/raid1/www/Hosts/bankrupt/TCR_Public/040901.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, September 1, 2004, Vol. 8, No. 186
Headlines
4441 BROADWAY: Case Summary & 12 Largest Unsecured Creditors
AIR CANADA: KfW Wants to Set Aside Monitor's Claim Reduction
ARCHIMEDES FUNDING: Fitch Raises Ratings on Three Classes to B+
ARMSTRONG WORLD: Proxicom's Holds an Allowed $1.1 Million Claim
BERWALD PARTNERSHIP: Case Summary & Largest Unsecured Creditors
BIB HOLDINGS: Executes Acquisition Agreement with Incode Corp.
BIOTECH HOLDINGS: Expects Profits from Sucanon Diabetes Drug
BREUNERS HOME: Turns to FTI Consulting for Financial Advice
CEDAR VALLEY COMMS: Case Summary & 20 Largest Unsecured Creditors
CENDANT MORTGAGE: Fitch Rates Privately Offered Classes at Low-Bs
CERADYNE INC: Wins 5-Year Marine Corps Ceramic Body Armor Pact
CHAPCO CARTON: Committee Hires Foley & Lardner as Counsel
CHARTER COMMS: Taps 3 Telephony Partners for Service Connectivity
COMMUNITY HEALTH: S&P Assigns BB- Rating to Planned Bank Loan
CONSECO FINANCE: 49 Low-B-Rated & 27 Junked Classes on S&P Watch
CROMPTON CORP: Implements Price Increases for Flexzone Products
CSFB MORTGAGE: Fitch Puts Low-B Ratings on Six Certificate Classes
CWMBS INC: Fitch Assigns Low-B Ratings to Two 2004-18 Classes
CWMBS INC: Fitch Puts Low-B Ratings on Two 2004-19 Classes
DENALI CAPITAL: Moody's Junks Class 3 Composite Securities
DRESDNER RCM: Moody's May Downgrade $5.5 Mil. Class C Ba2 Rating
DS WATERS: Weak Performance Prompts S&P to Cut Ratings to B-
ENRON: Wants Court to Approve Polaroid Claims Settlement Pact
ENTERPRISE PRODUCTS: Extends Tender Offers for GulfTerra Notes
FOSTER WHEELER: Extends Equity-for-Debt Exchange Offer to Tomorrow
HARBOURVIEW: Fitch Slashes Class C Note Rating Six Notches to B-
HAYNES INTERNATIONAL: Completes Chapter 11 Restructuring
HEALTH ENHANCEMENT: Has Immediate Need for Additional Capital
HLM DESIGN INC: Case Summary & 64 Largest Unsecured Creditors
HLM DESIGN: Section 341(a) Meeting Slated for September 29
HOLLINGER INC: Plans to Make Sept. 1 Interest Payment on Bonds
HOLLINGER INC: SEC Sends Wells Notices to Company & Directors
HOLLINGER INC: 10 Toronto Extends Peter G. White Consulting Pact
HOLLINGER INT'L: Special Committee Files Report in Illinois Court
HOLLYWOOD CASINO: Intends to File Prepack Chapter 11 in 4th Qtr.
HOME CARE: Ordered to File Plan & Disclosure Statement by Nov. 16
IGAMES ENTERTAINMENT: Sherb & Co. Raises Going Concern Doubt
INTEGRATED PERFORMANCE: KBA Replaces Malone & Bailey as Auditors
JCBT INC: Case Summary & 20 Largest Unsecured Creditors
LOUDEYE CORP: Delayed Form 10-Q Filing Prompts Nasdaq Delisting
LNR PROPERTY: S&P Places BB CounterParty Rating on CreditWatch
LNR PROPERTY: Fitch's BB+ & BB- Debt Ratings on Watch Evolving
LNR PROPERTY: Moody's Reviewing Low-B Ratings & May Downgrade
MILLENIUM ASSISTED: Brings-In GCP as Asset Disposition Agent
MIRANT AMERICAS: Committee Taps James Donnell as Energy Consultant
NAPA VALLEY INC: Case Summary & 2 Largest Unsecured Creditors
NATIONAL CENTURY: PwC Asks Court to Quash August 2004 Subpoena
NEW CENTURY: Moody's Places Ba2 Rating on Class B-III Certificates
NVCN CORP.: Dismisses Silverman Olson as Independent Accountant
PARMALAT USA: GE Capital Okays Extension of Investigation Period
RCN CORP: Classification & Treatment of Claims Under Reorg. Plan
S S FUELING INC: Case Summary & 6 Largest Unsecured Creditors
SCHENECTADY N.Y.: Moody's Affirms Ba3 Rating with Negative Outlook
SECURITIZED ASSET: Fitch Places BB+ Rating on $4 Mil. Class B-4
SOLECTRON CORP: S&P Puts B+ Rating on $500 Million Credit Facility
ST. LOUIS INDUSTRIAL: Moody's Cuts Rating on $98M Bonds to B3
STRUCTURED ADJUSTABLE: Fitch Rates Class B4 at BB & Class B5 at B
TEMPUR PEDIC: Closes Amended & Restated Sr. Credit Facilities
THE INN AT ORCHARD: Case Summary & Largest Unsecured Creditors
UNITED AIRLINES: Flight Attendants Call for New Management
UNITED RENTALS: SEC Inquiry Prompts S&P's BB Ratings
VANGUARD HEALTH: Extends 9-3/4% Sr. Debt Offering to Sept. 22
VELOCITY CLO: S&P Assigns BB Ratings to $8 Million Class D Notes
WATERMAN INDUSTRIES: Gets Fifth Approval to Use Cash Collateral
WESTPOINT STEVENS: Seeks Court Nod to Assume IBM Computer Lease
WORLD AM, INC.: L.L. Bradford Replaces Michael Johnson as Auditor
WORLDCOM INC: Insists Covad's Cure Payment Only Amounts to $2.6M
* Clear Thinking Group Completes Asset Acquisition from Parent Co.
* Paul Hastings Strengthens Litigation Department with R.M. Martin
* Upcoming Meetings, Conferences and Seminars
*********
4441 BROADWAY: Case Summary & 12 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: 4441 Broadway Realty Corporation
4441 Broadway
New York, New York 10040
Bankruptcy Case No.: 04-15674
Type of Business: Real estate.
Chapter 11 Petition Date: August 30, 2004
Court: Southern District of New York (Manhattan)
Judge: Prudence Carter Beatty
Debtor's Counsel: Michael S. Schneider, Esq.
Law Office of Michael Schneider
1500 Broadway, 21st Floor
New York, New York 10036
Tel: (212) 302-9477
Fax: (212) 354-6468
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 12 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
NYC Buildings Department $100,000
Ralph Monserrat $10,000
Pro Painters $7,500
Fordham Glass Corporation $5,000
Victor Poralatra $4,500
Paul Monserrat $4,500
Nelson Vega $3,950
VNJ Hardware Supply Corporation $2,420
All Clear Drain Services $1,920
B & R Rubbish Removal $1,800
New Palace Painters Supply Company $1,245
1100 Inc. Unstated
AIR CANADA: KfW Wants to Set Aside Monitor's Claim Reduction
------------------------------------------------------------
Kreditanstalt fur Wiederaufbau asks the Ontario Superior Court of
Justice to set aside the determination of Claims Officer David
Stockwood, Q.C., with respect to KfW's claim in the CCAA case of
Air Canada.
KfW asserts a CN$111,421,065 restructuring claim and a
CN$267,658,815 pre-filing claim against Air Canada. The Court-
appointed Monitor, Ernst & Young, Inc., objected to the Claims.
The Monitor issued a Notice of Revision or Disallowance, expunging
the pre-filing claim in its entirety. The Monitor held that KfW's
rights with respect to the pre-filing claim had been assigned and
the assignment, at KfW's request, had been accepted by Air Canada
and the Monitor.
The Monitor reduced KfW's restructuring claim to $63,382,159.
Mr. Stockwood upheld the Monitor's decision.
KfW does not dispute the disallowance of the pre-filing claim.
KfW, however, takes issue on the reduction of its restructuring
claim.
KfW's Restructuring Claim
KfW's Restructuring Claim comprise six elements:
(1) A Claim for the principal amount outstanding as of
April 1, 2003, under an Aircraft Installment Sale
Agreement between KfW and Air Canada, dated December 29,
2000;
(2) A claim for interest owing under the Installment Sale
Agreement until April 1, 2003;
(3) A claim for breakfunding losses from April 1, 2003 to
April 30, 2010;
(4) A claim for losses in respect of an indemnity given by Air
Canada to KfW dated December 29, 2000. Air Canada agreed
to indemnify KfW against the losses which KfW suffers or
incurs as a result of entering into the Installment Sale
Agreement;
(5) A set-off in respect of an invoice for spare parts Air
Canada sold and delivered to KfW after April 1, 2003; and
(6) A set-off in respect of the value of the security Air
Canada pledged under the Installment Sale Agreement --
being a Boeing 747-475 aircraft bearing serial number
24883.
Mr. Stockwood disallowed the Breakfunding Claim and the Indemnity
Claim, and reduced the Aircraft Valuation Claim to CN$48,314,733,
of which CN$48,169,285 was on account of the value of the
Aircraft.
The Breakfunding Claim
Geoff R. Hall, Esq., at McCarthy Tetrault, LLP, in Toronto,
Ontario, asserts that Mr. Stockwood was clearly wrong in
disallowing the Breakfunding Claim. Mr. Stockwood erred in his
interpretation of KfW's agreement with Air Canada.
Mr. Stockwood interpreted the phrase "any prepayment or
accelerated repayment" in a commercially unreasonable manner.
Mr. Stockwood noted that breakfunding losses occur when there have
been prepayments or accelerated repayments. However, there has
been no prepayment of the loan or accelerated repayments.
According to Mr. Stockwood, KfW cannot claim breakfunding losses
because its contractual entitlement to the losses has not been
triggered.
Properly construed in accordance with the principle that contracts
are to be interpreted in a commercially reasonable manner, Mr.
Hall asserts that Air Canada's obligation was triggered on Air
Canada's filing for CCAA protection and by its termination of the
Installment Sale Agreement.
Mr. Stockwood also erred in finding that the Breakfunding Claim is
a claim for post-filing interest. Mr. Stockwood held that KfW is
seeking the present value of the difference in interest between
what KfW should have received under the Installment Sale
Agreement, but for the CCAA filing on April 1, 2003.
Mr. Hall contends that Mr. Stockwood's determination that KfW's
Claim is for post-filing interest is conclusory and unsupported by
reasons. It is also wrong. The Breakfunding Claim is
compensatory for the loss of the Installment Sale Agreement and is
not on account of interest.
The Breakfunding Claim should be allowed.
The Indemnity Claim
In 1990, KfW entered into a term loan agreement with Canadian
Airlines International, Ltd. The purpose of the loan was to
finance CAIL's purchase of the Aircraft. KfW advanced funds and
the Aircraft was pledged to KfW as security. When CAIL became
insolvent, Air Canada came to CAIL with new financing. CAIL,
subsequently, was restructured and merged with Air Canada.
As part of CAIL's restructuring process, KfW agreed to purchase
the Aircraft and resell it to Air Canada under the Installment
Sale Agreement. To induce KfW to agree to the arrangement, the
parties signed the Indemnity.
KfW asserts a claim for pre-filing interest pursuant to the
Indemnity. Mr. Stockwood, however, ruled that when the CAIL Loan
was purportedly rolled into the Installment Sale Agreement, KfW
made a mistake in calculating the outstanding balance of the
principal and interest due at that time under the CAIL Loan.
Moreover, Mr. Stockwood found that the claim for pre-filing
interest is not covered by the Indemnity. Mr. Stockwood pointed
out that KfW did not incur the loss by virtue of entering into or
carrying out the Installment Sale Agreement. KfW suffered the
loss because CAIL became insolvent and could not meet its
obligations under the Loan. It is a loss that pre-existed the
making of the Installment Sale Agreement, the Indemnity and
related agreements, Mr. Stockwood ruled.
KfW also alleges that as a result of entering into the Installment
Sale Agreement and related transactions, it lost priority in that
it is now subordinated to Senior Debt holders, whereas it would
have been a Senior Debt holder if the terms of the CAIL Loan were
still in place.
While KfW might have had priority in the event of CAIL's
insolvency, Mr. Stockwood noted that KfW never had priority in the
event of Air Canada's insolvency. KfW's interest in the CAIL Loan
was assigned before CAIL's merger into Air Canada. The Indemnity
cannot be construed in a way that gives KfW the benefit of the
priority it might have had in respect of CAIL, to proceedings in
respect of Air Canada.
Mr. Hall tells Mr. Justice Farley that Mr. Stockwood was wrong in
his disallowance of the Indemnity Claim. Mr. Stockwood erred in
interpreting the Indemnity. Properly construed, the Indemnity
includes KfW's claim in respect of the mistake made in calculating
the outstanding balance of principal and interest due at the time
of the antecedent transaction before the Installment Sale
Agreement, as that amount would have been the subject of
compensation by Air Canada.
The Indemnity also includes KfW's loss of priority as a result of
entering into the Installment Sale Agreement and related
transactions. It is unjust, and a commercially unreasonable and
unduly narrow reading of the Indemnity, to exclude these items
from the scope of the Indemnity, Mr. Hall asserts.
The Indemnity Claim should be allowed.
The Aircraft Valuation Claim
In the aircraft industry, there are at least four methods of
calculating the value of an aircraft:
(1) Current Market Value -- The most likely trading piece that
may be generated under the market conditions that are
assumed to exist at the time for an aircraft in average
condition with a maintenance status at mid-life;
(2) Adjusted Market Value -- Current Market Value adjusted to
reflect the actual condition of the aircraft;
(3) Distress Value -- Current Market Value adjusted to reflect
"fire sale" conditions, where the seller has little
leverage because it is uncommonly motivated to sell, and
buyers are aware of this; and
(4) Adjusted Distress Value -- Distress Value adjusted to
reflect the actual condition of the aircraft.
Current Market Value is typically assessed with reference to
reports published by AVITAS, Inc., for general use in the
industry. AVITAS is an independent aircraft appraiser with
recognized expertise in the area.
In the first half of 2003, the AVITAS Current Market Value for the
Aircraft was $39,360,000. In the second quarter of 2004, the
AVITAS Current Market Value for the Aircraft was $35,570,000.
Taking the halfway point between the valuation for early 2003 and
the valuation for mid-2004, Mr. Stockwood assigns the Aircraft a
Current Market Value of $37,465,000 as at November 2003.
Air Canada personnel familiar with the Aircraft opined that the
value of the Aircraft on the date it was returned to KfW should be
approximately 10% less than its Current Market Value. This would
yield an Adjusted Market Value of $33,718,500. Although KfW
disputes the methodology used by Air Canada in making that
calculation, KfW did not provide any alternative methodology.
KfW's own report, which was prepared by AVITAS on its behalf,
estimates the Adjusted Market Value of the Aircraft as of May 2004
at $33,770,000.
Given both the subjective nature of the valuation and the limited
information provided, Mr. Stockwood found it best to fix the
Aircraft's Adjusted Market Value as of November 2003 at
$33,718,500. Mr. Stockwood held that KfW is entitled to deduct
from the amount its reasonable expenses associated with realizing
its security. Based on the Monitor's calculation, Mr. Stockwood
assessed KfW's costs at $1,011,555. Therefore, the total amount
of the set-off with respect to the value of the Aircraft is
$32,706,945, or CN$48,169,285.
Mr. Hall asserts that Mr. Stockwood erred in using the Adjusted
Market Value instead of the Distress Value or the Adjusted
Distress Value. Mr. Stockwood erred in determining the value of
the Aircraft as at November 2003 in the hands of KfW, when he
ought to have determined the value of the Aircraft as at
April 1, 2003 in the hands of KfW. On this basis, the appropriate
valuation -- and the one which reflects commercial reality -- is
the Distress Value or the Adjusted Distress Value.
Accordingly, KfW wants the Aircraft Valuation adjusted based on
the Distress Value or the Adjusted Distress Value. The Aircraft
Valuation Claim should also be adjusted.
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. 46; Bankruptcy Creditors' Service, Inc., 215/945-7000)
ARCHIMEDES FUNDING: Fitch Raises Ratings on Three Classes to B+
---------------------------------------------------------------
Fitch Ratings upgrades five classes of notes issued by Archimedes
Funding III, Ltd. These rating actions are effective immediately:
-- $5,000,000 class C-1 fixed-rate third priority senior
secured notes to 'BBB' from 'BBB-';
-- $85,000,000 class C-2 floating rate third priority senior
secured notes to 'BBB' from 'BBB-';
-- $5,000,000 class D-1 fixed rate fourth priority senior
secured notes to 'B+' from 'B-';
-- $23,000,000 class D-2 floating rate fourth priority senior
secured notes to 'B+' from 'B-';
-- $17,000,000 class D-3 fixed rate fourth priority senior
secured notes to 'B+' from 'B-'.
Archimedes is a collateralized debt obligation -- CDO -- managed
by ING Capital Advisors, LLC, which closed Nov. 2, 1999.
Archimedes was established to issue approximately $1 billion in
debt and equity securities and invest the proceeds in a portfolio
of predominantly high yield bank loans and high-yield bonds. As
of the July 20, 2004 trustee report, approximately 92% of the
portfolio consisted of:
* senior secured loans and bonds,
* 6% senior unsecured loans and bonds, and
* the remaining 2% in subordinated and synthetic securities.
Included in this review, Fitch discussed the current state of the
portfolio with the asset manager and their portfolio management
strategy going forward. In addition, Fitch conducted cash flow
modeling utilizing various default timing and interest rate
scenarios.
Since the last rating action on July 24, 2003, the class A/B
overcollateralization -- OC -- ratio increased from 122% to 124.7%
as reported on the July 20, 2004 trustee report. The class C OC
ratio increased from 105.1% to 107.3%, however the class D OC
ratio of 100.3% failed marginally versus the trigger of 100.5%.
The weighted average rating of the performing collateral has
improved from 'B/B-' to 'B'. Assets rated 'CCC+' or lower
represent 10.1% of Archimedes' maximum investment amount, a sharp
decrease from 27.7% as of the last rating action. Archimedes'
portfolio included $70.1 million par amount of defaulted assets
when last reviewed, representing roughly 9.4% of the total pledged
securities. That number has been reduced to less than 1% of the
total pledged securities or $6.2 million as of the most recent
trustee report. On the November 2003 and February 2004 payment
dates, Archimedes paid all deferred interest, which had accrued on
the class C and D notes, respectively.
As indicated by the Trustee, the class D notes have been paid down
by $1,440,427.52 as of the Aug. 30, 2004 payment date. The
payment has brought the class D OC ratio into compliance at
100.5%. The balances shown above are as of the July 20, 2004
trustee report and do reflect the August 30, 2004 payment.
The rating of the class C and D notes addresses the likelihood
that investors will receive ultimate and compensating interest
payments, as well as the stated balance of principal by the final
payment date. Fitch does not rate the class A or B notes issued
by Archimedes.
Fitch conducted cash flow modeling utilizing various default
timing and interest rate scenarios to measure the breakeven
default rates going forward relative to the minimum cumulative
default rates required for the rated liabilities. For more
information on the Fitch Vector Model, see 'Global Rating Criteria
for Collateralised Debt Obligations', dated Aug. 1, 2003 and
available on the Fitch Ratings web site at
http://www.fitchratings.com/ As a result of this analysis, Fitch
determined that the current ratings assigned to the class C-1,
C-2, D-1, D-2 and D-3 notes no longer reflect the current risk to
noteholders and has subsequently improved over the past year.
Fitch will continue to monitor and review this transaction for
future rating adjustments.
ARMSTRONG WORLD: Proxicom's Holds an Allowed $1.1 Million Claim
---------------------------------------------------------------
In 1999, Armstrong World Industries, Inc. retained Proxicom, Inc.,
as e-business consultant to improve its information technology
infrastructure. On November 29, 1999, Proxicom and AWI entered
into a Professional Services Agreement. On February 11, 2000,
Proxicom and AWI entered into the Armstrong eBusiness
Transformation Statement of Work No. 6503-01142000.
Pursuant to the Proxicom Contract, Proxicom was employed to
consolidate AWI's 11 Web sites into a single residential and
commercial Web site to serve as an "umbrella" site, or gateway, to
the full family of Armstrong products, providing Armstrong.com Web
site users with a new user and brand experience.
Between March 10, 2000 and September 26, 2000, AWI paid Proxicom
$2,357,727 pursuant to the Proxicom Contract for a total of 9,372
hours of personnel charges and expenses incurred between January
2000 and June 2000.
The Proxicom Claim and AWI Counterclaim
On August 31, 2001, Proxicom filed a proof of claim against AWI,
asserting a prepetition, general unsecured liability for
$2,539,938. Proxicom sought payment for the hourly fees and
expenses it incurred between July and November 2000. Proxicom
also sought recovery of an additional 9,950 billable hours,
$145,879 in reimbursable business expenses, $28,838 in prompt
payment discounts that Proxicom alleged were improperly deducted
by AWI, and $26,913 in finance charges.
On May 9, 2003, AWI filed an objection to the Proxicom Claim,
disputing the amount due under the Proxicom Contract and asserting
a counterclaim in an amount to be determined by the Court based on
Proxicom's alleged breach of the Contract. According to AWI,
Proxicom breached the Contract by:
* failing to provide AWI with certain specified key
documentation;
* failing to complete the project by the August 2000 deadline;
* exceeding the estimated hours to be expended in completing
the project without authorization; and
* failing to meet the design specifications in accordance with
the terms of the Proxicom Contract.
On November 1, 2003, the U.S. Bankruptcy Court for the District of
Delaware modified the automatic stay to allow the parties to
liquidate the Proxicom Claim and the AWI Claim. On March 30,
2004, AWI filed a demand for arbitration of the AWI Claim with the
American Arbitration Association.
Settlement of AWI and Proxicom Claims
The parties have engaged in good faith, arm's-length negotiations
to resolve the Proxicom Claim and the AWI Claim on a consensual
basis. These efforts have culminated in a Settlement Agreement
and Release.
The parties agree that the Proxicom Claim will be reduced and
allowed as an unsecured, non-priority claim for $1,100,000. AWI
will withdraw its Counterclaim with prejudice. AWI and Proxicom
will grant the other a full release of all obligations in
connection with their Claims.
Best Interest
Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., in
Wilmington, Delaware, tells the Court that the Settlement
Agreement is warranted because it resolves the dispute between AWI
and Proxicom on a consensual basis. The legal expenses required
to defend Proxicom's Claim as well as prosecute AWI's Claim could
be substantial. All of these legal expenses would constitute
administrative expenses that would diminish AWI's Chapter 11
estate.
In addition, the outcome of any litigation is uncertain. Any
potential litigation would hinge on the legal and factual issue of
whether Proxicom effectively notified AWI of its intent to exceed
the 10,900-hour estimate. Accordingly, each side would be
required to present relevant evidence as to their understanding of
the 10,900-hour cap. Moreover, quantifying the specific damages
suffered by AWI for its Claim would be difficult and fact-
intensive.
For these reasons, AWI asks the Court to approve the Settlement
Agreement and Release with Proxicom.
Headquartered in Lancaster, Pennsylvania, Armstrong World
Industries, Inc. -- http://www.armstrong.com/-- the major
operating subsidiary of Armstrong Holdings, Inc., designs,
manufactures and sells interior finishings, most notably floor
coverings and ceiling systems, around the world. The Company
filed for chapter 11 protection on December 6, 2000 (Bankr. Del.
Case No. 00-04469). Stephen Karotkin, Esq., Weil, Gotshal &
Manges LLP and Russell C. Silberglied, Esq., at Richards, Layton &
Finger, P.A., represent the Debtors in in their restructuring
efforts. When the Debtors filed for protection from their
creditors, they listed $4,032,200,000 in total assets and
$3,296,900,000 in liabilities. (Armstrong Bankruptcy News, Issue
No. 66; Bankruptcy Creditors' Service, Inc., 215/945-7000)
BERWALD PARTNERSHIP: Case Summary & Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Berwald Partnership
dba Berwald Brothers
dba Berwald Dairy
dba C&M Dairy
dba Sokota Dairy
19460 471st Avenue
Toronto, South Dakota 57268
Bankruptcy Case No.: 04-10273
Chapter 11 Petition Date: August 23, 2004
Court: District of South Dakota (Northern Aberdeen)
Judge: Irvin N. Hoyt
Debtor's Counsel: Clair R. Gerry, Esq.
Stuart, Gerry & Schlimgen, LLP
PO Box 966
Sioux Falls, South Dakota 57101-0966
Tel: (605) 336-6400
Estimated Assets: $10 Million to $50 Million
Estimated Debts: $10 Million to $50 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Van Beek Scientific, LLC & R&J Van Beek, LLC $110,000
PHI Financial Services $90,327
Genske Mulder & Company, LLP $70,315
Mix-Rite, Inc. $68,640
Farm Plan Financial $68,303
Estelline Coop Grain $62,805
Brock Millan $50,000
Walco $48,829
Veterinary Pharmaceuticals, Inc. $40,708
Seed 2000, Inc. $38,180
US Commodities, LLC $33,564
Watertown Livestock Auction, Inc. $31,047
USDA Farm Service $27,948
Larson Engineering $27,552
Dakota Project, Inc. $20,524
Monsanto Company $14,926
Cache Valley $13,802
Glacial Lakes Energy, LLC $12,523
Prairie Livestock Supply $12,151
Ramsdell's Fertilizer & Propane $9,585
BIB HOLDINGS: Executes Acquisition Agreement with Incode Corp.
--------------------------------------------------------------
BIB Holdings Ltd. (OTCBB:BIBO), executed an agreement to acquire
Incode Corporation, a privately held technology services company
whose business model is the acquisition, development and
commercialization of innovative subscription-based eBusinesses.
Incode's goal is to sequentially develop numerous subscription-
based eBusinesses that are capable of generating recurring revenue
streams and above-average operating margins. Its tactical plan is
to develop and acquire these businesses sequentially, driving each
to critical mass and leveraging their respective earnings into the
continued development of additional subscription-based
eBusinesses. The first of these eBusinesses will be in the
lucrative online personals industry.
The Online Personals Industry
The increased cultural acceptance and growth of online personals
has translated into an attractive business opportunity. In
October 2003, Nielsen//NetRatings published a report on online
dating services which reported "in the past year, the personals
sub-category has increased 54% in unique audience," while, in
contrast, "the total digital media universe has only increased
5%." In November 2003, Jupiter Research estimated that 2003
revenues for the U.S. online personals industry would be $313
million, growing to $642 million in 2008. 21% of Internet users
browsed online personals in the last year and 13% posted their own
profiles" (Nov. 2003) Similarly, Hitwise, in February 2004,
reported the market share of visits to online dating web sites in
the U.S. has grown over 52% from January 2003 to January 2004,
making online dating one of the fastest growing categories on the
web.
Restructuring Plan
The acquisition of Incode is expected to be the vehicle for the
first stage of a BIB restructuring plan. The restructuring plan
will include efforts to complete:
(1) the acquisition and development of strategic
technologies and assets that drive improvement in the
relative financial strength of BIB;
(2) the disposition of assets and operating divisions that
are dilutive to BIB's earnings and overall financial
strength; and,
(3) the refinancing of BIB's various financing arrangements.
Gail Binder, chief executive officer of BIB Holdings, said, "We
are very excited about the expected Incode acquisition, which we
expect to be but the first step in the reinvention of our
business. We believe that our proposed restructuring is and will
be critical to maximizing the long-term wealth of our shareholders
and we look forward to executing our plans in the near term."
The acquisition agreement calls for BIB to acquire 100% of the
capital stock of Incode for one million shares of a new class of
preferred stock in BIB that is convertible into two hundred
million shares of common stock eighteen months after closing. The
Incode acquisition is subject to various conditions which must be
satisfied prior to closing. More information regarding either of
Incode's or BIB's plans was not disclosed at the time of this
release.
About Incode Corporation
Incode is a private company whose business model is the
acquisition, development and commercialization of innovative
subscription-based eBusinesses. Additional information is
available online at http://www.incodetech.com/
About BIB Holdings Ltd.
BIB Holdings Ltd. designs, manufactures, imports, sells and
markets branded and non-branded apparel. The company has a
showroom in New York, a distribution center in Pennsylvania and a
distribution center in Las Vegas, within a Foreign Trade Zone.
The company designs, sources and markets a brand of high quality
apparel under the m.Sasson, Elk Canyon and New Terrain labels as
well as private label. Product lines have included underwear,
loungewear and outerwear, as well as accessories such as ties,
hats, scarves, gloves, jewelry, backpacks and small leather goods
as well as apparel. BIB Holdings Ltd. distributes its clothing
via leading retailers throughout the United States and abroad.
Additional information is available online at
http://www.msasson.com/
At June 30, 2004, BIB Holdings, Ltd. reports a $2,072,763
stockholders' deficit, compared to a $1,933,002 deficit at
December 31, 2003.
BIOTECH HOLDINGS: Expects Profits from Sucanon Diabetes Drug
------------------------------------------------------------
Robert Rieveley, the President of Biotech Holdings reported that
the launch of the Company's Sucanon diabetes drug will put the
company into a cash flow position.
"I am pleased to report that report that, with the coming launch
of Sucanon in Mexico, followed by launch in Peru, we can look
forward to the beginning of cash flow from our investment in this
important new drug," said Robert Rieveley, the President of
Biotech.
"Production, tableting and quality-control processes for Sucanon
are now fully operational and sales of Sucanon are planned to
begin at the end of the current quarter, with revenues beginning
in the quarter starting October 1, 2004," Mr. Rieveley said.
"Our marketing partners, who will also be responsible for
presentations to pharmacists and doctors throughout Mexico, have
received initial purchase commitments from two of the largest
drugstore chains in Mexico, representing more than 50% of all
pharmaceutical sales in Mexico. In-store sales will be supported
by point-of-sales staff who will answer diabetics' questions about
Sucanon," Mr. Rieveley stated. "While the Company would be
profitable based on monthly production of Sucanon for only 20,000
one-month packages or 1.2 million tablets, our facility has in
fact been designed for twenty times that amount. We believe that
Mexico presents tremendous opportunities for Sucanon, both as a
market with over 10 million diagnosed diabetics and as the entry
point into a Latin American market with more than 20 million
diabetics. The Company is preparing to make several regulatory
applications in Latin American jurisdictions in the coming
months," Mr. Rieveley said in the President's letter to
shareholders.
An interview with the President of Biotech Holdings can be heard
by clicking on this link:
http://www.stockhouse.com/featuredsector/index.asp?page=detail§orname=un
dervalued&ticker=V.BIO
Sucanon tablets and Sucanon packaging for Mexico can be viewed by
clicking on this link:
http://www.biotechltd.com/products/index.asp
If you would you would like to be added to Biotech Holdings' email
list for future news updates or summary clinical materials, click
here: http://www.biotechltd.com/info.asp
Biotech Holdings Ltd.'s head office is in Richmond, British
Columbia. Biotech Holdings' shares trade on the Over the Counter
Bulletin Board in the United States (BIOHF.OB) and on the TSX
Venture Exchange in Canada (BIO.V).
Biotech Holdings' business focus is on developing the distribution
of its Type II diabetes drug known variously as DIAB II, Sucanon
and Glucanin. The operations of the Company's subsidiary for the
development, manufacture and distribution of lotions and creams
were discontinued during the year ended March 31, 2003, based on a
management decision that the subsidiary had limited prospects for
developing profitable operations in the near-term. The Companyˇs
business focus remains the development and distribution of the
Company's Type II diabetes drug, particularly in Mexico and Latin
America.
Sadovnick Telford + Skov, Biotech Holdings' auditor, stated in
Biotech Holdings' Audited Fiscal Year Report Ending
March 31, 2004:
"The Company has incurred recurring operating losses and has an
accumulated deficit of $26,142,727 and a Shareholders' Deficiency
of $556,264 at March 31, 2004. These factors, among others, raise
substantial doubt about the Company's ability to be able to
continue as a going concern."
BREUNERS HOME: Turns to FTI Consulting for Financial Advice
-----------------------------------------------------------
Breuners Home Furnishings Corp., and its debtor-affiliates ask the
U.S. Bankruptcy Court for the District of Delaware for permission
to employ FTI Consulting, Inc., as their financial advisors.
The Debtors tell the Court that FTI Consulting's services are
necessary to maximize the value of their estates. The Debtors
assure the Court that FTI Consulting is well qualified and able to
represent them in an effective and efficient manner.
FTI is expected to:
a) review the Debtors' financial condition and assist in the
Debtors' cash flow forecasts;
b) assist in identifying initiatives to improve the Debtors'
liquidity or alternatively, develop a plan to liquidate
the Debtors' assets;
c) review the Debtors' strategic assessment and business
plan;
d) review the Debtors' contingency plans; and
e) perform all other financial advisory services for the
Debtors which may be necessary and proper in these
proceedings.
Mr. Kevin Regan, Senior Managing Director of FTI, discloses that
the Firm received $348,875 in prepetition fees and expenses and a
$275,000 retainer from the Debtors.
Mr. Regan reports FTI's professionals bill at:
Designation Hourly Rate
----------- -----------
Senior Managing Directors $550-625
Directors/Managing Directors 395-550
Associates/Senior Associates 195-365
Administrative/Paraprofessional 80-160
To the best of the Debtors knowledge, FTI is a "disinterested
person" as the term is defined in Section 101(14) of the
Bankruptcy Code.
Headquartered in Lancaster, Pennsylvania, Breuners Home
-- http://www.bhfc.com/-- is one of the largest national
furniture retailers focused on the middle to upper-end segment of
the market. The Company, along with its debtor-affiliates, filed
for chapter 11 protection on July 14, 2004 (Bankr. Del. Case No.
04-12030). Great American Group, Gordon Brothers, Hilco Merchant
Resources, and Zimmer-Hester were brought on board within the
first 30 days of the bankruptcy filing to conduct Going-Out-of-
Business sales at the furniture retailer's 47 stores. Bruce
Grohsgal, Esq., and Laura Davis Jones, Esq., at Pachulski, Stang,
Ziehl, Young & Jones represent the Debtors in their restructuring
efforts. The Company reported more than $100 million in assets and
liabilities when it sought protection from its creditors.
CEDAR VALLEY COMMS: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------------
Debtor: Cedar Valley Communications, Inc.
dba Trinity Valley Services, Inc.
dba TVS Communications
dba Trinity Valley Services, Inc.
PO Box 1360
Athens, Texas 75751
Bankruptcy Case No.: 04-61802
Type of Business: The Debtor is engaged in a variety of internet
services like Web-hosting, html design, and
graphics design. See http://www.cvcinc.net/
Chapter 11 Petition Date: August 27, 2004
Court: Eastern District of Texas (Tyler)
Judge: Chief Judge Bill Parker
Debtor's Counsel: Jeffrey S. Davis, Esq.
Michael J. Rogers, P.C.
108 East Chambers Street
Cleburne, Texas 76031
Tel: (817) 558-4323
Estimated Assets: $500,000 to $1 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Sprint $725,365
PO Box 219489
Kansas City, Missouri 64121-9489
TVEC $430,565
PO Box 888
Kaufman, Texas 75142-0888
MCI $66,709
Millford Engineering $45,754
NRTC $33,257
NISC $23,382
Creative Support Solutions $15,641
Curtis Blakely & Company $8,671
Workco Staffing Services $7,409
TXU Energy $6,026
Xerox Capital $5,550
Corban Networks, Inc. $5,400
Health Market $3,153
Savvis, Inc. $3,119
Sprint-PCS $2,004
Shell Credit Card Center $1,799
Michael Stribling $1,700
ESI $1,606
CDW Direct, LLC $1,205
PowerNet Global $1,148
CENDANT MORTGAGE: Fitch Rates Privately Offered Classes at Low-Bs
-----------------------------------------------------------------
Cendant Mortgage Capital, LLC, mortgage pass-through certificates,
series 2004-4 is rated by Fitch as follows:
-- $118.5 million classes A-1 through A-9, R-I and R-II
certificates (senior certificates) 'AAA';
-- $5.6 million class B-1 certificates 'AA';
-- $819,763 class B-2 certificates 'A';
-- $441,411 class B-3 certificates 'BBB';
-- $252,235 privately offered class B-4 certificates 'BB';
-- $252,235 privately offered class B-5 certificates 'B'.
The 'AAA' rating on the senior certificates reflects the 6.00%
subordination provided by:
* the 4.45% class B-1,
* the 0.65% privately offered class B-2,
* the 0.35% privately offered class B-3,
* the 0.20% privately offered class B-4,
* the 0.20% privately offered class B-5, and
* the 0.15% privately offered class B-6 (which is not rated by
Fitch).
Fitch believes the credit enhancement will be adequate to support
mortgagor defaults as well as bankruptcy, fraud and special hazard
losses in limited amounts. In addition, the ratings also reflect
the quality of the underlying mortgage collateral, strength of the
legal and financial structures and the servicing capabilities of
Cendant Mortgage Corporation, which is rated 'RPS1' by Fitch
Ratings.
The certificates represent ownership in a trust fund, which
consists primarily of 263 one-to-four family conventional, 30-
year fixed rate mortgage loans secured by first liens on
residential mortgage properties. As of the cut-off date (August
1, 2004), the mortgage pool has:
* an aggregate principal balance of approximately $126,117,414;
* a weighted average original loan-to-value ratio -- OLTV -- of
71.13%;
* a weighted average coupon -- WAC -- of 6.20%;
* a weighted average remaining term -- WAM -- of 359 months and
an average balance of $479,534.
The loans are primarily located in:
* New Jersey (19.49%),
* California (18.17%), and
* New York (10.25%).
None of the mortgage loans are 'high cost' loans as defined under
any local, state or federal laws. For additional information on
Fitch's rating criteria regarding predatory lending legislation,
please see the press release issued May 1, 2003 entitled 'Fitch
Revises Rating Criteria in Wake of Predatory Lending Legislation',
available on the Fitch Ratings web site at
http://www.fitchratings.com/
All of the mortgage loans were either originated or acquired in
accordance with the underwriting guidelines established by Cendant
Mortgage Corporation. Any mortgage loan with an OLTV in excess of
80% is required to have a primary mortgage insurance policy.
Approximately 0.40% of the mortgage loans are pledged asset loans.
These loans, also referred to as 'Additional Collateral Loans',
are secured by a security interest, normally in securities owned
by the borrower, which generally does not exceed 30% of the loan
amount. Ambac Assurance Corporation provides a limited purpose
surety bond, which guarantees that the Trust receives certain
shortfalls and proceeds realized from the liquidation of the
additional collateral, up to 30% of the original principal amount
of that Additional Collateral Loan.
Citibank N.A. will serve as Trustee. For federal income tax
purposes, an election will be made to treat the trust fund as two
real estate mortgage investment conduits.
CERADYNE INC: Wins 5-Year Marine Corps Ceramic Body Armor Pact
--------------------------------------------------------------
Ceradyne, Inc., (Nasdaq:CRDN) received a new 60-month Indefinite
Delivery/Indefinite Quantity U.S. Marine Corps Small Arms
Protective Inserts light-weight ceramic body armor contract with
an estimated maximum value of $41.5 million. The Company also
received an initial delivery order under this contract for
$3.2 million to be shipped late in 2004 through early 2005. The
contract was issued by the U.S. Marine Corps, Quantico, Virginia,
under U.S. Marine Corps specifications.
Joel Moskowitz, Ceradyne chief executive officer, commented: "We
are proud to receive this Marine SAPI contract. Under an ID/IQ
equipment type contract, the government is obligated to purchase
only certain minimum quantities. Each delivery order, such as the
initial Ceradyne $3.2 million order, is issued as a release
against the government's estimated maximum amount, which for this
contract is $41.5 million. Therefore, follow-on business after
the initial delivery order will depend on additional releases, or
delivery orders, over the next five years."
Ceradyne develops, manufactures and markets advanced technical
ceramic products and components for defense, industrial,
automotive/diesel and commercial applications. Additional
information about the Company can be found at
http://www.ceradyne.com/
* * *
As reported in the Troubled Company Reporter on July 15, 2004,
Standard & Poor's Ratings Services assigned its 'BB-' corporate
credit rating to advanced technical ceramics manufacturer,
Ceradyne, Inc.
At the same time, Standard & Poor's assigned its 'BB-' senior
secured bank loan rating and recovery rating of '3' to the
company's proposed $160 million senior secured bank facility.
Proceeds will be used to fund Ceradyne's acquisition of the mostly
industrial ceramics business, ESK Ceramics GmbH & Co. KG, from
privately held Wacker-Chemie GmbH for EUR111.4 million.
The acquisition is expected to close in August. The '3' recovery
rating indicates an expected meaningful recovery (50%-80%) of
principal in the event of a default. The outlook is stable.
The bank facility consists of a $50 million revolving credit
facility due 2009 and a $110 million term loan due 2011 and is
secured by a first-priority perfected security interest in all the
tangible and intangible assets owned by Ceradyne and the capital
stock of its guarantor subsidiaries.
"The ratings on Costa-Mesa, California-based Ceradyne reflect
its modest size, dependence on key end markets and customers, and
weak albeit likely improving free cash flow generation," said
Standard & Poor's credit analyst Linli Chee.
CHAPCO CARTON: Committee Hires Foley & Lardner as Counsel
---------------------------------------------------------
The Honorable Bruce W. Black of the U.S. Bankruptcy Court for the
Northern District of Illinois, Eastern Division, approved the
retention of Foley & Lardner LLP as counsel by the Official
Unsecured Creditors Committee in Chapco Carton Company's chapter
11 case.
Foley & Lardner is expected to:
a) provide legal advice with respect to the Committee's
powers and duties in this case;
b) prepare on behalf of the Committee of all necessary
applications, answers, orders, reports and other legal
papers;
c) represent the Committee in any and all matters involving
contests with the Debtor, alleged secured creditors and
other third parties;
d) negotiate consensual plans of liquidation or
reorganization;
e) assist the Committee in analyzing the claims of the
Debtor's creditors and capital structure and in
negotiating with holders of claims and equity interests;
f) assist the Committee's investigation of the acts,
conduct, assets, liabilities and financial condition of
the Debtor and the operation of the Debtor's business;
g) assist and advise the Committee to its communications to
the general creditor body regarding significant matters
in the Debtor's case;
h) review and analyze all applications, orders, statements
of operations and schedules filed with the Court and
advise the Committee as to their propriety;
i) perform all other legal services for the Committee which
may be necessary and proper in these proceedings; and
j) provide assistance as local counsel to co-counsel
Lowenstein Sandler PC.
The attorneys and legal assistants designated to represent the
Committee and their current hourly rates are:
Professionals Hourly Rate
------------- -----------
Mark L. Prager $625
Michael J. Small 430
Cynthia A. Fonner 370
Amie D. Goble 230
Katherine E. Hall 140
To the best of the Committee's knowledge, Foley & Lardner is a
"disinterested person" as the term is defined in Section 101(14)
of the Bankruptcy Code.
Headquartered in Bolingbrook, Illinois, Chapco Carton Company
-- http://www.chapcocarton.com/-- manufactures, sells and
distributes folding cartons used for retail packaging in food,
candy, office supplies and automotive parts industries. The
Company filed for chapter 11 protection (Bankr. N.D. Ill. Case No.
04-26000) on July 13, 2004. Chad H. Gettleman, Esq., at Adelman
Gettleman & Merens, represents the Company in its restructuring
efforts. When the Debtor filed for protection from its creditors,
it listed $15,232,256 in assets and $19,220,379 in liabilities.
CHARTER COMMS: Taps 3 Telephony Partners for Service Connectivity
-----------------------------------------------------------------
Charter Communications, Inc. (NASDAQ: CHTR), through its
subsidiaries, inks pacts with Level 3 Communications, Inc.
(NASDAQ: LVLT) and Sprint Communications Company, L.P. (NYSE: FON)
to provide long distance and local telephone service connectivity
in selected Charter markets. In addition, Charter selected
Accenture (NYSE: ACN) to provide telephony provisioning services.
"These agreements enable Charter to significantly increase
telephony deployments in each of our Divisions during 2005," said
Tom Cullen, Charter Executive Vice President of Advanced Services
and Business Development.
The agreements with Level 3 and Sprint followed a Request for
Information issued by Charter earlier this year. "Our objective
was to significantly improve our cost structure over our current
position and decrease the time required to deploy telephony
services," said Mr. Cullen. "Level 3 and Sprint have the
networks, the technical expertise, and the experience we were
looking for in an underlying provider."
Mr. Cullen said the agreements enable Charter to reduce the cost
and time required to deploy telephony services across many
markets. "By partnering with Level 3 and Sprint, we expect to
gain speed to market with efficient and cost effective local
connectivity and long distance services support. We chose to
align with more than one carrier to maximize the benefits of each
agreement on a market-by-market basis and achieve the maximum cost
savings and flexibility. We'll continue to look at other
potential partners in order to further gain critical competitive
advantage," he said.
The agreement with Accenture will provide Charter with automated
provisioning processes, which are designed to improve operational
efficiency and accelerate customer acquisition. Mr. Cullen also
stated that Accenture's provisioning solution offered significant
cost reductions over other back-office systems reviewed by
Charter.
"Provisioning of new customers is a critical process requiring
high levels of organization and proven competence. Accenture will
provide those qualities to Charter's voice services deployment."
Charter had over 31,000 telephony customers as of the end of the
second quarter, with service offered in multiple markets and more
markets being launched planned for later this year and in early
2005.
About Charter
Charter Communications, Inc., a broadband communications company,
provides a full range of advanced broadband services to the home,
including cable television on an advanced digital video
programming platform via Charter Digital(TM) and Charter High-
Speed Internet Service(TM). Charter also provides business to
business video, data and Internet protocol (IP) solutions through
Charter Business Division. Advertising sales and production
services are sold under the Charter Media(R) brand.
More information about Charter can be found at
http://www.charter.com/
* * *
As reported in the Troubled Company Reporter's May 26, 2004
edition, Standard & Poor's Ratings Services revised its outlook on
Charter Communications, Inc., and subsidiaries to positive from
developing. All ratings, including the 'CCC+' corporate credit
rating, were affirmed.
"The outlook revision is based largely on the company's improved
maturity profile following the April 2004 refinancing," explained
Standard & Poor's credit analyst Eric Geil. "Operating
improvement, including a slowing rate of basic subscriber loss,
also factored into the outlook revision."
Nevertheless, the ratings are still dominated by very high
financial risk from elevated leverage, negative discretionary cash
flow, and pressure from rising debt maturities, including $588
million in convertible debt due in 2005. Repayment of this debt
could depend on access to external financing, which will hinge on
Charter's demonstration of sustainable positive operating
momentum. Performance could be challenged by intense competition
for video customers from satellite TV companies, which have
recently increased promotional spending.
COMMUNITY HEALTH: S&P Assigns BB- Rating to Planned Bank Loan
-------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB-' rating and
its recovery rating of '3' to CHS/Community Health Systems Inc.'s
proposed senior secured bank credit facility. CHS is a wholly
owned subsidiary of the holding company parent, Community Health
Systems Inc., a Brentwood, Tennessee-based operator of non-urban
hospitals.
The new CHS facility is rated the same as Community Health
Systems' corporate credit rating; this and the '3' recovery rating
mean that lenders are unlikely to realize full recovery of
principal in the event of a bankruptcy, though meaningful recovery
is likely (50%-80%). The facility comprises a $425 million
revolving credit facility due in 2009, and a $1.2 billion term
loan due in 2011.
At the same time, Standard & Poor's assigned its preliminary 'B'
rating to Community Health Systems Inc.'s $1.0 billion Rule 415
shelf registration. Community intends to use the net proceeds
from the possible sale of convertible debt or equity securities
under the shelf for general corporate purposes.
In addition, Standard & Poor's affirmed its 'BB-' corporate credit
rating on Community Health Systems Inc. The company's total debt
outstanding as of June 30, 2004, was $1.4 billion.
"The speculative-grade ratings on Community Health Systems reflect
Standard & Poor's concern about the company's somewhat aggressive
acquisition activity and the uncertain future reimbursement levels
it can expect to receive from the government and other third-party
payors," said Standard & Poor's credit analyst David Peknay.
"However, the company's diversified hospital portfolio provides
modest protection against adverse conditions in any single
market."
The company owns and operates 72 hospitals in 22 states, primarily
in small, non-urban markets with stable or growing populations of
20,000 to 100,000 people. It maintains strong market positions
because the majority of its hospitals are the sole providers in
their communities. Community Health also maintains an aggressive
but disciplined approach to acquiring hospitals, focusing on the
possibilities of physician recruitment and service enhancement.
The company's revenues have grown rapidly, more than doubling
since 2000.
Community Health reduced its debt leverage in 2000 with the use of
equity and has continued to lower leverage slightly since then
despite its rapid growth.
CONSECO FINANCE: 49 Low-B-Rated & 27 Junked Classes on S&P Watch
----------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on various
manufactured housing transactions related to Green Tree Investment
Holdings, LLC, formerly Conseco Finance Corp.'s manufactured
housing business, on CreditWatch with negative implications.
The CreditWatch placements reflect the continued poor performance
trends displayed by the underlying pools of manufactured housing
contracts and the resulting deterioration in credit enhancement
since Standard & Poor's last rating actions in March 2004,
reported in the Troubled Company Reporter on March 10, 2004.
Although delinquency levels have decreased in most transactions,
the high levels of repossessions and loss severity rates have
caused credit support in Green Tree's manufactured housing
transactions to be significantly depleted. Most of the
transactions have experienced principal write-downs on their
subordinate classes. In some transactions, high losses have
caused the complete principal write-down on the subordinate
classes, resulting in the partial principal write-down of the
mezzanine classes.
Standard & Poor's expects to complete a detailed review of the
credit performance of the transactions listed below relative to
the remaining credit support in order to determine within the next
two months if any rating changes are necessary.
Ratings Placed On Creditwatch Negative
Green Tree Financial Corp. Man Hsg Trust 1995-2
Rating
Class To From
----- -- ----
M-1 AAA/Watch Neg AAA
B-1 A-/Watch Neg A-
Green Tree Financial Corp. Man Hsg Trust 1995-3
Rating
Class To From
----- -- ----
M-1 AAA/Watch Neg AAA
B-1 A+/Watch Neg A+
Green Tree Financial Corp. Man Hsg Trust 1995-4
Rating
Class To From
----- -- ----
M-1 AA/Watch Neg AA
B-1 BB/Watch Neg BB
Green Tree Financial Corp. Man Hsg Trust 1995-5
Rating
Class To From
----- -- ----
M-1 AAA/Watch Neg AAA
B-1 A/Watch Neg A
Green Tree Financial Corp. Man Hsg Trust 1995-6
Rating
Class To From
----- -- ----
M-1 AA-/Watch Neg AA-
B-1 BBB/Watch Neg BBB
Green Tree Financial Corp. Man Hsg Trust 1995-7
Rating
Class To From
----- -- ----
M-1 AA/Watch Neg AA
B-1 BBB-/Watch Neg BBB-
Green Tree Financial Corp. Man Hsg Trust 1995-8
Rating
Class To From
----- -- ----
M-1 AAA/Watch Neg AAA
B-1 BB+/Watch Neg BB+
Green Tree Financial Corp. Man Hsg Trust 1995-9
Rating
Class To From
----- -- ----
M-1 A+/Watch Neg A+
B-1 BB/Watch Neg BB
Green Tree Financial Corp. Man Hsg Trust 1995-10
Rating
Class To From
----- -- ----
M-1 AA-/Watch Neg AA-
B-1 BB/Watch Neg BB
Green Tree Financial Corp. Man Hsg Trust 1996-1
Rating
Class To From
----- -- ----
M-1 AA-/Watch Neg AA-
B-1 BB/Watch Neg BB
Green Tree Financial Corp. Man Hsg Trust 1996-2
Rating
Class To From
----- -- ----
M-1 A-/Watch Neg A-
B-1 CCC/Watch Neg CCC
Green Tree Financial Corp. Man Hsg Trust 1996-3
Rating
Class To From
----- -- ----
M-1 BBB+/Watch Neg BBB+
B-1 CCC/Watch Neg CCC
Green Tree Financial Corp. Man Hsg Trust 1996-4
Rating
Class To From
----- -- ----
M-1 BB/Watch Neg BB
Green Tree Financial Corp. Man Hsg Trust 1996-5
Rating
Class To From
----- -- ----
M-1 BBB-/Watch Neg BBB-
Green Tree Financial Corp. Man Hsg Trust 1996-6
Rating
Class To From
----- -- ----
M-1 BBB/Watch Neg BBB
Green Tree Financial Corp. Man Hsg Trust 1996-7
Rating
Class To From
----- -- ----
M-1 BBB+/Watch Neg BBB+
B-1 CCC/Watch Neg CCC
Green Tree Financial Corp. Man Hsg Trust 1996-8
Rating
Class To From
----- -- ----
M-1 BB+/Watch Neg BB+
Green Tree Financial Corp. Man Hsg Trust 1996-9
Rating
Class To From
----- -- ----
M-1 BBB+/Watch Neg BBB+
B-1 CCC/Watch Neg CCC
Green Tree Financial Corp. Man Hsg Trust 1996-10
Rating
Class To From
----- -- ----
M-1 BBB/Watch Neg BBB
B-1 CCC/Watch Neg CCC
Green Tree Financial Corp. Man Hsg Trust 1997-4
Rating
Class To From
----- -- ----
A-5 AAA/Watch Neg AAA
A-6 AAA/Watch Neg AAA
A-7 AAA/Watch Neg AAA
M-1 BBB-/Watch Neg BBB-
Green Tree Financial Corp. Man Hsg Trust 1997-6
Rating
Class To From
----- -- ----
A-6 AA+/Watch Neg AA+
A-7 AA+/Watch Neg AA+
A-8 AA+/Watch Neg AA+
A-9 AA+/Watch Neg AA+
A-10 AA+/Watch Neg AA+
M-1 BB/Watch Neg BB
Green Tree Financial Corp. Man Hsg Trust 1997-7
Rating
Class To From
----- -- ----
A-6 AA+/Watch Neg AA+
A-7 AA+/Watch Neg AA+
A-8 AA+/Watch Neg AA+
A-9 AA+/Watch Neg AA+
A-10 AA+/Watch Neg AA+
M-1 BB/Watch Neg BB
Green Tree Financial Corp. Man Hsg Trust 1997-8
Rating
Class To From
----- -- ----
A-1 AA+/Watch Neg AA+
M-1 BB/Watch Neg BB
Green Tree Financial Corp. Man Hsg Trust 1998-2
Rating
Class To From
----- -- ----
A-5 A+/Watch Neg A+
A-6 A+/Watch Neg A+
M-1 B+/Watch Neg B+
Green Tree Financial Corp. Man Hsg Trust 1998-3
Rating
Class To From
----- -- ----
A-5 A+/Watch Neg A+
A-6 A+/Watch Neg A+
M-1 B/Watch Neg B
Green Tree Financial Corp. Man Hsg Trust 1998-5
Rating
Class To From
----- -- ----
A-1 AA-/Watch Neg AA-
M-1 BB-/Watch Neg BB-
Green Tree Financial Corp. Man Hsg Trust 1998-6
Rating
Class To From
----- -- ----
A-6 A/Watch Neg A
A-7 A/Watch Neg A
A-8 A/Watch Neg A
M-1 B+/Watch Neg B+
M-2 CCC+/Watch Neg CCC+
Green Tree Financial Corp. Man Hsg Trust 1998-8
Rating
Class To From
----- -- ----
A-1 A-/Watch Neg A-
M-1 BB-/Watch Neg BB-
M-2 CCC+/Watch Neg CCC+
Manufactured Housing Sr/Sub Pass-Thru Trust 1999-1
Rating
Class To From
----- -- ----
A-4 BBB/Watch Neg BBB
A-5 BBB/Watch Neg BBB
A-6 BBB/Watch Neg BBB
A-7 BBB/Watch Neg BBB
M-1 B-/Watch Neg B-
M-2 CCC/Watch Neg CCC
Manufactured Housing Sr/Sub Pass-Thru Trust 1999-2
Rating
Class To From
----- -- ----
A-3 BBB/Watch Neg BBB
A-4 BBB/Watch Neg BBB
A-5 BBB/Watch Neg BBB
A-6 BBB/Watch Neg BBB
A-7 BBB/Watch Neg BBB
M-1 B-Watch Neg B-
M-2 CCC/Watch Neg CCC
Manufactured Housing Sr/Sub Pass-Thru Trust 1999-3
Rating
Class To From
----- -- ----
A-5 BBB/Watch Neg BBB
A-6 BBB/Watch Neg BBB
A-7 BBB/Watch Neg BBB
A-8 BBB/Watch Neg BBB
A-9 BBB/Watch Neg BBB
M-1 B-/Watch Neg B-
M-2 CCC/Watch Neg CCC
Manufactured Housing Sr/Sub Pass-Thru Trust 1999-4
Rating
Class To From
----- -- ----
A-5 BB-/Watch Neg BB-
A-6 BB-/Watch Neg BB-
A-7 BB-/Watch Neg BB-
A-8 BB-/Watch Neg BB-
A-9 BB-/Watch Neg BB-
M-1 CCC/Watch Neg CCC
Manufactured Housing Sr/Sub Pass-Thru Trust 1999-5
Rating
Class To From
----- -- ----
A-4 B+/Watch Neg B+
A-5 B+/Watch Neg B+
A-6 B+/Watch Neg B+
M-1 CCC/Watch Neg CCC
Manufactured Housing Contract Sr/Sub Pass-Thru Tr 1999-6
Rating
Class To From
----- -- ----
A-1 B-/Watch Neg B-
M-1 CCC/Watch Neg CCC
Manufactured Housing Sr/Sub Pass-thru Trust 2000-2
Rating
Class To From
----- -- ----
A-4 CCC+/Watch Neg CCC+
A-5 CCC+/Watch Neg CCC+
A-6 CCC+/Watch Neg CCC+
Conseco MH Senior/Subordinate Pass-Through Trust 2000-3
Rating
Class To From
----- -- ----
A B-/Watch Neg B-
M-1 CCC/Watch Neg CCC
Manufactured Hsg Contract Sr/Sub Pass-thru Certs Ser 2000-4
Rating
Class To From
----- -- ----
A-4 CCC+/Watch Neg CCC+
A-5 CCC+/Watch Neg CCC+
A-6 CCC+/Watch Neg CCC+
Manufactured Hsg Contract Sr/Sub Pass-thru Certs Ser 2000-5
Rating
Class To From
----- -- ----
A-4 B-/Watch Neg B-
A-5 B-/Watch Neg B-
A-6 B-/Watch Neg B-
A-7 B-/Watch Neg B-
Manufactured Hsg contract Sr/Sub Pass-thru Certs Ser 2000-6
Rating
Class To From
----- -- ----
A-4 B/Watch Neg B
A-5 B/Watch Neg B
M-1 CCC/Watch Neg CCC
Manufactured Hsg Contract Sr/Sub Pass-Thru Certs Ser 2001-1
Rating
Class To From
----- -- ----
A-4 B-/Watch Neg B-
A-5 B-/Watch Neg B-
M-1 CCC/Watch Neg CCC
Manufactured Hsg Contract Sr/Sub Pass-Thru Certs Ser 2001-2
Rating
Class To From
----- -- ----
M-1 B-/Watch Neg B-
M-2 CCC/Watch Neg CCC
Manufactured Housing Contract Sr/Sub Pass-Thru Certs Series 2001-3
Rating
Class To From
----- -- ----
A-2 B+/Watch Neg B+
A-3 B+/Watch Neg B+
A-4 B+/Watch Neg B+
M-1 B-/Watch Neg B-
M-2 CCC/Watch Neg CCC
Manufactured Housing Contract Sr/Sub Pass-Thru Certs Series 2001-4
Rating
Class To From
----- -- ----
A-2 B+/Watch Neg B+
A-3 B+/Watch Neg B+
A-4 B+/Watch Neg B+
M-1 B-/Watch Neg B-
M-2 CCC/Watch Neg CCC
Manufactured Housing Contract Sr/Sub Pass-Through
Certificates Series 2002-1
Rating
Class To From
----- -- ----
A BBB-/Watch Neg BBB-
M-1-A B-/Watch Neg B-
M-1-F B-/Watch Neg B-
M-2 CCC/Watch Neg CCC
B-1 CCC/Watch Neg CCC
Manufactured Housing Contract Sr/Sub Pass-Through
Certificates Series 2002-2
Rating
Class To From
----- -- ----
A-2 BBB/Watch Neg BBB
M-1 B+/Watch Neg B+
M-2 B-/Watch Neg B-
B-1 CCC/Watch Neg CCC
CROMPTON CORP: Implements Price Increases for Flexzone Products
---------------------------------------------------------------
Crompton Corporation (NYSE:CK) is implementing price increases for
all of its Flexzone(R) anti-degradent products.
Over the last five years, the prices of Flexzone anti-degradent
grades have declined dramatically. Throughout this period,
Crompton continued to invest in the Flexzone product line to keep
plants operational and meet increasingly stringent health, safety
and environmental requirements. Concurrently, the company very
aggressively implemented cost-saving measures to help compensate
for these necessary expenditures. However, even with these
improvements and running at full capacity, this product line has
remained unprofitable for several years.
During 2004, the situation has been exacerbated by dramatic raw-
material and energy cost increases. In particular, the price of
benzene, the key raw material for Flexzone, tripled, and pricing
for another important raw material, MIBK, also increased
substantially. The combination of these cost issues has resulted
in unsustainable losses for Crompton.
Because of the above factors, the company finds it necessary to
take the following pricing actions:
-- Effective September 1, or as contract terms permit, Crompton
is increasing the price of all Flexzone products by
$1.32/kg. or equivalent local currency per kilogram (Price
Schedule attached).
-- Crompton is also implementing a quarterly benzene price
adjustment of $0.022/kg. for every $0.10/gal. increase or
decrease in benzene above or below the base benzene price of
$1.90/gal., the three-year average.
The company is shutting down 20,000 metric tons of our worldwide
Flexzone capacity by year-end. This will include the closure of
Flexzone production sites in Ansan, Korea and Rayong, Thailand,
representing 7,000MT of capacity. With the closure of these
locations, Flexzone customers in the Asian market will primarily
be serviced from Crompton's production facility in Kaohsiung,
Taiwan. The balance of the reduction will be implemented at other
worldwide Crompton locations. The company will continue to
manufacture Flexzone at a total of six facilities worldwide, in
Europe, the Americas and Taiwan. Crompton also previously
announced that it would reduce production of a Flexzone
intermediate (called 4-ADPA) by 13,000 metric tons, at its
Geismar, Louisiana facility by the end of the year.
Crompton is committed to improving our rubber chemicals business,
and it is our intention to remain a viable, long-term supplier of
Flexzone products to the tire and rubber industries.
Crompton Corporation, with annual sales of $2.2 billion, is a
producer and marketer of specialty chemicals and polymer products
and equipment. Additional information concerning Crompton
Corporation is available at http://www.cromptoncorp.com/
* * *
As reported in the Troubled Company Reporter's July 23, 2004,
edition, Standard & Poor's Ratings Services lowered the ratings on
the existing senior notes and debentures of Middlebury,
Connecticut-based Crompton Corp. to 'B+' from 'BB-'.
The 'BB-' corporate credit rating of this specialty chemicals and
polymer products producer is affirmed and the outlook remains
negative.
The existing notes, which are assigned a recovery rating of '3'
and will become secured upon the close of the new revolving
credit facility, are now rated one notch lower than the corporate
credit rating. The lower rating reflects the notes'
disadvantaged position since lenders under the new credit
facility retain a first-priority distribution on the collateral in
an amount equal to 10% of the company's consolidated net tangible
assets. Standard & Poor's also assigned a 'B' rating to proposed
tranches of senior unsecured debt totaling $600 million with
maturity dates of 2010, 2011, and 2014. The new unsecured notes
are rated two notches lower than the corporate credit rating,
reflecting the priority of secured debt as well as substantial
subsidiary obligations relative to total assets.
Standard & Poor's assigned a 'BB-' bank loan rating and its '2'
recovery rating to a new secured $250 million revolving credit
facility maturing in 2009. The 'BB-' rating is the same as the
corporate credit rating; this and the '2' recovery rating
indicate that bank lenders can expect a substantial recovery of
principal in the event of default.
"The ratings on Crompton reflect the vulnerability of its
operating margins and earnings to competitive pricing pressures,
raw materials costs, and the cyclicality of its markets; and weak
cash flow protection measures," said Standard & Poor's credit
analyst Wesley E. Chinn.
CSFB MORTGAGE: Fitch Puts Low-B Ratings on Six Certificate Classes
------------------------------------------------------------------
Credit Suisse First Boston Mortgage Securities Corp.'s commercial
mortgage pass-through certificates, series 2001-CP4, are affirmed
by Fitch Ratings as follows:
-- $66.9 million class A-1 'AAA';
-- $86.9 million class A-2 'AAA';
-- $110.0 million class A-3 'AAA';
-- $611.4 million class A-4 'AAA';
-- Interest-only class A-X 'AAA';
-- Interest-only class A-CP 'AAA';
-- $61.9 million class B 'AA';
-- $45.7 million class C 'A';
-- $22.1 million class D 'A-';
-- $16.2 million class E 'BBB+';
-- $16.2 million class F 'BBB';
-- $11.8 million class G 'BBB-';
-- $22.1 million class H 'BB+';
-- $19.1 million class J 'BB';
-- $10.3 million class K 'BB-';
-- $8.8 million class L 'B+';
-- $7.4 million class M 'B'; and
-- $5.9 million class N 'B-'.
Fitch does not rate the $20.1 million class O certificates.
The rating affirmations reflect the consistent loan performance
and minimal reduction of the pool collateral balance since
issuance. As of the August 2004 distribution date, the pool's
collateral balance has decreased 3% to $1.14 billion from
$1.18 billion at issuance.
Midland Loan Services, the master servicer, collected year-end
2003 financials for 84% of the mortgage pool. The YE 2003
weighted average debt service coverage ratio -- DSCR -- is 1.65
times (x), compared with 1.66x as of YE 2002 for the same loans.
As of the August 2004 remittance date, three loans (3.27%) are
currently with the special servicer. All three loans are current
with their debt service payments. The largest specially serviced
loan (1.4%) is secured by two apartment properties in Dallas,
Texas. Following the finalization of a modification to the cash
management agreement, the loan is expected to be returned to the
master servicer.
The two credit assessed loans, Landmark (7.6%) and the Parfinco
East and West Annex loan (4.6%) remain investment grade. Fitch
reviewed operating statement analysis reports and other
performance information provided by the master servicer. The
Fitch stressed DSCR for the loans are calculated based on a Fitch-
adjusted net cash flow -- NCF -- and a stressed debt service based
on the current loan balance and a hypothetical mortgage constant.
The Parfinco East and West Annex loan is secured by two, eight-
story office buildings totaling 510,550 sf located in Pasadena,
California. The YE 2003 Fitch-adjusted NCF increased
approximately 15.4% since issuance. The increase is due to an
increase in occupancy to 99.2% as of May 2004, compared with 91.5%
at issuance. The DSCR as of YE 2003 was 1.64x, compared with
1.40x at issuance.
CWMBS INC: Fitch Assigns Low-B Ratings to Two 2004-18 Classes
-------------------------------------------------------------
CWMBS, Inc.'s mortgage pass-through certificates, CHL Mortgage
Pass-Through Trust 2004-18, are rated by Fitch as follows:
-- Classes A-1, PO, and A-R ($388,199,784 senior certificates)
'AAA';
-- Class M ($5,800,000) 'AA';
-- Class B-1 ($2,400,000) 'A';
-- Class B-2 ($1,400,000) 'BBB';
-- The privately offered class B-3 ($800,000) 'BB';
-- The privately offered class B-4 ($600,000) is rated 'B'.
The 'AAA' rating on the senior certificates reflects the 2.95%
subordination provided by:
* the 1.45% class M,
* the 0.60% class B-1,
* the 0.35% class B-2,
* the 0.20% privately offered class B-3,
* the 0.15% privately offered class B-4, and
* the 0.20% privately offered class B-5 (not rated by Fitch).
Classes M, B-1, B-2, B-3, and B-4 are rated 'AA', 'A', 'BBB',
'BB', and 'B' based on their respective subordination only.
Fitch believes the credit enhancement will be adequate to support
mortgagor defaults as well as bankruptcy, fraud, and special
hazard losses in limited amounts. In addition, the ratings also
reflect the quality of the underlying mortgage collateral,
strength of the legal and financial structures, and the master
servicing capabilities of Countrywide Home Loans Servicing LP
(Countrywide Servicing), rated 'RMS2+' by Fitch, a direct wholly
owned subsidiary of Countrywide Home Loans, Inc.
The certificates represent an ownership interest in a group of 30-
year conventional, fully amortizing mortgage loans. The pool
consists of 30-year fixed-rate mortgage loans totaling
$346,049,284, as of the cut-off date, Aug. 1, 2004, secured by
first liens on one- to four- family residential properties. The
mortgage pool demonstrates an approximate weighted-average loan-
to-value ratio of 73.28%. The weighted average FICO credit score
is approximately 740. Cash-out refinance loans represent 10.11%
of the mortgage pool and second homes 3.70%. The average loan
balance is $511,907. The three states that represent the largest
portion of mortgage loans are:
* California (45.32%),
* New York (7.37%), and
* Virginia (5.43%).
None of the mortgage loans are 'high cost' loans as defined under
any local, state, or federal laws.
Approximately 93.13% and 6.87% of the mortgage loans were
originated under Countrywide Home's standard underwriting
guidelines and expanded underwriting guidelines, respectively.
Mortgage loans underwritten pursuant to the expanded underwriting
guidelines may have higher loan-to-value ratios, higher loan
amounts, higher debt-to-income ratios, and different documentation
requirements than those associated with the standard underwriting
guidelines. In analyzing the collateral pool, Fitch adjusted its
frequency of foreclosure and loss assumptions to account for the
presence of these attributes.
CWMBS purchased the mortgage loans from Countrywide Home and
deposited the loans in the trust, which issued the certificates,
representing undivided beneficial ownership in the trust. The
Bank of New York will serve as trustee. For federal income tax
purposes, an election will be made to treat the trust fund as a
real estate mortgage investment conduit.
CWMBS INC: Fitch Puts Low-B Ratings on Two 2004-19 Classes
----------------------------------------------------------
CWMBS, Inc.'s mortgage pass-through certificates, CHL Mortgage
Pass-Through Trust 2004-19, are rated by Fitch as follows:
-- Classes A-1 through A-16, PO, and A-R ($388,199,993 senior
certificates) 'AAA';
-- Class M ($5,800,000) 'AA';
-- Class B-1 ($2,400,000) 'A';
-- Class B-2 ($1,400,000) 'BBB';
-- The privately offered class B-3 ($800,000) 'BB';
-- The privately offered class B-4 ($600,000) 'B'.
The 'AAA' rating on the senior certificates reflects the 2.95%
subordination provided by:
* the 1.45% class M,
* the 0.60% class B-1,
* the 0.35% class B-2,
* the 0.20% privately offered class B-3,
* the 0.15% privately offered class B-4, and
* the 0.20% privately offered class B-5 (not rated by Fitch).
Classes M, B-1, B-2, B-3, and B-4 are rated 'AA', 'A', 'BBB',
'BB', and 'B' based on their respective subordination only.
Fitch believes the credit enhancement will be adequate to support
mortgagor defaults as well as bankruptcy, fraud, and special
hazard losses in limited amounts. In addition, the ratings also
reflect the quality of the underlying mortgage collateral,
strength of the legal and financial structures, and the master
servicing capabilities of Countrywide Home Loans Servicing, LP,
(Countrywide Servicing), rated 'RMS2+' by Fitch, a direct wholly
owned subsidiary of Countrywide Home Loans, Inc.
The certificates represent an ownership interest in a group of 30-
year conventional, fully amortizing mortgage loans. The pool
consists of 30-year fixed-rate mortgage loans totaling
$344,807,180.70, as of the cut-off date, Aug. 1, 2004, secured by
first liens on one- to four- family residential properties. The
mortgage pool demonstrates an approximate weighted-average loan-
to-value ratio -- OLTV -- of 72.82%. The weighted average FICO
credit score is approximately 741. Cash-out refinance loans
represent 12.38% of the mortgage pool and second homes 3.38%. The
average loan balance is $497,557. The three states that represent
the largest portion of mortgage loans are:
* California (53.54%),
* New York (4.80%), and
* Virginia (4.23%).
None of the mortgage loans are 'high cost' loans as defined under
any local, state, or federal laws.
Approximately 92.34% and 7.66% of the mortgage loans were
originated under Countrywide Home Loans' standard underwriting
guidelines and expanded underwriting guidelines, respectively.
Mortgage loans underwritten pursuant to the expanded underwriting
guidelines may have higher loan-to-value ratios, higher loan
amounts, higher debt-to-income ratios, and different documentation
requirements than those associated with the standard underwriting
guidelines. In analyzing the collateral pool, Fitch adjusted its
frequency of foreclosure and loss assumptions to account for the
presence of these attributes.
CWMBS purchased the mortgage loans from Countrywide Home Loans and
deposited the loans in the trust, which issued the certificates,
representing undivided beneficial ownership in the trust. The Bank
of New York will serve as trustee. For federal income tax
purposes, an election will be made to treat the trust fund as a
real estate mortgage investment conduit.
DENALI CAPITAL: Moody's Junks Class 3 Composite Securities
----------------------------------------------------------
Moody's Investors Service assigned ratings to four classes of
notes issued by Denali Capital CLO IV, Ltd.:
(1) Aaa to the U.S. $312,000,000 Class A Senior Secured Notes
Due 2016;
(2) A2 to the U.S. $26,000,000 Class B Senior Secured
Deferrable Interest Notes Due 2016;
(3) Baa2 to the U.S. $22,000,000 Class C Senior Secured
Deferrable Interest Notes Due 2016; and
(4) Ba2 to the U.S. $8,000,000 Class D Subordinated Secured
Deferrable Interest Notes Due 2016.
Moody's also assigned ratings to four classes of composite
securities issued by Denali Capital CLO IV, Ltd.:
(1) Baa3 to the U.S. $7,500,000 Class 1 Composite Securities
Due 2016;
(2) Baa1 to the U.S. $11,000,000 Class 2 Composite Securities
Due 2016;
(3) Caa2 to the U.S. $1,850,000 Class 3 Composite Securities
Due 2016;
(4) Ba2 to the U.S. $3,250,000 Class 4 Composite Securities Due
2016.
The Issuer also issued $32,000,000 of Junior Subordinated Notes,
which were not rated by Moody's.
The ratings assigned to the Notes address the ultimate cash
receipt of all interest and principal payments required by the
notes' governing documents and are based on the expected loss
posed to the noteholders relative to the promise of receiving the
present value of such payments. The ratings of the notes are also
based upon the transaction's legal structure and the
characteristics of the collateral pool, which will consist
primarily of U.S. dollar-denominated senior secured loans.
Moody's ratings on the composite securities only address the
ultimate receipt of the rated balance for each composite security
relative to the promise of receiving the present value of such
payment and do not address any other payments or additional
amounts that a holder of composite securities may receive pursuant
to the underlying documents.
The collateral pool will be managed by DC Funding Partners, LLC.
DRESDNER RCM: Moody's May Downgrade $5.5 Mil. Class C Ba2 Rating
----------------------------------------------------------------
Moody's Investors Service confirmed the ratings of six tranches
issued by Dresdner RCM Global Investors CBO II, Ltd. According to
Moody's, the previously observed trend of par and credit
deterioration in the underlying assets has abated and the credit
risk associated with the Class A-2, Class B, and Class C Notes has
stabilized such that the risk presented to investors is again
consistent with the ratings assigned to each such class of notes.
Issuer: Dresdner RCM Global Investors CBO II, Ltd.
Rating Action: Confirmation
Class Description: U.S. $12,000,000 Class A-2A Senior Floating
Rate Notes
Prior Rating: A3 (under review for downgrade)
Current Rating: A3
Class Description: U.S. $10,000,000 Class A-2B Senior Fixed Rate
Notes
Prior Rating: A3 (under review for downgrade)
Current Rating: A3
Class Description: U.S. $10,000,000 Class B-1 Senior Subordinate
Floating Rate Notes
Prior Rating: Baa2 (under review for downgrade)
Current Rating: Baa2
Class Description: U.S. $15,000,000 Class B-2 Senior Subordinate
Fixed Rate Notes
Prior Rating: Baa2 (under review for downgrade)
Current Rating: Baa2
Class description: U.S. $12,000,000 Class B-3 Senior Subordinate
Notes
Prior Rating: Baa2 (under review for downgrade)
Current Rating: Baa2
Class description: U.S. $5,500,000 Class C Subordinate Fixed Rate
Notes
Prior Rating: Ba2 (under review for downgrade)
Current Rating: Ba2
DS WATERS: Weak Performance Prompts S&P to Cut Ratings to B-
------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on privately owned bottled water producer and distributor
DS Waters LP, as well as the senior secured bank loan rating on
its subsidiary DS Waters Enterprises LP, to 'B-' from 'B+'. These
ratings remain on CreditWatch with negative implications, where
they were placed March 25, 2004, following DS Waters' weaker-than-
expected performance for fiscal 2003.
CreditWatch with negative implications means that the ratings
could be affirmed or lowered after the completion of Standard &
Poor's review.
Standard & Poor's estimates DS Waters had about $397 million of
total debt and about $325 million of 12% pay-in-kind preferred
stock outstanding at July 2, 2004.
"The downgrade reflects Standard & Poor's heightened concerns
regarding DS Waters' continued weak operating performance for the
second fiscal quarter ended July 2, 2004, and its ability to stem
further performance declines," said Standard & Poor's credit
analyst David Kang. According to DS Waters' recent disclosures to
Standard & Poor's, EBITDA for the six months ended July 2, 2004,
was about 25.9% below that of the same period last year and 8.6%
below budget. The decline is primarily due to a net loss of
34,000 customers during the first six months of fiscal 2004 and
increased competition from retail outlets selling water coolers.
The company also faced higher-than-expected costs related to the
integration of the two bottled water businesses acquired from
Danone Waters of North America and Suntory Water Group. Cooler
rentals, which drive the company's cash flow, have continued to
decline at greater-than-expected rates and DS Waters will be
challenged to replace this declining revenue stream with more
profitable business in the intermediate term.
Furthermore, Standard & Poor's is concerned about DS Waters'
ability to maintain compliance with its credit facilities'
leverage covenant, as leverage has remained higher than expected.
While total debt to EBITDA was about 3.45x at July 2, 2004, in
compliance with the 3.5x maximum leverage covenant, this covenant
steps down to 3.4x for the next fiscal quarter ending in
September 2004. (This covenant does not include the company's
substantial preferred stock liability; when adjusted for this and
operating leases, total debt to EBITDA was 7.8x at July 2, 2004.)
Standard & Poor's believes DS Waters will be challenged to
maintain compliance with this lower covenant level without a
marked improvement in operating performance.
Before resolving the CreditWatch listing, Standard & Poor's will
continue to monitor developments and review the company's near-
term plans to maintain compliance with covenants.
Atlanta, Georgia-based DS Waters is a leading North American
producer and distributor of bottled water.
ENRON: Wants Court to Approve Polaroid Claims Settlement Pact
-------------------------------------------------------------
Enron Energy Services Operations, Inc., and Polaroid Corporation
entered into an Energy Management Agreement, dated December 2,
1999, and Master Lease Agreement, dated December 2, 1999, and
related lease schedules.
Pursuant to the Master Lease, EESO agreed to provide Polaroid
with certain energy management services at Polaroid's facilities,
including supplying Polaroid's energy requirements. EESO also
constructed certain energy projects, including the installation
of Polaroid's facilities of premium efficiency motors, control
systems, chillers and glycol tanks.
Frank A. Oswald, Esq., at Togut, Segal & Segal, LLP, in New York,
relates that on October 12, 2001, Polaroid filed for Chapter 11
protection before the U.S. Bankruptcy Court for the District of
Delaware. On April 18, 2002, Polaroid sought to sell
substantially all of its assets, including the Polaroid Projects,
to OEP Imaging Corporation. EESO objected to the sale and the
transfer of the Polaroid Projects unless the cure claims were
paid in full. EESO also filed a request seeking the immediate
payment of its administrative expense claims.
The Administrative Motion Settlement
After extensive negotiations, EESO and Polaroid entered into an
Administrative Expense Settlement Agreement that resolved EESO's
objection to the OEP Sale and the Administrative Expense Motion.
The Administrative Expense Settlement Agreement provided, among
other things, for:
(a) the transfer of the Polaroid Projects to OEP, free and
clear of all claims, liens and other encumbrances;
(b) Polaroid and OEP's payment of $900,000 to EESO in
satisfaction of EESO's postpetition administrative claims
against Polaroid;
(c) the termination of the Polaroid Agreements; and
(d) the release and discharge of all claims by and between
EESO and Polaroid, except that EESO and Polaroid retained
their unsecured claims, if any, for arrears and
termination damages under the Polaroid Agreements.
The Proofs of Claim
Mr. Oswald relates that on October 14, 2002, Primary PDC, Inc.,
on behalf of Reorganized Polaroid, filed Claim No. 13045 against
EESO for alleged damages arising from the rejection of certain
agreements between Polaroid and EESO. On May 30, 2002, EESO
filed a proof of claim in the Polaroid cases. On May 6, 2003,
EESO amended its claim with Claim No. 7144, asserting a
$15,284,778 general unsecured claim with regard to the Polaroid
Agreements.
According to Mr. Oswald, the Official Committee of Unsecured
Creditors of the Polaroid Debtors sought to disallow and expunge
the EESO Claim in the Polaroid Court. Similarly, EESO objected
to the allowance of the Polaroid Claim in EESO's bankruptcy
proceeding.
The Claim Objections Settlement
After continued discussions and informal exchange of documents,
the Debtors and Polaroid reached an agreement to resolve the
Claim Objections and any and all matters between them relating to
the Polaroid Agreements. In general, the Settlement Agreement
provides that:
(a) EESO will have an allowed unsecured claim for $10,500,000
in Polaroid's bankruptcy cases;
(b) The Polaroid Claim and all claims Polaroid may have
against the Debtors are disallowed and expunged;
(c) The EESO Allowed Claim will be afforded the same treatment
provided to holders of general unsecured claims under
Polaroid's confirmed Plan; and
(d) The guaranty Enron Corporation executed in favor of
Polaroid will be withdrawn and deemed terminated.
Pursuant to Rule 9019 of the Federal Rules of Bankruptcy
Procedure and the Retail Contracts Settlement Procedures, the
Debtors ask the Court to approve their Settlement Agreement with
Polaroid.
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). Judge Gonzalez confirmed the Company's Modified Fifth
Amended Plan on July 15, 2004, and numerous appeals followed.
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. 123;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
ENTERPRISE PRODUCTS: Extends Tender Offers for GulfTerra Notes
--------------------------------------------------------------
Enterprise Products Operating L.P., the principal operating
subsidiary of Enterprise Products Partners, L.P., (NYSE:EPD), is
extending the Expiration Time of its four cash tender offers to
purchase any and all of the outstanding senior subordinated and
senior notes of GulfTerra Energy Partners, L.P. and GulfTerra
Energy Finance Corporation to 5:00 p.m. New York City time on
Sept. 10, 2004. The Purchase Price for each series of GulfTerra
notes will be determined at 2:00 p.m. New York City time on the
second business day preceding the Expiration Time.
The cash tender offers were initiated by Enterprise on
Aug. 4, 2004, and included a solicitation of consents to proposed
amendments that would eliminate certain restrictive covenants and
default provisions contained in the indentures governing the
notes. Through Aug. 27, 2004, holders of approximately 99.3% of
the aggregate outstanding amount of all four series tendered their
notes, thereby consenting to the proposed amendments and
qualifying for the Consent Payment of $30 per $1,000 of notes.
This consent payment is in addition to the tender offer Purchase
Price offered by Enterprise for each series of notes.
GulfTerra has executed supplements to the indentures that affect
the proposed amendments. However, the supplements will become
effective only upon Enterprise's purchase of more than a majority
in principal amount of the outstanding GulfTerra notes.
Enterprise will purchase these notes promptly after the expiration
time for the tender offers, provided that the conditions to the
tender offers, including the completion of the merger between
Enterprise Products Partners, L.P., and GulfTerra Energy Partners,
L.P., have been satisfied or waived.
Enterprise recently satisfied one of these conditions by entering
into a $2.25 billion acquisition credit facility, providing an
unsecured 364-day facility that will be available for interim
financing of certain transactions associated with the merger, the
refinancing of GulfTerra's existing secured credit facility and
term loans, and the purchase of all of the GulfTerra notes that
are tendered to Enterprise.
Enterprise expects the merger with GulfTerra to be completed this
month.
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 on May 20, 2004,
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.
FOSTER WHEELER: Extends Equity-for-Debt Exchange Offer to Tomorrow
------------------------------------------------------------------
Minimum thresholds related to Foster Wheeler Ltd.'s (OTCBB: FWLRF)
equity-for-debt exchange were not met for two classes of
securities. Specifically, only 50.1% of the minimum threshold of
75% has been tendered by holders of the 9.00% Preferred
Securities, and 86.0% of the minimum threshold of 90% has been
tendered by holders of the 6.75% Senior Notes. Foster Wheeler is
extending its exchange offer until 5:00 p.m., New York City time,
on September 2, 2004.
"We need increased participation by holders of the Preferred
Securities and Senior Notes to meet our minimum tender
conditions," said Raymond J. Milchovich, chairman, president and
chief executive officer.
Legal Details
The securities proposed to be exchanged are as follows:
(1) Foster Wheeler's Common Shares and its Series B Convertible
Preferred Shares for any and all outstanding 9.00% referred
Securities, Series I issued by FW Preferred Capital Trust I
(liquidation amount $25 per trust security) and guaranteed
by Foster Wheeler Ltd. and Foster Wheeler LLC, including
accrued dividends;
(2) Foster Wheeler's Common Shares and Preferred Shares for any
and all outstanding 6.50% Convertible Subordinated Notes
due 2007 issued by Foster Wheeler Ltd. and guaranteed by
Foster Wheeler LLC;
(3) Foster Wheeler's Common Shares and Preferred Shares for any
and all outstanding Series 1999 C Bonds and Series 1999 D
Bonds (as defined in the Second Amended and Restated
Mortgage, Security Agreement, and Indenture of Trust dated
as of October 15, 1999 from Village of Robbins, Cook
County, Illinois, to SunTrust Bank, Central Florida,
National Association, as Trustee); and
(4) Foster Wheeler's Common Shares and Preferred Shares and up
to $150,000,000 of Fixed Rate Senior Secured Notes due 2011
of Foster Wheeler LLC guaranteed by Foster Wheeler Ltd. and
certain Subsidiary Guarantors for any and all outstanding
6.75% Senior Notes due 2005 of Foster Wheeler LLC
guaranteed by Foster Wheeler Ltd. and certain Subsidiary
Guarantors; and solicitation of consents to proposed
amendments to the indenture relating to the 9.00% Junior
Subordinated Deferrable Interest Debentures, Series I of
Foster Wheeler LLC, the indenture relating to the 6.50%
Convertible Subordinated Notes due 2007 and the indenture
relating to the 6.75% Notes due 2005.
As of 5:00 p.m. on August 30, 2004, holders have tendered the
following dollar amounts and percentages of the following original
securities:
(1) 9.00% Preferred Securities, $87,599,400 (50.1%);
(2) 6.50% Convertible Subordinated Notes, $208,296,000
(99.2%);
(3) Robbins Series C Bonds due 2024, $56,640,249 (73.4%),
Robbins Series C Bonds due 2009, $12,027,440 (99.2%),
and Robbins Series D Bonds, $35,488,159 based on the
balance due at maturity (99.1%); and
(4) 6.75% Senior Notes, $172,091,000 (86.0%).
A copy of the prospectus relating to the New Notes and other
related documents may be obtained from the information agent:
Georgeson Shareholder Communications Inc.
17 State Street
10th Floor
New York, N.Y. 10014
Georgeson's telephone number for bankers and brokers is 212-440-
9800 and for all other security holders is 800-891-3214.
Direct any questions regarding the exchange offer and consent
solicitation to the dealer manager:
Rothschild Inc.
1251 Avenue of the Americas
51st Floor
New York, N.Y. 10020
Tel. No. 212-403-3784
The exchange agent for the exchange offer is the Bank of New York,
London Branch.
About the Company
Foster Wheeler, Ltd., is a global company offering, through its
subsidiaries, a broad range of design, engineering, construction,
manufacturing, project development and management, research, plant
operation and environmental services.
At June 25, 2004, Foster Wheeler Ltd.'s balance sheet showed an
$856,601,000 stockholders' deficit, compared to an $872,440,000
deficit at December 26, 2003.
HARBOURVIEW: Fitch Slashes Class C Note Rating Six Notches to B-
----------------------------------------------------------------
Fitch Ratings downgrades three classes of notes issued by
HarbourView CDO III, Ltd. These rating actions are effective
immediately:
-- $279,548,803 class A notes downgraded to 'AA-' from 'AAA';
-- $22,500,000 class B notes downgraded to 'BBB-' from 'AA';
-- $26,250,000 class C notes downgraded to 'B-' from 'BBB-'.
Furthermore, the ratings for all classes have been removed from
Rating Watch Negative.
The ratings of the class A and class B notes address the
likelihood that investors will receive full and timely payments of
interest, as per the governing documents, as well as the stated
balance of principal by the legal final maturity date. The rating
of the class C note address the likelihood that investors will
receive ultimate and compensating interest payments, as per the
governing documents, as well as the stated balance of principal by
the legal final maturity date.
HarbourView III is a collateralized debt obligation -- CDO --
managed by HarbourView Asset Management, which closed
April 24, 2001. HarbourView III is composed of:
* 43.0% residential mortgage-backed securities -- RMBS;
* 24.0% asset-backed securities -- ABS;
* 16.1% commercial mortgage-backed securities -- CMBS;
* 6.6% collateralized debt obligations -- CDOs;
* 5.4% real estate investment trusts -- REITs; and
* 4.9% corporate debt.
Since the rating action on Oct. 8, 2003, the collateral has
deteriorated. The class A/B overcollateralization -- OC -- ratio
and class C OC ratio have decreased from 107.78% and 99.89%,
respectively to 102.38% and 94.06% as of the most recent trustee
report dated July 31, 2004. The weighted average rating factor --
WARF -- has increased from 26 ('BBB-/BB+') to 30 ('BBB-/BB+'). As
of the most recent trustee report available, defaulted assets
represented 5.2% of the $319.8 million of total collateral.
Additionally, assets rated 'BB+' or lower represented
approximately 24.0% of the total collateral as of the most recent
trustee report.
Fitch conducted cash flow modeling utilizing various default
timing and interest rate scenarios to measure the breakeven
default rates going forward relative to the minimum cumulative
default rates required for the rated liabilities.
Fitch will continue to monitor and review this transaction for
future rating adjustments.
HAYNES INTERNATIONAL: Completes Chapter 11 Restructuring
--------------------------------------------------------
Haynes International, Inc., completed the necessary steps to
implement its Plan of Reorganization and has successfully emerged
from Chapter 11.
Haynes President and Chief Executive Officer Francis J. Petro
said, "This is an exciting day for Haynes. [Yesterday] we have
officially completed our Chapter 11 restructuring and we emerge
with a greatly de-leveraged balance sheet and significant cash
resources to allow the Company to emerge from Chapter 11 as a
stronger business."
As part of the consummation of the Haynes' confirmed Plan of
Reorganization, holders of Haynes' Senior Notes exchanged
$140 million of 11-5/8% Senior Notes due September 2004 for 96% of
the equity in the reorganized company. Haynes' prepetition
majority equity holder cancelled its equity interests in exchange
for its pro rata share of 4% of the equity in the reorganized
company.
"The fact that we were able to complete the Chapter 11 process in
just five months is a testament to the hard work, loyalty and
support of many groups to whom I would like to extend my gratitude
on behalf of the Company," Mr. Petro said. "First, I would like
to thank our employees, including the membership of United Steel
Workers of America (USWA) Local 2958, for their dedication, hard
work and patience throughout this process. I would also like to
thank our vendors and customers for their outstanding support. I
am pleased to say that all vendors will receive 100% payment for
prepetition claims that are ultimately allowed. Finally, I would
like to express my appreciation for the hard work and commitment
demonstrated by Blackstone and our legal and financial advisors.
Their efforts have been crucial to our success."
Now that Haynes has emerged from Chapter 11, the previously
announced modification of Haynes' collective bargaining agreement
with the USWA becomes effective. In addition, Haynes has closed
its $100 million exit financing facility with Congress Financial
Corporation (Central), substantially of all which is immediately
available. It is anticipated that the exit financing facility
will provide the Company with sufficient resources to complete
several capital expenditure projects over the next three years.
It is the Company's intent to focus many improvement projects at
the Company's main manufacturing facilities in Kokomo, Indiana.
In addition, Haynes' pension plan was not affected by the Chapter
11 cases.
In recent months, Haynes' sales have improved. "We have seen
increased sales in each of our major markets and our order backlog
has doubled since this time a year ago," Mr. Petro said. "As we
emerge from Chapter 11, we intend to continue to service our
customers and capitalize on the increased customer demand for our
products. We are confident that with continued support from our
vendors and the $100 million exit financing facility that we have
obtained, we should be able to grow our business."
The Disclosure Statement and the Plan of Reorganization can be
accessed at http://www.kccllc.net/haynes/Information on the
Chapter 11 case can also be obtained on the Bankruptcy Court's Web
site with PACER registration: http://www.insb.uscourts.gov/
Haynes International, Inc., develops, manufactures and markets
technologically advanced, high performance alloys, primarily for
use in the aerospace and chemical processing industries. The
company, along with its affiliates, filed for chapter 11
protection (Bankr. S.D. Ind. Case No. 04-05264) on March 29, 2004,
before the Honorable Metz, Anthony J., III. J. Eric Ivester, Esq.,
at Skadden, Arps, Slate, Meagher & Flom LLP and Jeffrey A.
Hokanson, Esq., at Ice Miller represent the debtors in their
restructuring efforts. When Haynes filed for chapter 11
protection, it listed total assets of $187,000,000 and total debts
of $362,000,000.
HEALTH ENHANCEMENT: Has Immediate Need for Additional Capital
-------------------------------------------------------------
Health Enhancement Products, Inc.'s Consolidated Financial
Statements for the period ending June 30, 2004, show that the
company has incurred significant net losses and negative cash flow
from operations since inception, including a net loss of
$2,352,222 during the six months ended June 30, 2004. In
addition, the Company had an estimated working capital deficit of
$360,000 at August 23, 2004.
The Company says it "has an immediate need for additional
capital."
Going Concern Doubts
The company's current financial condition raises substantial doubt
about the Company's ability to continue as a going concern.
Health Enhancement's consolidated financial statements for the
fiscal year ended December 31, 2003, were qualified as to the
uncertainty relating to Health Enhancement's ability to continue
as a going concern.
Change in Auditors
On July 6, 2004, the Board of Directors of Health Enhancement
Products, Inc., dismissed Pritchett, Siler & Hardy, P.C., as its
independent auditors, and engaged Wolinetz, Lafazan & Company,
P.C., to serve as its new independent auditors for fiscal 2004.
The change in auditors became effective as of July 6, 2004.
SEC Investigation
In or around April, 2004, the Company learned that the staff of
the Securities and Exchange Commission was conducting an informal
inquiry into the accuracy of certain of the Company's press
releases and other public disclosures, and the trading in the
Company's securities. The Company cooperated fully with the SEC
staff's informal inquiry by producing documents and having certain
of its officers appear for testimony at the SEC's offices. On or
about July 14, 2004, the SEC issued an Order Directing Private
Investigation and Designating Officers to Take Testimony. The
Company understands that the factual basis underlying the Order of
Investigation are questions as to:
(1) whether there were any false or misleading statements or
material omissions in reports the Company filed with the
SEC or in other public documents or disclosures,
including statements about the efficacy of the Company's
primary product, ProAlgaZyme; or
(2) whether there was improper trading or other activity in
the Company's securities.
The Company is continuing to cooperate fully in the SEC's
investigation, including producing additional documents, and
making the Company's officers and directors available for
testimony before the SEC. The Company understands that the SEC
investigation is ongoing. The SEC has informed the Company that
it has not yet concluded that the Company or its officers and
directors have violated any securities laws, rules or regulations,
nor has the SEC advised the Company that it intends to take any
action against the Company, or any of its officers, directors or
others. If the SEC were to take action against the Company or its
officers and directors, that action likely would have a material
adverse effect on the Company.
About the Company
Based in Tempe, Ariz., Health Enhancement Products, Inc.
(OTC: HEPI) -- http://www.heponline.com/-- is a nutraceutical
company directed specifically at the development and marketing of
supplementary health-enhancing products using only pure, all-
natural and herbal extracts. In particular, Health Enhancement's
products use beneficial herbal extracts, vitamins, minerals, and
botanical extracts in varying combinations to address common or
specific illnesses. The Company's primary product is ProAlgaZyme,
an immune system enhancing water that is produced from an algae
grown in 100% distilled water. The algae produces an enzyme as a
means of protecting itself from exposure to outside disease and
harmful bacteria. The enzyme is then drawn off, filtered, tested
and bottled for consumption. Recent clinical trials performed by
the Company have indicated that ProAlgaZyme may increase and
activate the white blood cells in individuals whose white cells
are low or inactive, in effect enhancing the immune system. Heath
Enhancements is currently doing internal clinical trials on
several illnesses and diseases with ProAlgaZyme, including various
types of cancer, HIV/AIDS, diabetes and Chronic Fatigue Syndrome.
HLM DESIGN INC: Case Summary & 64 Largest Unsecured Creditors
-------------------------------------------------------------
Lead Debtor: HLM Design, Inc.
112 South Tryon Street, Suite 1600
Charlotte, North Carolina 28284
Bankruptcy Case No.: 04-33049
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
HLM Design USA, Inc. 04-33050
HLM Design of North America, Inc. 04-33051
HLM Design Architecture Engineering 04-33052
and Planning, P.C.
Type of Business: The Debtor provides architectural, engineering
and project planning services.
See http://www.hlmdesign.com/
Chapter 11 Petition Date: August 27, 2004
Court: Western District of North Carolina (Charlotte)
Judge: George R. Hodges
Debtors' Counsel: Travis W. Moon, Esq.
Hamilton, Gaskins, Fay & Moon, PLLC
2020 Charlotte Plaza
201 South College Street
Charlotte, NC 28244-2020
Tel: 704-344-1117
Total Assets Total Debts
------------ -----------
HLM Design, Inc. $1,063,178 $14,642,062
HLM Design USA, Inc. $2,804,148 $10,507,124
HLM Design of North America, Inc. $246,271 $9,492,538
HLM Design Architecture $686,888 $8,805,107
Engineering and Planning, P.C.
A. HLM Design, Inc.'s 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Scott Brady Note - Principal & $1,235,400
5908 Shorefront Lane Interest
Flower Mound, TX 75022
Service Point Trade Payable $648,691
P.O. Box 9606
Manchester, NH 03108-9606
Xerox Corporation Trade Payable $406,489
P.O. Box 650361
Dallas, TX 75265-0361
Scott Brady Note - Principal & $392,458
5908 Shorefront Lane Interest
Flower Mound, TX 75022
Fidelity Investments Real Estate Lease $321,669
Pembroke Real Estate
P.O. Box 13787
Newark, NJ 07188-0787
ePlus Group, Inc. Trade Payable $210,308
Zurich U.S. Specialties Trade Payable $200,000
Richard Morgan Note - Principal & $141,660
Interest
Bill Smith Note - Principal & $134,463
Interest
Crescent Brookdale Assoc., Real Estate Lease $117,383
LLC Limit
Jaster-Quintanilla & Assoc. Consulting Contract $98,857
Bentley Systems, Inc. Trade Payable $90,176
Alston & Bird LLP Trade Payable $83,751
Price Waterhouse Coopers LLP Trade Payable $80,000
Starcite, Inc. Real Estate Lease $75,123
Saltz Hollaender PC Trade Payable $66,606
Walt Viney Note - Principal & $60,716
Interest
Weldon Nash Note - Principal & $60,639
Interest
Parker, Poe, Adams & Trade Payable $60,524
Bernstein
Softmart Trade Payable $60,000
B. HLM Design USA, Inc.'s 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
ZBA Engineers & Consultant Consulting Contract $233,060
MKK Consulting Engineers, Consulting Contract $164,783
Inc.
Muller & Caulfield Consulting Contract $163,378
ABSG Consulting, Inc. Consulting Contract $151,890
Pola & Associates, Inc. Consulting Contract $105,133
Carter Goble Assoc., Inc. Consulting Contract $91,337
Shen Milsom & Wilke, Inc. Consulting Contract $85,706
Amer. Express Tax & Business Consulting Contract $83,691
Szynskie Group, Inc. Consulting Contract $76,850
R.G. Vanderweil Eng. NCR, Consulting Contract $75,146
Inc.
PGA Design Consulting Contract $74,542
Robert A.M. Stern Architects Consulting Contract $59,740
Francis Krahe & Assoc. Inc. Consulting Contract $57,239
Robert Director Associates Consulting Contract $43,961
SJ Engineers Consulting Contract $43,780
Shoemaker & Haaland Consulting Contract $42,917
BCER Engineering, Inc. Consulting Contract $37,700
Shen Milsom & Wilke, Inc. Consulting Contract $27,180
Henneman Jaspal/Engineering Consulting Contract $24,879
S.A. Miro, Inc. Consulting Contract $24,469
C. HLM Design of North America's 8 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Magnolia Associates, LP Real Estate Lease $548,655
c/o Tower Realty Trust, Inc.
P.O. Box 35325
Newark, NJ 07193-5325
Tryon St. LLC Real Estate Lease $317,288
c/o Spectrum Properties
121 West Trade Street
Ste. 3050
Charlotte, NC 28202
CTHL Properties Real Estate Lease $63,000
ZBA Engineers & Consultants Consulting Agreement $35,876
CMH & Associates, LLC Consulting Agreement $15,355
CMT Laboratories Consulting Agreement $5,192
Brinjac Engineering, Inc. Consulting Agreement $2,585
Briggs Elevator Consulting, Consulting Agreement $1,148
Inc.
D. HLM Design Architecture's 16 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Ross Murphy Finkelstein Consulting Agreement $131,849
Shen Milson & Wilke, Inc. Consulting Agreement $47,690
O'Donnell & Naccarato Consulting Agreement $33,024
SST Planners Consulting Agreement $21,349
Mahan Rykiel Associates Inc. Consulting Agreement $13,855
Hanscomb Associates, Inc. Consulting Agreement $12,727
Water Technology, Inc. Consulting Agreement $10,178
Brinjac Engineering, Inc. Consulting Agreement $8,257
DMS International, Inc. Consulting Agreement $4,800
CMH & Associates, LLC Consulting Agreement $4,700
Rolf Jensen & Associates Consulting Agreement $3,300
Allied Keystone Technologies Consulting Agreement $3,000
International Consultants, Consulting Agreement $2,280
Inc.
Belstar, Inc. Consulting Agreement $2,200
Allen & Shariff Corporation Consulting Agreement $1,766
Mahan Rykiel Associates Inc. Consulting Agreement $693
HLM DESIGN: Section 341(a) Meeting Slated for September 29
----------------------------------------------------------
The Bankruptcy Administrator of the U.S. Bankruptcy Court of
Western District of Carolina will convene a meeting of HLM Design,
Inc.'s creditors at 2:00 p.m., on September 29, 2004, at 402 West
Trade Street, Suite 205, in Charlotte, North Carolina. This is
the first meeting of creditors required under 11 U.S.C. Sec.
341(a) in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors
Headquartered in Charlotte, North Carolina, HLM Design --
http://www.hlmdesign.com/-- provides architectural, engineering
and project planning services. The Company and its debtor-
affiliates filed for chapter 11 protection on August 27, 2004
(Bankr. W.D. NC. Case No. 04-33049). Travis W. Moon, Esq., at
Hamilton, Gaskins, Fay & Moon, PLLC represents the Debtors in
their restructuring efforts. When the Debtors filed for
protection they listed approximately $4 million in total assets
and more than $10 million in total debts on a consolidated basis.
HOLLINGER INC: Plans to Make Sept. 1 Interest Payment on Bonds
--------------------------------------------------------------
Hollinger, Inc., (TSX:HLG.C; HLG.PR.B) provides the following
update in accordance with the guidelines pursuant to which the
June 1, 2004 management and insider cease trade order was issued.
These guidelines contemplate that Hollinger will normally provide
bi-weekly updates on its affairs until such time as it is current
with its filing obligations under applicable Canadian securities
laws.
As previously announced, Hollinger International, Inc., is now
prepared in principle to co-operate with and assist Hollinger and
its auditors in the audit of Hollinger's 2003 annual financial
statements and to assist in obtaining the co-operation of
Hollinger International's auditors, and has set out a process for
so doing. Hollinger and Hollinger International continue to
pursue, on a without prejudice basis, the conclusion of mutually
acceptable arrangements to permit the audit of Hollinger's 2003
annual financial statements to begin as soon as possible.
Hollinger's 2003 annual financial statements cannot be completed
and audited until Hollinger International's 2003 annual financial
statements are completed. Hollinger International has advised
Hollinger that it believes that it needs to review the final
report of the Special Committee established by Hollinger
International before it can complete its 2003 annual financial
statements. Hollinger understands that the work of the Special
Committee is ongoing and its final report is expected to be issued
soon.
As previously announced, as a result of the delay in the filing of
Hollinger's 2003 Form 20-F (which would include its 2003 audited
annual financial statements) with the United States Securities and
Exchange Commission by June 30, 2004, Hollinger is not in
compliance with its obligation to deliver to relevant parties its
filings under the indenture governing its senior secured notes due
2011. US$78 million principal amount of Notes are outstanding
under the Indenture. On August 19, 2004, Hollinger received a
Notice of Event of Default from the trustee under the Indenture
notifying Hollinger that an event of default has occurred under
the Indenture. As a result, pursuant to the terms of the
Indenture, the trustee under the Indenture or the holders of at
least 25 percent of the outstanding principal amount of the Notes
will have the right to accelerate the maturity of the Notes.
Approximately US$5 million in interest on the Notes is due on
September 1, 2004. Hollinger has deposited the full amount of
such interest payment with the trustee under the Indenture and
noteholders will receive their interest payment in a timely
manner.
As of the close of business on August 27, 2004, Hollinger had
approximately US$8.7 million of cash or cash equivalents on hand
and owned, directly or indirectly, 792,560 shares of Class A
Common Stock and 14,990,000 shares of Class B Common Stock of
Hollinger International. Based on the August 27, 2004 closing
price of the shares of Class A Common Stock of Hollinger
International on the New York Stock Exchange of US$17.14, the
market value of Hollinger's direct and indirect holdings in
Hollinger International was US$270,513,078.40. All of Hollinger's
direct and indirect interest in the shares of Class A Common Stock
of Hollinger International are being held in escrow with a
licensed trust company in support of future retractions of its
Series II Preference Shares and all of Hollinger's direct and
indirect interest in the shares of Class B Common Stock of
Hollinger International are pledged as security in connection with
the Notes. In addition, Hollinger has previously deposited with
the trustee under the Indenture approximately US$10.5 million in
cash as collateral in support of the Notes.
Consequently, there is currently in excess of US$267.4 million
aggregate collateral securing the US$78 million principal amount
of the Notes outstanding.
Hollinger's principal asset is its approximately 68.0% voting and
18.2% equity interest in Hollinger International. Hollinger
International is an international newspaper publisher with
English-language newspapers in the United States and Israel. Its
assets include the Chicago Sun-Times and a large number of
community newspapers in the Chicago area, The Jerusalem Post and
The International Jerusalem Post in Israel, a portfolio of new
media investments and a variety of other assets.
HOLLINGER INC: SEC Sends Wells Notices to Company & Directors
-------------------------------------------------------------
Hollinger, Inc., (TSX:HLG.C; HLG.PR.B) received notice from staff
of the Midwest Regional Office of the U.S. Securities and Exchange
Commission that they intend to recommend to the Commission that it
authorize civil injunctive proceedings against Hollinger for
certain alleged violations of the U.S. Securities Exchange Act of
1934 and the Rules thereunder. The notice includes an offer to
Hollinger to make a "Wells Submission", which Hollinger will be
making, setting forth the reasons why it believes the injunctive
action should not be brought. A similar notice has been sent to
some of Hollinger's directors and officers.
As earlier reported, as a result of the delay in the filing of
Hollinger's 2003 Form 20-F (which would include its 2003 audited
annual financial statements) with the United States Securities and
Exchange Commission by June 30, 2004, Hollinger is not in
compliance with its obligation to deliver to relevant parties its
filings under the indenture governing its senior secured notes due
2011. US$78 million principal amount of Notes are outstanding
under the Indenture. On August 19, 2004, Hollinger received a
Notice of Event of Default from the trustee under the Indenture
notifying Hollinger that an event of default has occurred under
the Indenture. As a result, pursuant to the terms of the
Indenture, the trustee under the Indenture or the holders of at
least 25 percent of the outstanding principal amount of the Notes
will have the right to accelerate the maturity of the Notes.
Approximately US$5 million in interest on the Notes is due on
September 1, 2004. Hollinger has deposited the full amount of
such interest payment with the trustee under the Indenture and
noteholders will receive their interest payment in a timely
manner.
As of the close of business on August 27, 2004, Hollinger had
approximately US$8.7 million of cash or cash equivalents on hand
and owned, directly or indirectly, 792,560 shares of Class A
Common Stock and 14,990,000 shares of Class B Common Stock of
Hollinger International. Based on the August 27, 2004 closing
price of the shares of Class A Common Stock of Hollinger
International on the New York Stock Exchange of US$17.14, the
market value of Hollinger's direct and indirect holdings in
Hollinger International was US$270,513,078.40. All of Hollinger's
direct and indirect interest in the shares of Class A Common Stock
of Hollinger International are being held in escrow with a
licensed trust company in support of future retractions of its
Series II Preference Shares and all of Hollinger's direct and
indirect interest in the shares of Class B Common Stock of
Hollinger International are pledged as security in connection with
the Notes. In addition, Hollinger has previously deposited with
the trustee under the Indenture approximately US$10.5 million in
cash as collateral in support of the Notes.
Consequently, there is currently in excess of US$267.4 million
aggregate collateral securing the US$78 million principal amount
of the Notes outstanding.
Hollinger's principal asset is its approximately 68.0% voting and
18.2% equity interest in Hollinger International. Hollinger
International is an international newspaper publisher with
English-language newspapers in the United States and Israel. Its
assets include the Chicago Sun-Times and a large number of
community newspapers in the Chicago area, The Jerusalem Post and
The International Jerusalem Post in Israel, a portfolio of new
media investments and a variety of other assets.
HOLLINGER INC: 10 Toronto Extends Peter G. White Consulting Pact
----------------------------------------------------------------
10 Toronto Street, Inc., an indirect wholly owned subsidiary of
Hollinger, Inc., (TSX:HLG.C; HLG.PR.B), has extended the
consulting agreement with Peter G. White Management Ltd., a
company controlled by Peter G. White, for a further six-month term
on the same terms and conditions. Since December 23, 2003, Peter
G. White has been the Co-Chief Operating Officer and Secretary of
Hollinger and has assisted the company in conserving the value of
its assets, addressing liquidity issues, meeting applicable
regulatory requirements and otherwise performing duties similar to
those of a restructuring officer. The White Consulting Agreement
will now terminate on January 22, 2005. For its services under
the White Consulting Agreement, Peter G. White Management Ltd.
receives C$75,000 per month. The White Consulting Agreement and
its extension were reviewed, reported on and approved by the
independent directors of Hollinger.
As earlier reported, as a result of the delay in the filing of
Hollinger's 2003 Form 20-F (which would include its 2003 audited
annual financial statements) with the United States Securities and
Exchange Commission by June 30, 2004, Hollinger is not in
compliance with its obligation to deliver to relevant parties its
filings under the indenture governing its senior secured notes due
2011. US$78 million principal amount of Notes are outstanding
under the Indenture. On August 19, 2004, Hollinger received a
Notice of Event of Default from the trustee under the Indenture
notifying Hollinger that an event of default has occurred under
the Indenture. As a result, pursuant to the terms of the
Indenture, the trustee under the Indenture or the holders of at
least 25 percent of the outstanding principal amount of the Notes
will have the right to accelerate the maturity of the Notes.
Approximately US$5 million in interest on the Notes is due on
September 1, 2004. Hollinger has deposited the full amount of
such interest payment with the trustee under the Indenture and
noteholders will receive their interest payment in a timely
manner.
As of the close of business on August 27, 2004, Hollinger had
approximately US$8.7 million of cash or cash equivalents on hand
and owned, directly or indirectly, 792,560 shares of Class A
Common Stock and 14,990,000 shares of Class B Common Stock of
Hollinger International. Based on the August 27, 2004 closing
price of the shares of Class A Common Stock of Hollinger
International on the New York Stock Exchange of US$17.14, the
market value of Hollinger's direct and indirect holdings in
Hollinger International was US$270,513,078.40. All of Hollinger's
direct and indirect interest in the shares of Class A Common Stock
of Hollinger International are being held in escrow with a
licensed trust company in support of future retractions of its
Series II Preference Shares and all of Hollinger's direct and
indirect interest in the shares of Class B Common Stock of
Hollinger International are pledged as security in connection with
the Notes. In addition, Hollinger has previously deposited with
the trustee under the Indenture approximately US$10.5 million in
cash as collateral in support of the Notes.
Consequently, there is currently in excess of US$267.4 million
aggregate collateral securing the US$78 million principal amount
of the Notes outstanding.
Hollinger also received notice from staff of the Midwest Regional
Office of the U.S. Securities and Exchange Commission that they
intend to recommend to the Commission that it authorize civil
injunctive proceedings against Hollinger for certain alleged
violations of the U.S. Securities Exchange Act of 1934 and the
Rules thereunder. The notice includes an offer to Hollinger to
make a "Wells Submission", which Hollinger will be making, setting
forth the reasons why it believes the injunctive action should not
be brought. A similar notice has been sent to some of Hollinger's
directors and officers.
Hollinger's principal asset is its approximately 68.0% voting and
18.2% equity interest in Hollinger International. Hollinger
International is an international newspaper publisher with
English-language newspapers in the United States and Israel. Its
assets include the Chicago Sun-Times and a large number of
community newspapers in the Chicago area, The Jerusalem Post and
The International Jerusalem Post in Israel, a portfolio of new
media investments and a variety of other assets.
HOLLINGER INT'L: Special Committee Files Report in Illinois Court
-----------------------------------------------------------------
Hollinger International, Inc.'s (NYSE: HLR) Special Committee of
its Board of Directors filed with the U.S. District Court for the
Northern District of Illinois its Report of findings of its
investigation into allegations raised by certain of the Company's
shareholders and other matters uncovered in the course of the
Special Committee's work.
A full-text copy of the 513-page Report is available at no charge
at:
http://www.sec.gov/Archives/edgar/data/868512/000095012304010413/y01437exv99
w2.htm
The Company said that the Special Committee filed the Report with
the Court consistent with the terms of the Consent Judgment
entered into by the Company and the U.S. Securities and Exchange
Commission on January 16, 2004. As previously announced, the
Special Committee has filed a lawsuit on the Company's behalf in
the Court against defendants including certain directors and
former directors and officers, as well as the Company's
controlling shareholder and its affiliated companies.
Gordon A. Paris, Interim Chairman and Chief Executive Officer and
Chairman of the Special Committee, said, "The Report . . . is the
result of extensive investigation and analysis by the Special
Committee and its advisors. It is an important step forward in
our pursuit of restitution for funds and assets inappropriately
taken from the Company's coffers and in our efforts to
significantly improve corporate governance at Hollinger
International."
The Special Committee's work, including the retention of Richard
C. Breeden & Co. and O'Melveny & Myers LLP, will continue through
the conclusion of the litigation based on its investigation.
As reported in the Troubled Company Reporter on August 20, 2004,
certain management and other insiders of the Company are currently
subject to a cease trade order in respect of securities of the
Company issued by the Securities Commission on June 1, 2004. The
cease trade order results from the delay in filing the Company's
annual financial statements for the year ended December 31, 2003,
its interim financial statements for the three months ended March
31, 2004 and its Annual Information Form -- AIF - by the required
filing dates. The cease trade order will remain in place until
two business days following receipt by the Securities Commission
of all filings that the Company is required to make pursuant to
Ontario securities laws.
On July 20, 2004, the Company did not anticipate that it would be
in a position to file its interim financial statements for the
six-month period ended June 30, 2004 by the filing date required
by applicable Canadian securities legislation, since it was not
expected that the final report of the Special Committee would be
available sufficiently in advance of that time. The Company
confirms that those interim financial statements have not been so
filed.
The Company believes that it needs to review the final report of
the Special Committee established by the Company before it can
complete and file the financial statements and the AIF in
question. The work of the Special Committee is ongoing and its
final report has not yet been issued. The Company will continue
to provide bi-weekly updates, as contemplated by the OSC Policy,
until the financial statements and AIF have been filed.
Hollinger International Inc. is a newspaper publisher with
English-language newspapers in North America and Israel. Its
assets include The Chicago Sun-Times and a large number of
community newspapers in the Chicago area, The Jerusalem Post and
The International Jerusalem Post in Israel, as well as a portfolio
of new media investments and a variety of other assets.
HOLLYWOOD CASINO: Intends to File Prepack Chapter 11 in 4th Qtr.
----------------------------------------------------------------
Hollywood Casino Shreveport entered into an agreement with
Eldorado Resorts, LLC, providing for the acquisition of the
Company by Eldorado. The Agreement also contemplates a financial
restructuring of HCS that will significantly reduce outstanding
secured debt obligations and annual cash interest payments, while
rationalizing its capital structure.
Under the proposed restructuring, holders of the Company's
existing secured notes are to receive $140 million of new first
mortgage notes, $20 million of PIK Preferred Equity Securities, a
25% non-voting equity interest in the reorganized company, and
cash in an amount to be determined, in exchange for existing
secured notes in the principal face amount of $189 million plus
accrued interest.
The Company intends to effectuate the sale and related financial
restructuring transaction through a prepackaged Chapter 11
bankruptcy reorganization to be filed in the fourth quarter of
this year. The Agreement remains subject to final documentation,
subsequent noteholder solicitation and acceptance, filing with and
approval by the Bankruptcy Court of the Agreement, Louisiana
Gaming Control Board approval and certain other conditions.
The Company expects the sale and restructuring process to have
minimal impact on its day-to-day operations and that its
significant cash on hand will continue to be sufficient to timely
fulfill ordinary course obligations to employees, customers and
trade vendors in full as they come due, pending completion of the
transaction. The Agreement contemplates payment of such
obligations in the ordinary course both during and after the
restructuring process.
HCS previously reported that it has been in default of its
outstanding secured notes under the terms of its related note
indentures since March 2003. The Company entered into
negotiations with an ad hoc committee of noteholders regarding a
possible restructuring of its outstanding indebtedness. In
February 2004, HCS commenced a broad, competitive process to
explore proposals for the sale or merger of the Company in order
to reduce indebtedness, infuse new equity capital and maximize
value for creditors. The Agreement is the result of an exhaustive
process, conducted in collaboration with the Committee and
supported by both the Company and the Committee. Libra Securities
LLC acted as financial advisor to the Company in the sale process.
Eldorado Resorts, LLC, owns and operates the Eldorado Hotel &
Casino in Reno, Nevada, and is a joint venture partner with
Mandalay Resort Group in the Silver Legacy Resort Casino, also
located in Reno. The Eldorado Hotel & Casino, had net operating
revenues of $133,000,000 in 2003, has over 84,000 square feet of
gaming space, including over 1,800 slot machines and approximately
75 table games, 817 guest rooms, 12,000 square feet of convention
space and is renowned for its eight restaurants. The Silver
Legacy Resort Casino had 2003 net operating revenues of
$152,000,000. The Silver Legacy has over 87,000 square feet of
gaming space, including over 2,000 slot machines and 80 table
games, 1,170 guest rooms, 90,000 square feet of exhibit and
convention space, and operates six distinctive restaurants.
Hollywood Casino Shreveport is a riverboat casino/hotel complex
located on the Red River in Shreveport, Louisiana.
HOME CARE: Ordered to File Plan & Disclosure Statement by Nov. 16
-----------------------------------------------------------------
The Honorable Jack B. Schmetterer of the U.S. Bankruptcy Court for
the Northern District of Illinois, Eastern Division, directs Home
Care Home Health Agency, Inc., to file its Chapter 11
Reorganization Plan and Disclosure Statement by November 16, 2004.
Judge Schmetterer intends to hold a status conference to talk
about the Plan and Disclosure Statement on November 18, 2004.
Home Care Home Health Agency, Inc.-- http://www.homefirst.com/--
provides a full range of services in family health care in the
greater Chicago metropolitan area with five medical centers. The
Company filed for chapter 11 protection on July 14, 2004 (Bankr.
N.D. Ill. Case No. 04-26224). James A. Chatz, Ltd., Esq., at
Arnstein & Lehr represents the Debtor in its restructuring
efforts. When the Debtor filed for protection from its creditors,
it listed less than $50,000 in assets and more than $10 million in
estimated debts.
IGAMES ENTERTAINMENT: Sherb & Co. Raises Going Concern Doubt
------------------------------------------------------------
Sherb & Co., LLP, the independent auditors for IGames
Entertainment, Inc., note in its Audit Report dated June 23, 2004,
that IGames has an accumulated deficit of $10,224,394 as of March
31, 2004, net losses topping $6.6 million and negative cash flow
from operations in the year ended March 31, 2004. "This raises
substantial doubt about [IGames'] ability to continue as a going
concern," Sherb & Co. says.
Management has noted that the Company's available cash equivalent
balance at March 31, 2004 was approximately $232,000 and was
approximately $2,148,000 at May 31, 2004. From inception through
March 31, 2003, IGames raised an aggregate of approximately
$2,500,000 in capital through the sale of its equity securities.
In addition, the Company issued two 10% convertible promissory
notes in the aggregate principal amount of $250,000 to one
investor. In October 2002, this investor converted a $150,000
note into 300,000 shares of Company common stock, and from July
2003 through December 2003, IGames repaid an additional $81,500 of
this debt. The Company intends to repay the remaining principal
balance of this note of $18,500 in fiscal 2005.
A significant portion of the Company's existing indebtedness is
associated with its line of credit of $3,000,000 with Mercantile
Capital, L.P., which IGames uses to provide vault cash for its
operations. Vault cash is not working capital but rather the
money necessary to fund the float, or money in transit, that
exists when customers utilize the Company's services but the
Company has yet to be reimbursed from the Debit, Credit Card Cash
Advance, or ATM networks for executing the transactions. Although
these funds are generally reimbursed within 24-48 hours, due to
the magnitude of IGames' transaction volume, a significant amount
of cash is required to fund its operations. The Company's vault
cash loan accrues interest at the base commercial lending rate of
Wilmington Trust Company of Pennsylvania plus 10.75% per annum on
the outstanding principal balance, with a minimum rate of 15% per
annum, and has a maturity date of May 31, 2005. IGames' obligation
to repay this loan is secured by a first priority lien on all of
its assets.
IGames also has $6,000,000 of debt associated with its acquisition
of Available Money. $2,000,000 of this indebtedness is payable in
1,470,589 shares of its common stock or cash to the previous
shareholders of Available Money at IGames' discretion. The terms
of the Stock Purchase Agreement allow for certain purchase price
adjustments associated with this indebtedness that may lower the
actual amount the Company is required to pay. The actual amount
paid will not be determined until certain events outlined in the
Stock Purchase Agreement have materialized.
An additional $2,000,000 of this indebtedness is a loan provided
by Chex Services, Inc. IGames filed suit against Chex Services
regarding certain breaches to the term note evidencing IGames'
obligation to repay this loan and breaches to a Stock Purchase
Agreement entered into by the parties in November 2003. It is
IGames' position that the damages the Company suffered as a result
of the breaches by Chex Services, Inc., exceed the principal
amount of this loan. The Company will continue to record this note
as a liability until a judgment is rendered in the lawsuit.
The final $2,000,000 of this indebtedness is a bridge loan
provided by Mercantile Capital, L.P. This bridge loan accrues
interest at an annual rate of 17% and has a maturity date of May
1, 2005. The Company's obligation to repay this loan is secured by
a first priority lien on all of its assets. The Company intends
to refinance this obligation in fiscal 2005. It paid a facility
fee of $41,000 in connection with this loan.
Though management anticipates IGames' operating profits to be
sufficient to meet current obligations under its credit
facilities, if the Company becomes unable to satisfy these
obligations, then its business will be adversely affected as
Mercantile Capital will execute its lien and sell the Company's
assets to satisfy any amount of outstanding indebtedness under the
Company's line of credit loan or its term loan that it is unable
to repay.
IGames also has a substantial amount of accounts payable and
accrued expenses. To the extent that it is unable to satisfy
these obligations as they come due, the Company risks the loss of
services from its vendors and possible lawsuits seeking collection
of amounts due.
In addition, IGames has an existing obligation to redeem 37,500
shares of its common stock from an existing stockholder at an
aggregate price of $41,250. This obligation arose in connection
with the Company's purchase of certain gaming software products
for 75,000 shares of its common stock. In order to complete this
transaction under these terms, the Company's former management
granted this stockholder the option to have 37,500 shares of his
stock redeemed. This stockholder has elected to exercise this
redemption option.
IGames is actively seeking various sources of growth capital and
strategic partnerships that will assist it in achieving its
business objectives. The Company is also exploring various
potential financing options and other sources of working capital.
There is no assurance that it will succeed in finding additional
sources of capital on favorable terms or at all. To the extent
that it cannot find additional sources of capital, IGames may be
delayed in fully implementing its business plan.
IGames Entertainment Inc. is a single source provider of cash
access services to the gaming industry. The Company has combined
state-of-the-art technology with personalized customer services to
deliver the best in ATM, Credit Card Advance, POS Debit, Check
Cashing Services, CreditPlus outsourced marker services, and
merchant card processing. As the top suppliers to the gaming
industry have consolidated service offerings, IGames will meet the
growing trend towards single source providers of products and
services to casinos and other gaming facilities worldwide. This
trend supports its business plan to identify fragmented segments
of the market to capitalize on merger and acquisition targets of
synergistic companies that support its business model.
INTEGRATED PERFORMANCE: KBA Replaces Malone & Bailey as Auditors
----------------------------------------------------------------
Integrated Performance Systems, Inc., with the approval of its
Board of Directors, dismissed its principal independent accountant
and primary auditors, Malone & Bailey, PLLC, on June 18, 2004.
Although unrelated to the change in auditors, the former
accountant's report on the Company's financial statements for each
of the past two fiscal years contained an opinion questioning the
Company's ability to continue as a going concern.
On June 22, 2004, the Company engaged KBA Group LLP, as its
principal accountant to audit the Company's financial statements.
At May 31, 2004, Integrated Performance Systems' balance sheet
shows liabilities exceed assets by $2,871,826. IPS' management
says it "continues to look for ways to improve operational
performance and is actively seeking additional sources of
capital."
Integrated Performance Systems provides high quality electronic
components and state-of-the-art total solution electronics
manufacturing services to the high-speed wireless communications
industry, the digital electronics market, and the broadband
communications industry, with applications in commercial and
military markets. The Company's high quality components,
microwave interconnect solutions, antennas and sophisticated sub-
system assemblies are currently manufactured for an impressive
array of Fortune 500 companies and leading electronic
manufacturers worldwide. For more information visit
http://www.integratedperformancesystems.com/
JCBT INC: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------
Debtor: JCBT Inc.
aka Boice Jet
5885 Highway 62
Central Point, Oregon 97502
Bankruptcy Case No.: 04-66826
Type of Business: The Debtor specializes in designing inboard
jet boats. See http://www.boicejet.com/
Chapter 11 Petition Date: August 27, 2004
Court: District of Oregon (Eugene)
Judge: Frank R. Alley III
Debtor's Counsel: Tom Dzieman, Esq.
915 West 10th Street
Medford, OR 97501
Tel: 541-772-7457
Estimated Assets: $50,000 to $100,000
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Freedom Financial, Inc. Bank loan $1,200,000
221 West Tenth St. Value of Collateral:
Medford, OR 97501 $70,000
Unsecured: $1,130,000
IRS - Insolvency Group Bank loan $140,000
Carnal Trailers, Inc. $88,070
Mercury Marine $66,265
KEM Equipment Inc. $57,987
Ruben's Auto Body $53,160
SAIF Corporation $40,000
American Turbine $31,618
Frank Surma Products $30,386
Hamilton Jet Inc. $27,721
Integris Metal Bank loan $25,000
Wells Fargo Bank loan $40,000
Value of Collateral:
$15,000
Unsecured: $25,000
Marine Power Engines $23,678
US Distributing $22,352
Boiler Law Firm $20,390
Lawson Supply $13,943
Industrial Finishes Trade debt $13,000
Moss Adams $12,067
Colvin Oil Inc. Trade debt $11,695
Rex Pegg Fabrics $11,191
LOUDEYE CORP: Delayed Form 10-Q Filing Prompts Nasdaq Delisting
---------------------------------------------------------------
Loudeye Corp. (Nasdaq: LOUD; LOUDE), a worldwide leader in
business-to-business digital media solutions, previously disclosed
that it was unable to timely file its Quarterly Report on Form
10-Q for the period ended June 30, 2004 because it required
additional time to complete the purchase accounting for its
June 2004 acquisition of On Demand Distribution Limited in
accordance with SFAS No. 141. Loudeye expects to file the
Quarterly Report shortly.
Due to its delay in filing, on August 24, 2004, Loudeye received a
letter from the staff of The Nasdaq Stock Market, indicating that
Loudeye had failed to timely file its Quarterly Report on Form 10-
Q for the period ended June 30, 2004, as required by NASD
Marketplace Rule 4310(c)(14). The delisting notification is
standard procedure when a Nasdaq listed company fails to complete
a required filing in a timely manner. As a result of Loudeye's
filing delinquency, the fifth character "E" was appended to its
ticker symbol. Accordingly, Loudeye's ticker symbol was changed
from "LOUD" to "LOUDE" at the opening of business on
August 26, 2004. The Company expects its ticker symbol will
revert back to "LOUD" shortly after it files its Quarterly Report
on Form 10-Q and meets its requirements under Marketplace Rule
4310(c)(14).
To ensure it remains listed until it can file its Quarterly Report
and regain compliance with all applicable listing standards,
Loudeye took the additional step to file an appeal of the
delisting notification to the NASDAQ Listings Qualifications
Panel. The filing of this appeal will prevent the delisting of
Loudeye's securities until Loudeye regains compliance with all
applicable listing standards through the filing of its Quarterly
Report or, should that not occur, pending the Panel's decision.
As a result of Loudeye's expectation to file the Quarterly Report
shortly, Loudeye expects to become compliant with the applicable
Nasdaq listing requirements prior to the completion of the appeals
process.
About Loudeye Corp.
Loudeye is a worldwide leader in business-to-business digital
media solutions and the outsourcing provider of choice for
companies looking to maximize the return on their digital media
investment. Loudeye combines innovative products and services
with the world's largest music archive and the industry's leading
digital media infrastructure enabling partners to rapidly and cost
effectively launch complete, customized digital media stores and
services. For more information, visit http://www.loudeye.com/
* * *
In its Form 10-Q for the quarterly period ended March 31, 2004
filed with the Securities and Exchange Commission, Loudeye Corp.
reports:
"We may need to raise additional capital in the future, and if we
are unable to secure adequate funds on terms acceptable to us, we
may be unable to execute our business plan. If we raise
additional capital, current stockholders may experience
significant dilution.
"As of March 31, 2004, we had approximately $34.8 million in cash
and cash equivalents, marketable securities, and restricted
investments. In the first quarter of 2004, we completed a private
placement that resulted in net proceeds of $18.9 million. We
have, however, experienced net losses from operations and net
losses are expected to continue into future periods. If our
existing cash reserves prove insufficient to fund operating and
other expenses, we may find it necessary to secure additional
financing, sell assets or reduce expenditures further. In the
event additional financing is required, we may not be able to
obtain such financing on acceptable terms, or at all. If adequate
funds are not available or are not available on acceptable terms,
we may not be able to pursue our business objectives. This
inability could seriously harm our business, results of operations
and financial condition.
"If additional funds are raised through the issuance of equity or
convertible debt securities, the percentage ownership of our
current stockholders will be reduced and these securities may have
rights and preferences superior to those of our current
stockholders. If we raise capital through debt financing, we may
be forced to accept restrictions affecting our liquidity,
including restrictions on our ability to incur additional
indebtedness or pay dividends.
"We have never paid any dividends on our common stock and do not
plan to pay dividends on our common stock for the foreseeable
future. We currently intend to retain future earnings, if any, to
finance operations, capital expenditures and the expansion of our
business."
Arthur Andersen LLP audited Loudeye's financial statements for the
year ending Dec. 31, 2002, and expressed doubt about the company's
ability to continue as a going concern. Arthur Andersen's 2003
audit did not contain this statement.
LNR PROPERTY: S&P Places BB CounterParty Rating on CreditWatch
--------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on Miami
Beach, Florida-based LNR Property Corp, including LNR's 'BB' long-
term counterparty credit rating, on CreditWatch with developing
implications.
"The CreditWatch placement follows LNR's announcement that it has
agreed to be acquired by a newly formed company, majority owned by
affiliates of Cerberus Capital Management L.P. and its real estate
affiliate, Blackacre Institutional Capital Management LLC.," said
Standard & Poor's credit analyst Steven Picarillo.
Standard & Poor's will meet with LNR's management to discuss the
company's financial strategies, especially as they relate to
postacquisition capitalization and liquidity. Standard & Poor's
would also need to assess the financial condition and business
strategy of LNR's ultimate parent Cerberus, or in the absence of
such an assessment, evaluate any firewalls constructed to protect
the interests of debtholders of LNR. Based on conclusions from
these discussions, the ratings could be raised, affirmed, or
lowered.
"Standard & Poor's will update the CreditWatch action on an as-
needed basis," Mr. Picarillo said. "Resolution of the CreditWatch
action will follow the acquisition, which is expected to be
completed by the end of 2004 or early in 2005."
LNR, with $3.1 billion in assets, is a real estate investment,
finance, and management company. The company operates primarily
within real estate investment activities including acquiring,
developing, managing, and repositioning commercial and multifamily
residential properties; investing in unrated and noninvestment
grade-rated CMBS; and acquiring and managing portfolios of
mortgage loans.
LNR PROPERTY: Fitch's BB+ & BB- Debt Ratings on Watch Evolving
--------------------------------------------------------------
Fitch Ratings places LNR Property Corp.'s ratings on Rating Watch
Evolving following the company's announcement that it is being
acquired by Cerberus Capital Management L.P. The 'BB+' senior
unsecured debt and 'BB-' subordinated debt ratings were previously
on Rating Outlook Positive. Approximately $1.4 billion of
unsecured debt obligations are affected by Fitch's action. Rating
Watch Evolving indicates that a rating is could be raised, lowered
or maintained over a three-to-six month period following the
resolution of uncertain circumstances.
On Aug. 29, 2004, LNR announced that it was being acquired by
Cerberus Capital Management L.P. in a transaction valued at
$3.8 billion including debt and equity. All of LNR's outstanding
shares will be acquired by newly formed Cerberus subsidiary Riley
Property Holdings, LP. LNR is expected to continue operating
largely as an independent company and will retain its existing
executive management and associate level employees. Cerberus may
refinance certain components of LNR's existing indebtedness.
Subordinated debt holders have the right to require that LNR
repurchase their notes at 101% of the principal amount in the
event of a change of control.
On April 21, 2004, Fitch revised LNR's Rating Outlook to Positive
from Stable recognizing the company's improving funding diversity,
migration toward an unsecured funding strategy and longer term
capital base, and expertise as one of the nation's leading
commercial mortgage backed securities -- CMBS -- special servicing
franchises. Following the proposed transaction, Fitch expects
that LNR's real estate selection, repositioning and management
strengths will remain, and that Cerberus may help to provide a
more stable, longer term funding base. However, there is little
available information available to assess Cerberus' capacity to
provide a stable supply of long-term capital or the level of
dividends that Riley will pay to Cerberus.
The Rating Watch Evolving is driven by the significant degree of
uncertainty at the present time concerning the company's funding
and capitalization structure following the completion of the
transaction. Additional uncertainties remain relative to the
future direction of LNR's leverage level, asset growth rate, and
asset acquisition strategy, which Fitch believes are likely to
become more aggressive.
Based in Miami, FL, with roots dating to 1969, LNR underwrites,
purchases and manages real estate and real estate-driven
investments. LNR has one of the premier commercial mortgage-backed
securities special servicing franchises in the United States.
LNR PROPERTY: Moody's Reviewing Low-B Ratings & May Downgrade
-------------------------------------------------------------
Moody's Investors Service placed LNR Property Corporation's Ba3
senior subordinate ratings on review for possible downgrade
following the announcement by LNR of its agreement to be acquired
by Riley Property Holdings, an entity controlled by Cerberus
Capital Management L.P. and its real estate affiliate Blackacre
Institutional Capital Management. Cerberus will own 75% of the
newly formed Riley, with LNR's management and Stuart Miller (LNR's
Chairman) and his family purchasing the other 25%. Cerberus has
arranged debt financing to help fund this acquisition, which
should close in late 2004 or early 2005. Cerberus Capital
Management is a New York City-based global private investment
firm, which, together with its affiliates, manages in excess of
$14 billion of unlevered capital.
According to Moody's, the transaction is designed to provide LNR
with greater financial and operational flexibility. At the same
time, Moody's expects the transaction to be highly leveraged,
putting additional pressure on LNR's fixed charge coverage and
effective leverage. LNR's permanent capital structure is
uncertain at this time. On a positive note, LNR's management will
retain their roles, and Moody's expects this management team to
continue its successful track record.
During its review, Moody's will focus on potential shifts in LNR's
business strategy and governance, the exit strategy for Cerberus
and the related effects on LNR, and LNR's financing risk appetite,
including the use of secured debt and effective subordination.
These ratings were placed on review for possible downgrade:
LNR Property Corporation:
* Senior unsecured debt shelf at (P)Ba2;
* senior subordinated notes at Ba3;
* senior subordinated shelf at (P)Ba3; and
* preferred stock shelf at (P)B1.
LNR Property Corporation [NYSE: LNR] is a real estate investment
and management company headquartered in Miami Beach, Florida, USA,
with assets of $3.1 billion and equity of $1.1 billion at
May 31, 2004.
MILLENIUM ASSISTED: Brings-In GCP as Asset Disposition Agent
------------------------------------------------------------
Millenium Assisted Living Residence at Freehold, LLC, sought and
obtained approval from the U.S. Bankruptcy Court for the District
of New Jersey to retain General Capital Partners, LLC, as its
asset disposition agent.
The Debtor believes it is in its best interests that General
Capital be retained as its asset disposition agent due to the
Company's need for professional assistance to dispose its assets
on a going concern basis.
Managing Director J. Gregory Barrow says General Capital has the
capabilities to provide the services that the Debtor will require.
The Debtor is confident that no conflict exists between General
Capital and Millenium.
General Capital will:
a) inspect the Assets to determine their physical condition;
b) prepare a program which may include marketing the Assets
through newspapers, magazines, journals, letters, fliers,
signs, telephone solicitation, or such other methods as
General Capital may deem appropriate;
c) prepare advertising letters, fliers and similar sales
materials which would include information regarding the
Assets;
d) endeavor to locate parties who may have an interest in
acquiring or refinancing the Assets;
e) circulate materials to interested parties regarding the
Assets, after completing confidentiality documents with
those interested parties;
f) respond, provide information to, communicate and negotiate
with and obtain offers from interested parties and make
recommendations to Debtor as to whether or not a
particular offer should be accepted;
g) communicate regularly with Debtor in connection with the
status of General Capital's efforts with respect to the
disposition of the Assets. This shall include a weekly
written or electronic report to the Debtor;
h) recommend to Debtor the proper method of handling any
specific problems encountered with respect to the
marketing or disposition of the Assets; and
i) perform related services necessary to maximize the
proceeds to be realized for the Assets.
General Capital, based in Greenwood Village, Colorado, will be
paid a commission based on the Gross Proceeds realized from any
Transaction:
Gross Proceeds Percentage
-------------- ----------
first $2,000,000 6%
$2,000,001 to $4,000,000 5%
$4,000,001 to $6,000,000 4%
$6,000,001 to $8,000,000 3%
$8,000,001 to $10,000,000 2%
$10,000,001 1%
Headquartered in Freehold, New Jersey, Millenium Assisted Living
Residence at Freehold, LLC, filed for chapter 11 protection on
June 7, 2004 (Bankr. N.J. Case No. 04-29097). Larry Lesnik, Esq.,
and Sheryll S. Tahiri, Esq., at Ravin Greenberg PC, represent the
Debtor in its restructuring efforts. When the Company filed for
protection from its creditors, it estimated over $10 million in
debts and assets.
MIRANT AMERICAS: Committee Taps James Donnell as Energy Consultant
------------------------------------------------------------------
Judge Lynn of the U.S. Bankruptcy Court for the Northern District
of Texas authorizes the Official Committee of Unsecured Creditors
of Mirant Americas Generation, LLC, a Mirant Corporation debtor
affiliate, to retain James M. Donnell as energy industry
consultant effective June 1, 2004, through and including November
30, 2004. Subject to further Court order, Mr. Donnell will be
paid in an amount not more than $400,000, which will be further
limited to $100,000 per month for June and July 2004 and $50,000
per month for August, September, October and November 2004.
As reported in the Troubled Company Reporter on July 2, 2004, Mr.
Donnell will:
(a) provide the MAGi Committee with strategic advice and
information regarding the energy industry and in
particular, the assets and business of MAGi and its
subsidiaries, and the various alternatives available to
the MAGi Committee to maximize value for the benefit of
MAGi's creditors;
(b) review, analyze and advise on the operational, personnel,
regulatory, financial and other issues related to a sale
or other disposition of MAGi and its subsidiaries, and a
severance of their stock ownership and other relationships
with Mirant and its other subsidiaries;
(c) assist in the preparation of a business plan to sever
MAGi and its subsidiaries from ownership and other
relationships with Mirant and its other subsidiaries, and
for the operation of MAGi and its subsidiaries post-
emergence from Chapter 11;
(d) provide advice to the MAGi Committee on other strategic
alternatives relating to MAGi's business and assets;
(e) assist and advice the MAGi Committee on other matters as
it may request; and
(f) testify in Court on the MAGi Committee's behalf.
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. 42; Bankruptcy Creditors' Service, Inc., 215/945-7000)
NAPA VALLEY INC: Case Summary & 2 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Napa Valley, Inc.
317 2nd Street East
Sonoma, California 95476
Bankruptcy Case No.: 04-12057
Chapter 11 Petition Date: August 26, 2004
Court: Northern District of California (Santa Rosa)
Judge: Alan Jaroslovsky
Debtor's Counsel: Richard K. Bivin, Esq.
Law Office of Richard K. Bivin
116 Memory Lane
Campbell, CA 95008
Tel: 408-559-4043
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 2 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
CMR $2,000,000
c/o PLM
577 Salmar Ave.
Campbell, CA 95008
Cal Home Loans $950,000
1680 The Almeda
San Jose, CA 95126
NATIONAL CENTURY: PwC Asks Court to Quash August 2004 Subpoena
--------------------------------------------------------------
PricewaterhouseCoopers, LLP, was the predecessor auditor for
National Century Financial Enterprises, Inc., and has audited
NCFE's financial statements for the years ended 1995, 1996, 1997
and 1998. PwC's last audit opinion was dated August 10, 1999,
more than three years before the Petition Date. Hence, PwC
asserts that it is much removed from the events that precipitated
the Debtors' collapse.
Tiffany C. Miller, Esq., at Bailey Cavalieri, Esq., in Columbus,
Ohio, tells the U.S. Bankruptcy Court for the Southern District of
Ohio that despite the passage of time since PwC's audit engagement
ended, PwC has been a recurring target of the Debtors' efforts to
obtain discovery pursuant to Rule 2004 of the Federal Rules of
Bankruptcy Procedure. In response, PwC has produced to the
Debtors over 29,000 pages of documents consisting of all of PwC's
workpapers on the engagements it performed for NCFE. Ms. Miller
relates that the Debtors have impermissibly made these materials
available to civil plaintiffs who have already sued PwC and have
used the documents to their benefit in the Multidistrict
Litigation currently pending before Judge Graham.
The Debtors now seek to subject PwC to further Rule 2004
discovery, in the form of an oral examination of a PwC
representative pursuant to Rule 30(b)(6) of the Federal Rules of
Civil Procedure. The Debtors have designated 24 topics for an
examination of unlimited duration. The Court granted the Debtors'
third request for a Rule 2004 Exam on May 4, 2004. However, the
Debtors waited until August 2, 2004, to serve PwC with the
Subpoena.
Because the designated topics stemmed from the allegations
contained in the Noteholder complaints in the MDL Cases and a
deposition would therefore be duplicative of any discovery that
would proceed if any of the Noteholders' claims against PwC
survived the pending motion to dismiss, PwC proposed to the
Debtors a more efficient course of action.
PwC proposed adjournment of the deposition of a PwC representative
until a reasonable period of time after the resolution of PwC's
motion to dismiss, and, at that time, PwC's representative could
be deposed on any topics relevant to the Debtors as well as any
surviving claims on the Noteholders' behalf. To allay any
concerns by the Debtors about the expiration of statutes of
limitations governing claims against PwC, PwC proposed an
appropriate tolling agreement. The Debtors rejected PwC's
proposal in its entirety.
Accordingly, PwC asks the Court to quash the Debtors' Rule 2004
subpoena for the oral examination of a Civil Rule 30(b)(6)
corporate representative of PwC.
Ms. Miller asserts that PwC's request is warranted because:
A. The Debtors failed to explain the urgency of conducting
an examination at this time rather than coordinating the
examination with discovery in the MDL action after the
District Court has ruled on the pending motions to dismiss.
The Debtors have repeatedly represented to both the Bankruptcy
Court and the District Court that they must conduct Rule 2004
discovery now because of a supposedly looming November 2004
deadline for filing claims. However, the Debtors have
identified neither a single claim that would be barred in
November 2004, nor which statute of limitations they believe
will expire at that time.
B. The Subpoena improperly seeks discovery for the benefit of the
Noteholders in the pending civil litigation.
Gibbs & Bruns, LLP, who represent most of the Noteholders in
the MDL Cases also represent the Debtors. Notwithstanding
its agreement to abide by the provisions of an Agreed
Protective Order, the Debtors' counsel promptly turned over
the fruits of the first round of Rule 2004 discovery to the
advantage of their Noteholder clients. The Noteholders
submitted a proposed amended complaint that directly quoted
and referenced numerous non-public PwC documents that only
could have been obtained through PwC's Rule 2004 production.
In light of Gibbs & Bruns' misuse of PwC's first Rule 2004
document production, Ms. Miller points out that the law firm
will have no qualms about also making the oral examination of
PwC's representative available to the Noteholders, who are
currently subject to the discovery stay in the MDL.
C. The Debtors may not use Civil Rule 30(b)(6) to investigate
potential claims.
Bankruptcy Rule 2004 does not incorporate Civil Rule 30.
Thus, Ms. Miller asserts, the Debtors should not be authorized
to conduct Rule 30(b)(6) corporate designee examinations.
The rare cases that have permitted Rule 30(b)(6) depositions
ostensibly in the context of Rule 2004 have actually involved
contested matters or adversary proceedings. However, no
adversary proceeding or contested matter is pending between
the Debtors or the Litigation Trust and PwC. Thus, the
Debtors should not be permitted to reap the benefit of
Rule 30(b)(6) in the context of a Rule 2004 examination.
D. To permit the examination would give the Debtors and the
Noteholders an unfair litigation advantage.
Because Rule 2004 depositions may be taken without attendance
or questioning by other interested parties, the resulting
testimony would be no substitute for depositions or in-court
trial testimony in the MDL Cases. Parties cannot know how,
if, or by whom those depositions may be used in future
litigation or the MDL Cases.
Should the Court refuse to quash the Subpoena in its entirety,
PwC asks Judge Calhoun to limit the scope of the examination to
minimize the burden on PwC and to prevent the misuse of Rule
2004.
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. S.D. Ohio Case No. 02-65235). The healthcare finance
company prosecuted its Fourth Amended Plan of Liquidation to
confirmation on April 16, 2004. Paul E. Harner, Esq., at Jones Day
represents the Debtors in their restructuring efforts.
NEW CENTURY: Moody's Places Ba2 Rating on Class B-III Certificates
------------------------------------------------------------------
Moody's Investors Service assigned a rating of Aaa to the senior
certificates issued by New Century Home Equity Loan Trust 2004-A
and ratings of Baa3 and Ba2 to the mezzanine and subordinate
certificates, respectively, issued in the deal.
The securitization is backed by New Century originated adjustable-
rate (28%) and fixed-rate (72%) sub-prime mortgage loans. The
ratings for the senior certificates in this deal are based
primarily on a guaranty from Fannie Mae or a surety bond insurance
policy provided by Financial Guaranty Insurance Company. Fannie
Mae and Financial Guaranty Insurance Company receive some
protection from losses through a combination of subordination,
excess spread and overcollateralization. Based on these factors,
Moody's has concluded that the risk to Fannie Mae and Financial
Guaranty Insurance Company from guaranteeing or insuring the
certificates is in line with investment grade. The ratings for
the mezzanine and subordinate certificates in this deal are base
on the credit quality of the loans, the performance of past deals
by this issuer, and on the protection from subordination,
overcollateralization, and excess spread.
The loans backing this deal are of much better than average
quality relative to the industry's sub-prime mortgage pools as
well as relative to previous securitizations of New Century
collateral by this issuer. GMAC Mortgage Corporation and
Countrywide Home Loans Servicing LP will service the loans in this
transaction.
The complete rating actions are:
Issuer: New Century Home Equity Loan Trust 2004-A
Securities: Asset Backed Pass-Through Certificates,
Series 2004-A
* Class A-I-1, rated Aaa;
* Class A-I-2, rated Aaa;
* Class A-I-3, rated Aaa;
* Class A-I-4, rated Aaa;
* Class A-I-5, rated Aaa;
* Class A-I-6, rated Aaa;
* Class A-I-7, rated Aaa;
* Class A-I-8, rated Aaa;
* Class A-I-9, rated Aaa;
* Class M-I-1, rated Aaa;
* Class M-I-2, rated Baa3;
* Class B-I, rated Ba2;
* Class A-II-1, rated Aaa;
* Class A-II-2, rated Aaa
* Class A-II-3, rated Aaa;
* Class A-II-4, rated Aaa;
* Class A-II-5, rated Aaa;
* Class A-II-6, rated Aaa;
* Class A-II-7, rated Aaa;
* Class A-II-8, rated Aaa;
* Class A-II-9, rated Aaa;
* Class M-II, rated Baa3;
* Class B-II, rated Ba2;
* Class A-II-A, rated Aaa;
* Class A-III-B1, rated Aaa;
* Class A-III-B2, rated Aaa;
* Class M-III, rated Baa3;
* Class B-III, rated Ba2;
NVCN CORP.: Dismisses Silverman Olson as Independent Accountant
-------------------------------------------------------------
Effective on July 8, 2004, the independent accountant who was
previously engaged as the principal accountant to audit NVCN
Corporation's financial statements, Silverman, Olson, Thorvilson &
Kaufman, Ltd., was dismissed. The decision to dismiss this
accountant was approved by the Company's Board of Directors. This
accountant audited the Company's financial statements for the
fiscal years ended May 31, 2000 and 1999. This firm's report on
these financial statements was modified to express uncertainty
that the Company will continue as a going concern.
Effective on July 8, 2004, the firm of George Brenner, C.P.A., was
engaged to serve as the new principal accountant to audit NVCN's
financial statements. The decision to retain this accountant was
approved by NVCN's Board of Directors.
In a Form 8-K filed on August 28, 2003, the Company incorrectly
reported its name as "NVCN, Inc." The correct name of the company
is "NVCN Corporation". The Company was formerly known as Novacon
Corporation and was engaged in the manufacture and distribution of
the DIB Drug Infusion Balloon, a proprietary infusion pump
technology designed for applications in pain management. On
May 3, 2000, Novacon was notified the U.S. District Court, Central
District of California, granted I-Flow Corporation, through a
final default judgment, a permanent injunction restraining Novacon
from importing, manufacturing, and selling its DIB Drug Infusion
Balloon in the United States.
PARMALAT USA: GE Capital Okays Extension of Investigation Period
----------------------------------------------------------------
General Electric Capital Corporation agrees to indefinitely extend
the deadline of the Official Committee of Unsecured Creditors of
the chapter 11 cases of Parmalat USA Corporation debtors to
investigate claims, rights and causes of action against GE Capital
and its affiliates. GE Capital may, upon written notice, advise
the Committee of its decision to cause the expiration of the
Investigation Period. The Notice will be delivered via telecopier
and overnight mail, and will specifically state the date by which
the Investigation Period will expire. The expiration date will be
no less than seven days after the date of the Notice.
Judge Drain of the U.S. Bankruptcy Court for the Southern District
of New York approves the Stipulation.
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. 28; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
RCN CORP: Classification & Treatment of Claims Under Reorg. Plan
----------------------------------------------------------------
In accordance with Section 1122 of the Bankruptcy Code, the
Reorganization Plan classifies claims against and interests in
the Debtors under 10 classes.
Classes 1, 2, 4, 6 and 9 consist of sub-Classes for each Debtor:
Sub-Class Name of Debtor
--------- --------------
.01 RCN Corporation
.02 TEC Air, Inc.
.03 RLH Property Corporation
.04 RCN Finance, LLC
.05 Hot Spots Productions, Inc.
.06 RCN Telecom Services Of Virginia, Inc.
.07 RCN Entertainment, Inc.
.08 ON TV, Inc.
Class 1 sub-Classes consist of Other Priority Claims against each
Debtor. Class 2 sub-Classes consist of Bank Claims against each
Debtor except for RLH Property Corporation and RCN Finance, LLC.
Class 4 sub-Classes consist of Other Secured Claims against each
Debtor. Class 6 sub-Classes consist of General Unsecured Claims
against each Debtor except for RCN. Class 9 sub-Classes consist
of Subordinated Claims against each Debtor.
RCN Corp. Chairman and Chief Executive Officer David McCourt
relates that a Claim or Interest is placed in a particular Class:
-- only to the extent that the Claim or Interests falls within
the description of that Class and is classified in other
Classes to the extent that any portion of the Claim or
Interest falls within the description of the other Classes;
and
-- for the purpose of receiving distributions pursuant to the
Plan only to the extent that the Claim is an Allowed Claim
in that Class and the Claim has not been paid, released or
otherwise settled before the Effective Date.
Classes 1, 2, 4 and 6 are unimpaired. Holders of Classes 1, 2, 4
or 6 Claims are deemed to have accepted the Plan and are not
entitled to vote in respect of the Plan.
Class 3 Evergreen Claims, Class 5 RCN General Unsecured Claims
and Class 7 Preferred Interests are impaired and entitled to vote
on the Plan. Class 8 Equity Interests, Class 9 Subordinated
Interests and Class 10 Warrants Interests are impaired and will
not receive or retain any distribution or property under the
Plan. Accordingly, Holders of Class 8, 9 or 10 Interest are
presumed to have rejected the Plan and are not entitled to vote
in respect of the Plan.
Pursuant to Section 1123(a)(1), Administrative Claims and
Priority Tax Claims are not classified and are not entitled to
vote on the Plan.
Class Description Treatment Under the Plan
----- ------------ -----------------------
N/A Administrative Paid in full in Cash
N/A Priority Tax Holder will receive on account of
Claims the Allowed Claim:
-- Cash equal to the unpaid
portion of its Allowed Claim;
-- treatment in any other manner
that its Allowed Claim will not
be impaired, including payment
over a period of not more than
six years from the date of
assessment of any of the Allowed
Claim; or
-- other treatment to which the
Debtors and the Holder have
agreed upon in writing.
The Debtors reserve the right to pay
any Allowed Priority Tax Claim, or
any remaining balance of any Allowed
Priority Tax Claim, in full at any
time on or after the Distribution
Date without premium or penalty.
No Holder will be entitled to any
payments on account of any pre-
Effective Date interest accrued on,
or penalty arising after the
Petition Date with respect to or in
connection with the Allowed Claim.
1 Other Priority Holders will receive, Cash equal to
Tax Claims the unpaid portion of the Allowed
Other Priority Claim.
2 Bank Claims Paid in full in Cash
In respect of any letters of credit
issued and undrawn under the Bank
Credit Agreement, the Debtors will,
at the option of the Applicable
Debtor:
-- cash collateralize the letters of
credit in an amount equal to 105%
of the undrawn amount of any of
the letters of credit;
-- return any of the letters of
credit to the applicable fronting
bank undrawn and marked
"cancelled"; or
-- provide a "back-to-back" letter
of credit to the issuing bank in
a form and issued by an
institution reasonably
satisfactory to the issuing bank,
in an amount equal to 105% of the
then undrawn amount of the
letters of credit.
Est. Claim Amt: $432,500,000
The Bank Claims will be deemed
allowed in the aggregate
principal amount of $432,453,582,
plus interest at the non-default
rate and fees and expenses provided
for in the Bank Credit Agreement or
the Bankruptcy Court orders, to
the extent not paid before the
Effective Date.
3 Evergreen Claims Unless the Official Committee of
Unsecured Creditors and the Debtors
otherwise agree, the Evergreen Claim
will be reinstated, subject to the
modifications set forth in the New
Evergreen Credit Agreement.
Est. Claim Amt: $32,500,000
4 Other Secured At the option of the applicable
Claims Debtor, the Holder will be entitled
to these treatments:
Option A: Paid in full in Cash
Option B: Claim will be Reinstated.
The Debtors' failure to
object to any Other
Secured Claim that is
Reinstated will be without
prejudice to the
Reorganized Debtors' right
to contest or otherwise
defend against the Claim
in the appropriate forum
when and if the Claim is
sought to be enforced.
Option C: Claims will be satisfied
by the surrender to the
Holder of the Claim of the
collateral securing the
Claim.
Option D: Claims will be satisfied
in accordance with the
other terms and conditions
as may be agreed upon by
the applicable Debtor or
Reorganized Debtor and the
Holder of the Allowed
Claim.
The applicable Debtor will be deemed
to have elected Option B with
respect to all Allowed Other Secured
Claims, except those with respect to
which the applicable Debtor elects
another option in writing before the
Confirmation Hearing.
In respect of any issued and undrawn
letters of credit issued by JPMorgan
Chase Bank for the account of
certain of the Debtors, which
letters of credit are cash
collateralized pursuant to the Cash
Collateral Agreement dated as of
June 20, 2002, made by RFM 2, LLC,
in favor of JPMorgan Chase Bank --
Bilateral LCs -- on the Effective
Date, the Debtors will, at the
option of the applicable Debtor:
-- cash collateralize the Bilateral
LCs in an amount equal to 105% of
the undrawn amount of any of the
Bilateral LCs;
-- return any of the Bilateral LCs
to JPMorgan undrawn and marked
"cancelled;" or
-- provide a "back-to-back" letter
of credit to JPMorgan in a form
and issued by an institution
reasonably satisfactory to
JPMorgan, in an amount equal to
105% of the then undrawn amount
of the Bilateral LCs. Except
as otherwise provided, JPMorgan's
rights in respect of the
Bilateral LCs will continue in
full force and effect.
Est. Claim Amt: $16,124,647
5 RCN General Holder of Allowed Claim will get:
Unsecured Claim
-- its Pro Rata share of 100% of the
shares of New Common Stock,
subject to dilution by
exercise of the Management
Incentive Options and the New
Warrants; or
-- at the Holder's election, Cash
equal to 25% of the Allowed
Claim. If the aggregate amount
of Cash to be distributed to all
Electing Holders exceeds the
$12,500,000 Cash Component Cap,
then each Electing Holder will
receive its Pro Rata share of:
* the Cash Component Cap; and
* the New Common Stock calculated
by multiplying the Face Amount
of the Holder's Allowed Claim
by the percentage by which the
Capped Distribution Component
is less than what the Cash
Component would have been.
If Class 5 Holders vote to accept
the Plan, the Holders are deemed to
agree to a distribution of New
Warrants to the Holders of Class 7
Preferred Interests and Class 8
Equity Interests which, if
exercised, will be dilutive of their
distribution under the Plan.
For income tax purposes, all New
Common Stock and any Cash Component
or Capped Distribution Component
received by the Holders of Allowed
Senior Note Claims will, to the
extent permitted, be allocated:
-- First, in full satisfaction of
the outstanding principal amount
of the Senior Notes; and
-- Second, in satisfaction of any
accrued and unpaid interest.
Est. Claim Amt: $1,190,100,000
Est. Allowed Amt: $1,188,511,079
6 Subsidiary General Holder of an Allowed Claim:
Unsecured Claims
-- to the extent the Claim is due
and owing on the Effective Date,
will be paid in full in Cash on
the later of the Distribution
Date and the date the Claim
becomes an Allowed Claim, or will
otherwise be paid in accordance
with the terms of any agreement
between the Debtor and the
Holder;
-- to the extent the Claim is not
due and owing on the Effective
Date, will be paid in full in
Cash when and as the Claim
becomes due and owing in the
ordinary course of business; or
-- receive treatment that leaves
unaltered the legal, equitable,
and contractual rights to which
the Allowed Claim entitles the
Holder.
In the event the Allowed Claims in
the separate Class 6 sub-Classes
aggregate in excess of $500,000, the
Subsidiary Debtors reserve the right
to:
(a) withdraw or modify the Plan with
respect to one or more of the
Subsidiary Debtors; and
(b) impair treatment of the Class 6
Claims in any modified Plan.
Est. Claim Amt: $_____________
7 Preferred No distribution.
Interests
On Effective Date, all Preferred
Interests will be deemed cancelled
and extinguished.
If the Holders of the Class 5 RCN
General Unsecured Claims have voted
to accept the Plan, and the Holders
of the Class 7 Preferred Interests
have voted to accept the Plan, the
Holders of Class 7 Preferred
Interests will receive their Pro
Rata share of New Warrants for
Reorganized RCN common stock equal
to 1.75% of the New Common Stock.
8 Equity Interests No distribution.
On the Effective Date, all Common
Stock will be deemed cancelled and
extinguished.
If the Holders of Class 5 RCN
General Unsecured Claims vote to
accept the Plan, the Holders of
Class 8 Equity Interests will
receive their Pro Rata share of New
Warrants for Reorganized RCN common
stock equal to 0.25% of the New
Common Stock.
9 Subordinated No distribution.
Claims
On the Effective Date, all
Subordinated Claims will be
cancelled and extinguished.
The Debtors do not believe that
there are any Subordinated Claims
and, therefore, the Plan constitutes
an objection to any Subordinated
Claims which may be asserted.
10 Warrants Interests No distribution.
On the Effective Date, all Warrants
will be deemed cancelled and
extinguished.
Allowed Claims and Interests
The Debtors or Reorganized Debtors will only make distributions
to holders of Allowed Claims and Allowed Interests. A holder of
a Disputed Claim or Disputed Interest will only receive a
distribution, when and to the extent that its Disputed Claim or
Disputed Interest becomes an Allowed Claim or Allowed Interest.
Postpetition Interest
The amount of all Claims against the Debtors will be calculated
as of the Petition Date. Except for the Bank Claims, and as
otherwise explicitly provided for in a Bankruptcy Court order
including the final order authorizing the use of lenders' cash
collateral and granting adequate protection dated June 22, 2004,
no holder of a Claim will be entitled to or receive Postpetition
Interest.
Intercompany Claims
On the Effective Date, all claims between and among the Debtors
or between one or more Debtors and a non-Debtor affiliate will,
at the election of the applicable Debtor, be either:
* reinstated,
* released, waived and discharged; or
* contributed to the capital of the obligor corporation.
Alternative Treatment
Any holder of an Allowed Claim may receive, instead of the
distribution or treatment to which it is entitled, any other
distribution or treatment to which it and the Debtors may agree
to in writing.
Objections to Claims
As soon as practicable, but in no event later than the Claims
Objection Deadline, the Debtors or the Reorganized Debtors will
file objections to Claims with the Bankruptcy Court and serve the
objections on the holders of each of the Claims to which
objections are made. The Debtors and Reorganized Debtors will
not object to Claims specifically allowed pursuant to the Plan.
The Allowed Claims will not be subject to set-off, recoupment, or
any other defense or avoidance action.
Nothing will limit the right of the Reorganized Debtors to object
to Claims, if any, filed or amended after the Claims Objection
Deadline. The Debtors and the Reorganized Debtors will be
authorized to, and will resolve, all Disputed Claims by
withdrawing or settling the objections, or by litigating to
judgment in the Bankruptcy Court or at another court having
jurisdiction over the validity, nature or amount of the Claim.
Disputed Claims Reserve
The Disbursing Agent will withhold the Distribution Reserve from
the New Common Stock and the Cash Component to be distributed
under the Plan. The amount of New Common Stock and the Cash
Component withheld as part of the Distribution Reserve will be
equal to the amount the Reorganized Debtors reasonably determine
is necessary to satisfy the distributions required to be made, to
the holders of Claims in the Classes when the allowance or
disallowance of each Claim is ultimately determined.
The Disbursing Agent may request estimation for any Disputed
Claim that is contingent or unliquidated, but is not required to
do so. The Disbursing Agent will also place in the Distribution
Reserve any dividends, payments, or other distributions made on
account of, as well as any obligations arising from, the property
withheld in the Distribution Reserve at the time the
distributions are made or the obligations arise. Nothing in the
Plan will be deemed to entitle the holder of a Disputed Claim to
Postpetition Interest on the Claim.
Distributions After Allowance
Payments and distributions from the Distribution Reserve to the
holder of a Disputed Claim, to the extent that the Claim
ultimately becomes an Allowed Claim, will be made in accordance
with the provisions of the Plan that govern distributions to the
holders of the Claims. As soon as reasonably practicable after
the date that the order or judgment of the Bankruptcy Court, or
other applicable court of competent jurisdiction, allowing any
Disputed Claim becomes a Final Order, the Disbursing Agent will
provide to the holder of the Claim any New Common Stock or Cash
Component in the Distribution Reserve that would have been
distributed on the Distribution Date had the Allowed Claim been
allowed on the Distribution Date. After a Final Order has been
entered or other final resolution has been reached with respect
to each Disputed Claim, any remaining New Common Stock in the
Distribution Reserve will be distributed, pro rata, to the
holders of Allowed Class 5 Claims entitled to distributions under
the terms of the Plan and any remaining Cash Component will be
vested in the Reorganized RCN.
Headquartered in Princeton, New Jersey, RCN Corporation --
http://www.rcn.com/-- provides bundled Telecommunications
services. The Company, along with its affiliates, filed for
chapter 11 protection (Bankr. S.D.N.Y. Case No. 04-13638) on
May 27, 2004. Frederick D. Morris, Esq., and Jay M. Goffman,
Esq., at Skadden Arps Slate Meagher & Flom LLP, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $1,486,782,000 in
assets and $1,820,323,000 in liabilities. (RCN Corp. Bankruptcy
News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 215/945-
7000)
S S FUELING INC: Case Summary & 6 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: S S Fueling, Inc.
PO Box 3912
Port Arthur, Texas 77643-3912
Bankruptcy Case No.: 04-11192
Chapter 11 Petition Date: August 26, 2004
Court: Eastern District of Texas (Beaumont)
Judge: Chief Judge Bill Parker
Debtor's Counsel: Jason R. Searcy, Esq.
Jason R. Searcy, P.C.
PO Box 3929
Longview, Texas 75606
Tel: (903) 757-3399
Estimated Assets: $0 to $50,000
Estimated Debts: $1 Million to $10 Million
Debtor's 6 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Houston Marine Service, Inc. $110,318
United States Coast Guard $32,500
City of Port Arthur Water Utilities $2,689
Sierra Springs $753
Southwestern Bell $547
Entergy $534
SCHENECTADY N.Y.: Moody's Affirms Ba3 Rating with Negative Outlook
------------------------------------------------------------------
Moody's Investors Service confirmed the Ba3 rating on the City of
Schenectady, New York's General Obligation bonds and removed the
rating from watchlist for possible downgrade. The outlook is
negative affecting approximately $50 million of previously issued
parity debt.
Confirmation of the Ba3 rating reflects some improvement in
liquidity position driven primarily by receipt of one-time
revenues and deferment of a pension payment (per changed state
law) from December to February, which has eliminated projected
cash deficits through December despite previous issuance of a cash
flow note. The Ba3 rating continues to reflect the city's
deteriorated financial condition evidenced by accumulated deficits
across all major funds and a challenged tax base. The negative
outlook reflects reliance on one-time revenues which will further
challenge the city's ability to eliminate fund deficits and close
a 2005 operating deficit and expectations of future cash flow
constraints toward the end of 2004 and into 2005.
The city was placed on watchlist for possible downgrade in June of
this year due to critical cash flow constraints projected at that
time for August and again in December. The August constraint was
eliminated with advances in:
* state aid ($2 million),
* sales tax ($916,000),
* HAZMAT ($400,000), and
* county police payments ($125,000).
The next projected liquidity constraint will occur in December
when the city is expected to repay a $12 million note and reissue
another note. It is anticipated that the December 2004 note will
be a minimum of $8 million but may be higher contingent upon the
successful closing of a property tax lien sale for which the city
is projecting a one-time revenue of over $6 million.
Ongoing Cash Flow Concerns
Moody's believes that liquidity continues to be a significant
challenge for the city and therefore we have assigned a negative
outlook to the city's Ba3 rating. While the city has made some
short-term progress in addressing its cash flow requirements,
closing of an approved tax lien sale and issuance of the third
consecutive year of cash flow notes is critical to the city's cash
flow for December 2004. The city first issued cash flow notes
($14 million) in December 2002 to repay monies from the capital
projects fund used for operations. The intent had been to repay
the 2002 notes with $9.5 million from the 2003 levy and
$4.5 million from the collection of back taxes. The city was not
successful in the collection of back taxes in 2003 and the
increased levy was not used to repay the notes in full. As a
result, the city issued $12 million of the tax anticipation notes
in December of 2003 compared to an operating budget of
$52.8 million and the city now projects issuance of $8 million in
TANs in December 2004. However, the size of this proposed TAN
issuance is dependent on the city's successfully closing a tax
lien sale that has been authorized by the city council for an
amount up to $6.5 million. While the city was successful
negotiating the sale of $11 million in bond anticipation notes in
May, these notes were sold at a premium relative to prevailing
market rates; market access in December when the city plans to
roll its cash flow notes is not a certainty.
Overbudgeting of Revenues, Expense Overruns and
Continuing Losses in Parking Fund Weaken Financial Condition
Moody's believes that the city has suffered from a protracted
deterioration in its financial condition (accumulated General Fund
balance of negative $6.17 million as of December 31, 2002)
emanating from a severe (25%) contraction of its tax base between
1996 and 2001 and failure to adjust its budget accordingly.
Unrealistic budgets, lack of financial controls and, until earlier
this year when the city sold it, support of the deficit-ridden
parking garage resulted in mounting accumulated fund balances
expected to reach $6.7 million across all funds for fiscal 2003
(based on unaudited information).
Offsetting the size of the accumulated deficit, are significant
one-time revenues that the city projects it will receive in 2004
which could result in a $7 million surplus across all funds for
fiscal 2004 and potentially reduce the deficit across all funds to
$3 million. Factored into this surplus is a delay in the 2004
pension payment until February 2005 ($4.8 million), an additional
$1.4 million in annual state aid beginning in 2004, and the sale
of the city's parking garage for $1 million. Earlier in the year,
the city had projected a $3.5 million operating deficit for 2004
that would have led to a $10.2 million across all funds
accumulated deficit by the end of fiscal 2004, without additional
revenues or expenditure reductions.
Audited 2002 results reflect the third straight year of operating
losses ($4.1 million General Fund operating deficit in 2002 after
consideration of a $2.2 million equity transfer out of the General
Fund, up from negative $3.1 million in 2001 after consideration of
a $719,000 equity transfer out of the General Fund, and negative
$1 million in 2000 after consideration of $146,000 transfer out of
the General Fund to support other enterprises including, most
notably, the Parking Fund). Losses can be attributed to
unrealistic budgeting of revenues including higher estimates of
property tax collections than realized and overexpenditures
including, most notably overtime for public safety personnel and
payment of judgments and claims. Management anticipates that
audited 2003 results will be available in September and we will
review those statements upon receipt. Although management
projects some reduction in the 2003 deficit, historically,
projected city results have varied from actual results.
Moody's believes that the city will be challenged to restore
fiscal viability to its financial condition in 2005 unless the
city significantly increases revenues or decreases expenditures.
Major revenue sources for the city include:
* property taxes (32%),
* departmental income (25%),
* sales taxes (18.7%), and
* state aid (11%).
The city has shown a willingness to increase property taxes (25%
increase in 2003 and 7.8% increase in 2004) in the past. However,
the city has a narrow tax margin ($4.48 million as of 2004).
Therefore, without rapid tax base growth upon which the tax margin
is calculated, additional increases in this primary source of
revenues will be limited to another 15% to 20%, a heavy burden for
taxpayers with modest means. Departmental Income represents 25%
of the city's revenues. Rates for both the water and sewer funds
were increased by 5% in 2004 and may increase in the future which
could allow for some reduction in the deficits in these funds.
Additionally, the city is considering introduction of a waste
disposal fee beginning in fiscal 2005. The third largest revenue
(18.7%) for the city is sales tax for which a multi-year agreement
with Schenectady County (rated Aa2) guaranteeing $11 million of
sales taxes for the city expires on November 30, 2004. However,
the county is reportedly exploring a one-year extension of this
agreement.
On the expenditure side, in fiscal 2004, the city reduced slightly
its $55.9 million operating budget by about $145,000. The 2004
budget assumes salaries held flat for 50% of the city's employees
as six unions representing all employees except public safety
personnel have no contract for 2004. Other reductions have not
been significant and there were no large expenditure reductions
proposed by the city with the exception of the sale of the parking
garage to Metroplex Authority (sales tax bonds rated A2) which is
estimated to save the city approximately $800,000 per year.
Management reports that it has signed a memorandum of agreement
with the county pertaining to an intergovernmental agreement for
the consolidation of mechanics services, is expecting a reduction
in liability insurance premiums based on new proposals to be
solicited this week, and is studying potential expenditure
reductions related to health insurance.
Improvements to Tax Base Critical to Recovery
Moody's believes that the city's $1.4 billion tax base has
benefited from some redevelopment in the housing stock following
years of significant declines however the city's long-term fiscal
viability will likely need to include additional tax base
enhancement. The full value, which had declined almost 25% from
1996-2001, largely due to the closure of targeted General Electric
(rated Aaa) properties and a property revaluation, posted small
gains in 2002 and 2003 and then a relatively sizeable 6.6%
increase in 2004. Some of this increase can be attributed to
residential home improvements and private investment encouraged by
the county's economic development agency. This agency, Metroplex
(sales tax bonds rated A2) provides financial commitments to city
projects. Despite increases in the overall tax base, the city's
two largest taxpayers, General Electric and Niagara Mohawk Power
Corporation (rated Baa3, on watchlist for possible upgrade) have
significantly reduced their respective assessments shifting more
of the tax burden to residents with modest means (per capita
income equal to 73% of the state median and median family income
equal to 71% of the state median). Further exacerbating the tax
base issue is the fact that almost one-third of the development in
this city, located 5 miles from Albany (rated A3), is tax-exempt
and there are no "Payment in Lieu of Taxes" in place with any of
the tax-exempt properties which include county offices, two
colleges, a hospital, a rehabilitation center, a post office and
several churches.
Key Statistics:
2000 Population: 61,821 (-5.7% since 1990)
2004 Full Value: $1.4 billion
2004 Full Value per Capita: $23,146 (36% of New York State median)
2002 General Fund Operating
Deficit (before equity
transfer): $1.9 million
2002 General Fund Operating
Deficit (after equity
transfer): $4.1 million
Accumulated General Fund
Operating Deficit as of
December 31, 2002: $7.5 million
2002 Operating Deficit
(General, Water, Sewer,
Parking Funds): $1.9 million
Debt Burden: 7.5% of Full Value
Per Capita Income (1999): $17,076 (73% of New York State median,
down from 76.2% in 1989)
SECURITIZED ASSET: Fitch Places BB+ Rating on $4 Mil. Class B-4
---------------------------------------------------------------
Securitized Asset Backed Receivables LLC Trust's mortgage pass-
through certificates, series 2004-NC2, is rated by Fitch Ratings
as follows:
-- $326.5 million class A-1 and A-2 'AAA';
-- $25 million class M-1 'AA';
-- $19 million class M-2 'A';
-- $5.8 million class M-3 'A-';
-- $5.2 million class B-1 'BBB+';
-- $4 million class B-2 'BBB';
-- $3 million class B-3 'BBB-'; and
-- $4 million class B-4 'BB+'.
Credit enhancement for the 'AAA' privately offered class A-1 and
the offered class A-2 certificates reflects the 16.50%
subordination provided by classes M-1 through M-3, B-1 through
B-4, monthly excess interest and initial overcollateralization
-- OC -- of 2%.
Credit enhancement for the 'AA' class M-1 certificates reflects
the 10.25% subordination provided by class M-2, M-3, B-1, B-2,
B-3, B-4, monthly excess interest and initial OC.
Credit enhancement for the 'A' class M-2 certificates reflects the
5.50% subordination provided by class M-3, B-1, B-2, B-3, B-4,
monthly excess interest and initial OC.
Credit enhancement for the 'A-' class M-3 certificates reflects
the 4.05% subordination provided by class B-1, B-2, B-3, B-4,
monthly excess interest and initial OC.
Credit enhancement for the 'BBB+', privately offered class B-1
certificates reflects the 2.75% subordination provided by class
B-2, B-3, B-4, monthly excess interest and initial OC.
Credit enhancement for the 'BBB', privately offered class B-2
certificates reflects the 1.75% subordination provided by class
B-3, B-4, monthly excess interest and initial OC.
Credit enhancement for the 'BBB-', privately offered class B-3
certificates reflects the 1% subordination provided by class B-4,
monthly excess interest and initial OC.
Credit enhancement for the 'BB+', privately offered class B-4
certificates reflects the monthly excess interest and initial OC
of 2%.
In addition, the ratings reflect the integrity of the
transaction's legal structure, as well as the capabilities of
Litton Loan Servicing LP as servicer. Deutsche Bank National
Trust Company will act as trustee.
The mortgage pool consists of closed-end, first lien, adjustable-
rate subprime mortgage loans with interest-only terms of either
two, three or ten years. The aggregate principal balance as of
the cutoff date is $400,668,306. The weighted average loan rate
is approximately 6.086%. The weighted average remaining term to
maturity -- WAM -- is 352 months. The average cut-off date
principal balance of the mortgage loans is approximately $268,006.
The weighted average combined original loan-to-value ratio -- OLTV
-- is 82.07%. The properties are primarily located in:
* California (68.06%),
* Washington (3.66%), and
* Colorado (3.42%).
All of the mortgage loans were purchased by an affiliate of the
depositor from NC Capital Corporation, which in turn were acquired
from New Century Mortgage Corporation, a wholly owned subsidiary
of New Century Financial Corporation. New Century is a consumer
finance and mortgage banking company that originates, sells and
services first and second mortgage loans and other consumer loans.
New Century emphasizes the origination of mortgage loans that are
commonly referred to as non-conforming 'B&C' loans. New Century
commenced lending operations on Feb. 26, 1996.
SOLECTRON CORP: S&P Puts B+ Rating on $500 Million Credit Facility
------------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B+' bank loan
rating and its '2' recovery rating to Milpitas, California-based
Solectron Corp.'s $500 million senior secured revolving credit
facility due 2007.
"The bank loan rating--which is rated the same as the company's
corporate credit rating--and the company's recovery rating reflect
Standard & Poor's expectation for substantial recovery of
principal (80%-100%) by lenders in the event of a default or
bankruptcy," said Standard & Poor's credit analyst Emile Courtney.
At the same time, Standard & Poor's affirmed Solectron's corporate
credit and other ratings. The outlook is positive.
Solectron, the borrower, is a holding company for numerous
domestic and foreign subsidiaries. The facility is secured by a
perfected first-priority security interest in accounts receivable,
inventory, and equipment of Solectron and the company's U.S.
subsidiaries, as well as 100% of the capital stock of all domestic
material subsidiaries and 65% of the capital stock of first-tier
foreign material subsidiaries. The facility also is guaranteed by
all existing and future direct and indirect material domestic
subsidiaries of Solectron Corp. All guarantees are of payment,
and not collection, and enhance the security package by protecting
lenders against the structural subordination of the credit
facility to domestic subsidiaries' current and future obligations.
Standard & Poor's believes the collateral package includes liquid,
high-quality assets, such as accounts receivable and inventory.
However, the credit facility may not prevent the movement of
tangible assets from the collateral package. Standard & Poor's
expects the movement of manufacturing assets toward low-cost, non-
U.S. locations likely will be an ongoing feature in the contract
manufacturing industry. Given this expectation, as well as
Solectron's ongoing restructuring actions, some amount of U.S.-
based assets could move out of the collateral package over time.
Consequently, Standard & Poor's does not believe a discrete asset
valuation is the appropriate recovery analysis for this facility.
Lenders likely would affect recovery by reorganizing Solectron as
a going concern, because of the critical nature of the company's
manufacturing services for some of the world's largest electronics
original equipment manufacturers -- OEM. As a result, Standard &
Poor's used an enterprise valuation methodology to arrive at
expected recovery levels. Standard & Poor's enterprise valuation
assumes EBITDA profitability falls to Solectron's debt service
levels in a default or bankruptcy scenario, and that a distressed
multiple of five is appropriate. Standard & Poor's discounted
non-U.S. based EBITDA by 35%, consistent with the pledge of 65%
capital stock of foreign subsidiaries. Based on Standard & Poor's
enterprise value analysis, lenders likely will achieve substantial
(80%-100%) recovery of principle.
ST. LOUIS INDUSTRIAL: Moody's Cuts Rating on $98M Bonds to B3
-------------------------------------------------------------
Moody's downgraded to B3 from Ba3 the rating assigned to St. Louis
Industrial Development Authority's $98 million in senior lien
hotel revenue bonds. The bonds were issued in 2000 to finance a
portion of the costs of construction and renovation of the
headquarters hotels for the America's Center Convention Center in
downtown St. Louis. The 165-room Renaissance Suites opened for
business in April 2002, and the 918-room Renaissance Grand opened
for business in February 2003. The bonds are secured by a pledge
and assignment of net revenues, generated primarily from the
operation of the two hotels, a debt service reserve fund, standby
credit facilities, and a first lien mortgage on the project.
The rating change reflects the hotel's poor financial performance
since opening and the limited likelihood that the hotel will
generate revenues sufficient to cover operations and debt service
costs this year or next year, given the weak demand and an
anticipated slow return to historic occupancy and room rates in
downtown St. Louis. Continued poor performance is expected to
deplete remaining standby commitment balances by the end of 2004
to pay for operations. We expect the project will draw on the
senior lien debt service reserve to fund portions of principal and
interest due in December 2004 and June 2005. Despite the
anticipated depletion of reserves, the B3 rating is supported by
our expectation that equity-holder Kimberly-Clark Corporation
(senior unsecured debt rated Aa2), acting through its affiliate,
Housing Horizons, LLC, although not obligated, will continue to
subsidize operations as long as their benefits from the
substantial federal tax credits associated with the project
outweigh Kimberly-Clark Corporation's required financial
contribution to the hotel. Based on current projections, Moody's
expects these tax credits will remain significantly larger than
the required financial contribution in each of 2005 and 2006.
Project Expected to Rely on Reserves
to Fund Operating Losses and Debt Service
The project continues to rely on one-time resources to fund
operating deficits and pay debt service on the Series 2000A bonds.
The project tapped the standby funding agreement provided by
Housing Horizons, LLC to pay $1.5 million in operating losses in
2003, equal to roughly 5% of total operating and support costs, as
well as $1.4 million for debt service in 2003. Through June 2004,
the project used an additional $5.6 million of the standby
commitment for debt service and operating expenses, as well as a
$173,288 on the Marriott Guarantee, for deposit to the debt
service fund for interest payments due on June 15, 2004 for the
AmerUS loan (Series B loan). The hotels are expected to fully
draw down the remaining Housing Horizons, LLC standby commitment
by the end of 2004. This amount is available for operating losses
and senior lien debt service. The $10 million Series B loan is
guaranteed by Marriott (senior unsecured debt rated Baa2).
Weak Operating Results, Despite Proactive Management
The hotels' operating performance remains poor, with occupancy and
average daily rates -- ADR -- significantly below breakeven and
projected levels. In 2003, occupancy and ADR equaled 48% and
$110, respectively, at the Renaissance Grand, and 53% and $107,
respectively, at the Renaissance Suites. The hotels' operator,
Marriott, expects modest gains in both occupancy and ADR for 2004.
Nonetheless, based on operating results through August 2004,
Marriott has forecasted a $2.3 million net operating loss for the
year, after payments in lieu of taxes owed to the city, but prior
to senior lien debt service. In the first half of 2004, the
Renaissance Grand recorded a low 52% occupancy rate and $113
average daily rate. Marriott continues to take proactive steps to
enhance revenues, through direct marketing and bookings through
its national sales team. The operator has also had success in
reducing operating costs while maintaining very high quality
service levels. These steps have contributed to more favorable
operating results in the second quarter. Nonetheless, the hotels
continue to suffer from weak demand for convention center space
and hotel rooms.
Demand for hotels and meeting space has significantly weakened due
in part to a regional and national economic slowdown and
exacerbated by the terrorist attacks of September 11, 2001. These
trends have contributed to occupancy and room rates that remain
substantially lower than forecast, and we expect only modest
improvement over the next year.
Increasingly Competitive Group Meeting Market
The hotel has operated in an increasingly competitive business
environment since the 2000 financing, due in part to an increase
in supply of regional convention center space that has captured a
portion of the small- and medium-sized group market, resulting in
less favorable pricing advantage among the second-tier regional
and national convention centers for the large group segment of the
market.
The convention center has failed to attract the forecast volume of
group room nights. The St. Louis Convention and Visitors
Commission's aggressive forecast at bond financing anticipated the
convention center expansion and additional room supply provided by
these hotels would allow St. Louis to capture a larger share of
the large and medium-sized group meetings market. The St. Louis
Convention expected to generate 800,000 citywide group room nights
per year by 2004. Actual room nights dropped from a high of
500,000 in 2000 to 400,000 in 2003, and a revised forecast
anticipates 470,000 by 2007. The Renaissance hotels were
developed based on capturing a significant portion of the
projected increase in city-wide group room nights, and the St.
Louis Convention's failure to generate room nights has shifted a
significant booking role to Marriott's sales team.
Equity Holders have Strong Financial Incentives
to Support the Project in 2005 and 2006
Moody's notes that the weak operating and financial profile is
somewhat mitigated by factors such as strong financial incentive
of the hotel's owners, affiliates of Kimberly Clark and Historic
Restoration Inc. and the hotel operator, Marriott International
(rated Baa2) to support the project during the project's ramp-up
period. Kimberly-Clark Corporation (senior unsecured debt rated
Aa2), through its affiliate Housing Horizons, LLC, contributed $38
million in the form of cash equity ($22 million), a standby
funding commitment ($10 million), and a subordinate loan ($6
million). Further, Kimberly-Clark Corporation, through its
affiliate, claimed approximately $21 million of federal historic
tax credits, which were used to fund a portion of the project
equity. Portions of these tax credits would be subject to
recapture if the hotel owner fails to retain ownership in the
project over the next four years. Lastly, the hotel operator,
Marriott, has guaranteed payment of a $10 million AmerUS Life
Insurance Company loan, which is subordinate to the 2000A bonds.
Outlook
The outlook for the St. Louis convention center hotels is negative
based on our expectation of a slow return to historic occupancy
and room rate trends in the downtown St. Louis market, which will
likely require the hotel to rely on remaining reserve balances and
additional financial contributions from Kimberly-Clark to continue
operations in 2005 and 2006. Beyond that timeframe, unless the
local convention business improves significantly, we expect
continued credit deterioration absent third-party financial
support of the hotel.
STRUCTURED ADJUSTABLE: Fitch Rates Class B4 at BB & Class B5 at B
-----------------------------------------------------------------
Structured Adjustable Rate Mortgage Loan Trust's (SARM) pass-
through certificates, series 2004-13, are rated by Fitch Ratings
as follows:
-- $430,823,100 class A and R senior certificates 'AAA';
-- $8,712,000 class B1 'AA';
-- $6,649,000 class B2 'A' ;
-- $4,814,000 class B3 'BBB';
-- $2,751,000 privately offered class B4 'BB';
-- $1,375,000 privately offered class B5 'B'.
The 'AAA' rating on the senior certificates reflects the 6.05%
subordination provided by the:
* 1.90% class B-1,
* 1.45% class B-2,
* 1.05% class B-3,
* 0.60% privately offered class B-4,
* 0.30% privately offered class B-5, and
* 0.75% privately offered class B-6 certificates.
The ratings on the class B-1 to B-5 certificates are based on
their respective subordination.
Fitch believes the credit enhancement will be adequate to support
mortgagor defaults as well as bankruptcy, fraud and special hazard
losses in limited amounts. In addition, the ratings also reflect
the quality of the underlying mortgage collateral, strength of the
legal and financial structures and the master servicing
capabilities of Aurora Loan Services, Inc. (Aurora; rated 'RMS2+'
by Fitch).
As of the cut-off date (Aug. 1, 2004), the mortgage pool consists
of 1,402, adjustable-rate, conventional, fully amortizing
residential mortgage loans, substantially all of which have
original terms to stated maturity of 30 years. The mortgage loans
provide for an interest rate adjustment based on:
* the six-month LIBOR index,
* the one-month LIBOR index,
* the one-year CMT index, or
* the one-year LIBOR index.
Approximately 96.37% of the mortgage loans provide for interest-
only payments with an interest-only period for the first five to
ten years after origination. The mortgage pool has:
* an aggregate principal balance of approximately $458,566,934;
* a weighted average original loan-to-value ratio -- OLTV -- of
73.09% a weighted average coupon -- WAC -- of 4.00%;
* a weighted average remaining term -- WAM -- of 348 months and
an average balance of $327,081.
The mortgaged properties are primarily located in:
* California (33.15%),
* Georgia (14.58%),
* South Carolina (11.90%), and
* Florida (5.92%).
All other states represent less than 5% of the pool as of the cut-
off date. These entities will service the mortgage loans:
Entity Percentage
------ ----------
Aurora Loan Services, Inc. 47.13
Countrywide Home Loans Servicing, LP 17.89
Mortgage Network, Inc. 17.41
BancMortgage 14.11
(a division of National Bank of Commerce)
National City Mortgage Co. 2.88
Wells Fargo Bank, N.A. 0.38
Colonial Savings, F.A. 0.20
None of the mortgage loans are 'high cost' loans as defined under
any local, state or federal laws. For additional information on
Fitch's rating criteria regarding predatory lending legislation,
please see the press release issued May 1, 2003 entitled 'Fitch
Revises Rating Criteria in Wake of Predatory Lending Legislation',
available on the Fitch Ratings web site at
http://www.fitchratings.com/
Structured Asset Securities Corporation, a special purpose
corporation, deposited the loans in the trust, which issued the
certificates. For federal income tax purposes, an election will
be made to treat the trust fund as one or more real estate
mortgage investment conduits. JPMorgan Chase Bank will act as
trustee.
TEMPUR PEDIC: Closes Amended & Restated Sr. Credit Facilities
-------------------------------------------------------------
Tempur-Pedic International Inc. (NYSE: TPX) has closed on an
amendment and restatement of its existing senior secured credit
facilities. The changes include a reduction in the interest rates
charged on outstanding borrowings as well as favorable changes to
the covenant structure included in the agreement.
"Our senior lending group, led by GE Commercial Finance, worked
with us to provide senior credit facilities that reflect the
strong growth in the sales and cash flows of the business along
with our significant reduction in leverage since we renegotiated
the facilities last August, and a covenant package that is more
consistent with our status as a growing, successful public
company," said Dale Williams, Chief Financial Officer.
Significant changes to the amended and restated agreement include:
-- a 75 basis point reduction in the interest rates applicable
to various components of the facilities;
-- a more flexible covenant package including the elimination
of the maximum capital expenditure covenant; and
-- the allowance of Industrial Revenue Bond financing for the
proposed Albuquerque, New Mexico plant.
The amended and restated agreement continues to provide for
revolving credit facilities in the committed amounts of $20
million in the United States and $15 million in Europe with an
additional $5 million working capital line in Europe, and term
loans in the aggregate amount of approximately $203 million
outstanding. The revolving credit facilities continue to mature in
2008 and the term loans continue to mature in 2008 and 2009.
The Company expects that the more favorable interest rate pricing
will initially result, based on the level of borrowings
outstanding at June 30, 2004, in a savings of approximately $1.6
million in interest expense on an annualized basis. These savings
will be partially offset by amortization of the related financing
costs of approximately $0.3 million per year.
Mr. Williams added, "This agreement illustrates a continued strong
commitment to the business from our lending group and we
appreciate the long term support we have received from GE
Commercial Finance. The terms of the agreement also allow the
company the flexibility to start construction of the Albuquerque
plant earlier than previously announced to meet the increasing
demand for our products."
Tempur-Pedic, through its primary subsidiary Tempur World,
manufactures and markets foam mattresses under Tempur-Pedic and
other brand names.
* * *
As reported in the Troubled Company Reporter on April 30, 2004,
Standard & Poor's Ratings Services raised its corporate credit
rating and bank loan rating on mattress manufacturer Tempur-Pedic
International Inc. and related entities to 'BB-' from 'B+'. At the
same time, the firm's subordinated debt rating was raised to 'B'.
The ratings were removed from CreditWatch, where they were placed
on Dec. 18, 2003.
The outlook is stable.
Total debt outstanding as of March 31, 2004, was $309.9 million.
"The upgrade reflects the company's recent $87.5 million IPO of
common stock and the application of the funds to debt reduction,
as well as operating performance that exceeded Standard & Poor's
expectations," said Standard & Poor's credit analyst Martin S.
Kounitz.
The ratings on Lexington, Kentucky-based Tempur-Pedic
International Inc. are based on its niche presence in the mattress
manufacturing industry, modest but growing market share through
its alternative technology to traditional innersprings, the stable
characteristics of the domestic mattress market, and the firm's
leveraged balance sheet.
THE INN AT ORCHARD: Case Summary & Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: The Inn at Orchard Park, Ltd.
1490 East Whitestone
Building 2, Suite 200
Cedar Park, Texas 78613
Bankruptcy Case No.: 04-43893
Type of Business: The Debtor owns and operates an assisted
living facility in Plano Texas.
Chapter 11 Petition Date: August 23, 2004
Court: Eastern District of Texas (Sherman)
Judge: Brenda T. Rhoades
Debtor's Counsel: Eric A. Liepins, Esq.
Law Offices of Eric A. Liepins, P.C.
12770 Coit Road, Suite 1100
Dallas, Texas 75251
Tel: (972) 991-5591
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Chase $109,845
Collin County Tax Assessor $62,113
US Foodservice $11,539
Mary Jackson $8,367
TXU Energy $5,970
Great Southwestern Fire & Safety $5,855
Mid Cities Landscape & Irrigation $5,835
Southern Sprinkler $5,830
Freeman, Shapard & Story $4,915
Direct Supply Healthcare $4,653
Ronald Richards $4,097
Jim Sercely $4,075
Betty Veale $3,968
Cardinal Health Medical Products $3,946
National Greenery, Inc. $3,507
Donald Hander $3,151
Marie Hendricks $3,090
Linda Portnoy $2,771
Margaret Hughes $2,747
Stephen Friedman $2,746
UNITED AIRLINES: Flight Attendants Call for New Management
----------------------------------------------------------
Committed to the success of United Airlines but frustrated with
United's executives, flight attendants expressed grave concern
over the continued reckless and incompetent strategies of United
Airlines senior management. Leaders of the Association of Flight
Attendants- CWA, AFL-CIO at United Airlines unanimously passed a
resolution of no confidence in the senior management of United
Airlines and vowed to take all necessary and appropriate legal
steps to seek the failed executives' replacement. The full
resolution follows.
"United Airlines senior management has attacked our wages,
benefits and work rules; they've attacked our retirees; and now
they've attacked our pensions. Yet, they have failed to
accomplish what employees have been working to achieve -- a
successful exit from bankruptcy," stated United Master Executive
Council President Greg Davidowitch. "Senior management has
squandered the extraordinary contributions of employees to the
financial and operational turnaround that should have returned
United Airlines to its former position as one of the world's pre-
eminent airlines.
"We condemn United Airlines senior management for devising a
business plan which, in addition to termination of pension plans,
continues the failed strategy of seeking further concessions from
employees who have already sacrificed so much," Mr. Davidowitch
continued. "They need to attack the competition, not their own
employees. They need to attack industry-high non- labor costs,
not the people who make the airline run.
"This management has failed to recognize that a successful
reorganization is impossible without the support of flight
attendants and other workers. We have concluded that there is no
choice but to seek new leadership possessing the competence
necessary to prepare a workable and fair business plan for the
successful reorganization of our airline," Mr. Davidowitch
concluded.
"United management appears determined to run this proud airline
into the ground, taking its workers and customers along with it,"
added AFA International President Pat Friend. "The court must
recognize that the company's continued betrayal of its employees
is the single largest obstacle to its recovery and emergence from
Chapter 11."
"To say that airline workers have lost confidence in management is
an understatement," stated Morton Bahr, President of the
Communication Workers of America as he added 700,000 workers'
voices to the call for new United Airlines senior management.
"Instead of dealing with the company's problems, management
continues to assault worker wages, healthcare and pensions. If
United Airlines senior management is allowed to further dismantle
its employees' professions, the destruction of worker jobs will
spread like a cancer that American taxpayers will not be able to
cure."
More than 46,000 flight attendants, including the 21,000 flight
attendants at United, join together to form AFA, the world's
largest flight attendant union. AFA is part of the 700,000 member
strong Communications Workers of America, AFL-CIO. Visit us at
http://www.unitedafa.org.
Resolution of No Confidence in United Airlines Senior Management
WHEREAS, United Airlines Flight Attendants have demonstrated
commitment and continue to wholly focus our efforts on the success
of our airline; and,
WHEREAS, it has become all too apparent that the management at
United Airlines has failed to accomplish what we have been working
to achieve -- a successful exit from bankruptcy; and,
WHEREAS, United Airlines through gross mismanagement and total
disregard for the interests of employees has squandered over $2
billion in sacrifices Flight Attendants made for the future of our
airline and destroyed the good will and spirit of cooperation
between labor and management necessary to successfully navigate
bankruptcy; and,
WHEREAS, United Airlines senior management has failed, despite the
best efforts of thousands of employees, to return our airline to
its former status as one of the world's pre-eminent airlines; and,
WHEREAS, 97% of United Airlines Flight Attendants voting in a poll
conducted on the AFA United Master Executive Council website voted
that they have "no confidence" in senior management at United
Airlines.
THEREFORE BE IT RESOLVED, that the United Master Executive Council
of the Association of Flight Attendants-CWA, AFL-CIO:
Condemns United Airlines senior management for removing the
corporate officers who served as fiduciaries to the employees'
pension plans and replaced them, not with other executives, but
with the bankruptcy protected entity of United Airlines. This
action was a thinly veiled attempt to shield the corporate
officers from potential personal liability as revealed by the fact
that a week later, the Company announced it was going to stop
payments mandated by law into the pension plans; and,
Condemns United Airlines senior management for actions termed
"blatant" and a "hopeless conflict of interest" by the Department
of Labor, by exalting the interests of these individual executives
over the interests of the plan participants they had a duty to
protect; and,
Condemns United Airlines senior management, and current CEO Glenn
Tilton in particular, for increasing his salary by $130,000 per
year in May 2004 when, at the same time, management was seeking to
slash the medical benefits of retired United Airlines employees;
and,
Condemns United Airlines senior management for deciding not to
make pension payments due on July 15, 2004; and,
Condemns United Airlines senior management for entering into a
debtor-in- possession (DIP) Financing Agreement, initially
described as effectively prohibiting United Airlines from making
any pension contributions, contrary to its existing legal and
contractual obligations; and,
Condemns United Airlines senior management for devising a business
plan, without having first identified all non-labor cost savings
that could be realized, and instead assumed that all its pension
plans would be terminated; and,
Condemns United Airlines senior management for not seeking
financing based on a business plan that would have permitted the
pensions to continue; and,
Condemns United Airlines senior management for devising a business
plan, which in addition to termination of pension plans continues
the failed strategy of seeking further concessions from employees
who have already sacrificed so much; and,
Condemns United Airlines senior management for the gross
mismanagement, incompetence and dishonesty it has exhibited by
taking these and other actions and thereby undermining the
Company's attempts to successfully emerge from bankruptcy and
return to profitability; and,
Condemns United Airlines senior management for poisoning the work
environment and alienating the Flight Attendants by these and
other actions; and,
Condemns United Airlines senior management for squandering the
extraordinary contributions of employees to the financial and
operational turnaround that should have returned United Airlines
to it's former position as one of the world's pre-eminent
airlines; and,
BE IT FURTHER RESOLVED, that the above actions represent a
continuation of the pattern of dishonesty and incompetence
exhibited by United Airlines senior management in its dealings
with employees; and,
BE IT FURTHER RESOLVED, that based upon all of the above findings,
the United Master Executive Council declares that it has no
confidence in the senior management to effectively operate the
airline, to prepare a workable and fair business plan or to
successfully reorganize; and,
BE IT FINALLY RESOLVED, that this Union shall take all necessary
and appropriate legal steps to seek the replacement of senior
management of United Airlines.
Unanimously Adopted.
Headquartered in Chicago, Illinois, UAL Corporation --
http://www.united.com/-- through United Air Lines, Inc., is the
holding company for United Airlines -- the world's second largest
air carrier. The Company filed for chapter 11 protection on
December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M.
Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq.,
and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the
Debtors in their restructuring efforts. When the Debtors filed for
protection from their creditors, they listed $24,190,000,000 in
assets and $22,787,000,000 in debts.
UNITED RENTALS: SEC Inquiry Prompts S&P's BB Ratings
----------------------------------------------------
Standard & Poor's Ratings Services placed its 'BB' corporate
credit rating and its other ratings on United Rentals (North
America), Inc., on CreditWatch with negative implications. The
action followed the announcement by the company that it received
notice from the SEC of a non-public, fact-finding inquiry of the
company. Although no specific reason or scope has been cited for
the investigation, the notice was accompanied by a subpoena
requesting the production of documents relating to certain of the
company's accounting records.
"The lack of specific information reflected in the company's
announcement and the possibly broad parameters of the
investigation are a cause of concern," said Standard & Poor's
credit analyst John Sico. "We will review events as further
information becomes available and could lower the ratings if
events unfold that have a material effect on credit quality or are
detrimental to the company's liquidity."
Greenwich, Connecticut-based United Rentals offers a broad range
of construction and industrial equipment through a network of 730
locations in the U.S., Canada, and Mexico with sales of about $3
billion in 2003 and total debt outstanding of $3 billion.
VANGUARD HEALTH: Extends 9-3/4% Sr. Debt Offering to Sept. 22
-------------------------------------------------------------
Vanguard Health Systems, Inc., is extending the expiration date of
its cash tender offer for any and all of its $300 million
aggregate principal amount of 9-3/4% Senior Subordinated Notes due
2011 (CUSIP No. 922036AB4).
The tender offer has been extended to expire at 11:59 p.m., New
York City time, on September 22, 2004, unless further extended or
earlier terminated. The price determination date has been
extended to 2:00 p.m., New York City time, on September 9, 2004,
unless further extended. The consent date and the last day to
validly withdraw tendered Notes and to revoke consents, remains
unchanged and was 5:00 p.m., New York City time, on
August 9, 2004.
Holders who tender their Notes will receive accrued and unpaid
interest up to, but not including, the applicable payment date in
connection with the tender offer. The tender price for the Notes
will be payable to holders who validly tender and do not properly
withdraw their Notes on or prior to the tender expiration date.
As of 5:00 p.m., New York City time, on August 9, 2004, Vanguard
had received consents and tenders, not validly withdrawn, for
approximately $298,789,000 aggregate principal amount of the
Notes.
Any holders who tender their Notes after 5:00 p.m., New York City
time, August 9, 2004, and before the expiration date of the tender
offer, will receive the tender offer consideration but not the
consent payment.
Vanguard and J.P. Morgan Trust Company, National Association
(successor in interest to Bank One Trust Company, N.A.), the
trustee under the indenture pursuant to which the Notes were
issued, have executed a supplemental indenture to the Indenture in
connection with the proposed amendments to the Notes and the
Indenture, as provided in the Offer to Purchase. However, the
amendments will not become operative with respect to the Notes
until the Notes are accepted for purchase pursuant to the terms of
the tender offer.
The tender offer and consent solicitation are being made pursuant
to Vanguard's offer to purchase and consent solicitation statement
dated July 27, 2004, and related consent and letter of
transmittal, which more fully set forth the terms of the tender
offer and consent solicitation. Copies of these documents may be
obtained from Global Bondholder Services Corporation, the
information agent for the offer, at (866) 804-2200 (US toll free)
and (212) 430-3774 (collect).
The Company has engaged Citigroup Global Markets Inc. and Banc of
America Securities LLC to act as the dealer managers and
solicitation agents in connection with the tender offer and
consent solicitation. Questions regarding the offer may be
directed to Citigroup at (800) 558-3745 (US toll-free) and (212)
723-6106 (collect) or Banc of America at (888) 292-0070
(US toll-free) and (704) 388-4813 (collect).
About Vanguard Health Systems
Vanguard Health Systems, Inc. owns and operates 16 acute care
hospitals and complementary facilities and services in Chicago,
Illinois; Phoenix, Arizona; Orange County, California; and San
Antonio, Texas. The Company's strategy is to develop locally
branded, comprehensive healthcare delivery networks in urban
markets. Vanguard will pursue acquisitions where there are
opportunities to partner with leading delivery systems in new
urban markets. Upon acquiring a facility or network of facilities,
Vanguard implements strategic and operational improvement
initiatives, including expanding services, strengthening
relationships with physicians and managed care organizations,
recruiting new physicians and upgrading information systems and
other capital equipment. These strategies improve quality and
network coverage in a cost effective and accessible manner for the
communities we serve.
* * *
As reported in the Troubled Company Reporter on August 13, 2004,
Standard & Poor's Ratings Services assigned its 'B' rating and its
recovery rating of '3' to the proposed $1.05 billion senior
secured bank credit facility of Vanguard Health Holding Co. II LLC
and Vanguard Holding Co. II Inc. -- the co-borrowers. The
facility is due in 2011. Vanguard Holding Co. II Inc. is a newly
formed wholly owned subsidiary of Vanguard Health Holding Co. II
LLC. The latter, in turn, is a newly formed wholly owned
subsidiary of a new holding company that will be 100% owned by
Vanguard Health Systems Inc.
The new facility is rated the same as Vanguard Health Systems
Inc.'s corporate credit rating; this and the '3' recovery rating
mean that lenders are unlikely to realize full recovery of
principal in the event of a bankruptcy, though meaningful recovery
is likely (50%-80%).
At the same time, Standard & Poor's assigned its 'CCC+' rating to
$560 million in senior subordinated notes due 2014 that are
obligations of the same co-borrowers as the bank credit
facilities. A 'CCC+' rating has been assigned to $140 million in
senior discount notes due 2015, issued by Vanguard Health Holding
Co. I LLC and Vanguard Holding Co. I Inc. -- the co-borrowers.
Standard & Poor's also lowered its corporate credit rating on
hospital operator Vanguard Health Systems Inc. to 'B' from 'B+'
and removed it from CreditWatch where it was placed on July 26,
2004. The CreditWatch listing followed the announcement that The
Blackstone Group, a private equity firm, would acquire Vanguard
Health Systems in a transaction estimated to be about $1.75
billion. As of June 30, 2004, Vanguard's total debt outstanding
was $623 million. However, pro forma for the transaction, the debt
will increase to approximately $1.2 billion. The outlook is
stable.
Upon completion of the Blackstone buyout, the ratings on Vanguard
Health Systems' existing senior secured credit facility and
subordinated notes will be withdrawn.
"The downgrade reflects the significant increase in Vanguard's
debt leverage pro forma for the Blackstone transaction and
Standard & Poor's concern that the company's aggressive business
policies will prevent it from soon earning a return consistent
with a higher level of credit quality," said Standard & Poor's
credit analyst David Peknay.
VELOCITY CLO: S&P Assigns BB Ratings to $8 Million Class D Notes
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its preliminary
ratings to Velocity CLO Ltd./Velocity CLO Corp.'s $273 million
floating-rate notes.
The preliminary ratings are based on information as of
Aug. 30, 2004. Subsequent information may result in the
assignment of final ratings that differ from the preliminary
ratings.
The preliminary ratings reflect:
-- The expected commensurate level of credit support in the
form of subordination to be provided by the notes junior to
the respective classes and by the preferred shares and
overcollateralization;
-- The cash flow structure, which is subject to various
stresses requested by Standard & Poor's;
-- The experience of the collateral manager; and
-- The legal structure of the transaction, which includes the
bankruptcy remoteness of the issuer.
A copy of Standard & Poor's complete presale report for this
transaction can be found on RatingsDirect, Standard & Poor's Web-
based credit analysis system, at http://www.ratingsdirect.com/
The presale can also be found on the Standard & Poor's Web site at
http://www.standardandpoors.com/ Select Credit Ratings, and then
find the article under Presale Credit Reports.
Preliminary Ratings Assigned
Velocity CLO Ltd./Velocity CLO Corp.
Class Rating Amount (mil. $)
----- ------ ---------------
A AAA 229.0
B* A 22.0
C* BBB 14.0
D* BB 8.0
Preferred shares N.R. 27.0
* The class B, C, and D notes will be deferrable-interest
notes.
N.R. -- Not rated.
WATERMAN INDUSTRIES: Gets Fifth Approval to Use Cash Collateral
---------------------------------------------------------------
The Honorable W. Richard Lee of the U.S. Bankruptcy Court for the
Eastern District of California gave Waterman Industries, Inc., a
fifth extension to use Wells Fargo Bank's cash collateral.
The Debtor needs the cash collateral to pay their employees and
suppliers and for the continued operation of its businesses as
well as preserving the value of its assets. Watermark provides
the Court with a budget showing projected cash flow and collateral
roll forward through October 2, 2004 (in thousands of dollars):
Cash Flow Aug 7 Aug 14 Aug 21 Aug 28 Sept 4
--------- ----- ------ ------ ------ ------
Beginning
Cash Bal. $600 $395 $462 $498 $448
Ending
Cash Bal. $395 $462 $498 $448 $340
Collateral
Roll Forward
------------
Total Beg.
Receivables $4,800 $4,791 $4,802 $4,813 $4,910
Total End.
Receivables $4,791 $4,802 $4,813 $4,910 $4,986
Cash Flow Sept 11 Sept 18 Sept 25 Oct 2
--------- ------- ------- ------- -----
Beginning
Cash Bal. $340 $378 $325 $400
Ending
Cash Bal. $378 $326 $400 $300
Collateral
Roll Forward
------------
Total Beg.
Receivables $4,986 $5,015 $5,057 $5,110
Total End.
Receivables $6,015 $5,057 $5,110 $5,148
To provide adequate protection to the Lender, a replacement lien
of the same scope, validity, perfection, relative priority and
enforceability as the Lender's prepetition lien is granted.
This replacement lien is in addition to the Replacement Liens
previously granted on the first to fourth extension to use the
cash collateral.
In addition, the Debtor will make these adequate protection
payments to the Lender:
a) $37,000 on or before August 6, 2004;
b) $50,000 on or before August 27, 2004;
c) $50,000 on or before September 17, 2004; and
d) an amount equal to the difference between all cash which the
Debtor has on hand as of October 1, 2004 reduced by $300,000
on or before October 1, 2004.
The Debtors will prepare and deliver to Wells Fargo a proposed
budget for the sixth cash collateral period commencing on
October 2, 2004 to November 30, 2004.
Headquartered in Exeter, California, Waterman Industries
-- http://www.watermanusa.com/-- provides water and irrigation
control. The Company filed for chapter 11 protection on
February 10, 2004 (Bankr. E.D. Calif. Case No. 04-11065).
Riley C. Walter, Esq., at Walter Law Group, represents the Debtor
in its restructuring efforts. When the Debtor filed for
protection from its creditors, it listed more than $10 million in
estimated assets and debts.
WESTPOINT STEVENS: Seeks Court Nod to Assume IBM Computer Lease
---------------------------------------------------------------
In connection with their business operations, the Debtors
routinely lease computer equipment from various vendors to be used
at their manufacturing facilities and office locations. Prior to
the Petition Date, the Debtors were party to various financing
agreements with IBM Credit, LLC, formerly known as IBM Credit
Corporation, for the lease of multiple AS400 computers and
personal computers.
John J. Rapisardi, Esq., at Weil, Gotshal & Manges, LLP, in New
York, relates that many of the leases are scheduled to expire in
the near future. In contemplation of the expiration of these
leases, the Debtors conducted an extensive search of the
marketplace and entertained various bid packages from vendors in
an effort to identify appropriate replacements for the Equipment.
After an exhaustive search, the Debtors decided that the package
submitted by IBM constituted the best offer, both in terms of
quality and price, to allow the Debtors to continue leasing new
equipment.
In exchange for IBM's agreement to continue to extend credit to
the Debtors in connection with the lease of additional equipment
at highly competitive rates, the Debtors have agreed to assume one
of the leases for an AS400 computer. The monthly lease payment is
$15,565. The Lease is scheduled to expire on its own terms on
February 22, 2005.
By this motion, the Debtors seek the Court's authority to assume
Supplement No. D00049791 to Agreement No. 6540302 between the
Debtors and IBM, dated February 23, 2002.
In connection with outstanding prepetition amounts owing on
account of various leases with IBM, IBM filed a proof of claim in
the Debtors' Chapter 11 cases for $1,784,274. As a result of the
proposed lease assumption, the Debtors will cure the amounts owing
in connection with that specific lease -- $30,692. IBM's
prepetition unsecured claim will be reduced to $144,755.
Mr. Rapisardi notes that the IBM Proposal will provide the Debtors
with the best equipment at prices, which are lower than market.
The Debtors have successfully negotiated with IBM to limit the
assumption to a single Lease, and thereby have limited the
proposed cure amount to less than 2% of the outstanding
prepetition claim.
Mr. Rapisardi asserts that the savings to the Debtors pursuant to
the IBM Proposal far outweigh the relatively insignificant cure
payment that will result from the assumption of the Lease. In
addition, IBM has repeatedly conditioned any further extension of
credit on the Debtors' assumption of the Lease. In the event the
Debtors fail to assume the Lease, the Debtors will be forced to
either lease the equipment from other vendors at substantially
higher prices or purchase the Equipment on a cash basis, further
impacting the Debtors' cash management system.
Headquartered in West Point, Georgia, WestPoint Stevens, Inc., --
http://www.westpointstevens.com/-- is the #1 US maker of bed
linens and bath towels and also makes comforters, blankets,
pillows, table covers, and window trimmings. It makes the Martex,
Utica, Stevens, Lady Pepperell, Grand Patrician, and Vellux
brands, as well as the Martha Stewart bed and bath lines; other
licensed brands include Ralph Lauren, Disney, and Joe Boxer.
Department stores, mass retailers, and bed and bath stores are its
main customers. (Federated, J.C. Penney, Kmart, Sears, and Target
account for more than half of sales.) It also has nearly 60 outlet
stores. Chairman and CEO Holcombe Green controls 8% of WestPoint
Stevens. The Company filed for chapter 11 protection on June 1,
2003 (Bankr. S.D.N.Y. Case No. 03-13532). John J. Rapisardi, Esq.,
at Weil, Gotshal & Manges, LLP, represents the Debtors in their
restructuring efforts. (WestPoint Bankruptcy News, Issue No. 28;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
WORLD AM, INC.: L.L. Bradford Replaces Michael Johnson as Auditor
-----------------------------------------------------------------
Effective on July 2, 2004, the independent accountant who was
previously engaged as the principal accountant to audit World Am
Communication's financial statements, Michael Johnson & Co., LLC,
was dismissed. The decision to dismiss this accountant was
approved by the Company's Board of Directors. This accountant
audited World Am Communication's financial statements for the
fiscal years ended December 31, 2003 and 2002. This firm's report
on these financial statements was modified as to uncertainty that
the Company will continue as a going concern.
Effective on July 2, 2004, the firm of L.L. Bradford & Company,
LLC, was engaged to serve as the new principal accountant to audit
the Company's financial statements. The decision to retain this
accountant was approved by the Company's Board of Directors.
World Am, Inc. (fka World Am Communications) owns Isotec, Inc.,
which develops, manufacturers, and distributes automated passage
control and security devices used to monitor or control access,
egress or passage from one area to another (like airport security
portals, building entries and exits, gates for vehicles or
personnel, public building access points, laboratories, hospitals,
government buildings and any other building for which the owners
desire to control and track whoever is coming or going and detect
if something is coming or going that should not be).
WORLDCOM INC: Insists Covad's Cure Payment Only Amounts to $2.6M
----------------------------------------------------------------
Covad Communications Company is a party to an executory contract
under which it supplied communication services to Worldcom's
debtor-affiliate UUNET Technologies, Inc. Pursuant to WorldCom's
confirmed chapter 11 Plan, the Debtors assumed all leases and
executory contracts other than those enumerated on certain
schedules to the Plan. The Covad Contract was not included in the
Schedules. Therefore, the Covad Contract was deemed assumed
pursuant to the Plan.
Robert J. Dehney, Esq., at Morris, Nichols, Arsht, & Tunnell, in
Wilmington, Delaware, recounts that the Plan provides for the
Debtors to cure all undisputed defaults under assumed executor
contracts without delay. Hence, Mr. Dehney contends, the Debtors
need to pay $2,667,311 plus attorneys' fees to Covad to cure the
default under the Covad Contract.
Debtors Object
On July 27, 1999, Covad and UUNET Technologies, Inc., entered into
an "ISP Customer Agreement for TeleSpeedSM Services". The Debtors
subsequently became successors-in-interest to UUNET, when UUNET
assigned the Agreement on December 20, 2001.
Adam P. Strochak, Esq., at Weil, Gotshal & Manges, LLP, in New
York, informs the Court that the Agreement provided that UUNET
could, but was not under an obligation, to request from Covad
permanent virtual circuits for Digital Subscriber Line technology
and high-speed telecommunications data service. The language of
the Agreement itself makes clear that it is no more than an offer
by Covad to sell certain services and would become effective only
on the issuance of one or more specific requests for services by
MCI.
After succeeding UUNET, the Debtors issued various Access Service
Requests to order Covad's services under the terms specified in
the Agreement. The Agreement provided for an initial term of
three years, thereafter continuing according to its terms on a
month-to-month basis with either party authorized to terminate
within 30 days' notice. However, the Agreement obligated Covad to
continue to maintain any circuits ordered and provisioned under it
so long as the Debtors continue to pay for them past the
termination date of the Agreement.
On May 7, 2004, the Debtors executed a new agreement with Covad to
replace the original Agreement. The new agreement became
effective on June 1, 2004. By its terms, the Superceding
Agreement "is the complete understanding of the parties and
supersedes and cancels all previous written and oral agreements
and communications relating to any of [its] subject matter. . . ."
Mr. Strochak tells the Court that during the negotiations over the
Superceding Agreement, Covad never raised any contention that the
Debtors owed a cure payment under the original Agreement.
On May 4, 2004, Covad demanded for a cure payment through a letter
to the Debtors' counsel. Whether the date of the letter was
coincidental or intentional, Mr. Strochak notes, the demand letter
came two weeks after Covad executed the Superceding Agreement.
In mid-July 2004, Covad alleged that the Debtors assumed the
original Agreement because the Agreement was not listed on
Schedule 8.01(a) as a contract designated for rejection. Covad
asked the Court to compel payment of $2,667,311 for prepetition
services as a cure obligation, thus elevating the debt from a
Class 6 general unsecured claim, which would be entitled to
$0.1785 per dollar of allowed claim plus 7.14 shares of new common
stock per $1,000 of allowed claim, to one that is entitled under
the Plan to payment in full, in cash.
The Debtors dispute both Covad's characterization of its
prepetition, general unsecured claim as a cure obligation and the
claim amount asserted. Covad's demand for a cure payment is
inconsistent with the Plan treatment of telecommunications
services, like Covad's, purchased pursuant to Access Service
Requests that are on a month-to-month term. The Plan
characterizes these contracts as non-executory ones for which no
cure is required, and the Plan treatment is binding.
But even if the Plan treatment were not controlling, Covad's
assertion that MCI assumed the original Agreement and owes a cure
obligation is inconsistent with the policies behind Section 365 of
the Bankruptcy Code. There is no basis to give Covad a priority
over all other unsecured creditors. The ASRs are not executory
and require no cure under the Plan.
Even absent the Plan, Covad is not entitled to a cure payment,
Mr. Strochak says. The Agreement is akin to an option contract,
pursuant to which MCI had an opportunity, but no duty, to submit
ASRs for services. Option contracts are not executory.
Mr. Strochak notes that the amount asserted by Covad as the
prepetition default is incorrect. Covad is only entitled to a
prepetition damages claim for $2.36 million. The Debtors'
analysis of prepetition invoices and proof of payment demonstrate
that, prior to Petition Date, MCI in fact had paid $300,000 of the
prepetition amount claimed by Covad. Covad provided no basis for
the $300,000 discrepancy between the amounts alleged by it and the
amounts scheduled by MCI.
Accordingly, the correct claim amount is $2,356,738 and its proper
Plan treatment is Class 6 general unsecured claim.
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. The Bankruptcy Court confirmed WorldCom's Plan on October
31, 2003, and on April 20, 2004, the company formally emerged from
U.S. Chapter 11 protection as MCI, Inc. (Worldcom Bankruptcy News,
Issue No. 60; Bankruptcy Creditors' Service, Inc., 215/945-7000)
* Clear Thinking Group Completes Asset Acquisition from Parent Co.
------------------------------------------------------------------
Clear Thinking Group's management team has completed the
acquisition of the consulting firm's assets from parent company
Liquidation World (TSX: LQW). Concurrent with the transaction,
Clear Thinking Group became a limited liability corporation.
"We are pleased to have completed this transaction, which allows
us to focus on growing our consulting business and Liquidation
World, in turn, to concentrate on its core business," said Stuart
Kessler, CEO of Clear Thinking Group, LLC. "As an independent
entity, we are now free to pursue certain opportunities which may
have conflicted with the operations of our parent company, as well
as to develop additional service offerings."
Clear Thinking Group became a wholly owned subsidiary of
Liquidation World, Calgary, Alberta, in March 2002. "We are
grateful to the management of Liquidation World for their support
during our formative years and wish them well," Kessler commented.
"Moreover, we look forward to working with them on projects that
might require the talents and resources of both organizations."
Liquidation World's menu of services includes auctions, reverse
logistics, store closure sales management, and retail liquidations
of consumer merchandise through 100 outlets across North America.
The company opened its first retail outlet in 1986 and is now the
largest liquidator in Canada, with more than 1,600 employees in
outlets and offices across Canada and the United States.
Clear Thinking Group provides a wide range of corporate
turnaround, workout and strategic consulting services to retail
companies, consumer product manufacturers/distributors and
industrial companies. Through its Turnaround & Crisis Management,
Process & Productivity Improvement, and Creditor Rights practice
groups, the national advisory organization assists small- to-
multi-billion-dollar companies during times of strategic change,
opportunity, growth, acquisition, and crisis. For further
information, visit the firm's website at
http://www.clearthinkinggrp.com/
* Paul Hastings Strengthens Litigation Department with R.M. Martin
------------------------------------------------------------------
Paul, Hastings, Janofsky & Walker, a leading international law
firm, welcomed R. Matthew Martin, previously at Jones Day, in
firm's litigation department, resident in the Atlanta office.
"We are interested in dramatically expanding the litigation
practice throughout all of our offices in order to meet growing
client demand and market opportunities," said Jack Reding, Chair
of the Paul Hastings Litigation Department. "Matt Martin is a
highly regarded trial lawyer in the Atlanta legal community and
his broad trial experience litigating in state and federal courts
is one of his strengths. That experience and expertise in many
areas of commercial litigation will be a tremendous asset to the
Paul Hastings Litigation Department."
"Over the last few months we have added a number of attorneys to
the Atlanta office, the litigation department in particular," said
Philip Marzetti, Chair of the Paul Hastings Atlanta Office. "There
is a high level of demand for the type of litigation expertise
that Matt Martin brings to the table which is invaluable to
corporate boards and management not only in Atlanta, but across
the country."
Mr. Martin has focused his practice on the areas of general
commercial litigation, health care litigation, secured
transactions, creditors' rights bankruptcy and product liability.
Mr. Martin has been lead counsel in approximately forty jury
trials in state and federal courts throughout the United States.
About Paul Hastings
Paul, Hastings, Janofsky & Walker LLP, founded in 1951, is an
international law firm, representing Fortune 500 companies with
more than 950 attorneys located in 15 offices: Atlanta, Beijing,
Brussels, Hong Kong, London, Los Angeles, New York, Orange County,
Paris, San Diego, San Francisco, Shanghai, Stamford, Tokyo and
Washington, DC.
Paul Hastings maintains one of the broadest national litigation
platforms among U.S. based global law firms. With more than 340
attorneys and litigation assistants arrayed across the firm's
eight U.S. offices, the firm provides prompt, responsive, and
expert litigation representation from each office. In the past
year, Paul Hastings litigators have been lead counsel in cases
tried in forums on four continents. Paul Hastings firm-wide
expertise in national class action defense is second to none. The
firm's U.S., Asian, European and Latin American lawyers team to
provide seamless transnational litigation capabilities - in
international arbitrations, in support of U.S. litigation defense,
and in foreign court proceedings.
* 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;
or dhenderson@renaissanceamerican.com
December 2-4, 2004
AMERICAN BANKRUPTCY INSTITUTE
Winter Leadership Conference
Marriott's Camelback Inn, Scottsdale, Arizona
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
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania,
USA, and Beard Group, Inc., Frederick, Maryland USA. Yvonne L.
Metzler, 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.
This material is copyrighted and any commercial use, resale or
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re-mailing and photocopying) is strictly prohibited without prior
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herein is obtained from sources believed to be reliable, but is
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*** End of Transmission ***