/raid1/www/Hosts/bankrupt/TCR_Public/040902.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, September 2, 2004, Vol. 8, No. 187
Headlines
ACCLAIM ENTERTAINMENT: Files Chapter 7 Petition in E.D. New York
ACCLAIM ENTERTAINMENT: Voluntary Chapter 7 Case Summary
ANGIOLAZ INC: Case Summary & 2 Largest Unsecured Creditors
BALLY TOTAL FITNESS: Opens Tenth Fitness Center in China
BANC OF AMERICA: Fitch Assigns Low-B Ratings to Four Cert. Classes
BANC OF AMERICA: Fitch Puts Low-B Ratings on Two Cert. Classes
BP INT'L: FY 2004 Balance Sheet Upside Down by $1.4 Million
CLAREMONT PROJECT: Brings-In Albert Weiland as Counsel
COGNISTAR CORPORATION: Completes Financial Restructuring
CONSECO FINANCE: Moody's Junks 32 Cert. Classes & Rates 15 Low-B
CORAM HEALTHCARE: Parties Respond to FFF Enterprises Notice
COTT CORPORATION: S&P Affirms BB Credit & B+ Debt Ratings
COVANTA ENERGY: Judge Blackshear Allows Gregg's $29.2MM Claim
CRDENTIA CORP: Secures $10 Million Term Loan to Fund Acquisitions
DS WATERS: Possible Default Prompts Moody's to Cut Ratings to B1
DYNACQ HEALTHCARE: Late SEC Filings Triggers Bank Debt Default
ELDORADO RESORTS: S&P Affirms B+ Corporate Credit Rating
ENRON: Southern Union/GE Joint Venture Completes CrossCountry Sale
ENRON: Committee Wants Court Nod to Amend Houlihan Retention Terms
ENTERPRISE PRODS: New Distribution Rate Following Gulfterra Merger
ENVIRONMENTAL ELEMENTS: Receives Bank Waiver on Covenant Defaults
EZLINKS GOLF: List of 13 Largest Unsecured Creditors
FAIRFAX FIN'L: Fitch Puts Low-B & Junk Ratings on Negative Watch
FIRST HORIZON: Fitch Gives $757K Class B-4 & $504K Class B-5 Low-B
FLAGSHIP CLO: S&P Assigns BB Rating to $10.6 Class D Notes
FOSTER WHEELER: New Notes to Bear 10.390% Annual Interest Rate
FOUNDATION HOUSING: Likely Default Prompts Fitch's Junk Ratings
FOURTH AND WASHINGTON: U.S. Trustee Moves to Dismiss Bankruptcy
GADZOOKS INC: James Motley Resigns as Chief Financial Officer
GOLF TRUST: Completes $2.475 Million Wekiva Golf Club Asset Sale
GSI GROUP: Craig Sloan Retires as Chief Executive Officer
HERITAGE ORG: Files Chapter 11 Reorganization Plan in Texas
HERITAGE ORG: Court Appoints Dennis Faulkner as Chapter 11 Trustee
HERITAGE ORG: Turns to Tatum CFO for Financial Advice
HILLCREST DEV'T: Case Summary & 14 Largest Unsecured Creditors
HORIZON NATURAL: Court Confirms Chapter 11 Reorganization Plan
HUDSON'S BAY: Discloses $6.2 Million Net Loss for 2004 2nd Qtr.
INTERPUBLIC GROUP: Tony Wright Named Worldwide CEO & President
LOUISIANA-PACIFIC: Moody's May Upgrade Ba1 Ratings After Review
MASTR ALTERNATIVE: Fitch Puts BB Rating on $1.326MM Cert. Class
METALLURG HOLDINGS: Fails to Pay $7.7MM Semi-Annual Debt Interest
MIRANT: Kendall Permitted to Shut Down Part of Massachusetts Plant
MISSION HEALTH: Case Summary & 20 Largest Unsecured Creditors
MORTGAGE ASSET: Fitch Puts BB Rating on $656K Class Certificates
NATIONAL CENTURY: Court Okays Rule 2004 Exams of 24 More Parties
NATIONAL COAL: Issues $19 Million of New Convertible Securities
NATIONAL ENERGY: Parent Settles Tax Litigation for $350 Million
NAVISTAR INTERNATIONAL: Names Steven Covey SVP & General Counsel
PACIFIC COAST: Fitch Rates C Notes BB+ & Junks Preference Shares
PARMALAT USA: Has Until Sept 9 to File Plan & Disclosure Statement
PENTHOUSE INT'L: Completes Internet Billing Sale to Care Concepts
QUEBECOR INC: Workplace Violations Prompt Community Rally
RCN CORP: Secures $46 Million Exit Facility From Deutsche Bank
RIVERSIDE FOREST: Tolko Offers C$29 Per Share in Cash
RIVERSIDE FOREST: Tells Shareholders to Ignore Tolko's Hostile Bid
ROYAL OLYMPIC: Greek Court Extends Plan Filing to November 27
RURAL/METRO: Will Release 4th Quarter & Year-End Results Today
SEQUOIA MORTGAGE: Fitch Assigns Low-B Ratings on Classes B-4 & B-5
SOLUTIA: Wants Court Permission to Pay $5MM Settlement Installment
SPANISH BROADCASTING: Moody's Reviewing Single-B & Junk Ratings
SPEIZMAN INDUSTRIES: Creditors Must File Proofs of Claim by Oct. 4
SPEIZMAN INDUSTRIES: Brings-In BDO Seidman as Accountants
TECH DATA: Fitch Affirms BB+ Unsecured & BB Sub. Debt Ratings
TENET HEALTHCARE: Completes Doctors Hospital of Jefferson Sale
TENET: Inks Pact to Transfer 3 L.A. Hospitals to Centinela Freeman
THAXTON GROUP: Sells Tennessee & Kentucky Consumer Loan Business
UNIVERSAL ACCESS: Retains Buccino as Fin'l & Turnaround Advisors
U.S. CANADIAN: Management Completes Successful Ecuador Site Visit
UAL CORP: Wants Court OK to Restructure 5 Aircraft Financing Deals
US AIRWAYS: New World Mortgage Launches Program for Employees
VITAL BASICS: Appoints Akin Gump as Intellectual Property Counsel
WESTPOINT STEVENS: Judge Drain Extends KERP to June 30, 2005
WILDWOOD ROSE INC: Voluntary Chapter 11 Case Summary
WINSTAR COMMS: Trustee Wants Court Nod on HP & Fidelity Pacts
WOOD PRODUCTS: Appoints Frank Schultz V.P. Finance & Director
WORLDCOM INC: Court Won't Enforce Bank Claimants' Stipulation
Z-TEL TECH: Faces Possible Delisting from Nasdaq SmallCap Market
*********
ACCLAIM ENTERTAINMENT: Files Chapter 7 Petition in E.D. New York
----------------------------------------------------------------
Acclaim Entertainment, Inc., (Nasdaq: AKLM) a worldwide developer,
publisher and mass marketer of software for use with interactive
entertainment game consoles, filed for bankruptcy under chapter 7
of the United States Bankruptcy Code.
As reported in the Troubled Company Reporter on August 24, the
extension agreement with Acclaim Entertainment, Inc.'s primary
lender, GMAC Commercial Finance LLC, to extend GMAC CF's
previously announced termination of the Company's credit facility,
expired on August 20, 2004.
The Company was previously in negotiations with a new proposed
lender seeking to replace the GMAC CF credit facility.
In a Bloomberg News Report, Jeff Friedman, Acclaim's bankruptcy
lawyer said, "We couldn't get money to fund a Chapter 11
bankruptcy so we had to liquidate. The liquidation will begin very
shortly. There are a lot of titles that we have that will be more
valuable if we can sell them before the Christmas season."
The titles include new games "Juiced" and "Red Star," Mr. Friedman
said.
In addition, the Company had received notice from the Nasdaq Stock
Market that delisting proceedings had been initiated against the
Company due to the Company's inability to meet the minimum market
capitalization continued listing requirements of the Nasdaq Small
Cap Market, as set forth in Marketplace Rule 4310(c)(2)(B)(ii),
and the Company's failure to file its quarterly report on Form 10-
Q for the period ended June 27, 2004, as required by Marketplace
Rule 4310(c)(14). The Company intends to appeal Nasdaq's delisting
decision and expects to regain compliance as a timely filer once
it files its Form 10-Q with the Securities and Exchange
Commission, as soon as possible. During the appeal process with
Nasdaq, the Company's securities will continue to trade on the
Nasdaq Small-Cap Market pending a final determination.
In the event that the Company's securities are delisted from The
Nasdaq Stock Market, then the Company's securities will be
reported on the OTC Bulletin Board(R)(OTCBB) so long as two or
more broker/dealers make a market in the Company's securities and
the Company becomes current and continues to remain current with
its filings with the Securities and Exchange Commission.
At March 31, 2004, Acclaim Entertainment's balance sheet
reflects a $97,983,000 stockholders' deficit, compared to a
$55,088,000 deficit at March 31, 2003.
Headquartered in Glen Cove, New York, Acclaim Entertainment is a
worldwide developer, publisher and mass marketer of software for
use with interactive entertainment game consoles including those
manufactured by Nintendo, Sony Computer Entertainment and
Microsoft Corporation as well as personal computer hardware
systems. The Company filed for chapter 7 petition on September 1,
2004 (Bankr. E.D. N.Y Case No. 04-85595). Jeff Friedman at Katten
Muchin Zavis Rosenman represents the Debtor in its liquidation
efforts. When the Company filed for chapter 7, it listed
$47,338,000 in total assets and $145,321,000 in total debts.
ACCLAIM ENTERTAINMENT: Voluntary Chapter 7 Case Summary
-------------------------------------------------------
Debtor: Acclaim Entertainment, Inc.
One Acclaim Plaza
Glen Cove, New York 11542
Bankruptcy Case No.: 04-85595
Type of Business: The Debtor publishes, develops and markets
interactive entertainment software and comic
books. See http://www.acclaim.com/
Chapter 11 Petition Date: September 1, 2004
Court: Eastern District of New York (Central Islip)
Judge: Stan Bernstein
Debtor's Counsel: Jeff J. Friedman, Esq.
Katten Muchin Zavis Rosenman
575 Madison Avenue
New York, NY 10022-2585
Tel: 212-940-7035
Fax: 212-940-7109
Total Assets: $47,338,000
Total Debts: $145,321,000
ANGIOLAZ INC: Case Summary & 2 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: AngioLaz, Inc.
PO Box 535
Rockingham, Vermont 05101
Bankruptcy Case No.: 04-11198
Type of Business: The Debtor manufactures innovative products
for medical, industrial, quality control, and
safety & inspection markets.
See http://www.angiolaz.com/
Chapter 11 Petition Date: August 31, 2004
Court: District of Vermont (Rutland)
Judge: Colleen A. Brown
Debtor's Counsel: Rebecca A Rice, Esq.
Cohen & Rice
26 West Street, Suite 1
Rutland, Vermont 05701-3274
Tel: (802) 775-2352
Total Assets: $587,425
Total Debts: $1,609,967
Debtor's 2 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Vermont Medical, Inc. $1,159,967
PO Box 556
Bellows Falls, VT 05101
Melsur Corporation $250,000
PO Box 556
Bellow Falls, VT 05101
BALLY TOTAL FITNESS: Opens Tenth Fitness Center in China
--------------------------------------------------------
To meet the ever increasing health and fitness needs of the
Chinese market, Bally Total Fitness (NYSE: BFT) announced the
opening of the tenth Bally Total Fitness franchise in China
through a joint venture with China Sports Industry. Located in
Shijiazhuang city in Hebei province, the new location will make
Bally Total Fitness the largest chain of fitness centers in China.
Chinese dietary habits are quickly becoming very similar to those
in the West with obesity rates reflecting this trend. According to
leading health experts, an estimated 200 million Chinese will face
obesity challenges in just 10 years time.
"The newest Bally Total Fitness facility in the Hebei province
further reinforces the fact that fitness is quickly becoming part
of the modern Chinese lifestyle all across the country, not just
in the larger cities such as Beijing and Shanghai," said Paul
Toback, president and CEO, Bally Total Fitness. "With rising
obesity rates and an urgent need for an emphasis on health and
fitness, there is a tremendous market in China for fitness centers
such as Bally Total Fitness that offer state-of-the-art fitness
offerings and affordable pricing."
The new 45,000 square foot facility is the most advanced fitness
center in the region featuring state-of-the-art equipment and
facilities, innovative group exercise classes such as Kick-Boxing,
Yoga and Spinning and expert nutrition programming.
Ben Amante, vice president of Bally Total Fitness franchising,
added, "The strength of our franchising system is growing as we
continue to join forces with local entrepreneurs to help build our
global brand and meet the needs of the Chinese health conscious
consumer."
About Bally Total Fitness
Bally Total Fitness is the largest and only nationwide, commercial
operator of fitness centers, with approximately four million
members and over 420 facilities located in 29 states, Canada, Asia
and the Caribbean under the Bally Total Fitness(R), Crunch
Fitness(SM), Gorilla Sports(SM), Pinnacle Fitness(R), Bally Sports
Clubs(R) and Sports Clubs of Canada(R) brands. With more than 150
million annual visits to its clubs, Bally offers a unique platform
for distribution of a wide range of products and services targeted
to active, fitness-conscious adult consumers. For more
information, visit http://www.ballyfitness.com/
* * *
As reported in the Troubled Company Reporter on August 19, 2004,
Standard & Poor's Ratings Services lowered its ratings on Bally
Total Fitness Holding, Corp., including its corporate credit
rating to 'B' from 'B+', and placed them on CreditWatch with
negative implications based on increasing debt leverage and delays
in releasing of the second quarter financial results.
The Chicago, Illinois-based fitness club operator's total debt
outstanding at March 31, 2004, was $731.8 million.
"The rating action reflects Bally's rising debt leverage and the
expectation that the company is not likely to de-lever in the near
term," said Standard & Poor's credit analyst Andy Liu. Although
the company's new membership enrollment trend is encouraging, with
three consecutive quarters of year-over-year increases, these
higher enrollments have not yet translated into higher EBITDA.
"Over the medium term, Bally's debt leverage could gradually
decrease if the positive membership enrollment trend is sustained,
membership duration remains steady, and new members improve
earnings mix."
BANC OF AMERICA: Fitch Assigns Low-B Ratings to Four Cert. Classes
------------------------------------------------------------------
Banc of America Alternative Loan Trust (BoAALT) 2004-8 mortgage
pass-through certificates are rated by Fitch Ratings as follows:
Groups 1 and 2 certificates:
-- $210,601,000 classes 1-CB-1, 2-CB-1, CB-IO (consisting of
classes 1-IO and 2-IO components) 'AAA' (groups 1 and 2
senior certificates);
-- $100 class 1-CB-R 'AAA' (senior certificates);
-- $4,429,000 class 30-B-1 'AA';
-- $1,993,000 class 30-B-2 'A';
-- $1,108,000 class 30-B-3 'BBB';
-- $1,107,000 class 30-B-4 'BB';
-- $665,000 class 30-B-5 'B'.
Group 3 certificates:
-- $51,511,514 classes 3-A-1, 15-PO, and 15-IO 'AAA' (group
3 senior certificates);
-- $1,037,000 class 15-B-1 'AA';
-- $159,000 class 15-B-2 'A';
-- $160,000 class 15-B-3 'BBB';
-- $106,000 class 15-B-4 'BB';
-- $53,000 class 15-B-5 'B'.
Groups 1 through 3 certificates:
-- $585,353 class X-PO 'AAA'; (consisting of classes 1-X-PO,
2-X-PO, and 3-X-PO components).
The 'AAA' ratings on the groups 1 and 2 senior certificates
reflect the 4.65% subordination provided by:
* the 2.00% class 30-B-1,
* the 0.90% class 30-B-2,
* the 0.50% class 30-B-3,
* the 0.50% privately offered class 30-B-4,
* the 0.30% privately offered class 30-B-5, and
* the 0.45% privately offered class 30-B-6.
Classes 30-B-1, 30-B-2, 30-B-3, and the privately offered classes
30-B-4 and 30-B-5 are rated 'AA', 'A', 'BBB', 'BB', and 'B',
respectively, based on their respective subordination. The class
30-B-6 is not rated by Fitch.
The 'AAA' ratings on the group 3 senior certificates reflects the
3.05% subordination provided by:
* the 1.95% class 15-B-1,
* the 0.30% class 15-B-2,
* the 0.30% class 15-B-3,
* the 0.20% privately offered class 15-B-4,
* the 0.10% privately offered class 15-B-5, and
* the 0.20% privately offered class 15-B-6.
Classes 15-B-1, 15-B-2, 15-B-3, and the privately offered classes
15-B-4 and 15-B-5 are rated 'AA', 'A', 'BBB', 'BB', and 'B',
respectively, based on their respective subordination. The class
15-B-6 is not rated by Fitch.
The ratings also reflect the quality of the underlying collateral,
the primary servicing capabilities of Bank of America Mortgage,
Inc. (rated 'RPS1' by Fitch) and Fitch's confidence in the
integrity of the legal and financial structure of the transaction.
The transaction is secured by three pools of mortgage loans. Loan
groups 1 and 2, the 30-year crossed loan group, are cross-
collateralized and supported by the 30-B-1 through 30-B-6
subordinate certificates. Loan group 3 is not cross-
collateralized and is supported by the 15-B-1 through 15-B-6
subordinate certificates. The class X-PO certificates consist of
three nonseverable components relating to each loan group for
distribution purposes only. Additionally, the class 15-PO relates
to loan group 3 only.
Approximately 26.90% and 29.38% of the mortgage loans in the
30-year crossed group and group 3, respectively, were underwritten
using Bank of America's 'Alternative A' guidelines. These
guidelines are less stringent than Bank of America's general
underwriting guidelines and could include limited documentation or
higher maximum loan-to-value ratios. Mortgage loans underwritten
to 'Alternative A' guidelines could experience higher rates of
default and losses than loans underwritten using Bank of America's
general underwriting guidelines.
Loan groups 1 and 2 in the aggregate consist of 1,635 recently
originated, conventional, fixed-rate, fully amortizing, first
lien, one- to four-family residential mortgage loans with original
terms to stated maturity ranging from 240 to 360 months. The
aggregate outstanding balance of the pool as of Aug. 1, 2004 (the
cut-off date) is $221,465,088, with an average balance of $135,453
and a weighted average coupon of 6.581%. The weighted average
original loan-to-value ratio -- OLTV -- for the mortgage loans in
the pool is approximately 74.81%. The weighted average FICO
credit score is 735. Second homes and investor-occupied
properties comprise 2.10% and 49.81% of the loans in the group,
respectively. Rate/term and cash-out refinances account for 8.55%
and 22.65% of the loans in the group, respectively. The states
that represent the largest geographic concentration of mortgaged
properties are:
* California (24.43%),
* Florida (15.97%), and
* Texas (7.36%).
All other states comprise fewer than 5% of properties in loan
groups 1 and 2.
Loan group 3 consists of 472 recently originated, conventional,
fixed-rate, fully amortizing, first lien, one- to four-family
residential mortgage loans with original terms to stated maturity
ranging from 120 to 180 months. The aggregate outstanding balance
of the pool as of the cut-off date is $53,153,423, with an average
balance of $112,613 and a weighted average coupon of 5.930%. The
weighted average OLTV for the mortgage loans in the pool is
approximately 62.70%. The weighted average FICO credit score for
the group is 734. Second homes and investor-occupied properties
comprise 6.17% and 69.02% of the loans in the group, respectively.
Rate/term and cash-out refinances account for 30.28% and 36.83% of
the loans in the group, respectively. The states that represent
the largest geographic concentration of mortgaged properties are:
* California (30.87%),
* Florida (14.24%),
* Texas (7.75%),
* Virginia (6.49%), and
* North Carolina (5.28%).
All other states comprise fewer than 5% of properties in the
group.
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,
see the press release 'Fitch Revises Rating Criteria in Wake of
Predatory Lending Legislation,' dated May 1, 2003, available on
the Fitch Ratings web site at http://www.fitchratings.com/
Banc of America Mortgage Securities, Inc., deposited the loans in
the trust, which issued the certificates, representing undivided
beneficial ownership in the trust. For federal income tax
purposes, an election will be made to treat the trust as a
separate real estate mortgage investment conduit. Wells Fargo
Bank, National Association will act as trustee.
BANC OF AMERICA: Fitch Puts Low-B Ratings on Two Cert. Classes
--------------------------------------------------------------
Banc of America Mortgage Securities, Inc., (BoAMSI) series 2004-H,
mortgage pass-through certificates, are rated by Fitch Ratings as
follows:
-- $580,025,100 classes 1-A-1, 1-A-2, 1-A-R,1-A-LR, 2-A-1, and
2-A-2 (senior certificates) 'AAA';
-- $9,903,000 class B-1 'AA';
-- $3,901,000 class B-2 'A';
-- $2,100,000 class B-3 'BBB';
-- $1,501,000 class B-4 'BB'; and
-- $1,200,000 class B-5 'B'.
The 'AAA' rating on the senior certificates reflects the 3.35%
subordination provided by:
* the 1.65% class B-1,
* the 0.65% class B-2,
* the 0.35% class B-3,
* the 0.25% privately offered class B-4,
* the 0.20% privately offered class B-5, and
* the 0.25% privately offered class B-6.
The ratings on class B-1, B-2, B-3, B-4, and B-5 certificates
reflect each certificates' respective level of subordination.
The ratings also reflect the quality of the underlying mortgage
collateral, the primary servicing capabilities of Bank of America
Mortgage, Inc., (rated 'RPS1' by Fitch) and Fitch's confidence in
the integrity of the legal and financial structure of the
transaction.
The transaction consists of two groups of adjustable interest
rate, fully amortizing mortgage loans, secured by first liens on
one- to four-family properties, with a total of 1,151 loans and an
aggregate principal balance of $600,130,849 as of Aug. 1, 2004
(cut-off date). The two loan groups are cross-collateralized.
The group 1 collateral consists of 3/1 hybrid ARM mortgage loans.
After the initial fixed interest rate period of three years, the
interest rate will adjust annually based on the sum of one-year
LIBOR index and a gross margin specified in the applicable
mortgage note. As of the cut-off date, the group has an aggregate
principal balance of approximately $92,853,661 and an average
balance of $521,650. The weighted average original loan-to-value
ratio -- OLTV -- for the mortgage loans is approximately 73.40%.
The weighted average remaining term to maturity is 359 months, and
the weighted average FICO credit score for the group is 731.
Second homes and investor-occupied properties constitute 7.15% and
3.68%, respectively, of the loans in group 1. Rate/term and
cashout refinances account for 17.47% and 17.26%, respectively, of
the loans in group 1. The states that represent the largest
geographic concentration of mortgaged properties are:
* California (55.82%),
* Illinois (9.98%), and
* Florida (7.14%).
All other states represent less than 5% of the outstanding balance
of the group.
The group 2 collateral consists of 5/1 hybrid ARM mortgage loans.
After the initial fixed interest rate period of five years, the
interest rate will adjust annually based on the sum of one-year
LIBOR index and a gross margin specified in the applicable
mortgage note. Approximately 66.89% of group 2 loans are net 5
mortgage loans, which require interest-only payments until the
month following the first adjustment date. As of the cut-off date,
the group has an aggregate principal balance of approximately
$507,277,188 and an average balance of $521,354.
The weighted average OLTV for the mortgage loans is approximately
72.73%. The weighted average remaining term to maturity is 358
months and the weighted average FICO credit score for the group is
737. Second homes and investor-occupied properties constitute
10.34% and 1.44%, respectively, of the loans in group 2. Rate/term
and cashout refinances account for 13.83% and 13.08%,
respectively, of the loans in group 2. The states that represent
the largest geographic concentration of mortgaged properties are
California (58.51%), Florida (8.56%), and Virginia (5.66%). All
other states represent less than 5% of the outstanding balance of
the pool.
Approximately 66.06% and 54.10% of the groups 1 and 2 mortgage
loans, respectively, were originated under the Accelerated
Processing Programs. Loans in the Accelerated Processing Programs,
which may include the All-Ready Home and Rate Reduction Refinance
programs, are subject to less stringent documentation
requirements.
None of the mortgage loans are 'high cost' loans as defined under
any local, state, or federal laws. For additional information on
Fitch's rating criteria regarding predatory lending legislation,
see the press release 'Fitch Revises Rating Criteria in Wake of
Predatory Lending Legislation,' dated May 1, 2003, available on
the Fitch Ratings web site at 'www.fitchratings.com'.
Banc of America Mortgage Securities, Inc. deposited the loans in
the trust, which issued the certificates, representing undivided
beneficial ownership in the trust. For federal income tax
purposes, elections will be made to treat the trust as two
separate real estate mortgage investment conduits. Wells Fargo
Bank, National Association will act as trustee.
BP INT'L: FY 2004 Balance Sheet Upside Down by $1.4 Million
-----------------------------------------------------------
BP International, Inc., (OTC BB: BPIL), a rapidly growing
manufacturer of fabric architecture shade structures and tennis
and athletic field equipment, posted the company's first quarterly
operating profit since first quarter FYE 2003. The company
reported revenue for the fourth quarter, which ended May 31, 2004,
rose 53% to $1,626,552 compared with $1,061,750 a year ago.
Operating profits for the quarter were $45,883 compared with a net
operating loss of $(486,498) during the same period the previous
year.
"These numbers represent some pretty aggressive growth for our
last quarter, and that growth is represented by increases in every
one of our product divisions," said Larry Ball, BP International
CEO. "What's especially exciting to me, but not unexpected based
on our projections, is that our profound growth continues into the
first quarter of our new year, which we'll be reporting in a
separate release."
Comparing 2003 fourth quarter sales with 2004 fourth quarter
sales, increases in each division were as follows:
ShadeZone(TM) fabric architecture division: up 163.67%
Tennis Court Equipment division: up 59.2 %
Athletic Field Equipment division: up 20.45%
Fence division: up 17.09%
"The numbers reflect the primary source of our over all growth,"
Mr. Ball continued. "It's coming from the total offering of our
fabric shade products, which we sell first and foremost in our
ShadeZone(TM) division, and secondarily in the Tennis division.
Three years ago we introduced our fabric architecture product
line. As we investigated that market, we realized that we were
poised on the brink of an incredibly huge phenomenon: the need for
shade in all outdoor facilities, for reasons of health and for
comfort. We knew we had a product that could address that need in
a way that would be extremely attractive and competitive. At that
time, we began a severe reorganization within our company to gear
up for and prepare to address that need, with the unequivocal goal
of capturing a significant share of the newly emerging market.
Reorganization required significant capitol, and some lean months
for the company, but our long-term projections were right on
target.
"The primary growth factor in tennis is the response of tennis
court builders to the various shade products. Until recently,
shade was not a consideration at tennis facilities. Now, it's the
number one request from players and spectators, and clubs are
responding to the pressure. One of the major advantages we have
over any other shade product manufacturer is the vast network of
contractors, already our customers, all over the country. Tennis
division sales increases come primarily from those few contractors
who already see the advantage of representing our ShadeZone(TM)
products to their own customers. When, as a group, tennis court
builders recognize the incredible additional income opportunity
available to them through selling shade products, then we will
have, in effect, established distributors in all 50 states. Our
distributorship program is already being widely received by
playground reps and fence contractors, who are bringing us
significant business from their regions.
"What has happened is that BP International has turned the corner
-- all our preparation is finally beginning to be reflected in our
sales. The shade market is still in its infancy, but it's growing,
and we are right in there growing with it. Everyone wants shade.
We are building shade, and we are doing it right, and we are doing
it in a way that makes it cost effective for almost every market
where the demand exists.
"As far as the ShadeZone(TM) division, we are marketing our
product to several significant sectors: all playgrounds at
schools, day cares, parks; golf courses and driving ranges;
parking lots for multi-family dwellings, office and shopping
complexes, pay-for-parking; bleacher covers at parks, schools,
universities, and professional baseball and football facilities;
pavilions at parks, Amusement Parks, zoos; car washes, auto
dealerships, etc. The list is endless. The response is powerful.
The numbers tell the story."
About BP International, Inc.
BP International, Inc. (BPIL) is a leading manufacturer of tennis
court equipment, athletic field and gymnasium equipment, custom
netting, and outdoor fabrics for use in privacy and construction
fencing and fabric architecture shade structures and cabanas. The
company recently introduced ShadeZone(TM) shade structures, an
expanding line of standard and custom, permanent and portable,
fabric architecture to reduce heat and block UV rays on
playgrounds, golfing facilities, zoos, baseball and football
complexes, theme parks, parking lots, car dealerships, outdoor
concessions, pool sides, etc...For more information, please visit
our website at http://www.BPInternational.com/
* * *
In its Form 10-KSB for the fiscal year ended May 31, 2004, filed
with the Securities and Exchange Commission, BP International,
Inc. reports that it has a revolving credit line secured by
eligible receivables and eligible inventory. The company can
borrow up to 50% of eligible inventory and up to 80% of eligible
receivables. Currently, the company's borrowed the maximum
available under the credit line.
At May 31, 2004, BP International's balance sheet showed a
$1,497,638 stockholders' deficit, compared to a $79,153 in
positive equity at May 31, 2003.
CLAREMONT PROJECT: Brings-In Albert Weiland as Counsel
------------------------------------------------------
Claremont Project, LLC, sought and obtained permission from the
U.S. Bankruptcy Court for the Central District of California,
Santa Ana division, to employ Albert, Weiland & Golden, LLP as
bankruptcy counsel.
Prior to the Court's order, creditors Ronald Newburg, Richard S.
Held, Ann Hu, Al and Lil Lester, objected to the proposed
compensation. The Debtor paid Albert Weiland a $25,000
prepetition retainer and intended to pay an additional $25,000
postpetition retainer from the Lender's cash collateral.
The Debtor and the Lenders hammered-out a three-part solution to
the problem:
a) the Debtor shall be authorized to employ Albert Weiland
as counsel;
b) the Firm's modified fee application shall be limited to
the $25,000 prepetition retainer; and
c) the Firm shall accept no postpetition retainer without
Court approval.
Headquartered in Newport Beach, California, Claremont Project LLC
filed for chapter 11 protection (Bankr. C.D. Calif. Case No.
04-13016) on May 7, 2004. Michael J. Weiland, Esq., at Albert,
Weiland & Golden, represents the Company in its restructuring
efforts. When the Debtor filed for protection from its creditors,
it listed both estimated debts and assets of over $10 million.
COGNISTAR CORPORATION: Completes Financial Restructuring
--------------------------------------------------------
Cognistar(R), the premiere provider of continuing online legal and
professional education, has completed the sale of its assets in
its Chapter 11 case to Cognistar Holdings LLC. The new firm, which
will continue doing business as Cognistar, was created through the
purchase of assets of Cognistar Corporation by Karl Eller of
Phoenix, Arizona. Mr. Eller was an investor in and major lender to
the former Cognistar Corporation. Mr. Eller has tapped industry
veteran Urban Joseph Hecker to lead Cognistar as its new president
and CEO.
Mr. Hecker brings over 25 years experience in the legal and
publishing world. Prior to joining Cognistar, Mr. Hecker was
President and CEO of Pike & Fisher, Inc., a leader in providing
authoritative legal and business reference services, conferences
and seminars, software, newsletters, special reports and
directories to the legal, business and regulatory communities. Mr.
Hecker is a graduate of Washington University and the National Law
Center, George Washington University. He is admitted to practice
before all federal and local trial and appellate courts in the
District of Columbia.
Cognistar's new owner is no stranger to building value in
businesses. Mr. Eller's business career spans over four decades
during which he built and sold the Eller Media Company, which
included properties in outdoor advertising, radio, television, and
newspapers, and served as head of Circle K Corporation and
Columbia Pictures. He is currently a consultant to outdoor
advertising companies, and has investment interests in several
other companies. He has also been a long time supporter of his
alma mater, the University of Arizona, where he established and
funded The Karl Eller Center for the Study of the Free Enterprise
Economy, and where its business school now bears his name.
"I continue to believe in the future of online education, and am
pleased with the superior reputation that Cognistar has
established to date," states Mr. Eller. "Having now resolved the
debt and liability issues, the new enterprise can move forward to
build upon this solid foundation to create a premiere e- learning
company. Mr. Eller continued, "I am pleased that Joe Hecker has
joined us to bring seasoned business leadership to the new
Cognistar."
"With Karl Eller's continuing support, I am confident about the
future opportunities to strengthen Cognistar's industry-leading
position in providing online continuing legal education," stated
Mr. Hecker. "The content-rich CLE course catalog, promoted by the
marketing power and extensive sales organization of our new
strategic alliance partner, LexisNexis(R), continues to attract
attorneys from America's largest and most prestigious law firms
and corporate law departments."
Mr. Hecker continued, "I am especially excited about the prospects
for some of Cognistar's newer products; LawPartner, proprietary
training solutions for leading law firms, and customized e-
learning and compliance solutions for private clients." To
spearhead new initiatives beyond the legal market, Mr. Hecker has
retained Stephen Henn, Cognistar's founder and former president,
as Senior Vice President, Business Development. "Steve's in-depth
understanding of Cognistar's courseware capabilities and the power
of its learning management system make him a natural for this new
role."
Headquartered in Southborough, Massachusetts, Cognistar
Corporation -- http://www.cognistar.com/-- provides legal
education and training online for executives, lawyers, and
professionals. The Company filed for chapter 11 protection (Bankr.
D. Dela. Case No. 04-11718) on June 9, 2004. Adam G. Landis, Esq.,
and Kerri K Mumford, Esq., at Landis Rath & Cobb LLP, represent
the Company in its restructuring efforts. When the Debtor filed
for protection from its creditors, it listed over $100,000 in
estimated assets and over $1 Million in estimated liabilities.
CONSECO FINANCE: Moody's Junks 32 Cert. Classes & Rates 15 Low-B
----------------------------------------------------------------
Moody's Investors Service downgraded the ratings of 54 classes of
senior, mezzanine and subordinate certificates of Conseco Finance
Corporation manufactured housing securitizations. The rating
actions conclude Moody's review, which began on
August 27, 2004.
The rating actions are prompted by the continued performance
deterioration of Conseco Finance's pools, as reflected by the high
levels of cumulative repossessions and losses. Many pools have
experienced significant erosion of credit support as losses have
far exceeded the available amount of excess spread. As credit
enhancement eroded, subordinate classes experienced interest
shortfalls and were written down.
The transactions are currently being serviced by Green Tree
Investment Holdings II, LLC, which bought the manufactured housing
servicing platform of Conseco Finance in 2003. Green Tree is a
joint venture between Fortress Investment Group LLC and Cerberus
Capital Management.
The complete ratings actions are:
Issuer: Conseco Finance Securitization Corporation
Series 1999-6:
* 7.36% Class A-1 Certificates, downgraded from B2 to B3;
and
* 7.96% Class M-1 Certificates, downgraded from Caa1 to Ca.
Series 2000-1:
* 7.62% Class A-4 Certificates, downgraded from B2 to Caa1;
* 8.06% Class A-5 Certificates, downgraded from B2 to Caa1;
and
* 8.30% Class M-1 Certificates, downgraded from Caa2 to C.
Series 2000-2:
* 8.48% Class A-4 Certificates, downgraded from B2 to Caa1;
* 8.85% Class A-5 Certificates, downgraded from B2 to Caa1;
* 8.49% Class A-6 Certificates, downgraded from B2 to Caa1;
and
* 9.08% Class M-1 Certificates, downgraded from Caa2 to C.
Series 2000-3:
* 8.26% Class A-1 Certificates, downgraded from Ba2 to Caa1;
* 8.26% Class M-1 Certificates, downgraded from Caa1 to C;
Series 2000-4:
* 7.73% Class A-4 Certificates, downgraded from B1 to Caa1;
* 7.97% Class A-5 Certificates, downgraded from B1 to Caa1;
* 8.31% Class A-6 Certificates, downgraded from B1 to Caa1;
and
* 8.73% Class M-1 Certificates, downgraded from Caa2 to C.
Series 2000-5:
* 7.70% Class A-5 Certificates, downgraded from Ba2 to Caa1;
* 7.96% Class A-6 Certificates, downgraded from Ba2 to Caa1;
* 8.20% Class A-7 Certificates, downgraded from Ba2 to Caa1;
and
* 8.40% Class M-1 Certificates, downgraded from B3 to C.
Series 2000-6:
* 6.77% Class A-4 Certificates, downgraded from A3 to Ba1;
* 7.27% Class A-5 Certificates, downgraded from A3 to Ba1;
* 7.72% Class M-1 Certificates, downgraded from Ba3 to Caa2;
and
* 8.20% Class M-2 Certificates, downgraded from Caa2 to C.
Series 2001-1:
* 2.50% Class IO Certificates, downgraded from A3 to Baa3;
* 6.21% Class A-4 Certificates, downgraded from A3 to Ba1;
* 6.99% Class A-5 Certificates, downgraded from A3 to Ba1;
* 7.54% Class M-1 Certificates, downgraded from Ba2 to Caa2;
and
* 7.97% Class M-2 Certificates, downgraded from B3 to C.
Series 2001-2:
* 2.50% Class IO Certificates, downgraded from A2 to Baa3;
* 7.69% Class M-1 Certificates, downgraded from Ba1 to B2;
and
* 8.13% Class M-2 Certificates, downgraded from Ba3 to C.
Series 2001-3:
* 2.50% Class IO Certificates, downgraded from A3 to Baa3;
* 5.79% Class A-3 Certificates, downgraded from A3 to Ba1;
* 6.91% Class A-4 Certificates, downgraded from A3 to Ba1;
* 7.15% Class M-1 Certificates, downgraded from Ba1 to Caa2;
* 7.44% Class M-2 Certificates, downgraded from B3 to C; and
* 8.50% Class B-1 Certificates, downgraded from Ca to C.
Series 2001-4:
* 2.50% Class IO Certificates, downgraded from A2 to Baa3;
* 6.09% Class A-3 Certificates, downgraded from A2 to Ba1;
* 7.36% Class A-4 Certificates, downgraded from A2 to Ba1;
* LIBOR + 1.75% Class M-1 Certificates, downgraded from Baa2
to Caa2;
* 8.59% Class M-2 Certificates, downgraded from Ba1 to C;
and
* 9.40% Class B-1 Certificates, downgraded from B3 to C.
Series 2002-1:
* LIBOR + 2.05% Class M-1-A Certificates, downgraded from
Baa2 to Ba1;
* 7.95% Class M-1-F Certificates, downgraded from Baa2 to
Ba1;
* 9.55% Class M-2 Certificates, downgraded from Ba2 to Ba3;
* 10.00% Class B-1 Certificates, downgraded from B2 to Caa2;
and
* 9.86% Class B-2 Certificates, downgraded from Ca to C.
Series 2002-2:
* 8.50% Class IO Certificates, downgraded from A2 to A3;
* 6.03% Class A-2 Certificates, downgraded from A2 to A3;
* 7.42% Class M-1 Certificates, downgraded from to Baa3 to
Ba1;
* 9.16% Class M-2 Certificates, downgraded from Ba2 to B3;
* 9.25% Class B-1 Certificates, downgraded from B3 to Caa2;
and
* 9.25% Class B-2 Certificates, downgraded from Caa2 to Ca.
CORAM HEALTHCARE: Parties Respond to FFF Enterprises Notice
-----------------------------------------------------------
As previously reported by Coram Healthcare Corporation, two
competing proposed plans of reorganization have been filed in the
United States Bankruptcy Court for the District of Delaware in the
jointly administered bankruptcy cases of Coram Healthcare
Corporation and Coram, Inc.
The two competing plans of reorganization have been proposed by:
(i) Arlin M. Adams, the Chapter 11 Trustee for the Debtors'
estates, and
(ii) the Official Committee of Equity Security Holders of
Coram Healthcare Corporation.
The hearings to consider confirmation of the two competing
proposed plans of reorganization commenced on September 30, 2003.
The related briefing period concluded on June 14, 2004; however,
such proposed plans of reorganization remain subject to Bankruptcy
Court confirmation. No assurances can be given that either plan
will ultimately be confirmed by the Bankruptcy Court.
Pursuant to a request from legal counsel for FFF Enterprises,
Inc., the Chapter 11 Trustee's legal counsel disclosed at a recent
Bankruptcy Court hearing that FFF, a privately held company
incorporated under the laws of the State of California, forwarded
a non-binding letter of intent to the Chapter 11 Trustee wherein
an unsolicited offer to acquire substantially all of the assets of
the Debtors and their operating subsidiaries was proffered. FFF is
headquartered in Temecula, California and is one of the Company's
significant vendors. On June 30, 2004, FFF filed in the Bankruptcy
Court its Notice Of Submission Of FFF Enterprises, Inc.'s "Letter
of Intent" To Purchase Assets Of The Estate And Request For
Consideration Thereof.
Among other things, the FFF Notice:
(i) describes certain details of the unsolicited offer to
acquire substantially all of the Company's assets and
(ii) requested that the Bankruptcy Court consider the FFF Offer
at the Debtors' July 19, 2004 omnibus hearing.
On July 12, 2004, the Chapter 11 Trustee filed his Response Of
Chapter 11 Trustee To Notice Of Submission Of FFF Enterprises,
Inc.'s "Letter of Intent" To Purchase Assets Of The Estate And
Request For Consideration Thereof wherein, among other things, the
FFF Offer was rejected for the reasons set forth therein.
The Equity Committee, as well as Cerberus Partners, L.P., Goldman
Sachs Credit Partners L.P. and Wells Fargo Foothill, Inc. (the
Company's Noteholders), also filed responses to the FFF Notice in
the Bankruptcy Court on July 12, 2004. The responses of the Equity
Committee and the Company's Noteholders, both of which also reject
the FFF Offer and certain other relief requested in the FFF
Notice, can be found at docket numbers 3891 and 3883,
respectively, in the Debtors' jointly administered bankruptcy
proceedings.
Management can provide no assurances as to how or when the
Bankruptcy Court will rule on the FFF Notice, the Chapter 11
Trustee's Response or the other responses filed by interested
parties.
Coram Healthcare Corporation is a provider of infusion-therapy
services. The Company filed for chapter 11 protection on
August 8, 2000 (Bankr. D. Del. Case No. 00-03299). Christopher
James Lhuiler, Esq., at Pachulski Stang Ziehl Young & Jones PC
represent the Debtor. Kenneth E. Aaron, Esq., at Weir & Partners
LLP and Barry E. Bressler, Esq., at Schnader Harrison Segal &
Lewis LLP represent the Chapter 11 Trustee in these proceedings.
Richard Levy, Esq., at Jenner & Block, LLC, represents an Equity
Committee led by Sam Zell. Michael Cook, Esq., at Schulte, Roth &
Zabel, representing Cerberus, the target of RICO and other claims
asserted by the Equity Committee. Judge Walrath has twice denied
confirmation of a plan of reorganization for Coram finding that an
undisclosed relationship between Cerberus and Coram management,
brought to light by the Equity Committee, tainted the plan
process.
COTT CORPORATION: S&P Affirms BB Credit & B+ Debt Ratings
---------------------------------------------------------
Standard & Poor's Rating Services revised its outlook for Cott
Corp. to positive from stable. At the same time, Standard &
Poor's affirmed its 'BB' long-term corporate credit and 'B+'
subordinated debt ratings on Toronto, Ontario-based Cott Corp.
Total debt outstanding was about US$362 million at July 3, 2004.
"The outlook revision reflects the company's improving financial
profile," said Standard & Poor's credit analyst Lori Harris.
"Cott's operating performance and credit protection measures
strengthened for the 12 months ended July 3, 2004, despite a
challenging competitive environment," Ms. Harris added.
The ratings on Cott reflect its below-average business profile
stemming from:
* a narrow product portfolio,
* customer concentration,
* limited manufacturing capacity, and
* small size in a sector dominated by companies with
substantially greater financial resources.
These factors are partially offset by Cott's solid credit
protection measures and good market position as a private label
manufacturer and marketer of take-home carbonated soft drinks --
CSD. Cott competes in the mature and highly competitive soft
drink category alongside bigger players by seeking a strong
private label share. Despite this defensive operating strategy,
the company is vulnerable to pricing and market share actions by
its primary competitors.
The U.S. remains Cott's most important market, representing
reported sales and operating profits of 72% and 83%, respectively,
for 2003. The company's U.S. revenues rose 22% in the six months
ended July 3, 2004, while operating income increased 16%. Cott
experienced a capacity shortage in the U.S. recently due to its
strong revenue growth rates, resulting in the need to outsource
production to meet demand. As a result, logistics and
manufacturing costs have increased somewhat, which has affected
gross margins. Standard & Poor's believes Cott will be challenged
to satisfy growing customer demand in light of potential capacity
constraints.
Management, however, is making efforts to expand capacity through
capital expenditures in existing facilities, improved
productivity, SKU rationalization, acquisitions, and the
construction in 2005 of a new U.S. plant.
The positive outlook on Cott reflects Standard & Poor's
expectation that the company will continue its acquisitive and
internal growth strategy to enhance its manufacturing capacity.
If Cott can sustain low-investment-grade financial measures and
expand capacity to adequately meet demand, the ratings could be
raised during the outlook period.
COVANTA ENERGY: Judge Blackshear Allows Gregg's $29.2MM Claim
-------------------------------------------------------------
F. Browne Gregg filed a second amended proof of claim for
$31,720,755 against Covanta Lake, Inc. However, subsequent to the
filing of the Second Amended Claim, Mr. Gregg learned that due to
an inadvertent error in calculation, certain amounts within the
Second Amended Claim may have been overstated. Therefore, the
actual amount Mr. Gregg currently asserts and seeks is
$29,231,860.
As previously reported in the Troubled Company Reporter, Covanta
objected to Mr. Gregg's proof of claim.
In a 36-page Memorandum Decision and Order, Judge Blackshear
sustains Covanta Lake, Inc.'s objection to F. Browne Gregg's
Second Amended Claim, after addressing the components of Mr.
Gregg's Claim:
A. O&M Charge Revenue Sharing Claim
Section 9(b) of Covanta Lake's written agreement dated
October 17, 1988, with Mr. Gregg states one of the rights
under the service agreement between the Board of County
Commissioners of Lake County, Florida and NRG/Recovery Group,
Inc.:
"(b) as of the date that the County is obligated to pay the
Service Fee under the Service Agreement, subject to the
matters described below, the fixed component of the
Operations and Maintenance Charge shall be distributed
first to OMS in the amount of four million two hundred
fifty-eight thousand dollars ($4,258,000) plus one hundred
sixty-five thousand dollars ($165,00); thereafter adjusted
for the Escalation Factor from January 1, 1991 and in each
case, FBG shall receive the remainder of the fixed
Operations and Maintenance Charge payment;"
Judge Blackshear observes that Covanta Lake and Mr. Gregg
submit that Section 9(b) is unambiguous. Yet each party
advances a different interpretation. Judge Blackshear holds
that Section 9(b) clearly and unambiguously provides that Mr.
Gregg "shall receive the remainder of the Operations and
Maintenance Charge payment." However, the documents do not
provide a definition of what the term "payment" denotes.
Black's Law Dictionary defines payment as "satisfaction of a
claim or debt. Therefore, Lake County, Florida's actual
payment of the Service Fee began Covanta Lake's obligation to
pay Mr. Gregg, if any. Furthermore, the word "payment"
modified the term "charge," thus, the excess is to be
calculated on the actual payment by Lake County to Covanta
Lake, not the invoice amount that Covanta Lake submitted.
Judge Blackshear makes it clear that the Court cannot and will
not stray from black letter law, which prohibits a Court from
looking outside of an unambiguous contract for the meaning of
that contract. Thus, Mr. Gregg's Revenue Share as it relates
to the operations and maintenance will be calculated and paid
based on the amounts actually paid by Lake County to Covanta
Lake.
B. Disputed Operations and Maintenance Charges
Lake County's unpaid amount to Covanta Lake includes the
disputed O&M Charges that would have been included in the
amounts on which Mr. Gregg's revenue share would be
calculated. However, the proposed settlement between Lake
County and Covanta Lake does not provide for any payment to
Mr. Gregg upon Lake County's payment to Covanta Lake pursuant
to the Service Agreement. In addition, Covanta Lake reserved
its rights with respect to all amounts asserted by Covanta
Lake as to being unpaid by the County under the Service
Agreement.
Mr. Gregg's right to his portion of the operations and
maintenance pursuant to Section 9(b) of the FBG Agreement
becomes vested upon Lake County's payment of the charges to
Covanta Lake. Therefore, Mr. Gregg has no right to payment
of his portion of the O&M Charges absent an actual payment by
Lake County to Covanta Lake.
The Court further rules that Covanta Lake's decision to settle
the dispute with Lake County was commercially reasonable.
Covanta Lake's right to terminate the Service Agreement
without Mr. Gregg's consent is consistent with the plain
language of the FBG Agreement, the Service Agreement and
Florida Law. Accordingly, Covanta Lake's objection to Mr.
Gregg's claim for future damages is sustained.
C. Tonnage Risk Guarantee Claim
Mr. Gregg contends that the First Amendment to the FBG
Agreement was intended to limit his liability to pay 40% of
the Annual Revenue Makeup Amounts that potentially could be
due to Lake County under Section 8.06(e) of the Service
Agreement.
Judge Blackshear notes that Section 10(b) of the FBG Agreement
is also clear and unambiguous in authorizing Covanta Lake to
make deductions from amounts "otherwise payable to [Mr. Gregg]
in any year under Section 9(b) or 9(c) . . ." The Court must
look to the plain meaning of the terms, Judge Blackshear says.
D. Additional Waste Service Fee
Mr. Gregg asserts that he is entitled to $188,206 for the
Additional Waste Service Fee Covanta Lake billed under Section
8.07(a) of the Service Agreement but that Lake County refused
to pay.
Lake County's obligation to pay Covanta Lake pursuant to
Section 8.07(a) is triggered if the "Tons of Acceptable waste
in such Billing Year . . . exceed the Guarantee Plan
performance for such Billing Year, the County shall pay
[Covanta Lake] the Additional Waste Service Fee per Ton for
each excess ton delivered. . ." Thus, Judge Blackshear notes,
there must be a determination as to whether there was a
delivery of waste in excess of the 163,000 tons -- the
Guaranteed Plan Performance -- and processing at the Facility
to calculate the Additional Waste Service Fee. Covanta Lake
acknowledges that there may be some years between 1991 and
2001 that the Facility processed more than 163,000 tons of
waste originating from Lake County. However, the excess in
those years can be attributed to the combination of both Lake
County and outside waste tonnage.
In addition, Mr. Gregg insists that the Additional Waste
Service Fee must be included in the calculation of the
amounts due to him as a "Tipping Fee." However, Judge
Blackshear points out that the Tipping Fee is defined as
separate and apart from the Additional Service Fee.
E. Future Revenue Sharing Claim
Section 22(a) of the FBG Agreement plainly contemplates that
the Service Agreement could be terminated before July 1, 2014,
and provides that, in the event of a termination, the FBG
Agreement will terminate as well. Accordingly, Mr. Gregg's
entitlements under the FBG Agreement will end as of the date
the termination of the Service Agreement becomes effective.
Nothing in the FBG Agreement requires Mr. Gregg's consent to a
termination of the Service Agreement.
Contrary to Mr. Gregg's assertion, Judge Blackshear holds that
the proposed settlement between Covanta Lake and Lake County
is not a sham designed to eliminate Mr. Gregg from the
transaction. "[T]he only step that is remaining is a motion
by Covanta Lake to seek approval of the Term Sheet from [the
Bankruptcy] Court," Judge Blackshear says. The testimony
presented at trial showed that the only option to resolve the
litigation between Covanta Lake and Lake County was to
terminate the Service Agreement and enter into a new and
different contract.
Because no breach exists as it relates to the termination of
the FBG Agreement, Covanta Lake's objection is sustained.
However, until there is an official termination of the Service
Agreement and the FBG Agreement, Mr. Gregg will receive his
share of the revenues pursuant to those agreements.
F. Residue Related Claim
The terms of the FBG Agreement control where the Residue
should be delivered. Without the required permits, Judge
Blackshear makes it clear that there is no way the Court would
require Covanta Lake to attempt delivery in possible violation
of the Florida Department of Environmental Protection
regulations, which violation could give rise to a possible
liability.
Therefore, Mr. Gregg failed to prove that he was ever capable
to receive Residue at the location that Covanta Lake was
required to deliver or even a mutually agreed upon location.
Accordingly, Covanta Lake's objection as it relates to Mr.
Gregg's claim for non-delivery of Residue is sustained. Mr.
Gregg's claim for loss profits also fails.
Headquartered in Fairfield, New Jersey, Covanta Energy Corporation
-- http://www.covantaenergy.com/-- is a publicly traded holding
company whose subsidiaries develop, own or operate power
generation facilities and water and wastewater facilities in the
United States and abroad. The Company filed for Chapter 11
protection on April 1, 2002 (Bankr. S.D.N.Y. Case No. 02-40826).
Deborah M. Buell, Esq., and James L. Bromley, Esq., at Cleary,
Gottlieb, Steen & Hamilton represent the Debtors in their
restructuring efforts. When the Debtors filed for protection from
its creditors, they listed $3,280,378,000 in assets and
$3,031,462,000 in liabilities. (Covanta Bankruptcy News, Issue No.
64; Bankruptcy Creditors' Service, Inc., 215/945-7000)
CRDENTIA CORP: Secures $10 Million Term Loan to Fund Acquisitions
-----------------------------------------------------------------
Crdentia Corp. (OTC Bulletin Board: CRDE), a leading U.S. provider
of healthcare staffing services, has entered into a three-year
secured term loan of up to $10 million in support of its strategic
expansion strategy and acquisition plan. Funded by Bridge
Healthcare Finance, the term loan allows Crdentia to draw down
amounts based on the EBITDA performance of the acquired company.
James D. Durham, CEO and Chairman of Crdentia commented, "In
keeping with Crdentia's stated acquisition and consolidation
goals, this financing vehicle provides the additional capital
resources and financial flexibility needed to fund our targeted
transactions and selectively expand our business. We are pleased
to expand our relationship with Bridge Healthcare Finance, and
with this funding support we look forward to our continued
successful execution of our expansion plan."
"We are very pleased to close this acquisition line for Crdentia,"
said Randy T. Abrahams, President and Chief Executive Officer of
Bridge Healthcare Finance. "We believe Crdentia's accretive
acquisitions are a key component in building the Company into a
significant platform poised for future growth."
About Bridge Healthcare Finance
Bridge Healthcare Finance offers a combination of comprehensive
loan products, decades of financial expertise and an unparalleled
service approach unique to the healthcare lending industry.
Through accounts receivable, cash flow and real estate based term
loan lending products, Bridge is able to address the differing
capital needs of the healthcare industry.
About Crdentia Corp.
Crdentia Corp. is one of the nation's leading providers of
healthcare staffing services. Crdentia seeks to capitalize on an
opportunity that currently exists in the healthcare industry by
targeting the critical nursing shortage issue. There are many
small, private companies that are addressing the rapidly expanding
needs of the healthcare industry. Unfortunately, due to their
relatively small capitalization, they are unable to maximize their
potential, obtain outside capital or expand. By consolidating
well-run small private companies into a larger public entity,
Crdentia intends to facilitate access to capital, the acquisition
of technology, and expanded distribution that, in turn, drive
internal growth. For more information, visit
http://www.crdentia.com/
Liquidity Concerns
In its Form 10-KSB for the fiscal year ended December 31, 2003,
filed with the Securities and Exchange Commission, Crdentia Corp.
reports:
"The audit report for the year ended December 31, 2002 contained
an opinion that was qualified as to the Company's ability to
sustain itself as a going concern without securing additional
funding. During 2003 the Company was able to secure additional
funding to fund its operations as it began executing its business
plan to acquire and grow companies involved in healthcare
staffing. Although the Company ended 2003 with negative working
capital of $1,220,865, the following are considered to be
mitigating factors:
(i) in February 2004 the Company raised an additional $1
million of Series A Convertible Preferred Stock, and
(ii) of the $910,000 convertible debt outstanding, the Company
believes that the holders of a majority of this debt will
convert to equity in 2004. The Company believes that
these two factors, coupled with its cash on hand at
December 31, 2003 and its anticipated cash flow from
operations in 2004, will be sufficient to service its
debt and fund its operations for the foreseeable future.
Crdentia posted a $2.9 million net loss in the half-year ending
June 30, 2004, eroding shareholder equity to $1.9 million -- a
greater than 50% drop from Dec. 31, 2003.
DS WATERS: Possible Default Prompts Moody's to Cut Ratings to B1
----------------------------------------------------------------
Moody's Investors Service downgraded the ratings of DS Waters
Enterprises, LP, reflecting our revised view of the company's
financial profile given the material negative variance from
expectations at initial rating assignment (joint venture
combination formed in November 2003).
Despite some leveling of performance - albeit still soft - during
the second quarter 2004 after posting poor first quarter results,
business challenges and integration costs remain severe and EBIT
is negative. In Moody's opinion, it is probable that the company
would not be in compliance with existing third quarter covenants,
specifically the leverage test for which the hurdle is 3.4 times.
The severity of the downgrades to B3 from B1 ratings reflects
concerns about the depth and speed of impairment to DS Waters'
core business of home office delivery -- HOD -- water bottles and
services, notably given the high residential customer churn that
is exceeding initial expectations. There is persistent
competition from retailers selling coolers and replacement
bottles. Additional business challenges include sizable and rapid
reduction in high margin cooler rentals (representing a large
portion of total EBITDA with approximately half of that being the
hard hit residential rentals), and the need to execute a proven
plan to consistently increase pricing of non-cooler related
products so as to off-set the erosion in the higher margin
business.
The ratings outlook is changed to negative from stable at these
reduced ratings reflecting the need for timely execution of a
sustained rebound, exacerbated by the absence of financial
flexibility to absorb further material erosion in EBIT and free
cash flow before ratings could be lowered again. The negative
ratings outlook expresses heightened concern about DS Waters' high
cost structure, which has primarily resulted from negative mix and
consolidation costs related to the integration, as well as higher
operating expenses, such as route delivery and freight expenses.
While acknowledging some temporary reduction in water customer
churn with quit rates down roughly 17% in the second quarter 2004,
the churn is still overwhelming and the trend will likely continue
to be adverse over the long term.
Moody's ascribed some value to the apparent learning curve
experienced by DS Waters' senior management, all of whom were new
to the company at combination. The ratings acknowledge
management's identification of issues and their articulation of a
defensive strategy (e.g. pricing initiatives and introduction of
new services and cooler sales as opposed to rentals). The ratings
also favorably incorporate the company's ability to weather its
very weak start-up results by using cash on hand to finance
shortfalls (to date, there have been no advances under the
$150 million senior secured revolver; there have been
approximately $28 million letters of credit outstanding). However
going forward, Moody's expects liquidity during the third quarter
to be weak as cash consumption has likely left little on hand and
there would not likely be any effective availability under the
existing revolver, absent an amendment. The existing mandatory
term amortization is concerning at approximately $12 million (of
which roughly $4 million has been pre-paid) and approximately
$20 million in 2005, given the probability of no unadjusted free
cash flow for fiscal 2004.
Despite the decline in enterprise value given DS Waters' weak
performance to date, there is likely collateral coverage of the
approximately $390 million term loan outstanding, albeit with
minimal to no excess, in Moody's opinion. The B3 rating of the
secured facility reflects the priority position in the capital
structure and is constrained by the significant amount of
intangibles on the balance sheet (approximately 60% of total
assets) for which adequate returns are not being generated.
DS Waters' balance sheet remains very weak as there is no tangible
equity and financial leverage is high. In Moody's opinion, debt
to bank calculated EBITDA is likely to be in excess of 4 times for
the remainder of fiscal 2004. When the $325 million of preferred
stock is added to debt, the ratio increases to over 7.5 times.
Today, Moody's downgraded these ratings of DS Waters:
(1) To B3 from B1 rating for the approximately $540 million
senior secured credit facility consisting of a $150 million
revolver, due 2008, and approximately $390 million term
loans outstanding, due 2009
(2) Senior implied rating to B3 from B1; and
(3) Senior unsecured issuer rating to Ca from B3 (non-
guaranteed exposures).
The ratings outlook is negative.
Formed by the combination of HOD businesses of Groupe Danone and
Suntory Limited, DS Waters Enterprises, LP is a leading provider
of a range of water products including 5 gallon and 3 gallon
returnable bottles, 2.5 gallon and 1 gallon high density
polyethylene -- HDPE -- bottles, individual serving or
polyethylene terephthalate -- PET -- bottles, water dispensers,
filtration products, and other ancillary items such as coffee,
food products, cups, and stirrers.
DYNACQ HEALTHCARE: Late SEC Filings Triggers Bank Debt Default
--------------------------------------------------------------
Dynacq Healthcare Inc. (Pink Sheets:DYII) filed with the
Securities and Exchange Commission reports on Form 10-Q for each
of the first three quarters of fiscal 2004, the quarters ended
Nov. 30, 2003, Feb. 29, 2004 and May 31, 2004.
For the three months ended Nov. 30, 2003, net patient revenue was
$18.1 million and net income was $1.5 million as compared to $17.9
million and $5.2 million, respectively, in the three months ended
Nov. 30, 2002.
For the three months ended Feb. 29, 2004, net patient revenue was
$16.9 million and net income was $0.9 million as compared to $21.1
million and $4.1 million, respectively, in the three months ended
Feb. 28, 2003.
For the three months ended May 31, 2004, net patient revenue was
$12.9 million and net loss was $1.3 million as compared to $25.6
million and net income of $6.4 million, respectively, in the three
months ended May 31, 2003.
For the nine months ended May 31, 2004, net patient service
revenue was $47.9 million and net income was $1.1 million,
declines of 26% and 93% respectively, from net patient service
revenue and net income of $64.7 million and $15.7 million in the
comparable prior year period.
Dynacq Healthcare Inc. -- http://www.dynacq.com/-- is a holding
company. Its subsidiaries provide surgical healthcare services and
related ancillary services through hospital facilities and
outpatient surgical centers.
* * *
Bank Debt Default
In its Form 10-Q for the quarterly period ended May 31, 2004,
filed with the Securities and Exchange Commission, Dynacq
Healthcare, Inc. reports:
"Because we did not timely file the Form 10-K for the fiscal year
ending August 31, 2003 and the three quarterly reports on Form
10-Q for the fiscal quarters ended November 30, 2003, February 29,
2004 and May 31, 2004, we are in default under the terms of the
line of credit. On April 16, 2004, the financial institution
submitted to us a written notice of default. Since we did not cure
the default within 10 days, we are now in default under the line
of credit. To this date, the financial institution has not taken
any further action. Our indebtedness under our line of credit is
secured by substantially all of our assets. If we are unable to
repay all outstanding balances, the financial institution could
proceed against our assets to satisfy our obligations under the
line of credit. There can be no assurance that the Company will
have sufficient funds available to meet all of its capital needs."
ELDORADO RESORTS: S&P Affirms B+ Corporate Credit Rating
--------------------------------------------------------
Standard & Poor's Ratings Services affirmed its ratings, including
its 'B+' corporate credit rating on Eldorado Resorts, LLC.
Reno, Nevada-based Eldorado owns and operates the Eldorado Hotel &
Casino. The outlook is negative.
The affirmation follows Eldorado's announcement that it has
entered into an agreement to acquire Hollywood Casino Shreveport.
The agreement contemplates a financial restructuring of Hollywood
Casino whereby holders of Hollywood Casino's existing secured
notes will receive $140 million of new first mortgage notes,
$20 million of PIK preferred equity securities, 25% non-voting
equity interest in the reorganized company, and cash in an amount
to be determined, in exchange for $189 million of existing secured
notes plus accrued interest. The acquisition and related
financial transaction will be effectuated through a prepackaged
Chapter 11 bankruptcy expected to be filed in the fourth quarter
of this year.
"The affirmation assumes that Hollywood Casino will become an
unrestricted subsidiary of Eldorado, the cash portion of the
transaction that will be contributed by Eldorado will not be
significant, Hollywood Casino' debt will be non-recourse to
Eldorado, and that there will be little ongoing financial support
provided to Hollywood Casino by Eldorado," said Standard & Poor's
credit analyst Peggy Hwan.
The negative outlook reflects the uncertainty regarding the size
and quality of Native American gaming expansion in northern
California, which may cause further pressure on Eldorado's
performance. Although the Eldorado Hotel & Casino maintains a
good market position in Reno and the company's current financial
profile provides a cushion against increasing competition, ratings
could be lowered if operating performance weakens beyond current
expectations.
ENRON: Southern Union/GE Joint Venture Completes CrossCountry Sale
------------------------------------------------------------------
Enron has reached an agreement with CCE Holdings, LLC, a joint
venture of Southern Union Company and GE Commercial Finance Energy
Financial Services, for the sale of CrossCountry Energy, LLC for
$2.45 billion in cash, including the assumption of debt.
The sale price represents an increase of $100 million over the CCE
Holdings stalking horse contract entered into in June. Following
review of two written proposals submitted in the process outlined
by the Bankruptcy Court, Enron and the Official Unsecured
Creditors' Committee determined that a revised CCE Holdings
contract would be in the best interest of the estate and its
creditors. Enron and the Committee considered the risks associated
with the competing proposals as well as the advantages provided by
the revised purchase agreement, including, among other things, the
enhanced purchase price and that the purchaser has obtained all
material state regulatory approvals and federal antitrust
clearance.
"This transaction represents a tremendous outcome for Enron's
creditors," said Stephen F. Cooper, Enron interim CEO. "The
purchase price reflects the quality of these assets and
opportunities presented by these high-performing businesses."
The sale remains subject to approval of the Bankruptcy Court for
the Southern District of New York. A hearing before the Bankruptcy
Court is scheduled for September 9, 2004. Subject to this approval
and certain other conditions precedent, the sale is expected to
close by mid-December.
CrossCountry Energy was formed in June 2003 as a holding company
for Enron's interests in Transwestern Pipeline Company, Citrus
Corp., and Northern Plains Natural Gas Company. These three
businesses have approximately 8.6 Bcf/d of capacity and 9,700
miles of pipeline. When the sale closes, Southern Union/GE will
own 100 percent of CrossCountry.
CrossCountry Energy is headquartered in Houston and has
approximately 1,100 employees. Transwestern Pipeline Company is a
wholly owned 2,400-mile pipeline system extending from West Texas
to the California border. Citrus Corp., which is held 50 percent
by Enron and 50 percent by Southern Natural Gas, an El Paso
affiliate, owns the 5,000-mile Florida Gas Transmission system
that runs from south Texas to south Florida. The wholly owned
Northern Plains Natural Gas Company is one of the general partners
of Northern Border Partners, L.P. (NYSE:NBP), which owns interests
in Northern Border Pipeline Company, Midwestern Gas Transmission
Company, Viking Gas Transmission Company and Guardian Pipeline,
LLC. CrossCountry Energy's Internet address is
http://www.crosscountryenergy.com/
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: Committee Wants Court Nod to Amend Houlihan Retention Terms
------------------------------------------------------------------
The Official Committee of Unsecured Creditors retained Houlihan
Lokey Howard & Zukin Financial Advisors, Inc., to provide
financial advisory services pursuant to an engagement letter,
dated December 17, 2001. Under the Engagement Letter, Houlihan's
compensation is based on a fixed monthly fee and a fixed
transaction free that is subject to certain credits based on the
length of the engagement. In addition, the Engagement Letter
reflected the Committee's belief that the use of Houlihan's
services would vary during the Debtors' cases, including some
potential periods of inactivity.
According to Luc A. Despins, Esq., at Milbank, Tweed, Hadley &
McCloy, LLP, in New York, those periods of reduced services did
not materialize. Under the known circumstances at the time of
the Engagement Letter negotiations, the Committee was not capable
of foreseeing the substantial demands for the services it would
actually place on Houlihan. In the Committee's view, Houlihan
has devoted extraordinary efforts and staffing throughout the
Debtors' cases and provided great results for creditors.
In this regard, the Committee seeks the Court's authority,
pursuant to Sections 328(a) and 1103 of the Bankruptcy Code, to
amend the terms of Houlihan's compensation:
* The $9,500,000 transaction free would be increased to
$14,500,000;
* The provision reducing the transaction free by a portion
of the monthly fees would be eliminated;
* The $350,000 monthly fee payable to Houlihan would be
reduced to $175,000 per month, for all monthly periods
commencing after December 31, 2004; and
* Rather than on the Effective date of the Plan, the payment
of the transaction fee would take place on the earlier of:
-- the completion of the closing of the sale of
CrossCountry Energy; or
-- December 31, 2004.
Taken together, Mr. Despins explains that the amendment will in
effect increase Houlihan's compensation by about $8,200,000. The
Committee believes that the amended compensation terms will
provide Houlihan with reasonable compensation reflective of
efforts expended, or to be expended, and resulted in, or expected
to be obtained, for prior and future services for the Committee.
During the Engagement Letter negotiation, the Committee failed to
foresee Houlihan's required efforts in connection with:
-- the recovery of over $1 billion through the liquidation of
Enron's extensive trading positions through protracted
negotiations with literally hundreds of counterparties;
-- the recovery of more than $2 billion in value for unsecured
creditors through complex negotiations with special
purpose entity transaction investors; and
-- the substantial value to unsecured creditors generated
from Houlihan's efforts in connection with the sale of the
Debtors' platform company assets and other assets.
The Committee is mindful of the magnitude of the administrative
costs associated with the Debtors' cases and understands that the
Amended Compensation Terms would increase those costs.
Notwithstanding this fact, the Committee members unanimously
support amending the terms of Houlihan's compensation in light of
the effort put forward by Houlihan and the value and contribution
it made to enhance the unsecured creditors' recoveries.
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 PRODS: New Distribution Rate Following Gulfterra Merger
------------------------------------------------------------------
The Board of Directors of Enterprise Products Partners L.P.'s
(NYSE:EPD) general partner has approved an increase in
Enterprise's quarterly cash distribution rate to its limited
partners upon the completion of the merger with GulfTerra Energy
Partners, L.P.
The new rate will be at least $0.395 per common unit, or $1.58 per
common unit on an annual basis, effective with the third quarter
cash distribution which is payable in November 2004. This would be
a 6% increase from the current quarterly rate of $0.3725 per
common unit, or an annual rate of $1.49. The increase in the cash
distribution rate is contingent upon the closing of the merger
with GulfTerra and will be effective when the third quarter
distribution is declared by the Board of Directors of Enterprise's
general partner.
"We are in the final stages of completing our merger with
GulfTerra and expect to complete the transaction in September,"
said O.S. Andras, President and Chief Executive Officer of
Enterprise. "In preparation, the Board of Directors of our general
partner approved an increase in the cash distribution rate to our
limited partners, as provided in the merger agreement. We believe
this will be the first increase for our partners supported by what
we estimate to be in excess of $100 million of annual synergies
resulting from the merger. These synergies are attributable to
lower cash distributions paid to the general partner under
Enterprise's incentive distribution right structure which is
capped at 25% compared to GulfTerra's existing 50% incentive
distribution rights, general and administrative expense synergies
and lower interest costs. We also believe there will be
significant revenue and margin growth opportunities for the
combined partnership. Upon completion of the merger, we are
looking forward to our respective commercial groups working
together for the first time to identify and implement these,"
stated Andras.
"On Monday, we announced an extension of the expiration time for
our four cash tender offers to purchase GulfTerra's outstanding
senior subordinated and senior notes to September 10. Our tender
is contingent upon our completion of the merger and therefore, the
expiration time of the tender period will be subsequent to the
merger date. This extension was made based on our current
expectations of the earliest probable closing date for the
merger."
Enterprise Products Partners L.P. is the second-largest publicly
traded midstream energy partnership, with an enterprise value of
over $7.0 billion. Enterprise is a leading North American provider
of midstream energy services to producers and consumers of natural
gas and NGLs. 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.
ENVIRONMENTAL ELEMENTS: Receives Bank Waiver on Covenant Defaults
-----------------------------------------------------------------
Mercantile-Safe Deposit and Trust Company has waived previously
disclosed covenant defaults for the period ended June 30, 2004,
under its loan agreement with Environmental Elements Corporation
(OTC: EECP).
In its quarterly report filed with the Securities and Exchange
Commission for the period ended June 30, 2004, the Company
disclosed that it was not in compliance with certain terms of the
loan agreement with its Bank. This was due to the operating loss
that EEC incurred in the first quarter of fiscal 2005 as a result
of lowered revenues that the Company experienced due to weakened
spending on air pollution control by its main customer segments,
electric power generators and pulp and paper producers.
Lawrence Rychlak, President and Chief Financial Officer, said, "We
are obviously very pleased with the continued support and
cooperation that we receive from our Bank and the continuing
confidence from our customers evidenced by the recent project
awards and our growing backlog. These past two years have marked a
difficult period in EEC's history," Mr. Rychlak continued, "but
the great support of our employees, customers and our lender has
allowed the Company to continue its long-standing tradition of
providing effective and efficient solutions to our customers' air
pollution control needs."
Environmental Elements Corporation is a solutions-oriented
provider of plant maintenance services, air pollution control
technology and complementary products. For over 55 years, EEC has
served a broad range of customers in the power generation, pulp
and paper, waste-to-energy, rock products, metals and
petrochemical industries.
At June 30, 2004, Environmental Elements' balance sheet showed an
$11,491,000 stockholders' deficit, compared to a $10,965,000
deficit at March 31, 2003.
EZLINKS GOLF: List of 13 Largest Unsecured Creditors
----------------------------------------------------
EZLinks Golf Limited Liability Company released a list of its 13
Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Banco Panamericano Inc. $1,101,197
330 S. Wells #718
Chicago, IL 60606
D'Ancona & Pflaum $29,392
MCI Worldcom Communications $22,427
Savvis Communcations $17,021
Griskelis & Smith Architects Ltd. $16,879
Intermedia Communications Inc. $10,776
CB Richard Ellis $9,999
Belmont International Inc. $6,950
Tiburon Group Inc. $3,782
Convergent Communications $2,284
Commonwealth Edison $2,012
Fore Better Golf $1,090
ESA Management Inc. $1,017
Headquartered in Denver, Colorado, EZLinks Golf Limited Liability
Company filed for chapter 11 protection (Bankr. D. Colo. Case No.
04-28150) on August 20, 2004. James T. Markus, Esq., at Block
Markus & Williams LLC, represents the Company in its restructuring
efforts. When the Debtor filed for protection from its creditors,
it listed estimated assets of $0 to $50,000 and estimated debts of
over $1 million.
FAIRFAX FIN'L: Fitch Puts Low-B & Junk Ratings on Negative Watch
----------------------------------------------------------------
Fitch Ratings placed the ratings of Fairfax Financial Holdings
Limited and its rated subsidiaries and affiliates on Ratings Watch
Negative. The ratings previously had a Negative Outlook.
This action largely reflects Fitch's concerns as to increasing
liquidity pressures at Fairfax, as well as a continued decline in
transparency of management's public disclosures, which make it
increasingly difficult for third parties to judge Fairfax's
creditworthiness.
Fitch intends to resolve its Rating Watch within several weeks,
following additional analysis of publicly available information.
Barring an increase in our comfort level, Fitch expects to
downgrade and/or withdraw Fairfax's ratings. A withdrawal will
occur if Fitch determines that the company's disclosures do not
allow for a reasonable assessment of the financial health of
Fairfax as a whole. This would relate primarily to the myriad of
evolving intercompany transactions and ownership relationships,
both on- and off-shore, as well as a lack of adequate disclosures
regarding certain entities and transactions that could effect
parent company liquidity.
While Fairfax's financial disclosures have become more voluminous
over the years, Fitch has been concerned by an increasing lack of
specific and readily available disclosures. Specifically, Fitch's
heightened concern largely stems from:
* an inability to reconcile second quarter holding company cash
based on public disclosures;
* the complex series of transactions related to the Kingsmead
run-off syndicates that appears to have been the catalyst for
movement of the Advent collateral to Odyssey Re as provider;
and
* a number of ownership changes and preferred stock issuances
among significant subsidiaries, the rationale of which is
unclear.
Fitch believes that Fairfax may have averted a liquidity squeeze
in the second quarter of 2004 resulting from its need to support
the collateralization of the Kingsmead run-off. Per disclosures
in its second quarter 2004 10-Q, it appears that majority-owned
Odyssey Re provided US$200 million in collateral balances via an
'arm's length' fee-based transaction. If such an 'arm's length'
transaction could not have been arranged, Fitch is concerned
whether Fairfax's cash balances would have been largely depleted
if it had to cover the $200 million funding requirement.
Furthermore, given the potential magnitude of the collateral
requirements on Fairfax's liquidity, Fitch is concerned that the
possible need for such funding was not disclosed specifically by
Fairfax other than through the SEC disclosure made by Odyssey Re.
Additionally, Fitch is concerned that such a potential cash
squeeze occurred after Fairfax's operating subsidiaries had been
experiencing their most favorable market conditions in years.
Fitch believes that Fairfax requires a return to profitability and
strong operating cash flows from its core operating subsidiaries
to truly turn around its fortunes. However, many market observers
have indicated a softening of rates has begun in Fairfax's key
markets.
Finally, Fitch also remains concerned by:
* the adequacy of Fairfax's reserves for its growing runoff
operations;
* uncertainty as to the true financial position of nSpire Re
Limited and its abilities to perform on intercompany
reinsurance transactions;
* the significant use of finite reinsurance within the
organization; and
* Fairfax's highly leveraged balance sheet and low levels of
tangible equity.
Fitch's ratings of Fairfax are based primarily on public
information.
Fairfax Financial Holdings Limited
-- Long-term issuer 'B+'/Rating Watch Negative;
-- Senior debt 'B+'/Rating Watch Negative.
Crum & Forster Holdings Corp.
-- Senior debt 'B'/Rating Watch Negative.
TIG Holdings, Inc.
-- Senior debt 'B'/Rating Watch Negative;
-- Trust preferred 'CCC+'/Rating Watch Negative;
Members of the Fairfax Primary Insurance Group
-- Insurer financial strength 'BBB-'/Rating Watch Negative
Members of the Odyssey Re Group
-- Insurer financial strength 'BBB+'/Rating Watch Negative;
Negative
Members of the Northbridge Financial Insurance Group
-- Insurer financial strength 'BBB-'/Rating Watch Negative.
Members of the TIG Insurance Group
-- Insurer financial strength 'BB+'/Rating Watch Negative;
-- Ranger Insurance Co. 'BBB-'/Rating Watch Negative.
The members of the Fairfax Primary Insurance Group:
* Crum & Forster Insurance Co.;
* Crum & Forster Underwriters of Ohio;
* Crum & Forster Indemnity Co.;
* Industrial County Mutual Insurance Co.;
The North River Insurance Co.:
* United States Fire Insurance Co.;
* Zenith Insurance Co. (Canada)
The members of the Odyssey Re Group:
* Odyssey America Reinsurance Corp.
* Odyssey Reinsurance Corp.
Members of the Northbridge Financial Insurance Group:
* Commonwealth Insurance Co.;
* Commonwealth Insurance Co. of America;
* Federated Insurance Co. of Canada;
* Lombard General Insurance Co. of Canada;
* Lombard Insurance Co.; and
* Markel Insurance Co. of Canada.
The members of the TIG Insurance Group:
* Fairmont Insurance Company;
* TIG American Specialty Insurance Company;
* TIG Indemnity Company;
* TIG Insurance Company;
* TIG Insurance Company of Colorado;
* TIG Insurance Company of New York;
* TIG Insurance Company of Texas;
* TIG Insurance Corporation of America;
* TIG Lloyds Insurance Company; and
* TIG Specialty Insurance Company.
FIRST HORIZON: Fitch Gives $757K Class B-4 & $504K Class B-5 Low-B
------------------------------------------------------------------
Fitch rates First Horizon Asset Securities Inc. (FHASI) mortgage
pass-through certificates, series 2004-AR5 as follows:
-- Classes I-A-1, II-A-1, III-A-1, IV-A-1, and II-A-R,
($430,823,100) 'AAA';
-- Classes B-1 ($3,783,000) 'AA';
-- Class B-2 ($1,891,000) 'A';
-- Class B-3 ($883,000) 'BBB';
-- Class B-4 ($757,000) 'BB';
-- Class B-5 ($504,000) 'B'.
The class B-6 certificates are not rated by Fitch.
The 'AAA' rating on the senior certificates reflects the 3.35%
subordination provided by:
* the 1.50% class B-1,
* the 0.75% class B-2,
* the 0.35% class B-3,
* the 0.30% privately offered class B-4,
* the 0.20% privately offered class B-5, and
* the 0.25% privately offered class B-6 certificates.
The ratings on the class B-1, B-2, B-3, B-4, and B-5 certificates
are based on their respective subordination. Fitch 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 reflect the quality of the
mortgage collateral, strength of the legal and financial
structures, and the servicing capabilities of First Horizon Home
Loan Corporation, currently rated 'RPS2' by Fitch.
The certificates represent ownership interests in a trust fund
that consists of four cross-collateralized pools of mortgages.
The senior certificates whose class designation begins with I, II,
III, and IV correspond to pools I, II, III, and IV, respectively.
Each of the senior certificates generally receives distributions
based on principal and interest collected from mortgage loans in
its corresponding mortgage pool. If on any distribution date a
pool is undercollaterized and borrower payments from the
underlying loans are insufficient to pay senior certificate
principal and interest, borrower payments from the other pools
that would have been distributed to the subordinate certificates
will instead be distributed as principal and interest to the
undercollaterized group's senior certificates. The subordinate
certificates will only receive principal and interest
distributions after all the senior certificates receive all their
required principal and interest distributions.
Pool I consists of 3/1 hybrid adjustable-rate mortgages -- ARMs.
The loans have an initial fixed interest rate period of three
years. Thereafter, the interest rate will adjust annually based
on the weekly average yield on U.S. Treasury securities (one-year
CMT) plus a gross margin. Approximately 63.39% of the mortgage
loans in pool I have interest-only payments scheduled during the
three-year fixed-rate period, with principal and interest payments
commencing after the first rate adjustment date. The aggregate
principal balance of this pool is $46,002,331 and consists of
conventional, fully amortizing, ARM loans secured by first liens
on single-family residential properties, substantially all of
which have original terms to maturity of 30 years. The average
principal balance of the loans in this pool is approximately
$500,025. The mortgage pool has a weighted average original loan-
to-value ratio -- OLTV -- of 75.00%. Rate/term and cash-out
refinance loans account for 10.92% and 8.59% of the pool,
respectively. Second homes and investor occupancies represent
1.88% and 0.92% of the pool, respectively. The states with the
largest concentrations are:
* California (36.76%),
* Washington (10.26%),
* Virginia (9.00%),
* Massachusetts (8.90%), and
* Maryland (5.97%).
All other states represent less than 5% of the pool as of the cut-
off date.
Pool II consists of 5/1 hybrid ARMs. The loans have an initial
fixed interest rate period of five years. Thereafter, the
interest rate will adjust annually based on the weekly average
yield on U.S. Treasury securities (one-year CMT) plus a gross
margin. Approximately 55.77% of the mortgage loans in pool II
have interest-only payments scheduled during the five-year fixed-
rate period, with principal and interest payments commencing after
the first rate adjustment date. The aggregate principal balance
of this pool is $133,117,045 and consists of conventional, fully
amortizing, ARM loans secured by first liens on single-family
residential properties, substantially all of which have original
terms to maturity of 30 years. The average principal balance of
the loans in this pool is approximately $511,989. The mortgage
pool has a weighted average OLTV of 73.67%. Rate/term and cash-
out refinance loans account for 10.18% and 5.75% of the pool,
respectively. Second homes represent 4.61% of the pool; there are
no investor occupancies. The states with the largest
concentration are:
* California (37.04%),
* Virginia (9.50%),
* Washington (8.46%), and
* Maryland (5.59%).
All other states represent less than 5% of the pool as of the cut-
off date.
Pool III consists of 7/1 hybrid ARMs. The loans have an initial
fixed interest rate period of seven years. Thereafter, the
interest rate will adjust annually based on the weekly average
yield on U.S. Treasury securities (one-year CMT) plus a gross
margin. Approximately 52.92% of the mortgage loans in pool III
have interest-only payments scheduled during the seven-year fixed-
rate period, with principal and interest payments commencing after
the first rate adjustment date. The aggregate principal balance
of this pool is $35,001,658 and consists of conventional, fully
amortizing, ARM loans secured by first liens on single-family
residential properties, substantially all of which have original
terms to maturity of 30 years. The average principal balance of
the loans in this pool is approximately $564,543. The mortgage
pool has a weighted average OLTV of 68.59%. Rate/term and cash-
out refinance loans account for 14.04% and 2.67% of the pool,
respectively. Second homes represent 3.02% of the pool; there are
no investor occupancies. The states with the largest
concentrations are:
* California (30.87%),
* Virginia (17.36%),
* Arizona (7.32%),
* Washington (6.02%),
* North Carolina (5.95%), and
* Texas (5.01%).
All other states represent less than 5% of the pool as of the cut-
off date.
Pool IV consists of 10/1 hybrid ARMs. The loans have an initial
fixed interest rate period of 10 years. Thereafter, the interest
rate will adjust annually based on the weekly average yield on
U.S. Treasury securities (one-year CMT) plus a gross margin.
Approximately 62.73% of the mortgage loans in pool IV have
interest-only payments scheduled during the 10-year fixed-rate
period, with principal and interest payments commencing after the
first rate adjustment date. The aggregate principal balance of
this pool is $38,095,384 and consists of conventional, fully
amortizing, ARM loans secured by first liens on single-family
residential properties, substantially all of which have original
terms to maturity of 30 years. The average principal balance of
the loans in this pool is approximately $586,083. The mortgage
pool has a weighted average OLTV of 68.24%. Rate/term and cash-
out refinance loans account for 17.43% and 5.90% of the pool,
respectively. Second homes and investor occupancies represent
1.13% and 1.18% of the pool, respectively. The states with the
largest concentrations are:
* California (47.53%),
* Virginia (14.74), and
* Tennessee (6.00%).
All other states represent less than 5% of the pool as of the cut-
off date.
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,
see the press release 'Fitch Revises Rating Criteria in Wake of
Predatory Lending Legislation,' dated May 1, 2003, available on
the Fitch Ratings web site at 'www.fitchratings.com'.
All the mortgage loans were originated or acquired in accordance
with First Horizon Home Loan Corporation's underwriting
guidelines. The trust, First Horizon Mortgage Pass-Through Trust
2004-AR5, was created for the sole purpose of issuing the
certificates. For federal income tax purposes, an election will
be held to treat the trust as two real estate mortgage investment
conduits. The Bank of New York will act as trustee.
FLAGSHIP CLO: S&P Assigns BB Rating to $10.6 Class D Notes
----------------------------------------------------------
Standard & Poor's Ratings Services assigned its ratings to
Flagship CLO III/Flagship CLO III Corp.'s $274 million notes due
2016.
The ratings reflect:
-- Credit enhancement provided through the subordination of
cash flows to the respective class;
-- The transaction's cash flow structure, which has been
subjected to various stresses requested by Standard &
Poor's;
-- The experience of the collateral manager; and
-- The legal structure of the transaction, including the
bankruptcy remoteness of the issuer.
Ratings Assigned
Flagship CLO III/Flagship CLO III Corp.
Class Rating Amount (mil. $)
----- ------ ---------------
A revolving notes AAA 35.4
A funded notes AAA 234.0
B A 29.4
C BBB 13.0
D BB 10.6
Subordinated notes N.R. 32.0
N.R. -- Not rated.
FOSTER WHEELER: New Notes to Bear 10.390% Annual Interest Rate
--------------------------------------------------------------
Foster Wheeler Ltd. (OTCBB:FWLRF) declared the recalculated
interest rate applicable to the Fixed Rate Senior Secured Notes
due 2011, Series A, to be issued by Foster Wheeler LLC in the
equity for debt exchange offer that the company launched on June
11, 2004.
If the exchange offer expires as currently scheduled today,
September 2, 2004, the New Notes will bear interest at a rate of
10.390% per annum. This rate is equal to 6.65% plus the yield on
U.S. Treasury notes having a remaining maturity equal to the
maturity of the New Notes determined as of 2:00 p.m. New York City
time on the second business day prior to the expiration of the
exchange offer. The terms of the New Notes are described in the
registration statement on Form S-4 (File No. 333-107054) relating
to the exchange offer.
The interest rate set forth above supersedes the rate previously
announced on August 26, 2004.
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.
Investors and security holders are urged to read the following
documents filed with the SEC, as amended from time to time,
relating to the proposed exchange offer because they contain
important information: (1) the registration statement on Form S-4
(File No. 333-107054) and (2) the Schedule TO (File No.
005-79124). These and any other documents relating to the proposed
exchange offer, when they are filed with the SEC, may be obtained
free at the SEC's Web site at http://www.sec.gov/or from the
information agent as noted above.
The foregoing reference to the exchange offer and any other
related transactions shall not constitute an offer to buy or
exchange securities or constitute the solicitation of an offer to
sell or exchange any securities in Foster Wheeler Ltd. or any of
its subsidiaries.
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.
FOUNDATION HOUSING: Likely Default Prompts Fitch's Junk Ratings
---------------------------------------------------------------
Fitch Ratings downgrades to 'C' from 'CC' its rating of
$14.5 million Will County, Illinois student housing revenue bonds
(Joliet Junior College Project), series 2002A and taxable series
2002B. Fitch believes that default appears inevitable based on
the project's disclosure filings, which are the only sources of
information available.
Now beginning its third year of operations, Centennial Commons,
the student housing project at Joliet Junior College, has
struggled since its first year. Prospects remain negative. As of
June 30, 2004 the unaudited balance of the bonds' debt service
reserve fund -- DSRF -- was $800,800. Since bond interest
accounts held almost no funds on June 30 and summer cash flows are
assumed to be negative, Fitch believes that a substantial portion
of the remaining DSRF will be liquidated to make a $505,525
payment due next week.
Without improvement in project performance, exhaustion of the DSRF
may occur with the March 1, 2005 payment, which is scheduled to be
$484,750. Bankruptcy could occur even earlier due to lower than
budgeted occupancy rates. The fiscal 2005 project budget ends in
net cash flow deficit even with an apparent assumption of more
than 90% academic year occupancy. Actual occupancy during the
first week of the academic year reportedly was 46.6%. Severe
strains on cash flow could result from low occupancy, and this may
impede the ability of the project to meet payroll, vendor,
utility, and other regular expenses.
The bonds financed construction of a privately managed 296-bed
student residence on Joliet Junior College's campus, which opened
in 2002. Neither Joliet Junior College nor its fundraising
foundation is obligated to make debt service payments. Foundation
Housing, LLC, owns the project in a structure typical of off-
balance-sheet student housing transactions. Century Campus
Housing Management, L.P., one of the largest private managers of
student housing, manages the project. The bonds require
semiannual interest payments and were issued as term bonds due in
2009, 2013, 2023, and 2033. The indenture allows amortization
installments, and a note executed at closing requires semiannual
principal and interest payments by the LLC to the trustee.
Draws on the DSRF began in Sept. 2003 due to weak financial
performance during the project's first year of operations when
several negative events, including significantly escalated
expenses, a fire, incidents of crime, and payment delinquencies by
residents, affected operations. While the LLC settled a dispute
with the state concerning its property tax exemption for 2004 and
certain future payments, financial position remained decidedly
negative in year two due to expense burdens, low occupancy rates,
and significant, lingering problems with revenue collections.
Disclosure filings indicate a renewed emphasis on rent guarantor
credit and increased rental rates in the 2004-2005 school year.
Nevertheless, Fitch sees little prospect for the project avoiding
bond default, given the project's existing expense burdens, low
reported occupancy levels, and impaired financial condition after
two trying years.
Closing documents included a land sale contract between JJC as
seller and the LLC as purchaser and a mortgage from the LLC to the
issuer, which was assigned to the trustee. As the project sits
adjacent to the college outside of the city, the ability to recoup
funds from alternative uses appears very uncertain. While first
year leasing levels initially appeared quite favorable, it is
unknown whether student interest would increase if debt levels
were lowered and rents decreased, given the troubled history of
the project. For these reasons, the potential for recovery
following the expected default appears low to moderate.
FOURTH AND WASHINGTON: U.S. Trustee Moves to Dismiss Bankruptcy
---------------------------------------------------------------
United States Trustee C.E. "Sketch" Rendlen, III, asks the U.S.
Bankruptcy Court for the Eastern District of Missouri to dismiss
Fourth and Washington LLC's chapter 11 case.
The U.S. Trustee tells the Court the Debtor has failed to file a
single monthly operating report.
Mr. Rendlen states that any further delay in the administration of
this case constitutes "an unreasonable delay which is prejudicial
to creditors."
The Debtor will owe quarterly fees to the U.S. Trustee for the
second and third quarters of 2004 in the event that the Court
dismisses the case.
Headquartered in Clayton, Missouri, Fourth and Washington LLC, is
engaged in the business of operating a hotel. The Company filed
for chapter 11 protection (Bankr. E.D. Mo. Case No. 04-45890) on
May 3, 2004. Randall F. Scherck, Esq., at Lathrop and Gage, L.C.,
represents the Company in its restructuring efforts. When the
Debtor filed for protection from its creditors, it listed
$16,000,000 in assets and $12,500,000 in liabilities.
GADZOOKS INC: James Motley Resigns as Chief Financial Officer
-------------------------------------------------------------
Gadzooks, Inc.'s (OTC Pink Sheets: GADZQ) chief financial officer,
James A. Motley, will be leaving the Company on September 10,
2004.
"Jim has accepted an offer to join a Dallas-based private
distribution company and we wish him well in that venture," said
Jerry Szczepanski, Gadzooks chairman and chief executive officer.
Mr. Szczepanski said that Gadzooks will immediately begin a search
for a new chief financial officer. "In the interim, we are
confident that the financial team at the Company working with our
financial advisors can maintain the momentum of our restructuring
and financial reporting activities," said Mr. Szczepanski. "The
Company has made substantial progress in our Chapter 11 case and
is working towards filing a Plan of Reorganization," Mr.
Szczepanski concluded.
Headquartered in Carrollton, Texas, Gadzooks, Inc.
-- http://www.gadzooks.com/-- is a mall-based specialty retailer
providing casual apparel and related accessories for youngsters,
between the ages of 14 and 18. The Company filed for chapter 11
protection on February 3, 2004 (Bankr. N.D. Tex. Case No. 04-
31486). Charles R. Gibbs, Esq., and Keith Miles Aurzada, Esq., at
Akin Gump Strauss Hauer & Feld, LLP represent the Debtor in its
restructuring efforts. When the Company filed for protection from
its creditors, it listed $84,570,641 in total assets and
$42,519,551 in total debts.
GOLF TRUST: Completes $2.475 Million Wekiva Golf Club Asset Sale
----------------------------------------------------------------
On August 26, 2004, Golf Trust of America, Inc. (AMEX:GTA)
consummated its sale of Wekiva Golf Club to Wekiva Golf Club,
Inc., a Florida corporation, for total consideration of $2.475
million. Wekiva Golf Club is an 18-hole public golf course located
in Longwood, Florida.
Golf Trust of America, Inc., formerly a real estate investment
trust, is now liquidating its interests in golf courses in the
United States pursuant to a plan of liquidation approved by its
stockholders. After the sale, the Company owns an interest in four
properties (8.0 eighteen-hole equivalent golf courses). Additional
information regarding Golf Trust and its interest in the Westin
Innisbrook Golf Resort is available in Golf Trust's periodic
filings with the SEC and on the Company's website at
http://www.golftrust.com/
GSI GROUP: Craig Sloan Retires as Chief Executive Officer
---------------------------------------------------------
Craig Sloan retired as the Chief Executive Officer of The GSI
Group, Inc. On that date, Mr. Sloan and the Company entered
into a Severance, Non-Compete and Consulting Agreement providing
the terms and conditions of Mr. Sloan's
retirement and establishing a three-year period
(subject to extension) during which Mr. Sloan will act as a
consultant to the Company.
Pursuant to that agreement, the Company also repurchased a portion
of Mr. Sloan's common stock. The agreement provides that Mr. Sloan
will continue to serve as a director of the Company and as the
non-executive Chairman of the Board. The Board of Directors has
elected Russell C. Mello as Chief Executive
Officer of the Company.
GSI Group is a leading manufacturer and supplier of agricultural
equipment and services worldwide. The Company is also one of the
largest global providers of poultry feed storage, feed delivery,
watering, ventilation and nesting systems. The Company markets
its agricultural products in approximately 75 countries through
a network of over 2,500 independent dealers to grain, swine and
poultry producers primarily under its GSI, DMC, FFI, Zimmerman, AP
and Cumberland brand names. The Company's current market position
in the industry reflects both the strong, long-term relationships
the Company has developed with its customers as well the quality
and reliability of its products.
At July 2, 2004, GSI Group's balance sheet showed a $39,669,000
stockholders' deficit, compared to a $23,333,000 deficit at
December 31,2003.
HERITAGE ORG: Files Chapter 11 Reorganization Plan in Texas
-----------------------------------------------------------
The Heritage Organization, LLC filed its Chapter 11 Reorganization
Plan with the U.S. Bankruptcy Court for the Northern District of
Texas, Dallas Division. A full-text copy of the Debtor's Plan is
available for a fee at:
http://www.researcharchives.com/download?id=040812020022
The Plan groups creditors and equity holders in six classes and
describes their treatment:
Class Treatment
----- ---------
1 - Priority Claims Unimpaired. Allowed Priority Claims
will be paid in full upon the Initial
Distribution Date, and will bear
interest from Petition Date
until paid at the lesser of
(a) the rate prescribed by
non-bankruptcy
applicable law, or
(b) the Plan Rate.
2 - Litigation Claims Impaired. Allowed Litigation Claims will
be paid in full with interest from and
after the effective date:
(a) Each Allowed Litigation Claim will
receive interest on the unpaid
amount thereof from and after the
Effective Date until paid at
the Plan Rate.
(b) Each Allowed Litigation Claim will
be paid in not more than twelve
substantially equal annual
installments, each including both
principal and interest. The first
such installment being due and
payable on each successive
anniversary until each Allowed
Litigation Claim is pain in full.
(c) All Litigation Claims will be deemed
as Contested Claims without the need
for any objection thereto.
3 - Unsecured Claims Impaired. Allowed Unsecured General
Claims will be paid in full with
interest as set forth below.
(a) Each Allowed Unsecured (General)
Claim shall be pain in four
substantially equal installments,
each including both principal
and interest. The first such
installment will be due and payable
on the Initial Distribution Date,
with a like installment
being due and payable on each
successive anniversary thereof
until the Allowed Claim is paid in
full.
4 - Secured Claims May be impaired.
(a) The Security of a Claim depends on
the amount of the Allowed Claim
or the value of the Collateral
securing such claim. Each
holder of a Secured Claim will be
put in a separate subclass. As to
each holder of a Secured Claim, the
Reorganized Debtor will either:
(i) object to the Claim;
(ii) return the Collateral in full
satisfaction of such Secured
Claim;
(iii) pay cash in an amount
equivalent to the lesser of
to the lesser of the value of
the Collateral or the full
amount of the Secured Claim;
(iv) allow the Secured Claimant to
offset in satisfaction of its
Claim;
(v) file a Valuation Motion to
determine the value of the
Claimant's Collateral; or
(vi) provide such other treatment
as may be agreed to in writing
by such holder of the Secured
Claim and the Reorganized
Debtor.
The Unsecured General Claim is the
difference between the Claimant's Allowed
Claim and the value of the Collateral,
unless the Claimant has elected treatment
pursuant to Section 1111(b)and Rule 3014
of the Bankruptcy Code.
Reorganized Debtor will, at its sole
discretion, determine whether the
treatment afforded will be a return of the
Collateral or payment in cash.
5 - Insider Claims Not impaired. Allowed Insider Claims will
be paid on such terms as may be agreed
between the holders of such Claims and the
Reorganized Debtor on behalf of any
Allowed Insider Claim until all
Allowed Litigation Claims have been paid
in full.
6 - Equity Interests Holders of Equity Interests will retain
such interests subject to the terms of
this Plan.
Headquartered in Dallas, Texas, Heritage Organization, L.L.C.
filed for chapter 11 protection (Bankr. N.D. Tex. Case No.
04-35574) on May 17, 2004. Cynthia Williams Cole, Esq., at
Neligan Tarpley Andrews & Foley, L.L.P., initially represented the
Company. David W. Parham, Esq., and Laurie D. Babich, Esq., at
Baker and McKenzie now represent the Debtor. When Heritage filed
for protection from its creditors, it listed both estimated debts
and assets of over $10 million.
HERITAGE ORG: Court Appoints Dennis Faulkner as Chapter 11 Trustee
------------------------------------------------------------------
The Honorable Steven A. Felsenthal of the U.S. Bankruptcy Court
for the Northern District of Texas, Dallas Division, appointed
Dennis S. Faulkner to serve as Chapter 11 Trustee in The Heritage
Organization, LLC's chapter 11 proceeding, pursuant to 11 U.S.C.
Sec. 1104(a).
W. Ralph Canada, Jr., one of Heritage's largest creditors, asked
the Court to appoint a chapter 11 trustee. He argued that the
Debtor's case has been pending in Court for months with no
progress. Also, the Debtor's law firm, Neligan Tarpley Andrews &
Foley, was replaced by Baker and McKenzie without formal
explanation about the reasons for the substitution.
Mr. Canada holds a $6 million claim against the Debtor. The claim
has been liquidated and determined by an arbitration award in
April 14, 2004, by the American Arbitration Association Commercial
Arbitration. Mr. Canada was seeking to have the award executed
when the Debtor filed for chapter 11 protection. The Debtor
testified that its primary reason for seeking relief is to stall
enforcement of the arbitration award.
Betty Joan Rainwater and Homer Ben Rainwater, two other
significant creditors, supported Mr. Canada' motion.
Headquartered in Dallas, Texas, Heritage Organization, L.L.C.
filed for chapter 11 protection (Bankr. N.D. Tex. Case No.
04-35574) on May 17, 2004. Cynthia Williams Cole, Esq., at
Neligan Tarpley Andrews & Foley, L.L.P., initially represented the
Company. David W. Parham, Esq., and Laurie D. Babich, Esq., at
Baker and McKenzie now represent the Debtor. When Heritage filed
for protection from its creditors, it listed both estimated debts
and assets of over $10 million.
HERITAGE ORG: Turns to Tatum CFO for Financial Advice
-----------------------------------------------------
The Heritage Organization, LLC, asks the U.S. Bankruptcy Court for
the Northern District of Texas, Dallas Division, for permission to
employ Tatum CFO Partners, LLC, as its financial advisor nunc pro
tunc to August 2, 2004.
The Debtor chose Tatum because of the firm's extensive experience
and expertise in commercial banking and lending, and commercial
collection and recovery, including work with distressed companies.
The Debtor requires Tatum's services in prosecuting its plan of
reorganization to confirmation.
William F. Herzog is the Tatum professional who'll primarily work
with the Debtor. Mr. Herzog bills $500 per hour for his work.
Mr. Herzog relates that the Debtor paid Tatum a $25,000 retainer.
To the best of the Debtor's knowledge, Tatum CFO is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
Headquartered in Dallas, Texas, Heritage Organization, L.L.C.
filed for chapter 11 protection (Bankr. N.D. Tex. Case No.
04-35574) on May 17, 2004. Cynthia Williams Cole, Esq., at
Neligan Tarpley Andrews & Foley, L.L.P., initially represented the
Company. David W. Parham, Esq., and Laurie D. Babich, Esq., at
Baker and McKenzie now represent the Debtor. When Heritage filed
for protection from its creditors, it listed both estimated debts
and assets of over $10 million.
HILLCREST DEV'T: Case Summary & 14 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Hillcrest Development & Building, Inc.
154 Commodore Drive
Jupitor, Florida 33477
Bankruptcy Case No.: 04-32312
Type of Business: The Debtor develops commercial properties.
Chapter 11 Petition Date: August 24, 2004
Court: Eastern District of Wisconsin (Milwaukee)
Judge: Susan V. Kelley
Debtor's Counsel: Dayten P. Hanson, Esq.
Hanson & Payne, LLC
1841 North Prospect Avenue
Milwaukee, Wisconsin 53202
Tel: 414-271-4550
Total Assets: $3,000,000
Total Debts: $2,000,000
Debtor's 14 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Internal Revenue Service Taxes $240,000
Waukesha County Treasurer Taxes $55,000
EPA Region 5 Goods & Services $15,000
T W & Company Goods & Services $7,000
Hacker & Romano, S.C. Goods & Services $2,000
Holland & Vollmer, S.C. Goods & Services $1,700
WE Energies Goods & Services $1,000
A Cut Above Goods & Services $800
Miller Electrical Enterprises $188
Elena Design Associates Goods & Services Unknown
Losik Ellena Design Group Unknown
New Berlin Grading, Inc. Goods & Services Unknown
Wisconsin Department of Taxes Unknown
Revenue
Wisconsin Drywall Distributors Unknown
HORIZON NATURAL: Court Confirms Chapter 11 Reorganization Plan
--------------------------------------------------------------
U.S. Bankruptcy Judge William S. Howard confirmed the Horizon
Natural Resources' plan of reorganization which sells the company
for $786 million to an investor group led by Wilbur Ross.
Consummation will likely occur in approximately one month, ending
the proceeding that began in November 2002.
The plan divides Horizon into two new entities, International Coal
Group and Old Ben Coal Company. Wilbur L. Ross, Jr., Chairman of
International Coal Group said, "With the cooperation of the Office
of Surface Mining and the states of Kentucky, West Virginia,
Illinois, Indiana and Tennessee, we have created the fifth largest
U.S. coal company, an enterprise free of contingent liabilities.
Our one billion tons of steam coal reserves and $600 million of
highly profitable projected 2005 revenues will provide a basis for
consolidating other producers. Furthermore, Old Ben has been
provided with resources estimated to be adequate to deal with its
reclamation liabilities and to continue mining those properties
that have economically recoverable reserves. We are proud that the
plan meets the regulators' primary objective of leaving no permit
behind."
Daniel J. Geiger has been appointed CEO of Old Ben Coal Company.
He had been Vice President, Engineering of James River Coal
Company since 1982. He holds a B.S. in Civil Engineering from Ohio
State University.
Headquartered in Ashland, Kentucky, Horizon Natural Resources
(f/k/a AEI Resources Holding, is one of the United States' largest
producers of steam (bituminous) coal. The Company filed for
chapter 11 protection on February 28, 2002 (Bankr. E.D. Ky. Case
No. 02-14261). Ronald E. Gold, Esq., at Frost Brown Todd LLC,
represents the Debtor in its restructuring efforts. When the
Company filed for protection from its creditors, it listed over
$100 million in total assets and total debts.
HUDSON'S BAY: Discloses $6.2 Million Net Loss for 2004 2nd Qtr.
---------------------------------------------------------------
Hudson's Bay Company reported results for the three months ended
July 31, 2004.
Sales and revenue for the second quarter 2004 were $1.627 billion
compared to $1.664 billion in the same period last year. On a
comparable store basis, Hbc sales in the quarter declined 1.8 per
cent over last year. Seasonal businesses declined by 5 per cent
compared to the same period last year.
As the weather returned to seasonal norms, sales improved month
over month in the quarter with a 1.6 per cent growth in comparable
store sales in the last month of the quarter as compared to the
same period last year. The overall retail gross margin rate for
the Company declined by 60 basis points, reflecting the need for
higher than planned markdowns to clear seasonal merchandise,
offset in part by gross margin rate increases in home and
hardlines. The selling, general and administrative costs
(excluding store closing costs) were flat compared to the second
quarter of last year.
The Company recorded a loss before interest and income taxes
(EBIT) of $6.2 million for the quarter compared to earnings of
$17.5 million in the same period last year. For the first half of
2004, EBIT was a loss of $26.3 million compared to a loss of $23.7
million in the corresponding period of 2003.
On a normalized basis, after excluding non-comparable items that
occurred in the first quarter of 2003, EBIT in the first half of
2004 was a loss of $26.3 million compared to a normalized loss in
the first half of 2003 of $13.9 million.
Commenting on the quarter, George Heller, President and Chief
Executive Officer of Hudson's Bay Company stated, "While our
retail formats experienced improving sales trends in our first
quarter, they were negatively impacted by the lack of demand for
seasonal merchandise in the first two months of the second
quarter. We are encouraged that as the weather returned to
seasonal norms our sales responded positively, with all Hbc
formats recording positive comparable store sales in July and
August. Through quick and appropriate action we exited the season
clean, ending with 11 per cent less seasonal inventory compared to
last year and only a slight impact to our margin rate.
This is the result of improved assortments and the growth of our
opportunity buy programs. Our balance sheet and cashflow remain
extremely strong, our net debt levels are $239 million below last
year's levels, and we managed our cost structure flat to last
year. We remain confident in the back half of the year and
reaffirm our year-end guidance, given the positive indications
from our growth initiatives and the anticipated contribution from
24 expanded and renovated Zellers stores coming on stream this
fall, as well as the current positive sales trends."
Hbc continues to expect normalized earnings per share for fiscal
2004 in the range of $1.15 - $1.25 per share, approximately a 24
per cent to 34 per cent improvement versus the 2003 normalized
result.
Hudson's Bay Company (S&P, BB+ Long-Term Corporate Credit and
Senior Unsecured Debt Ratings, Negative Outlook), established in
1670, is Canada's largest department store retailer and oldest
corporation. The Company provides Canadians with the widest
selection of goods and services available through retail channels
including more than 500 stores led by the Bay, Zellers and Home
Outfitters chains. Hudson's Bay Company is one of Canada's largest
employers with 70,000 associates and has operations in every
province in Canada. Hudson's Bay Company's common shares trade on
The Toronto Stock Exchange under the symbol "HBC".
INTERPUBLIC GROUP: Tony Wright Named Worldwide CEO & President
--------------------------------------------------------------
Tony Wright was named Worldwide CEO and President of Lowe &
Partners Worldwide. Mr. Wright, 43, is among the advertising
industry's most distinguished practitioners. He joins Lowe from
Ogilvy & Mather, where he had been Worldwide Chief Strategy
Officer, charged with leading the strategic process for key
multinational clients, as well as for global new business
development. He assumes his new responsibilities from Jerry Judge,
the agency's current CEO. Judge will continue as CEO of The
Partnership division of Interpublic, which encompasses a number of
agency brands.
According to David Bell, CEO and President of Interpublic, "Back
in mid-2001, Jerry signed on to do a four-year job at Lowe and
help us address a number of issues at the company. He has been
successful in putting together a management team that will help
build a more powerful agency. As is usual in the course of
business, we had put together a succession plan at Lowe. We're
convinced we have found the right leader for Lowe now, which is
why we've decided to accelerate management transition at the
agency. Jerry respects that decision."
Mr. Judge added: "After having overseen one of the biggest mergers
in advertising history between Lowe and APL, I am proud of the
steps we have taken to futurize the agency. I am also proud of our
strong new business record this year. I will be working with David
to ensure a smooth transition through the end of 2004."
In describing Mr. Wright, David Bell commented: "Tony is an
exceptional talent. He has proven his ability to succeed as both a
leader at top creative agencies and as an effective steward of
major global brands. His intellect and rigor, as well as his
energy and passion for great work, will all be valuable in
restoring Lowe to its traditional place among the first rank of
global creative agencies."
"From my earliest days in the business, I have always considered
Lowe as one of advertising's most admired brands. I am very much
looking forward to joining the agency and working with the team
there," said Mr. Wright. "I believe Lowe is uniquely positioned to
address the paradox clients must increasingly confront -- how to
get big, highly creative ideas quickly from an agency that is also
able to think and execute globally."
Prior to joining Ogilvy & Mather in 1995, Mr. Wright was a partner
in the successful New York creative agency, Berlin Wright Cameron.
From 1986 to 1992, Wright made his name as a planner and
strategist at Chiat Day, where he is credited as having been the
driving force behind the immensely successful "Energizer Bunny"
campaign, which continues to this day. Wright began his career in
London at Hedger, Mitchell, Stark, a leading British creative
agency.
About Interpublic
Interpublic is one of the world's leading organizations of
advertising agencies and marketing-services companies. Major
global brands include Draft, Foote, Cone & Belding Worldwide,
GolinHarris International, Initiative, Lowe & Partners Worldwide,
McCann-Erickson, Universal McCann, Octagon, Jack Morton Worldwide
and Weber Shandwick Worldwide. Leading domestic brands include
Campbell-Ewald, Deutsch and Hill Holliday.
* * *
As reported in the Troubled Company Reporter on April 6, 2004,
Fitch Ratings affirmed the ratings on The Interpublic Group of
Companies, Inc.'s (IPG) senior unsecured debt at 'BB+', multi-
currency bank credit facility at 'BB+' and convertible
subordinated notes at 'BB-'. The Rating Outlook has been revised
to Stable from Negative. Approximately $2.3 billion of debt is
affected. The ratings on IPG's debt consider the progress made
with its cost structure and strengthened balance sheet as well as
the company's position as a leading global advertising holding
company and its diverse client base with long term relationships
with key accounts. Of concern remains the resolution of the
operation of the Silverstone racetrack and the sizeable related
liabilities and negative organic revenue growth.
The Stable Outlook reflects Fitch's expectation that IPG's
turnaround efforts have begun to steady operating earnings and
cash flow generation. Also acknowledged are the improvements to
IPG's balance sheet and its success in resolving certain non-
operating issues that have been a distraction for the company's
management, including the shareholder lawsuits and asset
dispositions.
LOUISIANA-PACIFIC: Moody's May Upgrade Ba1 Ratings After Review
---------------------------------------------------------------
Moody's Investors Service placed the Ba1 Senior Implied and Senior
Unsecured debt ratings of Louisiana-Pacific Corporation on review
for possible upgrade. Moody's expects the review to be completed
over the next several weeks.
Ratings Placed Under Review:
Outlook: Stable
Senior Implied: Ba1
US$174.1 million 8.5% Senior Unsecured Notes due
August 15, 2005: Ba1
US$199.4 million 8.875% Senior Unsecured Notes due
August 15, 2010: Ba1
Despite unusually strong recent earnings and a large cash/short
term investment balance, given Louisiana-Pacific's exposure to the
very volatile oriented strandboard -- OSB -- market, Moody's
previously expressed concern about Louisiana-Pacific's liquidity
arrangements and the lack of a significant credit facility that
was contractually committed for a reasonable tenor. Acquisition
appetite and potential financial leverage had also been noted as a
concern. In light of expectations of continued strong
fundamentals and financial performance, Moody's will review the
company's strategy and business plan including growth aspirations
and the bounds of acceptable debt and capitalization parameters.
This will include assessment of the company's complete liquidity
plan including that for dedicated cash balances and lines of
credit. As well, legacy issues related to OSB and hardboard
siding liabilities and expenses will also be assessed as part of a
comprehensive review.
Louisiana-Pacific is a leading manufacturer and distributor of
building materials, and is North America's largest producer of OSB
with a 26% market share. The company's products (produced in 42
facilities in the United States and Canada with one facility in
Chile) are used primarily in new home construction, repair and
remodeling, and manufactured housing. Headquartered in Nashville,
Tennessee, Louisiana-Pacific's common shares trade on the New York
Stock Exchange under the symbol "LPX".
MASTR ALTERNATIVE: Fitch Puts BB Rating on $1.326MM Cert. Class
---------------------------------------------------------------
Fitch Ratings-New York-August 31, 2004
Fitch rates MASTR Alternative Loan Trust, series 2004-7, as
follows:
-- $382,100,000 classes 1-A-1, 2-A-1, 3-A-1, 4-A-1 - 4-A-3,
5-A-1, 6-A-1, 7-A-1, 8-A-1, PO, 30-AX-1, 30-AX-2, 15-AX,
A-LR, and A-R senior certificates 'AAA';
-- $1,888,000 class B-3 'BBB-';
-- $6,251,000 class B-I-1 'AA';
-- $2,084,000 class B-I-2 'A';
-- $1,137,000 class B-I-3 'BBB';
-- $1,326,000 privately offered class B-I-4 'BB'.
The 'AAA' rating on the Group 1, 4, 5 and 8 senior certificates
reflects the 8.35% subordination provided by:
* the 3.75% class B-1,
* 1.70% class B-2,
* 0.90% class B-3,
* 0.90% privately offered class B-4,
* 0.60% privately offered class B-5, and
* 0.50% privately offered class B-6 certificates,
all of which are not rated by Fitch.
The rating on the class B-3 certificate is based on its respective
subordination.
The 'AAA' rating on the Group 2, 3, 6 and 7 senior certificates
reflects the 6.5% subordination provided by:
* the 3.30% class B-I-1,
* 1.10% class B-I-2,
* 0.60% class B-I-3,
* 0.70% privately offered class B-I-4,
* 0.40% privately offered class B-I-5 (not rated by Fitch), and
* 0.40% privately offered class B-I-6 (not rated by Fitch)
certificates.
The ratings on the class B-I-1, B-I-2, B-I-3 and B-I-4
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 Wells Fargo Bank Minnesota, N.A. (rated 'RMS1' by
Fitch).
The mortgage loans are separated into eight cross-collateralized
mortgage loan groups. Groups 1, 4, 5 and 8 are cross-
collateralized and Groups 2, 3, 6 and 7 are cross-collateralized.
Each group's senior certificates will receive interest and
principal from its respective mortgage loan group. In certain
very limited circumstances when a pool experiences either rapid
prepayments or disproportionately high realized losses, principal
and interest collected from the other pools may be applied to pay
principal or interest, or both, to the senior certificates of the
pool that is experiencing such conditions. The subordinate
certificates will support all ten groups and will receive interest
and principal from available funds collected in the aggregate from
all mortgage pools.
Groups 1, 4, 5 and 8 in aggregate contain 1,415 conventional,
fully amortizing 30-year fixed-rate mortgage loans secured by
first liens on one- to four-family residential properties with an
aggregate scheduled principal balance of $209,842,460. The
average unpaid principal balance of the aggregate pool as of the
cut-off date (Aug. 1, 2004) is $148,299. The weighted average
original loan-to-value ratio -- OLTV -- is 78.31%. The weighted
average credit score of the borrowers is 695. Approximately
75.36% of the pool was originated under a reduced (non
Full/Alternative) documentation program. Investor properties
comprise 49.09% of the loans. The weighted average mortgage
interest rate is 6.596% and the weighted average remaining term to
maturity -- WAM -- is 357 months. The states that represent the
largest portion of the aggregate mortgage loans are:
* California (13.19%),
* Florida (10.39%),
* New York (6.35%),
* Texas (5.59%), and
* New Jersey (5.55%).
All other states represent less than 5% of the pool balance as of
the cut-off date.
Groups 2, 3, 6 and 7 in aggregate contain 1,584 conventional,
fully amortizing 15- to 30-year fixed-rate mortgage loans secured
by first liens on one- to four-family residential properties with
an aggregate scheduled principal balance of $189,425,875. The
average unpaid principal balance of the aggregate pool as of
Aug. 1, 2004 is $119,587. The weighted average OLTV is 69.99%.
The weighted average credit score of the borrowers is 714.
Approximately 29.96% of the pool was originated under a reduced
(non Full/Alternative) documentation program. Investor properties
comprise 100.00% of the loans. The weighted average mortgage
interest rate is 6.000% and the WAM is 298 months. The states
that represent the largest portion of the aggregate mortgage loans
are:
* California (18.19%),
* Florida (8.51%),
* New York (7.68%), and
* New Jersey (6.13%).
All other states represent less than 5% of the pool balance as of
Aug. 1, 2004.
None of the mortgage loans are 'high cost' loans as defined under
any local, state or federal laws.
MASTR, a special purpose corporation, deposited the loans into the
trust, which issued the certificates. U.S. Bank National
Association will act as trustee. For federal income tax purposes,
elections will be made to treat the trust fund as multiple real
estate mortgage investment conduits.
METALLURG HOLDINGS: Fails to Pay $7.7MM Semi-Annual Debt Interest
-----------------------------------------------------------------
Metallurg Holdings, Inc., Metallurg, Inc.'s parent company, did
not make the $7.7 million semi-annual interest payment due
July 15, 2004, on its outstanding $121 million issue of 12-3/4%
Senior Discount Notes due 2008.
The company had 30 days to cure the interest payment default under
the terms of the indenture governing the Senior Discount Notes,
but didn't. This could lead to a foreclosure on all of the
outstanding common stock of Metallurg, Inc., which has been
pledged as collateral for the Company's obligations under the
Senior Discount Notes. If a foreclosure occurs, this will result
in a change of control of Metallurg.
A change of control would require Metallurg to make an offer to
purchase all of its $100 million aggregate principal amount 11%
Senior Notes due 2007 under the terms of the indenture governing
the Senior Notes. Metallurg does not anticipate having sufficient
funds necessary to purchase all of the Senior Notes. The failure
to purchase any of the Senior Notes requested to be purchased
would result in a default under the Senior Notes.
In addition, in the event that the maturity of the Senior Notes is
accelerated as a result of the failure of Metallurg to purchase
Senior Notes, an event of default will occur under Metallurg's
revolving credit facility with Fleet National Bank.
Advisors on Board
As previously announced, Metallurg has retained Compass Advisers,
LLP, as financial advisors, and Paul, Weiss, Rifkind, Wharton &
Garrison, LLP, as legal counsel, to assist Metallurg in analyzing
and evaluating possible transactions for the principal purposes of
refinancing the Fleet Credit Facility (which is scheduled to
mature on October 29, 2004) and restructuring its balance sheet.
Talks Continue
Metallurg is engaged in negotiations, which are at an advanced
stage with a potential lender, regarding a refinancing of the
Fleet Credit Facility.
Bankruptcy Filing Possible
Metallurg neither expresses any opinion nor gives any assurances
whatsoever regarding whether, when, or on what terms it will be
able to refinance the Fleet Credit Facility or complete any
broader restructuring of its balance sheet. Management believes
that the refinancing and restructuring of the Fleet Credit
Facility and balance sheet is essential to the long-term viability
of Metallurg. If Metallurg is not able to reach agreements that
favorably resolve the issues described, Metallurg likely will not
have adequate liquidity to enable it to make the interest payments
required with respect to its Senior Notes or to repay the Fleet
Credit Facility. In such event, Metallurg may have to resort to
certain other measures to resolve its liquidity issues, including
ultimately seeking the protection afforded under the United States
Bankruptcy Code. Furthermore, any negotiated refinancing of the
Fleet Credit Facility or negotiated restructuring of Metallurg's
balance sheet may require that Metallurg seek the protection
afforded under the reorganization provisions of the United States
Bankruptcy Code.
Metallurg is a leading international producer and seller of high-
quality specialty metals, alloys and metallic chemicals which are
essential to the production of high-performance aluminum and
titanium alloys, specialty steel, superalloys and certain non-
metallic materials for various applications in the aerospace,
power supply, automotive, petrochemical processing and
telecommunications industries. Metallurg sells approximately 50
different product groups to over 1,500 customers worldwide
(primarily in North America and Europe).
At June 30, 2004, Metallurg Holdings' balance sheet showed a
$78,213,000 stockholders' deficit, compared to a $74,069,000
deficit at December 31, 2003.
MIRANT: Kendall Permitted to Shut Down Part of Massachusetts Plant
------------------------------------------------------------------
On April 1, 2004, Mirant Kendall, LLC, a Mirant Corporation
debtor-affiliate, applied to the Independent System Operator of
New England to deactivate, as of October 1, 2004, a combustion
turbine and three steam generation units located in Cambridge
Massachusetts due to Mirant Kendall's determination that the units
do not produce sufficient revenues under current market conditions
to justify their continued operation at this time.
Dan Streek, Mirant Corporation Vice-President and Controller
(Principal Accounting Officer), relates that on June 10, 2004,
Mirant Kendall made a similar filing to deactivate its Kendall
Jet #1 and to retire Kendall Jet #2.
On June 25, 2004, the ISO New England did not approve Mirant
Kendall's application to deactivate the three steam generation
units, stating that two of the three steam generation units are
needed to mitigate risk to the Kendall Substation area load, and
only one of the steam generation units may be deactivated on
October 1, 2004.
On July 13, 2004, ISO New England determined that the deactivation
of the combustion turbine will not have a significant effect upon
the reliability or operating characteristics of the ISO New
England's transmission system and Mirant Kendall may continue with
its plan to deactivate the combustion turbine on October 1, 2004.
"On July 27, 2004, the ISO New England did not approve Mirant
Kendall's application to deactivate Jet #1 stating that such
deactivation would have a significant adverse effect on the
reliability of the New England Power Pool system or of the systems
of one or more other participants; namely the Kendall Substation
area load," Mr. Streek discloses in a regulatory filing with the
Securities and Exchange Commission. As with the July 13, 2004
rejection of the deactivation of two of the three steam generation
units, Mirant must negotiate in good faith with the ISO New
England regarding an agreement to avoid any adverse effect
resulting from the deactivation of Jet #1.
On July 27, 2004, the ISO New England determined that the
deactivation of Jet #2 will not have a significant effect upon the
reliability or operating characteristics of the ISO New England's
transmission system or on the system of any other participant and
Mirant Kendall may continue with its plan to deactivate Jet #2 on
October 1, 2004.
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. 43; Bankruptcy Creditors' Service, Inc., 215/945-7000)
MISSION HEALTH: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Mission Health Services
dba Alpine Valley Care Center
dba Hillside Rehabilitation Center
dba Hurricane Rehabilitation Center
dba Pleasant Grove Rehabilitation Center
dba West Jordan Care Center
dba Zion Health Care Complex
2598 East 3650 North
Layton, Utah 84040
Bankruptcy Case No.: 04-34063
Type of Business: The Debtor operates nursing and rehabilitation
facilities.
Chapter 11 Petition Date: August 30, 2004
Court: District of Utah (Salt Lake City)
Judge: William T. Thurman
Debtor's Counsel: Kenneth L. Cannon, II, Esq
Durham Jones & Pinegar
111 East Broadway
Suite 900
Salt Lake City, Utah 84111
Tel: (801) 415-3000
Fax: (801) 415-3500
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $10 Million to $50 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Internal Revenue Service $118,000
Zion Rehabilitation $55,260
Gulf South Medical Supply $14,861
Superior Care Pharmacy $14,439
Mountain Land Rehabilitation $13,328
Sysco $11,553
Care First Pharmacy $10,074
Remedy, Inc. $4,780
Quality Staffing $4,720
Therapeak, Inc. $4,057
City of Hurricane $3,450
Medline Industries $2,558
Utah Power $2,486
Utah Health Care Association $2,344
Questar Gas $2,099
2HM, LLC $1,872
Superior Care Specialty Products $1,559
City of West Jordan $1,452
Life Skills Nutritional Supplement $1,447
Home Depot Commercial Account $1,305
MORTGAGE ASSET: Fitch Puts BB Rating on $656K Class Certificates
----------------------------------------------------------------
Mortgage Asset Securitization Transactions, Inc., mortgage pass-
through certificates, series 2004-9, MASTR Asset Securitization
Trust 2004-9, is rated by Fitch as follows:
-- $656,000,000 classes 1-A-1, 2-A-1 - 2-A-4, 3-A-1 through
3-A-7, 4-A-1, 5-A-1, 6-A-1, 7-A-1, PO, 15-A-X, 30-A-X, A-LR
and A-UR senior certificates 'AAA';
-- $6,069,000 class 30-B-1 'AA';
-- $1,969,000 class 30-B-2 'A';
-- $1,148,000 class 30-B-3 'BBB';
-- $656,000 privately offered class B-4 'BB'.
The 'AAA' rating on the Group 1, 5, 6 and 7 senior certificates
reflects the 1.10% subordination provided by:
* the 0.50% class 15-B-1,
* 0.20% class 15-B-2,
* 0.15% class 15-B-3,
* 0.10% privately offered class 15-B-4,
* 0.10% privately offered class 15-B-5, and
* 0.05% privately offered class 15-B-6,
all of which are not rated by Fitch.
The 'AAA' rating on the Group 2 and 4 senior certificates reflects
the 3.40% subordination provided by:
* the 1.85% class 30-B-1,
* 0.60% class 30-B-2,
* 0.35% class 30-B-3,
* 0.20% privately offered class 30-B-4,
* 0.25% privately offered class 30-B-5 (not rated by Fitch),
and
* 0.15% privately offered class 30-B-6 (not rated by Fitch).
Classes 30-B-1, 30-B-2, 30-B-3, and 30-B-5 are rated 'AA', 'A',
'BBB', and 'BB' based on their respective subordination only.
The 'AAA' rating on the Group 3 certificates reflects cash-flow
from the previously issued MASTR Asset Trust 2004-6, class 7-A-1
certificate (rated 'AAA' by Fitch). As Group 3 contains a
resecuritized certificate, the sources of payment for this group
include cash-flows from the mortgage loans in the underlying
trust.
The trust will consist of eight asset groups. The certificates
whose class designation begins with 1 through 7 correspond to
Groups 1 through 7 respectively. Groups 1, 5, 6 and 7 will be
cross collateralized, with credit enhancement provided by the
subordinate class 15-B certificates; and Groups 2 and 4 will be
cross collateralized, with credit enhancement provided by the
subordinate class 30-B certificates. Additionally, classes A-LR
and A-UR certificates represent interests in Groups 1; class 30-A-
X represent interests in Groups 2, 3, and 4; class 15-A-X
represent interest in Groups 5 and 6; and class PO represent
interests in Groups 1 through 6.
As of the cut off date (Aug. 1, 2004), the mortgage pool in
aggregate for Groups 1, 2, 4, 5, 6 and 7 consists of $521,267,349
of 1,071 conventional, fully amortizing, 15 and 30-year fixed-
rate, mortgage loans secured by first liens on one- to four-family
residential properties. The average principal balance is
$486,711. The weighted average FICO score is 735. The pool has a
weighted average original loan-to-value ratio -- OLTV -- of
66.79%. Approximately 40.45% of the loans were originated under a
reduced (non Full/Alternative) documentation program. The
weighted average remaining term to maturity -- WAM -- is
approximately 287 months. The states that represent the largest
portion of the mortgage loans are:
* California (42.81%),
* New York (7.06%), and
* Texas (6.05%).
All other states represent less than 5% of the outstanding balance
of the pool.
None of the mortgage loans are 'high cost' loans as defined under
any local, state or federal laws.
MASTR, a special purpose corporation, deposited the loans into the
trust, which issued the certificates. Wachovia Bank, National
Association will act as trustee. For federal income tax purposes,
elections will be made to treat the trust fund as multiple real
estate mortgage investment conduits.
NATIONAL CENTURY: Court Okays Rule 2004 Exams of 24 More Parties
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Ohio gave
its permission to the Unencumbered Assets Trust, the successor-in-
interest to certain rights and assets of National Century
Financial Enterprises, Inc., and its debtor-affiliates, to
direct the production of documents from 24 additional third party
entities that may be in possession of information relevant to the
Trust's evaluation of potential estate claims.
According to Sydney Ballesteros, Esq., at Gibbs & Bruns, in
Houston, Texas, the 24 entities were the custodial holders of
payments or disbursements relating to NCFE securities within the
preference period of the bankruptcy. The custodians therefore
have relevant information relating to the identity of the
beneficial owners of the NCFE securities. This information will
help the Trust identify and determine whether certain preference
claims exist and should be brought on behalf of the Debtors'
estate.
As reported in the Troubled Company Reporter on July 20, 2004, the
24 third party entities are:
(1) ABN Amro Incorporated/Bond Trading,
(2) Bear Sterns Securities Corp.,
(3) Boston Safe Deposit and Trust Co.,
(4) Brown Brothers Harriman & Co.,
(5) Citibank,
(6) Credit Suisse First Boston, LLC,
(7) Deutsche Bank Securities, Inc.,
(8) Deutsche Bank Trust Co. (Bankers Trust Co.),
(9) First National Bank of Omaha,
(10) Harris Trust and Savings Bank,
(11) Investors Bank & Trust Co.,
(12) JP Morgan Chase Bank,
(13) JPM/CCS2,
(14) JPM/JPMSI,
(15) LaSalle Bank National Assn.,
(16) M&I Marshall & Ilsley Bank,
(17) Mercantile-Safe Deposit & Trust Co.,
(18) Northern Trust Co.,
(19) Salomon Brothers (Citigroup Global Markets, Inc./Salomon),
(20) State Street Bank and Trust Co.,
(21) The Bank of New York,
(22) Wachovia Bank, N.A.,
(23) Wells Fargo Bank Minnesota, N.A., and
(24) WestLB AG.
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. (National Century Bankruptcy News, Issue
No. 45; Bankruptcy Creditors' Service, Inc., 215/945-7000)
NATIONAL COAL: Issues $19 Million of New Convertible Securities
---------------------------------------------------------------
National Coal Corp. (OTCBB: NLCP), a coal producer operating in
Eastern Tennessee, today announced has completed $19 million in
private placements through the issuance of $16 million of Series A
Convertible Preferred Stock and $3 million of Convertible
Promissory Notes.
The Company issued a total of 1,068.67 shares of Series A
Convertible Preferred Stock, at $15,000 per share, for cash
consideration of $11.3 million and consideration in the form of
the cancellation of $4.725 million of existing debt. Each share of
Series A Convertible Preferred Stock has a conversion price of
$1.50 and is convertible into 10,000 shares of common stock. The
Series A purchasers were also issued 2,000 common stock purchase
warrants for each share of Series A Convertible Preferred Stock
purchased. The Warrants have a term of two years and an exercise
price of $2.10 per share.
In a separate transaction, the Company issued $3,000,000 of
Convertible Promissory Notes to two institutional investors. Prior
to maturity, the Convertible Promissory Notes may be converted
into Series A Convertible Preferred Stock and Warrants. The
Convertible Promissory Notes pay interest at a rate of 8% per
annum and have a term of nine months.
Purchasers who paid cash consideration in either financing also
received the right to purchase an amount of Series A Convertible
Preferred Stock and Warrants equal to 33.33% of their initial
purchase amount. Such right must be exercised no later than ninety
days following the effective date of a registration statement
covering the common stock underlying the Series A Convertible
Preferred Stock and Warrants. For each purchaser of the
Convertible Promissory Notes, this additional purchase right is
contingent on the full conversion of such purchaser's Convertible
Promissory Notes.
National Coal also announced that concurrently with the closing of
the Series A and Convertible Promissory Note financings, the
investors purchased a total of 5,380,277 shares of common stock
from the Company's former Chairman, who currently serves as a
director.
National Coal has agreed to file a registration statement covering
the restricted common shares purchased from the former Chairman,
the common shares underlying the Series A Convertible Preferred
Stock, and the common stock underlying the Warrants.
For complete details related to rights and preferences of the
Series A Convertible Preferred Stock, the Convertible Promissory
Notes, the Warrants and the details related to the sale of the
restricted common shares sold by the Company's former Chairman,
please refer to the Company's Form 8-K that will be filed with the
SEC this week.
The financings announced today include eight new institutional
investors and several existing investors, including Crestview
Capital. The Company intends to use these funds primarily for new
mine acquisitions, repayment of $3.195 million of principal and
accrued interest on the Company's senior secured debt and other
existing debt, and general corporate purposes.
"Today's announcement reflects the continued support of our core
investors, as well as the growing relationship with our most
recent investors," said Rob Chmiel, CFO of National Coal Corp.
"These proceeds provide for a stronger balance sheet by
significantly enhancing our shareholders' equity, reducing our
outstanding debt and providing important working capital that will
assist us in the execution of our business plan. We believe this
financing gives us a strong foundation on which to pursue our
production goals and positions us well for continued revenue
increases."
Burnham Hill Partners, a division of Pali Capital Inc., and
William Blair & Company acted as placement agent in the
financings.
About National Coal Corp.
National Coal Corp., through its wholly-owned subsidiary, National
Coal Corporation, owns the coal mineral rights on approximately
70,000 acres in Eastern Tennessee. National Coal's website can be
found at http://www.nationalcoal.com/
At June 30, 2004, National Coal Corp.'s balance sheet showed a
$431,360 stockholders' deficit compared to a $436,729 deficit at
March 31, 2004.
NATIONAL ENERGY: Parent Settles Tax Litigation for $350 Million
---------------------------------------------------------------
PG&E Corporation (NYSE: PCG) has entered into a settlement with
its National Energy & Gas Transmission, Inc. (NEGT) subsidiary to
resolve claims that the Corporation is obligated to compensate
NEGT for tax savings resulting from the incorporation of losses
and deductions related to NEGT or its subsidiaries in the
Corporation's consolidated federal income tax return.
The Corporation expects the settlement will allow it to make
approximately $350 million of additional cash available for stock
repurchases. The $350 million, which had been restricted pending a
resolution of the dispute, will be incremental to $1.2 billion the
Corporation has previously estimated will be available for
dividends and stock repurchases in 2005, assuming the refinancing
of Pacific Gas and Electric Company's $2.21 billion regulatory
asset occurs as planned in January 2005. Accordingly, the
Corporation is raising its previous guidance for 2005 earnings
from operations to a range of $2.15 to $2.25 per share, reflecting
the impact of the expected additional share repurchases.
"The settlement agreement provides for timely closure of
outstanding issues between PG&E Corporation and NEGT," said Robert
D. Glynn, Jr., Chairman, CEO and President of PG&E Corporation.
"This resolution lifts the restriction on corporate cash and
reduces uncertainty as we focus on shareholder value from the
improved financial performance of our core utility business."
Terms of the Settlement
The parties to the settlement -- PG&E Corporation, NEGT and its
wholly owned or controlled subsidiaries, and the official
committee of unsecured creditors in NEGT's Chapter 11 case -- will
execute a mutual release of all tax-related claims and
substantially all other claims. Additionally, the Corporation will
pay NEGT $30 million. The release of claims by PG&E Corporation
has no effect on the previously reported value of the
Corporation's net negative investment in NEGT.
The settlement agreement requires the approval of the U.S.
District Court for the District of Maryland, where NEGT's
complaint has been transferred, and the Bankruptcy Court
overseeing Chapter 11 proceedings for NEGT and certain of its
subsidiaries. A joint hearing before both courts has been set for
September 22, 2004. If either the District Court order or the
Bankruptcy Court order approving the settlement is appealed so
that the order does not become final before by October 29, 2004,
the settlement agreement would terminate unless the parties
mutually agree to waive such termination.
Remaining NEGT-Related Obligations
As previously reported, following NEGT's Chapter 11 filing in July
2003, PG&E Corporation's financial statements no longer reflect
NEGT's operations. However, the Corporation continues to be
responsible for including income or losses from NEGT and its
subsidiaries in the Corporation's consolidated federal income tax
returns until the effective date of NEGT's Chapter 11 plan of
reorganization, when PG&E Corporation's equity interest in NEGT
will be cancelled. Based on preliminary information recently
provided by NEGT, PG&E Corporation anticipates paying
approximately $100 million of consolidated tax obligations in 2004
attributable to NEGT taxable income.
Headquartered in Bethesda, Maryland, NEGT received bankruptcy
court approval on its reorganization plan in May 2004 and
anticipates emerging from bankruptcy shortly.
NAVISTAR INTERNATIONAL: Names Steven Covey SVP & General Counsel
----------------------------------------------------------------
Steven K. Covey has been elected senior vice president and general
counsel of both Navistar International Corporation and its
operating company, International Truck and Engine Corporation,
producer of International(R) brand trucks, school buses and diesel
engines, it was announced today.
Mr. Covey, 53, succeeds Robert A. Boardman, who retired effective
Tuesday, Aug. 31. Mr. Covey also will become a member of the
company's executive council.
Daniel C. Ustian, Navistar chairman, president and chief executive
officer, said the company is fortunate to have someone with Mr.
Covey's experience already on board, noting that Mr. Covey has
provided legal counsel and representation to most of the company's
operations and staff groups since he joined the company more than
20 years ago.
"Steve has demonstrated genuine leadership throughout his career
and he has played a key role in helping the company establish new
joint ventures and set up new operations." Mr. Ustian said. "I
also would like to thank Bob Boardman for his many contributions
during his nearly 15 years as our general counsel."
Mr. Covey joined Navistar in 1981. Most recently he served as
deputy general counsel after serving several years as general
counsel of Navistar Financial Corporation, the company's finance
subsidiary. He also served as Navistar corporate secretary from
1990 to 2000.
He earned his bachelor's degree from the University of Illinois
and his juris doctorate degree from DePaul University.
About Navistar International
Navistar International Corporation (NYSE:NAV) is the parent
company of International Truck and Engine Corporation. The
company produces Internationalr brand commercial trucks, mid-range
diesel engines and IC brand school buses and is a private label
designer and manufacturer of diesel engines for the pickup truck,
van and SUV markets. With the broadest distribution network in
North America, the company also provides financing for customers
and dealers. Additionally, through a joint venture with Ford
Motor Company, the company builds medium commercial trucks and
sells truck and diesel engine service parts. Additional
information is available at http://www.nav-international.com/
* * *
As reported in the Troubled Company Reporter's May 17, 2004
edition, Standard & Poor's Ratings Services affirmed its 'BB-'
corporate credit rating and its senior unsecured, and
subordinated debt ratings on Warrenville, Illinois-based Navistar
International Corp. The outlook remains stable.
"The affirmation follows announcements from Navistar regarding
various financing transactions," said Standard & Poor's credit
analyst Eric Ballantine.
"We expect Navistar's earnings and cash flow to gradually improve
as market conditions rebound. We expect free cash flow in fiscal
2004 to be relatively modest in the $100 million area."
PACIFIC COAST: Fitch Rates C Notes BB+ & Junks Preference Shares
----------------------------------------------------------------
Fitch Ratings downgraded three classes and affirmed two classes of
notes issued by Pacific Coast CDO, Ltd.
These rating actions are effective immediately:
-- $387,504,802 class A notes affirmed at 'AAA';
-- $96,000,000 class B notes to 'BBB-' from 'A-';
-- $19,756,768 class C-1 notes to 'B-' from 'BB+';
-- $8,453,740 class C-2 notes to 'B-' from 'BB+';
-- $26,000,000 preference shares affirmed at 'CC'.
Furthermore, the class B, C-1 and C-2 notes are removed from
Rating Watch Negative.
The ratings of the class A and 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 ratings of the
class C-1 and C-2 notes 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. The rating of the Preference
Shares addresses the likelihood that investors will receive
ultimate and compensating payments resulting in a yield on the
preference share rated balance equivalent to 2% per annum, as per
the governing documents, as well as the initial preference share
rated balance by the legal final maturity date.
Pacific Coast is a collateralized debt obligation -- CDO -- that
closed in September 2001 and is managed by Pacific Investment
Management Company. Pacific Coast is composed of approximately:
* 55.2% residential mortgage-backed securities -- RMBS;
* 19.1% asset-backed securities -- ABS;
* 13% commercial mortgage-backed securities -- CMBS;
* 6.9% corporate bonds; and
* 5.8% CDOs.
As a result of failing coverage tests, Pacific Investment
Management is limited to sales of securities as defined by Pacific
Coast's governing documents.
On May 25, 2004 the class B, C-1 and C-2 notes were placed on
Rating Watch Negative as Fitch observed the performance of several
securities for possible further deterioration. Since then,
$16.5 million (3.1%) of collateral has been downgraded which Fitch
expects to incur significant impairment of principal and interest.
The latest trustee report dated July 20, 2004 shows the class A/B
overcollateralization -- OC -- ratio and class C OC ratio failing
their test levels at 102.7% and 97.5% compared to requirements of
105% and 110% respectively. The weighted average rating factor
(WARF) of 19 ('BBB/BBB-') is failing its required level of 18
('BBB/BBB-'). Assets rated below 'BBB-' represent approximately
17.1% of the portfolio 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.
PARMALAT USA: Has Until Sept 9 to File Plan & Disclosure Statement
------------------------------------------------------------------
After further negotiations, Parmalat USA Corporation and its U.S.
debtor-affiliates, General Electric Capital Corporation as agent
and lender, Citibank, N.A., and the Official Committee of
Unsecured Creditors stipulate that the Debtors will file a plan of
reorganization and accompanying disclosure statement on or before
September 9, 2004. The Debtors' failure to comply will constitute
a Termination Event under the DIP Financing Agreement.
The parties also agree that all obligations and commitments of
Citibank, GE Capital and the DIP Lenders, and the U.S. Debtors'
authorization to use the Cash Collateral, will terminate at the
earliest of:
(i) September 9, 2004;
(ii) the effective date of any reorganization plan;
(iii) the entry of a Court order converting any of the
Chapter 11 Cases to a case under Chapter 7 of the
Bankruptcy Code or dismissing any of the cases; or
(iv) the termination of the DIP Financing Agreement or the
Debtors' Receivables Purchase Agreement with Citibank.
The Final DIP Order remains in full force and effect in all other
respects.
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. 29; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
PENTHOUSE INT'L: Completes Internet Billing Sale to Care Concepts
-----------------------------------------------------------------
Penthouse International (Pink Sheets:PHSL), a holding company with
operating subsidiaries in adult entertainment, payment processing,
Web-based software and real estate, completed the sale of its
wholly owned subsidiaries, Media Billing LLC and Internet Billing
LLC, to Care Concepts I, Inc. (AMEX:IBD).
Penthouse received approximately $55.0 million in stock in the
transaction. Penthouse acquired iBill in March 2004 in a
transaction valued at approximately $33.0 million.
"We believe we made a sound investment in March and an even more
advantageous disposition in August, rewarding us with a
significant gain in less than six months," said Claude Bertin,
executive vice president of Penthouse.
"We are pleased to have completed the sale and to be able to focus
on preserving our rights as sole shareholder in the General Media
bankruptcy case," said Mr. Bertin. "Penthouse believes that we
have substantial remedies available to us against the Bell/Staton
Group and we intend to pursue them no matter how long it takes."
In consideration for the sale of iBill, Penthouse received IBD
securities (based on its $6.00 per share market price at closing)
valued at approximately $55.0 million paid through the issuance of
330,000 shares of newly authorized IBD Series D convertible
preferred stock, with a $100 per share liquidation value and
3.6 million shares of common stock of IBD. As a result of the
transaction, Penthouse will initially own 19.9% of the outstanding
common stock of IBD. The percentage of the fully diluted IBD
common shares into which the IBD Series D Preferred may be
converted will depend upon the cash flow of iBill in fiscal 2004
or 2005, and the maximum number of CCI common shares issued and
issuable to Penthouse in the transaction will not exceed 49.9% of
the fully diluted IBD common stock. Penthouse's right to convert
the IBD Series D Preferred is subject to approval of the
transaction by the American Stock Exchange and the holders of a
majority of the outstanding shares of IBD common stock. The day-
to-day operations of iBill will be continued to be managed by its
current management. Penthouse was granted representation on the
IBD board of directors, and, as a significant shareholder, will
hold the IBD stock for investment purposes and expects long-term
appreciation.
Penthouse delivered unaudited financial statements of iBill to IBD
in connection with the transaction. Pursuant to an amendment to
the agreement, in the event that there is a difference of more
than ten percent between the iBill shareholder equity presented in
the unaudited financial statements versus the audited financial
statements, IBD has the option to rescind the transaction.
About Penthouse International, Inc.
Penthouse International, Inc., through its subsidiaries General
Media, Inc., Del Sol Investments LLC and PH Realty Associates LLC
and iBill, is a brand-driven global entertainment business founded
in 1965 by Robert C. Guccione. General Media's flagship PENTHOUSE
brand is one of the most recognized consumer brands in the world
and is widely identified with premium entertainment for adult
audiences. General Media caters to men's interests through
various trademarked publications, movies, the Internet, location-
based live entertainment clubs and consumer product licenses.
Internet Billing Company (iBill) sells access to online services
and other downloadable products (music, games, videos, personals,
etc.) to consumers through proprietary Web-based payment
applications. The iBill online payments systems manage
transaction authorization on the global financial networks such as
Visa(R) and MasterCard(R) and simultaneously provide password
management controls for the life of the subscribing consumer. On-
demand CRM (Customer Relationship Management) applications are
provided to registered independent merchants, typically small and
medium-sized businesses seeking a cost-effective technology
platform to outsource non-core banking and finance functions.
Since 1996, iBill has established a trusted brand with consumers
and online businesses with 27 million customers in 38 countries.
Balance Sheet Upside-Down
In its latest Form 10-Q filed with the Securities and Exchange
Commission for the period ended September 30, 2003, Penthouse
International reported a $69,854,000 stockholders' deficit.
New Auditors & Delayed Financials
Penthouse has not filed its Form 10-K Annual Report for the fiscal
year ended December 31, 2003, because, the Company says, it
recently hired Stonefield Josephson, Inc., as its new auditors and
its has effected a number of significant transactions, including a
change of control, a significant acquisition and private
financings -- all of which need to be reviewed by the new auditors
and properly disclosed in a "subsequent events" footnote in the
2003 financial statements.
General Media Bankruptcy
Penthouse also indicates that its revenues have been derived
principally from the PENTHOUSE(TM) related publishing activities
conducted by its 99.5% owned subsidiary General Media and its
subsidiaries. Penthouse International's General Media subsidiary
(which publishes Penthouse magazine) filed for reorganization
under Chapter 11 on August 12, 2003 (Bankr. S.D.N.Y. Case No. 03-
15078). Robert Joel Feinstein, Esq. Pachulski, Stang, Ziehl,
Young, Jones & Weintraub P.C. represent General Media. A Plan of
Reorganization confirmed on August 13, 2004, delivered a huge
chunk of new equity in Reorganized General Media to PET Capital
(holding approximately 89% of the General Media's Senior Notes).
Penthouse International says it was cheated and intends to do what
it can to block the Plan from taking effect.
QUEBECOR INC: Workplace Violations Prompt Community Rally
---------------------------------------------------------
Dozens of elected officials, religious leaders, and concerned
community members from the United States and Canada joined
Quebecor World (NYSE: IQW; Toronto) workers from throughout the
southern U.S. for a rally at Quebecor, Inc.'s headquarters to
highlight the hazardous and oppressive conditions faced by
Quebecor World workers on the job.
During the rally, members of the Kentucky Workers' Rights Board,
including Kentucky State Representative Joni Jenkins and Peace and
Justice Minister for the Archdiocese of Lexington, Kentucky,
Father John Rausch, released a report based on the board's
investigation into abuses at Quebecor World's Versailles,
Kentucky, plant.
The report calls for:
* improved workplace safety;
* adequate, affordable healthcare; and
* demands that the company end its campaign of coercion against
workers who are forming a union.
Rep. Jenkins and Father Rausch met with top Quebecor management to
discuss the reports' findings.
"We came to Montreal and met with Quebecor management in May, and
they said that they would look into our concerns," said Lloyd
Mayes, a worker in Quebecor World's Olive Branch, Missouri, plant.
"That was four months ago and we're still facing the same
harassment on the job."
"The problems at our plant in Versailles with safety didn't get
fixed for years until we, the workers, took it upon ourselves to
pressure the company," said Don Butler who works at Quebecor's
Versailles plant. "In response to our pressures, the company made
changes before the government inspected the plant, but there are
still hazards that need to be fixed. We're determined to make our
jobs safer."
In addition to Tuesday's rally, workers and their allies sponsored
a community forum for Montreal-based members of social justice and
labor organizations.
"The purpose of the Kentucky Workers' Rights Board and of our trip
is to expose the injustices that Quebecor World workers face in
the United States," said Rep. Jenkins. "We're here today to let
the company know that the Versailles community will continue to
take action until workers at Quebecor have the respect they
deserve."
The Workers' Rights Board is a project of Kentucky Jobs with
Justice and strives to provide a community-based alternative to
the National Labor Relations Board. Workers' Rights Boards
throughout the U.S. provide a forum for workers to call for safe
working conditions and fair treatment. Jobs with Justice is the
largest community-labor organization in the United States.
Two regions of the U.S. National Labor Relations Board have found
merit in 22 unfair labor practice charges file by Quebecor World
workers stating the company threatened, harassed, discriminated
against, and fired workers because they stood up for a voice on
the job. Currently, the Equal Employment Opportunity Commission
is investigating discrimination at the company's Olive Branch,
Missouri, plant.
Quebecor World workers in the U.S. are forming a union with the
Graphic Communications International Union as part of the
JusticeQuebecor campaign, an unprecedented effort by Quebecor
workers and their unions to win basic human rights on the job at
Quebecor World's facilities throughout the globe.
Quebecor, Inc., (TSX: QBR.A, QBR.B) is a communications company
with operations in North America, Europe, Latin America and Asia.
It has two operating subsidiaries, Quebecor World, Inc., and
Quebecor Media, Inc. Quebecor World is one of largest commercial
print media services companies in the world. Quebecor Media owns
operating companies in numerous media-related businesses:
Videotron ltee, the largest cable operator in Quebec and a major
Internet Service Provider; Sun Media Corporation, Canada's second-
largest newspaper group; TVA Group Inc., the largest French-
language general-interest television network in Quebec; Netgraphe
Inc., operator of the CANOE network of English- and French-
language Internet properties in Canada; Nurun Inc., a leading Web
agency in Canada and Europe. Quebecor Media is also engaged in
book publishing, in magazine publishing through TVA Publishing
Inc., in distribution and retailing of cultural products through
Archambault Group, the largest chain of music stores in eastern
Canada, and through the SuperClub Videotron chain of video rental
and sales stores, and in business telecommunications through
Videotron Telecom Ltd. Quebecor, Inc. has operations in 17
countries.
As of June 30, 2004, Quebecor's balance sheet showed a CDN$384
million working capital deficit, compared to a $254.4 million
working capital deficit at December 31, 2003.
Moody's and Standard & Poor's have put their low-B ratings on
Quebecor.
RCN CORP: Secures $46 Million Exit Facility From Deutsche Bank
--------------------------------------------------------------
Simultaneously with the consummation of the Plan, RCN
Corporation, as borrower, and each of its direct and indirect
subsidiaries, as guarantors, will enter into a $460,000,000 exit
financing facility with Deutsche Bank. RCN will use the initial
borrowings under the Exit Facility to consummate the Plan,
including the repayment of any obligations owed to the Senior
Secured Lenders under the Bank Credit Agreement and the payment
of related fees and expenses.
David McCourt, RCN Corp.'s Chairman and Chief Executive Officer,
relates that the Exit Facility will consist of:
(i) a senior first-lien secured credit facility; and
(ii) $150,000,000 of second-lien floating rate notes.
The Senior First-Lien Financing will consist of $285,000,000 of
term loans and a $25,000,000 letter of credit facility.
Interest and Fees
RCN may choose Eurodollar rate or base rate pricing for the Term
Loans and may elect interest periods of one, two, three, six,
nine or twelve months. Each Eurodollar loan will bear interest
at a rate per year equal to the Eurodollar rate for that day plus
4%. Each base rate loan will bear interest at a rate per year
equal to the base rate plus 3%. Overdue amounts will accrue
interest at a rate equal to the greater of 2% over the applicable
margin for base rate loans or 2% over the rate then borne by the
overdue amounts.
RCN will pay a commitment fee of 0.5% per year on the daily unused
portion of the commitments to Deutsche Bank under the L/C
Facility. RCN also will pay a letter of credit fee equal to 4%
per year on the outstanding amount of letters of credit under the
L/C Facility -- in addition to any customary administrative
charges -- with a facing fee of 1/4 of 1% per year.
The Second-Lien Notes will bear interest at the Eurodollar rate
plus 8%.
Guarantees and Collateral
RCN's obligations under the Exit Facility will be guaranteed by
each of the Subsidiary Guarantors. RCN's obligations under the
Exit Facility and the obligations of the Subsidiary Guarantors
under the Exit Facility will be secured by a lien on
substantially all of RCN's and each Subsidiary Guarantor's
present and future tangible and intangible assets, including,
without limitation:
-- all receivables, contract rights, securities, inventory,
equipment, real estate, intellectual property, promissory
notes;
-- all of the equity interests in each of the Subsidiary
Guarantors; and
-- 65% of the total outstanding voting stock in each of RCN's,
or any Subsidiary Guarantor's, foreign subsidiaries.
Amortization and Maturity
One percent of the principal amount of the Term Loans will
amortize quarterly during the first six years following the
consummation of the Plan. The remaining principal amount of the
Term Loans will amortize quarterly during the seventh year
following the consummation of the Plan. The Term Loans will
mature on the seventh anniversary of the consummation of the
Plan. Deutsche Bank's commitments under the L/C Facility will
terminate five years from the consummation of the Plan. The
Second-Lien Notes will mature 7-1/2 years from the consummation
of the Plan and will not amortize prior to maturity.
Prepayments
A. Optional Prepayments
RCN may make voluntary prepayments on the Term Loans, without
premium or penalty, as long as it gives the administrative
agent three business days prior notice in the case of
Eurodollar loans, and one business day prior notice in the
case of base rate loans. Prepayments of Eurodollar loans made
on a date other than the last day of the applicable interest
period will be subject to customary breakage costs. RCN may
make voluntary prepayments on the Second-Lien Notes at any
time after the second anniversary of the consummation of the
Plan, upon written notice:
(a) subject to a premium equal to:
-- 2%, if prepaid within the third year after the
consummation of the Plan; or
-- 1%, if prepaid within the fourth year after the
consummation of the Plan; and
(b) at par at any time after the fifth anniversary of the
consummation of the Plan.
In addition, on or before the second anniversary of the
consummation of the Plan, RCN may voluntarily prepay up to 35%
of the Second-Lien Notes with the proceeds of one or more
equity offerings by RCN, at a price equal to par plus a
premium equal to the interest rate borne by the Second-Lien
Notes, plus accrued and unpaid interest, if any.
B. Mandatory Prepayments
With certain exceptions, RCN will be required to make
mandatory prepayments on the Term Loans equal to:
(a) 100% of net cash proceeds from any issuance of equity
by, or capital contributions to, RCN or its
Subsidiaries;
(b) 100% of net cash proceeds from any issuance of
indebtedness by RCN or its Subsidiaries, other than
indebtedness issued pursuant to the Exit Facility;
(c) 100% of net cash proceeds from an asset sale received
by RCN or its Subsidiaries, subject to certain
reinvestment exceptions;
(d) 100% of net cash proceeds from any property or casualty
insurance claim or any condemnation proceeding received
by RCN or its Subsidiaries, subject to certain
reinvestment exceptions; and
(e) up to 75% of annual excess cash flow of RCN or its
Subsidiaries.
The proceeds from the mandatory prepayments will be applied
pro rata to outstanding Term Loans.
With certain exceptions, RCN will be required to make
mandatory prepayments on the Second-Lien Notes equal to:
* 100% of net cash proceeds from any issuance of
indebtedness by RCN or its Subsidiaries, other than
indebtedness issued pursuant to the Exit Facility, to
the extent the proceeds are not required to be used to
prepay the Term Loans; and
* 100% of net cash proceeds from an asset sale received by
RCN or its Subsidiaries, subject to certain reinvestment
exceptions, to the extent the proceeds are not required
to be used to prepay the Term Loans.
Upon the occurrence of a change of control, RCN must offer to
repay the Second-Lien Notes at a price equal to 101% of the
Notes' principal amount, plus accrued interest.
Covenants
The Exit Facility will contain affirmative and negative
covenants, subject to exceptions and baskets to be agreed,
including without limitation:
(a) Limitations on the incurrence of indebtedness, including
contingent liabilities and seller notes;
(b) Limitations on mergers, acquisitions, joint ventures,
partnerships, acquisitions and dispositions of assets;
(c) Limitations on sale-leaseback transactions;
(d) Limitations on dividend s and restricted payments,
(e) Limitations on voluntary prepayments of other indebtedness
and amendments thereto and amendments to organizational
documents and other material agreements;
(f) Limitations on transactions with affiliates and formation
of Subsidiaries;
(g) Limitations on investments;
(h) Limitations on liens;
(i) Limitation on changes in nature of business;
(j) Limitations on the use of proceeds of the Exit Facility;
(k) Maintenance of existence and properties, including
adequate insurance coverage;
(l) ERISA covenants;
(m) Financial reporting covenants, including visitation and
inspection rights for Deutsche Bank;
(n) Compliance with laws, including environmental laws and
ERISA;
(o) Payment of taxes and other material liabilities; and
(p) Maintenance of minimum subscriber levels and revenue
generating units.
In addition, RCN will be required to give notice to the
administrative agent and Deutsche Bank of defaults and other
material events, make any new wholly owned domestic subsidiary a
subsidiary guarantor, and pledge after-acquired property as
collateral to secure RCN's and the Subsidiary Guarantors'
obligations under the Exit Facility.
The Exit Facility will contain certain financial covenants
including, without limitation:
* Maximum total debt to EBITDA;
* Maximum senior debt to EBITDA;
* Minimum interest coverage ratio;
* Minimum EBITDA, including minimum thresholds for specific
market or geographic regions;
* Minimum unrestricted cash on hand; and
* Maximum capital expenditures, including sub-limits for
specific markets or geographical regions.
Events of Default
The Exit Facility will contain events of default that are usual
and customary for facilities of this type.
Escrow Funding and Closing
Upon completion of the successful syndication of the Exit
Facility, the proceeds of the Exit Facility may be funded into
escrow before the consummation of the Plan, subject to the
satisfaction of certain conditions precedent. The conditions
precedent to the Escrow Funding include, without limitation:
(a) No material adverse effect on RCN and its Subsidiaries,
taken as a whole, will have occurred since December 31,
2003;
(b) The administrative agent and Deutsche Bank will have
received and be satisfied with:
-- RCN's audited consolidated financial statements for the
last three fiscal years;
-- RCN's unaudited consolidated financial statements for
each fiscal quarter ended after the most recently
completed fiscal year;
-- RCN's pro forma consolidated financial statements which
will demonstrate pro forma compliance with the
financial covenants and a minimum consolidated EBITDA
level to be agreed;
-- RCN's interim financial statements for each month ended
after the date the most recently completed fiscal
quarter; and
-- RCN's projected consolidated financial statements for
the five fiscal years following the consummation of the
Plan;
(c) The administrative agent will be satisfied with RCN's
management;
(d) The administrative agent will be satisfied with the
aggregate number of basic cable subscribers and revenue
generating business units; and
(e) Moody's and Standard & Poor's will have rated the Exit
Facility.
On the day of the consummation of the Plan, the escrowed funds
will be released to RCN, subject to the satisfaction of certain
conditions precedent, including, without limitation:
* the conditions to Escrow Funding disclosed; and
* RCN will have unrestricted cash on hand, after giving
effect to all payments to be made by it pursuant to the
Plan, for an aggregate of at least $115,000,000.
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)
RIVERSIDE FOREST: Tolko Offers C$29 Per Share in Cash
-----------------------------------------------------
Tolko Industries, Ltd., formally made its offer to purchase all
the outstanding shares of Riverside Forest Products Limited (TSX:
RFP) for C$29.00 per share in cash.
The offer will remain open for acceptance until 9:00 pm (Vancouver
time) on October 6, 2004, unless extended or withdrawn by Tolko.
The offer is subject to a number of conditions, including there
being validly deposited under, and not withdrawn from, the offer
that number of common shares of Riverside which, when combined
with the common shares held by Tolko and its affiliates,
represents not less than 75% of the outstanding common shares on a
fully diluted basis.
The Dealer Manager for the offer is RBC Capital Markets and the
Depositary for the offer is CIBC Mellon Trust Company.
The circular for the offer was filed with all securities
commissions in Canada and will be mailed to shareholders of
Riverside as soon as Riverside provides Tolko with a shareholder
list.
Any questions and requests for assistance by Riverside
shareholders may be directed to either the Dealer Manager in
Vancouver at 604-257-7620 or the Depositary in Toronto at 416-643-
5500.
About Tolko Industries Ltd.
Tolko Industries, Ltd., is a family-owned private forest products
company based in Vernon, British Columbia, which manufactures and
markets specialty forest products to world markets. The Company
was incorporated in 1961 and grown to more than 2,400 employees in
10 manufacturing divisions and three sales and marketing offices
in British Columbia, Alberta, Saskatchewan and Manitoba.
Tolko has grown by implementing progressive business practices,
demonstrating respect for people and the environment and
emphasizing integrity in all business relationships. Tolko also
believes that profits are essential to the success of the company,
employees and business partners by supporting growth, employment
stability and the ability to meet the changing needs of customers.
Sales in 2003 were $899 million. More than one billion equivalent
board feet of lumber and engineered wood products and 138,000
metric tonnes of specialty kraft papers were shipped in 2003.
Approximately 25% of Tolko's sales were to Canadian customers,
while 68% of sales were to the U.S. and 7% were to 17 other
countries.
The Company has lumber operations in Lavington, Merrit and
Quesnel, B.C.; High Level, Alberta; and The Pas, Manitoba. It
also owns a plywood plant in Heffley Creek, B.C. and OSB
operations in High Prairie and Slave Lake, Alberta and Meadow
Lake, Saskatchewan. The company also owns a kraft paper mill in
The Pas. Corporate, regional and sales offices also exist in
Vernon, Edmonton and Winnipeg.
Tolko's offer for Riverside
Statement from Mr. J. Allan Thorlakson, Tolko's President and
Chief Executive Officer:
"We are making this offer because we are convinced that our people
and physical assets, when combined with Riverside's people and
physical assets, will yield a stronger, more competitive world-
class forest products company with greater growth prospects than
each of the companies could achieve alone."
"Tolko was founded in BC 50 years ago and remains a BC-based
business - and we are continuing to invest in B.C. because of the
favourable business climate."
"Our all cash offer represents a significant premium of 35% and
provides Riverside's shareholders with an immediate value
maximization opportunity in a stock that has been characterized by
low trading volumes."
"We believe the combination of Tolko and Riverside would, over the
long term:
- benefit the employees of both companies,
- increase the stability of the communities in which they
operate,
- enhance the value of the forest resources they manage, and
- better serve our customers around the world."
"Our competitors - in B.C. and Canada and around the world - are
growing and consolidating and both Tolko and Riverside have to
grow to remain competitive and to operate on a larger scale."
Riverside Forest Products Limited is the fourth largest lumber
producer in British Columbia with over 1.0 Bbf of annual capacity
and an annual allowable cut of 3.1 million cubic metres. The
company is also the second largest plywood and veneer producer in
Canada.
* * *
As reported in the Troubled Company Reporter on August 27, 2004,
Standard & Poor's Ratings Services placed its 'B+' long-term
corporate credit and senior unsecured debt ratings on Kelowna,
B.C.-based Riverside Forest Products Ltd. on CreditWatch with
developing implications following the company's announcement that
it would reject an unsolicited takeover offer from privately held
Tolko Industries Ltd.
"The ratings could be lowered, raised, affirmed, or withdrawn
depending on how the situation evolves," said Standard & Poor's
credit analyst Daniel Parker. "Riverside's unsecured notes
contain a provision that requires the company to make an offer to
repurchase all the outstanding notes in the event of a change of
control. It is unclear whether Tolko's offer will be successful
and what the effect will be on the outstanding notes," Mr. Parker
added. Standard & Poor's uses a consolidated methodology and
would consider the credit profile of any successful acquisitor in
determining the effect on the credit ratings on Riverside. At
this stage, it is too early to determine the impact on the
ratings.
The ratings on Riverside reflect its narrow product concentration
in cyclical wood products, its vulnerability to foreign exchange
risk, and its acquisition strategy. Partially offsetting these
risks are the company's low-cost position in the manufacturing of
lumber and plywood, some vertical integration in fiber and energy,
and good liquidity.
RIVERSIDE FOREST: Tells Shareholders to Ignore Tolko's Hostile Bid
------------------------------------------------------------------
Riverside Forest Products Limited (TSX: RFP) advised the company's
shareholders to take no action on the hostile takeover bid
formally launched by Tolko Industries Limited to acquire all
Riverside shares it does not currently own for $29 per share.
Based on the price of Riverside's stock at the close of market
Tuesday, Tolko's offer represents a 9% discount to Riverside's
stock price.
Riverside's Board of Directors will mail the Directors' Circular
presenting the Board's formal recommendation to shareholders on
the Tolko bid on or before September 15, 2004.
As previously indicated, Riverside's Board of Directors and its
financial advisors reviewed Tolko's proposal. The Board concluded
the proposal significantly undervalues Riverside and would not be
in the best interests of the company or its shareholders.
Riverside's Board of Directors has retained BMO Nesbitt Burns and
Bear Stearns & Co., Inc., as its financial advisors and has
directed them to study strategic alternatives for maximizing value
to Riverside shareholders. Riverside also previously announced
the appointment of a Special Committee of independent directors
charged with overseeing the strategic review process.
Gordon W. Steele, Riverside Chairman, President and Chief
Executive Officer, said, "Together, our board and management own
over 28% of Riverside. Our interests are totally aligned with the
interests of our public shareholders and we are proceeding
accordingly."
Riverside Forest Products Limited is the fourth largest lumber
producer in British Columbia with over 1.0 Bbf of annual capacity
and an annual allowable cut of 3.1 million cubic metres. The
company is also the second largest plywood and veneer producer in
Canada.
* * *
As reported in the Troubled Company Reporter on August 27, 2004,
Standard & Poor's Ratings Services placed its 'B+' long-term
corporate credit and senior unsecured debt ratings on Kelowna,
B.C.-based Riverside Forest Products Ltd. on CreditWatch with
developing implications following the company's announcement that
it would reject an unsolicited takeover offer from privately held
Tolko Industries Ltd.
"The ratings could be lowered, raised, affirmed, or withdrawn
depending on how the situation evolves," said Standard & Poor's
credit analyst Daniel Parker. "Riverside's unsecured notes contain
a provision that requires the company to make an offer to
repurchase all the outstanding notes in the event of a change of
control. It is unclear whether Tolko's offer will be successful
and what the effect will be on the outstanding notes," Mr. Parker
added. Standard & Poor's uses a consolidated methodology and
would consider the credit profile of any successful acquisitor in
determining the effect on the credit ratings on Riverside. At this
stage, it is too early to determine the impact on the ratings.
The ratings on Riverside reflect its narrow product concentration
in cyclical wood products, its vulnerability to foreign exchange
risk, and its acquisition strategy. Partially offsetting these
risks are the company's low-cost position in the manufacturing of
lumber and plywood, some vertical integration in fiber and energy,
and good liquidity.
ROYAL OLYMPIC: Greek Court Extends Plan Filing to November 27
-------------------------------------------------------------
The Greek Court administrating the Section 45 proceeding regarding
Royal Olympic Cruise Lines' (OTC Pink Sheets: ROCLF) subsidiaries
has issued a decision to extend the period of time for the company
to present a restructuring plan consented to by 51% of its
creditors until November 27, 2004.
Royal Olympic Cruise Lines is currently operating two cruise ships
under the protection of Article 45 of the Greek Courts.
Discussions with creditors and lenders continue and the company
continues to seek capital needed to continue operations of the
company.
* * *
As reported in the Troubled Company Reporter on June 18, 2004,
Royal Olympic Cruise Lines said it would miss the filing deadline
for its Annual Report on Form 20-F for the fiscal year ended
November 30, 2003. The company had previously filed for a 15 day
extension of the original filing date of June 1.
The extension request and current delay are brought about due to
the more complicated accounting and finance position stemming from
the ongoing Article 45 process in Greece involving the Company's
subsidiaries.
As previously announced, the Company had applied for listing on
the Nasdaq SmallCap market after failing to meet the criteria for
continued listing on the Nasdaq National Market. Delisting from
the Nasdaq National Market had been delayed during the pendency of
the Company's application to the Small Cap Market. It is expected
that Nasdaq will now reinstitute delisting procedures due to the
Company's failure to file its 20F on time.
RURAL/METRO: Will Release 4th Quarter & Year-End Results Today
--------------------------------------------------------------
Rural/Metro Corporation (OTC Bulletin Board: RURL) will release
fiscal 2004 fourth-quarter and year-end financial results after
the close of market today, September 2, 2004. The Company will
follow this release by hosting a conference call and webcast on
Friday, September 3rd at 8:00 a.m. Pacific Time (11:00 a.m.
Eastern Time) to discuss fiscal 2004 fourth-quarter and year-end
results, including Q&A.
To listen to the call, dial 800-361-0912 (domestic) or
913-981-5559 (international). A live webcast also will be made
available at http://www.ruralmetro.com/ Please RSVP to Ferial
Randera at 415-439-4514 or frandera@fd-us.com
A phone replay will be available following the call's conclusion
and remain in effect through Friday, September 10 until 12:00
midnight Eastern Time. To access the replay, dial 888-203-1112
(domestic) or 719-457-0820 (international). The required passcode
to access the replay is 216-236.
About Rural/Metro
Rural/Metro Corporation -- whose March 31, 2004 balance sheet
shows a stockholders' deficit of about $209 million -- provides
emergency and non-emergency medical transportation, fire
protection, and other safety services in 24 states and more than
400 communities throughout the United States. For more
information, visit the company's web site at
http://www.ruralmetro.com/
SEQUOIA MORTGAGE: Fitch Assigns Low-B Ratings on Classes B-4 & B-5
------------------------------------------------------------------
Sequoia Mortgage Trust 2004-8 mortgage pass-through certificates
are rated by Fitch as follows:
-- Classes A-1, A-2, X-A, X-B, and A-R ($783,099,100) 'AAA';
-- Class B-1 ($16,400,000) 'AA';
-- Class B-2 ($8,200,000) 'A';
-- Class B-3 ($4,100,000) 'BBB';
-- Class B-4 ($2,460,000) 'BB';
-- Class B-5 ($2,050,000) 'B'.
The class B-6 certificates are not rated by Fitch.
The 'AAA' rating on the senior certificates reflects the 4.50%
subordination provided by:
* the 2.00% class B-1,
* the 1.00% class B-2,
* the 0.50% class B-3,
* the 0.30% privately offered class B-4,
* the 0.25% privately offered class B-5, and
* the 0.45% privately offered class B-6 certificates.
The ratings on the class B-1, B-2, B-3, B-4, and B-5 certificates
are based on their respective subordination.
Fitch believes the credit enhancement will be adequate to support
mortgagor defaults, as well as bankruptcy, fraud, and special
hazard losses in limited amounts. The ratings also reflect the
quality of the mortgage collateral, the capabilities of Wells
Fargo Bank, National Association, as master servicer (rated 'RMS1'
by Fitch), and Fitch's confidence in the integrity of the legal
and financial structure of the transaction.
The trust consists of two cross-collateralized groups of
adjustable-rate mortgage loans, designated as pool 1 and pool 2.
Each group's senior certificates will receive interest and/or
principal from its respective mortgage loan group. In certain
very limited circumstances when a pool experiences either rapid
prepayments or disproportionately high realized losses, principal
and interest collected from the other pools may be applied to pay
principal or interest, or both, to the senior certificates of the
pool that is experiencing such conditions. The subordinate
certificates will support both groups and will receive interest
and principal from available funds collected in the aggregate from
both mortgage pools.
The two groups in aggregate contain 2,287 fully amortizing 25- and
30-year adjustable-rate mortgage loans secured by first liens on
one- to four-family residential properties, with an aggregate
principal balance of $819,999,652 and a weighted average principal
balance of $358,548. All of the loans have interest-only terms of
either five or 10 years, with principal and interest payments
beginning thereafter and adjusting semi-annually based on the six-
month LIBOR rate plus a margin.
The mortgage loans were originated by:
* GreenPoint Mortgage Funding, Inc., 66.14%;
* Morgan Stanley Dean Witter Credit Corporation, 16.34%; and
* Bank of America, N.A, 9.75%.
The remainder of the loans was originated by various mortgage
lending institutions. The weighted average original loan-to-value
ratio -- OLTV -- is 70.46% and a weighted average FICO of 735.
Second home and investor-occupied properties constitute 7.97% and
1.93%, respectively. The states with the largest concentration of
mortgage loans are:
* California (29.80%),
* Florida (10.25%),
* Arizona (6.53%), and
* Ohio (5.79%).
All other states represent less than 5% of the pool 1 balance as
of the cut-off date.
None of the mortgage loans are 'high cost' loans as defined under
any local, state, or federal laws.
Sequoia Residential Funding, Inc., a Delaware corporation and
indirect wholly owned subsidiary of Redwood Trust, Inc., will
assign all its interest in the mortgage loans to the trustee for
the benefit of certificate-holders. For federal income tax
purposes, an election will be made to treat the trust as multiple
real estate mortgage investment conduits. HSBC Bank USA will act
as trustee.
SOLUTIA: Wants Court Permission to Pay $5MM Settlement Installment
------------------------------------------------------------------
Solutia, Inc., and Monsanto Company were both created as
subsidiaries of Pharmacia Corporation to operate certain of
Pharmacia's historic business divisions. Through a series of
transactions entered into between 1997 and 2002, Pharmacia:
-- transferred its chemicals business to Solutia;
-- transferred its agricultural products business to Monsanto;
and
-- spun off Solutia and Monsanto to become independent
publicly owned companies.
In connection with the spin-off of Solutia in 1997, Pharmacia and
Solutia entered into a distribution agreement. Under the
Agreement, Solutia was required to assume financial responsibility
for, and to indemnify Pharmacia against, contingent, known and
unknown liabilities related primarily to the chemicals business.
The liabilities included litigation defense, judgment and
settlement costs related to chemical products formerly
manufactured, released or used by Pharmacia in its operations.
In connection with the spin-off of Monsanto in 2000, Pharmacia and
Monsanto entered into a separation agreement. Monsanto agreed to
indemnify Pharmacia for any liabilities of the agricultural
business and the chemicals business, including any liabilities to
be paid by Solutia under the Distribution Agreement to the extent
that Solutia failed to pay, perform or discharge the liabilities.
On July 1, 2002, Solutia, Monsanto and Pharmacia entered into an
amendment to the Distribution Agreement. Solutia agreed to
indemnify Monsanto for any losses resulting from Solutia's failure
to fulfill its obligations to Pharmacia under the Distribution
Agreement.
In April 2003, Pharmacia was acquired by Pfizer, Inc., and is now
a wholly owned subsidiary of Pfizer.
The Anniston Global Settlement Agreement
On September 9, 2003, Solutia, Monsanto and Pharmacia entered into
a global settlement agreement in certain lawsuits that were
pending in the United States District Court for the Northern
District of Alabama and in the Circuit Court, Etowah County
Alabama. The Global Settlement Agreement was intended to resolve
21,000 personal injury and property damage claims against Solutia,
Pharmacia and Monsanto relating to the manufacture of and alleged
release of polychlorinated biphenyls at Pharmacia's plant in
Anniston, Alabama.
The Global Settlement Agreement covers two lawsuits:
(1) Antonia Tolbert, et al. v. Monsanto Company, et al., Civil
Action No. 01-C-1407-S; and
(2) Sabrina Abernathy, et al. v. Monsanto Company, et al.,
Civil Action No. CV-01-832 (Etowah County).
According to Conor D. Reilly, Esq., at Gibson, Dunn & Crutcher,
LLP, in New York, the Global Settlement provides for the payment
of $600,000,000 to the plaintiffs and certain other entities as
specified by separate settlement agreements in the Tolbert and
Abernathy lawsuits. The Litigation Settlement Agreements were
approved by each of the Tolbert and Abernathy courts and are
incorporated into the Global Settlement Agreement.
As contemplated in the Global Settlement Agreement, Monsanto paid
$550,000,000 to the litigation plaintiffs -- of which insurance
proceeds covered $160,000,000. Only $50,000,000 remains to be
paid to the plaintiffs under the Litigation Settlement Agreements.
The Tolbert and Abernathy Settlement Agreements each require a
payment of $2,500,000 on August 26, 2004, and each August 26th
thereafter through August 26, 2013. The annual amount due under
the Tolbert Settlement Agreement is to be paid to the community
medical clinic, which was established pursuant to the Tolbert
Agreement. The annual amount due under the Abernathy Settlement
Agreement is to be paid as:
(a) $1,000,000 to the plaintiffs' counsel for attorney's fees;
and
(b) $1,500,000 to the corporation, foundation, trust, or other
entity designated by the plaintiffs' counsel for providing
health care, educational grants or other welfare benefits
as set forth in the Abernathy Settlement Agreement.
The Side Agreement
Between Solutia, Monsanto and Pharmacia
Before entering into the Litigation Settlement Agreements,
Solutia, Monsanto and Pharmacia entered into an agreement to set
forth each other's obligations under the Litigation Settlement
Agreements.
The Side Agreement provides that Solutia will:
(a) enter into the Global Settlement Agreement;
(b) pay $50,000,000 over 11 years in accordance with the terms
of the Litigation Settlement Agreements;
(c) fully perform all of its obligations as set forth in the
Side Agreement;
(d) issue warrants to Monsanto for the purchase of up to
10,000,000 shares of Solutia common stock;
(e) fully perform all of its obligations under the Global
Settlement Agreement relating to the Payton Litigation;
(f) acknowledge Monsanto's rights to access and receive direct
reimbursement from insurance policies relating to the
Anniston litigation claims; and
(g) release Monsanto and Pharmacia from claims relating to the
Anniston litigation.
The settlement amount to be paid by Solutia under the Side
Agreement corresponds to the remaining payments due under the
Litigation Settlement Agreements, although Solutia, Monsanto and
Pharmacia are jointly and severally liable for all payments due
under the Litigation Settlement Agreements.
Pursuant to the Side Agreement, Monsanto agreed to:
(a) enter into the Global Settlement Agreement;
(b) pay all amounts due under the Litigation Settlement
Agreements except for Solutia's $50,000,000 settlement
amount and the contribution of Pfizer, as Pharmacia's
parent company, to the Global Settlement Agreement; and
(c) release Solutia from any and all claims relating to the
Litigation Settlement Agreements, including Monsanto's
$390,000,000 claim arising from the indemnification
provisions of the Amended Distribution Agreement.
In consultation with the Official Committee of Unsecured
Creditors, Solutia decided that payment of the $5,000,000 due on
August 26, 2004, under the Side Agreement and the Litigation
Settlement Agreements will help preserve Monsanto's release of its
$390,000,000 Anniston Indemnity Claim under the Side Agreement.
If Solutia fails to pay the $5,000,000 Settlement Installment,
there is a risk that Monsanto will assert that its release of the
Anniston Indemnity Claim in the Side Agreement is no longer
enforceable.
Solutia's payment of the Settlement Installment is contemplated by
the Debtors' business plan and is permitted by their DIP
Agreement, Mr. Reilly says. Solutia negotiated a provision
specifically permitting the payment of the Settlement Installment
under their DIP Agreement in connection with the recent amendment,
which was approved by a Bankruptcy Court order dated July 19,
2004.
Consequently, Solutia sought and obtained the authority of the
U.S. Bankruptcy Court for the Southern District of New York to pay
the Settlement Installment pursuant to the Side Agreement.
Headquartered in St. Louis, Missouri, Solutia, Inc. --
http://www.solutia.com/-- with its subsidiaries, make and sell a
variety of high-performance chemical-based materials used in a
broad range of consumer and industrial applications. The Company
filed for chapter 11 protection on December 17, 2003 (Bankr.
S.D.N.Y. Case No. 03-17949). When the Debtors filed for
protection from their creditors, they listed $2,854,000,000 in
assets and $3,223,000,000 in debts. (Solutia Bankruptcy News,
Issue No. 21; Bankruptcy Creditors' Service, Inc., 215/945-7000)
SPANISH BROADCASTING: Moody's Reviewing Single-B & Junk Ratings
---------------------------------------------------------------
Moody's Investors Service placed the ratings for Spanish
Broadcasting Systems, Inc., on review for possible upgrade
following the company announced its agreement to sell two Southern
California radio stations for $120 million. In addition, the
company announced its intention to use sale proceeds and cash on
hand to deleverage.
This most recent announcement brings total expected proceeds from
asset sales to over $200 million for 2004. Cash on hand plus sale
proceeds will provide the company with approximately $230 million
for liquidity and debt reduction. The review for upgrade
anticipates meaningful deleveraging following the station sales.
While Moody's expects the company to continue to fund acquisitions
of top market radio stations with debt, any potential upgrade will
be predicated on maintaining more prudent leverage levels in
future, thereby reducing the company's dependence on significant
growth to achieve even modest cash flow coverage. The review will
be concluded after Spanish Broadcasting has received the sale
proceeds and there is greater visibility into the company's future
capital structure.
These ratings are under review for possible upgrade:
(1) B1 rating on $135 million senior secured bank credit
facilities;
(2) Caa1 rating on the 9.625% senior subordinated notes due
2009;
(3) Caa2 rating on the 10.75% preferred stock;
(4) the company's B2 senior implied rating; and
(5) Spanish Broadcasting Systems' B3 senior unsecured issuer
rating.
Spanish Broadcasting is based in Miami, Florida. After giving
effect to the proposed pending divestitures, the Company will own
and operate 19 stations in New York, Los Angeles, Miami, Chicago
and Puerto Rico.
SPEIZMAN INDUSTRIES: Creditors Must File Proofs of Claim by Oct. 4
------------------------------------------------------------------
The United States Bankruptcy Court for the Northern District of
Georgia, Newnan Division, set October 4, 2004, as the deadline for
all creditors owed money by:
*Speizman Industries, Inc.
*Wink Davis Equipment Co., Inc.
*Speizman Yarn Equipment, Inc. or
*Todd Motion Controls, Inc.
on account of claims arising prior to May 20, 2004, to file formal
written proofs of claim.
On or before the Oct. 4 Claims Bar Date, creditors must deliver
their claim forms to:
Clerk of Bankruptcy Court
United States Bankruptcy Court
18 Greenville Street
Newnan, Georgia 30263-2602
Creditors whose Claims are listed in the correct amount and
priority in the Debtors' Schedules of Assets and Liabilities and
whose claims are not disputed, contingent or unliquidated as to
amount need not file a proof of claim.
Headquartered in Charlotte, North Carolina, Speizman Industries,
Inc. -- http://www.speizman.com/-- is a distributor of
specialized Commercial industrial machinery parts and equipment
operating primarily in textile and laundry. The Company, along
with its affiliates, filed for chapter 11 protection (Bankr. N.D.
Ga. Case No. 04-11540) on May 20, 2004. Michael D. Langford,
Esq., at Kilpatrick Stockton LLP, represents the debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors, they listed $23,938,000 in assets and $23,073,000
in liabilities.
SPEIZMAN INDUSTRIES: Brings-In BDO Seidman as Accountants
---------------------------------------------------------
Speizman Industries, Inc., and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Northern District of Georgia, Newnan
Division, for permission to employ BDO Seidman, LLP, as their
accountants.
The Debtors need BDO Seidman to prepare various federal and state
tax returns and related items.
Norman F. Manley, a Partner at BDO Seidman, states that the firm
asserts a prepetition claim in the amount of $47,714 against the
Debtors but agrees to waive the claim should the Court approve its
retention. For the tax preparation services, the Debtors will pay
the firm a $25,000 service fee.
Mr. Manley assures the Court that the firm does not hold any
interest adverse to the Debtors. Out of an abundance of caution,
Mr. Manley discloses that BDO provided tax services to Textile
Group, Inc., one of the creditors of Speizman. The task, he said,
was not related to the Debtors' chapter 11 cases.
Headquartered in Charlotte, North Carolina, Speizman Industries,
Inc. -- http://www.speizman.com/-- is a distributor of
specialized Commercial industrial machinery parts and equipment
operating primarily in textile and laundry. The Company, along
with its affiliates, filed for chapter 11 protection (Bankr. N.D.
Ga. Lead Case No. 04-11540) on May 20, 2004. Michael D. Langford,
Esq., at Kilpatrick Stockton LLP, represents the debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors, they listed $23,938,000 in assets and $23,073,000
in liabilities.
TECH DATA: Fitch Affirms BB+ Unsecured & BB Sub. Debt Ratings
-------------------------------------------------------------
Fitch affirmed Tech Data Corporation's 'BB+' senior unsecured debt
and 'BB' subordinated debt. The Rating Outlook is changed to
Positive from Stable. Approximately $290 million of public debt
securities are affected by Fitch's action.
The Positive Rating Outlook reflects Tech Data's improved credit
protection measures and financial flexibility, better end-market
environment, and solid operating performance. Lower debt balances
have been due to declining bank revolver borrowings, which
initially increased to fund the acquisition of The Azlan Group in
the first quarter of fiscal 2004 ended April 30, 2003. The
company's stabilized end markets and improved cost structure have
enabled Tech Data to hold operating margins steady after a
sustained period of gradual erosion.
The ratings continue to incorporate the thin margins for
information technology distributors and the challenges associated
with meaningfully expanding operating margins, along with limited
growth prospects. Also considered is Tech Data's concentration of
sales derived from its relationship with Hewlett-Packard Company,
which accounted for over 30% of total sales for fiscal 2004 (27%
for second quarter 2005), as well as the possible negative effects
of certain suppliers moving to sell direct and gradually limiting
their use of distributors, which could be more than offset by
others increasing their use of the indirect channel. Positively,
Tech Data's leading position in the competitive wholesale
technology distribution and services industry, diversified revenue
base with product depth and long-term customer relationships, and
proven ability to generate cash from working capital in a downturn
scenario support Fitch's ratings.
Operating margins have improved and quarterly net sales have
increased on a year-over-year basis in each of the past five
quarters, driven by a combination of a more favorable albeit still
cautious IT spending environment, stronger Euro, the inclusion of
Azlan's results for a full quarter, and modest growth in the
company's specialized business units. For the latest 12 months --
LTM -- ended July 31, 2004, Fitch estimates total adjusted
leverage (total debt including operating leases to EBITDAR)
improved to 2.4 times(x) from 3.5x for the prior year, while
leverage on an unadjusted basis (including accounts/receivable
securitizations) decreased to 1.2x from 2.5x for the same periods.
Coverage ratios also improved, as adjusted interest (EBITDAR-to-
interest incurred plus rents) improved to 4.0x from 3.6x for the
LTM ended July 31, 2004, versus the prior year, while interest
coverage (EBITDA-to-interest incurred) improved to more than 10x
from 8x for the same periods. Despite Tech Data's efforts to
expand into higher margin businesses, Fitch believes Tech Data
operating margins are likely to remain at the 1.5% level.
Tech Data's liquidity is solid and is supported by approximately
$180 million of cash and equivalents, consistent of free cash
flow, as well as approximately $1.2 billion of credit facilities
as of the second quarter ended July 31, 2004, including a
$250 million multicurrency revolving credit facility expiring
May 2006, a recently renewed $400 million receivables
securitization facility expiring August 2005, and approximately
$560 million of aggregate revolving letter-of-credit and overdraft
credit facilities with various maturities. At the end of the
second quarter, approximately $46 million was outstanding;
however, covenants contained in the multicurrency revolver limit
total and senior leverage at 4.75x and 3.5x, respectively, as of
July 31, 2004, limiting amounts available under these facilities
to approximately $749 million, up from approximately $475 million
available to the company as of July 31, 2003.
Total debt was $362 million as of July 31, 2004, down
approximately $400 million from the company's most recent
highpoint resulting from the increased borrowings used to fund the
Azlan acquisition during the first quarter of fiscal 2004. This
acquisition and resultant increase in debt levels temporarily
reversed the company's ongoing efforts to deliver the balance
sheet from historical debt-financed acquisitions. However, Fitch
recognizes that past acquisitions resulted from significant
industry consolidation, and Azlan was immediately accretive to
Tech Data's profitability. Total debt consisted primarily of the
aforementioned utilized liquidity sources and $290 million 2%
convertible subordinated debentures, which are due 2021 but
putable in December 2005.
TENET HEALTHCARE: Completes Doctors Hospital of Jefferson Sale
--------------------------------------------------------------
Tenet Healthcare Corporation's (NYSE: THC) subsidiary has
completed the sale of Doctors Hospital of Jefferson, a 124-bed
acute care hospital in Metairie, Louisiana, to East Jefferson
General Hospital. For a short period of time following completion
of the sale, Tenet will remain responsible for all day-to-day
hospital operations to facilitate an orderly transition to East
Jefferson General Hospital.
Gross proceeds to Tenet from the sale, including the liquidation
of working capital, are estimated to be approximately $27 million,
which includes approximately $24 million for property, plant and
equipment. Net after-tax proceeds, including the liquidation of
working capital, are expected to be approximately $33 million. The
company expects to use the proceeds of the sale for general
corporate purposes.
East Jefferson General Hospital, a community-owned, 460-bed
hospital that has served Jefferson Parish since 1971, is located
across the street from the Doctors Hospital of Jefferson campus.
East Jefferson General Hospital will continue to offer health care
services at the Doctors Hospital facility. Employees of Doctors
Hospital of Jefferson will have the opportunity to apply for
vacant positions at East Jefferson General Hospital and at the
other Tenet hospitals and health care facilities in the New
Orleans area that Tenet is retaining.
"We are pleased to be transferring Doctors Hospital of Jefferson
to an experienced, community-based provider who will continue to
use the facility to provide health care services to Jefferson
Parish," said W. Randolph Smith, president of Tenet's former
Western Division, who is overseeing the company's previously
announced divestiture program. "New Orleans remains an important
market for Tenet and we are committed to continue serving the
community through the remaining network of acute care hospitals
and related health care facilities that we are retaining in the
area."
Doctors Hospital of Jefferson is one of the 27 facilities Tenet
announced in late January that it was divesting -- 19 in
California, two in Louisiana, three in Massachusetts, two in
Missouri and one in Texas. In June, Tenet completed the sale of
Brownsville Medical Center in Brownsville, Texas, to Valley
Baptist Health System. Net after-tax proceeds, including the
liquidation of working capital, are estimated to be approximately
$68 million. In July, Tenet announced it had entered into a
definitive agreement to sell four hospitals in the East Los
Angeles area to AHMC Inc. Estimated net after-tax proceeds,
including the liquidation of working capital, are expected to be
approximately $95 million. That transaction is expected to be
complete by Sept. 30. Also in July, Tenet returned 232-bed Doctors
Medical Center - San Pablo in San Pablo, Calif., to the West
Contra Costa Health Care District, the entity from which the
company had been leasing the facility. In a separate announcement
today, Tenet said it was transferring ownership of three West Los
Angeles-area hospitals to Centinela Freeman HealthSystem, a new
community-based health care delivery network in Los Angeles. In
agreement with the new owner, terms of the transaction were not
immediately disclosed. Negotiations with potential buyers for the
remaining 17 hospitals are ongoing.
Tenet Healthcare Corporation, through its subsidiaries, owns and
operates acute care hospitals and related health care services.
Tenet's hospitals aim to provide the best possible care to every
patient who comes through their doors, with a clear focus on
quality and service. Tenet can be found on the World Wide Web at
http://www.tenethealth.com/
* * *
As reported in the Troubled Company Reporter on June 21, 2004,
Standard & Poor's Ratings Services said that the ratings and
outlook on Tenet Healthcare Corp. (B/Negative/--) will not be
affected by an increase in the size of the company's new
senior unsecured note issue due in 2014, to $1 billion from $500
million. Tenet used $450 million of the proceeds to repay debt due
in 2006 and 2007, and the balance will be retained in cash
reserves. Despite the additional debt and interest costs, Standard
& Poor's considers the additional liquidity provided by the cash,
as well as the effective extension of maturities, to be
offsetting factors. The ratings already consider expectations of
weak operating performance and cash flow over the next year while
the negative outlook incorporates the risk of ongoing litigation
and investigations related to the hospital chain's operations.
TENET: Inks Pact to Transfer 3 L.A. Hospitals to Centinela Freeman
------------------------------------------------------------------
Several of Tenet Healthcare Corporation's (NYSE:THC) subsidiaries
have entered into a definitive purchase agreement to transfer the
assets of three acute care hospitals in the West Los Angeles area
to Centinela Freeman HealthSystem. The hospitals are 370-bed
Centinela Hospital Medical Center and 358-bed Daniel Freeman
Memorial Hospital in Inglewood, and 166-bed Daniel Freeman Marina
Hospital in Marina del Rey. In agreement with the new owner, terms
of the transaction were not immediately disclosed.
The new community-based health care delivery network formed for
the specific purpose of creating a locally owned health delivery
system dedicated to the preservation of these three community
hospitals and the enhancement of services. The ownership of the
system includes physicians, community leaders, private investment
firm Westridge Capital and members of current hospital management.
One of the investors is Ira Kaufman, a key figure in building
Centinela Hospital Medical Center from its roots as 12-bed Milton
Hospital.
"We are pleased these important community hospitals have been
acquired by Centinela Freeman HealthSystem, a new entity comprised
of physicians, community members and executives with a
longstanding record in hospital management," said W. Randolph
Smith, president of Tenet's former Western Division, who is
overseeing the company's divestiture program.
Under the agreement, Centinela Freeman HealthSystem has committed
to offer employment to substantially all employees at the three
hospitals and honor any labor agreements. In addition, the new
owner plans to continue to operate these hospitals as acute care
facilities with emergency departments. The transaction is expected
to be complete by Oct. 31, subject to regulatory approvals. In
addition, Centinela Freeman HealthSystem has agreed to comply with
conditions placed by the California Attorney General on future
operations of these three facilities.
"Tenet continues to make progress on its divestiture program," Mr.
Smith added. "We continue to have negotiations and discussions for
the remaining hospitals with operators who are committed to
keeping the facilities open and who are dedicated to their
communities. Tenet's management team continues to work toward
meeting the original targets for the previously announced
divestiture program, both in terms of completing the sale process
by year-end, and generating expected net proceeds of approximately
$600 million, including the value of tax benefits."
The three West Los Angeles-area hospitals are among 27 facilities
Tenet announced late January that it would divest -- 19 in
California, two in Louisiana, three in Massachusetts, two in
Missouri and one in Texas. In June, Tenet completed the sale of
Brownsville Medical Center in Brownsville, Texas, to Valley
Baptist Health System. Net after-tax proceeds, including the
liquidation of working capital, are estimated to be approximately
$68 million. In July, Tenet announced it had entered into a
definitive agreement to sell four hospitals in the East Los
Angeles area to AHMC Inc. Estimated net after-tax proceeds,
including the liquidation of working capital, are expected to be
approximately $95 million. That transaction is expected to be
complete by Sept. 30. Also in July, Tenet returned 232-bed Doctors
Medical Center -- San Pablo in San Pablo, California, to the West
Contra Costa Health Care District, the entity from which the
company had been leasing the facility. In a separate announcement,
a Tenet subsidiary has completed the sale of Doctors Hospital of
Jefferson, a 124-bed acute care hospital in Metairie, Louisiana,
to East Jefferson General Hospital. Net after-tax proceeds,
including the liquidation of working capital, are expected to be
approximately $33 million. Negotiations with potential buyers for
the remaining 17 hospitals are ongoing.
Tenet Healthcare Corporation, through its subsidiaries, owns and
operates acute care hospitals and related health care services.
Tenet's hospitals aim to provide the best possible care to every
patient who comes through their doors, with a clear focus on
quality and service. Tenet can be found on the World Wide Web at
http://www.tenethealth.com/
* * *
As reported in the Troubled Company Reporter on June 21, 2004,
Standard & Poor's Ratings Services said that the ratings and
outlook on Tenet Healthcare Corp. (B/Negative/--) will not be
affected by an increase in the size of the company's new
senior unsecured note issue due in 2014, to $1 billion from $500
million. Tenet used $450 million of the proceeds to repay debt due
in 2006 and 2007, and the balance will be retained in cash
reserves. Despite the additional debt and interest costs, Standard
& Poor's considers the additional liquidity provided by the cash,
as well as the effective extension of maturities, to be
offsetting factors. The ratings already consider expectations of
weak operating performance and cash flow over the next year while
the negative outlook incorporates the risk of ongoing litigation
and investigations related to the hospital chain's operations.
THAXTON GROUP: Sells Tennessee & Kentucky Consumer Loan Business
----------------------------------------------------------------
After obtaining the approval of the Bankruptcy Court, The Thaxton
Group, Inc. consummated the sale of substantially all of its
Tennessee and Kentucky consumer loan receivables regarding its
TICO business to Heights Finance Corporation, an Illinois
corporation and Heights Finance Corporation, a Tennessee
corporation, as of June 30, 2004.
The transaction included the assumption of certain of TICO's
branch location real property leases in Tennessee and Kentucky and
the purchase of certain equipment.
The gross proceeds from the sale (before deducting a hold back
amount, a refund escrow amount, and certain fees and expenses)
were approximately $7.7 million. The proceeds placed into escrow
to be credited against the Company's stated indebtedness to Finova
were approximately $7.1 million. The proceeds are being placed
into escrow because of the dispute in the bankruptcy proceedings
regarding Finova's claims.
On July 7, 2004, Mr. Arthur B. Kramer resigned from the Board of
Directors of the Company, as well as from all other positions he
may hold with the Company, or any of its subsidiaries or
affiliates, if any.
On July 8, 2004, Mr. Robert R. Dunn, the Company's President and
Chief Restructuring Officer, was elected a Director by the Board
of Directors to fill the vacancy on the Board created by Mr.
Kramer's resignation.
Headquartered in Lancaster, South Carolina, The Thaxton Group,
Inc., is a diversified consumer financial services company. The
Company filed for Chapter 11 protection on October 17, 2003
(Bankr. Del. Case No. 03-13183). The Debtors are represented by
Michael G. Busenkell, Esq., and Robert J. Dehney, Esq., at Morris,
Nichols, Arsht & Tunnell.
UNIVERSAL ACCESS: Retains Buccino as Fin'l & Turnaround Advisors
----------------------------------------------------------------
Universal Access Global Holdings Inc. (Nasdaq: UAXSQ) has hired
Buccino & Associates, Inc. as financial advisors and turnaround
consultants, and Duane Morris LLP as bankruptcy counsel in
connection with its reorganization.
Buccino & Associates, Inc. was first retained on July 12 to
provide an assessment of the Company's business and to present its
findings and recommendations to the board of directors on July
26th. Gerald P. Buccino, Chairman and CEO, and Harry R. Novak,
Senior Vice President, led the assessment. The firm concluded that
the best environment for the Company to effect a turnaround of the
business, to preserve capital, as well as to maximize value for
all constituencies, was to file for bankruptcy protection.
On August 4, 2004, the Company and four affiliates filed voluntary
petitions for reorganization under Chapter 11 of the U.S.
Bankruptcy Code in the United States Bankruptcy Court for the
Northern District of Illinois. "In evaluating the financial and
strategic alternatives available to Universal Access, it was
critically important that we receive the best professional advice
in the marketplace. Buccino & Associates Inc. provided us with
reasoned and sound counsel and continues to do so. We are
confident that we will achieve the best results for all of our
constituencies as we continue our work with Jerry Buccino and the
firm," said Randy Lay, Chief Executive Officer and President of
Universal Access.
Duane Morris LLP was hired pre-petition as special counsel, and
will continue, post-petition, as the Company's bankruptcy counsel.
"We are glad to have John Collen, head of Duane Morris' Chicago
bankruptcy practice, utilizing his deep experience in bankruptcy
matters, as our quarterback in this process," Mr. Lay added.
The Company will continue to focus on operating and refining its
core business, and maintaining a high level of customer service,
while working through the reorganization process.
About Buccino & Associates, Inc.
Buccino & Associates, Inc., founded in 1981, provides turnaround
consulting; crisis and interim management; insolvency and
reorganization services in judicial and non-judicial settings;
post-confirmation plan administration, including disbursing agent
and liquidating trustee services; litigation support and expert
testimony; financial advisory services for lenders, other economic
stakeholders and official and unofficial creditor committees;
corporate and business-unit assessment; corporate restructuring;
and forensic analysis. Our professionals have extensive operating,
financial, accounting, strategic, legal and board of directors
experience. The firm has offices in New York, Chicago, Atlanta and
Tampa. For more information, see http://www.buccinoassociates.com/
or contact the New York office at (212) 459-2600.
About Duane Morris
Duane Morris LLP, one of the 100 largest law firms in the United
States, is a full-service firm of approximately 550 lawyers. In
addition, Duane Morris affiliates have approximately 50
professionals engaged in ancillary service businesses. The firm
represents clients across the nation and around the world through
a combination of more than 20 offices and a relationship with an
international network of independent law firms.
Headquartered in Chicago, Illinois, Universal Access --
http://www.universalaccess.com/-- provides network infrastructure
services and facilitates the buying and selling of capacity on
communications networks. The company, and its affiliates, filed
for a chapter 11 protection on August 4, 2004 (Bankr. N.D. Ill.
Case No. 04-28747). John Collen, Esq., and Rosanne Ciambrone,
Esq., at Duane Morris LLC, represent the Company. When the Debtor
filed for protection from its creditors, it listed $22,047,000 in
total assets and $24,054,000 in total debts.
U.S. CANADIAN: Management Completes Successful Ecuador Site Visit
-----------------------------------------------------------------
Members of U.S. Canadian Minerals Inc.'s (OTCBB: UCAD) management
team have recently returned from Ecuador, where several of its
operational employees are working diligently to increase the
efficiency of the current operation. During this trip, management
met with local attorneys to resolve all outstanding regulatory and
tax matters and bring the facility's reporting system up to UCAD
approved standards. In addition, management reached an agreement
with Nevada Minerals' Ecuadorian subsidiary for joint operations
in the Yellow River region.
Rendal Williams, UCAD's CEO, stated, "We are extremely excited to
have confirmation that all governmental and regulatory issues have
been resolved and that the company is in good standing." Mr.
Williams continued, "I am confident in the expertise of our joint
operational partner here in Ecuador." Alejandro Diaz Silvia,
geologist and operations manager for Nevada Minerals' Ecuadorian
subsidiary, commented, "This further enhances the company's
ability to increase its extraction and processing of gold ore from
the Yellow River mine."
Further details relative to this project will be forthcoming in
future press releases and at http://www.uscanadian.net/and
http://www.yellowrivermining.com/
About UCAD
U.S. Canadian Minerals is a multi-dimensional, mineral-based
corporation headquartered in Las Vegas, Nevada. On its own and
through Joint Ventures, U.S. Canadian Minerals is looking to
expand and develop mining properties throughout the world. U.S.
Canadian Minerals has already begun work on several projects, all
of which are in various stages of development.
* * *
As reported in the Troubled Company Reporter on July 30, 2004, the
Board of Directors of U.S. Canadian Minerals, Inc., dismissed
Beckstead and Watts, LLP, as its independent public accountants on
June 11, 2004. The Company's Board of Directors participated in
and approved the decision to dismiss Beckstead and Watts, LLP.
Beckstead and Watts, LLP had been the Company's certifying
accountant for the prior year. During the past year, Beckstead
and Watts, LLPs' report on the Company's financial statements
contained an explanatory paragraph questioning the Company's
ability to continue as a going concern.
UAL CORP: Wants Court OK to Restructure 5 Aircraft Financing Deals
------------------------------------------------------------------
UAL Corp. and its debtor-affiliates ask the Court for permission
to settle, compromise and restructure five financing agreements
with General Electric Company and Societe Nationale d'Etude et de
Construction de Moteurs d'Aviation related to aircraft with Tail
Nos. N326UA, N375UA, N376UA, N377UA and N378UA. The GE/SNECMA
Financings are currently structured as U.S. leveraged leases, in
which GE and SNECMA have each purchased 50% of the debt.
After several months of vigorous negotiations, the Debtors, GE
and SNECMA agreed to amend and restructure the GE/SNECMA
Financings pursuant to a term sheet. The GE/SNECMA Financings
consist of:
(a) leases;
(b) secured loans, other secured debt or debt-related
agreements; or
(c) trust indenture, mortgage, participation, indemnity and
other agreements, documents or instruments.
The Debtors need to maximize their fleet utility at the lowest
possible cost. James H.M. Sprayregen, Esq., at Kirkland & Ellis,
reports that the Debtors analyzed several aircraft financings and
considered the financing structure and related equipment in light
of the projected demand for air travel, flight schedules,
maintenance requirements, labor costs and other business factors.
After careful review, the Debtors determined that terms of the
five GE/SNECMA-financed aircraft are burdensome to the estates.
The rate under the leases exceeds the current market value and
the payment obligations far outweigh the benefits that the
Debtors receive from using the Aircraft.
The Term Sheet reserves GE's and SNECMA's rights to assert
administrative expense claims and a general unsecured non-
priority prepetition claim for payment obligations that became
due before the Petition Date and remained unpaid.
Mr. Sprayregen asserts that the transactions contemplated in the
Term Sheet are beneficial to the Debtors' estates because they
provide:
(1) reductions in the Debtors' rental payment and other
obligations;
(2) limitations on GE's and SNECMA's administrative and
general unsecured claims; and
(3) reduction in the length of the terms of the GE/SNECMA
Financings to meet the Debtors' current fleet plan.
Because the Term Sheet contains confidential commercial
information, it is filed with the Court under seal. The Debtors
will provide copies of the Term Sheet to the Official Committee
of Unsecured Creditors' professionals, the Aircraft Leasing
Subcommittee and the DIP Lenders.
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 Airlines Bankruptcy
News, Issue No. 58; Bankruptcy Creditors' Service, Inc., 215/945-
7000)
US AIRWAYS: New World Mortgage Launches Program for Employees
-------------------------------------------------------------
New World Mortgage, Inc. has launched a program aimed at helping
Charlotte area employees of financially troubled US Airways cut
their mortgage costs by as much as 30 percent.
"Wage concessions of up to 30 percent seem inevitable for US
Airways employees," says Christian Werner, president of New World
Mortgage. "But their expenses won't be coming down 30 percent. We
have developed interest only mortgage and home equity loan
programs to help US Airways employees weather this financial
storm."
Mr. Werner says that home foreclosures are running around 20
percent in Cabarrus County, largely attributable to mass layoffs
at Pillowtex. He says he wouldn't want to see US Airways employees
in the same situation. So, Werner says, US Airways employees need
to move quickly in order to qualify before wage concessions affect
their income picture.
"New World Mortgage has loan officers trained and ready to help US
Airways employees make the best financial decisions possible under
these tough circumstances," says Mr. Werner. "It's not an ideal
solution, but it could just keep someone from losing a home until
their financial picture clears up."
New World Mortgage has developed three programs specific to US Air
employees and their families:
-- The USAIR One Fee has combined closing costs of only
$1,500.00 to cover all costs in refinancing their home.
-- The USAIR No Fee carries a slightly higher rate than the One
Fee yet, the closing costs are paid for by New World
Mortgage.
-- The USAIR Home Equity Freedom is a home equity line of
credit for any employee who has a valued interest rate and
needs just a home equity line for uncertain economic time.
The borrowers can use the equity in their home to pay for
loss of wages, cash flow, or career development for
education.
All programs have credit guidelines and credit restrictions apply.
Call for specific details.
New World Mortgage, Inc. is the full service mortgage brokerage
whose mission is to be a consumer's financial advocate, not just a
one-time lender. Founded in 1998, New World Mortgage, Inc. employs
51 loan originators, 11 support staffers and five managers in
Charlotte, North Carolina; Fort Mill, South Carolina; and Stow,
Ohio.
The company is located on the web at http://www.mortgagemaps.com/
and can be reached by telephone at 704-549-4600.
Headquartered in Arlington, Virgina, US Airways' primary business
activity is the ownership of the common stock of US Airways, Inc.,
Allegheny Airlines, Inc., Piedmont Airlines, Inc., PSA Airlines,
Inc., MidAtlantic Airways, Inc., US Airways Leasing and Sales,
Inc., Material Services Company, Inc. and Airways Assurance
Limited, LLC. The Company filed for chapter 11 protection on
August 11, 2002 (Bankr. E.D. Va. Case No. 02-83984). Alexander
Williamson Powell Jr., Esq. and David E. Carney, Esq. at Skadden,
Arps, Slate, Meagher & Flom and Lawrence E. Rifken, Esq. at
McGuireWoods LLP represent the Debtors in their restructuring
efforts.
VITAL BASICS: Appoints Akin Gump as Intellectual Property Counsel
-----------------------------------------------------------------
Vital Basics, Inc., asks the U.S. Bankruptcy Court for the
District of Maine, for permission to hire Akin Gump Strauss Hauer
& Feld LLP as its special trademark and intellectual property
counsel.
Akin Gump is expected to:
a) provide the Debtor advice regarding matters involving
trademark and other intellectual property rights;
b) monitor commercial use of marks that may infringe on
those used by or registered to the Debtor;
c) prosecute patent applications with the U.S. Patent and
Trademark Office;
d) register trademarks and prosecute patent applications
with foreign intellectual property offices to the extent
required by the Debtor;
e) register state trademarks;
f) register copyright works with the Copyright Office in the
Library of Congress;
g) litigate in order to protect and enforce the Debtor's
intellectual property rights or defend it from actions
brought by other intellectual property rights holders;
and
h) perform other services as requested by the Debtor and
matters related to its intellectual property.
The professionals who will provide services for the Debtor and
their hourly billing rates are:
PROFESSIONAL RATE
------------ ----
Bruce Lehman $475
Karol Kepchar 410
David Lee 215
Denise Ballantyne 150
Kristyne Bullock 305
Dr. Sandra Katz 195
The firm received a $15,000 retainer from the Debtor.
To the best of the company's knowledge, Akin Gump does not hold
any interest adverse to the Debtor or its estate.
Headquartered in Portland, Maine, Vital Basics, Inc.
-- http://www.vitalbasics.com/-- is into direct consumer
marketing and retail of nutraceutical and related products
throughout the United States and Canada. The Company, along with
its affiliate, filed for chapter 11 protection (Bankr. D. Me. Case
No. 04-20734) on May 10, 2004. George J. Marcus, Esq., at Marcus,
Clegg & Mistretta, PA, represents the Company in its restructuring
efforts. When the Debtor filed for protection from its creditors,
it listed $6,291,356 in assets and $16,314,589 in liabilities.
WESTPOINT STEVENS: Judge Drain Extends KERP to June 30, 2005
------------------------------------------------------------
WestPoint Stevens Inc. asked the U.S. Bankruptcy Court for the
Southern District of New York to approve an extension of its Key
Employee Retention Plan, as modified.
Pursuant to Sections 105(a) and 363(b)(1) of the Bankruptcy Code,
Judge Drain approves the extension of the Key Employee Retention
Program and provides that:
(a) The KERP is extended to cover those periods through and
including Debtors' fiscal quarter ending June 30, 2005,
and any further extension will require the further Court
approval;
(b) For the quarters ending June 30 and September 30, 2004,
the Debtors are authorized to make aggregate payments
under the KERP of $2,251,395 per quarter in lieu of the
KERP payments that otherwise may have been required for
those periods;
(c) For the quarters ending December 31, 2004, March 31, 2005,
and June 30, 2005, the "Target" metrics for EBITDA and
Cash Availability will be set at the EBITDA and Cash
Availability amounts that the Debtors project for those
periods in their forthcoming 2004 Business Plan;
(d) For purposes of calculating payments under the extended
KERP, the Debtors will use the same methodology that they
used for the calculation of payments and applicable
metrics under the KERP for quarters ending on March 31,
2004, and earlier, including the setting of "Minimum" and
"Maximum" metrics and the percentage payouts for each
group of employees, provided, however, that no adjustments
to actual EBITDA and Cash Availability will be made with
respect to any "Inventory Rationalization" or similar
program without first obtaining the prior written consent
of the Steering Committee or a Court order, obtained on
notice to the Steering Committee;
(e) The Debtors will continue to defer payment of 50% of all
payments until confirmation of a plan in these Chapter 11
cases, but will defer 100% of payments for Group 1A for
the quarter ending September 30, 2004, and all subsequent
periods, until confirmation of a plan; and
(f) The Debtors are authorized to establish an escrow account
into which payments due Group 1A employees will be made
and held for the benefit of Group 1A employees until
confirmation of a plan.
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)
WILDWOOD ROSE INC: Voluntary Chapter 11 Case Summary
----------------------------------------------------
Debtor: Wildwood Rose, Inc.
625 State Highway 165
Branson, Missouri 65616
Bankruptcy Case No.: 04-62256
Type of Business: The Debtor operates a restaurant and theatre.
Chapter 11 Petition Date: August 30, 2004
Court: Western District of Missouri (Springfield)
Judge: Arthur B. Federman
Debtor's Counsel: Raymond I. Plaster, Esq.
Raymond I. Plaster, P.C
3275 East Ridgeview Street, Suite C
Springfield, MO 65804
Tel: 417-862-3704
Fax: 417-862-1936
Total Assets: $1,331,000
Total Debts: $588,638
The Debtor did not file a list of its 20-Largest Creditors.
WINSTAR COMMS: Trustee Wants Court Nod on HP & Fidelity Pacts
-------------------------------------------------------------
On March 26, 2003, Christine C. Shubert, the Chapter 7 Trustee
overseeing the liquidation of Winstar Communications, Inc.'s
estate, commenced adversary proceedings against Hewlett-Packard
Company and Fidelity Engineering Corp. to avoid and recover
transfers pursuant to Sections 547 and 550 of the Bankruptcy
Code.
Pursuant to a November 6, 2002 Order, the Court permitted the
Trustee to settle certain avoidable preference recovery
controversies without further Court approval. However, the
Avoidance Actions against Fidelity and Hewlett-Packard fall
outside of the November 6, 2002 Order, thus requiring Court
approval.
The Trustee engaged in settlement discussions with Fidelity and
Hewlett-Packard, and subsequently reached agreements to resolve
their disputes.
According to Sheldon K. Rennie, Esq., at Fox Rothschild, LLP, in
Wilmington, Delaware, the Trustee asserts a $228,972 gross
preference claim against Fidelity. Fidelity provided evidence
that Winstar's payments were made in the ordinary course of
business, which justified a substantial reduction of the amount
recoverable by the Trustee. Pursuant to the Settlement
Agreement, the Trustee agrees to accept $50,000 from Fidelity in
full and final settlement of all claims.
The Trustee's complaint against Hewlett-Packard asserted a gross
preference amount of $279,639. Hewlett-Packard provided evidence
of statutory new value, which justified an almost complete
reduction of the amount recoverable by the Trustee. Hence, the
Trustee agrees to accept $5,000 from Hewlett-Packard in full and
final settlement of all claims.
The Trustee will execute mutual releases with both parties.
Pursuant to Rule 9019 of the Federal Rules of Bankruptcy
Procedure, the Trustee asks the Court to approve the Settlement
Agreements with Fidelity and Hewlett-Packard.
Winstar Communications, Inc., and its debtor-affiliates filed for
chapter 11 protection on April 18, 2001. Following a sale of
substantially all of the company's assets, the case converted to a
chapter 7 liquidation proceeding on January 24, 2002. Christine C.
Shubert serves as the Chapter 7 Trustee and hired the law firm of
Fox Rothschild O'Brien & Frankel, LLP as her counsel. (Winstar
Bankruptcy News, Issue No. 59; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
WOOD PRODUCTS: Appoints Frank Schultz V.P. Finance & Director
-------------------------------------------------------------
Wood Products, Inc. (OTC Bulletin Board: WPRO) has appointed Frank
A. Schultz as Vice President of Finance and Director of the
Company. Mr. Schultz brings over 40 years of finance and
operations experience to Wood Products.
Chris Harper, Director, President, CEO and Chairman of Wood
Products, commented, "Frank's proven leadership and experience in
dealing with foreign investments make him a significant addition
to the Wood Products executive team. His understanding of the
capital markets and knowledge of China's investment opportunities
uniquely qualifies him as Wood Products moves into the next phase
of its growth."
Mr. Schultz is a television commentator covering the Frankfurt
Stock Exchange for Deutsche Welle, a leading German broadcasting
company. Deutsche Welle's programs are broadcast around the world
in 30 different languages via television, the internet and radio.
Mr. Schultz is also a board member of Union Vermogensverwaltung
AG.
In 1990, Mr. Schultz co-founded Ballmaier & Schultz Borsenmakler
GmbH, The firm was listed on the Frankfurt Stock Exchange in 1994
as Ballmaier & Schultz Wertpapier AG, making it the first stock
brokerage company to go public on Germany's largest stock
exchange. Prior to that, Mr. Schultz was Vice President of Rabe &
Partner Borsenmakler who specialized in Japanese securities
instruments. His primary engagement for 10 years was as a
specialist advising on corporate restructuring of companies in
Germany. Mr. Schultz began his career in 1968 as a systems
specialist and sales representative at IBM Deutschland GmbH. Mr.
Schultz received his economics degree from Johann Wolfgang Goethe
University in Frankfurt, Germany.
Mr. Schultz said, "I am excited to join Wood Products having
worked in the international financial sector my entire life. The
Company has many exciting projects underway that I will focus on,
in addition to helping maintain transparency with investors and
working to build shareholder value."
About Wood Products, Inc.
In May 2004, Wood Products, Inc. announced a new strategic
objective of developing a diversified portfolio in China's rapidly
developing economy through acquisitions of certain carefully
chosen dynamic industrial enterprises. In July 2004, the Company
announced that the directors had approved a name change of the
Company from Wood Products, Inc. to China Industrial Corporation.
The name change is expected to be completed following approval by
shareholders at a special meeting of the shareholders. On July 21,
2004, the board of directors approved in principle the acquisition
of 100% of the outstanding shares of Harper & Harper, Ltd. The
sole asset of Harper & Harper, Ltd. consists of its interest in a
contract to purchase a fully-funded 28% interest in Shijiazhaung
Dongfang Thermal & Electric Enterprises Group Co., Ltd. The
acquisition of Dongfang is expected to close in the fourth quarter
of 2004. Finally, the Company recently announced that it had
acquired a 5% investment interest in Zhong Huan Water Treatment
Construction Co., Ltd., a waste water treatment plant construction
and management company based in Beijing, China.
At June 30, 2004, Wood Products, Inc.'s balance sheet showed a
$37,525 capital deficit, compared to a $27,726 deficit at
March 31, 2004.
WORLDCOM INC: Court Won't Enforce Bank Claimants' Stipulation
-------------------------------------------------------------
Before the bankruptcy petition date, 25 banks that were parties to
the Worldcom Inc. Debtors' 364-Day Facility filed a Constructive
Trust Action against the Debtors in the New York state court.
According to Abbey W. Ehrlich, Esq., at O'Melveny & Myers, LLP, in
New York, the Banks subsequently filed an action in Maryland
against Susan Mayer, who was then the Debtors' Senior Vice
President and Treasurer. At the Debtors' request, the Court
entered a preliminary injunction under Section 104 of the
Bankruptcy Code staying the Maryland Action through June 15, 2003.
The Banks filed proofs of claim against Debtor WorldCom, Inc.
Wells Fargo Bank, N.A., also filed proofs of claim against
substantially all of the other Debtors. The Debtors objected to
Wells Fargo's multiple claims. Wells Fargo filed a response on
May 15, 2003.
Ms. Ehrlich relates that after the Court approved the Debtors'
Disclosure Statement on May 23, 2003, the Banks and the Debtors
agreed on a compromise of the Bank Actions. The compromise was
described in a supplement to the Debtors' Disclosure Statement,
which was approved by the Court for distribution to creditors.
The Supplement also contained the Debtors' Amended Plan, which
included provisions for the distribution of New Notes to the
holders of Bank Settlement Claims under Class 3A.
Ms. Mayer resigned on June 10, 2003, thereby obviating the need
for the preliminary injunction entered in the Injunction
Proceeding. However, to preserve the status quo, the Debtors and
the Banks consented to various extensions of the preliminary
injunction pending consummation of the Class 3A settlement.
After it became apparent that the Debtors would not make
distributions to the holders of Class 3A claims, the Banks in the
Maryland Action agreed to extend the preliminary injunction
entered in the Injunction Proceeding through June 8, 2004.
Under the Bank Settlement, the holders of Bank Settlement Claims
are to receive $75 million in New Notes. The Bank Settlement
required that the Banks deliver to the Debtors dismissals of the
Maryland Action.
Furthermore, the preliminary injunction entered in the Injunction
Proceeding has a June 22, 2004 expiry. Unless the injunction is
extended, the Court in the Maryland Action will insist that the
Maryland Action be prosecuted or dismissed. The Banks in the
Maryland Action cannot allow the Maryland Action be dismissed
without adequate assurance that they will receive their share of
the Class 3A distributions. However, recommencing litigation of
the Maryland Action would arguably violate the terms of the Bank
Settlement. Ms. Ehrlich emphasizes that the current stalemate
should be resolved as quickly as possible.
Therefore, the holders of Bank Settlement Claims under Class 3A of
the Plan ask the Court to enforce the terms of the Wells Fargo
Stipulation and direct the Debtors to make distributions to the
holders of Class 3A Claims, other than Wells Fargo.
Debtors Object
The Debtors' Plan provides that "[a]llowance and distribution on
account of Bank Settlement Claims is expressly contingent upon the
prior dismissals with prejudice of the Constructive Trust
Action and the Maryland Action." As of July 8, 2004, the
Constructive Trust Action and the Maryland Action have not been
dismissed and no distributions have been made.
Thus, the Debtors ask the Court to deny the Banks' request to
enforce the Stipulation.
Adam P. Strochak, Esq., at Weil, Gotshal & Manges, LLP, in New
York, argues that the Stipulation contains permissive and not
mandatory language. The Stipulation provides that "[t]he other
Banks participating in the Bank Settlement may receive their
benefits thereunder without regard to [Wells Fargo Bank's]
position."
Therefore, the Stipulation permits, but does not require, the
Debtors to make Class 3A distributions in circumstances where the
condition precedent of dismissal with prejudice of the Maryland
Action has not been satisfied. The language was acceptable to the
Debtors because it does not require them to do anything. If the
Debtors had determined that a distribution to the Banks, other
than Wells Fargo, was appropriate, the provision allows the
Debtors to make the distributions without prejudice to the
Debtors' arguments as against Wells Fargo.
Moreover, the Debtors do not have an obligation to make Class 3A
distributions to the Banks until the Maryland and Constructive
Trust Actions are dismissed with prejudice as provided in the
Plan.
* * *
Judge Gonzalez denies the Class 3A Bank Claimants' request to
enforce the Stipulation. The Court finds that because the
provision in the Stipulation concerning the receipt of benefit by
the other banks participating in the Bank Settlement is
permissive, the Debtors are permitted to make distributions to
those banks without prejudicing the Debtors' position in their
dispute with Wells Fargo. Pursuant to the terms of the
Stipulation, however, the Debtors are not required to make a
distribution to the banks participating in the Bank Settlement.
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)
Z-TEL TECH: Faces Possible Delisting from Nasdaq SmallCap Market
----------------------------------------------------------------
Z-Tel Technologies, Inc. (Nasdaq/SC: ZTEL) has received a Nasdaq
Staff Determination indicating that the company failed to comply
with Nasdaq's $35 million market value of listed securities
requirement for continued listing on the Nasdaq SmallCap Market
and consequently is subject to delisting from that market
beginning September 9, 2004.
The company said it intends to appeal the staff determination to a
Nasdaq Listing Qualifications Panel and pending that hearing, the
company's common shares will continue to trade on the Nasdaq
SmallCap Market. According to the company, there can be no
assurance that it will prevail at the hearing, and that its common
stock will not be delisted from the Nasdaq SmallCap Market.
About Z-Tel
Z-Tel offers consumers and businesses nationwide enhanced wire
line and broadband telecommunications services. All Z-Tel products
include proprietary services, such as Web-accessible, voice-
activated calling and messaging features, which are designed to
meet customers' communications needs intelligently and
intuitively. Z-Tel is a member of the Cisco Powered Network
Program and makes its services available on a wholesale basis to
other communications and utility companies, including Sprint. For
more information about Z-Tel and its innovative services, please
visit http://www.ztel.com/
At June 30, 2004, Z-Tel Technologies' balance sheet showed a
$159,022,000 stockholders' deficit, compared to a $131,019,000
deficit at December 31, 2003.
*********
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
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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.
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*** End of Transmission ***