant
Techsystems, Inc.'s proposed $180 million convertible senior
subordinated notes, due 2024 ($20 million green shoe provision).
The purpose of the proposed notes is to finance the acquisition of
PSI Group, to reduce Alliant Techsystems 's senior debt and for
general corporate purposes. All existing ratings of the company
have been affirmed as follows:
-- $700 million senior secured credit facilities, consisting of
a $300 million revolving credit facility due 2009 and a $400
million term loan B due 2011, rated Ba2;
-- $400 million guaranteed senior subordinated notes due 2011,
rated B2;
-- $280 million guaranteed convertible senior subordinated
notes, due 2024, rated B2;
-- Senior implied rating of Ba3; and
-- Unsecured issuer rating of B1.
The ratings outlook is stable.
The ratings consider the company's leverage, increased with the
debt-funded acquisitions of PSI and Mission Resources Corporation
(MRC, acquired in March 2004), the high level of goodwill in the
company's asset base, and a sizeable under-funded pension plan.
The ratings also reflect Alliant Techsystems's strong financial
performance and cash flow generation and successful integration of
recent acquisitions amidst a favorable industry environment. The
stable outlook reflects Moody's expectations that the company will
continue to grow its revenues without further decreasing its
operating margins, while repaying debt at a level similar to
historical levels. Alliant Techsystems's outlook or ratings may
be subject to upward revision if the company exhibits successful
integration of its two recent acquisitions with continued growth
in revenue and cash flows leading to acceleration of debt
reduction. Conversely, ratings may be subject to downward
adjustments if the company were to undertake additional levered
acquisitions that would increase leverage beyond its current
levels, particularly if contributions from such purchases appear
to put pressure on operating margins.
Alliant Techsystems will remain moderately levered upon close of
the proposed transaction. Debt will increase by about 15%, from
approximately $1.1 billion at July 4, 2004 to pro forma $1.3
billion. Leverage, however, will increase modestly, from 65% of
total capital to pro forma 68%. Debt-to-EBITDA will increase from
3.2x at July 4, 2004 (3.8x lease-adjusted debt-to-EBITDAR) to pro
forma 3.6x post-transaction (4.2x lease-adjusted). Moody's notes,
however, that the leverage statistics at July 4, 2004 include all
the debt associated with the MRC acquisition in March 2004, but
only one quarter of MRC's EBITDA. If calculated pro-forma for all
LTM acquisitions (including the current transaction), Alliant
Techsystems 's Debt-to-EBITDA will be at about 3.5x.
EBIT-to interest coverage reduces but remains robust at pro forma
4.2x, versus over 6x coverage prior to these transactions.
Moody's notes that the company's interest coverage statistics
currently benefit from long-term interest swap agreements.
Liquidity will remain strong, with approximately $297 million
available under the company's $300 million revolving credit
facility, due 2009. Outside of nominal amortization of the $400
million term loan facility, no debt matures until 2009.
Alliant Techsystems has exhibited strong operating performance
since their acquisition of Thiokol in 2001, owing to a strong
defense environment supporting its ammunition and precision
systems segments. The aerospace segment has experienced
relatively stable revenues and margins, with little adverse
affects from interruption in launches related to NASA's shuttle
program (16% of FY 2004 sales). Total revenue has more then
doubled, from $1.1 billion in FY 2001 to about $2.5 billion pro-
forma the latest transaction. However, Moody's notes that in the
same period company's margins have been decreasing slowly from
12.5% to below 11%. Continuation of this trend, in Moody's
opinion, would diminish company's ability to repay acquisition
related debt.
Free cash flow (cash flow from operations less capital
expenditures) has grown significantly since 2001, peaking at about
$142 million in FY 2003. However, due to a substantially under-
funded pension obligation, Alliant Techsystems is required to make
significant contributions over the next several years, depressing
projected free cash flows. The company has contributed about $37
million in FY 2004, and expects to pay $40 million in 2005.
However, due to Alliant Techsystems 's status as a contractor on a
large number of cost-plus DoD projects, a significant portion of
the company's pension contribution is recoverable through these
contracts, mitigating the effect of planned pension contribution
on cash flows. FY 2004 free cash flow of $121 million is about
15% below FY 2003 levels, despite increases in both revenue and
EBITDA over the same period. Moreover, Moody's notes that in
August 2004 the company's board of directors authorized the
repurchase of up to 2 million shares (closing price of $58 on
August 9, 2004). Moody's notes that a restriction in the bank
agreement allows the company to purchase an additional $50 million
of shares in FY 2005. This amount carries forward if not used and
increases by at least $25 million per year. Still, free cash flow
generation in both the near and long term should be adequate to
provide for significant debt repayment and improvement of credit
fundamentals.
As a tuck-in acquisition, Moody's perceives PSI as complementary
to Alliant Techsystems's business. With revenue of about $100
million per year, PSI will represent below 5% of Alliant
Techsystems 's sales. The company indicates that PSI will be
accretive to Alliant Techsystems's earnings. The acquisition will
strengthen Alliant Techsystems's space based capabilities by
increasing the company's content on missions. PSI Group, a
satellite components and propellant tank manufacturer, provides
mission critical components for the emerging needs of the US
military, including next generation global positioning, navigation
and communication satellites.
The B2 rating assigned to the new convertible senior subordinated
notes, two notches below the senior implied rating and the same as
the existing two classes of senior subordinated notes, reflects
the substantial amount of secured debt ($700 million in committed
bank facilities) that is ahead of these securities in claim, as
well as subordination to all current and future potential senior
unsecured obligations of the company. Also, on a balance sheet
with about $2.8 billion in total assets (July 2004), over $1
billion comprises goodwill, with fixed assets representing only
about $457 million. In Moody's opinion, this provides weaker
asset coverage for debt below the senior secured facilities in
claim, increasing the likelihood of loss of principal to holders
of these notes under a distressed or default scenario.
Headquartered in Edina, Minnesota, Alliant Techsystems, a holding
company, through its subsidiaries is the leading supplier of
propulsion, composite structures, munitions, precision
capabilities, and civil and sporting ammunition.
ALPHARMA INC: S&P Junks Subordinated Debt & Says Outlook Negative
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
and senior secured debt rating on generic drug company Alpharma
Inc. to 'B' from 'B+'. Standard & Poor's also lowered its senior
unsecured debt rating on Alpharma to 'B-' from 'B' and its
subordinated debt rating to 'CCC+' from 'B-'. The outlook remains
negative.
"The rating actions reflect the Fort Lee, N.J.-based Alpharma's
continued poor operating performance in its key U.S. generics
business, which has been exacerbated by ongoing FDA manufacturing
compliance issues and the company's reduced--but still
significant--debt load," said Standard & Poor's credit analyst
Arthur Wong. "These negative factors are only partially offset by
Alpharma's well-established positions in the human pharmaceutical
and animal health businesses."
Standard & Poor's also affirmed its 'B+' senior secured debt
rating on a $436 million senior secured credit facility issued by
Alpharma's wholly owned subsidiary, Alpharma Operating Corp. This
senior secured facility has been assigned a recovery rating of
'1', which indicates Standard & Poor's high expectations for a
full recovery of principal in the event of a default.
Alpharma Inc. draws roughly two-thirds of its sales from the human
generic drug business. It also holds leading positions in the
topical and liquids generic drug market, and following its late-
2001 acquisition of the generic business from F.H. Faulding & Co.
for $660 million, it has established itself as a major player in
the highly competitive U.S. solid dose generic drug market.
However, the company faces several challenges in the human generic
drug business. In the U.S., which accounts for 40% of total
revenues, sales continue to decline because the company has not
launched new products. The FDA has been reluctant to approve new
drugs until Alpharma resolves ongoing manufacturing noncompliance
issues at its Baltimore liquid drug manufacturing facility and at
its solid dose facility in Elizabeth, New Jersey. While the
company has made considerable progress in resolving these issues,
the number of product introductions will not meaningfully increase
before 2006. The noncompliance issues have also hindered
production capacity and inflated Alpharma's cost basis for its
products. In the meantime, more efficient rival generic drug
makers are seizing market share from the company.
ANALYTICAL SURVEYS: Hires Pannell Kerr Forster as New Auditors
--------------------------------------------------------------
Analytical Surveys, Inc. (ASI) (Nasdaq: ANLT), a leading provider
of utility-industry data collection, creation and management
services for the geographic information systems (GIS) markets, has
changed its independent auditor.
On August 7, 2004, the Audit Committee of the Board of Directors
authorized the engagement of Pannell Kerr Forster of Texas, P.C.,
as the Company's new independent accountants for the fiscal year
ending September 30, 2004.
During the two most recent fiscal years ended September 30, 2003
and 2002 and the subsequent interim period through August 6, 2004,
PKF has not been engaged as independent accountants to audit the
financial statements of the Company, nor has it been consulted
regarding the application of accounting principles to any
specified transaction, either completed or proposed, or the type
of audit opinion that might be rendered on the Company's financial
statements, or any matter that was the subject of a disagreement
or reportable event.
About ASI
Analytical Surveys Inc. (ASI) provides technology-enabled
solutions and expert services for geospatial data management,
including data capture and conversion, planning, implementation,
distribution strategies and maintenance services. Through its
affiliates, ASI has played a leading role in the geospatial
industry for more than 40 years. The Company is dedicated to
providing utilities and government with responsive, proactive
solutions that maximize the value of information and technology
assets. ASI is headquartered in San Antonio, Texas and maintains
operations in Waukesha, Wisconsin. For more information, visit
http://www.anlt.com/
As reported in the Troubled Company Reporter's July 13, 2004
edition, Analytical Surveys, Inc. (ASI) (Nasdaq: ANLT), a leading
provider of utility-industry data collection, creation and
management services for the geographic information systems (GIS)
markets, cured an event of default announced on June 1, 2004.
The Company's $1.7 million Senior Secured Convertible Note has
been restructured by extending the maturity of the Note has been
extended until January 2, 2006. The Note is convertible into
Common Stock pursuant to the terms of the previous Note or is
payable in cash upon maturity at the option of the holder. The
restructuring eliminated approximately $134,000 of accrued
interest, and all penalties that had been incurred under the event
of default. The holder of the Note relinquished its rights under
a Warrant that was issued on April 2, 2002, pursuant to the
issuance of the original Note and which provided the holder of the
Note the right to purchase 500,000 shares of Common Stock. This
Warrant was cancelled in the restructuring.
AT&T CORP: S&P Lowers Ratings on Various Synthetic Transactions
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on various
AT&T Corporation-related synthetic transactions and removed them
from CreditWatch, where they were placed with negative
implications May 4, 2004. Additionally, the ratings on
SATURNS Trust No. 2004-7 are lowered to ' BB+' from 'BBB'.
The rating actions follow the August 3, 2004 lowering of AT&T
Corporation's long-term corporate credit and senior unsecured debt
ratings and subsequent removal from CreditWatch, where they were
placed with negative implications May 4, 2004.
With the exception of SATURNS Trust No. 2001-8, which is a swap-
dependent synthetic transaction, each of the remaining synthetics
affected by the AT&T Corporation downgrade is swap-independent.
Each of the transactions is weak-linked to the underlying
securities, AT&T Corporation's senior unsecured debt. The rating
actions reflect the credit quality of the underlying securities
issued by AT&T Corporation.
Details of S&P's August 3 AT&T related ratings can be read at the
Troubled Company Reporter's August 5, 2004 edition.
Ratings Lowered and Removed from Watch Negative:
SATURNS Trust No. 2001-8 $44 million callable units
series 2001-8
Rating
To From
-- ----
BB+ BBB/Watch Neg
Corporate Backed Trust Certificates
AT&T Note-Backed Series 2001-33 Trust
$33 million corporate-backed trust certs series 2001-33
Rating
Class To From
----- -- ----
A-1 BB+ BBB/Watch Neg
Trust Certificates (TRUCs) Series 2001-1
$25 million corporate bond backed certs series 2001-1
Rating
Class To From
----- -- ----
A-1 BB+ BBB/Watch Neg
PreferredPLUS Trust Series ATT-1
$35 million trust certs series ATT-1
Rating
Class To From
----- -- ----
certs BB+ BBB/Watch Neg
Corporate Backed Trust Certificates Series 2001-21 Trust
$28 million corporate backed trust certs series 2001-21
Rating
Class To From
----- -- ----
A-1 BB+ BBB/Watch Neg
A-2 BB+ BBB/Watch Neg
SATURNS Trust No. 2004-3
$45 million adjustable rate callable unit series 2004-3
Rating
Class To From
----- -- ----
A BB+ BBB/Watch Neg
B BB+ BBB/Watch Neg
STRATS Trust For AT&T Corp Securities Series 2004-4
$25 million certificates series 2004-4
Rating
Class To From
----- -- ----
A-1 BB+ BBB/Watch Neg
A-2 BB+ BBB/Watch Neg
Corporate Backed Trust Certificates
AT&T Note Backed Series 2004-2
$50 million certificates series 2004-2
Rating
Class To From
----- -- ----
A-1 BB+ BBB/Watch Neg
A-2 BB+ BBB/Watch Neg
SATURNS Trust No. 2003-17
$30 million callable units series 2003-17
Rating
Class To From
----- -- ----
A BB+ BBB/Watch Neg
B BB+ BBB/Watch Neg
Corporate Backed Trust Certificates
AT&T Note Backed Series 2003-18
$40 million certificates series 2003-18
Rating
Class To From
----- -- ----
A-1 BB+ BBB/Watch Neg
A-2 BB+ BBB/Watch Neg
Structured Asset Trust Unit Repackagings (SATURNS)
AT&T Corp Debenture Backed Series 2003-14
$35 million callable units series 2003-14
Rating
Class To From
----- -- ----
A Units BB+ BBB/Watch Neg
B Units BB+ BBB/Watch Neg
Rating Lowered:
SATURNS Trust No. 2004-7
$26 million callable units series 2004-7
Rating
Class To From
----- -- ----
A BB+ BBB
B BB+ BBB
ATNG INC: Demands Immediate Delisting from Berlin Stock Exchange
----------------------------------------------------------------
ATNG Inc. (OTCBB:ATNG) is again demanding an immediate delisting
from the Berlin-Bremen Stock Exchange in an attempt to prevent
trading practices that are banned in the United States. ATNG
recently learned that it was one of hundreds of companies added to
the Berlin-Bremen Stock Exchange without its knowledge, consent or
authorization. ATNG's management has instructed its counsel to
request the immediate removal of ATNG's common stock from this
exchange. Requests by ATNG's counsel prior to this date have been
ignored.
According to Robert Simpson, CEO of ATNG Inc., "We are taking
legal action against these illicit acts and as part of that legal
action we are engaging a German law firm. Additionally, we have no
interest in trading on any exchange on which we have not sought a
listing."
About ATNG
ATNG has several strategic alliances of profitable or soon to be
profitable companies in the works. The ATNG web site provides a
communication link to those interested in our progress. Web site:
http://www.atnginfo.com/Contact information: ir@atnginfo.com
* * *
As reported in the Troubled Company Reporter's May 17, 2004
edition, ATNG Inc. (OTCBB:ATNG) announced that on May 12, 2004,
the Bankruptcy Court approved the settlements reached between ATNG
Inc. and the Petitioning Creditors and accordingly dismissed the
entire bankruptcy proceeding which had been brought against ATNG.
According to Robert Simpson, Chairman-CEO of ATNG Inc., "The judge
signed the order dismissing the Involuntary Petition which was
filed against ATNG on July 15, 2003. The signing effectively ends
all known legal action against ATNG, including a federal court
case in Tennessee and a state court case in California. The
parties to those pending lawsuits in California and Tennessee will
seek dismissal of those actions in their respective courts."
ATNG is now resuming acquisition activities. There are three
acquisitions planned for this quarter.
BALLY TOTAL: Expects Postponed 2nd Quarter Release to Show a Loss
-----------------------------------------------------------------
Bally Total Fitness Holding Corporation (NYSE: BFT) is postponing
the release of its financial results for the second quarter ended
June 30, 2004, and the filing of its Form 10-Q quarterly report
with the Securities and Exchange Commission. The delay, Bally
says is "due to an examination of certain accounting issues."
As previously announced, KPMG LLP succeeded Ernst & Young LLP as
the Company's independent auditor on May 18, 2004, and is
conducting its initial quarterly review of the Company's financial
statements. The Company also previously announced it is being
investigated by the Securities and Exchange Commission Division of
Enforcement and is fully cooperating with this investigation.
At this time, the Company expects to restate prior periods to
record a liability that has accumulated to approximately $5
million as of June 30, 2004 related to repayment obligations due
in 2015 or later on membership contracts sold by a subsidiary
before Bally acquired it in the late 1980s. The effect on prior
income statements is the addition of non-cash annual interest
charges of between $231,000 and $472,000 in each of the years 1996
through 2003. Among other accounting issues being examined, the
Company is also considering changing the balance sheet
presentation of its installment contract receivables which would
also change an equal amount of deferred revenue so as not to
report these amounts on the balance sheet. It is possible that
this or one or more of the accounting issues being examined by the
Company may require further restatement of prior period financial
statements.
The Company's management team is working with its independent
auditors under the oversight of its Audit Committee to examine and
resolve these accounting issues before filing further financial
statements.
Paul Toback, Chairman, President, and CEO of Bally Total Fitness
said, "We are working to resolve these matters as quickly as
possible and we remain intensely focused on executing our business
strategy of growing revenue and lowering costs."
As of June 30, 2004, the Company had $65.0 million available on
its $100 million revolving credit facility ($42.3 million at
July 31, 2004). The Company has obtained the consent of its
revolving credit lenders allowing until September 30, 2004,
subject to certain conditions, to file its Form 10-Q for the
second quarter, without the delayed delivery constituting a
default under its revolving credit facility. The delayed filing
alone does not constitute an event of default under the indentures
for its notes without notice and expiration of cure periods.
However, no assurance can be given that an event of default will
not occur in the future.
Selected Operating Data
The following operating data has not been reviewed by KPMG LLP and
therefore is subject to change, which changes may be material
individually or in the aggregate.
The Company expects to report a net loss for the second quarter
2004.
Gross committed membership fees originated during the three months
ended June 30, 2004 increased 15% compared to the prior year
quarter, with a 9% increase at same clubs. The number of new
members joining increased 22% during the three months ended June
30, 2004 compared to the prior year quarter, with a 16% increase
at same clubs. The average committed duration of memberships
originated during the three months ended June 30, 2004 decreased
5% compared to the prior year quarter due to the continued growth
of pay-as-you-go membership programs. Gross committed monthly
membership fees per member originated during the three months
ended June 30, 2004 were unchanged from the prior year period.
Gross committed membership fees originated in July 2004 were also
unchanged from July 2003.
Gross committed membership fees is a measure which includes the
total potential future value of all initial membership fee
revenue, dues revenue, earned finance charges and membership-
related products and services revenue from new membership sales
originations in a period. It is measured on a gross basis before
consideration of any uncollectible amounts. We track gross
committed membership revenue as an indicator of the success of our
current sales activities and believe it to be a useful measure to
allow investors to understand current trends in membership sales.
About Bally Total Fitness
Bally Total Fitness is the largest and only nationwide commercial
operator of fitness centers, with approximately four million
members and 440 facilities located in 29 states, Mexico, Canada,
Asia and the Caribbean under the Bally Total Fitness(R), Crunch
Fitness(SM), Gorilla Sports(SM), Pinnacle Fitness(R), Bally Sports
Clubs(R) and Sports Clubs of Canada(R) brands. With an estimated
150 million annual visits to its clubs, Bally offers a unique
platform for distribution of a wide range of products and services
targeted to active, fitness-conscious adult consumers.
* * *
As reported in the Troubled Company Reporter's May 3, 2004
edition, Fitch lowered three of Bally Total Fitness
Holding Corp.'s ratings:
--Secured bank credit facility to 'B+' from 'BB-';
--Senior notes to 'B-' from 'B';
--Senior subordinated notes to 'CCC' from 'B-'.
The downgrade reflects Bally's ongoing weak operating performance
and recent write-down of its receivables. Further, on March 30
Bally announced that its auditors resigned and the company just
disclosed that the SEC is investigating Bally's recent change in
accounting for its memberships. Simultaneously, Fitch withdrew
all ratings and will no longer provide analytical coverage of this
issuer.
BAYTEX ENERGY: Incurs $15.5 Million Half-Year Net Loss
------------------------------------------------------
Baytex Energy Trust (TSX-BTE.UN) of Calgary, Alberta reported its
operating and financial results for the six months ended
June 30, 2004. The Trust commenced operations on September 2,
2003 as a result of the reorganization of Baytex Energy Ltd. As
the Trust is considered the successor organization to Baytex
Energy Ltd. for reporting purposes, comparative information is
provided for the three months and six months ended June 30, 2003.
Pursuant to the Plan of Arrangement effecting the reorganization,
certain assets were not transferred to the Trust. Accordingly,
results of the corresponding periods in 2003 and 2004 are not
entirely comparable.
The second quarter is traditionally the least active quarter in
the year for the Trust's drilling operations due to field
conditions during spring breakup. Weather conditions so far this
spring and summer have been less than favourable in the Trust's
major operating areas, resulting in a modest capital program of
only $16.0 million in the second quarter. During this period,
Baytex participated in the drilling of 25 (25.0 net) wells,
resulting in 23 (23.0 net) oil wells, one (1.0 net) gas well and
one (1.0 net) dry hole. The drilling program's overall success
rate was 96 percent. In addition to this program, eight wells were
drilled by other operators through farm-in arrangements on Baytex
lands, resulting in six cased potential oil and gas wells and two
dry holes. The Trust has retained various working or royalty
interests in these wells.
According to industry drilling statistics, Baytex Energy Trust
ranked as the 20th most active operator in the Province of Alberta
and 15th in the Province of Saskatchewan during the first six
months of 2004. These high rankings, which are not normally
associated with the operations of oil and gas income trusts,
demonstrate the strategy of Baytex in maintaining its production
and asset base through internally generated opportunities.
Production for the second quarter of 2004 averaged 34,411 boe/d
compared to 34,709 boe/d for the first quarter of 2004, despite
the expected production interruption caused by road bans during
spring breakup. This production level is also superior to that of
the second quarter of 2003 as the 34,574 boe/d reported for the
same period last year included approximately 1,500 boe/d of
production that were transferred to Crew Energy Inc. pursuant to
the Plan of Arrangement. This operating performance is achieved
entirely through internal property development as Baytex has not
completed any acquisitions since the fourth quarter of 2002.
Financial Review
WTI oil averaged US$38.32 per barrel in the second quarter of
2004, the highest quarterly average on record. The Trust incurred
$16.4 million of losses on derivative instruments during the
quarter primarily from the 15,000 bbl/d of WTI collar contracts,
which prices are capped at the average of US$29.75. These
contracts are due to expire on December 31, 2004.
Baytex employs a comprehensive hedging program to safeguard cash
flow in order to sustain its cash distributions and capital
reinvestments. World geo-political events have kept oil prices at
unprecedented levels, inciting varying opinions on the future of
oil prices. The Trust has taken advantage of recent market
conditions and entered into several WTI costless collar contracts
for calendar 2005. These contracts are for an aggregate volume of
8,000 bbl/d, have a floor price of US$35.00 and an average cap
price of US$42.55, thus providing significant downside protection
to 2005 cash flow while allowing for participation in the benefits
of continued high oil prices.
Wellhead prices for heavy oil were negatively affected by heavy
oil differentials in the second quarter of 2004. Lloyd blend crude
differentials averaged 32% during this period, compared to the 28%
long-term average for the comparable periods. Baytex is
substantially sheltered from these volatilities as the fixed
differential crude oil supply agreement with Frontier Oil
Corporation covers approximately three-quarters of the Trust's
heavy oil production volume after royalties. Costs of blending
diluents were also very high during this second quarter, with
condensate trading at significant premiums over par crude.
However, seasonal factors are expected to improve both
differentials and diluent costs during the third quarter and early
part of the fourth quarter.
Operating expenses averaged $6.78 per boe for the second quarter
of 2004, representing the fifth consecutive quarter where these
expenses have been maintained at the same level amidst the
inflationary environment in the oil and gas sector fueled by high
commodity prices.
General and administrative expenses averaged $1.14 per boe in the
first half of 2004. Baytex's overhead cost structure is ranked in
the best quartile in the oil and gas income trust sector as there
were no expenses capitalized and no external management fees paid.
Cash distributions in the first half of 2004 amounted to
$55.6 million, representing 74% of cash flow from operations.
Based on current operating and market conditions, Baytex is
comfortable in maintaining its monthly distribution at $0.15 per
unit for the balance of 2004, considering that current cash flow
is significantly impaired by the crude oil hedging contracts which
are due to expire at the end of this year. The Trust incurred a
net loss of $15.5 million during the first six months of 2004,
entirely due to unrealized losses on derivative contracts and
foreign currency translation totalling $35.1 million. The
underlying new accounting policies have no impact on cash flow and
could cause significant fluctuations in net income due to
volatilities in commodity prices and foreign exchange rates.
Outlook
With $60 million of the $105 million capital budget left to be
spent in the second half of this year, Baytex will continue to be
disciplined in managing its operational and financial affairs.
The Trust will maintain its approach in evaluating acquisition
opportunities to ensure that only beneficial and accretive
transactions are considered. In addition to its cash
distributions, Baytex trust units have appreciated approximately
15% in value so far in 2004, compared to a 2% increase in the
S&P/TSX Energy Trust Index. Management and employees at Baytex
will continue to focus on delivering superior return to its
unitholders.
Management's Discussion and Analysis
Baytex Energy Trust (the "Trust) as established on September 2,
2003, under a Plan of Arrangement involving the Trust, Baytex
Energy, Ltd. and Crew Energy, Inc. The Trust is an open-ended
investment trust created pursuant to a trust indenture.
Subsequent to the Plan of Arrangement, the Company is a subsidiary
of the Trust.
Prior to the Plan of Arrangement, the consolidated financial
statements included the accounts of the Company and its
subsidiaries and partnership. After giving effect to the Plan of
Arrangement, the consolidated financial statements have been
prepared on a continuity of interests basis which recognizes the
Trust as the successor to the Company.
Management's discussion and analysis -- MD&A, dated August 9,
2004, should be read in conjunction with the unaudited interim
consolidated financial statements for the three months and the six
months ended June 30, 2004 and the audited consolidated financial
statements and MD&A for the year ended December 31, 2003. Barrel
of oil equivalent ("boe") amounts have been calculated using a
conversion rate of six thousand cubic feet of natural gas to one
barrel of oil.
Cash flow from operations is not a measure based on generally
accepted accounting principles, but is a financial term commonly
used in the oil and gas industry. It represents cash generated
from operating activities before changes in non-cash working
capital, site restoration and reclamation expenditures, other
assets and deferred credits. The Trust's cash flow from
operations may not be comparable to other companies. The Trust
considers it a key measure as it demonstrates the ability of the
Trust to generate the cash flow necessary to fund future
distributions and capital investments.
Revenue
Petroleum and natural gas sales increased 16% to $104.5 million
for the second quarter of 2004 from $90.0 million for the second
quarter of 2003. For the first six months, petroleum and natural
gas sales decreased by 7% to $200.7 million in 2004 from
$214.8 million a year earlier.
For the per unit calculations, heavy oil sales for the three
months ended June 30, 2004 were 266 barrels per day higher than
the production for the period due to inventory in transit under
the Frontier supply agreement. The corresponding number for the
six months ended June 30, 2004 was 24 barrels per day.
Revenue from light oil for the second quarter of 2004 increased
12% from the same period a year ago due to a 10% decrease in
production and a 24% increase in wellhead prices. Revenue from
heavy oil increased 23% due to an increase in wellhead prices.
Revenue from natural gas increased 6% as the 7% increase in
wellhead prices was offset by a 1% decrease in production.
For the first six months of 2004, light oil revenue decreased 17%
from the same period last year due to a 6% increase in wellhead
prices and a 22% decrease in production. Revenue from heavy oil
increased 2% due to increase in wellhead prices. Revenue from
natural gas decreased 16% as wellhead prices decreased 3% and
production decreased 14% compared to the first half of 2003.
Royalties
Total royalties remained the same at $16.2 million for the second
quarter of 2004. Total royalties for the second quarter of 2004
were 15.5% of sales compared to 18.0% of sales for the same period
in 2003. For the second quarter of 2004, royalties were 13.4% of
sales for light oil, 11.8% for heavy oil and 22.8% for natural
gas. These rates compared to 18.9%, 13.7% and 24.3%, respectively,
for the same period last year.
For the six months ended June 30, 2004, royalties decreased 18% to
$31.5 million from $38.4 million for the same period last year.
Total royalties for the first half of 2004 were 15.7% of sales,
down from 17.9% of sales for the corresponding period a year ago
due to an increased percentage of total production from heavy oil.
For the first six months of 2004, royalties were 13.6% of sales
for light oil, 12.3% for heavy oil and 22.2% for natural gas.
These rates compared to 18.6%, 13.9% and 23.4%, respectively, for
the same period in 2003.
Operating Expenses
Operating expenses for the second quarter of 2004 increased 2% to
$21.4 million from $21.0 million in the corresponding quarter last
year. Operating expenses were $6.78 per boe for the second quarter
of 2004 compared to $6.77 per boe for the second quarter of 2003.
For the second quarter of 2004, operating expenses were $9.97 per
barrel of light oil, $7.28 per barrel of heavy oil and $0.82 per
mcf of natural gas. The operating expenses for the same period a
year ago were $8.91, $7.65 and $0.71, respectively.
Operating expenses for the first half of 2004 increased 5% to
$42.7 million from $40.7 million for the first half of 2003.
Operating expenses were $6.78 per boe for the first six months of
2004 compared to $6.33 per boe for the corresponding period of the
prior year. For the first half of 2004, operating expenses were
$9.14 per barrel of light oil, $7.39 per barrel of heavy oil and
$0.79 per mcf of natural gas versus $6.32, $7.44 and $0.68,
respectively, for the same period a year earlier.
Transportation Expenses
Transportation expenses for the second quarter of 2004 were $4.7
million compared to $4.3 million for the second quarter of 2003.
These expenses were $1.48 per boe for the second quarter of 2004
compared to $1.40 for the same period in 2003. Transportation
expenses were $1.62 per barrel of oil and $0.19 per mcf of natural
gas. The corresponding amounts for 2003 were $1.56 and $0.16,
respectively.
Transportation expenses for the six months ended June 30, 2004
were $9.6 million compared to $8.5 million for the first six
months of 2003. These expenses were $1.52 per boe in 2004 compared
to $1.32 in 2003. Transportation expenses were $1.68 per barrel of
oil and $0.19 per mcf of natural gas in the 2004 period, and $1.50
per barrel of oil and $0.15 per mcf of natural gas in the 2003
period.
General and Administrative Expenses
General and administrative expenses for the second quarter of 2004
were $3.9 million compared to $1.8 million in 2003. On a per sales
unit basis, these expenses were $1.22 per boe for the second
quarter of 2004 compared to $0.57 per boe for 2003. In accordance
with our full cost accounting policy, $1.8 million of expenses
were capitalized in the second quarter of 2003 compared to no
capitalized expenses for the second quarter of 2004. The amount of
capitalized expenses has been reduced due to lower exploration
activity since the effective date of the Plan of Arrangement.
General and administrative expenses for the first half of 2004
were $7.2 million, compared to $3.4 million for the prior year.
On a per sales unit basis, these expenses were $1.14 per boe in
2004 and $0.52 per boe in 2003. In accordance with our full cost
accounting policy, $3.4 million of expenses were capitalized in
the first six months of 2003, while no expenses have been
capitalized in 2004.
Unit-based Compensation Expense
Compensation expense was $1.7 million for the second quarter of
2004 compared to $0.2 million for the second quarter of 2003.
For the six months ended June 30, 2004, compensation expense was
$3.0 million compared to $0.5 million for the same period in
2003. The 2004 compensation expense was based on the amount that
the market price of the trust unit exceeds the exercise price for
trust unit rights issued as at the date of the consolidated
financial statements. The compensation expense for 2003 was based
on the fair value of the stock options outstanding prior to the
Plan of Arrangement.
Interest Expenses
Interest expenses on long-term debt decreased to $5.2 million for
the second quarter of 2004 from $5.3 million for the same quarter
last year.
For the first six months of 2004, interest expenses on long-term
debt was $9.0 million compared to $11.8 million for the same
period last year. The decrease is due to the redemption of the
Company's senior secured notes in May 2003 and the stronger
Canadian currency as interest on the long-term notes is payable in
U.S. dollars.
Foreign Exchange
The foreign exchange loss in the second quarter of 2004 was $5.4
million compared to a gain of $17.4 million in the prior year.
The 2004 loss is based on the translation of the Company's U.S.
dollar denominated long-term debt at 0.7460 at June 30, 2004
compared to 0.7631 at March 31, 2004. The 2003 gain is based on
translation at 0.7378 at June 30, 2003 compared to 0.6806 at March
31, 2003.
The foreign exchange loss for the first six months of 2004 was
$8.6 million compared to a gain of $40.2 million in the prior
year. The 2004 loss is based on the translation of the Company's
U.S. dollar denominated long-term debt at 0.7460 at June 30, 2004
compared to 0.7737 at December 31, 2003. The 2003 gain is based on
translation at 0.7378 at June 30, 2003 compared to 0.6331 at
December 31, 2002.
Depletion, Depreciation and Accretion
The provision for depletion, depreciation and accretion increased
to $38.6 million for the second quarter of 2004 compared to $25.1
million for the same quarter a year ago. On a sales-unit basis,
the provision for the current quarter was $12.24 per boe compared
to $8.09 per boe for the same quarter in 2003 due to the revisions
in proved reserves under the new standards of disclosure for oil
and gas activities, National Instrument -- NI -- 51-101.
Depletion, depreciation and accretion increased to $78.6 million
for the first half of 2004 compared to $51.8 million for the same
period last year. On a sales-unit basis, the provision for the
current period was $12.49 per boe compared to $8.04 per boe for
the same period a year earlier.
Income Taxes
Current tax expenses were $2.6 million for the second quarter of
2004 compared to $1.9 million for the same quarter a year ago. The
current tax expense is comprised of $1.8 million of Saskatchewan
Capital Tax and $0.8 million of Large Corporation Tax compared to
$1.5 million and $0.4 million, respectively, in the corresponding
period in 2003.
Current tax expenses were $4.8 million for the first half of 2004
compared to $4.5 million for the same period last year. The
current tax expense is comprised of $3.2 million of Saskatchewan
Capital Tax and $1.6 million of Large Corporation Tax compared to
$3.7 million and $0.8 million, respectively in 2003. Overall
current tax expense has increased primarily due to increased Large
Corporation Tax brought about by the new capital structure present
under the Trust.
Net Income (Loss)
Net loss for the second quarter of 2004 of $11.2 million was the
result of increased charges for depletion, depreciation and
accretion, and the losses on financial derivatives and foreign
currency translation. Net income for the second quarter of 2003
was impacted by the foreign exchange gain for the period.
Net loss for the first six months of 2004 was $15.5 million and
was impacted by the same reasons noted in the second quarter
comparison.
Liquidity and Capital Resources
At June 30, 2004, total net debt (including working capital) was
$280.0 million compared to $223.1 million at June 30, 2003 and
$213.6 million at December 31, 2003. The $280.0 million net debt
included $31.9 million of notional liabilities based on the mark-
to-market valuations of derivative contracts. At the end of June
2004, there were no amounts outstanding under the Company's bank
credit facilities, which totalled $165.0 million.
Capital Expenditures
Exploration and development expenditures decreased to
$45.2 million for the first half of 2004 compared to $114.7
million for the same period last year.
BLOCKBUSTER: Fitch Expects to Rate Unsecured Sub. Notes at B+
-------------------------------------------------------------
Fitch Ratings expects to assign a 'B+' rating to Blockbuster
Inc.'s proposed $300 million unsecured subordinated notes due
2012. Fitch's also affirms the 'BB' rating on Blockbuster's
senior secured bank facility. The Rating Outlook is Stable.
As a result of this offering the senior secured bank facility will
be reduced to $1.15 billion from $1.45 billion. The subordinated
notes and the bank facility will be utilized to finance
Blockbuster's $905 million special cash dividend to holders of its
class A and B shares prior to completion of its proposed split off
from Viacom.
The subordinated debt rating reflects the junior and unsecured
position of the notes. The notes will be subordinated in right of
payment to all existing and future senior indebtedness of
Blockbuster. The notes are also guaranteed on a senior
subordinated basis by each of the company's subsidiary guarantors.
Blockbuster benefits from a leading market position in the highly
competitive and fragmented and mature home entertainment industry,
its strong global brand name recognition, as well as its high cash
flow generating ability. Blockbuster holds 39% market share in
the movie rental industry, while its primary competitors hold
significantly less share. Of concern is the $1.1 billion of debt
that the company will incur at the time of split off, which will
immediately weaken credit protection measures. Also of concern is
the long-term risk of competing technologies as well as potential
unforeseen technological advances that would lead to easier access
of home video. Nevertheless, the strategic importance of the
video rental market to the movie studios, which generates over 60%
their revenues, make the development of other distribution
channels more difficult.
During the first six months of 2004, Blockbuster's revenues
remained flat at $2.9 billion compared to the prior period last
year. Operating earnings decreased to $201 million from $254
million as a result of higher advertising expense as well as
continued spending on the company's new initiatives. Worldwide
same store sales growth remained weak at negative 5.1% due to
industry wide weak rental traffic and continued competition from
DVDs at retail.
However, credit protection measures weakened only slightly as
total adjusted debt, defined as Total Debt plus 8 times rents,
remained at approximately $4.7 billion for both December 31, 2003
and June 30, 2004. As a result leverage, as defined by Total
Adjusted Debt to EBITDAR, was 3.8 times (x) for the latest twelve
months (LTM) ending June 30, 2004 from 3.7x at year end, and
EBITDAR to (Interest plus rents) remained at 2.1x for both
periods.
Fitch expects credit protection measures to worsen significantly
at the close of Blockbuster's split off from Viacam. Leverage is
anticipated to rise above 5.0x from current levels and coverage is
also expected to weaken. Internally generated cash should be
sufficient to meet capital needs, and as a result debt repayment
should be modest. Fitch anticipates minimal changes to credit
protection measures in the intermediate term.
BLOCKBUSTER INC: Moody's Assigns B1 Rating to New $300M Debt Issue
------------------------------------------------------------------
Moody's Investors Service assigned a B1 rating to Blockbuster
Inc.'s $300 million of senior subordinated notes due 2012 in
connection with its expected split-off to Viacom Inc.'s
shareholders and affirmed the existing ratings. The ratings
outlook is stable.
Viacom and Blockbuster have announced a split-off transaction
whereby Viacom shareholders will be given the opportunity to
exchange Viacom shares for Blockbuster class B shares. In
addition, Viacom will distribute Blockbuster class A shares into
the Viacom pension plan. In anticipation of the split-off,
Blockbuster will pay a one-time special dividend of $5 per share
or $905 million to all shareholders. The special dividend was
initially intended to be financed with the proceeds of the new
credit facilities of $1.45 billion. The proposed capital
structure has now been changed to reduce the credit facilities to
$1.15 billion and to add a $300 million senior subordinated note
issue.
The B1 rating on the $300 million senior subordinated notes is
supported by Blockbuster's clear leadership and global presence in
the area of video and game rentals, the lack of major competitors
in the rental arena, high brand value, and strong cash flow
generation. The rating also reflects the improvement in both
rental and retail margins as the business shifts away from VHS to
the more profitable DVD format, the opportunities and risks
associated with the company's new business initiatives (including
the subscription program and trading), and Blockbuster's ability
to be the only competitor in its space with complete capabilities
by the end of 2004.
The rating also considers debt protection measures which are
slightly weak for the rating category because of Blockbuster's
relatively high rents, the significant level of the initial
dividend as a part of the split-off, and the anticipated decline
in EBITDA margins with the expected continuation in the erosion of
the rental market as consumers shift more towards purchasing,
which will continue to drive negative rental comparable store
sales. Also impacting the EBITDA margins going forward will be
the additional SG&A expenses associated with the expected new
business initiatives.
The outlook is stable reflecting Moody's expectation that
Blockbuster will not only be able to fund its capital
expenditures, dividends, and working capital entirely from
internally generated cash flow, but that the company will also be
able to offset to a large degree some of the existing secular
declines in the video rental segment with its planned new business
initiatives.
Given the weak credit metrics for the rating category and the
expectation that Blockbuster's core rental business will continue
to mature, an upgrade is highly unlikely over the near term.
However, the ratings could move upward should Blockbuster
significantly reduce its adjusted debt to EBITDAR ratio and turn
around its trend of negative comparable rental store sales. In
addition, an upgrade would likely require that there is evidence
of the stabilization in the rental market. The rating could move
downward should operating performance and debt protection measures
deteriorate significantly from those levels expected at closing.
The SGL2 reflects good liquidity. Blockbuster generates strong
internal cash flow, which leaves ample cash flow to pay down debt
or accumulate on balance sheet cash after funding working capital,
capital expenditures, and a more modest level of dividends. At
March 31, 2004 the company had approximately $137 million cash on
balance sheet. It will have a $500 million revolving credit
facility for additional liquidity, however only $275 million will
be available after deducting out the $150 million Viacom letter of
credit, the borrowings expected at close, as well as the letters
of credit Blockbuster will need to issue for insurance and trade
L/C's. The company is expected to be in compliance with the
proposed financial covenants.
The senior subordinated notes will be guaranteed by all domestic
subsidiaries on a subordinated basis. In addition, the notes will
be non callable for the first four years and will contain
covenants placing limitations on indebtedness, dividends, share
repurchases, sale of assets as well as other standard covenants.
In addition, the senior subordinated notes will have a cross
acceleration clause to other material indebtedness and will give a
30 day cure period on the payment of interest. The senior notes
are notched down by two from the senior implied to reflect their
contractual subordination to other senior indebtedness of
Blockbuster, Inc., as well as the structural subordination to the
secured credit facilities. In addition, the notching of the
senior subordinated notes reflects its relatively small size in
the capital structure when compared to the banking facilities.
The committed bank facilities are approximately 3x the amount of
the subordinated notes.
The following rating has been assigned to Blockbuster Inc.:
* $300 million 8 year senior subordinated notes due 2012 at B1.
The following ratings are affirmed for Blockbuster Inc.:
* Senior Implied of Ba2;
* Issuer Rating of Ba3;
* $500 million 7 year revolving credit facility of Ba2;
* $100 million 7 year term loan A of Ba2;
* $550 million 7 year term loan B of Ba2;
* Speculative Grade Liquidity Rating of SGL-2
* Outlook: Stable.
Blockbuster, Inc., is a leading provider of in-home movies and
game entertainment with approximately 8,900 stores though out the
Americas, Europe, Asia, and Australia. Total revenues for fiscal
year 2003 were approximately $5.9 billion.
BLOUNT INC: Strengthened Capital Structure Prompts S&P B+ Rating
----------------------------------------------------------------
Standard & Poor's Ratings Services raised its corporate credit
rating on Portland, Oregon-based Blount Inc. to 'B+' from 'B-'.
All existing ratings were removed from CreditWatch, where they
were placed on June 4, 2004. At the same time, the following
ratings were assigned to the company's recent financings:
-- US$125 million first-lien revolving credit facility due 2009
rated 'B+' with a recovery rating of '3' (meaningful
likelihood of recovery of principal in a default scenario;
50%-80%);
-- US$240 million first lien term loan B due 2010 rated 'B+'
with a recovery rating of '3' (meaningful likelihood of
recovery; 50%-80%;);
-- US$50 million second-lien term loan due 2010 rated 'B-' with
a recovery rating of '5' (negligible likelihood of recovery;
0%-25%);
-- US$5.2 million first lien Canadian term loan B due 2010
rated 'BB' with a recovery rating of '1' (high expectation
of full recovery; 100%); and
-- US$175 million 8.875% subordinated notes due 2012 rated
'B-'.
Proceeds have been used to refinance existing debt. At June 30,
2004, the company had roughly $611.6 million of total debt
outstanding (including capitalized operating leases) and cash
balances of $37.4 million. The outlook is positive.
"The upgrade reflects the company's strengthened capital structure
because of a material reduction in debt leverage given a recent
$125 million common stock offering by parent company, unrated
Blount International Inc.; extended debt maturity profile;
improved operating performance; and the expectation of further
improvements as forestry fundamentals strengthen," said Standard &
Poor's credit analyst Linli Chee.
The company's first-priority bank facilities consisting of the
$125 million revolving credit facility and the $240 million term
loan B are secured by a first-priority perfected security interest
in all the domestic tangible and intangible assets owned by Blount
and the capital stock of its guarantor subsidiaries (limited to
65% of the voting stock of its foreign subsidiaries).
Certain Canadian assets of the company secure Blount's
$5.2 million Canadian term loan B.
Blount's $50 million second-lien term loan B due December 2010 is
secured on a second-priority basis by the same assets securing the
senior secured U.S. credit facility.
BOUNDLESS MOTOR: Dismisses BDO Seidman as Independent Auditors
--------------------------------------------------------------
On June 2, 2004, Boundless Motor Sports Racing, Inc. dismissed BDO
Seidman, LLP as its independent auditors.
BDO Seidman's report on the Company's financial statements for the
past fiscal year was qualified as to the Company's ability to
continue as a going concern.
Boundless Motor Sports Racing's Board of Directors participated
in, and approved, the decision to change independent auditors.
As of June 25, 2004 the Company had not hired a new auditing firm.
BURLINGTON INDUSTRIES: Franchise Tax Board Claim Allowed for $200K
------------------------------------------------------------------
On May 29, 2002, the Franchise Tax Board of the State of
California filed an unsecured priority claim for $399,993 in the
Chapter 11 cases of Burlington Industries, Inc., its debtor-
affiliates and its subsidiaries.
The BII Distribution Trust asked the United States Bankruptcy
Court for the District of Delaware to disallow and expunge the
Board's Claim. The Board did not respond to the Objection before
the response deadline. Subsequently, the Court sustained the
objection.
After discussions, the parties agree that:
(1) the Objection Order is vacated solely as it relates to the
Board's Claim;
(2) the Board is granted an allowed claim for $200,000, which
will be treated as a Priority Tax Claim under the Plan;
(3) the Trust will pay the Board the allowed claim without
further delay; and
(4) all subsequent Proofs of Claim filed by the Board will be
reduced to the amount of the Allowed Claim;
Headquartered in Greensboro, North Carolina, Burlington
Industries, Inc. -- http://www.burlington-ind.com/-- is one of
the world's largest and most diversified manufacturers of soft
goods for apparel and interior furnishings. The Company filed for
chapter 11 protection in November 15, 2001 (Bankr. Del. Case No.
01-11282). Daniel J. DeFranceschi, Esq., at Richards, Layton &
Finger One Rodney Square, and David G. Heiman, Esq., and Richard
M. Cieri, Esq., at Jones, Day, Reaves & Pogue North Point
represent the Debtors in their restructuring efforts. Burlington
Reorganization Plan confirmed on October 30, 2003 was declared
effective on November 10, 2003. (Burlington Bankruptcy News, Issue
No. 52; Bankruptcy Creditors' Service, Inc., 215/945-7000)
BUSH IND: Z-Line Gets Prelim. Injunction Against Top Executives
---------------------------------------------------------------
The United States District Court for the Northern District of
Georgia granted Z-Line Designs, Inc.'s Motion for a Preliminary
Injunction in its recently filed lawsuit against Lewis Aronson and
John Cooper, who are both top executives of Bush Industries, Inc.,
(Pink Sheets: BINDQ).
Z-Line's suit stems from Bush's and Mr. Cooper's apparent
violation of a settlement agreement that Z-line, Bush and Mr.
Cooper executed in March of this year. The settlement agreement
resolved an earlier dispute between Z-Line and Bush over whether
Bush's hiring of Mr. Cooper violated his employment agreement and
non-compete with Z-Line. The Preliminary Injunction was granted
by the Court in part based on emails that Z-Line received from an
anonymous source indicating Bush's and Mr. Cooper's complicity in
knowingly violating that settlement agreement.
The ruling requires Messrs. Aronson and Cooper, as well as Bush,
which filed for Chapter 11 bankruptcy protection earlier this
year, and its other employees and agents, to:
1) refrain from making certain communications that would breach
the settlement agreement and;
2) refrain from destroying or erasing any documents (electronic
or otherwise) in their custody or control which relate to
any contact or communication by Mr. Aronson, Mr. Cooper, or
Bush that would have breached the settlement agreement in
order that they be preserved for future discovery.
The Court also ordered expedited electronic discovery, which will
allow Z-Line's computer expert to examine the computers of Messrs.
Aronson and Cooper for evidence of communications that were
prohibited by the Settlement Agreement.
"We relish competition and understand our competitors are trying
to reproduce our designs in China due to our success in the
industry. However, if our competitors attempt to use our
proprietary information, replicate our international patents or
approach our factories then Z-Line will take the appropriate legal
action. We will vigorously pursue any legal action in or outside
of the U.S.," said Jim Sexton, president of Z-Line. "We had a
legal agreement with Bush and it appears that Bush blatantly broke
it. We're pleased and grateful for the Court's decision and look
forward to their findings."
Z-Line was represented in court by John North, Esq., Ann Fort,
Esq., and Mark Henderson, Esq., at the law firm of Sutherland
Asbill & Brennan in Atlanta, Georgia.
Based in Danville, California, Z-Line Designs, Inc., is a leading
designer and manufacturer of ready to assemble (RTA) home office
and entertainment furniture. The quality of Z-Line's products and
designs has been recognized through the grant of an unprecedented
number of industry awards, including both the 2002 and 2003 ADEX
Award for Design Excellence and Value and Staples' 2003 "Vendor of
the Year" award. In conjunction with Denis Publishing, Z-Line
designs and manufactures the Maxim Collection, a line of Maxim
magazine branded RTA home entertainment furniture. Z-Line products
can be found in major retailers such as Staples, Circuit City,
Wal-Mart, and Linens & Things.
Headquartered in Jamestown, New York, Bush Industries, Inc.,
-- http://www.bushindustries.com/-- is engaged in the manufacture
and sale of ready-to-assemble furniture under the Bush, Eric
Morgan and Rohr trade names and production of after market
accessories for cell phones. The Company filed for chapter 11
protection on March 31, 2004 (Bankr. W.D.N.Y. Case No. 04-12295).
Garry M. Graber, Esq., at Hodgson Russ LLP represents the Debtor
in its restructuring efforts. When the Company filed for
protection from its creditors, it listed $53,265,106 in total
assets and $169,589,800 in total debts.
CAL WESTERN: Section 341(a) Meeting Scheduled for August 26
-----------------------------------------------------------
The United States Trustee for Region 16 will convene a meeting of
Cal Western Produce Marketing Inc.'s creditors at 9:00 a.m., on
August 26, 2004, at 128 East Carrillo Street in Santa Barbara,
California. 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 Orcutt, California, Cal Western, filed for a
chapter 11 protection on July 12, 2004 (Bankr. C.D. Cal. Case No.
04-11776). Robert E. Hurlbett, Esq., in Santa Barbara, Calif.,
represents the company in its restructuring efforts. When the
Debtor filed for protection it listed $345,000 in total assets and
$24,228,045 in total debts.
CAPTEC FRANCHISE: Moody's Cuts Restaurant Franchise Trust Ratings
-----------------------------------------------------------------
Moody's Investors Service has placed on review for possible
downgrade three classes of notes issued by Franchise Loan Trust
1998-I, five classes of notes issued by Captec Franchise Trust
1999-1, and six classes of notes issued by Captec Franchise Trust
2000-1. The Franchise Loan Trust transaction was a joint
securitization of franchise loans originated by Captec Financial
Group and Convenience Store Finance Company LLC (CSFC). CSFC is an
affiliate of Credit Suisse First Boston Mortgage Capital. Loans
contributed to the Captec Franchise Trust 1999-1 and 2000-1 deals
were loans to franchise restaurant operators originated by Captec
Financial Group. The ratings review is due to the continued
deterioration in collateral performance of the pools.
Rating Action:
Franchise Loan Trust 1998-I
Franchise Loan Notes
-- $161 million Class A-3 Notes, rated Baa3, on review for
possible downgrade;
-- $12.8 million Class B Notes, rated B3, on review for
possible downgrade;
-- Class A-X IO, rated Aaa, on review for possible downgrade
Captec Franchise Trust 1999-1
Franchise Receivable Notes
-- $58.0 million Class A-2 Notes, rated Baa2, on review for
possible downgrade;
-- $4.3 million Class B Notes, rated B1, on review for possible
downgrade;
-- $7.2 million Class C Notes, rated Caa1, on review for
possible downgrade;
-- $7.2 million Class D Notes, rated Ca, on review for possible
downgrade;
-- Class A-X IO, rated Baa2, on review for possible downgrade;
Captec Grantor Trusts 2000-1
Franchise Receivable Trust Certificates
-- $85.98 million Class A-1 Notes, rated A3, on review for
possible downgrade;
-- $40.6 million Class A-2 Notes, rated A3, on review for
possible downgrade;
-- $8.7 million Class B Notes, rated Ba2, on review for
possible downgrade;
-- $7.7 million Class C Notes, rated B2, on review for possible
downgrade;
-- $6.8 million Class D Notes, rated Caa1, on review for
possible downgrade;
-- Class A-IO, rated Aaa, on review for possible downgrade.
As of the July 2004 distribution date, the delinquency rate for
the Franchise Loan Trust 1998-I was 25.6%, 19% for Captec 1999-1,
and 21% for Captec 2000-1 with most of the loans severely
delinquent. The review will focus on the likely recoveries for the
problem borrowers and the impact of the recoveries on
subordination protecting investors.
Captec Financial Group, Inc. based in Ann Arbor, Michigan, is a
specialized commercial finance company. Convenience Store Finance
Company, LLC (CSFC) was formed for the purpose of originating
fixed rate loans to the owners of franchised, licensed, and
branded convenience stores, gas stations, and auto plazas/truck
stops.
The notes were sold in a privately negotiated transaction without
registration under the Securities Act of 1933 under circumstances
reasonably designed to preclude a distribution thereof in
violation of the Act. The issuance has been designed to permit
resale under Rule 144A.
CENTURY ALUMINUM: S&P Assigns BB- Rating to $250M Sr. Unsec. Notes
------------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB-' rating to
Century Aluminum Co.'s new $250 million senior unsecured notes due
2014, and its 'B' rating to the company's new $150 million 1.75%
convertible notes due 2024. The rating on the convertible notes
is placed on CreditWatch with positive implications. The
convertible notes are currently structurally subordinated due to a
significant amount of priority liabilities at the company's
operating subsidiaries. The rating on the convertible notes could
be raised to 'BB-' and removed from CreditWatch in the event
Century is successful in obtaining guarantees on the convertible
bonds from its primary domestic subsidiaries.
At the same time, Standard & Poor's affirmed its 'BB-' corporate
credit rating on the company. Standard & Poor's also raised its
rating on the company's $100 million senior secured revolving
credit facility due 2006 to 'BB' from 'BB-' and assigned a
recovery rating of '1' to the facility.
The bank loan is rated one notch higher than the corporate credit
rating; this and the '1' recovery rating indicate a high
expectation of full recovery of principal in the event of a
default. The outlook is stable.
Total debt at Monterey, California-based Century was about
$555 million at June 30, 2004.
"The ratings on Century reflect its exposure to the cyclical
aluminum industry, its high cost position among primary aluminum
producers, limited product diversity, and aggressive growth
spending and financial profile," said Standard & Poor's credit
analyst Paul Vastola. These factors offset currently favorable
industry conditions and the company's fair liquidity position.
Century intends to use the net proceeds from both notes offerings
to purchase up to 100% of its outstanding $325 million aggregate
principal amount 11% senior secured first mortgage notes that may
be tendered pursuant to its earlier announced tender offer. The
proceeds also will be used for general corporate purposes,
including funding a portion of the costs related to the ongoing
expansion of the company's Nordural, Iceland facility. The rating
on the company's first mortgage notes will be withdrawn upon
successful completion of its tender offer.
As a result of the current refinancing, Century's net debt will
increase by about $53 million. Despite the increase in debt
levels, the company is expected to save $17 million in annual
interest costs due to the much-lower coupon on the new notes. In
the intermediate term, Century should maintain adequate credit
measures, with funds from operations as a percentage of total debt
around 20% and total debt to EBITDA below 4x.
With an annual capacity of about 615,000 metric tons of primary
aluminum, Century is a distant third in the production of primary
aluminum in North America, after market leaders Alcoa Inc. and
Alcan Inc.
CNH GLOBAL: Fiat's Troubles Prompt Negative Outlook from S&P
------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on CNH
Global N.V, to negative from stable, following that same outlook
action taken by Standard & Poor's on parent company, Italy-based
Fiat SpA (BB-/Negative/B).
"The actions were taken because of concerns regarding the
turnaround of Fiat's troubled automotive business amid intensified
competition and mounting refinancing risk," said Standard & Poor's
credit analyst Daniel DiSenso.
At the same time, Standard & Poor's affirmed its 'BB-' corporate
credit rating on CNH. Consolidated debt at June 30, 2004, totaled
about $7.8 billion.
The corporate credit rating and outlook on CNH are the same as
those of the parent company because of the still-close ties
between the two entities, notwithstanding two public debt
transactions whereby CNH raised about $1.5 billion, with a portion
of the proceeds being used to pay down intercompany borrowings
with Fiat. Fiat views CNH as a core business and continues to
provide strong liquidity support to CNH, in the way of
intercompany loans and bank loan guarantees, and has a 92% equity
ownership (converted basis) interest in CNH, a public company. At
June 30, 2004, CNH had $1.6 billion of cash and cash equivalents
deposited with Fiat and its affiliates (repayable to CNH upon one-
day's notice), and CNH had $1.7 billion of intercompany borrowings
with Fiat affiliates.
CNH, with executive headquarters in Lake Forest, Illinois, is one
of the world's two largest agricultural equipment producers and
third-largest manufacturer of construction equipment.
CNH, created in November 1999 though the merger of Case Corp. and
New Holland N.V. is in the final stages of completing its massive
rationalization and integration program to improve profitability
and cash flow generation. CNH is also cutting selling, general,
and administrative -- SG&A -- costs, and realizing benefits from
the introduction of new products using common platforms. From the
time of the merger through 2004, CNH estimates that it will have
achieved cost reductions totaling about $900 million. For the
2005-2007 period, CNH is targeting another $500 million of savings
in the areas of product design, manufacturing efficiencies,
purchasing, and logistics.
"While CNH's earnings and cash flows are expected to continue
strengthening over the next two years, Fiat is not expected to
generate positive free cash flow before 2006," said Mr. DiSenso.
"Consequently, Fiat's refinancing risk is expected to increase,
especially if it does not meet its milestones to turn the
automotive business around. Should recovery be delayed, ratings
could be lowered."
COLLINS & AIKMAN: S&P Puts B- Rating on Planned $400M Senior Notes
------------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B-' rating to
Troy, Michigan-based Collins & Aikman Products Co.'s proposed
$400 million senior subordinated notes due 2012.
The notes, to be issued under Rule 144A with registration rights,
will be guaranteed by the company's parent, Collins & Aikman Corp.
The 'B+' corporate credit rating of Collins & Aikman Corp. was
affirmed. Total debt is about $2.2 billion, including various
receivables sale programs and the present value of operating
leases. The outlook is negative.
Proceeds from the new debt issue will be used to refinance
$400 million of subordinated notes due June 2006, modestly
improving the company's financial flexibility by extending debt
maturities. The company is also currently pursuing a refinancing
of its secured credit facilities, which mature in December 2005.
"The ratings reflect Collins & Aikman's exposure to the highly
competitive and cyclical automotive supply industry and weak
financial profile, which more than offset the company's strong
market positions," said Standard & Poor's credit analyst Martin
King.
Collins & Aikman is a publicly held company controlled by
Heartland Industrial Partners L.P., which beneficially owns 40% of
outstanding common stock.
Collins & Aikman is a major producer of vehicle interior products,
including instrument panels, carpet, and plastic components.
COMMITTEE BAY: Discloses Summer Drill Program Assay Results
-----------------------------------------------------------
Committee Bay Resources Ltd. (TSX VENTURE: CBR): reports assay
results from the first eight drill holes of the summer drill
program at the Three Bluffs occurrence in Committee Bay located
northeast of Baker Lake, Nunavut. These results are part of a
drill program designed to follow-up previous high-grade gold drill
intersections at Three Bluffs and drill some of the advanced
projects from the 45 targets identified from exploration.
Three Bluffs Drilling
Diamond drill hole 4TB013 is the deepest hole drilled at Three
Bluffs intersecting mineralization below 160m from surface. It
intersected two distinct mineralized zones containing 51.34 g/t Au
over 3.29m and a second zone of 12.51 g/t Au over 7.60m. This
hole in combination with 4TB014 (12.24 g/t Au over 2.19m) and
4TB019 (17.04 g/t Au over 13.04m) show that high grade gold
mineralization is continuous from near surface and is open at
depths greater than 160m.
Diamond drill holes 4TB015, 4TB016, 4TB017, and 4TB018 show high
grade gold mineralization is continuous near surface and extends
at least 400m along strike. Diamond drill hole 4TB015, the
eastern-most of the new near-surface drill holes, was collared in
mineralization and does not represent the full thickness of
mineralization. Recent drill holes at similar depths intersect
progressively stronger mineralization moving west into open areas.
DDH 4TB016 intersected a zone of mineralization grading 11.98 g/t
Au over 2.40m and 4TB017 intersected 13.62 g/t Au over 8.84m
including 20.65 g/t au over 3.94m. DDH 4TB018 has the strongest
mineralization and grades 16.69 g/t Au over 5.00m. These holes in
combination with previous drilling reinforce the assumption that
the widest, high grade zones extend from surface along a shallow
200 to 300 plunge direction to the northeast.
All of these holes intersect multiple zones of mineralization
containing irregular bands of pyrrhotite with lesser arsenopyrite
and pyrite. Distinct clusters of very coarse gold occur in the
translucent or grey quartz veining that overprint sulphides and
appear to concentrate in structures along the contact of iron
formation and dacite a conformable volcanic rock. This contact can
be traced for well over 3 km along strike in outcrop and drill
holes.
Drilling is ongoing at the Four Hills, Cop and Ledge prospects.
Additional drilling is anticipated on other targets during the
summer.
Committee Bay Resources Ltd maintains an extensive quality control
program in the preparation, shipping and checking of all samples
from the property. The program is supervised by Dean McDonald, P.
Geo. Ph.D., Vice President of the company, who is the Qualified
Person as defined by NI 43-101. All samples are assayed at TSL
Laboratories Saskatoon on a 50-gram fire assay using standard
sample preparation and fire assay procedures with a gravimetric
finish. All samples with visible gold or assaying over 20 g/t Au
are re-assayed with a standard metallics procedure. Check assays
are being prepared by ALS Chemex in Vancouver.
There is a map available on CCNMatthews' website at:
http://www2.cdn-news.com/database/fax/2000/809cbr.gif
Committee Bay Resources holds greater than 2.8 million acres of
prospective ground in the eastern arctic. In addition to the
C$7.1 million to be spent with joint venture partner Gold Fields
Limited on the Committee Bay project another $C2.0 million will be
spent on diamond and gold exploration this year. Gold Fields
Limited, through a subsidiary, is funding all gold exploration on
the Committee Bay Project as part of its option to earn a 55 %
interest in the property by spending US$5.0 million over the next
four years. Committee Bay Resources Ltd. is the operator.
As of March 31, 2004, Committee Bay posts a stockholders' deficit
of C$1,118,554 compared to a deficit of C$797,092 at December 31,
2003.
CONNECTICUT VALLEY: Fitch Affirms $32M Preference Shares BB Rating
------------------------------------------------------------------
Fitch Ratings affirms six tranches of Connecticut Valley
Structured Credit CDO I, Ltd.:
-- $296,000,000 class A notes affirmed at 'AAA';
-- $17,000,000 class B-1 notes affirmed at 'A-';
-- $3,000,000 class B-2 notes affirmed at 'A-';
-- $13,500,000 class C-1 affirmed at 'BBB';
-- $39,000,000 class C-2 affirmed at 'BBB';
-- $32,000,000 preference shares affirmed at 'BB'.
Connecticut Valley Structured Credit CDO I, Ltd. is a
collateralized debt obligation (CDO) managed by Babson Capital
Management LLC. The CDO was established in September 2001 to
issue $400 million in debt and preference shares. Payments are
made semi-annually in March and September, and the reinvestment
period ends in September 2006. In conjunction with the review,
Fitch discussed the current state of the portfolio with the asset
manager and their portfolio management strategy. Additionally,
Fitch conducted cash flow modeling, utilizing various default
timing and interest rate scenarios.
Overall, the portfolio has experienced relatively stable
performance, along with minimal negative ratings migration to its
weighted average rating factor. Currently, as stated in the
monthly trustee report dated June 15, 2004, all par and interest
coverage tests are passing. There is one defaulted obligation and
one technically deferred interest PIK obligation in the portfolio.
However, the technically deferred interest PIK obligation is
paying current coupon and is estimated to recoup deferred interest
by the end of 2006. As a result of its analysis, Fitch has
determined that the current ratings assigned to the class A, B-1,
B-2, C-1, C-2, and preference shares reflect the current risk to
noteholders.
The ratings assigned to the class A, B, and C notes address the
timely payment of interest and ultimate payment of principal. The
rating assigned to the preference shares address the ultimate
payment of principal.
CONSECO: Enters into Settlement with SEC & N.Y. Attorney General
----------------------------------------------------------------
Conseco, Inc. (NYSE:CNO) enters into a settlement with the
Securities and Exchange Commission and the New York Attorney
General, concluding the previously disclosed joint investigation
into market timing in variable annuities issued by a former
subsidiary of Conseco's predecessor company.
Without admitting or denying the alleged findings of the
investigation, two Conseco subsidiaries - Conseco Services, LLC
and Conseco Equity Sales, Inc. - have consented to the entry of a
cease and desist order requiring their future compliance with
securities laws. The settlement also calls for the subsidiaries to
pay a total of $5 million, and for the SEC and NYAG to file a
claim for an additional $10 million against the bankruptcy estate
of a subsidiary of the predecessor company.
Conseco said it is pleased to have resolved this legacy issue.
Because Conseco had previously established a reserve for potential
liabilities in this matter, the settlement is expected to have no
impact on the earnings guidance Conseco provided in its second
quarter 2004 earnings release last week.
As previously reported, Conseco's predecessor sold its variable
annuity subsidiary to an unrelated third party before filing for
bankruptcy in December 2002, and no Conseco affiliates have sold
any new variable annuity policies since the divestiture. Conseco,
Inc. emerged from bankruptcy in September 2003.
Conseco, Inc.'s insurance companies help protect working American
families and seniors from financial adversity: Medicare
supplement, long-term care, cancer, heart/stroke and accident
policies protect people against major unplanned expenses;
annuities and life insurance products help people plan for their
financial futures.
* * *
As reported in the Troubled Company Reporter's May 31, 2004,
edition, Standard & Poor's Ratings Services said that it raised
its counterparty credit and senior debt ratings on Conseco Inc. to
'BB-' from 'B-' and its preferred stock rating to 'B-' from
'CCC-', and removed the ratings from CreditWatch where they
were placed April 19, 2004.
At the same time, Standard & Poor's raised its counterparty credit
and financial strength ratings on Bankers Life & Casualty
Co., Colonial Penn Life Insurance Co., Conseco Insurance Co.,
Conseco Health Insurance Co., Conseco Life Insurance Co., and
Conseco Life Insurance Co. of NY to 'BB+' from 'BB-' and removed
the ratings from CreditWatch where they were placed April 19,
2004.
The outlook is stable.
"The upgrades reflect Conseco Inc.'s recapitalization, which
utilizes proceeds from the bank loan and preferred stock issue, in
conjunction with about $920 million of proceeds from a common
equity issuance to replace $1.3 billion of existing bank debt and
about $930 million of convertible exchangeable preferred stock and
enhance the capital of the insurance operations," said Standard &
Poor's credit analyst Jon Reichert.
"Standard & Poor's believes it is too early to consider Conseco
Inc.'s insurance operations to be investment grade largely due to
the uncertainty regarding the company's future competitive
position," Mr. Reichert added. "Before investment grade FSRs can
be considered, management will need to demonstrate its ability to
generate sustainable, profitable sales growth."
The outlook reflects Standard & Poor's expectation that management
will be challenged in its efforts to revitalize profitable sales
growth, primarily through its independent agent distribution
channel.
Conseco, Inc., and Conseco Finance Corp. filed for chapter 11
protection on December 17, 2002 (Bankr. N.D. Ill. Case Nos.
02-49671 through 02-49676, inclusive) (Doyle, J.). Conseco, Inc.,
emerged from chapter 11 protection on Sept. 10, 2003, under the
terms of a confirmed plan of reorganization. CFC liquidated its
consumer finance business under the terms of a plan of liquidation
confirmed on Sept. 9, 2003.
CONSECO INC: Moody's Upgrades Bank Debt Rating to B2
----------------------------------------------------
Moody's Investors Service upgraded the debt and financial strength
ratings of Conseco, Inc., based on the company's successful
completion of its previously announced capital restructuring
initiatives and its second quarter 2004 financial results, which
were in line with Moody's expectations. The rating agency
upgraded Conseco's existing bank debt to B2 from B3 and its
mandatory convertible preferred securities to Caa2 from Caa3. In
addition, the rating agency raised the insurance financial
strength ratings of Conseco, Inc.'s primary insurance subsidiaries
(with the exception of Conseco Senior Health Insurance Company) to
Ba1 from Ba2. Conseco Senior Health was affirmed at Caa1 with a
developing outlook. All of the company's ratings, with the
exception of Conseco Senior Health, now have a stable outlook.
This concludes the review that was initiated on May 27, 2004.
As the rationale for the rating actions, Moody's noted Conseco's
recent actions to enhance holding company flexibility. The
company recently raised approximately $923 million of proceeds
from the issuance of common equity and $690 million from the
issuance of mandatory convertible preferred stock (before
underwriting discount and expenses). The company has redeemed all
of its outstanding convertible exchangeable preferred stock
($929 million) as well as refinanced its previous bank debt.
The rating action reflects Moody's belief that Conseco's
recapitalization initiatives have significantly delevered the
company's balance sheet and reduced debt service requirements. In
addition, the company has shown improvement in its consolidated
NAIC risk-based capital ratio -- RBC, fixed charge coverage, and
statutory earnings during the first six months of 2004.
Moody's believes the recently completed recapitalization should
provide Conseco additional time to execute its business strategy
and provide greater flexibility in terms of financial leverage and
interest coverage. However, the current ratings continue to
reflect the challenges that Moody's believes the company will face
in maintaining the strength of its agency force and in growing new
business and retaining existing business in a profitable manner,
while at the same time servicing fixed charges at the holding
company and maintaining current risk-adjusted capital levels at
its insurance companies. In addition to increasing financial
flexibility at the holding company, Moody's notes that Conseco has
made significant progress in a number of other areas, including
expense management, improving the risk profile of its investment
portfolio, and resolving some uncertainty surrounding Conseco
Senior Health.
Moody's decision to affirm Conseco Senior Health's Caa1 insurance
financial strength rating with a developing outlook reflects the
continued uncertainty surrounding the company's future earnings
and relatively low capitalization levels. Conseco Senior Health
has experienced significant losses relating to a previously
acquired block of home health care policies in Florida and other
states. In April 2004, the Florida Insurance Department ordered
Conseco Senior Health to offer existing home health care
policyholders in Florida and other states three alternatives
involving changes to policy benefits and premiums on their current
policies. While the rating agency believes that this agreement
with the Florida Insurance Department is a positive for the
company as it removes some of the uncertainty surrounding the
company, the impact on earnings and capital for Conseco Senior
Health is difficult to estimate at this time, as it will partially
depend on policyholder behavior as it pertains to these new policy
alternatives. The company's ability to more closely monitor and
manage its claims activity on this runoff business will also
impact the future profitability of this subsidiary.
Following its most recent rating actions, Moody's stated that the
new rating levels include the following expectations:
-- Adjusted financial leverage (with 50% equity credit for
mandatory convertible preferred stock) of no greater than
30%;
-- Projected fixed charge coverage at the holding company of at
least 2.25x, calculated on a quarterly basis (looking at
next four quarters as well as taking into account the
quality of cash sources);
-- RBC ratio on a consolidated basis of at least 300%, and RBC
ratio of each statutory operating entity, excluding CSHIC,
of at least 200%; RBC ratio of companies actively marketing
insurance products of at least 250% by year-end 2004; and
-- 2004 combined statutory operating earnings before interest
and taxes in the range of $200 to $220 million.
The rating agency said that further upward rating movement could
occur if Conseco substantially resolves the continuing uncertainty
at Conseco Senior Health as it relates to this legal entity's
statutory profitability, liability exposures, and capital
requirements. In addition, Moody's would expect to see
improvement in Conseco's franchise as evidenced by new sales and
retention of profitable business, core sustainable statutory
operating earnings before interest and taxes of greater than $220
million, and a sustained cash coverage ratio at the holding
company greater than 2.5 times.
Commenting on Conseco Inc.'s second quarter 2004 GAAP earnings
results, Moody's stated that the company's pretax operating income
and net income of $106.8 million and $68.3 million, respectively,
were in line with the rating agency's previous expectations,
despite slightly lower revenue growth during the period. Estimated
consolidated statutory earnings (before realized investment
gains/losses and interest expense paid to the parent company on
surplus notes) of approximately $125 million for the first six
months of 2004 were modestly ahead of Moody's expectations, as was
the company's consolidated RBC ratio of 315% as of June 30, 2004.
The following ratings were upgraded with a stable outlook:
* Conseco Insurance Company (formerly Conseco Annuity Assurance
Company) -- insurance financial strength rating to Ba1 from
Ba2;
* Bankers Life and Casualty Company -- insurance financial
strength rating to Ba1 from Ba2;
* Conseco Health Insurance Company -- insurance financial
strength rating to Ba1 from Ba2;
* Colonial Penn Life Insurance Company -- insurance financial
strength rating to Ba1 from Ba2;
* Conseco Life Insurance Company -- insurance financial
strength rating to Ba1 from Ba2;
* Washington National Insurance Company -- insurance financial
strength rating to Ba1 from Ba2;
* Conseco Inc.'s bank debt to B2 from B3;
* Conseco Inc.'s mandatory convertible preferred securities to
Caa2 from Caa3.
The following rating was affirmed with a developing outlook:
* Conseco Senior Health Insurance Company -- Caa1 insurance
financial strength rating.
Conseco is a specialized financial services holding company that
operates primarily in the life and health insurance sectors
through its subsidiaries. In December 2002, Conseco Inc., the
holding company, and a number of its non-insurance subsidiaries
filed for reorganization under Chapter 11 of the US Bankruptcy
Code. Conseco's insurance subsidiaries were not part of the
bankruptcy filing. On September 9, 2003, the US Bankruptcy Court
confirmed Conseco Inc.'s plan of reorganization. On September 10,
2003, the company met all conditions of the plan and emerged from
bankruptcy. As of June 30, 2004, the company reported total GAAP
assets of approximately $29.9 billion and shareholders' equity of
$3.2 billion.
Conseco, Inc., and Conseco Finance Corp. filed for chapter 11
protection on December 17, 2002 (Bankr. N.D. Ill. Case Nos.
02-49671 through 02-49676, inclusive) (Doyle, J.). Conseco, Inc.,
emerged from chapter 11 protection on Sept. 10, 2003, under the
terms of a confirmed plan of reorganization. CFC liquidated its
consumer finance business under the terms of a plan of liquidation
confirmed on Sept. 9, 2003.
COVANTA ENERGY: Hires Peter Bynoe as Independent Director
---------------------------------------------------------
Covanta Energy Corporation's subsidiary, Danielson Holding
Corporation (AMEX:DHC) appointed Peter C.B. Bynoe as an
independent member of Danielson's Board of Directors on
July 19, 2004, filling a newly created vacancy on the Board
of Directors. Mr. Bynoe is a partner in the law firm of
Piper Rudnick LLP.
Danielson also announced that its 2004 Annual Meeting of
Stockholders shall be held on October 5, 2004 in Chicago,
Illinois, and that the Board of Directors set September 1, 2004 as
the record date for holders of Danielson's common stock authorized
to vote at such Annual Meeting of Stockholders. The Company will
not be amending the remaining periods previously disclosed in the
Company's last proxy statement for submission of any stockholder
proposal sought to be included in Danielson's proxy materials for
its 2004 Annual Meeting of Stockholders pursuant to Rule 14a-8 of
the Securities and Exchange Act of 1934. Proposals must relate to
matters appropriate for stockholder action and be consistent with
rules and regulations of the Securities and Exchange Commission
relating to stockholders' proposals in order to be considered for
inclusion in Danielson's proxy materials for that meeting.
Danielson Holding Corporation is an American Stock Exchange listed
company, engaging in the energy, financial services and specialty
insurance business through its subsidiaries. Danielson's charter
contains restrictions that prohibit parties from acquiring 5% or
more of Danielson's common stock without its prior consent.
Danielson's subsidiary, Covanta Energy Corporation, is an
internationally recognized owner and operator of waste-to-energy
and power generation projects. Covanta's waste-to-energy
facilities convert municipal solid waste into renewable energy for
numerous communities, predominantly in the United States.
Headquartered in Fairfield, New Jersey, Covanta Energy Corporation
-- http://www.covantaenergy.com/-- is a publicly traded holding
company whose subsidiaries develop, own or operate power
generation facilities and water and wastewater facilities in the
United States and abroad. The Company filed for Chapter 11
protection on April 1, 2002 (Bankr. S.D.N.Y. Case No. 02-40826).
Deborah M. Buell, Esq., and James L. Bromley, Esq., at Cleary,
Gottlieb, Steen & Hamilton represent the Debtors in their
restructuring efforts. When the Debtors filed for protection from
its creditors, they listed $3,280,378,000 in assets and
$3,031,462,000 in liabilities. (Covanta Bankruptcy News, Issue No.
62; Bankruptcy Creditors' Service, Inc., 215/945-7000)
DIRECTVIEW INC: London Investment Company Buys 47.5 Million Shares
------------------------------------------------------------------
DirectView, Inc. (OTCBB:DRVW) has signed an agreement with a
private investment company for the purchase by the investment
company of approximately $2,360,000 worth of DirectView's
restricted common shares in exchange for shares of the investment
company.
The investment company is a newly formed London-based company that
has applied for its shares to be admitted to trading on the London
stock exchange as an investment trust. The investment company has
been established specifically to invest in US micro cap companies
with long term growth potential. The investment company expects
its shares to be trading on the London Stock Exchange by
September 30, 2004.
Commenting on the agreement, Michael Perry, CEO of DirectView
stated, "We are very excited about this transaction as it will
enable us to continue to re grow our business as well as to invest
in the completion and launch of our proprietary streaming
software. This type of infusion, when completed, will enable us to
aggressively pursue new business as well as accelerate our
delivery schedules which should help us to quickly improve our
revenues and business outlook."
The investment company has entered into a "lock-up" agreement with
DirectView, Inc. pursuant to which it has agreed not to trade the
DirectView, Inc. shares it will receive as a result of this
transaction for a period of two years from the closing date. In
full payment for the shares of DirectView, Inc., the investment
company will issue to DirectView, Inc. USD $2.36 million
equivalent of its shares at a price per share valued at One Pound
Sterling.
Fifty percent of the investment company's shares will be held in
escrow for two years following their issuance and in the event the
per share market price of the DirectView, Inc. common stock at
such time is less than the per share value of the DirectView, Inc.
stock at the time of the closing, the investment company shall be
entitled to receive out of escrow a percentage of the shares equal
to the percentage of such decline. The remaining shares held in
escrow shall be released to DirectView, Inc. at such time. The
closing of this transaction is subject to certain contingencies,
including the listing of the investment company shares on the
London Stock Exchange on or before September 30, 2004.
About DirectView, Inc.
DirectView Inc., http://www.DirectViewInc.com,is a full-service
provider of high-quality, cost efficient videoconferencing
technologies and services. DirectView provides multipoint
videoconferencing, network integration services, custom room
design, staffing, document conferencing and IP / Webconferencing
services to businesses and organizations in the United States and
around the world. DirectView conferencing services enable our
clients to cost-effectively, instantaneously conduct remote
meetings by linking participants in geographically dispersed
locations.
At June 30, 2004, DirectView Inc.'s balance sheet showed
a $713,229 stockholders' deficit, compared to an $824,995 deficit
at December 31, 2003.
ENRON CORP: Insurers Want to Give Proceeds to Tittle Plaintiffs
---------------------------------------------------------------
In 1999, Enron purchased a Fiduciary and Employee Benefit
Liability Insurance Policy from Associated Electric & Gas
Insurance Services, Policy No. F0079A1A99.
The AEGIS ERISA Policy provides coverage to Enron, Enron's
Employee Benefit Plans, and its debtor and non-debtor
subsidiaries, as well as their past, present and future trustees,
officers, directors or employees, and certain other fiduciaries
and certain persons performing administration of those Employee
Benefit Plans. The AEGIS ERISA Policy provides insurance coverage
for legal fees and related expenses, settlements and judgments
incurred by covered AEGIS Insureds resulting from covered
"Claims."
The AEGIS ERISA Policy provides $35,000,000 of insurance coverage
for covered loss, plus an additional $10,000,000 of insurance for
covered "Defense Costs." The Policy applies to covered Claims
first made during the period from May 5, 1999 to May 5, 2002.
Effective May 15, 1999, Federal Insurance Company issued to Enron
an Excess Fiduciary Policy, Policy No. 8146-41-84A BMH, for the
policy period of May 15, 1999 to May 15, 2002. The Excess
Fiduciary Policy has a $50,000,000 limit of liability for each
year that liability against the Insureds exceeds the $35,000,000
coverage limit from the AEGIS ERISA Policy.
Lawsuits
On Federal's behalf, David M. Posner, Esq., at Hogan & Hartson,
L.L.P., in New York, recounts that Enron, its former officers and
directors, and certain other parties are defendants in a
consolidated putative class action lawsuit styled as Pamela M.
Tittle, et al. v. Enron Corp., et al., Civil Action No. H-01-3919,
commenced before the Petition Date in the United States District
Court for the Southern District of Texas, Houston Division.
In January 2002, certain plaintiffs in the Tittle Litigation
sought protection from the automatic stay to permit them to
liquidate their prepetition claims against Enron for its alleged
breaches of fiduciary duty under the Employee Retirement Income
Securities Act.
Accordingly, United States Bankruptcy Court for the Southern
District of New York lifted the automatic stay as to Enron as of
June 21, 2002 for all purposes, provided that the plaintiffs do
not seek to enforce any judgment against the Debtors' assets
without further Court order.
On March 20, 2002, AEGIS sought protection from the automatic
stay, to the extent applicable, to pay or advance Defense Costs to
certain individual Defendants under the Debtors' Directors and
Officers Liability Insurance Policy and the AEGIS ERISA Policy,
being incurred in pending and future lawsuits, proceedings and
investigations -- including, without limitation, the Tittle
Litigation -- subject to the full reservation of rights and
defenses by AEGIS and the execution of a written undertaking by
each of the subject Defendants to repay any amounts advanced if it
ultimately is determined that they are not entitled to coverage.
On May 15, 2002, the Court permitted AEGIS to pay or advance the
Defense Costs.
In addition, the Tittle Defendants, as well as others, are
defendants in a lawsuit brought by the United States Department of
Labor styled as Elaine L. Chao v. Enron Corporation, et al., Civil
Action No. H-03-2257, commenced in the U.S. District Court for the
Southern District of Texas, Houston Division.
The named plaintiffs in the Tittle Litigation are:
* Pamela M. Tittle,
* Thomas O. Padgett,
* Gary S. Dreadin,
* Janice Farmer,
* Linda Bryan,
* John L. Moore,
* Betty J. Clark,
* Shelly Farias,
* Patrick Campbell,
* Fanette Perry,
* Charles Prestwood,
* Roy Rinard,
* Steve Lacey,
* Catherine Stevens,
* Roger W. Boyce,
* Wayne M. Stevens,
* Norman L. and Paula H. Young,
* Michael L. McCown, and
* Dan Shultz.
The Tittle Plaintiffs have alleged that they represent a class of
similarly situated individuals. No class has yet been certified
in the Tittle Litigation.
The plaintiffs in the Tittle Litigation and the DOL Litigation
allege breaches of fiduciary duty and other claims against the
Defendants related to the administration of certain Employee
Benefit Plans. Various Defendants submitted the claims to AEGIS
and Federal for coverage under the AEGIS ERISA Policy and the
Excess Fiduciary Policy, which collectively afford up to the
$85,000,000 in coverage for settlements and judgments.
The Insurers, AEGIS and Federal, have been advised of a
preliminary partial settlement of claims against some but not all
Defendant Insureds in the Tittle Litigation.
The Settlement would exhaust the collective $85,000,000 of
coverage under the Policies, and would release the liability of
some but not all of the Insureds who are Tittle Defendants.
Accordingly, Mr. Posner concludes, if the proceeds of the
Policies are applied to the Settlement, the non-settling
Defendants who are Insureds would be left uninsured for loss
incurred by them in the Tittle Litigation or the DOL Litigation.
The non-settling Defendant Insureds have objected to AEGIS and
Federal applying the Policies' proceeds to the Settlement. A
request for preliminary approval of the Settlement is pending in
the Tittle Litigation.
The Interpleader Action
Mr. Posner explains that the $85,000,000 collective limits of
liability under the Policies are insufficient to resolve all
claims against all Insureds. Accordingly, AEGIS and Federal face
adverse and conflicting claims from the Insureds for the use of
the Policies' proceeds.
If AEGIS and Federal were to pay the $85,000,000 to the Tittle
Plaintiffs as part of the Settlement in that litigation, AEGIS and
Federal may be subjected to claims from the non-settling Insureds
that the Polices' proceeds were improperly paid for the benefit of
some but not all Insureds.
As a consequence, AEGIS and Federal have moved to intervene in the
Tittle Litigation to file a complaint in the nature of
interpleader. The Interpleader Action is currently pending in the
U.S. District Court for the Southern District of Texas, Houston
Division.
Enron and the other defendants in the Interpleader Action are the
potential Insureds under the Policies who have submitted claims
for coverage under the Policies.
Mr. Posner notes that the Insurers are merely stakeholders in the
Interpleader Action, and by that action, seek only a determination
as to whom the proceeds of the Policies should be paid.
Automatic Stay Should be Lifted
Federal and AEGIS ask the Court to lift the automatic stay to
allow them to release the proceeds of the Debtors' Primary and
Excess ERISA Fiduciary Liability Insurance Policies as directed by
and in accordance with the ruling of the Texas District Court in
the Interpleader Action, subject to their reservation of rights
and defenses.
On AEGIS' behalf, Louis A. Scarcella, Esq., at Scarcella Rosen &
Slome, LLP, points out that no determination has yet been made on
whether the proceeds of the Policies are property of the estate.
Accordingly, the automatic stay may not apply to Federal and
AEGIS' release of the proceeds of the Policies. However, to the
extent that the proceeds of the Policies are property of the
estate, both Federal and AEGIS acknowledge that the automatic stay
does apply.
Mr. Scarcella asserts that cause exists to lift the stay because
the Insurers would otherwise be in a position where they will be
forced to refuse to comply with an order that the District Court
may issue in connection with the Interpleader Action with respect
to disbursement of the proceeds of the Policies to avoid violating
the automatic stay.
Federal and AEGIS run the risk of either violating the automatic
stay by releasing the proceeds of the Policies in accordance with
the ruling in the Interpleader Action or violating a District
Court order directing them to tender the $85,000,000 proceeds of
their Policies into the registry of the District Court, into other
accounts as the District Court may specify or to one or more third
parties.
Lifting the automatic stay, Mr. Scarcella adds, would avoid the
entry of conflicting court orders and would expedite the
administration and resolution of issues related to the proceeds of
the Policies.
Debtors Object
On May 11, 2004, the Tittle Plaintiffs filed in the District
Court a notice of a partial settlement of the Tittle Action. The
Tittle Plaintiffs have apparently reached a class action
settlement with certain of the defendants in the case, subject to
the District Court's approval pursuant to Rule 23 of the Federal
Rules of Civil Procedure. Brian S. Rosen, Esq., at Weil, Gotshal
& Manges, LLP, in New York, notes that Enron is not a party to the
Partial Settlement and was not invited to participate in the
discussions leading to the settlement agreement. Indeed, Enron
was not even allowed to review the Partial Settlement before it
was served and filed.
The Partial Settlement provides for an $85,000,000 payment to the
Tittle Plaintiffs out of the Policies. According to Mr. Rosen,
the $85,000,000 payment would exhaust Enron's coverage under the
Policies and leave Enron effectively uninsured. The only
additional payment contemplated is a $100,000 Note from an
individual settling defendant. Pursuant to a May 31, 2004 Order,
the District Court granted preliminary approval of the Partial
Settlement, conditionally certified the class of plaintiffs for
purposes of settlement, approved the form and manner of notice of
the Partial Settlement to the class, and scheduled a hearing to
consider the fairness of the Partial Settlement for August 19,
2004.
On May 12, 2004, the Insurers filed in the District Court a
Motion to Intervene in the Tittle Case and File Their Complaint in
the Nature of Interpleader. The Interpleader Action seeks to
establish the rights of the various insureds under the Policies
and to authorize the Insurers to pay the $85,000,000 to the
Tittle Plaintiffs. On May 27, 2004, District Court Judge
Harmon granted the Insurers' request, but stayed the Interpleader
Action pending the Bankruptcy Court's resolution of the Joint
Motion.
The Insurers argue that unless the automatic stay is lifted, they
will be caught in a "catch 22" situation "where they run the risk
of either violating the automatic stay by releasing the proceeds
of the Policies in accordance with the ruling in the interpleader
action or violating an order of the [District Court] directing
them to tender" the proceeds of the Policies to satisfy the
proposed Partial Settlement.
"There is no catch 22," Mr. Rosen remarks. Because the automatic
stay is in effect, the Insurers are under no obligation to
release, and in fact are prohibited from releasing, any proceeds.
The proposed Partial Settlement actually conditions the payment of
the $85,000,000 on the Court's decision to lift the automatic
stay.
Mr. Rosen contends that the Insurers, by filing the Motion to
Intervene in the District Court, were attempting to create a
"catch 22," which does not exist. The District Court, having
stayed the Interpleader Action, has demonstrated an appreciation
for the fact that the Insurers cannot distribute the proceeds of
the Policies contrary to the Court's orders. Moreover, to the
extent the Insurers are between a rock and a hard place, Mr.
Rosen points out that they have wedged themselves in by their own
acts. By filing the Joint Motion after commencing their
Interpleader Action, the Insurers created the circumstances under
which they might be subject to conflicting Court orders.
The Debtors seek a global resolution of all claims related to the
Tittle action that will result in the greatest benefit to all
parties and not hinder the Debtors' attempts at reorganization.
If the Court were to allow the exhaustion of the $85,000,000 in
insurance proceeds at this time, Mr. Rosen asserts that it will be
even more difficult to resolve the remaining issues in the
Tittle Action and successfully implement the Plan.
While the Debtors do not believe that the Insurers have satisfied
applicable law, several factors established in In re Sonnax
Industries, 907 F.2d 1280, 1286 (2d Cir. 1990) weigh heavily
against modifying the automatic stay:
A. Lack of any connection with or interference with the
bankruptcy case
To allow the stay to be lifted and property of the estate to
be divided amongst creditors outside of the Debtors' Chapter
11 cases and the jurisdiction of the Bankruptcy Court would
interfere with the Debtors' Chapter 11 cases.
B. This is not a tenuous connection
The Insurers are asking that the stay be lifted so that
property of the estate can be released to the Tittle
Plaintiffs. Hence, it is a matter best determined by the
Bankruptcy Court.
C. Whether the Debtors' insurer has assumed full responsibility
for defending it
Both the $10,000,000 pool of funds available to pay defense
costs and the $85,000,000 coverage limits will be depleted by
the Partial Settlement, leaving Enron uninsured and forcing
Enron to fund the defense of the Tittle Action out of estate
property.
D. Whether litigation in another forum would prejudice the
interests of other creditors
Permitting release of estate property without management by
the Court, by definition, runs the risk of affecting all of
the creditors now properly seeking protection in the Court.
E. Whether the parties are ready for trial in the other
proceeding
The trial in the District Court will not occur for well more
than a year.
F. Impact of the stay on the parties and balance of harms
Contrary to the Insurers' arguments, they are not caught in
any real "catch-22" and will not be harmed if the automatic
stay is enforced. The Court can afford the Insurers all of
the protection they are now seeking in the District Court.
Thus, the Debtors ask Judge Gonzalez to enforce the automatic stay
and deny the Insurers' request in its entirety.
Headquartered in Houston, Texas, Enron Corporation is in the midst
of restructuring various businesses for distribution as ongoing
companies to its creditors and liquidating its remaining
operations. Before the company agreed to be acquired, controversy
over accounting procedures had caused Enron's stock price and
credit rating to drop sharply. The Company filed for chapter 11
protection on December 2, 2001 (Bankr. S.D.N.Y. Case No.: 01-
16033) Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at
Weil, Gotshal & Manges, LLP, represent the Debtors in their
restructuring efforts. (Enron Bankruptcy News, Issue No. 116 &
120; Bankruptcy Creditors' Service, Inc., 215/945-7000)
ENTERPRISE PRODUCTS: Sells 2.25 Million Additional Common Units
---------------------------------------------------------------
The underwriters of Enterprise Products Partners L.P.'s (NYSE:EPD)
recent equity offering have fully exercised their option to
purchase an additional 2,250,000 common units to cover over-
allotments. This sale is part of the Company's equity offering
that was priced on Aug. 4, 2004 and is at the offering price to
the public of $20.20 per common unit.
The total gross proceeds from the offering of 17,250,000 common
units, including the additional common units sold through the
over-allotment, were $348.45 million.
A copy of the prospectus supplement can be obtained from any of
the underwriters, including Citigroup Global Markets Inc. at
Brooklyn Army Terminal, 140 58th Street, 8th floor, Brooklyn, N.Y.
11220. Direct any requests to the attention of the Prospectus
Department at 718-765-6732 or by fax at 718-765-6734.
Enterprise Products Partners L.P. is the second-largest publicly
traded midstream energy partnership, with an enterprise value of
over $7 billion. Enterprise is a leading North American provider
of midstream energy services to producers and consumers of natural
gas and natural gas liquids. The Company's services include
natural gas transportation, processing and storage and NGL
fractionation (or separation), transportation, storage and
import/export terminaling.
* * *
As reported in the Troubled Company Reporter's May 20, 2004,
edition, Standard & Poor's Rating Services lowered its corporate
credit ratings on Enterprise Products Partners L.P. and Enterprise
Products Operating L.P. to 'BB+' from 'BBB-' and removed the
ratings from CreditWatch with negative implications. The outlook
is stable.
The ratings were originally placed on CreditWatch on Dec. 15, 2003
as a result of the announcement of the merger between Enterprise
Products and GulfTerra Energy Partners L.P. (BB+/Watch Neg/--).
The rating action is based upon an assessment that the credit
rating on Enterprise Products will be 'BB+' whether or not the
proposed merger with GulfTerra takes place.
"On a stand-alone basis, Enterprise Products' creditworthiness has
deteriorated over the past year," said Standard & Poor's credit
analyst Peter Otersen.
ENVIROTECH SYSTEMS: Case Summary & 19 Largest Unsecured Creditors
-----------------------------------------------------------------
Debtor: Envirotech Systems Worldwide, Inc.
7650 East Evans Road Suite C
Phoenix, Arizona 85260
Bankruptcy Case No.: 04-13908
Chapter 11 Petition Date: August 6, 2004
Court: District of Arizona (Phoenix)
Judge: Redfield T. Baum Sr.
Debtor's Counsel: Stanford E. Lerch, Esq.
Lerch & Deprima PLC
4000 North Scottsdale Road, Suite 107
Scottsdale, Arizona 85251
Tel: 480-212-0700
Fax: 480-212-0705
Estimated Assets: $0 to $50,000
Estimated Debts: $1 Million to $10 Million
Debtor's 19 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Larry M. Reynolds Value of Collateral: $519,074
PO Box 1959 $398,177
Fremont, California Unsecured:
$309,667
ION Tankless, Inc. $116,700
Myers & Jenkins P.C. $113,799
Electrosem $81,767
Sensor Technologies & $62,213
Systems, Inc.
Steven Onder $42,216
CGI, Inc. $38,000
Keith King $35,000
Navigant Consulting, Inc. $33,832
American Express $22,526
Holligan Investments $17,735
Frontier Tool & Mold $13,855
Osha & May, LLP $12,033
MEP Management Services $11,880
Kelly Services, Inc. $10,874
Leading Edge $10,295
Michael K. Hair, P.C. $9,790
Cary Conway $8,766
United Parcel Service $7,767
EUROGAS INC: Equity Deficit Tops $11 Million at March 31, 2004
--------------------------------------------------------------
EuroGas, Inc., has accumulated a deficit of $157,278,077 through
March 31, 2004. EuroGas has had no revenue, losses from
operations and negative cash flows from operating activities
during the years ended December 31, 2003 and 2002. At March 31,
2004, the Company had a working capital deficiency of $22,304,439
and a capital deficiency of $11,125,982. The Company has impaired
most of its oil and gas properties. These conditions raise
substantial doubt regarding the Company's ability to continue as a
going concern.
Realization of the investment in properties and equipment is
dependent upon management obtaining financing for exploration,
development and production of its properties. In addition, if
exploration or evaluation of property and equipment is
unsuccessful, all or a portion of the remaining recorded amount of
those properties will be recognized as impairment losses. Payment
of current liabilities will require substantial additional
financing.
Management of the Company plans to finance operations, explore and
develop its properties and pay its liabilities through borrowing,
through sale of interests in its properties, through advances
received against future talc sales and through the issuance of
additional equity securities. Realization of any of these planned
transactions is not assured.
The Company had an accumulated deficit of $157,278,077 at March
31, 2004, substantially all of which has been funded out of
proceeds received from the issuance of stock and the incurrence of
liabilities. At March 31, 2004, the Company had total current
assets of $148,396 and total current liabilities of $22,452,835
resulting in a working capital deficiency of $22,304,439. As of
March 31, 2004, the Company's balance sheet reflected $825,426 in
mineral interests in properties not subject to amortization, net
of valuation allowance. These properties are held under licenses
or concessions that contain specific drilling or other exploration
commitments and that expire within one to three years, unless the
concession or license authority grants an extension or a new
concession license, of which there can be no assurance. If the
Company is unable to establish production or resources on these
properties, is unable to obtain any necessary future licenses or
extensions, or is unable to meet its financial commitments with
respect to these properties, it could be forced to write off the
carrying value of the applicable property.
Throughout its existence, the Company has relied on cash from
financing activities to provide the funds required for
acquisitions and operating activities. As a result, the Company
used net cash of $204,733 during the three months ended March 31,
2004.
While the Company had a small amount of cash of $787 at
March 31, 2004, it has substantial short-term and long-term
financial commitments. Many of the Company's projects are long-
term and will require the expenditure of substantial amounts over
a number of years before the establishment, if ever, of production
and ongoing revenues. The Company has relied principally on cash
provided from equity and debt transactions to meet its cash
requirements. The Company does not have sufficient cash to meet
its short-term or long-term needs, and it will require additional
cash, either from financing transactions or operating activities,
to meet its immediate and long-term obligations. There can be no
assurance that the Company will be able to obtain additional
financing, either in the form of debt or equity, or that, if such
financing is obtained, it will be available to the Company on
reasonable terms. If the Company is able to obtain additional
financing or structure strategic relationships in order to fund
existing or future projects, existing shareholders will likely
continue to experience further dilution of their percentage
ownership of the Company.
If the Company is unable to establish production or reserves
sufficient to justify the carrying value of its assets, to obtain
the necessary funding to meet its short and long-term obligations,
or to fund its exploration and development program, all or a
portion of the mineral interests in unproven properties will be
charged to operations, leading to significant additional losses.
Eurogas Inc. is primarily engaged in the acquisition of rights to
explore for and exploit natural gas, coal bed methane gas, crude
oil, talc and other minerals. The Company has acquired interests
in several large exploration concessions and is in various stages
of identifying industry partners, farming out exploration rights,
undertaking exploration drilling, and seeking to develop
production. The Company is also involved in a planning-stage co-
generation and mineral reclamation project.
FALCON NEST: Voluntary Chapter 11 Case Summary
----------------------------------------------
Debtor: Falcon Nest, LLC
c/o Gerrard, Cox & Larson
4000 South Eastern, Suite 220
Las Vegas, Nevada 89119
Bankruptcy Case No.: 04-18579
Chapter 11 Petition Date: August 9, 2004
Court: District of Nevada (Las Vegas)
Judge: Linda B. Riegke
Debtor's Counsel: Alan R. Smith, Esq.
Law Offices of Alan R. Smith
505 Ridge Street
Reno, Nevada 89501
Tel: (775) 786-4579
Estimated Assets: $10 Million to $50 Million
Estimated Debts: $1 Million to $10 Million
The Debtor did not file a list of its 20-largest creditors.
FLEMING COMPANIES: Ask Court to Approve Rothmans Settlement
-----------------------------------------------------------
On January 30, 2004, Fleming Companies, Inc. and its debtor-
affiliates filed an adversary proceeding against Rothmans Benson &
Hedges, Inc., seeking:
(i) a declaration to disallow or reduce Rothmans'
reclamation claim; and
(ii) avoidance and recovery of preferential transfers.
Rothmans, the Official Committee of Reclamation Claimants and the
Debtors want to resolve the Adversary Proceeding to avoid the
expense and uncertainty of litigation. The parties agree that:
(a) On the Plan's Effective Date, Rothmans will have an
Allowed Non-TLV Reclamation Claim under Class 5 of the
Plan for $1,100,000. The Reclamation Claim will only be
enforceable against the Reclamation Creditors' Trust and
will not be subject to further offset, objection,
reduction, adjustment or reconciliation by the RCT or any
other party;
(b) The Adversary Proceeding will be dismissed with prejudice,
and Rothmans and the Debtors will mutually waive and
release any and all claims raised in the Adversary
Proceeding. Rothmans does not waive, release or
discharge its unsecured claim, which will receive the
treatment described in the Plan, or the Reclamation Claim
against the RCT. Upon the dismissal of the Adversary
Proceeding, Rothmans will be released of any and all
claims under Section 547 of the Bankruptcy Code or any
analogous cause of action under Canadian law that arise
from the facts or the parties' prepetition relationship
that is the subject of the Adversary Proceeding;
(c) Provided that the Adversary Proceeding is dismissed,
Rothmans agrees that it will not look to the Debtors,
Core-Mark Newco, or any other successor-in-interest for
recovery on its asserted reclamation claim and that the
treatment of its reclamation claim will be its sole and
exclusive remedy for payment; and
(d) The Reclamation Claim will remain subject to all other
rules developed by the Reclamation Committee to date, or
to be developed by the Reclamation Committee or RCT, for
governance and administration of the RCT, and payment of
RCT liabilities, to the extent the rules apply to all
Allowed Non-TLV Reclamation Claims.
The Debtors have investigated the facts and claims involved and
have concluded that there are significant litigation risks
associated with prosecuting the suit to a judgment. Without
prejudice to the potential defenses or positions that may be
asserted by the Debtors, Christopher J. Lhulier, Esq., at
Pachulski, Stang, Ziehl, Young, Jones & Weintraub, PC, in
Wilmington, Delaware, relates that there is a reasonable chance
Rothmans will prevail on a substantial majority of its reclamation
claim assuming that that underlying legal issues were decided in
its favor, and based on its analysis, the Debtors may recover
significantly less than the full amount of its preference claim
after the "ordinary course of business" defense is taken into
account. "While the success in litigation is not guaranteed, it
is certain that litigation will impose significant expenses and be
time-consuming," Mr. Lhulier notes.
Accordingly, the Debtors ask the United States Bankruptcy Court
for the District of Delaware to approve their Settlement Agreement
with Rothmans.
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. 41; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
GERMANTOWN GROUP: Voluntary Chapter 11 Case Summary
---------------------------------------------------
Debtor: Germantown Group, Inc.
dba Concrete Safety Systems
9190 Old Route 22
Bethel, Pennsylvania 19507-9719
Bankruptcy Case No.: 04-24185
Type of Business: The Debtor manufactures precast concrete
products for highway and industrial
use. See http://www.concretesafety.com/
Chapter 11 Petition Date: August 9, 2004
Court: Eastern District of Pennsylvania (Reading)
Judge: Thomas M. Twardowski
Debtor's Counsel: Robert L. Knupp, Esq.
Knupp, Kodak & Imblum, P.C.
407 North Front Street
P.O. Box 11848
Harrisburg, PA 17108-1848
Tel: 717-238-7151
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.
GLOBAL CROSSING: Will Pay British Telecom GBP123,006
----------------------------------------------------
British Telecom/BT Ignite is the agent for 23 telecommunication
companies that are each a signatory to the North Sea Cable
Maintenance Agreement, effective as of April 1, 1999:
* AT&T Corp.
* Belgacom S.A.
* British Telecommunications
* Global Marine Systems Limited
* Deutsche Telekom AG
* France Telecom
* GN Great Northern Telegraph Company Limited
* Guernsey Telecommunications
* Hermes Europe Railtel BV
* Jersey Telecommunications
* KPN-Telecom B.V.
* Mercury Communications GMbH & Co.
* Telekomunikacja Polska S.A.
* AO Rostelecom
* Sonera OY
* Tele Danmark A/S
* Telefonica de Espana, S.A.
* Teleglobe Canada, Inc.
* Telia AB
* Telenor Global Services AS
* Tele 2 AB
* Tyco Submarine Systems Ltd.
* WorldCom International Limited
BT Ignite is also the agent to 45 telecommunication companies that
are each a signatory to the TAT-12/TAT-13 Cable Network
Construction and Maintenance Agreement, dated December 16, 1992:
* Bundesministerium fuer Oeffenliche Wirtschaft und
Verkerh Generaldirecktion fuer die Post-und
Telegraphenverwaltung
* Belgacom
* SPT-Bratislava
* Cyprus Telecommunications Authority
* TELECOM Denmark Ltd.
* Posts and Telecommunications of Finland
* France Telecom
* Deutsche Bundespost Telekom
* Hungarian Telecommunications Company Limited
* Bord Telecom Eireann
* Italcable Servizi Cablografici Radiotelegrafici e
Radioelettrici S.p.A.
* Entreprise des Postes et Telecommunications de
Luxembourg
* Norwegian Telecom
* PTT Telecom BV
* Telekomunikacja Polska, S.A.
* Companhia Portuguesa Radio Marconi S.A.
* SPT-Praha
* Telefonica de Espana S.A.
* Swedish Telecom
* Enterprise des Postes, Telephones et Telegraphes
Suisses
* General Directorate of Turkish PTT
* British Telecommunications Limited
* AUSSAT Pty. Ltd.
* Australian and Overseas Telecommunications
Corporation Limited ACN 051 775 556
* Directorate General of Telecommunications
* Teleglobe Canada, Inc.
* Hong Kong Telecom International Limited
* Videsh Sanchar Nigam Limited
* International Digital Communications, Inc.
* International Telecom Japan, Inc.
* Kokusai Denshin Denwa Co., Ltd.
* DACOM Corporation
* Korea Telecom
* Telefonos de Mexico S.A. de C.V.
* Philippine Long Distance Telephone Company
* Singapore Telecommunications Private Limited
* International Telecommunication Development
Corporation
* American Telephone and Telegraph Company
* GTE Hawaiian Telephone Company Incorporated
* CICI, Incorporated d.b.a. IDB International
* MCI International, Inc.
* Sprint Communications Company L.P.
* Transoceanic Communications, Incorporated
* TRT/FTC Communications, Inc.
* World Communications, Inc.
In its own capacity and its capacity as agent for the NSCMA
Consortium and the TAT-12/TAT-13 Consortium Members, BT Ignite
filed an administrative proof of claim -- Claim No. 10600 -- for
$532,975, covering unpaid services arising under the NSCMA and the
TAT-12/TAT-13 Agreement against the Global Crossing, Ltd., and its
debtor-affiliates and subsidiaries.
Pursuant to Court orders dated October 9, 2003 and November 17,
2003, the Debtors rejected the NSCMA and the TAT-12/TAT-13
Agreement. The GX Debtors and BT Ignite have reached an agreement
resolving Claim No. 10600.
The GX Debtors, BT Ignite and the Consortium Members stipulate
that:
(a) GX will pay GBP123,006 without further delay.
(b) Claim No. 10600 will be expunged and BT Ignite will
release the GX Debtors from any liabilities arising under
Claim No. 10600 or for any services rendered under the
NSCMA and the TAT-12/TAT-13 Agreement.
Headquartered in Florham Park, New Jersey, Global Crossing Ltd.
-- http://www.globalcrossing.com/-- provides telecommunications
solutions over the world's first integrated global IP-based
network, which reaches 27 countries and more than 200 major cities
around the globe. Global Crossing serves many of the world's
largest corporations, providing a full range of managed data and
voice products and services. The Company filed for chapter 11
protection on January 28, 2002 (Bankr. S.D.N.Y. Case No. 02-
40188). When the Debtors filed for protection from their
creditors, they listed $25,511,000,000 in total assets and
$15,467,000,000 in total debts. Global Crossing emerged from
chapter 11 on Dec. 9, 2003. (Global Crossing Bankruptcy News,
Issue No. 64; Bankruptcy Creditors' Service, Inc., 215/945-7000)
GLOBALSTAR CAPITAL: Administrative Claims Are Due by Aug. 13
------------------------------------------------------------
The United States Bankruptcy Court for the District of Delaware
confirmed the First Modified Fourth Amended Joint Plan of
Globalstar Capital Corporation and its debtor-affiliates on June
17, 2004. The Honorable Peter J. Walsh directs all entities
holding Administrative Claims against the Debtors to file requests
for allowance of those claims no later than August 13, 2004.
Administrative Claims must be delivered to:
Robert L. Berger & Associates, LLC
PMB 1014
10351 Santa Monica Blvd, Suite 101A
Los Angeles, California, 90025
and a copy must be filed with the Bankruptcy Court.
Globalstar is the world's most widely used global mobile satellite
telecommunications service, offering both voice and data services
from virtually anywhere in over 100 countries around the world.
For more information, visit Globalstar's web site at
http://www.globalstar.com/
The Debtors filed for chapter 11 protection on February 15, 2002
(Bankr. Del. Case No. 02-10504-PJW). Judge Peter J. Walsh
administers the bankruptcy proceedings. Paul Leake, Esq., and
Scott J. Friedman, Esq., at Jones Day and Brendan Linehan Shannon,
Esq., at Young Conaway Stargatt & Taylor, LLP, represent the
Debtors.
HAMILTON SHEET: List of 20 Largest Unsecured Creditors
------------------------------------------------------
Hamilton Sheet Metal, LLC released a list of its 20 Largest
Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Air Distribution Group Trade Debt $52,077
All Metals Ind. Inc. Trade Debt $47,103
McGrill Air Flow Corp. Trade Debt $42,176
Harvard Pilgrim Health Care Trade Debt $30,000
Total Air Supply, Inc. Trade Debt $29,437
Northeast Air Solutions Inc. Trade Debt $28,570
American Express Trade Debt $25,648
Superior Sheet Metal Trade Debt $17,037
The Rowley Agency Trade Debt $16,145
A.I.M. Mutual Insurance Trade Debt $15,470
Air Purchases, Inc. Trade Debt $13,136
Central Steel Supply Trade Debt $8,658
Ritchie & Sons, Inc. Trade Debt $8,350
Air Purchases of NH Trade Debt $8,193
American Steel and Aluminum Trade Debt $7,922
Corp.
Home Depot CRC Trade Debt $7,791
Peerless Insurance Trade Debt $6,780
Advantage Gases & Tools Trade Debt $6,522
McNichols Co. Trade Debt $6,365
United Rentals Trade Debt $5,460
Headquartered in Manchester, New Hampshire, Hamilton Sheet Metal,
LLC -- http://www.hamiltonsheetmetal.com/-- fabricates and
installs sheet metal for HVAC systems. The Company filed for
chapter 11 protection (Bankr. D. N.H. Case No. 04-12711) on July
30, 2004. Grenville Clark, Esq., at Gray, Wendell & Clark, PC,
represents the Company in its restructuring efforts. When the
Debtor filed for protection from its creditors, it estimated debts
and assets of over $1 million.
HIGH VOLTAGE: Emerges from Chapter 11 Reorganization
----------------------------------------------------
High Voltage Engineering Corporation and all of its U.S.
subsidiaries have emerged from chapter 11 reorganization. The
Company emerged only 163 days after it commenced its chapter 11
case.
"We are very pleased that the restructuring process has been
completed. We were able to complete this challenging process due
to the cooperation and participation of our customers, suppliers,
channel partners, bondholders, and employees, all of whom helped
reposition the Company for long-term success. [High Voltage] is
now a considerably stronger company with significantly less debt
and well positioned for continued future growth in our core
markets," said High Voltage Chief Executive Officer Russell Shade.
The Company's Third Amended Joint Chapter 11 Plan of
Reorganization was confirmed by the U.S. Bankruptcy Court for the
District of Massachusetts on July 21, 2004. The Company was
represented by Fried, Frank, Harris, Shriver, & Jacobson LLP,
Goulston & Storrs, P.C., and Evercore Restructuring L.P.
Under the terms of the Plan, which has now become effective, all
of the Company's 103/4% Senior Notes due 2004, amounting to $155
million plus accrued interest, have been converted into 97% of the
Company's post-bankruptcy equity, subject to dilution, and the
Company's pre-bankruptcy preferred and common stock have been
extinguished. The holders of such pre-bankruptcy classes of stock
will receive, in the aggregate, warrants to acquire up to 10% of
the new common stock, subject to dilution. All trade suppliers
and other unsecured creditors will be paid in full pursuant to the
terms of the Plan within 90 days.
As part of its emergence from chapter 11, High Voltage has
obtained exit financing facilities of $45 million from a lending
group which is comprised of some of the same lenders who provided
the $25 million debtor in possession financing. The incremental
$20 million of proceeds will be used to fund a portion of the
distributions to HVE's pre-petition creditors and provide ongoing
working capital for growth plans.
Also effective with the Company's emergence from chapter 11, the
Company's previous Board of Directors was succeeded by a new Board
of Directors selected under the Plan. The new board members
joining CEO Russell L. Shade, Jr. are:
* Eugene I. Davis, Chairman of the Board for High Voltage;
* George A. Helland, Jr.;
* Robert L. Montgomery, Jr.; and
* Brent M. Stevenson.
High Voltage owns and operates a group of technology-based
manufacturing businesses that focus on designing and manufacturing
high quality, applications- engineered products and services
designed to address customer needs. High Voltage's businesses
include:
(1) ASIRobicon, which includes ASIRobicon S.p.A. (Milan Italy)
and Robicon Corporation (Pittsburgh Pennsylvania);
(2) Evans Analytical Group (Sunnyvale California); and
(3) High Voltage Engineering (Amersfoort, The Netherlands).
ASIRobicon, with joint headquarters in New Kensington,
Pennsylvania and Milan, Italy, is one of the leading power control
and power quality solutions providers to industrial markets
worldwide. The Company designs, manufactures and markets variable
frequency drives, motors and generators, power control and power
quality systems and automation systems that incorporate all of
these components. For more information about ASIRobicon, visit
http://www.asirobicon.com/
Headquartered in Wakefield, Massachusetts, High Voltage
Engineering Corp., designs and manufactures technology-based
products in three segments: power conversion technology and
automation, advanced surface analysis instruments and services,
and monitoring instrumentation and control systems for heavy
machinery and vehicles. The Company filed for chapter
11protection on March 1, 2004 (Bankr. Mass. Case No. 04-11586).
The Company was represented by Fried, Frank, Harris, Shriver, &
Jacobson LLP, Goulston & Storrs, P.C., and Evercore Restructuring
L.P. When the Company filed for protection from its creditors, it
listed estimated debts and assets of more than $100 million.
IMAX CORP: Inks Multiple Theatre Deal with National Amusements
--------------------------------------------------------------
IMAX Corporation (Nasdaq:IMAX; TSX:IMX) and National Amusements
Inc., a leading international exhibitor with over 1,425 screens
worldwide, signed a groundbreaking multiple theatre deal to
install as many as 18 IMAX(R) theatre systems over the next
several years.
Under the specific terms of the deal, National Amusements will
install 4 IMAX MPX(R) theatre systems in 2004 and 2 additional
systems in 2005 or 2006. As part of the deal, the parties reached
agreement on terms under which National Amusements may purchase up
to 12 additional systems, predominantly in the United Kingdom,
beginning next year, as an integral part of National Amusements'
development plans in that market. National Amusements currently
operates the IMAX Theatre at The Bridge Cinema de Lux at The
Promenade at Howard Hughes Center in West Los Angeles.
The deal signals an important milestone for IMAX in the
implementation of its commercial theatre growth strategy, which
uses the combination of its proprietary IMAX DMR(R) (Digital Re-
Mastering) technology to bring major Hollywood event films to the
IMAX theatre network, and the IMAX MPX theatre system technology
to drive signings and installations.
The first four IMAX theatres will be located at:
-- City Center 15: Cinema de Lux in White Plains, New York;
-- Showcase Cinemas Buckland Hills, near Hartford, Connecticut;
-- Showcase Cinemas Stonybrook, in Louisville, Kentucky; and
-- Showcase Cinemas Springdale, near Cincinnati, Ohio,
and are expected to open in November 2004, in time for the IMAX(R)
3D release of the Warner Bros. Pictures holiday film The Polar
Express. The specific locations for the 2005-6 installations have
not yet been determined, however, one of the theatres is likely to
be located in the United Kingdom. All 18 potential IMAX theatres
will utilize the revolutionary new IMAX MPX technology, which was
designed specifically for multiplex operators, enabling them to
add an IMAX theatre to a new or existing multiplex in a more cost
effective and timely manner.
"National Amusements is committed to providing our patrons the
ultimate movie going experience. We are excited to be partnering
with IMAX and feel that its new DMR technology is consistent with
a number of things we are working on throughout our circuit. Our
new Cinema de Lux brand, our focus on alternative entertainment
and this new IMAX technology we are now introducing will ensure
that our patrons have an entertainment experience that is
unrivalled elsewhere," stated Shari E. Redstone, president,
National Amusements, Inc.
"We are extremely pleased to expand our relationship with National
Amusements, one of the most forward-looking exhibitors in the
world," said IMAX's Co-Chairmen and Co-CEO's, Richard L. Gelfond
and Bradley J. Wechsler. "This multiple theatre commitment from
National Amusements confirms our belief in the potential of IMAX
theatres in commercial multiplexes and further advances our
commercial strategy. The strong interest from National Amusements
and other top multiplex theatre operators should help us attract
even more digitally re-mastered Hollywood event films, which, in
turn, can help us grow the IMAX network around the world."
About National Amusements, Inc.
National Amusements, Inc., North America's sixth largest theatre
operator is a closely held corporation, that operates more than
1,425 motion picture screens in the U.S., the U.K., Latin America,
is an equal partner in the online ticketing service,
MovieTickets.com and the parent company of Viacom. Viacom is a
leading global media company, with preeminent positions in
broadcast and cable television, radio, outdoor advertising and
online. With programming that appeals to audiences in every
demographic category across virtually all media, the company is a
leader in the creation, promotion and distribution of
entertainment, news, sports, music and comedy. Viacom's well-known
brands include CBS, MTV, Nickelodeon, VH1, BET, Paramount
Pictures, Viacom Outdoor, Infinity, UPN, Spike TV, TV Land, CMT:
Country Music Television, Comedy Central, Showtime, Blockbuster,
and Simon & Schuster.
About IMAX Corporation
Founded in 1967, IMAX Corporation is one of the world's leading
entertainment technology companies. IMAX's businesses include the
creation and delivery of the world's best cinematic presentations
using proprietary IMAX and IMAX 3D technology, and the development
of the highest quality digital production and presentation. IMAX
has developed revolutionary technology called IMAX DMR (Digital
Re-mastering) that makes it possible for virtually any 35mm film
to be transformed into the unparalleled image and sound quality of
The IMAX Experience(R). The IMAX brand is recognized throughout
the world for extraordinary and immersive family entertainment
experiences. As of June 30, 2004, there were 240 IMAX theatres
operating in 35 countries.
IMAX(R), IMAX(R) 3D, IMAX DMR(R), IMAX MPX(R) and The IMAX
Experience(R) are trademarks of IMAX Corporation. More information
on the Company can be found at http://www.imax.com/
At June 30, 2004, IMAX Corporation's balance sheet reflected a
$50,985,000 stockholders' deficit, compared to a $51,776,000
deficit at December 31, 2003.
INFOUSA: Prepays $5MM of Bank Debt & Reiterates Guidance for 2005
-----------------------------------------------------------------
infoUSA(R) (Nasdaq:IUSA), the leading provider of proprietary
business and consumer databases and sales leads, today announced
that it has prepaid $5 million of principal debt obligation under
its Revolving Credit Facility. Vin Gupta, Chairman and CEO,
infoUSA, commented, "Cost cuts that we implemented in second
quarter of 2004 have enabled us to get back on track to achieve
our long-term EBITDA margin goal of 30% plus in our core business
excluding most recent acquisitions. Based on what we know now, we
feel confident that we will generate over $102 million in EBITDA
in fiscal year 2005. We are projecting our free cash flow to
increase by approximately 33% from over $48 million in fiscal year
2004 to over $64 million in fiscal year 2005. We will use the
majority of our free cash flow to pay down debt. The disciplined
reduction in leverage, as we have demonstrated in the past, will
position us well to maximize our shareholder value."
About infoUSA
infoUSA -- http://www.infoUSA.com/-- founded in 1972, is the
leading provider of business and consumer information products,
database marketing services, data processing services and sales
and marketing solutions. Content is the essential ingredient in
every marketing program, and infoUSA has the most comprehensive
data in the industry, and is the only company to own a
proprietary database of 250 million consumers and 14 million
businesses under one roof. The infoUSA database powers the
directory services of the top Internet traffic-generating sites,
including Yahoo! (Nasdaq:YHOO) and America Online. Nearly 3
million customers use infoUSA's products and services to find new
customers, grow their sales, and for other direct marketing,
telemarketing, customer analysis and credit reference purposes.
infoUSA headquarters are located at 5711 S. 86th Circle, Omaha, NE
68127 and can be contacted at 402-593-4500.
* * *
As reported in the Troubled Company Reporter on May 20, 2004,
Standard & Poor's Ratings Services assigned its 'BB' ratings and
recovery ratings of '4' to infoUSA Inc.'s $250 million of senior
secured credit facilities, indicating a marginal recovery
(25%-50%) of principal in the event of a default.
In addition, Standard & Poor's affirmed its 'BB' corporate
credit rating on the Omaha, Nebraska-headquartered company. The
outlook is stable.
"The ratings on infoUSA Inc. reflect the company's meaningful
pro forma debt levels, moderate-size operating cash flow base and
competitive market conditions, including competition from
companies that have greater financial resources," said Standard
& Poor's credit analyst Donald Wong. "These factors are tempered
by infoUSA's historical operating cash flow margins in the mid-
to high-20% range, free operating cash flow generation, strong
niche market positions, a broad product and service offering
distributed through numerous channels to a diverse base of
businesses, and a significant portion of sales derived from
existing or former customers."
JILLIAN'S ENTERTAINMENT: Auctioning Assets on September 21
----------------------------------------------------------
An auction for the sale of the assets of Jillian's Entertainment
Holdings Inc. and its affiliates has been set for Tuesday,
September 21, 2004, at 10:00 a.m. Bids are due a week earlier, on
September 14, 2004, prior to 5:00 p.m. All times are Louisville
(Eastern Daylight) time.
Jillian's is a privately held company that operates 35 multi-venue
entertainment complexes, or clubs, under the Jillian's brand name
in 20 states. The company generated revenues of $160 million and
earnings of $18.7 million before interest, taxes, depreciation and
amortization for the fiscal year ended March 28.
As announced earlier, Jillian's received "stalking horse" bids
from two parties:
* Dave & Buster's Inc. (NYSE: DAB), offering $27.6 million for
11 locations; and
* Gemini Investors III, L.P., offering $11.2 million, for
19 locations;
for certain of its assets.
Under bid procedures approved July 13 by the U.S. Bankruptcy Court
for the Western District of Kentucky in Louisville, other
qualified parties may submit higher and better offers for some or
all of Jillian's assets, including clubs or other assets covered
by the stalking horse bids.
Bids can be proffered for:
-- some or all of the 11 mall-based clubs or other assets in
the Dave & Buster's bid;
-- some or all of the 19 urban and upscale clubs or other
assets in the Gemini bid;
-- and/or any or all of the clubs and other assets not covered
by the two stalking horse bids, including clubs in Memphis,
Tennessee;
-- Rochester, New York; and Tacoma, Washington.
The sale so far has generated a number of inquiries.
The auction is being conducted under Section 363 of the U. S.
Bankruptcy Code, under which Jillian's filed for Chapter 11
voluntary reorganization May 23. Except for certain administrative
and procedural requirements under Chapter 11, Jillian's has been
operating in the ordinary course of business since the filing.
Jillian's, like the rest of the "eat-drink-play" industry, was
affected by economic conditions beginning in 1999 and then fallout
from the events of 9/11. It has stabilized operations in the last
two years and has experienced improved sales since last September.
It has also improved financial performance since January 1.
Bidders must follow procedures set up by the Bankruptcy Court,
including submission of financial qualifications. Also, competing
bids for the assets comprising the Dave & Buster's bid must exceed
$28,657,400, and for the assets included in the Gemini bid,
$11,729,957.
Qualifying bidders, including the stalking horse bidders, may
increase their bids at the auction. The Bankruptcy Court has
scheduled a hearing for Thursday, September 23 at 10:30 a.m.
(Louisville time) on a motion to approve the sale or sales to
bidders with the highest and best bids.
Potential bidders may obtain more information regarding the
company's bankruptcy filing, including bid procedures, by visiting
http://www.kccllc.net/jillians/
Bid procedures and other court documents may also be found at
http://www.kywb.uscourts.gov/
Potential bidders may also obtain more information regarding the
sale by contacting Charlie Reardon of Houlihan Lokey Howard &
Zukin Capital, Investment Bankers, at (703) 714-1728.
Headquartered in Louisville, Kentucky, Jillian's Entertainment
Holdings, Inc. -- http://www.jillians.com/-- operates more than
40 restaurant and entertainment complexes in about 20 US states.
The Company filed for chapter 11 protection on May 23, 2004
(Bankr. W.D. Ky. Case No. 04-33192). Edward M. King, Esq., at
Frost Brown Todd LLC and James H.M. Sprayregen, Esq., at
Kirkland & Ellis LLP, represent the Debtors in their restructuring
efforts. When the Company filed for protection from their
creditors, they listed estimated assets of more than $100 million
and estimated debts of over $50 million.
KAISER: Hearing on Aug. 23 to Ratify 7th DIP Financing Amendment
----------------------------------------------------------------
On July 14, 2004, Judge Fitzgerald granted the Kaiser Aluminum
Corporation and its debtor-affiliates and its subsidiaries'
postpetition lenders liens on the proceeds received from the sale
of the Debtors' interests in and related to Alumina Partners of
Jamaica. The Court also permitted the Debtors to enter into a
waiver, pursuant to which the Lenders agreed to waive, until no
later than July 30, 2004, any non-compliance with the provisions
of the DIP Credit Agreement restricting the sale of the Alpart
Interests. The Debtors are also authorized to pay the $500,000
waiver fee, which will be credited toward the fees associated with
entering into the Seventh Agreement.
The Debtors and their postpetition lenders are still finalizing
the terms of the Seventh Amendment.
The Debtors asked their postpetition Lenders to modify the Waiver
to extend its term through September 30, 2004, and permit the sale
of certain assets associated with the Debtors' facility in
Gramercy, Louisiana, and interests in and related to Kaiser
Jamaica Bauxite Company, in consideration for which the Debtors
will pay a $250,000 extension fee that will be creditable against
the fees payable in connection with the Seventh Amendment.
On July 19, 2004, the Court decided that it will continue the
hearing on the Seventh Amendment on August 23, 2004, at 1:30 p.m.
Judge Fitzgerald also authorized the Debtors to enter into the
Waiver Agreement and to pay the related Waiver Fee. "The
Creditors' Committee, the Asbestos Claimants' Committee, the
Asbestos Representative and the Silica Representative shall have
the right to review the final documentation of the Waiver
Agreement and seek a hearing before the Court to address any
dispute regarding such documentation," Judge Fitzgerald
emphasized.
Headquartered in Houston, Texas, Kaiser Aluminum Corporation --
http://www.kaiseral.com/-- operates in all principal aspects of
the aluminum industry, including mining bauxite; refining bauxite
into alumina; production of primary aluminum from alumina; and
manufacturing fabricated and semi-fabricated aluminum products.
The Company filed for chapter 11 protection on February 12, 2002
(Bankr. Del. Case No. 02-10429). Corinne Ball, Esq., at Jones,
Day, Reavis & Pogue, represent the Debtors in their restructuring
efforts. On September 30, 2001, the Company listed $3,364,300,000
in assets and $3,129,400,000 in debts. (Kaiser Bankruptcy News,
Issue No. 47; Bankruptcy Creditors' Service, Inc., 215/945-7000)
KMART CORP: Gator Entities Filed Counterclaims against Kmart
------------------------------------------------------------
Kmart Corporation leases properties located in:
-- Daytona Beach, Florida from Gator Daytona Partners, Ltd.,
and
-- Fairhaven, Massachusetts from Gator Fairhaven Partners,
Ltd.
Kmart operates retail stores in the leased premises. Under the
Plan, Kmart assumed the Leases for the Daytona Beach and
Fairhaven properties. Gator Daytona and Gator Fairhaven submitted
cure claims with respect to their Leases and both claims have been
fully resolved by the Court.
William J. Barrett, Esq., at Barack, Ferrazzano, Kirschbaum,
Perlman & Nagelberg, LLP, in Chicago, Illinois, tells the Court
that Gator Daytona and Gator Fairhaven are Florida limited
partnerships with its principal place of business in North Miami
Beach, Florida. The general partner of Gator Daytona is Gator
Daytona, Inc., while the general partner of Gator Fairhaven is
Gator Fairhaven, Inc. James Goldsmith is President and William
Goldsmith is Vice President of both Gator Daytona, Inc. and Gator
Fairhaven, Inc.
Through various Gator entities that they control, Messrs. James
and William Goldsmith lease 10 properties to Kmart, including the
Daytona Beach and Fairhaven properties.
Since at least the Effective Date, Mr. Barrett asserts that the
Goldsmiths have launched and prosecuted a campaign to harass
Kmart in its enjoyment, use and occupancy of the Gator
Properties. To resolve a series of spurious defaults declared by
the owners of the Gator Properties, Kmart filed a lawsuit in the
Florida State Court in June 2004 against the direct and indirect
owners of the Gator Properties, including Gator Daytona and Gator
Fairhaven, and the Goldsmiths.
In the Florida State Court Action, Kmart asserted that the
Goldsmiths and the Gator Entities are operating the Gator
Properties with the intent to eliminate Kmart as a tenant in seven
leasehold properties and to capture for themselves the value
inherent in these under-market leases that were assumed during
Kmart's bankruptcy. Kmart believes that the Goldsmiths and the
Gator Entities are unlawfully manufacturing claims against Kmart
to serve as the basis for eviction actions or to otherwise create
a hostile landlord/tenant relationship between them.
Gator Daytona and Gator Fairhaven have filed counterclaims against
Kmart in the Florida state court action. Gator Daytona and Gator
Fairhaven made claims against Kmart that are subject to
prohibition under the Plan and Confirmation Order. Gator Daytona
and Gator Fairhaven assert claims against Kmart that have been
previously adjudicated by the Court or for which protection can
only be obtain from the Court.
(1) Gator Fairhaven Counterclaim
Gator Fairhaven alleges that in April 2002, Kmart wrongfully
closed the Penske Oil facility operated on the leased
premises and that, as a consequence, Gator Fairhaven was
denied the percentage rent that would have been earned from
the continued operation of the Penske facility.
Gator Fairhaven sought compensatory damages, "in excess of
$15,000" for the alleged lost percentage rent from the Penske
Oil facility. Mr. Barrett contends that to the extent that
Gator Fairhaven has a claim for additional rent, the claim
arose prior to Plan confirmation and, thus, has been
discharged except to the extent preserved in a timely filed
cure claim. Not only did Gator Fairhaven fail to assert a
cure claim for percentage rent, it agreed to the entry of an
order that stated "percentage rent is deemed paid in full and
satisfied through November 30, 2002."
Mr. Barrett points out that although Gator Fairhaven
submitted a cure claim for unpaid taxes and has received
payment of those taxes, it now contends that Kmart's
assumption of the Fairhaven property on May 28, 2002 was
ineffective because at that time Kmart had not paid all of
its tax obligations under the Lease. In effect, Gator
Fairhaven is challenging Kmart's Lease assumption, which the
Court approved in the Confirmation Order, with no objection
filed by Gator Fairhaven.
About 10 days prior to Kmart's assumption of the Fairhaven
Lease, Gator Fairhaven served Kmart with a default notice to
terminate Kmart's leasehold interest for failure to pay
percentage rent that might have accrued on account of the
closed Penske Oil facility.
Gator Fairhaven seeks to terminate the Fairhaven Lease for
Kmart's failure to pay the unearned percentage rent and
taxes. "In seeking to terminate the Fairhaven Lease based on
pre-Effective Date events, Gator Fairhaven has plainly
violated the injunction contained in the Plan, encroached on
the Court's exclusive jurisdiction and defied the Court's
orders," Mr. Barrett asserts.
(2) Gator Daytona Counterclaim
Gator Daytona alleges that in 2000, Kmart wrongfully ceased
to operate a supermarket in about 20,000 square feet of
retail space and converted it to storage space. Based on the
alleged default, Gator Daytona seeks to terminate the Daytona
Lease. To the extent that Gator Daytona had a claim for the
closing of the supermarket facility and conversion of the
space to storage, the claim arose prior to the Petition Date
and has been discharged except to the extent preserved in a
timely filed cure claim. Mr. Barrett relates that Gator
Daytona did not file a cure claim asserting any breach
relating to the closing of the supermarket facility or the
conversion of the space to storage space. Moreover, Gator
Daytona did not object to Kmart's assumption of the Daytona
Lease pursuant to the Plan.
Accordingly, Kmart asks the Court to:
(a) hold Gator Daytona and Gator Fairhaven in contempt for
violating the Confirmation Order;
(b) restrain and enjoin Gator Daytona and Gator Fairhaven from
litigating the Counterclaims in the Florida State Court
Action;
(c) declare that the Counterclaims are barred by the doctrines
of res judicata, collateral estoppel, and judicial
estoppel and that the Counterclaims seek protection that
may only by granted by the Bankruptcy Court; and
(d) temporarily and permanently enjoin Gator Daytona and Gator
Fairhaven from taking any further action to prosecute
their Counterclaims.
Headquartered in Troy, Michigan, Kmart Corporation --
http://www.bluelight.com/-- Kmart Corporation is the nation's
second largest discount retailer and the third largest merchandise
retailer. Kmart Corporation currently operates approximately 2,114
stores, primarily under the Big Kmart or Kmart Supercenter format,
in all 50 United States, Puerto Rico, the U.S. Virgin Islands and
Guam. The Company filed for chapter 11 protection on January 22,
2002 (Bankr. N.D. Ill. Case No. 02-02474). Kmart emerged from
chapter 11 protection on May 6, 2003. John Wm. "Jack" Butler,
Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP,
represents the Debtors in their restructuring efforts. The
Company listed $16,287,000,000 in assets and $10,348,000,000 in
debts. (Kmart Bankruptcy News, Issue No. 78; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
KROLL INC: Subsidiary Acquires Leading U.K. Employee Screening Co.
------------------------------------------------------------------
Kroll Background Worldwide Limited (KBW), Kroll Inc.'s London-
based international background screening subsidiary, has acquired
FPR Limited, one of the United Kingdom's leading pre-employment
screening companies. This acquisition solidifies KBW's position as
the foremost background screening company in both Europe and in
the United Kingdom.
Kroll Background Worldwide's business in the U.K., which includes
both local and international employee and vendor background
screening, is currently conducted by Kroll PRM, a Kroll company
located in Brighton. As a result of the acquisition, Kroll PRM and
FPR will be merged into a single operating entity, which will
conduct business under the name "Kroll FPR." FPR's former owners,
David Spencer-Butler and Michael Whittington, will join the new
company as managing director and operations director,
respectively.
Based in East Grinstead with more than 80 staff, FPR was founded
in 1992 by Spencer-Butler, following a number of years service in
the financial services industry at board level. In addition to
employment screening, FPR's services include Reference Bank, an
outsourced solution for reference provisioning and Employment
Verifications System (EVS), an on-line employment verification
software solution.
"By expanding our blue-chip client base and broadening the range
of our services, this acquisition has effectively secured our
position as Europe's first choice for background screening," said
Michael Shmerling, president of Kroll's Background Screening
Group. "Equally important, our expanded capabilities enable us to
meet the high demand for local and global employee screening
services coming from the clients of Marsh & McLennan Companies,
Kroll's parent company."
David Spencer-Butler also affirmed the benefits of the
acquisition. "Kroll's international network will provide our
clients with a far broader spectrum of services on a global scale.
Besides benefiting our clients, this deal gives FPR's staff the
opportunity to be part of the world's largest risk consulting
company and remain at the forefront of reducing employee risk."
About Kroll
Kroll Inc., the world's leading risk consulting company, provides
a broad range of investigative, intelligence, financial, security
and technology services to help clients reduce risks, solve
problems and capitalize on opportunities. Based in London, Kroll
Background Worldwide Ltd. (KBW) provides employee and vendor
screening services in the United Kingdom, Europe, Africa and Asia.
KBW is a unit of Kroll's Background Screening Group, which
provides background investigations, substance abuse testing,
mortgage credit reports and other screening services in North
America through Kroll Background America, Inc.; Kroll Factual
Data, Inc.; Kroll Laboratory Specialists, Inc. Kroll is an
operating unit of Marsh Inc., the risk and insurance services
subsidiary of Marsh & McLennan Companies, Inc. For more
information, please visit: http://www.krollworldwide.com/
* * *
As reported in the Troubled Company Reporter's May 21, 2004
edition, Standard & Poor's Ratings Services placed its ratings on
Kroll Inc., including its 'BB-' corporate credit rating, on
CreditWatch with positive implications following Marsh & McLennan
Cos.'s (MMC;AA-/Watch Neg/A-1+) announcement that it intends to
acquire Kroll for $1.95 billion in cash, with a significant
portion to be financed by prospective debt transactions.
In resolving the CreditWatch listing for Kroll, Standard & Poor's
will review the terms of the transaction, in particular, MMC's
intentions with regard to the existing indebtedness of Kroll.
LEHMAN BROTHERS: S&P Affirms B+ Rating on Class F Certificates
--------------------------------------------------------------
Standard & Poor's Ratings Services raised its ratings on four
classes of Lehman Brothers Commercial Mortgage Trust's commercial
mortgage pass-through certificates series 1998-C4. Concurrently,
the ratings on five other classes from the same transaction are
affirmed.
The raised and affirmed ratings reflect increased credit
enhancement levels and the stable operating performance of the
seasoned loan pool.
As of July 15, 2004, the trust collateral consisted of 275 loans
with an aggregate outstanding balance of $1.8 billion, down from
285 loans totaling $2.0 billion at issuance. Wachovia Securities
N.A. provided 2003 net cash flow debt service coverage -- DSC --
figures for 96.6% of the pool. Based on this information
Standard & Poor's computed a weighted average DSC of 1.67x, down
from 1.68x at issuance. These figures exclude six defeased loans
($21.1 million or 1.2%) and 30 credit tenant lease (CTL) loans
($88.7 million or 4.9%). The trust has experienced three losses
to date amounting to $0.1 million.
The top 10 loans have an aggregate outstanding balance of
$787.9 million (43.2%) and reported a 2003 weighted average DSC of
1.86x, down from 2.03x at issuance. Recent property inspections
characterize all of the properties underlying the top 10 loans as
"good" or "excellent." There are no top 10 loans that are
specially serviced, but the largest loan was in special servicing
because of a terrorism insurance issue, which has subsequently
been resolved. This loan has been returned to the master
servicer, but is now on the watchlist because of a DSC decline
since issuance. The ninth-largest loan is also on Wachovia's
watchlist because of a DSC issue.
All six delinquent assets are with the special servicer, Lennar
Partners, Inc., and have an aggregate outstanding balance of
$30.7 million (1.7%). The largest asset in special servicing is a
121,000-sq.-ft. office property in Rolling Meadows, Ill. with a
$9.5 million (0.5%) balance and $0.8 million in additional
servicer advances. This REO property was 100.0% leased to
Motorola, which vacated the property when its lease expired in
2003. A recent appraisal (as well as offers on the property)
suggests a substantial loss will be realized upon disposition.
The second-largest asset is secured by a 141,000-sq.-ft. retail
property in Stockbridge, Georgia with an outstanding principal
balance of $9.3 million and $0.4 million in additional advances.
The sole tenant, Garden Ridge Corp., filed for Chapter 11
bankruptcy in February 2004 and has not yet determined whether it
will continue operations at this location. The loan is 60-plus
days delinquent. The third-largest asset is secured by a 67,000-
sq.-ft. office property in Plainview, N.Y. with an outstanding
balance of $6.3 million and $7.3 million in total exposure. This
asset is in foreclosure proceedings and Standard & Poor's
anticipates a moderate loss will occur upon the liquidation of
this property. The Kmart Plaza in Sunnyside, Washington is also
in special servicing. The underlying property was liquidated in
August 2003, with proceeds that left an unpaid principal balance
of $3.2 million and has not yet been realized as a loss. The
eventual loss may be mitigated by a $1.0 million insurance claim
the trust obtained through litigation, which is currently under
appeal. The remaining specially serviced assets amount to $5.5
million (0.3%) and substantial losses are expected on a lodging
asset in Bay St. Louis, Missouri, with a $2.3 million balance and
a total exposure of $2.5 million.
Wachovia's watchlist consists of 72 loans with an outstanding
balance of $530.7 million (29.1%). The largest loan on the
watchlist, TRT Holdings, is also the largest loan in the deal.
This loan is secured by a portfolio of five Omni hotels
(consisting of 1,858 units) with an aggregate outstanding balance
of $222.3 million (12.2%). This portfolio generated a 2.34x DSC
at issuance but only a 1.25x DSC in 2003, a decline of 46.6%.
The three hotels located in Texas have suffered disproportionately
as their DSCs declined between 56.3% and 69.7% during this same
period. Additionally, none of the Texas hotels reported a 2003
DSC in excess of 1.21x or an occupancy rate greater than 60.0%.
The New York hotel reported a 2003 occupancy of 83.0%, up from
74.0% at issuance. However, the 2003 DSC for this property was
1.07x, down 33.4% from issuance. The Chicago property is
performing well and generated a 2003 DSC of 1.76x, yet this figure
is down 30.5% since issuance. The TRT Holdings loan became
specially serviced in September 2002 due to its noncompliance with
the terrorism insurance requirements as per the loan documents and
the determination of the master servicer. Litigation ensued over
such requirements and was resolved when a federal district court
ruled that the borrower must obtain $60.0 million in terrorism
insurance coverage. The loan was transferred back to the master
servicer in February 2004 when the borrower obtained the required
coverage. Should this loan continue to perform and payoff at
maturity in 2008, a corrected mortgage loan fee -- CMLF -- of
approximately $2.2 million, which is payable out of trust general
collections, will result in interest shortfalls to the trust.
Should the payment of the fee not be spread over multiple payment
periods, the investment-grade classes will short interest for one
to two payment periods. For more details, please refer to
Standard & Poor's "CMBS Quarterly Insights: First-Quarter 2004,"
dated Apr. 28, 2004. The other top 10 loan on the watchlist is
secured by a lodging asset with 354-rooms located in Manhattan.
This loan has an unpaid principal balance of $28.1 million and
reported a 2003 DSC of 0.51x, down from 1.47x at issuance. The
remaining loans on the watchlist appear primarily due to DSC or
occupancy issues, and none of these loans account for more than
1.0% of the trust balance.
The trust collateral is located across 36 states and is
concentrated in California (20.4%), New York (12.8%), and Texas
(10.0%). Property type concentrations can be found in retail
(44.5%), multifamily (18.0%), and lodging (17.8%) assets.
Standard & Poor's stressed the specially serviced assets, loans
that appear on the watchlist, and other loans with credit issues,
when appropriate, in its analysis. The resultant credit
enhancement levels support the raised and affirmed ratings.
Rating Raised
Lehman Brothers Commercial Mortgage Trust
Commercial mortgage pass-through certs series 1998-C4
Rating
Class To From Credit Enhancement
----- -- ---- ------------------
B AAA AA 24.8%
C A+ A 19.0%
D BBB+ BBB 12.3%
E BBB BBB- 10.6%
Ratings Affirmed
Lehman Brothers Commercial Mortgage Trust
Commercial mortgage pass-through certs series 1998-C4
Class Rating Credit Enhancement
----- ------ ------------------
A-1-A AAA 30.7%
A-1-B AAA 30.7%
A-2 AAA 30.7%
F BB+ 7.8%
X AAA N.A.
MIRANT: Perryville Asks Court to Lift Stay to Arbitrate Claim
-------------------------------------------------------------
Perryville Energy Partners, LLC, asks the United States Bankruptcy
Court for the Northern District of Texas to lift the automatic
stay to initiate arbitration for the resolution of a rejection
claim amount dispute.
John N. Schwartz, Esq., at Fulbright & Jaworski, LLP, in Dallas,
Texas, relates that on April 30, 2001, Perryville and Mirant
Corporation debtor-affiliate Mirant Americas Energy Marketing, LP,
entered into a long-term Tolling Agreement. The Tolling Agreement
gave MAEM the exclusive right to use and deliver natural gas to
Perryville's 725-MW power facility near Perryville, Louisiana
through December 31, 2022. The Tolling Fees under the Tolling
Agreement were Perryville's sole source of revenue.
As is customary in the wholesale electric generation industry, the
parties agreed to resolve any disputes under the Tolling Agreement
through arbitration. According to Mr. Schwartz, the Tolling
Agreement contains specific provisions relating to the procedures
for various aspects of an arbitration proceeding, including
discovery, pre-hearing briefing and the hearing. Perryville and
MAEM understood that an assessment of damages for a breach of the
long-term agreement would require substantial economic and
financial energy forecasting analyses, taking into account many
technical energy factors, including estimates concerning future
energy and fuel prices, energy demand, plant constructions and
retirements in the relevant markets, environmental costs,
operation and maintenance costs, reserve margins, discount rates,
and federal and state energy regulations. Accordingly, the
arbitration agreement requires the arbitrator to be knowledgeable
or experienced in the industry.
The Court authorized the Debtors to reject the Tolling Agreement
as of September 15, 2003. Mr. Schwartz tells the Court that the
rejection caused damage to Perryville. Thus, Perryville filed
Claim No. 6261 for $1,010,000,000. The Claim amount is the
expected future revenues under the Tolling Agreement for the life
of the contract, before discounting to present value. Upon
discounting the expected Tolling Fees to present value, Perryville
estimates that the Rejection Claim will be slightly less than half
of the claimed amount.
Consistent with the strong policy in favor of arbitration, Section
2 of the Federal Arbitration Act provides that agreements to
arbitrate are presumptively "valid, irrevocable, and enforceable."
The Supreme Court also stated that "[b]y its terms, the [Federal
Arbitration Act] leaves no place for the exercise of discretion by
a district court, but instead mandates that district courts shall
direct the parties to proceed to arbitration on issues as to which
an arbitration agreement has been signed." Dean Witter Reynolds,
Inc. v. Byrd, 470 U.S. 213, 218 (1985).
Given the strong policy in favor of arbitration, Mr. Schwartz
contends that MAEM cannot dispute that the Arbitration Clause is
valid and enforceable. Moreover, MAEM cannot deny that any
dispute about the amount of the Rejection Claim should be resolved
through arbitration, for the Arbitration Clause contains broad
language that "[a]ny dispute that may arise in connection with
this Agreement" will be resolved by arbitration.
Mr. Schwartz further argues that pursuant to the elements set by
the Fifth Circuit, the arbitration provision of the Tolling
Agreement should be enforced because:
(1) the dispute concerns a calculation of damages stemming
from MAEM's breach of the prepetition contract between
the parties and contract disputes do not derive
exclusively from the Bankruptcy Code;
(2) calculating the amount of the Rejection Claim through an
arbitration process would not conflict with the purposes
of the Bankruptcy Code;
(3) it will not subject the estates to piecemeal litigation;
and
(4) it will not affect the Court's power to enforce its own
orders.
* * *
Judge Lynn rules that:
(a) The parties will conduct a mediation for all of Perryville
Contested Matters:
(1) Debtors' Objections to Perryville Energy Partners,
LLC's claims against Mirant Americas Energy Marketing,
LP, Mirant Americas, Inc., and Mirant Corporation; and
(2) Perryville's motion for allowance and immediate
payment of administrative expenses,
to be completed no later than August 13, 2004, before the
Honorable Harlin D. Hale, who is designated as the
settlement judge to act as the mediator for these matters.
If Judge Hale is unavailable to serve as mediator, the
parties will use their best efforts to select another
mediator. Any costs of the mediator will be borne equally
by the Debtors and Perryville; and
(b) Pending completion of the mediation, each of the
Perryville Contested Matters is abated, without prejudice
to the rights of either party, provided that during the
abatement, Perryville may file motions for arbitration of
any of the Perryville Contested Matters and the Debtors
may timely respond. In the event mediation is
unsuccessful, or if mediation has not been concluded by
August 13, 2004, the Court, at Perryville's request, will
schedule a hearing to promptly consider:
-- any arbitration motion Perryville filed; and
-- a proposed scheduling order establishing response
dates, discovery deadlines and trial dates for the
Perryville Contested Matters to the extent no resolved
through arbitration or otherwise.
In no event will any delay occasioned by the parties'
participation in mediation be grounds for denial of any
motion for arbitration.
Headquartered in Atlanta, Georgia, Mirant Corporation --
http://www.mirant.com/-- together with its direct and indirect
subsidiaries, generate, sell and deliver electricity in North
America, the Philippines and the Caribbean. The Company filed for
chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-
46590). Thomas E. Lauria, Esq., at White & Case LLP represent the
Debtors in their restructuring efforts. When the Company filed
for protection from their creditors, they listed $20,574,000,000
in assets and $11,401,000,000 in debts. (Mirant Bankruptcy News,
Issue No. 40; Bankruptcy Creditors' Service, Inc., 215/945-7000)
MQ ASSOCIATES: S&P Assigns B+ Corporate Credit & B- Debt Ratings
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned a 'B+' corporate
credit rating to MQ Associates Inc., the parent holding company of
diagnostic imaging firm MedQuest Inc. (B+/Stable/--). The outlook
on MQ is stable. At the same time, a 'B-' senior unsecured debt
rating was assigned to MQ's proposed $85 million in notes due 2012
registered under rule 144A. Interest payments on this facility
will accrue on a non-cash paid-in-kind basis for the first four
years and turn to cash pay in 2008. As senior unsecured
obligations of the holding company, the notes are structurally
subordinate to obligations at MedQuest. Proceeds will be used to
fund a distribution to shareholders; J.P. Morgan Partners LLC owns
about 70% of MQ, which in turn owns 100% of MedQuest. All ratings
on MedQuest and its debt securities are affirmed.
"The low-speculative-grade ratings on privately held diagnostic
imaging company MedQuest Inc. reflect its operating concentration
in a single business line, the high fixed-cost nature of its
business, its ambitious growth plans, and the challenges of
current operating conditions," said Standard & Poor's credit
analyst Cheryl E. Richer. "On a consolidated basis with parent MQ
Associates Inc., the capital structure is aggressive. The strong
long-term demand fundamentals of MedQuest's specialty medical
field and the company's disciplined operating policies partly
offset these vulnerabilities."
Alpharetta, Georgia-based MedQuest provides diagnostic imaging
services through its large network of 91 fixed-site centers,
located mainly in the Southeast and Southwest U.S. Because almost
all of its operations comprise fixed-site facilities, the company
is not as reliant as its mobile imaging competitors on hospital
outsourcing business, which has been shrinking. Less than 10% of
revenues are contracted via purchase service agreements. MedQuest
has grown quickly by building de novo centers and undertaking
acquisitions primarily in certificate-of-need states. This
strategy limits competition but concentrates operations. For the
next few years, up to 15 centers could be added annually,
resulting in a perpetual layer of immature and high-fixed-cost
assets. This spending is discretionary, however, and new assets
usually achieve mature EBITDA levels within two years.
MedQuest's recent operating performance has reflected higher scan
volumes generated by new facilities and increased utilization of
existing centers. As a fixed-site provider, MedQuest has been
materially less affected than mobile providers by changes in
hospital demand and contracting patterns. The long-term
environment for diagnostic scans remains attractive because of
imaging's ability to limit health care costs, the expanded medical
applications for diagnostic tools, and the aging population. The
company will also benefit from changes in Medicare, which
represents about 19% of its revenues; though the program has
pressured scan prices downward in recent years, it provided a
slight reimbursement rate increase in 2003, to be followed by
similar increases in 2004 and 2005.
MQ ASSOCIATES: Moody's Junks Proposed Senior Discount Notes
-----------------------------------------------------------
Moody's Investors Service assigned a rating of Caa1 to MQ
Associates, Inc.'s $85 million senior discount notes. MQ
Associates, Inc. is a holding company whose wholly owned
subsidiary, MedQuest, Inc., is the issuer of senior secured credit
facilities and senior subordinated notes. In addition, Moody's
affirmed the existing senior implied rating of B1 and senior
unsecured issuer rating of B2 of MedQuest. The outlook for the
ratings is revised to negative from stable. The rating action
follows the announcement by the company that the senior discount
notes will be used to fund a dividend to the company's majority
shareholders, J.P. Morgan Partners, LLC, and management. The
dividend will be paid in a pro-rata portion of each of the
shareholders equity ownership.
Ratings assigned:
* $85 million senior discount notes at MQ Associates, Inc. due
2012, rated Caa1.
Ratings affirmed (at MedQuest):
* $80 million senior secured revolving credit facility due
2007, rated B1;
* $180 million 11.875% senior subordinated notes due 2012,
rated B3;
* B1 senior implied rating;
* B2 senior unsecured issuer rating.
The outlook for the ratings is revised to negative from stable.
The ratings reflect the company's increasing leverage profile; the
competitive nature of the diagnostic imaging business; the
significant number of physician group practices employing imaging
machines and the potential for lost scan volume of MedQuest; the
potential for continued pricing pressure of scans due to
competition; concerns about industry over utilization of
diagnostic imaging and the potential for volume reductions going
forward; the tight technician market and the overall increasing
labor cost trends; the potential for lost management focus after a
significant payout on their equity; and the limited debt repayment
ability of the company due to weak free cash flows.
The ratings also reflect the company's consistent performance of
historical operations; management's long tenure and continued
significant equity holdings; Moody's expectations for continued
scan volume increases despite concerns about over utilization
within the industry; the company's geographical diversity and
clustered market approach; a modern equipment base reflecting the
company's significant investment in new and updated equipment; and
the diversified payor mix of the company thus minimizing
concentration exposure.
The negative outlook reflects Moody's opinion that the aggressive
financial policies of management and J.P. Morgan Partners have
resulted in a releveraging of the company's balance sheet. The
increase in leverage is particularly concerning given the
potential for pressure on revenues and cash flow as a result of
competition or declines in reimbursement. If MedQuest experiences
margin pressure resulting in decreasing cash flow, the ratings
would likely be lowered.
The negative outlook also reflects the weak free cash flow of
MedQuest as a result of the significant capital employed by the
company in both maintenance of existing equipment and new
equipment purchases to expand market share. If MedQuest continues
to aggressively employ capital to expand market share resulting in
limited debt repayment, the outlook and ratings would not likely
be upgraded. However, if the company continues to generate
improving cash flow resulting in deleveraging (without debt
repayment) the outlook would improve. If the company looks to
utilize excess free cash flow to reduce debt, the ratings would
likely improve.
Cash flow coverage of debt pro-forma for the debt issuance for the
twelve months ended March 31, 2004 would have been 10%. Free cash
flow coverage of debt pro-forma for the debt issuance for the
twelve months ended March 31, 2004 would have been 2%. For
purposes of calculating free cash flow, Moody's has assumed no
difference between maintenance and expansionary capital
expenditures. Cash flow coverage of debt is projected to increase
to the mid teens by year end 2005, while free cash flow coverage
of debt remains weak at less than 5%.
EBIT coverage of interest pro-forma for the transaction for the
twelve months ended March 31, 2004 would have been 1.5 times. Pro-
forma EBIT coverage of interest assumes that the first fours years
of interest for the senior discount notes issuance will be non-
cash pay thus, Moody's has analyzed EBIT coverage of cash
interest. EBIT coverage of total interest pro-forma for the debt
issuance for the twelve months ended March 31, 2004 would have
been 1.1 times. Moody's has assumed that the coupon rate on the
senior discount notes would be 11%.
Following the issuance of the senior discount notes, debt to
EBITDA will increase to 5.1 times pro-forma for the twelve months
ended March 31, 2004. Adjusted debt to EBITDAR will increase to
5.6 times for the same time period. EBITDA coverage of cash
interest pro-forma for the twelve months ended March 31, 2004
would have been 2.8 times, while EBITDA coverage of total interest
over the same period would have been 2.0 times. Moody's notes
that the use of EBITDA and related EBITDA ratios as a single
measure of cash flow without consideration of other factors can be
misleading.
Pro-forma for the debt issuance, Moody's projects MedQuest to have
adequate liquidity. The company will have access to a $80 million
revolving credit facility, in addition to cash flow generated from
operations. Though MedQuest utilizes a significant portion of its
free cash flow to reinvest in the business, Moody's believes that
this reinvestment is somewhat discretionary. Moody's believes
that MedQuest could utilize less free cash flow for expansionary
purposes and allocate the cash flow to meet its debt obligations.
The senior discount notes are notched one level below the senior
subordinated notes to reflect the notes structural subordination
to the subordinated notes. The ratings are subject to Moody's
final review of documentation for the transaction.
MedQuest, Inc. is a leading operator of independent, fixed-site,
outpatient diagnostic imaging centers. MedQuest, Inc. is a wholly
owned subsidiary of MQ Associates, Inc. The company's centers
provide diagnostic imaging services using a variety of
technologies including magnetic resonance imaging (MRI), computed
tomography (CT), nuclear medicine, general radiology (fluoroscopy
and x-ray), ultrasound and mammography. MedQuest currently
operates a network of 89 centers in 13 states primarily throughout
the southeastern and southwestern United States. Of the company's
centers, 22 are multi-modality (MRI, CT and other technologies),
34 are dual modality (MRI and CT) and 33 are MRI only. For the
last twelve months ended March 31, 2004, MedQuest reported total
revenues of $254 million.
NATIONAL CENTURY: Trust Wants Documents from Bankers Trust Company
------------------------------------------------------------------
The Unencumbered Assets Trust believes that Bankers Trust Company
may have information that is relevant to the acts, conduct or
property of the estates of National Century Financial Enterprises,
Inc., and its debtor-affiliates and subsidiaries or to the
Debtors' liabilities and financial condition, which may affect the
administration of the Debtors' bankruptcy estate.
Hence, the Trust seeks the permission of the United States
Bankruptcy Court for the District of Ohio to obtain certain
documents from Bankers Trust.
Bankers Trust was the former trustee for certain of NCFE's NPF
vehicles before JPMorgan Chase Bank and Bank One, N.A., became
NCFE's Indenture Trustees. Sydney Ballesteros, Esq., at Gibbs &
Bruns, in Houston, Texas, points out that as a former trustee of
NCFE, Bankers Trust has relevant information relating to the
evaluation of available assets and determining what assets and
what claims may belong to the Debtors' estates.
Ms. Ballesteros asserts that to discharge its duties properly, the
Trust is entitled to seek and obtain discovery regarding matters
relating to the acts, conduct, property, liabilities and financial
condition of the Debtors' estates.
The Trust does not seek authority to take oral examination of
Bankers Trust, Ms. Ballesteros clarifies. However, once it has
reviewed the documents produced, the Trust reserves the right to
file an additional motion under Rule 2004 of the Federal Rules of
Bankruptcy Procedure to take oral examination of Bankers Trust.
Headquartered in Dublin, Ohio, National Century Financial
Enterprises, Inc. -- http://www.ncfe.com/-- is the market leader
in healthcare finance focused on providing medical accounts
receivable financing to middle market healthcare providers. The
Company filed for Chapter 11 protection on November 18, 2002
(Bankr. D. Ohio Case No. 02-65235). Paul E. Harner, Esq., Jones,
Day, Reavis & Pogue represents the Debtors in their restructuring
efforts. (National Century Bankruptcy News, Issue No. 44;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
NRG ENERGY: Asks Court to Compel CFTC to Withdraw Minnesota Action
------------------------------------------------------------------
Samuel S. Kohn, Esq., at Kirkland & Ellis, in New York, relates
that on July 1, 2004, the Commodity Futures Trading Commission
filed a complaint against Debtor NRG Energy, Inc., in the United
States District Court for the District of Minnesota. The
Commission avers that for a nine-month period ending approximately
one year prior to the commencement of NRG's bankruptcy, former NRG
employees made numerous "false, misleading, or knowingly
inaccurate" reports concerning natural gas transactions, which
were used in the creation of a price index published in an
industry letter. The Commission alleges that the false reports
are violations of Section 9(a)(2) of the Commodity Exchange Act
and further alleges that NRG is liable for these violations
pursuant to Section 2(a)(1)(B) of the Act. The Commission seeks
both the entry of a permanent injunction and "such other and
further remedial and ancillary relief as [the Minnesota District
Court] may deem necessary and appropriate."
Mr. Kohn points out that the Commission's filing of the Minnesota
Complaint in the Minnesota District Court is a willful and
deliberate violation of the injunctive and reservation of
jurisdiction provisions of the NRG Plan and Confirmation Order.
Section 13.4(i) of the NRG Plan contains a comprehensive
injunctive provision, which provides that:
"[A]ll entities who have held, hold or may hold Claims
against or Equity Interests in the Debtors, are
permanently enjoined, on and after the Confirmation
Date, from (i) commencing or continuing in any manner
any action or other proceeding of any kind with
respect to any such Claim or Equity Interest. . . ."
Mr. Kohn points out that the Minnesota Complaint relates to the
Claim that the Commission held, or may hold, against NRG.
The Confirmation Order, which confirmed the NRG Plan, also
contains injunctive protection in NRG's favor. The scheme of
injunctive protection set forth in the NRG Plan, and granted by
the Court in the Confirmation Order is a vital element of the NRG
Plan. It was created to supplement the discharge and injunctive
provisions of the Bankruptcy Code.
NRG asks the United States Bankruptcy Court for the Southern
District of New York to enforce the Confirmation Order and
specifically:
(a) require the Commission to withdraw the Minnesota
Complaint; and
(b) permanently enjoin the Commission from pursuing the
Minnesota Action against NRG or any other NRG Plan Debtor.
If the Commission is allowed to proceed with the litigation in
both the Bankruptcy Court and the Minnesota District Court, the
evidence submitted to each in order to establish violations of the
Commodity Exchange Act would be indistinguishable. In addition,
continuation of the Minnesota Action, in light of the Commission's
request for reconsideration of its expunged claim, would be an
injustice to NRG, as it would be required to litigate the same
issue in two forums.
Moreover, the NRG Plan and Confirmation Order vest the Bankruptcy
Court with exclusive jurisdiction over a broad array of matters
relating to NRG's bankruptcy case. Consequently, the Commission
may not, on its own, choose to alter the Bankruptcy Court's
exclusive jurisdiction over any claim the Commission may have
against NRG. Mr. Kohn reminds the Court that by filing the Proof
of Claim in NRG's Chapter 11 case, the Commission has undisputedly
submitted itself to the jurisdiction of the
Bankruptcy Court.
Permanently enjoining the Commission from pursuing the Minnesota
Action would not harm the public interest or frustrate in any way
the Commission's mandate to regulate and enforce the Commodity
Exchange Act. NRG is no longer engaged in any reporting of energy
market information whatsoever. Because NRG has not reported those
information for almost two years, and has no plans to report any
of those transactions to any trade publications, no regulatory
purpose can be cited to support the Commission's precipitous end-
run of the Court's jurisdiction.
In addition, NRG asks the Court to impose compensatory sanctions
against the Commission for its egregious violation of the Court's
Confirmation Order, as appropriate, pursuant to Section 106(a)(3)
of the Bankruptcy Code.
Mr. Kohn reports that NRG's bankruptcy and regulatory counsel have
spent numerous hours reviewing pleadings, researching related
issues, advising NRG's senior management on a course of action,
preparing the request and related documents, and preparing for a
hearing on the matter. NRG has also been forced to retain local
counsel in Minnesota to ensure that no action is taken by the
Minnesota District Court that is prejudicial to NRG's interests.
Furthermore, addressing the proceedings in Minnesota has been a
significant distraction for NRG's management. NRG should be
compensated for the unnecessary waste of its financial and
managerial resources.
NRG Energy, Inc. owns and operates a diverse portfolio of power-
generating facilities, primarily in the United States. Its
operations include baseload, intermediate, peaking, and
cogeneration facilities, thermal energy production and energy
resource recovery facilities. The company, along with its
affiliates, filed for chapter 11 protection (Bankr. S.D.N.Y. Case
No. 03-13024) on May 14, 2003. The Company emerged from chapter 11
on December 5, 2003, under the terms of its confirmed Second
Amended Plan. James H.M. Sprayregen, P.C., Matthew A. Cantor,
Esq., and Robbin L. Itkin, Esq. at Kirkland & Ellis, represented
NRG Energy in its $10 billion restructuring. (NRG Energy
Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
ODYSSEY: Attempts to Secure Funds to Solve Liquidity Problems
-------------------------------------------------------------
Odyssey Pictures Corporation's continued existence is dependent
upon its ability to resolve its liquidity problems. The company
must achieve and sustain a profitable level of operations with
positive cash flows and must continue to obtain financing adequate
to meet its ongoing operation requirements. These factors raise
substantial doubt about the Company's ability to continue as a
going concern. The Company relies heavily on interim loans,
capital contributions and increased equity placements from its
current, and new, shareholders. In addition, the Company
continues its attempt to secure additional funding through a
variety of opportunities and is currently engaging in negotiations
to secure such funds. The Company cannot make assurances that it
will be successful in adding to its working capital to meet its
expenditure needs and service of its debts. There are no lines of
credit available to the Company. The Company cannot make
assurances that additional funds will be available from any of
these sources on favorable terms, if at all.
On April 15, 2004, the Audit Committee of the Company engaged the
services of Michael F. Cronin as its new independent accountant.
Michael F. Cronin has been engaged to audit the financial
statements of the Company for the fiscal year ending June 30, 2004
and review the financial statements of the Company for the quarter
ending March 31, 2004.
At March 31, 2004, the Company had a cash position of $5,534.
Odyssey Pictures Corporation, formerly known as Communications and
Entertainment Corp., was formed in December 1989 as a holding
company. At such time, the Company had no material assets. In
September 1990, Double Helix Films, Inc., a producer of low budget
films, and Odyssey Entertainment Ltd., an international film
distribution company, were merged with wholly-owned subsidiaries
of the Company. Subsequent to the Mergers, each of Double Helix
and OEL became a wholly owned subsidiary of the Company. In June
1991, the Company sold Double Helix and thereafter began to focus
on the distribution of motion pictures in overseas markets as its
primary business.
ONSITE TECHNOLOGY: Files for Chapter 11 Protection in S.D. Texas
----------------------------------------------------------------
OnSite Technology L.L.C., a subsidiary of Environmental
Safeguards, Inc. (OTC Bulletin Board: ELSF), filed for chapter 11
bankruptcy protection in the U.S. Bankruptcy Court, Southern
District of Texas, Houston Division.
OnSite intends to timely submit for approval of the U.S.
Bankruptcy Court a plan of reorganization that enables OnSite to
pay its secured creditors in full from the sale of a portion of
its assets. While there can be no assurance of success in
litigation, OnSite believes it owns at least one cause of action
that will realize value for its creditors.
OnSite Technology LLC(R), offers a breakthrough in the clean-up
and recycling of contaminated materials. OnSite's innovative
patented Indirect Thermal Desorption Series 6000 System utilizes
indirect thermal desorption to remove and recycle hydrocarbons and
other contamination from various media.
ONSITE TECHNOLOGY: Voluntary Chapter 11 Case Summary
----------------------------------------------------
Debtor: OnSite Technology, L.L.C.
2600 South Loop West, Suite 645
Houston, Texas 77054
Bankruptcy Case No.: 04-41399
Type of Business: The Debtor is an environmental service
Company that offers a breakthrough in the
recycling of waste materials.
See http://www.onsite2.com/
Chapter 11 Petition Date: August 10, 2004
Court: Southern District of Texas (Houston)
Judge: Wesley W. Steen
Debtor's Counsel: Anne E. Catmull, Esq.
Hughes Watters & Askanase
1415 Louisiana, 37th Floor
Houston, TX 77002
Tel: 713-328-2829
Fax: 713-759-6834
Estimated Assets: $10 Million to $50 Million
Estimated Debts: $1 Million to $10 Million
The Debtor did not file a list of its 20-Largest Creditors.
OWENS CORNING: Allows D.L. Peterson Trust's $1,432,308 Claim
------------------------------------------------------------
Owens Corning and its debtor-affiliates leased forklift trucks and
related equipment under a January 15, 1996 master lease agreement,
which was part of a master services agreement with D.L. Peterson
Trust, formerly known as PHH Vehicle Management Services
Corporation. The Master Services Agreement provided for the
maintenance support with respect to the Equipment and was amended
on July 1, 1999.
On May 12, 2003, the Debtors asked the United States Bankruptcy
Court for the District of Delaware for permission to reject the
Master Services Agreement and related agreements. As part of the
request, the Debtors contemplated entering into an agreement with
PHH and a third party, IEMFS, Ltd., for the purchase by IEMFS of
the leased Equipment. PHH filed a conditional objection to the
proposed rejection.
The parties, subsequently, negotiated the terms of a disposition
of the Equipment. On June 25, 2003, the Court entered a
consensual order approving the rejection of the Agreement.
Pursuant to the Rejection Order, the Lease Agreement and the
Services Agreement were deemed rejected as of June 30, 2003.
On September 29, 2003, PHH filed an administrative expense claim
for $1,113,378, asserting an alleged shortfall with respect to the
disposition of the Equipment pursuant to the Lease Agreement and
the Sale Agreement. The Debtors dispute PHH's administrative
claim.
In a Court-approved stipulation, the Debtors and PHH agree that:
(a) as of November 24, 2003, PHH is owed $250,911 -- $7,147 of
the amount relates to personal property tax bills PHH
received in the ordinary course of business relating to
the Equipment, for which the Debtors are obligated to pay
pursuant to the Agreements;
(b) the Debtors will pay PHH the $250,911 pursuant to their
customary accounts payable practice. The Settlement
Amount will be in full, final and complete satisfaction of
any and all postpetition claims of PHH against the Debtors
with respect to the Agreements;
(c) PHH will amend Claim No. 7477 to include:
(1) a general, unsecured, non-priority claim of no more
than $698,413 with respect to prepetition damages
arising in connection with the rejection of the
Agreements;
(2) a general, unsecured, non-priority claim of no more
than $255,464 with respect prepetition damages
arising in connection with amounts due but
previously not billed by PHH under the Agreements;
and
(3) a general, unsecured, non-priority claim for no
more than $89,000 with respect to additional
personal property tax amounts that may be billed to
PHH.
(d) PHH will withdraw a $265,589 postpetition claim for
expenses;
(e) The Debtor will not object to the PHH Claim, as amended.
The PHH Claim will be deemed to hold an allowed, general,
unsecured, non-priority claim for $1,432,308 in the
Debtors' bankruptcy cases; and
(f) The Stipulation does not prejudice the claims asserted by
PHH pursuant to Claim Nos. 7355 or 7424 or the Debtors'
right to object to or dispute the claims, in any manner or
on any basis.
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. At June
30, 2004, the Company's balance sheet shows $7.3 billion in assets
and a $4.3 billion stockholders' deficit. (Owens Corning
Bankruptcy News, Issue No. 80 Bankruptcy Creditors' Service, Inc.,
215/945-7000)
PACIFIC GAS: Wants Court to Enforce Confirmation Order
------------------------------------------------------
Pursuant to the order of the United States Bankruptcy Court for
the Northern District of California confirming the Chapter 11
Plan, as of the confirmation date, December 22, 2003, all
creditors of Pacific Gas and Electric Company were enjoined from:
(a) commencing or continuing any action against PG&E with
respect to a claim that arose before the Confirmation
Date; and
(b) collecting or enforcing a judgment on any Claim, except as
otherwise provided in the Plan.
On April 12, 2004, the Plan Effective Date, PG&E was discharged
from any and all Claims that arose before the Confirmation Date.
Lisa A. Turbis, Esq., at Howard, Rice, Nemerovski, Canady, Falk &
Rabkin, in San Francisco, California, tells the Court that 31
plaintiffs have commenced and are pursuing lawsuits against PG&E
in courts throughout California that are subject to both the
discharge and the injunction imposed by the Plan and the
Confirmation Order. The claims on which the Lawsuits are based
arose before the Confirmation Date. The Plaintiffs in each of the
cases either:
-- failed to timely file proofs of claim; or
-- had their claims disallowed by the Bankruptcy Court.
The Plaintiffs include:
Name Case
---- ----
Deborah S. Ali, Ali v. City of Mountain View, et
on behalf of Samater Ali al. - Santa Clara Superior Court
Case No. 1-02-CV-806053
Emerson Archer Emerson Archer v. Asbestos
Defendants - San Francisco County
Superior Court Case No. 407063
Jerrel D. Barker Jerrel D. Barker, et al. v.
Abrasives, Inc., et al. - Alameda
County Superior Court Case No.
RG4162485
Sylvester Bass Sylvester Bass et al. v.
Abrasives, Inc., et al. - Alameda
County Superior Court Case No.
401138
Deborah Brooks Deborah Brooks v. PG&E - San
Francisco Superior Court Case No.
CGC-00-313266
Gus Brown Gus Brown v. City of Oakland,
PG&E - Alameda County Superior
Court Case NO. 1198 028491
Kathryne Buchanan Kathryne Buchanan v. PG&E - Yolo
Superior Court Case No. 99-
0001356-001
Emiliano and Lilia Burl Emiliano & Lilia Burl, et al. v.
PG&E - Monterey County Superior
Court Case No. M62425
City of Berkeley City of Berkeley v. PG&E -
Alameda County Superior Court
Case No. 2002-040269 (Cross-
complaint) [Main action - Jones
v. City of Berkeley]
Alvin Clark Alvin Clark v. Asbestos
Defendants - San Francisco County
Superior Court Case No. 407067
Ms. Turbis asserts that by prosecuting or otherwise allowing the
Lawsuits to proceed against PG&E, the Plaintiffs have failed to
comply with the Confirmation Order and Section 524(a)(2) of the
Bankruptcy Code. PG&E's informal efforts to obtain dismissals of
the Lawsuits have been unsuccessful.
Accordingly, PG&E asks the Court to enforce the Confirmation Order
by compelling the Plaintiffs to dismiss their Lawsuits against
PG&E or face sanctions.
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 and Electric emerged from chapter 11
protection on April 12, 2004, paying all creditors 100 cents-on-
the-dollar plus postpetition interest.
PARK PLACE: Fitch Rates $15.65 Million Class M-9 Certificate BB+
----------------------------------------------------------------
Park Place Securities Inc.'s certificates, series 2004-WCW1, are
rated by Fitch Ratings as follows:
-- $1.19 billion classes A-1 and A-2 'AAA';
-- $103.31 million class M-1 'AA';
-- $40.70 million class M-2 'AA-';
-- $78.26 million class M-3 'A';
-- $17.22 million class M-4 'A-';
-- $18.78 million class M-5 'BBB+';
-- $17.22 million class M-6 'BBB';
-- $17.22 million class M-7 'BBB';
-- $17.22 million class M-8 'BBB-';
-- $15.65 million class M-9 'BB+'.
Credit enhancement for the 'AAA' rated class A certificates
reflects the 20.80% subordination provided by classes M-1, M-2,
M-3, M-4, M-5, M-6, M-7, M-8, M-9, monthly excess interest and
initial overcollateralization -- OC -- of 3.25%. Credit
enhancement for the 'AA' rated class M-1 certificates reflects the
14.20% subordination provided by classes M-2, M-3, M-4, M-5, M-6,
M-7, M-8, M-9, monthly excess interest and initial OC. Credit
enhancement for the 'AA-' rated class M-2 certificates reflects
the 11.60% subordination provided by classes M-3, M-4, M-5, M-6,
M-7, M-8, M-9, monthly excess interest and initial OC. Credit
enhancement for the 'A' rated class M-3 certificates reflects the
6.60% subordination provided by classes M-4, M-5, M-6, M-7, M-8,
M-9, monthly excess interest and initial OC. Credit enhancement
for the 'A-' rated class M-4 certificates reflects the 5.50%
subordination provided by classes M-5, M-6, M-7, M-8, M-9, monthly
excess interest and initial OC. Credit enhancement for the 'BBB+'
rated class M-5 certificates reflects the 4.30% subordination
provided by classes M-6, M-7, M-8, M-9, monthly excess interest
and initial OC. Credit enhancement for the 'BBB' rated class M-6
certificates reflects the 3.20% subordination provided by classes
M-7, M-8, M-9, monthly excess interest and initial OC. Credit
enhancement for the 'BBB' rated class M-7 certificates reflects
the 2.1% subordination provided by classes M-8, M-9, monthly
excess interest and initial OC. Credit enhancement for the 'BBB-'
rated class M-8 certificates reflects the 1% subordination
provided by class M-9, monthly excess interest and initial OC.
Credit enhancement for the non-offered 'BB+' rated class M-9
certificates reflects the monthly excess interest and initial OC.
In addition, the ratings reflect the integrity of the
transaction's legal structure as well as the capabilities of
Countrywide Home Loans Servicing LP as master servicer. Wells
Fargo Bank N.A. will act as trustee.
The mortgage pool consists of closed-end, first lien subprime
mortgage loans that may or may not conform to Freddie Mac and
Fannie Mae loan limits. As of the cut-off date (Aug. 1, 2004),
the mortgage loans have an aggregate balance of $1,565,329,270.13.
The weighted average loan rate is approximately 7.35%. The
weighted average remaining term to maturity is 354 months. The
average cut-off date principal balance of the mortgage loans is
approximately $153,103.41. The weighted average original loan-to-
value ratio (OLTV) is 83.94% and the weighted average Fair, Isaac
& Co. (FICO) score was 621. The properties are primarily located
in California (25.72%), Illinois (10.26%) and Florida (9.04%).
The loans were originated or acquired by Argent Mortgage Company,
LLC, and Olympus Mortgage Company. Both mortgage companies are
subsidiaries of Ameriquest Mortgage Company, which is a specialty
finance company engaged in the business of originating, purchasing
and selling retail and wholesale subprime mortgage loans. Both
Argent and Olympus focus primarily on wholesale subprime mortgage
loans.
PARMALAT GROUP: Farmland Needs Colliers Help to Sell N.J. Property
------------------------------------------------------------------
Parmalat Group North America debtor-affiliate Farmland Dairies,
LLC, seeks the permission of the United States Bankruptcy Court
for the Southern District of New York to employ Colliers Houston &
Co. as real estate broker in connection with the sale of
Farmland's non-operating property in Long Valley, New Jersey, nunc
pro tunc to February 24, 2004.
Colliers Houston assisted in the marketing of the Long Valley
Property before the Petition Date. Pursuant to a prepetition sale
agreement and a Court-approved stipulation, Farmland agreed to
sell the Long Valley Property to Jade Land Co., LLC, excluding
fixtures, assets and equipments, for $3,650,000, subject to
certain adjustments. The Stipulation provided that the Closing
will take place no later than August 20, 2004.
Colliers Houston is one of the oldest industrial and commercial
real estate firms serving the greater New Jersey area. Colliers
Houston is also one of the largest and most successful, with a
breadth and depth of experience that includes services to most of
the major corporations in the state. Locally, Colliers Houston
services a broad area, which extends throughout all of northern
and central New Jersey as far south as Princeton and Trenton.
Three regional offices, located in Teaneck, Parsippany and
Somerset, assist in this extensive coverage.
Professional Services Performed
Colliers Houston undertook a marketing campaign intended to
solicit offers for the Long Valley Property. Colliers Houston was
selected because of its familiarity with the Long Valley Property.
To that end, Colliers Houston prepared and distributed a direct-
marketing flyer to a list of potentially interested parties and a
broker letter describing the availability of the Long Valley
Property to Colliers Houston's mailing list of over 700 brokers.
The broker letter solicited the individuals in the greater
brokerage community to present the Long Valley Property to their
clients.
Additionally, Colliers Houston contacted the mayor of Long Valley
and a company with property neighboring the Long Valley Property.
In connection with the marketing campaign, Colliers Houston
contacted and spoke with no fewer than 12 developers and builders,
and thirteen brokers. Site plans were presented to no fewer than
10 interested parties, including brokers and developers. As a
result of this aggressive campaign, Colliers Houston was presented
with one potentially comparable, additional proposal to develop
the Long Valley Property.
Colliers Houston relied on its expertise in selling property
similar to the Long Valley Property, and informed Farmland that
any potential purchaser other than Jade Land would inevitably
require a significant amount of additional time to perform due
diligence required to commit on a purchase of real property of the
type and with the characteristics of the Long Valley Property.
Colliers Houston further informed Farmland that no potential
purchaser other than Jade Land is likely to commit to purchase the
Long Valley Property without the contingencies and conditions in
the Sale Agreement, which would otherwise give a potential
purchaser the right to refuse to close the transaction. Having
completed a reasonable period of marketing, Colliers Houston
advised Farmland that the amended Sale Agreement:
(i) represented the highest and the best purchase price for
the Long Valley Property;
(ii) ensured the most timely opportunity for a sale; and
(iii) would bring the greatest return to Farmland's estate.
Exclusive Listing Agreement
Marcia L. Goldstein, Esq., at Weil, Gotshal & Manges, LLP, in New
York, relates that the Debtors and Colliers Houston entered into
an Exclusive Listing Agreement.
The Exclusive Listing Agreement provides that Farmland will pay
Colliers Houston a commission of 6-1/2% of the sale price after
the Long Valley Property is sold by Colliers Houston during the
term of the Exclusive Listing Agreement. If the Long Valley
Property is sold through a cooperating broker, an 8% commission
will be paid and divided equally.
The Exclusive Listing Agreement further provides that all
commissions are deemed earned and payable after the transfer of
the title to the new owner.
Farmland believes that the fee structure contains reasonable terms
and conditions of employment in light of:
-- industry practice;
-- market rates charged for comparable services both in and
out of Chapter 11 context;
-- Colliers Houston's substantial experience; and
-- the nature and scope of work to be performed by Colliers
Houston.
Ms. Goldstein tells the Court that Colliers Houston's services are
necessary to maximize the value of Farmland's assets for the
benefit of its estate, creditors, and all parties-in-interest.
Colliers Houston Senior Vice-President Mark D. Siegler assures the
Court that Colliers Houston does not hold or represent any
interest adverse to Farmland's estates, and is a "disinterested
person" as defined under Section 101(14) of the Bankruptcy Code.
Headquartered in Wallington, New Jersey, Parmalat USA Corporation
-- http://www.parmalatusa.com/-- generates more than 7 billion
euros in annual revenue. The Parmalat Group's 40-some brand
product line includes milk, yogurt, cheese, butter, cakes and
cookies, breads, pizza, snack foods and vegetable sauces, soups
and juices and employs over 36,000 workers in 139 plants located
in 31 countries on six continents. The Company filed for chapter
11 protection on February 24, 2004 (Bankr. S.D.N.Y. Case No. 04-
11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at
Weil Gotshal & Manges LLP represent the Debtors in their
restructuring efforts. On June 30, 2003, the Debtors listed
EUR2,001,818,912 in assets and EUR1,061,786,417 in debts.
(Parmalat Bankruptcy News, Issue No. 27; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
PEGASUS SATELLITE: Committee Retains Akin Gump as Lead Counsel
--------------------------------------------------------------
The Official Committee of Unsecured Creditors of the Chapter 11
cases of Pegasus Satellite Communications, Inc., and its debtor-
affiliates, sought and obtained permission from the United States
Bankruptcy Court for the District of Maine to retain Akin Gump
Strauss Hauer & Feld, LLP, as its co-counsel in the Debtors'
Chapter 11 cases, nunc pro tunc to June 2, 2004.
On the bankruptcy petition date, Akin Gump represented an ad hoc
committee of senior noteholders together with Pierce Atwood. The
senior notes issued by the Debtors are the Debtors' largest
unsecured obligations. As a result of that representation, Akin
Gump provided significant services to the Ad Hoc Committee,
including, reviewing and negotiating the Debtors' proposed interim
cash collateral order, as well as all other first-day applications
and motions, and attending the hearings held with respect to the
first-day applications and motions.
As co-counsel, Akin Gump will:
(a) advise the Committee with respect to its rights, duties
and powers in the Debtors' Chapter 11 cases;
(b) assist and advise the Committee in its consultations with
the Debtors, relative to the administration of the Chapter
11 cases;
(c) assist the Committee in analyzing the claims of the
Debtors' creditors and the Debtors' capital structure, and
in negotiating with holders of claims and equity
interests;
(d) assist the Committee in its 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 any third party concerning matters
related to the assumption or rejection of certain non-
residential real property leases and executory contracts,
asset dispositions, financing of other transactions, and
the terms of one or more reorganization plans for the
Debtors and accompanying disclosure statements and related
plan documents;
(f) assist and advise the Committee in its communications
to the general creditor body regarding significant matters
in the Chapter 11 cases;
(g) represent the Committee at all hearings and other
proceedings;
(h) review and analyze applications, orders, statements of
operations and schedules filed with the Court and advise
the Committee as to their propriety, and to the extent
deemed appropriate by the Committee, support, join or
object to them;
(i) assist the Committee in lobbying, if appropriate;
(j) assist the Committee in preparing pleadings and
applications as may be necessary in furtherance of the
Committee's interests and objectives;
(k) prepare, on the Committee's behalf, any pleadings,
including without limitation, motions, memoranda,
complaints, adversary complaints, objections or comments;
(l) investigate and analyze any claims against the Debtors'
non-debtor affiliates; and
(m) perform other legal services as may be required or are
deemed to be in the Committee's interest in accordance
with the Committee's powers and duties as set forth in the
Bankruptcy Code, the Bankruptcy Rules or other applicable
law.
The Committee wants all legal fees and related costs and expenses
it incurs on account of services rendered by Akin Gump in these
cases to be paid as administrative expenses of the estates
pursuant to Sections 328, 330(a), 331, 503(b) and 507(a)(1) of the
Bankruptcy Code.
For its legal services, Akin Gump will be paid these hourly rates:
Partners $325 - 775
Special Counsel and Counsel 325 - 725
Associates 185 - 450
Paraprofessionals 45 - 195
The Akin Gump professionals who are expected to have primary
responsibility in providing services to the Committee are:
Professional Position Rate per hour
------------ -------- -------------
Daniel H. Golden Partner $775
Russell W. Parks Partner 600
David H. Botter Partner 575
Stephen M. Baldini Partner 525
Philip C. Dublin Counsel 450
Abid Qureshi Counsel 450
Erica D. McGrady Counsel 395
Nava Hazan Associate 425
Joseph Kamnik Associate 285
Deborah Newman Associate 260
Dharmesh H. Vashee Associate 240
It will be necessary, from time to time, for other Akin Gump
professionals to provide services to the Committee.
Daniel H. Golden, a member of Akin Gump, tells the Court that the
firm is a "disinterested person" as that term is defined in
Section 101(14) of the Bankruptcy Code. Mr. Golden assures Judge
Haines that Akin Gump neither holds nor represents any interest
adverse to the Committee, the Debtors, their creditors, other
parties-in-interest, or their attorneys in these Chapter 11 cases.
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. Case No. 04-20889) on June 2,
2004. Larry J. Nyhan, Esq., James F. Conlan, Esq., and Paul S.
Caruso, Esq., at Sidley Austin Brown & Wood, LLP, and 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. (Pegasus Bankruptcy News, Issue No. 7; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
PEGASUS SATELLITE: Committee Hires Pierce Atwood as Local Counsel
-----------------------------------------------------------------
When Pegasus Satellite Communications, Inc. and its debtor-
affiliates filed for chapter 11 protection, Pierce Atwood,
together with Akin Gump Strauss Hauer & Feld, LLP, represented an
ad hoc committee of senior noteholders. The Senior Notes issued
by the Debtors are the Debtors' largest unsecured obligations.
Pierce Atwood provided significant services to the Ad Hoc
Committee, including assisting Akin Gump in reviewing and
negotiating the Debtors' proposed interim cash collateral order,
as well as other first-day applications and motions.
Accordingly, the Official Committee of Unsecured Creditors sought
and obtained permission from the United States Bankruptcy Court
for the District of Maine to retain Pierce Atwood as its
co-counsel in the Debtors' Chapter 11 cases, nunc pro tunc to
June 2, 2004.
As co-counsel, Pierce Atwood will assist Akin Gump in providing
various legal services to the Committee.
The Committee believes that Pierce Atwood has extensive knowledge
and expertise in the areas of law relevant to the Debtors' Chapter
11 cases, and that Pierce Atwood is well qualified to represent
the Committee in the Debtors' Chapter 11 cases.
Pierce Atwood professionals and paraprofessionals will be
compensated based on the firm's current hourly rates:
Partners $210 - 450
Counsel and Of-Counsel 165 - 375
Associates 140 - 200
Paraprofessionals 75 - 125
The firm's professionals who are expected to have primary
responsibility in providing services to the Committee, include:
Professional Position Rate per hour
------------ -------- -------------
Jacob A. Manheimer Partner $290
Keith J. Cunningham Partner 255
Matthew H. Newman Associate 150
According to Mr. Manheimer, Pierce Atwood neither holds nor
represents any interest adverse to the Committee, the Debtors,
their creditors, other parties-in-interest or their attorneys in
the Debtors' Chapter 11 cases. Mr. Manheimer asserts that Pierce
Atwood is a "disinterested person" within the meaning of Section
101(14) of the Bankruptcy Code.
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. Case No. 04-20889) on June 2,
2004. Larry J. Nyhan, Esq., James F. Conlan, Esq., and Paul S.
Caruso, Esq., at Sidley Austin Brown & Wood, LLP, and 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. (Pegasus Bankruptcy News, Issue No. 7; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
PILLOWTEX CORPORATION: Hires Bell Davis as Special Tax Counsel
--------------------------------------------------------------
In ordinary the course of their business, Pillowtex Corporation
and its debtor-affiliates incur obligations to pay real and
personal property taxes levied by various municipal, county and
state taxing authorities. Gilbert R. Saydah, Jr., Esq., at Morris
Nichols Arsht & Tunnel, in Wilmington, Delaware, relates that
these taxes are typically in the nature of ad valorem taxes, the
amount of which is assessed based on a percentage of the value of
the Debtors' non-exempt real and personal property.
From time to time, disputes arise between the Debtors and the
taxing authorities over the property taxes assessed, the
valuations assigned to the Debtors' property for the purpose of
calculating property taxes, refunds, credits and abatements to
which the Debtors are entitled in respect of property taxes, and
related matters. For example, the company-wide cessation of the
Debtors' manufacturing operations shortly before the bankruptcy
petition date has had a material effect on the fair market value
of the Debtors' property, which the Debtors believe should be, but
has not been, reflected in the taxing authorities' valuations.
In some cases, the Debtors are able to resolve Property Tax
Disputes consensually, while in other cases, the Debtors are
forced to pursue formal appeals. A number of Property Tax
Disputes are still pending and the Debtors anticipate additional
disputes to arise.
The Debtors sought and obtained the permission of United States
Bankruptcy Court for the District of Delaware to employ Bell,
Davis & Pitt, PA, as its special tax counsel. Bell Davis will
represent the Debtors in Property Tax Disputes relating to certain
of the Debtors' property within North Carolina.
Bell Davis is a law firm with offices located at Winston-Salem and
Charlotte, North Carolina. The partners at Bell Davis have
considerable experience in negotiation and litigation of ad
valorem taxes.
Bell Davis will be compensated based on this fee structure:
* A $30,000 non-refundable retainer, payable in advance.
* A contingency fee equal to:
(a) 25% of tax savings realized by the Debtors as a
result of the resolution of the Property Tax Disputes
prior to the commencement of court proceedings with
respect to those taxes. This will not apply to tax
savings resulting from reclassification of any
facility from "production facility" to "idle
facility"; and
(b) 30% of tax savings realized by the Debtors resulting
from the resolution of the Property Tax Disputes
after the commencement of court proceedings with
respect to those taxes.
The contingency fee will be payable only in the event
and to the extent that the contingency fee exceeds the
Retainer.
* Reimbursement for ordinary and necessary costs and expenses,
including third party expert fees, appraisal fees and out-
of-pocket costs and disbursements.
Bell Davis director John A. Cocklereece, Jr., discloses that the
firm represents Bank of America Strategic Solutions and Deutsche
Bank, both parties-in-interests in the Debtors' cases. However,
Mr. Cocklereece makes it clear that Bell Davis represents Bank of
America and Deutsche Bank in matters that are unrelated to these
cases.
Mr. Cocklereece further assures the Court that Bell Davis is a
"disinterested person" within the meaning of Section 101(14) of
the Bankruptcy Code, as modified by Section 1107(b), and
represents no interest adverse to the Debtors.
Fee Side Letter
Pursuant to the sale of substantially all of the Debtors' assets
to GGST, LLC, GGST continues to have designation rights with
respect to certain of the Debtors' real property. Mr. Saydah thus
perceived that some of the Tax Counsel's services will ultimately
inure to the benefit of GGST in the form of tax savings, credits
and refunds.
Accordingly, the Debtors and GGST entered into a letter agreement,
dated June 28, 2004. Under the Fee Side Letter, the parties agree
that:
* GGST will pay the $30,000 upfront fee that Bell Davis
requires. If Bell Davis is successful in reducing the
Debtors' property taxes, the parties will work together in
good faith to allocate the Upfront Fee based on the relative
benefit received by each parties, and the Debtors will pay
its appropriate share of the Upfront Fee to GGST; and
* they will work together to allocate in an equitable manner
based on the relative benefit each may receive, in all (i)
fees that accrue in connection with the engagement of the
Tax Consultant, and (ii) expenses that the Tax Consultant
may incur, for which the Debtors are responsible.
Mr. Saydah tells the Court that the Fee Side Letter will not
entitle Bell Davis to any fees or reimbursement of any expenses in
excess of the amounts payable to them under the terms for which
they are employed. Rather, the purpose of the Fee Side Letter is
only to ensure that the costs incurred by the Debtors in
connection with the employment of Bell Davis are fairly allocated
among the parties who will benefit from the services. The Debtors
believe that the Fee Side Letter does not violate Section 504 of
the Bankruptcy Code.
Although the services provided by Bell Davis might ultimately
inure to GGST's benefit, Mr. Saydah makes it clear that Bell
Davis will:
-- be employed by the Debtors only;
-- take instruction from the Debtors only; and
-- owe their duties to the Debtors only.
GGST will not be empowered to direct or influence Bell Davis'
activities.
Headquartered in Dallas, Texas, Pillowtex Corporation --
http://www.pillowtex.com/-- sold top-of-the-bed products to
virtually every major retailer in the U.S. and Canada. The
Company filed for Chapter 11 protection on November 14, 2000
(Bankr. Del. Case No. 00-4211), emerged from bankruptcy under a
chapter 11 plan, and filed a second time on July 30, 2003 (Bankr.
Del. Case No. 03-12339). The second chapter 11 filing triggered
sales of substantially all of the Company's assets. David G.
Heiman, Esq., at Jones Day, and William H. Sudell, Jr., Esq., at
Morris Nichols Arsht & Tunnel, represent the Debtors. On July 30,
2003, the Company listed $548,003,000 in assets and $475,859,000
in debts.
QUESTERRE ENERGY: Files Plan of Arrangement under CCAA
------------------------------------------------------
Questerre Energy Corporation (QEC:TSX) reported that, in
conjunction with its wholly owned subsidiary, Questerre Beaver
River, Inc., it has filed concurrent plans of arrangement for the
settlement of creditor claims.
Pursuant to the plans of arrangement proposed by Questerre Energy
and Questerre Beaver, unsecured creditors will have the option of
accepting a cash payment equal in value to the lesser of their
entire claim or $2,000. Alternatively, they can elect to receive
a cash dividend of $0.05 plus one Common Share of Questerre Energy
for each dollar of their claim. The Common Shares of Questerre
Energy will be subject to a hold period and released in two equal
installments on the four and eight-month anniversary of the date
the plans receive final Court approval.
Questerre Energy has been made aware that some unsecured creditors
entitled to receive Common Shares under the plans of arrangement
wish to immediately dispose of these Common Shares for cash. To
facilitate this disposition, Questerre Energy has arranged for a
liquidity option. Unsecured creditors that elect to participate
in the liquidity option will receive $0.05 for each dollar of
their claim, and will also receive an additional $0.07 for each
dollar of their claim in exchange for forgoing each Common Share
of Questerre Energy they would have otherwise received. This
would result in a cash settlement of $0.12 per dollar of claim
outstanding - an amount that exceeds the maximum liquidation value
unsecured creditors would receive as estimated by the Monitor,
Ernst & Young Inc.
The Common Shares that would otherwise have been issued to these
unsecured creditors will be issued to Terrenex Acquisition
Corporation pursuant to the terms of a Liquidity Option Agreement.
Under the Liquidity Option Agreement, Terrenex will establish a
fund to finance the liquidity option up to a maximum of $668,500,
representing the maximum number of Common Shares of Questerre
Energy to be issued under the plans of arrangement multiplied by
$0.07. In consideration for providing this liquidity option,
Terrenex will receive 300,000 Common Shares of Questerre Energy.
It will also be issued Common Shares of Questerre Energy that, but
for the election of the unsecured creditors to participate in the
liquidity option, would have been issued to the creditors of
Questerre Beaver and Questerre Energy. These Common Shares that
would be issued to Terrenex, will be subject to the same hold
obligations were they issued to the creditors of Questerre Beaver
and Questerre Energy.
The plans will be ratified at the respective meetings of unsecured
creditors to be held on August 31, 2004 at the offices of the
Monitor. The plans must be approved by creditors representing
two-thirds in dollar value and one-half in number of the total
creditors voting at each meeting. Each plan is conditional upon
both plans being approved by the respective creditors, the receipt
of requisite regulatory approvals and other conditions precedent
set forth in the plans.
The Company also announced that it has amended its $0.5 million
financing agreement with Rupert's Crossing, an Investment
Corporation. Rupert's is a private investment holding company
controlled by Michael Binnion, President and Chief Executive
Officer of the Company. Rupert's has placed in trust with the
Company's legal counsel $0.1 million. Should the plans be
approved, these funds will be advanced to the Company on the same
terms and conditions as the original advance of $0.5 million. The
funds will finance a portion of the cash component of the proposed
plans of arrangement.
The transactions with Rupert's and Terrenex are subject to the
receipt of all regulatory approvals. These transactions are
deemed related party transactions as defined by OSC Rule 61-501.
They are exempt from the valuation and minority approval
requirements of OSC Rule 61-501 pursuant to the exemptions
contained in sections 5.5(2) and 5.7(2) of Rule 61-501 in that the
value of the transactions were less than 25% of the market
capitalization of the Company.
Terrenex is a public investment company listed on the TSX Venture
Exchange. Terrenex, directly and indirectly, holds 9,522,421
Common Shares of Questerre Energy, representing approximately 21%
of the issued and outstanding capital. All the Directors of
Terrenex serve as directors or officers of Questerre.
Questerre Energy Corporation is a Calgary-based independent
resource company actively engaged in the exploration for and
development, production and acquisition of large-scale natural gas
projects in Canada.
R.H. DONNELLEY: S&P Assigns BB to Proposed $1.5B Credit Facilities
------------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB' ratings and
recovery ratings of '3' to R.H. Donnelley Inc.'s planned
$1.5 billion senior secured credit facilities, indicating a
meaningful recovery (50%-80%) of principal in the event of a
default.
These facilities consist of a $50 million revolving credit
facility, $400 million tranche A term loan facility (term loan A),
and $1.05 billion tranche B term loan facility (term loan B).
These new facilities will be added to the company's existing
credit facilities, which are being amended to include the
extension of their maturity dates by one year. This will result
in R.H. Donnelley having a $175 million revolving credit facility
due December 2009, $499.5 million term loan A due December 2009,
and $1,968.2 million term loan B due June 2011.
Proceeds from the incremental credit facilities will be used to
fund the planned acquisition of SBC Communications Inc.'s
directory publishing business in Illinois and northwest Indiana,
including SBC's 50% interest in the DonTech partnership, for $1.42
billion in cash. The purchase price is after the settlement of a
$30 million liquidation preference related to DonTech, which is an
existing partnership between SBC and R.H. Donnelley Corporation
for local sales into the Illinois and northwest Indiana SBC yellow
pages. The transaction is expected to close in the 2004 third
quarter, subject to regulatory approval and certain closing
conditions.
In addition, Standard & Poor's affirmed its 'BB' corporate credit
and senior secured debt ratings on R.H. Donnelley and its 'BB'
corporate credit rating on holding company parent R.H. Donnelley
Corporation. The outlook is stable. R.H. Donnelley Corporation
is expected to have about $3.4 billion of consolidated debt
outstanding following the acquisition.
The 'B+' rating on R.H. Donnelley 's $325 million 8.875% senior
notes due 2010 remains on CreditWatch with positive implications.
This debt will be secured ratably with the senior secured credit
facilities in connection with the SBC transaction. The rating
will be raised to 'BB', with a '3' recovery rating, and removed
from CreditWatch when the acquisition is completed.
REPTRON ELECTRONICS: Inks Multi-Million Dollar Deal with Clear-Com
------------------------------------------------------------------
Reptron Electronics, Inc. (OTC Bulletin Board: RPRN), an
electronics manufacturing services company, signed a multi-million
dollar relationship with new customer Clear-Com Communication
Systems whereby Reptron's Tampa facility will build an array of
electronic sub-assemblies for the communication systems provider.
"This is an important business development for Reptron that
increases our capacity to provide manufacturing services for the
communications industry sector," said Bonnie Fena, President of
Reptron Manufacturing Services. "The establishment of this
partnership with California-based Clear-Com signals that Reptron
is a provider of choice to large systems houses."
"Reptron is now in the pre-production engineering phase on the
contract. Full production is expected to ramp up by the end of
2004," said Ms. Fena.
Reptron will build 150 different sub-assemblies and printed
circuit boards (PCBs) to support Clear-Com's wired and wireless
intercommunications products. Much of the current phase of work
entails plans for converting the various PCBs from pin-through-
holes manufacturing techniques to surface mount technology, which
offers significant advances in quality and efficiency.
About Clear-Com
Clear-Com is a world leader in the design, manufacturing, and
distribution of an extensive line of wired and wireless enterprise
communications products, including digital and UHF wireless,
party-line, and digital matrix systems. These products are
classified as "production intercom systems" for use in broadcast,
TV fixed and mobile production, live theatre and performance,
aerospace, military, government, and industrial applications.
About Reptron
Reptron Electronics, Inc. is a leading electronics manufacturing
services company providing engineering services, electronics
manufacturing services and display integration services. Reptron
Manufacturing Services offers full electronics manufacturing
services including complex circuit board assembly, complete supply
chain services and manufacturing engineering services to OEMs in a
wide variety of industries. Reptron Display and System Integration
provides value-added display design engineering and system
integration services to OEMs. For more information, please access
http://www.reptron.com/
Reptron filed a voluntary petition for reorganization under
Chapter 11 of the U.S. Bankruptcy Code on October 28, 2003. The
Plan of Reorganization was confirmed by the U.S. Bankruptcy Court
on January 14, 2004 and became effective on February 3, 2004
allowing the Company to emerge from bankruptcy.
ROMAX FINANCE CORP: Voluntary Chapter 11 Case Summary
-----------------------------------------------------
Debtor: Romax Finance Corporation
19 Constitution Street
Ashland, Massachusetts 01721
Bankruptcy Case No.: 04-16560
Chapter 11 Petition Date: August 9, 2004
Court: District of Massachusetts (Boston)
Judge: Joan N. Feeney
Debtor's Counsel: John K. Buck, Esq.
210 Washington Street
Woburn, Massachusetts 01801
Tel: 781-935-2143
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.
SIX FLAGS: Reports $356.4 Million 2nd Quarter Revenues & Losses
---------------------------------------------------------------
Six Flags, Inc. (NYSE: PKS) reported results of operations for the
six months and quarter ended June 30, 2004.
The results reflect the Company's adoption of FASB Interpretation
No. 46. Under FIN 46, the results of Six Flags Over Georgia, Six
Flags White Water Atlanta, Six Flags Over Texas and Six Flags
Marine World are now consolidated in the financial statements of
the Company.
Prior to the fourth quarter of 2003, those parks had been reported
as unconsolidated operations under the equity method of
accounting. The results also reflect the reclassification as
discontinued operations for all periods presented of the
operations, assets and liabilities of the seven parks in Europe
and Six Flags Worlds of Adventure in Ohio, which the Company sold
in April 2004. Prior period results have been reclassified for the
adoption of FIN 46 and classifying the Divested Parks as
discontinued operations, in order to provide meaningful year over
year comparisons. Quarterly results prepared on that basis for all
of 2002 and 2003 have been posted on the Company's website at
http://www.sixflags.com/and furnished to the Securities and
Exchange Commission on Form 8-K.
Six Month Results
For the first six months of 2004, revenues were $401.2 million,
compared to $405.2 million for the comparable period of 2003, a
decrease of $4.0 million, or 1.0%. Attendance for the period
declined 543,000, or 4.1%, while total revenue per capita
increased by 3.2%, to $31.42.
Operating costs and expenses, including depreciation, amortization
and non-cash compensation, were $444.7 million in the 2004 six-
month period, as compared to $434.6 million in the prior-year
period. Excluding depreciation, amortization and non-cash
compensation, cash operating costs and expenses were $370.6
million in 2004 and $363.5 million in 2003, an increase of 1.9%,
primarily reflecting planned increases in operating expenses to
enhance the guest experience at the Company's parks.
EBITDA (Modified) was $30.7 million in the 2004 period as compared
to $41.8 million in the 2003 period1. Adjusted EBITDA for the 2004
period was $12.0 million compared to $25.6 million in 2003.
Loss from continuing operations was $124.1 million in the first
six months of 2004 as compared to $112.8 million in the 2003
period. Both six-month periods included a loss on early repurchase
of debt. Absent those losses, net of the associated tax benefits,
the loss from continuing operations would have been $104.6 million
in the 2004 period and $95.7 million in the 2003 period.
Three Month Results
Revenues for the 2004 second quarter were $356.4 million, compared
to $361.4 million for the comparable quarter of 2003. The 2004
performance reflects a decrease in attendance of 480,000, or 4.0%,
offset in part by a 2.8% increase in total revenue per capita.
Operating costs and expenses, including depreciation, amortization
and non-cash compensation, were $282.6 million in the 2004 quarter
and $283.4 million in the year ago period. Excluding depreciation,
amortization and non-cash compensation, cash operating costs and
expenses were $245.6 million in the second quarter of 2004, as
compared to $247.8 million in the prior-year quarter, a decrease
of 0.9%.
EBITDA (Modified) was $110.8 million in the second quarter of 2004
compared to $113.6 in the 2003 quarter. Adjusted EBITDA for the
second quarter of 2004 was $86.2 million compared to $91.3 million
in the second quarter of 2003.
Loss from continuing operations was $4.2 million in the second
quarter of 2004 as compared to $15.8 million in the 2003 period.
Both periods included a loss on early repurchase of debt. Absent
that loss, net of the associated tax benefits, the loss from
continuing operations would have been $0.3 million in the 2004
period as compared to income from continuing operations of $1.3
million in the 2003 period.
Discussion and Outlook
"In our release of July 15, we commented on our performance
through June 30, which saw a year over year attendance decline
mitigated by strong per capita spending growth, resulting in a $4
million decline in revenues for the six month period year over
year." noted Kieran E. Burke, Chairman and Chief Executive Officer
of the Company.
"While we had seen an improved performance in the early part of
July, our results over the last half of July were disappointing,
with substantial periods of adverse weather in a number of
markets, including several weekend days, particularly in the
Northeast," continued Mr. Burke. "For the full month of July, our
park-level revenues were 1.6% behind the prior year, as a result
of an attendance decline of 3.3% offset in part by an increase in
per capita revenues of 1.7%.
We still have a substantial period of operations remaining
(approximately 30%), making it difficult to predict with precision
what our full year results will be. We expect to benefit from
additional operating days in several markets in the third quarter
as a result of the later Labor Day holiday this year. In addition,
we have seen very strong performance since the beginning of
August. However, we did have a strong performance in October last
year. As a result, we estimate that our full year revenues from
continuing operations will be $1.035 to $1.049 billion, or flat to
down 1.3% from 2003. In reaction to performance year-to-date, we
have reduced a portion of our planned expense increases, but only
in areas which do not directly affect guest service, as we regard
our improved guest experience to be an important strategic
initiative for future performance recovery. Therefore, we expect
EBITDA (Modified) to be approximately $310 to $320 million for the
full year, and Adjusted EBITDA to be approximately $265 to $275
million.
We expect to remain in compliance with all covenants in our credit
agreements. We continue to enjoy substantial liquidity and have no
near-term debt maturities. Since the end of the first quarter to
date, we have retired approximately $260 million of permanent debt
with the proceeds of our sales of our European division and our
Cleveland park. We have also determined to defer the exercise of
our purchase option at Marine World, and will utilize the
liquidity which had been earmarked for that purpose for further
debt reduction and investment in our other properties."
Six Flags is the world's largest regional theme park company.
* * *
As reported in the Troubled Company Reporter on July 21, 2004,
Standard & Poor's Ratings Service placed its ratings on Six Flags
Inc., including its 'B+' corporate credit rating, on CreditWatch
with negative implications following the company's announcement
of weak operating performance in the second quarter ended June 30,
2004.
Oklahoma City, Oklahoma-based Six Flags is the largest regional
theme park operator and a distant second-largest theme park
company in the world. Total debt and preferred stock as of June
30, 2004, was about $2.4 billion.
EBITDA was down 7% in the three months ended June 30, 2004,
reflecting a 4% fall in June attendance. The drop in EBITDA
follows an increase in negative EBITDA in the seasonally weak
first quarter ended March 31, 2004, and last year's disappointing
second quarter, when EBITDA declined 60% as a result of a 6% drop
in attendance. Standard & Poor's estimates that debt and debt-
like preferred stock to EBITDA rose to roughly 8.5x in the
12 months ended June 30, 2004 versus 8.0x in 2003. "We had
anticipated improvement in Six Flags' credit measures in 2004,
which is now unlikely given the weak first half operating
performance," said Standard & Poor's credit analyst Hal Diamond.
Discretionary cash flow has been minimal during the past three
years despite reduced capital spending. The company plans to
further reduce capital spending in the full year 2004 to roughly
$75 million from $113 million in 2003. Standard & Poor's is
concerned that this strategy is resulting in underinvestment in
the rides and attractions necessary to stimulate visitation. The
earnings outlook for the remainder of 2004 will likely continue to
be challenging, and company will need to maintain marketing
expenses and limit ticket price increases in order to generate
attendance.
Standard & Poor's expects that downgrade potential of Six Flags'
corporate credit rating will be limited to one notch, to the 'B'
level. Standard & Poor's will reevaluate the company's future
business strategies and operating outlook based its key third
quarter in completing the CreditWatch review.
SK GLOBAL AMERICA: Judge Blackshear Approves Disclosure Statement
-----------------------------------------------------------------
On August 4, 2004, The Honorable Cornelius Blackshear approved SK
Global America, Inc.'s Disclosure Statement. Judge Blackshear
found that the document contains adequate information to enable a
hypothetical reasonable investor to make an informed judgment
about whether to vote to accept or reject the Company's Plan.
The Voting Record Date -- to determine who can and can't cast a
ballot -- is August 4, 2004 at 5:00 p.m. August 23, 2004, is the
last day for any party-in-interest to file a motion under Rule 3-
18 of the Federal Rules of Bankruptcy Procedure requesting
temporary allowance of a claim for voting purposes.
Creditors who want to vote to accept or reject the Plan must
return their Ballots to Bankruptcy Services LLC no later than 5:00
p.m. on September 8, 2004 at 5:00 p.m. Confirmation objections,
if any, are also due on or before September 8, 2004 at 5:00 p.m.
Judge Blackshear will consider confirmation of the Debtor's
Liquidation Plan at a hearing on September 15, 2004 at 10:00 a.m.
Headquartered in Fort Lee, New Jersey, SK Global America,
Inc., is a subsidiary of SK Global Co., Ltd., one of the world's
leading trading companies. The Debtors file for chapter 11
protection on July 21, 2003 (Bankr. S.D.N.Y. Case No. 03-14625).
Albert Togut, Esq., and Scott E. Ratner, Esq., at Togut, Segal &
Segal, LLP, represent the Debtors in their restructuring efforts.
When they filed for bankruptcy, the Debtors reported
$3,268,611,000 in assets and $3,167,800,000 of liabilities. (SK
Global Bankruptcy News, Issue No. 21; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
SOLUTIA INC: Trade Creditors Sell 26 Claims Aggregating $1.9 Mil.
-----------------------------------------------------------------
Between March 15, 2004 and July 8, 2004, the Bankruptcy Clerk
recorded 26 claim trading hands in Solutia, Inc., et al.'s Chapter
11 cases:
1. Debt Acquisition Company of America V, LLC acquired three
claims:
Transferor Claim Amount
---------- ------------
Chemical & Petrochemical Inspections, Inc. $665
Cardinal Steel Supply, Inc. 252
Business Forms Management, Inc. 915
------------
Total $1,832
2. Riverside Claims, LLC purchased claims from:
Transferor Claim Amount
---------- ------------
White's Sheet Metal Works, Inc. $39,717
Venture Marketing, Inc 8,018
White's Sheet Metal Works, Inc. 39,717
Transilwrap 27,892
O'Conner Group 6,183
Midway Bottled Gas, Co. 13,565
Highline Performance Group 20,000
Sign Supply USA 32,400
Summit Specialty Chemicals 87,500
Horizon Tool, Inc. 19,894
Carter Communications 6,455
Abeita Glass, Co. 1,174
------------
Total $302,515
3. Contrarian Funds, LLC picked up these creditors' claims:
Transferor Claim Amount
---------- ------------
HydroChem Industrial Services, Inc. $230,065
Creative Packaging Resources 26,927
Creative Packaging Resources 26,927
Amstaff Human Resources, Inc. VI 452,451
Landrum Staffing Services 51,840
The Plaza Group, Inc. 34,781
Wright State University 20,250
Pelican Waste Services, Inc. 198,643
Mosaic Sales Solutions US Operating Company 428,358
Hachette Filipacchi Media U.S., Inc. 39,800
Hachette Filipacchi Media U.S., Inc. 136,030
------------
Total $1,646,072
Headquartered in St. Louis, Missouri, Solutia, Inc. --
http://www.solutia.com/-- with its subsidiaries, make and sell a
variety of high-performance chemical-based materials used in a
broad range of consumer and industrial applications. The Company
filed for chapter 11 protection on December 17, 2003 (Bankr.
S.D.N.Y. Case No. 03-17949). When the Debtors filed for
protection from their creditors, they listed $2,854,000,000 in
assets and $3,223,000,000 in debts. (Solutia Bankruptcy News,
Issue No. 20; Bankruptcy Creditors' Service, Inc., 215/945-7000)
SR TELECOM: Gets First Purchase Order for $35 Mil. Frame Contract
-----------------------------------------------------------------
SR Telecom(TM) Inc. (TSX: SRX; Nasdaq: SRXA) has received the
first purchase order for the previously-announced $35 million
frame contract in Latin America. The purchase order calls for SR
Telecom to commence field surveys and network engineering for a
telecommunications infrastructure expansion and upgrade program,
which is being carried out for a major telecommunications operator
in Latin America. Under the terms of the frame contract, SR
Telecom will deliver fixed wireless access systems from the
SR500(TM) family, and also provide network planning, installation
and project management services. Further deployment and expansion
for this universal access program is expected to take place over
the next several years.
"The first phase of this major infrastructure project, which will
provide urban-quality services to rural and remote communities
throughout the country, is now underway," said Claude Giguere, SR
Telecom's Senior Vice-President, Sales and Marketing. "As we
previously announced, the delivery of our systems will extend over
several quarters, and should be completed by the end of the
first quarter of fiscal 2005."
AboutSR500
The SR500 family of fixed wireless access systems enables
operators to extend their reach and deliver a full range of
tailor-made voice and data applications to end-users. The systems
provide bandwidth-on-demand and allow service providers to offer
bundled service packages to meet the various needs of their
customers. The SR500 system can be deployed as a standalone
wireless access technology or as an overlay network that
complements narrowband wireless local loop networks.
About SR Telecom
SR TELECOM (TSX: SRX, Nasdaq: SRXA) is one of the world's leading
providers of Broadband Fixed Wireless Access technology, which
links end-users to networks using wireless transmissions. For over
two decades, the Company's products and solutions have been used
by carriers and service providers to deliver advanced, robust and
efficient telecommunications services to both urban and remote
areas around the globe. SR Telecom's products have been deployed
in over 120 countries, connecting nearly two million people.
The Company's unrivalled portfolio of BFWA products enables its
growing customer base to offer carrier-class voice, broadband data
and high-speed Internet services. Its turnkey solutions include
equipment, network planning, project management, installation and
maintenance.
SR Telecom is an active member of WiMAX Forum, a cooperative
industry initiative which promotes the deployment of broadband
wireless access networks by using a global standard and certifying
interoperability of products and technologies.
* * *
As reported in the Troubled Company Reporter's May 05, 2004
edition, Standard & Poor's Ratings Services lowered its long-term
corporate credit and senior unsecured debt ratings on SR Telecom
Inc. to 'CCC' from 'CCC+'. The outlook is negative.
"The ratings action reflects continued poor operating performance
and material negative free operating cash flow in 2003, and
follows the company's announcement that it plans to undertake
additional restructuring of its operations," said Standard &
Poor's credit analyst Michelle Aubin.
The negative outlook reflects the possibility that the ratings on
SR Telecom could be lowered further if the company's operating
performance and liquidity position do not improve.
TERRA INDUSTRIES: Fitch Affirms Low B-Ratings for Facility & Notes
------------------------------------------------------------------
Fitch Ratings affirmed the 'B+' ratings for Terra Industries'
senior secured credit facility and 12.875% senior secured notes,
as well as the 'B-' rating for the 11.5% senior secured second
priority notes. The affirmation comes after Terra announced a
definitive agreement to acquire Mississippi Chemical Corporation
stock for $268 million. The Rating Outlook is Stable.
Terra's strong financial performance and the expected neutral
impact of the Miss Chem purchase support the ratings affirmation.
Fitch believes the transaction enhances Terra's business
portfolio. Miss Chem's 50% interest in Point Lisas Nitrogen Ltd.
will give Terra access to low cost ammonia production, an element
missing from Terra's current nitrogen business. Miss Chem's
Donaldsonville terminal gives Terra access to imports and
additional distribution venues via the Union Pacific railroad and
the Kaneb ammonia pipeline. The terminal will provide Terra with
a 'make versus buy' option that the company does not have.
However, Terra will also gain ammonia swing capacity that does not
add value to Terra's business due to current high natural gas
prices in the U.S.
Terra's credit statistics are expected to be minimally affected by
the transaction. For the trailing twelve-month period ended June
30, 2004, total debt-to-EBITDA was 2.3 times (x) and EBITDA-to-
interest incurred was 3.2x. The acquisition is expected to be
financed with $161 million of cash and assumed debt and
$107 million of stock. The assumed debt would have increased
Terra's debt level to approximately $527 million at June 30, 2004
proforma. The transaction is expected to close by the first
quarter of 2005, pending regulatory approvals and U.S. Bankruptcy
Court approval.
Terra Industries is a major North American producer of ammonia,
UAN solutions, and methanol and a leading producer of ammonium
nitrate in the U.K. For the trailing twelve month period ended
June 30, 2004, Terra had revenue of $1.5 billion, EBITDA of
approximately $175 million, and debt of $402 million, all of which
is public debt.
TRAVIS COUNTY: Moody's Junks Sub. Debt & Lowers Sr. Debt Rating
---------------------------------------------------------------
Moody's Investors Service downgraded its ratings on the $17
million Travis County Housing Finance Corporation Multifamily
Housing Revenue Bonds (Park at Wells Branch Project), Senior
Series 2002 A & B to Ba3 from Baa3 and Subordinate Series 2002 C
to Caa1 from Ba3. The Junior Subordinate Series 2002 D bonds are
not rated.
"The credit is removed from our watchlist for possible downgrade
but the outlook remains negative," Moody's said.
The change in rating is primarily due to the property's weakening
financial condition and the tap on the Subordinate Series 2002 C
and the Junior Subordinate Series 2002 D debt service reserve
funds.
The Senior bonds continue to be insured by MBIA and therefore
carry MBIA's financial strength rating of Aaa; the Subordinate &
Junior Subordinate bonds are not insured.
Park at Wells Branch is a 304-unit rental property located in
Austin, Texas. The project's weak financials are attributable in
large part to the overall softening of the Austin rental market
that has required Park at Wells to reduce rents and provide
concessions necessary to compete with newer luxury apartments
within the submarket. With financial information that Moody's has
reviewed based on a year-end unaudited basis for 2003, the debt
service coverage ratio is significantly below underwritten levels
at 0.99x on the senior bonds and 0.79x on the subordinate bonds.
Debt service coverage continues to be weak in 2004 as of the June
unaudited financial statements, with annualized senior debt
service coverage of 0.82x and 0.63x on the subordinate bonds.
While the property's physical occupancy rate has improved to 93%
in June compared to the 80% reported at the end of August,
property revenues remain weak as rental revenues in 2003 were a
dramatic 25% below levels in 2001.
The debt service reserve funds for the Subordinate Series 2002 C
and the Junior Subordinate Series 2002 D were tapped to make the
June bond debt service payment and management expects that the
amounts remaining in those reserve funds will be tapped in
December. At this time, the senior debt service reserve fund has
not been tapped. While CHC, the property owner, has historically
contributed its own funds in order to avoid the need to tap these
debt service reserve funds, performance at other CHC facilities
prohibits their ability to continue that practice at this time.
Moody's will continue to monitor the property's monthly occupancy
rates, expenses, and debt service coverage closely.
Outlook
The current outlook on these bonds is negative based on the
fundamental credit factors.
TRUMP HOTELS: Expects to File Prepackaged Chapter 11 in September
-----------------------------------------------------------------
Trump Hotels & Casino Resorts, Inc. (NYSE: DJT), Donald J. Trump
and DLJ Merchant Banking Partners III, L.P., a private equity fund
of Credit Suisse First Boston, have reached an agreement in
principle with a significant portion of noteholders of the
Company's largest series of bonds to restructure the Company's
public indebtedness and to recapitalize the Company.
As part of the Recapitalization Plan, Mr. Trump and CSFB private
equity would co-invest $400 million of equity into the
recapitalized Company. Mr. Trump's investment in the
recapitalized Company is intended to be approximately $70.9
million, $55 million of which would be in the form of a co-
investment with CSFB private equity and the remainder of which
would be invested through Mr. Trump's contribution of
approximately $15.9 million principal amount of his Trump Casino
Holdings' 17.625% Second Priority Mortgage Notes due 2010 and the
granting to the recapitalized Company a new license agreement. Mr.
Trump's beneficial ownership of the recapitalized Company's common
stock is expected to be approximately 25%, on a fully-diluted
basis.
The Company, Mr. Trump and a committee formed by certain holders
of Trump Atlantic City Associates' 11.25% First Mortgage Notes due
2006 have entered into a restructuring support agreement
reflecting an agreement in principle to support the
Recapitalization Plan to restructure the existing TAC Notes, TCH
Second Priority Notes and Trump Casino Holdings' 11.625% First
Priority Notes due 2010 for approximately $1.25 billion principal
amount of new second priority secured notes, cash and common stock
of the recapitalized Company. The New Notes, which would be
issued by the Company's holding subsidiary, would have a 10-year
maturity and would be senior obligations of the issuer, guaranteed
by substantially all of the Company's operating subsidiaries and
secured by a lien on substantially all of such operating
subsidiaries' assets, subject to a first priority lien for a new
secured financing of up to $500 million.
If the Recapitalization Plan is successfully completed, the
Company expects to achieve:
-- A reduction of total publicly-traded indebtedness of
approximately $544 million, from approximately $1.8 billion
to approximately $1.25 billion;
-- A reduction in average interest rates on the Company's
publicly-traded indebtedness from a weighted average rate of
approximately 12% to 7.875% per annum;
-- A reduction in annual cash interest expense of approximately
$110.2 million;
-- An extension of the maturity of the Company's publicly-
traded indebtedness to ten years;
-- Ability to obtain new financing of up to $500 million
secured by a first priority lien on substantially all of the
operating subsidiaries' assets;
-- Funding for deferred capital expenditures and future
expansions at the Company's properties;
-- Significant liquidity to support growth in additional gaming
jurisdictions and the ability to expand the Company's brand
on a global basis;
-- Streamlining the public indebtedness of the Company's
subsidiaries into a consolidated single issuer of publicly-
traded debt; and
-- An ongoing relationship with DLJ Merchant Banking Partners
III, L.P., an affiliate of CSFB, one of the world's largest
financial institutions.
Mr. Trump commented on the developments, "I have had a wonderful
long-standing working relationship with CSFB, and I am proud to be
able to partner with them. I look forward to our recapitalized
company being a major player in the evolving gaming industry."
Scott C. Butera, the Company's Executive Vice President of
Corporate & Strategic Development, commented further, "We are very
pleased that the Company, Mr. Trump and CSFB private equity have
successfully come to an agreement with the TAC noteholders. I
strongly believe that our negotiations have resulted in a proposed
capital structure that should provide immediate value to our
stakeholders and position the company to be a significant
competitor in the global gaming industry. Upon the successful
completion of the recapitalization plan, the liquidity to be
provided by Mr. Trump and CSFB private equity's investment, the
reduction in our overall indebtedness and related interest expense
and our flexibility to raise additional financing will enable us
to upgrade our existing facilities as well as expand the world
renowned Trump brand into new jurisdictions." Mr. Butera added,
"The timing of our recapitalization plan is ideal, given the many
changes taking place in the gaming industry and the many
opportunities that we believe will become available."
Under the terms of the Recapitalization Plan:
(1) Holders of the TAC Notes would exchange their notes, now
approximately $1.3 billion aggregate principal amount for
approximately:
-- $228.2 million in cash;
-- $851.9 million aggregate principal amount of a new
series of 7.875% senior second priority mortgage
notes; and
-- $107.2 million of common stock of the recapitalized
Company (approximately 18.4% of the primary common
shares), based on CSFB private equity's per share
purchase price.
(2) Holders of the TCH First Priority Notes, now approximately
$406.3 million aggregate accreted amount, would exchange
their notes for approximately:
-- $55.9 million in cash; and
-- approximately $350.4 million aggregate principal amount
of the New Notes.
(3) Holders of the TCH Second Priority Notes, now approximately
$68.8 million aggregate principal amount, would exchange
their notes for approximately:
-- $500,000 in cash;
-- $47.7 million aggregate principal amount of the
New Notes; and
-- $15.7 million of common stock of the recapitalized
Company (approximately 2.7% of the primary common
shares), based on the Purchase Price.
In addition, the holders of the TAC Notes and TCH Notes would
receive certain accrued interest as set forth on the term sheet
attached to the Restructuring Support Agreement. CSFB and Mr.
Trump are currently holders of a portion of the TCH Second
Priority Notes and, in connection with the Recapitalization Plan,
would contribute their cash and a portion of their equity recovery
on such notes to the other holders of the TCH Second Priority
Notes who vote for the Recapitalization Plan, on a pro rata basis.
Each of the existing stockholders of the Company, including Mr.
Trump, would either keep their existing shares or, under certain
circumstances, exchange their existing shares for new shares with
the same economic terms as the Company's current shares. In
addition, each stockholder would receive a 30-day right to
purchase an amount, proportionate to that holder's existing
ownership, of shares of the recapitalized Company's common stock,
at the Purchase Price in a rights offering in the aggregate amount
of $50 million. The right to purchase shares in the Rights
Offering would be transferable only in connection with transfers
or assignments of each holder's interests in the shares underlying
the rights. If all holders of the existing shares, excluding Mr.
Trump, or those holders' permitted transferees were to participate
fully in the Rights Offering, they would invest approximately
$22.8 million and own approximately 4% of the recapitalized
Company's common stock, on a primary basis, or approximately 3.9%
on a fully-diluted basis. If none of the holders or permitted
transferees were to participate in the Rights Offering, their
holdings would represent approximately 0.1% of the recapitalized
Company's shares. Any shares of common stock purchased in the
Rights Offering and amounts invested directly in the Company or
its holding subsidiary by Mr. Trump would reduce CSFB private
equity's investment in the recapitalized Company. If all holders
of the existing shares, including Mr. Trump, or those holders'
permitted transferees were to participate fully in the Rights
Offering, CSFB private equity would own approximately 55.3% of the
recapitalized Company's common stock, on a primary basis, or
approximately 53.2% on a fully diluted basis, assuming Mr. Trump
invested $55 million into the recapitalized Company.
CSFB private equity, the Company and Mr. Trump anticipate entering
into an investment agreement establishing the definitive terms of
CSFB private equity's equity investment in the recapitalized
Company and/or its holding subsidiary. Also in connection with
CSFB private equity's proposed investment, the Company has entered
into a new exclusivity agreement and renewed a related letter
agreement previously entered into with CSFB private equity. As
part of the Recapitalization Plan, Mr. Trump would:
-- Invest up to $55 million in the equity of the recapitalized
Company and/or its holding subsidiary, either directly or
through the Rights Offering;
-- Contribute to the recapitalized Company approximately $15.9
million aggregate principal amount of the TCH Second
Priority Notes owned by him;
-- Serve as the Chairman of the recapitalized Company's Board
of Directors pursuant to a services agreement and terminate
his existing executive agreement; and
-- Grant to the recapitalized Company a perpetual and exclusive
worldwide trademark license, royalty free, to use his name
and likeness and all related marks and intellectual property
rights currently licensed to the Company in connection with
any casino and gaming activities, subject to customary terms
and conditions, and terminate his existing trademark license
agreement with the Company.
Upon the successful recapitalization of the Company and assuming
Mr. Trump's investment of $55 million into the recapitalized
Company, Mr. Trump would beneficially own approximately 25% of the
recapitalized Company's common stock, consisting of common stock
and/or common stock equivalents, and warrants to purchase common
stock. In consideration of Mr. Trump's equity investment and
modifications to his contractual arrangements with the Company,
Mr. Trump would also receive a parcel of land owned by the Company
in Atlantic City, NJ constituting the former World's Fair site
which may be developed for non-gaming related use and the
Company's interest in the Miss Universe pageant. In addition, the
recapitalized Company would enter into a renewable three-year
development agreement with Mr. Trump pursuant to which The Trump
Organization would have the right of first offer to serve as the
Company's general contractor, on commercially reasonable arm's
length terms, with respect to construction and development
projects for casinos and casino hotels and related lodging at the
Company's existing and future properties.
The recapitalized Company's Board of Directors would consist of
nine members. Initially, CSFB private equity would have the right
to nominate five members, and Mr. Trump would have the right to
nominate three. CSFB private equity and Mr. Trump would mutually
agree upon the nomination of one independent director and each
would nominate one independent director out of their respective
nominees, subject to applicable rules and regulations of the
Securities and Exchange Commission, the governance requirements of
the New York Stock Exchange or other exchanges on which the
recapitalized Company's new common stock would be traded, and
regulations of the gaming regulatory agencies. The number of
directors that CSFB private equity or Mr. Trump would be able to
nominate to the Board would be subject to adjustment based on
their respective ownership of the recapitalized Company's common
stock at any given time.
Given the large number of noteholders, the Company intends to
effect the transactions in a chapter 11 proceeding pursuant to a
pre-negotiated plan of reorganization in order to implement the
Recapitalization Plan in an efficient and timely manner. The
Company intends to commence its chapter 11 case by the end of
September 2004 and expects the Recapitalization Plan to be
consummated in the first quarter of 2005. The consummation of the
Recapitalization Plan is subject to a variety of conditions
discussed below. The Company intends to maintain its current level
of operations during the pendency of the proceedings, expects that
its patrons and vendors would experience no change in the way the
Company does business with them, and anticipates that the proposed
plan of reorganization would not impair trade creditor claims. The
Company intends to arrange for up to $100 million debtor-in-
possession financing during the proceedings.
In connection with the restructuring, the Company has held
discussions with certain holders of the TCH Notes, which have
formed a committee to discuss a potential restructuring, and the
TCH Noteholder Committee has engaged legal and financial advisors.
However, the Company has not reached any specific agreement with
the TCH Noteholder Committee or any other holders of the TCH Notes
concerning a restructuring, and there is no assurance that the
Company will reach such an agreement with such holders. The
Company's current proposal contemplates a recovery by holders of
TCH Notes of approximately the accreted value of the TCH Notes
(approximately 95.6% of the aggregate principal face amount),
which the Company believes is an appropriate recovery under the
Bankruptcy Code.
The consummation of the Recapitalization Plan is subject to a
number of conditions, the satisfaction of which cannot be assured,
including, among other things, the negotiation of a definitive
investment agreement with CSFB private equity, an indenture
governing the New Notes, the documentation relating to the
Company's proposed arrangements with Mr. Trump and a plan of
reorganization. The plan of reorganization would also be subject
to obtaining applicable governmental approvals, including court
confirmation of the plan of reorganization and approval of the
related solicitation materials, gaming regulatory authority
approvals and relevant filings under the Hart-Scott Rodino
Antitrust Improvements Act of 1976, as amended. The definitive
terms and conditions of the Recapitalization Plan would be
outlined in a disclosure statement that would be sent to security
holders and creditors entitled to vote on the plan of
reorganization. There can be no assurances that the
Recapitalization Plan will be officially proposed as described
herein or consummated.
The recapitalized Company intends to apply to have its new common
stock listed on the New York Stock Exchange or other national
securities exchange upon the consummation of the Recapitalization
Plan. The Company's announcement to implement the Recapitalization
Plan is anticipated to cause the New York Stock Exchange to
suspend the trading of the Company's current common stock.
None of the securities proposed to be issued in connection with
the proposed recapitalization (including the New Notes and shares
referenced herein) have been registered under the Securities Act
of 1933, as amended, or any state securities laws and unless so
registered may not be offered or sold in the United States except
pursuant to an exemption from, or in a transaction not subject to,
the registration requirements of the Securities Act and applicable
state securities laws. None of the Restructuring Support
Agreement, the term sheet attached thereto or this press release
constitutes an offer to sell or the solicitation of offers to buy
any security or constitute an offer, solicitation or sale of any
security in any jurisdiction in which such offer, solicitation or
sale would be unlawful.
About CSFB and DLJ Merchant Banking Partners
DLJ Merchant Banking (DLJMB) is a leading private equity investor
that has a 19-year record of investing in leveraged buyouts and
related transactions across a broad range of industries. DLJMB,
with offices in New York, London, Houston and Buenos Aires, is
part of Credit Suisse First Boston's Alternative Capital Division
(ACD), which is one of the largest alternative asset managers in
the world with more than $36 billion of assets under management.
ACD is comprised of $20 billion of private equity assets under
management across a diverse family of funds, including leveraged
buyout funds, mezzanine funds, real estate funds, venture capital
funds, fund of funds and secondary funds, as well as more than $16
billion of assets under management through its hedge fund (both
direct and fund of funds), leveraged loan and CDO businesses.
Credit Suisse First Boston's Investment Banking Division has been
serving as DLJMB's financial advisors in connection with the
Recapitalization Plan.
About the Company
Through its subsidiaries, THCR owns and operates four properties
and manages one property under the Trump brand name. THCR's owned
assets include Trump Taj Mahal Casino Resort and Trump Plaza Hotel
and Casino, located on the Boardwalk in Atlantic City, New Jersey,
Trump Marina Hotel Casino, located in Atlantic City's Marina
District, and the Trump Casino Hotel, a riverboat casino located
in Gary, Indiana. In addition, the Company manages Trump 29
Casino, a Native American owned facility located near Palms
Springs, California. Together, the properties comprise
approximately 451,280 square feet of gaming space and 3,180 hotel
rooms and suites. The Company is the sole vehicle through which
Donald J. Trump conducts gaming activities and strives to provide
customers with outstanding casino resort and entertainment
experiences consistent with the Donald J. Trump standard of
excellence. THCR is separate and distinct from Mr. Trump's real
estate and other holdings.
UBS Investment Bank has been serving as the Company's financial
advisors in connection with the Recapitalization Plan.
TRUMP HOTELS: NYSE Suspends Equity Trading & Will Delist Shares
---------------------------------------------------------------
The New York Stock Exchange determined yesterday that the common
stock of Trump Hotels & Casino Resorts, Inc. (NYSE:DJT) should be
suspended immediately.
The Exchange's action is being taken in view of the Company's
August 9, 2004 announcement regarding its recapitalization plan
which will be executed through a Chapter 11 proceeding pursuant to
a pre-negotiated plan of reorganization. The recapitalization
plan will include a $400m co-investment by Donald Trump and Credit
Suisse First Boston's private equity fund, DLJ Merchant Banking
Partners LLP as well as a restructuring of the Company's
indebtedness. Upon consummation of the recapitalization plan,
existing shareholders, excluding Mr. Trump, will represent
approximately 0.1% of the reorganized Company's shares, absent any
participation in the rights offering. In light of all the
circumstances involving the Company, including the significant
dilution to the existing shareholders, the NYSE has determined
that the Company's current common stock no longer satisfies the
requirements for continued listing on the NYSE.
The Company has a right to a review of this determination by a
Committee of the Board of Directors of the Exchange. Application
to the Securities and Exchange Commission to delist the issue is
pending the completion of applicable procedures, including any
appeal by the Company of the NYSE staff's decision. The NYSE
noted that it may, at any time, suspend a security if it believes
that continued dealings in the security on the NYSE are not
advisable.
UNIFIED HOUSING: Proofs of Claim Must Be Filed by December 7
------------------------------------------------------------
The United States Bankruptcy Court for the Northern District of
Texas directs creditors of Unified Housing of Kensington, LLC, to
file written proofs of claim by December 7, 2004. Claim forms
must be delivered to:
Tawana C. Marshall
Clerk of the Bankruptcy Court
501 W. Tenth Street
Fort Worth, Texas 76102
Headquartered in Dallas, Texas, Unified Housing of Kensington,
LLC, filed for chapter 11 protection on July 29, 2004 (Bankr. N.D.
Tex. Case No. 04-47183). John P. Lewis, Jr., Esq., at Cholette,
Perkins & Buchanan, represents the Company in its restructuring
efforts. When the company filed for protection, it listed more
than $10 million in assets and debts.
US RESTAURANT: Planned CNL Merger Prompts Moody's Review
--------------------------------------------------------
Moody's placed US Restaurant Properties, Inc.'s preferred stock
rating of B1 under review for possible downgrade. According to
Moody's, this review has been prompted by US Restaurant's
announcement today that it has decided to merge with CNL
Restaurant Properties, Inc. and 18 CNL Income Funds. This rating
action reflects the fact this will be a leveraged transaction at
least initially, and that CNL Restaurant Properties' capital
structure currently is weaker than US Restaurant. The transaction
will also be legally and structurally complex. Moody's recognizes
that the transaction should generate operating synergies through
the leveraging of the existing CNL Restaurant Properties
management team over a larger operating base and elimination of
redundancies in operations.
The new REIT, with $2.5 billion in pro forma assets, will trade on
the NYSE, will operate under the CNL Restaurant Properties name,
and will own 1,900 properties and have financial interests in a
total of approximately 3,000 properties in 49 states, which will
include leading brands such as Applebee's, Arby's, Bennigan's,
Burger King, Golden Corral, IHOP, Jack in the Box, KFC, Pizza Hut,
TGI Friday's and Wendy's. The combined REIT's main lines of
business will include sale/leaseback financing, property
management, lease and loan servicing, mergers and acquisitions
advisory services, investment and merchant banking, restaurant
real estate development, and trading restaurant properties in the
1031 exchange market. With increased brand, tenant and geographic
diversification, the combined portfolio will be the largest
restaurant REIT in the USA.
Pursuant to a merger agreement, CNL Restaurant Properties, Inc.
will merge with and into US Restaurant Properties, Inc. In
addition, pursuant to merger agreements between each CNL Income
Fund and US Restaurant Properties, each CNL Income Fund will merge
with a separate wholly owned subsidiary of US Restaurant
Properties' operating partnership.
CNL Restaurant Properties' shareholders will receive 0.7742 shares
of US Restaurant Properties' common stock, and 0.16 shares of
newly issued US Restaurant Properties' 7.5% Series C Redeemable
Convertible Preferred Stock for each share of CNL Restaurant
Properties' common stock held. The 7.5% Series C Redeemable
Convertible Preferred Stock will have a conversion price of $19.50
per share and a liquidation value of $25 per share. CNL Restaurant
Properties currently has approximately 45 million shares
outstanding.
In its review, Moody's will focus on the strategic effects of the
transaction on US Restaurant Properties, the legal structure of
the transaction, initial and permanent financing, the
opportunities for revenue and cost synergies, and the outlook for
financial returns and cash flow in the context of the restaurant
finance business. In addition, Moody's will review the ultimate
corporate governance structure of the REIT, including affiliate
relationships.
The following rating was placed under review for possible
downgrade:
-- US Restaurant Properties, Inc.
-- Cumulative preferred stock at B1.
US Restaurant Properties, Inc. [NYSE: USV], headquartered in
Dallas, Texas, USA, is a fully integrated, self-administered and
self-managed REIT. The REIT owns, acquires and manages branded
chain restaurants and select service retail properties. In
addition, the REIT makes opportunistic investments in mortgages
secured by leasehold interests in restaurants or real estate. As
of June 30, 2004, US Restaurant Properties owned 778 properties in
48 states, and with $542 million in assets and $196 million in
equity.
CNL Restaurant Properties, Inc., the largest self-advised
restaurant REIT in the USA, provides a complete range of
financial, real estate and advisory services to operators of
national and regional restaurant chains.
CNL Income Funds are 18 publicly held real estate limited
partnerships formed between 1986 and 1997. The Funds invest in
land and free-standing buildings that are triple-net leased to
operators of fast-food, family-style and casual-dining
restaurants, representing nationally or regionally-recognized,
top-tier chains.
VERITAS DGC: Board Appoints Mark Baldwin as CFO & Treasurer
-----------------------------------------------------------
Veritas DGC Inc.'s (NYSE & TSX: VTS) Board of Directors has
appointed Mark E. Baldwin Executive Vice President, Chief
Financial Officer & Treasurer effective August 23, 2004.
Prior to his appointment and since 2003, Mr. Baldwin was an
operating partner in First Reserve Corporation, a privately held
oilfield services equity firm. From 2001 to 2002, he served as
executive vice president/chief financial officer of Nexitraone,
LLC, a privately held telecommunications company. From 1997 to
2001, Mr. Baldwin was chairman/chief executive officer of
Pentacon, Inc., then a publicly traded distributor of aerospace
and industrial fasteners. For the seventeen years prior to 1997,
Mr. Baldwin held a number of progressively more responsible
financial and operating positions with Keystone International,
Inc., then a publicly traded manufacturer of flow control devices.
For the four years ending in 1980, he served as an accountant with
a national accounting firm. Mr. Baldwin is currently a director
of T-3 Energy Services, Inc., a publicly traded provider of
oilfield products and services, and from April 2003 until March
2004 served as chairman of its board of directors.
"We are extremely pleased to have Mark join Veritas," commented
Thierry Pilenko, Chairman & Chief Executive Officer of Veritas DGC
Inc. "Mark is bringing a broad experience that complements the
skills of the management team at a very interesting time for our
company and our industry, with many growth opportunities."
Veritas DGC Inc., headquartered in Houston, Texas, is a leading
provider of integrated geophysical, geological and reservoir
technologies to the petroleum industry worldwide.
As previously reported, Standard & Poor's Ratings Services
affirmed its ratings on Veritas DGC Inc. (BB+\Negative\--)
following the company's announcement that it will refinance a
large portion of its secured debt by issuing new unsecured
convertible notes. The outlook remains negative, S&P says.
VOEGELE MECHANICAL: First Creditors Meeting Slated for Sept 16
--------------------------------------------------------------
The United States Trustee for Region 3 will convene a meeting
of Voegele Mechanical, Inc.'s creditors at 1:00 p.m., on
September 16, 2004, at the Office of the U.S. Trustee, Suite 501,
833 Chestnut Street in Philadelphia, Pennsylvania. 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 Philadelphia, Pennsylvania, Voegele Mechanical --
http://www.voegele.net/-- is a heating, air conditioning,
refrigeration, plumbing and electricity contractor. The Company
filed for chapter 11 protection on August 3, 2004 (Bankr. E.D. Pa.
Case No. 04-30628). Rhonda Payne Thomas, Esq., at Klett Rooney
Lieber and Schorling, represents the Debtor in its restructuring
efforts. When the Debtor filed for protection it listed more than
$10 million in estimated assets and debts.
WASTECORP. INTERNATIONAL: Issues Default Status Report
------------------------------------------------------
Pursuant to the Ontario Securities Commission Policy 57-603,
Wastecorp. International Investments Inc. (TSX Venture: Stock
Symbol "WII"), hereby discloses the following information as
required by Appendix B of the CSA Staff Notice 57-301:
1. There is no material change in the information contained in
the Notice of Default dated July 20, 2004;
2. There is no failure by Wastecorp. to fulfill its stated
intentions in its Notice of Default dated July 20, 2004 to
file its annual audited consolidated financial statements
for the fiscal year ended February 29, 2004, by September
15, 2004.
3. There is no actual or anticipated default of a financial
statement filing subsequent to that disclosed in the Notice
of Default; and the company will file the interim financial
statements for the first quarter ended May 31, 2004,
simultaneously, with the annual consolidated financial
statements prepared by the auditor.
4. Wastecorp. has no material information concerning the
affairs of the company that has not already been generally
disclosed and will provide a news release of any material
information that ought to be disclosed to the general
public.
There are no other changes otherwise required to be disclosed.
Headquarted in Glen Rock, New Jersey, Wastecorp. Inc. --
http://www.wastecorp.com/-- is a waste management company
specializing in wastewater sewage treatment with its Wastecorp.
Marlow Plunger Pump line, medical waste disposal, with its
reusable sharps container program and plastic and scrap tire
recycling division. On April 7, 2003, Wastecorp. International
Investments Inc., together with its subsidiary, Wastecorp. Inc.,
filed voluntary Chapter 11 petitions in the United States,
Bankruptcy Court for the District of New Jersey. Wastecorp. is
represented in Canada by the law firm of Borden, Ladner, Gervais,
and in the United States by lawyers at Cole, Schotz, Meisel,
Forman & Leonard.
WORLDCOM INC: Asks Court to Approve ERISA Class Action Settlement
-----------------------------------------------------------------
Before the Petition Date, several putative class action suits were
filed against Worldcom Inc., certain of the Debtors' officers,
directors, and other parties for breach of fiduciary duties under
the Employee Retirement Income Security Act, in administering the
WorldCom 401(k) plan and predecessor plans. After the Petition
Date, the putative class actions were consolidated in the United
States District Court for the Southern District of New York and
lead plaintiffs for the consolidated case were designated.
The consolidated complaint sought to certify a class of persons
who participated in the WorldCom 401(k) plan and certain
predecessor plans during the period from September 14, 1998 to the
Petition Date.
Mark A. Jacoby, Esq., at Weil, Gotshal & Manges, LLP, in New York,
relates that during the Chapter 11 cases, proofs of claim were
filed against the Debtors by:
-- the Named Plaintiffs and other potential members of the
Settlement Class with respect to the same claims asserted
in the ERISA Action;
-- the U.S. Department of Labor for possible violations of the
fiduciary requirements of ERISA with respect to the 401(k)
Plans;
-- a number of former officers, directors and employees for
indemnification claims under the Debtors' corporate bylaws
and articles of incorporation in connection with the ERISA
Action and any losses incurred on account thereof; and
-- Merrill Lynch Trust Company, F.S.B. asserting a contractual
claim for indemnification in connection with the claims
asserted against Merrill Lynch in the ERISA Action.
The Debtors argued that the claims in the ERISA Action were not
meritorious, but even if allowed, the claims would be subject to
subordination under Section 510(b) of the Bankruptcy Code. The
Named Plaintiffs asserted that the ERISA claims would not be
subject to subordination and instead were general unsecured
claims. The Named Plaintiffs estimated the amount of the claim
for damages in the ERISA Action to be in the range of
$150,000,000 to $600,000,000.
The Settlement
The Named Plaintiffs, the Debtors and certain other defendants in
the ERISA Action participated in an intense, arm's-length
mediation process supervised by Magistrate Judge Michael Dolinger,
the District Court-appointed mediator. As a result of the
mediation, the Debtors and certain ERISA Defendants negotiated an
agreement in principle with the Named Plaintiffs to settle the
issues raised in the ERISA Action. The parties document that
agreement on July 2, 2004.
The Named Plaintiffs sought a preliminary approval of the
Settlement Agreement from the District Court, seeking to certify
the Settlement Class as a mandatory non-opt out class. The
District Court entered the Preliminary Approval Order on July 21,
2004.
Pursuant to the terms of the Preliminary Approval Order, notices
of class certification and claims bar order are to be transmitted
to the members of the Settlement Class and other persons and
entities by August 6, 2004. The District Court will conduct a
fairness hearing on October 15, 2004 at 2:00 p.m. to consider the
Settlement Agreement.
The Debtors ask United States Bankruptcy Court for the Southern
District of New York to approve the Settlement Agreement. The
salient terms of the Settlement Agreement are:
A. Settlement Consideration
The Debtors estimate that their share of the settlement
consideration to be paid will be between $23,750,000 and
$28,750,000. The Debtors and their insurance underwriters
will pay $46,750,000 cash, representing the "Principal Class
Settlement Amount," broken down as:
(a) $18,000,000, which will be paid by three of WorldCom's
insurance underwriters -- Continental Casualty Company,
Gulf Insurance Company, and Twin City Fire Insurance
Company;
(b) National Union Fire Insurance Company of Pittsburgh,
Pennsylvania, one of the Underwriters, will pay an amount
equal to $10,000,000 less defense costs disbursed under
its insurance policy through the date of the establishment
of the settlement fund; and
(c) MCI will pay the difference between $46,750,000 and the
amount paid by the Underwriters.
In addition, Bernard Ebbers will contribute $400,000 in cash
and a promissory note in a minimum amount of $450,000 and a
maximum amount of $4,000,000.
B. Settlement Class
The Settlement Class will consist of 401(k) Plan Participants
during the period from September 14, 1998 through the Petition
Date, and their beneficiaries, alternate payees,
representatives and successors, as a mandatory non-opt out
class.
C. Plan of Allocation
The settlement proceeds will be allocated to the various
members of the Settlement Class in proportion to their alleged
losses as a result of investments, through their 401(k) Plan
accounts, in WorldCom stock. The plan of allocation will be
proposed by the Named Plaintiffs and is subject to the
approval of the District Court.
D. Released Claims
These claims will be released by, against and among the
Settlement Class, the Settling Defendants and the
Underwriters:
(a) Claims asserted in the ERISA Action and similar claims
filed against the Debtors in the Chapter 11 cases;
(b) Claims that would be barred by res judicata if the claims
asserted in the ERISA Action or if the bankruptcy cases
had been litigated fully to a conclusion;
(c) Claims relating to or involving the Underwriters'
liability under the applicable fiduciary liability
insurance policies; and
(d) Claims for indemnity or contribution with respect to the
foregoing.
E. Bar Order
These claims will be barred against the Settling Defendants,
the 401(k) Plan, and the Debtors' present and former officers,
directors, employees agents, attorneys, representatives,
insurers and reinsurers:
(a) Claims for indemnity or contribution arising out of the
ERISA Action;
(b) Any other claims arising out of the Released Claims; and
(c) Any claims against the Underwriters under or in any way
involving the insurance policies or on any Released Claim
or for coverage under the insurance policies for any
Released Claim.
All persons who received or who have actual or constructive
notice of the notices to be provided with respect to the
settlement and the bar order, including the Non-Settling
Parties will be barred.
F. Termination
The Settlement Agreement may be terminated if:
(a) The District Court declines to enter the Final Approval
Order or, after entry, the Final Approval Order is
reversed or materially modified;
(b) The Bankruptcy Approval Order is not entered or does not
become a final order;
(c) The Final Approval Order is unsatisfactory to any Settling
Party and, after mediation, a mediator determines that the
Final Approval Order does not satisfy the terms and
conditions of the Settlement Agreement;
(d) Issues that the Department of Labor may have with any
of the Settling Defendants are not resolved including
the issues on the Department of Labor's claim filed in the
Debtors' Chapter 11 cases relating to the Debtors'
possible violations of the fiduciary requirements of ERISA
with respect to the 401(k) Plans; or
(e) The releases provided under the Settlement Agreement are
not effective.
In the event the Settlement Agreement is terminated:
-- All contributed settlement funds will be returned, less
certain expenses incurred to date;
-- The Debtors will file a preliminary objection to the
Named Plaintiffs' claims and to the ERISA Action;
-- The parties' claims and defenses will revert to their
status as of the day immediately before the date of the
Settlement Agreement's execution; and
-- No releases granted under the Settlement Agreement will
be effective or enforceable.
Headquartered in Clinton, Mississippi, WorldCom, Inc., now known
as MCI-- http://www.worldcom.com/-- is a pre-eminent global
communications provider, operating in more than 65 countries and
maintaining one of the most expansive IP networks in the world.
The Company filed for chapter 11 protection on July 21, 2002
(Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the
Debtors listed $103,803,000,000 in assets and $45,897,000,000 in
debts.
On April 20, 2004, the company (WCOEQ, MCWEQ) formally emerged
from U.S. Chapter 11 protection as MCI, Inc. This emergence
signifies that MCI's plan of reorganization, confirmed on October
31, 2003, is now effective and the company has begun to distribute
securities and cash to its creditors. (Worldcom Bankruptcy News,
Issue No. 59; Bankruptcy Creditors' Service, Inc., 215/945-7000)
* Upcoming Meetings, Conferences and Seminars
---------------------------------------------
September 18-21, 2004
AMERICAN BANKRUPTCY INSTITUTE
Southwest Bankruptcy Conference
The Bellagio, Las Vegas, Nevada
Contact: 1-703-739-0800 or http://www.abiworld.org/
October 9-10, 2004
INTERNATIONAL WOMEN'S INSOLVENCY & RESTRUCTURING
CONFEDERATION
IWIRC Annual Fall Conference
Nashville, Tennessee
Contact: 1-703-449-1316 or http://www.iwirc.com/
October 10-13, 2004
NATIONAL CONFERENCE OF BANKRUPTCY JUDGES
Seventy Seventh Annual Meeting
Nashville, Tennessee
Contact: http://www.ncbj.org/
October 15-18, 2004
TURNAROUND MANAGEMENT ASSOCIATION
2004 Annual Convention
Marriott Marquis, New York City
Contact: 312-578-6900 or http://www.turnaround.org/
November 29-30, 2004
BEARD GROUP & RENAISSANCE AMERICAN MANAGEMENT
The Eleventh Annual Conference on Distressed Investing
Maximizing Profits in the Distressed Debt Market
The Plaza Hotel - New York City
Contact: 1-800-726-2524; 903-592-5168;
dhenderson@renaissanceamerican.com
December 2-4, 2004
AMERICAN BANKRUPTCY INSTITUTE
Winter Leadership Conference
Marriott's Camelback Inn, Scottsdale, AZ
Contact: 1-703-739-0800 or http://www.abiworld.org/
March 9-12, 2005
TURNAROUND MANAGEMENT ASSOCIATION
2005 Spring Conference
JW Marriott Desert Ridge, Phoenix, Arizona
Contact: 312-578-6900 or http://www.turnaround.org/
April 28- May 1, 2005
AMERICAN BANKRUPTCY INSTITUTE
Annual Spring Meeting
J.W. Marriot, Washington, D.C.
Contact: 1-703-739-0800 or http://www.abiworld.org
June 2-4, 2005
ALI-ABA
Partnerships, LLCs, and LLPs: Uniform Acts, Taxation,
Drafting, Securities and Bankruptcy
Omni Hotel, San Francisco
Contact: 1-800-CLE-NEWS; http://www.ali-aba.org/
July 14 -17, 2005
AMERICAN BANKRUPTCY INSTITUTE
Ocean Edge Resort, Brewster, Massachusetts
Contact: 1-703-739-0800 or http://www.abiworld.org/
July 27- 30, 2005
AMERICAN BANKRUPTCY INSTITUTE
Southeast Bankruptcy Workshop
Kiawah Island Resort and Spa, Kiawah Island, S.C.
Contact: 1-703-739-0800 or http://www.abiworld.org/
October 19-23, 2005
TURNAROUND MANAGEMENT ASSOCIATION
2005 Annual Convention
Chicago Hilton & Towers, Chicago
Contact: 312-578-6900 or http://www.turnaround.org/
November 2-5, 2005
NATIONAL CONFERENCE OF BANKRUPTCY JUDGES
Seventy Eighth Annual Meeting
San Antonio, Texas
Contact: http://www.ncbj.org/
December 1-3, 2005
AMERICAN BANKRUPTCY INSTITUTE
Winter Leadership Conference
Hyatt Grand Champions Resort, Indian Wells, Calif.
Contact: 1-703-739-0800 or http://www.abiworld.org/
The Meetings, Conferences and Seminars column appears in the
Troubled Company Reporter each Wednesday. Submissions via e-mail
to conferences@bankrupt.com are encouraged.
*********
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
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Nothing in the TCR constitutes an offer or solicitation to buy or
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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
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
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than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
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For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
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of Delaware, contact Ken Troubh at Nationwide Research &
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*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania,
USA, and Beard Group, Inc., Frederick, Maryland USA. Yvonne L.
Metzler, Emi Rose S.R. Parcon, Bernadette C. de Roda, Rizande B.
Delos Santos, Jazel P. Laureno, Cherry Soriano-Baaclo, Marjorie
Sabijon and Peter A. Chapman, Editors.
Copyright 2004. All rights reserved. ISSN: 1520-9474.
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*** End of Transmission ***