/raid1/www/Hosts/bankrupt/TCR_Public/040903.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, September 3, 2004, Vol. 8, No. 188
Headlines
ABC ENTERPRISES: Case Summary & 20 Largest Unsecured Creditors
ALLEGHENY TECHNOLOGIES: Moody's Confirms Single-B Ratings
AMERICAN COMPUTER: Creditors Must File Proofs of Claim by Oct. 5
AMERICAN STANDARD: Moody's Reviewing Ba2 Ratings & May Upgrade
AQUILA INC: Intends to Retire $430 Million Sr. Secured Bank Loan
ARMSTRONG WORLD: Sells Wave Facility to Marine Venture for $1.5M
BATTERSON PARK: Fitch Raises Class A-5 Rating Two Notches to BB+
BENNINGTON COLLEGE: Moody's Raises Long-Term Debt Rating to Ba1
BIB HOLDINGS: Selling Apparel Unit as Part of Restructuring Plans
BRAGLIA MARKETING: FTC Target in Do-Not-Call Registry Lawsuit
CANADA PAYPHONE: Gets Court Approvals to Implement Globalive Offer
CARLISLE PROPERTIES: Case Summary & Largest Unsecured Creditors
CHYPS CBO: Fitch Junks $101.2 Mil., $57.1 Mil. & $42.4 Mil. Notes
CITIGROUP MORTGAGE: Fitch Puts Low-B Ratings on Classes B-4 & B-5
COVANTA ENERGY: Asks Court to Disallow Federal's Remaining Claims
CRDENTIA CORP: Inks Pact to Acquire Arizona Home & Healthcare
CREST G-STAR: Fitch Rates Limited Partnership Interest Certs. B
CREST G-STAR: Fitch Affirms Low-B Ratings on $20M & $15M Notes
CSFB MORTGAGE: S&P Slashes Certificate Class I-M-2 Rating to D
DELTA AIR: Extends Consent Solicitations to September 9
DT IND'S: U.S. Trustee Appoints 6-Member Creditors' Committee
ECHOSTAR COMMS: Elects to Redeem 10-3/8% Senior Notes Early
EES COKE: Moody's Upgrades Series B Secured Notes Rating to Ba3
ENRON: Insurance Companies Want Stay Lifted to Pay Defense Costs
FACTORY 2-U: Liquidation Sales on 172 Stores Begins Today
FAIR GROUNDS: Files Chapter 11 Plan of Reorganization in Louisiana
FAIR GROUNDS: Churchill Downs Offers $47 Mil. to Buy Race Course
FAIRFAX FINANCIAL: Does Not Maintain a Relationship with Fitch
FISHER COMMUNICATIONS: Moody's Puts B2 Rating on $150 Mil. Notes
FLEMING COS: Court Approves Grace Foods Settlement Agreement
FOSTER WHEELER: Subsidiary Wins 400 MW Power Plant Deal in Italy
FRIEDMAN'S: Bank Lender Talks Continue
GENERAL MILLS: Moody's Assigns Ba1 Rating to $5.9B Preferred Stock
GS MORTGAGE: Fitch Rates $14.64 Mil. Privately Offered Class BB+
GSAA HOME: Fitch Assigns BB Rating to $1.581 Mil. Class B-2 Certs.
HANGER ORTHOPEDIC: Moody's Cuts Debt Ratings & Junks Preferreds
HARCO COMPANY: Voluntary Chapter 11 Case Summary
HAYES LEMMERZ: Balks at GE Capital's "Stipulated Loss Value" Claim
HIGHWOODS PROPERTIES: Richmond Division Wins Saxon Contract
HILB ROGAL: S&P Raises Counterparty Credit Rating One Notch to BB
HOLLINGER INT'L: Committee Report Not Objective, Radler Says
INDYMAC BANCORP: Appoints Stuart A. Gabriel to Board of Directors
INTEGRATED ELECTRICAL: Gets Waiver on $175 Million Credit Facility
INTERSTATE BAKERIES: 10K Filing Delay Prompts Moody's Junk Ratings
KAISER GROUP: John Grigsby, Jr. Resigns as Chief Executive Officer
LA QUINTA: Declares Dividend on 9% Series A Preferred Stock
LEHMAN ABS: Moody's Puts Class B-2 Cert. Ba3 Rating Under Review
MEDIACOM COMMS: S&P Puts BB Credit Rating on Negative CreditWatch
MEDICAL DISCOVERIES: Eliminates Additional $540,000 Secured Debt
METALLURG INC: S&P Withdraws Junk Ratings at Company's Request
MICROTEC ENTERPRISES: Lenders Agree to Forbear Until Oct. 29
MIRANT: Gets Court Nod to Pay John Ragan $292,912 Separation Pay
MISSISSIPPI CHEMICAL: Files Amended Plan of Reorganization
NASH FINCH: Fitch Affirms B+ Bank Debt & B- Sr. Sub. Debt Ratings
NATIONAL CENTURY: CSFB Appealing Court Order on Rule 2004 Exam
NATIONAL COAL: Pays $5.5 Mil for Robert Clear Coal's Mining Rights
OWENS CORNING: Court Okays Comm.'s Limited Retention of Dr. Churg
PARMALAT USA: Court Extends Preliminary Injunction to Nov. 30
PLY GEM: S&P Assigns B+ Rating to $126 Million Senior Bank Loan
QUESTERRE: 90%+ of Creditors Approves CCAA Plans of Arrangement
QUESTERRE: Names David Mallory as CFO & Jason D'Silva VP
QUESTERRE ENERGY: Implements Employee Retention Plan
R.H. DONNELLEY: Completes $1.4B Directory Publishing Acquisition
RCN CORP: Reorganized Debtors Valued at $1.2BB in Chapter 11 Plan
RCP ENTERTAINMENT: Case Summary & 7 Largest Unsecured Creditors
RIVERSIDE FOREST: Board Member George L. Malpass Resigns
ROBECO CBO: S&P Puts Low-B Rating Classes D & E on Positive Watch
SECURED DIVERSIFIED: Selling 1.4MM Shares to London Investment Co.
SOLUTIA INC: Turns Over $3,218,846 to Anniston Educational Fund
STATE STREET: Creditors Must File Proofs of Claim by Dec. 27
STERICYCLE INC: Moody's Lifts Rating on Senior Sub. Notes to B2
TENET HEALTHCARE: Paul Hastings Advising Centinela in Transaction
UNIVERSAL ACCESS: Stock Trades at OTC Bulletin Board Today
US AIRWAYS: Court Closes Seven Out of Eight Chapter 11 Cases
VSOURCE: Launches Preferred Stock Offering for Subsidiary Interest
WESTERN REFINING: S&P Places B+ Credit Rating on CreditWatch
WESTPOINT: Resolving Dispute with R2 Top Hat Over $525M Claim
WORLDCOM INC: Tishman Technologies Holds $7.1 Million Claim
Z-TEL TECH: 150 Employee Reduction Lowers Payroll Expense by 25%
* Gabelli Asset Management Names Michael R. Anastasio CFO
* Matthews & Branscomb Lawyers Join Cox & Smith to Create New Firm
* Perry Glantz Leads Bohm Francis' New Los Angeles Office
* BOOK REVIEW: AMEX: A History of the American Stock Exchange
*********
ABC ENTERPRISES: Case Summary & 20 Largest Unsecured Creditors
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Debtor: ABC Enterprises, Inc.
Post Office Box 765
Monroeville, Alabama 36461
Bankruptcy Case No.: 04-15138
Type of Business: Fast food restaurant operator.
Chapter 11 Petition Date: August 31, 2004
Court: Southern District of Alabama (Mobile)
Judge: Margaret A. Mahoney
Debtor's Counsel: Robert M. Galloway, Esq.
Galloway, Smith, Wettermark & Everest, LLP
P.O. Box 16629
Mobile, AL 36616-0629
Tel: 251-476-4493
Total Assets: $1,222,377
Total Debts: $1,510,806
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Peoples Exchange Bank secured by 4 $854,373
Post Office Box 8 restaurants
Beatrice, AL 36425 Secured Value:
$771,000
Internal Revenue Service 2003-2004 federal $250,000
withholding tax
State of Alabama-Department Taxes $150,000
of Revenue
AlaTax - Tax Trust 2004 taxes $90,000
Internal Revenue Service 2003-2004 taxes $36,124
Alabama State - Department 2004 unemployment $25,000
of Ind. Rel. compensation
Ford Credit 2004 account $16,412
GreenTree 2004 account $14,382
Internal Revenue Service 2004 taxes $13,671
Blake, White, Brown & 2004 account $6,825
Farnell
GMAC 2004 account $4,854
State of Alabama-Department 2003-2004 $4,000
of Revenue withholding taxes
Alabama Power Company 2004 account $3,846
Skipper Insurance 2004 account $3,000
Alabama Power Company 2004 account $2,140
Alabama Power Company 2004 account $2,000
Internal Revenue Service 2004 account $1,946
Sheffield 2004 account $1,894
Cabrera & Associates, P.C. 2004 account $1,829
Alabama Power Company 2004 account $1,714
ALLEGHENY TECHNOLOGIES: Moody's Confirms Single-B Ratings
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Moody's Investors Service confirmed Allegheny Technologies
Incorporated's senior implied rating of B1 and senior unsecured
ratings of B3. The ratings confirmation is based on:
* the company's improving cost structure,
* favorable purchase price for additional low-cost stainless
capacity, and
* enhanced liquidity position from its recent equity offering.
The ratings continue to reflect, however:
* Allegheny Technologies' high leverage,
* its concentration in cyclical end-use markets, and
* exposure to volatility of input costs.
The outlook is stable.
Ratings confirmed:
* Allegheny Ludlum Corporation - guaranteed unsecured
debentures rated B1;
* Allegheny Technologies Incorporated -- senior implied rating
B1;
* Allegheny Technologies Incorporated -- senior unsecured notes
rating B3; and
* Allegheny Technologies Incorporated -- senior unsecured
issuer rating B3.
This action concludes Moody's review of Allegheny Technologies'
ratings for possible downgrade.
Moody's ratings acknowledge the considerable leverage in Allegheny
Technologies' capital structure, with debt comprising
approximately 80% of its book capitalization at June 30, 2004.
Moody's ratings also incorporate the significant risk elements of
Allegheny Technologies' business profile including its
vulnerability to:
(i) the cyclicality of Allegheny Technologies' larger end-use
markets (aerospace and electrical energy);
(ii) volatility of input costs; and
(iii) exposure to the availability of certain raw materials.
Moreover, industry dynamics can be highly competitive in the
stainless steel market where Allegheny Technologies competes with
North American Stainless, AK Steel, and imported products, and in
which it recently expanded its presence through its acquisition of
J&L Specialty Steels, LLC.
The ratings confirmation reflects Moody's expectations that
Allegheny Technologies' reduced cost structure coupled with
prevailing high demand should enable it to improve its operating
metrics and cash flow generation promptly. The company estimates
it will derive savings from its renegotiated labor contract of
about $200 million through 2006 due to reduced headcount, fewer
job grades, and revisions to pension and retiree benefit
obligations. These non-cash pension and benefit costs had
significantly amplified Allegheny Technologies' operating losses
during the recent down cycle. Additionally, savings from
Allegheny Technologies' ongoing cost reduction initiatives should
enhance operating efficiencies and profitability over the balance
of the year. Overhead costs following Allegheny Technologies'
acquisition of J&L are quite low due to the very favorable price
of $67 million that Allegheny Technologies paid; J&L's former
parent had valued the fixed assets alone at $242 million. Moody's
notes also that Allegheny Technologies' liquidity position was
greatly improved in July with $230 million of equity proceeds; a
portion of which may be kept in cash for enhanced financial
flexibility.
The outlook for the ratings is stable, but assumes that the
company realizes anticipated cost savings from its revised labor
agreement and the integration of the J&L assets. Upward pressure
may be applied to Allegheny Technologies' outlook or ratings if
the company demonstrates markedly improved levels of retained cash
flows, or improves its leverage ratio to less than 5.0x on a
sustained basis. Downward pressure may be applied to the outlook
or ratings should order cancellations occur, raw material supplies
become inadequate to support production needs, or should Allegheny
Technologies fail to improve the quality of its cash generation
(i.e. exclusive of unusual items). Also, should additional
restructuring charges or acquisition activity take place, the
ratings could be adjusted downward.
Allegheny Technologies amended its secured credit facility to
enable it purchase the J&L assets. The credit facility remains
undrawn and has one financial covenant requiring a minimum of 1.0x
fixed charge coverage that becomes effective when the facility
availability declines to $150 million. At June 30, Allegheny
Technologies would not have met the covenant test under its
borrowing base facility, effectively limiting its access to
$126 million. Favorable financing terms for the acquisition added
just $59.7 million of debt to Allegheny Technologies' balance
sheet, $52.2 million of which is secured by the J&L assets and is
non-recourse to either Allegheny Technologies or Allegheny Ludlum,
$7.5 million is in the form of an unsecured note, and the balance
was paid in cash. As the secured note holders have a claim only
on the purchased J&L assets, the unsecured note holders' position
has not been diminished, consequently Moody's has not reflected
any additional subordination in Allegheny Technologies' unsecured
ratings. At August 31, Allegheny Technologies had total debt of
$587 million and cash of roughly $300 million.
Allegheny Technologies Incorporated, headquartered in Pittsburgh,
PA is a producer of high performance metals, flat-rolled and
engineered production, and reported trailing twelve month revenues
of $2.2 billion through June 30, 2004.
AMERICAN COMPUTER: Creditors Must File Proofs of Claim by Oct. 5
----------------------------------------------------------------
The United States Bankruptcy Court for the Central District of
California, Los Angeles Division, set October 5, 2004, as the
deadline for all creditors owed money by American Computer and
Digital Components, Inc., on account of claims arising prior to
April 22, 2004, to file their proofs of claim.
Creditors must file written proofs of claim on or before the
October 5 Claims Bar Date and those forms must be delivered to:
Clerk of the Bankruptcy Court
Central District of California
300 North Los Angeles Street
Los Angeles, California 90012
A copy must also be sent to the Trustee's counsel:
John J. Bingham Jr., Esq.
Danning, Gill, Diamond & Kollitz, LLP
2029 Century Park East, Suite 300
Los Angeles, California 90067-2904
Headquartered in Baldwin Park, California, American Computer,
filed for chapter 11 protection on April 22, 2004 (Bankr. C.D.
Calif. Case No. 04-19259) and the case converted to a chapter 7
liquidation on June 25, 2004. Robert P. Goe, Esq., at Goe &
Forsythe LLP represents the Company in its restructuring efforts.
When the Debtor filed for protection from its creditors, it listed
above $10 million both in estimated assets and debts.
AMERICAN STANDARD: Moody's Reviewing Ba2 Ratings & May Upgrade
--------------------------------------------------------------
Moody's Investors Service placed under review for possible upgrade
the debt ratings (Ba2 guaranteed senior unsecured) of American
Standard, Inc., a wholly owned subsidiary of American Standard
Companies, Inc., guarantor of American Standard Inc.'s debt
issuances.
Ratings placed under review for possible upgrade are:
American Standard Inc
(all as guaranteed by American Standard Companies):
* Ba2 $250 million 7.375% senior notes,
* Ba2 EUR 250 million 7.125% Eurobonds,
* Ba2 $350 million 7.375% senior notes,
* Ba2 $100 million 8.25% global bonds,
* Ba2 GBP 60 million 8.25% Eurobonds,
* Ba2 $275 million 7.625% senior notes,
* (P)Ba2 senior unsecured shelf,
* Ba1 Senior Implied, Ba2 Issuer Rating
The review is prompted by the strengthened operating performance
and demonstrated free cash generation ability of American
Standard, Inc., and its parent American Standard Companies. The
review also reflects the progress that American Standard Companies
has made in reducing its overall debt position.
The review will focus on the improved operating performance of
American Standard, Inc., the strengthening in margins and
sustainability of margin improvement and free cash flow
generation. The same factors will also be evaluated with respect
to the performance of and outlook for American Standard Companies.
Other important considerations in the review will include
potential cash requirements for other liabilities and obligations
such as warranty expense, pensions and asbestos settlements. A
further key factor in the review will be the position of debt at
the American Standard, Inc., level in the overall capital
structure and structural subordination issues that exist by virtue
of guarantees provided by American Standard International Inc., to
the $1.0 billion bank revolving credit facility. Dependent upon
the outcome of the review, ratings for the senior unsecured,
guaranteed notes and Eurobonds at the American Standard, Inc.,
level could range from Ba2 to Baa3.
American Standard Companies is the holding company for American
Standard, Inc., through which all operations in the US are
conducted and American Standard International, Inc., which holds
essentially all the international operations (principally
domiciled in Europe). Through these subsidiaries, American
Standard Companies operates in three core business segments: Air
Conditioning Systems and Services, Bath and Kitchen and Vehicle
Control Systems (predominately sells to the European commercial
vehicle market).
Headquartered in Piscataway, New Jersey, American Standard
Companies, Inc., had revenues of $8.6 billion in 2003, split
roughly 50/50 between American Standard, Inc., and subsidiaries
owned by American Standard International, Inc.
AQUILA INC: Intends to Retire $430 Million Sr. Secured Bank Loan
----------------------------------------------------------------
Aquila, Inc., (NYSE:ILA) intends to retire its existing
$430 million secured credit facility and enter into two new
unsecured, working capital facilities. The company anticipates
this occurring prior to or on September 16, 2004. These
transactions are expected to reduce the company's aggregate debt
outstanding by approximately $230 million and lower the company's
annual interest expense.
Based in Kansas City, Mo., Aquila operates electricity and natural
gas distribution utilities in Colorado, Iowa, Kansas, Michigan,
Minnesota, Missouri and Nebraska. The company also owns and
operates power generation assets. More information is available
at http://www.aquila.com/
* * *
As reported in the Troubled Company Reporter on August 23, 2004,
Standard & Poor's Ratings Services assigned its 'B-' rating to
Aquila Inc.'s (B-/Negative/--) $300 million premium income equity
securities -- PIES -- offering. The outlook is negative.
Kansas City, Missouri-based energy provider Aquila has about $2.8
billion of debt.
The PIES carry a coupon of 6.75% and represent mandatory
convertible senior notes, which will convert into common stock no
later than Sept. 15, 2007. Net proceeds will be used toward
reducing liabilities and improving the company's weak financial
profile.
The ratings on Aquila reflect the company's marginal credit
measures and insufficient cash flow from operations to offset a
burdensome debt level, not quite mitigated by management's efforts
to refocus on its traditional utility business.
Due to weak cash flow generation from operations, asset sales have
been necessary for Aquila to reduce its debt levels. Management
has achieved progress toward stemming a deteriorating financial
profile with the execution of its asset sales program, and the
company has alleviated some of its most pressing liquidity
concerns.
On the other hand, Fitch Ratings assigned a 'B-' rating to the
12,000,000 premium income equity securities -- PIES -- expected to
be issued by Aquila, Inc. At the same time, Fitch has revised
Aquila's Rating Outlook to Stable from Negative and affirmed the
existing ratings. The PIES will represent $300 million of
mandatorily convertible senior notes. Proceeds from the issuance
will be used to retire long-term debt and other liabilities.
Approximately $2.9 billion of securities are affected, including
the PIES.
Each of the 12,000,000 PIES represents $25 million of principal
amount of mandatorily convertible notes. The PIES will
automatically convert to common shares of Aquila on Sept. 15, 2007
at the conversion rate, unless converted to shares earlier at the
option of the holder or upon the occurrence of certain other
events. The conversion rate is dependent on the closing price of
Aquila's common shares over the 20-day period prior to the
Sept. 15, 2007 conversion date but would be capped at a 22% price
appreciation.
Fitch's 'B-' rating primarily reflects concerns regarding
significant debt relative to cash flow and the negative drag on
cash from remaining merchant operations. While much progress has
been made in returning the company to its domestic utility roots,
Aquila remains highly leveraged and generates insufficient cash
flow to satisfy debt and other obligations. Further restructuring
efforts, as well as a favorable operating and regulatory
environment, are necessary to restore financial strength.
Additional credit concerns include the relatively weak cash flow
from electric operations that results from the lack of a fuel
adjustment mechanism in Missouri combined with high fuel costs, as
well as an increase in other operating costs. Most of Aquila's
jurisdictions, including its largest, Missouri, use historical
test years for ratemaking purposes, which creates recovery lags.
High fuel prices and the requirement to prepay certain gas
suppliers and pipelines during peak winter heating months increase
the need for working capital.
ARMSTRONG WORLD: Sells Wave Facility to Marine Venture for $1.5M
----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware granted the
request of Armstrong World Industries, Inc., and its debtor-
affiliates subsidiaries to sell, free and clear of liens, claims
and encumbrances, their interest in the land located at 5301 North
Point Boulevard in Baltimore County, Maryland, to Marine Venture
Properties, LLC, a Maryland limited liability company, and pay a
6% commission to CB Richard Ellis, as real estate broker, out of
the sales proceeds.
AWI purchased the property in November 1985 for the purpose of
building a manufacturing facility. The property is comprised of:
(1) 10.43 acres of land that contains a 114,000-square
foot manufacturing facility and other improvements; and
(2) a 6.56-acre vacant lot located at the north end.
The vacant property, never used or leased by AWI, was sold to
Millers Island Propeller, Inc., for $275,000, as reported in the
Troubled Company Reporter on July 19, 2004.
The improved property is currently leased by AWI to Worthington
Armstrong Venture, a joint venture owned by AWI and Worthington
Industries, Inc. Wave has outgrown the facility and consequently
did not renew the lease on the improved property. The lease will
terminate in the fourth quarter of 2004.
In January 2004, AWI concluded that it did not anticipate any
future need for the property and determined to sell it.
Accordingly, in March 2004, AWI employed CB Richard Ellis to
provide brokerage services in connection with the sale of the
property.
Selling the Improved Property
AWI will sell the improved property to Marine Venture for
$1,500,000, or $143,815.00 per acre. The general terms of the
sale agreement are:
(1) Closing. The closing will take place 30 days after
the expiration of the Study Period, but no later
than November 24, 2004;
(2) Purchase Price. The Purchase Price will be payable
by Marine Venture as:
(a) $50,000 deposit to be delivered to an escrow
agent at the execution of the sale agreement
and applied to the purchase price at closing;
(b) a $25,000 deposit to be delivered to an
escrow agent on the first business day after
expiration of the Study Period; and
(c) the balance to be delivered to the escrow
agent on the Closing Date;
(3) Necessary Approvals. The parties' obligations are
contingent upon AWI's receipt of Court approval of
the sale transaction;
(4) Study Period. Between the Effective Date and the
date that is 60 days after the Notice of Approval
Date, Marine Venture and its representatives will
have full access to the property for the purpose of
performing investigations, inspections, tests and
studies. Marine Venture will provide commercial
general liability insurance during this period, and
must restore the property to its original condition
at the conclusion of all tests and inspections.
If Marine Venture determines that the acquisition of
the property is not warranted or desirable due to a
defect discovered during the Study Period, Marine
Venture must notify AWI of the defect before the
expiration of the Study Period. AWI will then have
30 days to cure the defect. If the defect cannot be
cured within the 30-day period, Marine Venture may
terminate the sale agreement by giving AWI written
notice of the termination before the expiration of
the Study Period, in which case the deposit will be
returned to Marine Venture and all parties will be
relieved of further obligations under the sale
agreement. In the absence of the notice, Marine
Venture waives the right to terminate the sale
agreement because of a defect discovered in the Study
Period;
(5) Title. After the Notice of Approval Date, Marine
Venture must:
(i) order a title insurance commitment for the
property;
(ii) instruct the title company to provide a
copy of the title commitment and any
exceptions to AWI; and
(iii) provide AWI, within 60 days after the Notice
of Approval Date, with written notice of any
exception to title set forth in the title
commitment, other than permitted exceptions,
that Marine Venture determines, in its sole
discretion, would interfere with its use of
the improved property. Absent that notice,
Marine Venture accepts all matters of record
as of the Effective Date;
(6) Indemnification. AWI will indemnify Marine Venture
from all debts, liabilities and obligations regarding
the improved property arising from any breach by AWI
of a representation, warranty, covenant or other
obligation under the sale agreement, and any business
done or other events occurring before the Closing
Date. Marine Venture will indemnify AWI from all
debts, liabilities and obligations arising from
Marine Venture's breach of the sale agreement and any
business done by Marine Venture on the improved
property before the Closing, or as a result of entry
during the Study Period.
Broker's Commission
The sale agreement provides that AWI will pay CB Richard Ellis a
sales commission equal to 6% of the sale price. Upon closing, CB
Richard Ellis will provide Armstrong Realty Group, a wholly owned
subsidiary of AWI, with a rebate equal to 20% of the broker's
commission.
Headquartered in Lancaster, Pennsylvania, Armstrong World
Industries, Inc. -- http://www.armstrong.com/-- the major
operating subsidiary of Armstrong Holdings, Inc., designs,
manufactures and sells interior finishings, most notably floor
coverings and ceiling systems, around the world. The Company
filed for chapter 11 protection on December 6, 2000 (Bankr. Del.
Case No. 00-04469). Stephen Karotkin, Esq., Weil, Gotshal &
Manges LLP and Russell C. Silberglied, Esq., at Richards, Layton &
Finger, P.A., represent the Debtors in in their restructuring
efforts. When the Debtors filed for protection from their
creditors, they listed $4,032,200,000 in total assets and
$3,296,900,000 in liabilities. (Armstrong Bankruptcy News, Issue
No. 66; Bankruptcy Creditors' Service, Inc., 215/945-7000)
BATTERSON PARK: Fitch Raises Class A-5 Rating Two Notches to BB+
----------------------------------------------------------------
Fitch Ratings upgraded 1 tranche and affirmed 2 tranches of notes
issued by Batterson Park CBO I, Ltd. These rating actions are
effective immediately:
-- $172,400,000 class A-3 notes affirm at 'AAA';
-- $32,000,000 class A-4 notes affirm at 'AAA';
-- $49,500,000 class A-5 notes upgrade to 'BB+' from 'BB-';
The $16,500,000 class B notes remain at 'C'.
Batterson Park is a collateralized debt obligation -- CDO --
managed by General Re / New England Asset Management -- GR-NEAM --
which closed November 17, 1998. Batterson Park is composed of
high yield bond (79.7%) and high yield loans (20.3%). Included in
this review, Fitch Ratings discussed the current state of the
portfolio with the asset manager and their portfolio management
strategy going forward. In addition, Fitch Ratings conducted cash
flow modeling utilizing various default timing and interest rate
scenarios.
Since the last rating action, the collateral has slightly
improved. The weighted average rating has improved from 'CCC+' to
'B-/CCC+'. The overcollateralization ratio increased from 94.23%
as of March 26, 2003 to 95.45% as of the most recent trustee
report dated July 26, 2004. As of July 2004, Batterson Park's
defaulted assets represented 7.6% of the $118.4 million of total
collateral and eligible investments. Assets rated 'CCC+' or lower
represented approximately 36.35%, excluding defaults.
Prior to the distribution date in January, 2004 the collateral
manager repurchased $12 million of class A-5 notes in the
secondary market at a discount to par. Fitch analyzed this action
by the manager and determined that the repurchase increased all of
the overcollateralization ratios and did not have a negative
impact on any class of notes. The action reduced the coverage
test redemption amount paid to the class A-3 and the class A-4.
However, the class A-3 and class A-4 received a large cash
redemption due to the failure of the interest coverage test during
the period. On the distribution date in July 2004 the class A-5
and class B notes received current and all cumulative deferred
interest.
The rating of the class A-3 notes and class A-4 notes addresses
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 A-5 and class B 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.
Fitch conducted cash flow modeling utilizing various default
timing and interest rate scenarios to measure the breakeven
default rates going forward relative to the minimum cumulative
default rates required for the rated liabilities. For more
information on the Fitch Vector Model, see 'Global Rating Criteria
for Collateralised Debt Obligations,' dated Aug. 1, 2003,
available on Fitch's web site at http://www.fitchratings.com/ As
a result of this analysis, Fitch has determined that the original
ratings assigned to the class A-3 and A-4 notes and the current
rating assigned to the class B notes still reflect the current
risk to noteholders. However, the current ratings assigned to the
class A-5 no longer reflect the current risk of the A-5
noteholders.
Fitch will continue to monitor and review this transaction for
future rating adjustments.
BENNINGTON COLLEGE: Moody's Raises Long-Term Debt Rating to Ba1
---------------------------------------------------------------
Moody's Investors Service upgraded Bennington College's long-term
debt rating to Ba1 from Ba3 and affirmed the stable outlook. The
rating action affects $7.8 million of outstanding Revenue Bonds,
Series 1999 issued through the Vermont Educational and Health
Buildings Financing Agency -- VEHFA. The upgrade is based on
balance sheet growth as a result of private giving, improved
operating performance, a continued trend of increasing enrollment
and expectation of limited future borrowing. Payments on the
bonds are secured by the general obligation of the College, as
well as a mortgage of certain campus property.
The rating and outlook change are based on:
-- Improved balance sheet flexibility following receipt of a
$10 million cash gift. In 2004, expendable financial
resources to debt and operations will increase to 1.5 times
and .71 times, up dramatically from .5 times and .27 times
in 2003. While this large gift could be used to cover debt
or operations, it must receive presidential approval and was
given to promote innovation at the College. Despite its
strong fundraising, however, Bennington College's
unrestricted financial resources remain very thin because it
has had to direct the bulk of private gift support to
operations and capital needs. Bennington is making
preparations for a new fundraising campaign, which it
expects to undertake over the next several years. The
campaign goals will be focused on capital projects,
operating needs and endowment. Management does not expect
any additional borrowing over the next few years as it plans
to finance any additional campus projects and significant
deferred maintenance primarily with gifts rather than debt.
We see the College's ability to improve its liquidity
position and successfully fundraise for capital and deferred
maintenance as an important future credit issue.
-- Bennington College continues to be successful at growing
applications and enrollment. Located in Bennington,
Vermont, the college is a very small private, coeducational
liberal arts institution known primarily for its
experimental style. Applications continued to grow in 2004
as the college received almost 850 applications, a 10%
increase from 2003 and a 62% increase since 1998. Growth in
applications has translated into increases in undergraduates
with an expected undergraduate population of over 600
students in 2004. This student demand profile is a
substantial improvement from the low of 285 undergraduates
in 1995, when the College was suffering from negative
publicity surrounding the reorganization that occurred in
the mid-1990s. The graduate programs comprise 20% of the
total 750-student population. Bennington continues to
increase its sticker price to remain in line with its peers.
Given recent improvement in student demand and a track
record of growing net tuition, this pricing strategy may be
successful, although Moody's believes there may be some
associated risk given the highly competitive market and
potential affordability issues. The ability of the College
to continue to improve student enrollment and growth in net
tuition will continue to be a key factor in our rating
criteria.
-- We expect operating performance to remain balanced, albeit
with continued reliance on the College's strong
philanthropic support. Bennington College continues to
establish a trend of positive operations. Operating margins
in 2003 and 2002 were 5.2% and 21.8%. While a large $5
million unrestricted gift in 2002 caused a significant
operating margin, even without this one time gift, the
College was still able to have a positive operating margin
of 1.9%. Unaudited fiscal 2004 shows continued positive
operating performance. These positive operating margins are
a dramatic improvement from the College's significant
deficits in the mid to latter 1990s. Improved performance
is driven by increases in net tuition revenue and
unrestricted operating gift support. The College is heavily
reliant on student charges, which comprise 70% of its
operating budget highlighting the importance of its
improving market position to achieving operating balance.
Gifts, in the form of unrestricted current year gifts or
gifts released from restriction, comprise another 24% of
revenues, reflecting the pivotal role of fundraising to the
College's ongoing viability. The College has a near term
goal of reducing its reliance on fundraising to balance
operations.
Outlook
The stable rating outlook at the Ba1 level reflects our
expectation that the College's market position will continue to
strengthen, leading to steady enrollment growth and contributing
to gradually expanding net student revenues to sustain improved
operating performance. Ongoing fundraising success is important
to reduce budgetary reliance on annual gifts and to address
deferred maintenance needs of the College. Significant additional
leverage is not anticipated over the medium term, as the College
intends to finance capital projects with gifts.
Key Facts (Fiscal 2003 financial, Fall 2003 enrollment):
Total Enrollment: 721 full-time equivalent students
(Expected 2004: 755 FTE)
Freshman Selectivity: 70.5%
Freshman Yield on Accepted Students: 31.9%
Total Pro Forma Debt: $12.2 million
(Unaudited 2004: $10.5 million)
Expendable Resources to Pro Forma Debt: 0.5 times (unaudited
2004: 1.5 times)
Expendable Resources to Operations: 2.7 months (unaudited 2004:
7.1 months)
Total Resources per Student: $21,097 (unaudited 2004: $35,815)
Operating Margin: 5.2% (Unaudited 2004: 5.3%)
BIB HOLDINGS: Selling Apparel Unit as Part of Restructuring Plans
-----------------------------------------------------------------
BIB Holdings Ltd. (OTCBB: BIBO) declared its plans to sell its
existing apparel business as a component of the company's proposed
overall restructuring plans.
The sale is a condition of the company's agreement to acquire
Incode Corp., a privately held technology services company, and a
component of the company's restructuring plan, which were both
announced earlier this week. The proposed sale of the apparel
business will include the assumption of the operating assets and
liabilities by the planned purchaser of the apparel business.
Gail Binder, chief executive officer of BIB Holdings, said, "We
believe our apparel operation will benefit from becoming a private
company under the new leadership of Robert Sautter, who will
become president and chief executive officer of the apparel
company upon the completion of the proposed sale, and that the
sale of the apparel company is necessary to the reinvention of our
business and to the long-term benefit of our shareholders. We
remain very excited by this process and look forward to providing
our shareholders with further updates as they become current."
Earlier this week, BIB had executed an agreement to acquire 100%
of the capital stock of Incode for 1 million shares of a new class
of preferred stock in BIB that is convertible into 200 million
shares of common stock 18 months after closing. The Incode
acquisition is subject to various conditions that must be
satisfied prior to closing.
Restructuring Plan
The acquisition of Incode is expected to be the vehicle for the
first stage of a BIB restructuring plan. The restructuring plan
will include efforts to complete:
(1) the acquisition and development of strategic
technologies and assets that drive improvement in the
relative financial strength of BIB;
(2) the disposition of assets and operating divisions that
are dilutive to BIB's earnings and overall financial
strength; and,
(3) the refinancing of BIB's various financing arrangements.
More information regarding either of Incode's or BIB's plans was
not disclosed at the time of this release.
About Incode Corp.
Incode Corp. is a private company whose business model are the
acquisition, development and commercialization of innovative
subscription-based eBusinesses. Additional information is
available online at http://www.incodetech.com/
About BIB Holdings Ltd.
BIB Holdings Ltd. designs, manufactures, imports, sells and
markets branded and non-branded apparel. The company has a
showroom in New York, a distribution center in Pennsylvania and a
distribution center in Las Vegas, within a Foreign Trade Zone.
The company designs, sources and markets a brand of high quality
apparel under the m.Sasson, Elk Canyon and New Terrain labels as
well as private label. Product lines have included underwear,
loungewear and outerwear, as well as accessories such as ties,
hats, scarves, gloves, jewelry, backpacks and small leather goods
as well as apparel. BIB Holdings Ltd. distributes its clothing
via leading retailers throughout the United States and abroad.
Additional information is available online at
http://www.msasson.com/
At June 30, 2004, BIB Holdings, Ltd. reports a $2,072,763
stockholders' deficit, compared to a $1,933,002 deficit at
December 31, 2003.
BRAGLIA MARKETING: FTC Target in Do-Not-Call Registry Lawsuit
-------------------------------------------------------------
The United States Department of Justice, on behalf of the Federal
Trade Commission filed a lawsuit this week in the U.S. District
Court for the District of Nevada alleging that a Nevada-based
telemarketing group has made more than 300,000 calls to consumers
who registered their phone numbers on the National Do Not Call
Registry. The FTC is seeking civil penalties against Braglia
Marketing Group, L.L.C., and its principals, Frank and Kate
Braglia. This is the first time the FTC has sought civil
penalties for violations of the Registry. At a rate of $11,000
per violation, the fine could reach $3.3 billion.
Braglia is a telemarketing firm based in Las Vegas, Nevada, that
calls consumers on behalf of its clients, including Flagship
Resort Development Corporation and Atlantic Palace Development,
LLC, which sell timeshare resort properties in Atlantic City, New
Jersey.
According to the FTC, in addition to making calls to hundreds of
thousands of registered phone numbers since October 17, 2003,
Braglia also has made more than 10,000 calls to various phone
numbers without first paying the required annual fee to access the
registered numbers in those area codes. The FTC further alleges
that Braglia has abandoned calls to consumers by failing to
connect the call to a representative within two seconds after
consumers answered the phone. The FTC has charged the defendants
with violating the Do Not Call Registry provisions and other
provisions of the Telemarketing Sales Rule.
The Commission vote referring the matter to the Department of
Justice for filing was 5-0. The Commission authorizes the filing
of a complaint when it has "reason to believe" that the law has
been or is being violated, and it appears to the Commission that a
proceeding is in the public interest. The complaint is not a
finding or ruling that the defendant actually has violated the
law. The case will be decided by the court.
A full-text copy of the seven-page Complaint is available at no
charge at:
http://www.ftc.gov/os/caselist/0423036/040830comp0423036.pdf
The company has no comment, Sean L. Wilson, Esq., in Coral Gables,
Florida, told a Dow Jones Newswire reporter.
Alan Rosenfielde, chief operating officer for Flagship and
Atlantic, tell Scott Lanman and Peter J. Brennan at Bloomberg News
that Braglia has worked for them for about a year and may fire the
telemarketing company.
CANADA PAYPHONE: Gets Court Approvals to Implement Globalive Offer
------------------------------------------------------------------
Canada Payphone Corporation was granted an order pursuant to the
British Columbia Business Corporations Act requiring that the
Company purchase, and all of the shareholders of the Company sell,
all of the issued and outstanding shares of the Company at a price
of $0.02 per share.
The Final Order was entered in connection with a previously
disclosed offer from Globalive Communications, Inc., to acquire
the Company for an aggregate consideration of $1,000,000, one half
of which is to be distributed to creditors of the Company and the
remaining half to be distributed to shareholders of the Company.
The Offer was presented to the creditors of the Company by way of
an Amended Proposal under the Company's proceedings under the
Bankruptcy and Insolvency Act. The Amended Proposal, under which
the Company's creditors are to receive $500,000 in full
satisfaction of their claims was approved by a majority of the
creditors of the Company and by the Quebec Superior Court,
Commercial Chamber on August 27, 2004.
Provided that the Final Order is not varied, completion of the
transactions contemplated by the Offer, including payment to the
Company's shareholders of $0.02 per share, will occur on
September 30, 2004.
During more than four months since the Company filed a Notice of
Intention under the Bankruptcy and Insolvency Act, the Board of
Directors of the Company investigated all possible alternatives
available to the Company and is satisfied that the Globalive Offer
is the best available for all stakeholders. Nevertheless, at the
Company's request, the Final Order provides that the Company or
any other interested person has liberty to apply on or before
September 7, 2004 to amend the Final Order in the event that a
transaction is proposed to the Company which is financially more
attractive to the Company's stakeholders than the Offer.
As reported in the Troubled Company Reporter on August 27, 2004,
Globalive Communications, Inc., agreed to lend $500,000 to the
Company which amount will be shared by the unsecured creditors of
the Company to compromise and settle all of the Company's
unsecured debts.
In conjunction with the offer of Globalive, the Company will be
required to purchase from, and all shareholders will be deemed to
have sold to the Company, all of the issued and outstanding Common
Shares of the Company at a price of $0.02 per share. Globalive
has agreed to provide the Company with sufficient funds to permit
the purchase of such shares. Concurrent with the purchase of such
shares, Globalive will also subscribe for additional shares with
the result that the Company will, upon completion of the
transactions contemplated under the offer of Globalive, become a
wholly owned subsidiary of Globalive.
About Canada Payphone Corporation
Canada Payphone Corporation is Canada's leading competitive
payphone service provider. Over the past few years, Canada
Payphone has played an instrumental role in the deregulation of
the competitive payphone industry and continues to create exciting
business opportunities in the new era of public access
communications.
In 1999, Canada Payphone began installing payphones across Canada.
An experienced telecommunications team and the latest advancements
in payphone technology provide Canada Payphone's customers with
superior service and reliability.
Canada Payphone Corporation is currently registered in the TSX
Venture Exchange under the symbol 'CPY'.
CARLISLE PROPERTIES: Case Summary & Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Carlisle Properties Limited Partnership
aka Best Western-Carlisle
537 Virginia Circle
Forrest City, Arkansas 72335
Bankruptcy Case No.: 04-20159
Type of Business: The Debtor operates a hotel.
Chapter 11 Petition Date: August 27, 2004
Court: Eastern District of Arkansas (Little Rock)
Judge: Audrey R. Evans
Debtor's Counsel: Frederick S. Wetzel, Esq.
Frederick S. Wetzel, P.A.
1500 Riverfront Drive, Suite 104
Little Rock, AR 72202-1749
Tel: 501-663-0535
Total Assets: $3,080,209
Total Debts: $865,357
Debtor's 17 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
AT&T $76
American Hotel Register Co. Supplies $1,933
American Leak Detection $350
Arkansas DF&A 2001-2003 Sales Tax $149,678
(0101135-43-001)
$137,719
2002-2004 Withholding
(71-0671133)
$11959
Best Western International Franchise Fees $8,001
Forrest City Bank Insurance policy $15,506
financed
Gary Henard Highway Sign Rent $3,600
H.M., LLC Highway Sign Rent $2,000
Industrial West, LLC Highway Sign Rent $5,250
Internal Revenue Service 2002 & 2003 941&940 $80,988
Special Procedures taxes
Jim Rogers Pool & Spa Swimming pool repairs $1,658
Service
Kahn & Company Sheets & Towels $4,856
Lonoke County Collector 2003 Property Taxes $8,043
(due by 10/10/04)
Maintenance Warehouse Supplies $1,423
Home Depot Supply
New-Ark, Inc. $37,000
Outdoor Management Services Highway Sign Rent $2,880
Soft Source Computer tech support $750
CHYPS CBO: Fitch Junks $101.2 Mil., $57.1 Mil. & $42.4 Mil. Notes
-----------------------------------------------------------------
Fitch Ratings affirms one tranche of CHYPS CBO 1997-1 LTD as
follows:
-- $101,247,090 class A-2 notes affirmed at 'CCC'.
Additionally:
-- $57,100,000 class A-3 notes remain at 'CC';
-- $42,400,000 class B notes remain at 'C'.
CHYPS CBO 1997-1 LTD is a collateralized debt obligation -- CDO --
managed by Delaware Investment Advisors, Inc. The CDO was
established in December 1997 to issue approximately $322 million
in notes and income notes. Payments are made semi-annual, and the
reinvestment period ended in January 2003. In conjunction with
the review, Fitch discussed the current state of the portfolio
with the asset manager and their portfolio management strategy,
considering the reinvestment period has ended.
Fitch reviewed the credit quality of the individual assets
constituting the portfolio. Since Fitch's last rating action in
October 2002, the portfolio continues to experience negative
performance through impaired and defaulted assets, along with a
negative change to the weighted average rating factor. The class
A-1 notes have paid in full, while the class A-2 notes have paid
down nearly 30% of its original note balance and all tranches are
receiving current interest. Accordingly, as a result of our
analysis, Fitch has determined that the assigned ratings to all
rated notes reflect the current risk to noteholders.
The ratings of the class A-2 and A-3 notes address the timely
payment of interest and the ultimate payment of principal. The
ratings assigned to the class B notes address the ultimate receipt
of interest and the stated principal amount by the final maturity
date.
Fitch will continue to monitor and review this transaction for
future rating adjustments as needed.
CITIGROUP MORTGAGE: Fitch Puts Low-B Ratings on Classes B-4 & B-5
-----------------------------------------------------------------
Citigroup Mortgage Loan Trust Inc. $523.5 million mortgage pass-
through certificates, series 2004-NCM2 are rated as follows:
-- Publicly offered classes IA-CB-1, IACB-2, IA-CB-3, IIA-CB-1,
IIA-CB-2, IIA-CB-3, IIIA-CB-1, IIIA-CB-2, IVA-1, IVA-2,
XS-1, XS-2, XS-3, XS-4, PO-1, PO-2, PO-3, PO-4, and R
(senior certificates) 'AAA';
-- Publicly offered class B-1 certificates ($11,943,000) 'AA';
-- Publicly offered class B-2 certificates ($6,943,000) 'A';
-- Publicly offered class B-3 certificates ($4,444,000) 'BBB';
-- Privately offered class B-4 certificates ($2,777,000) 'BB';
-- Privately offered class B-5 certificates ($1,944,000) 'B';
-- Privately offered class B-6 certificates are not rated by
Fitch.
The 'AAA' rating on the publicly offered senior certificates
reflects the 5.75% subordination provided by:
* the 2.15% class B-1 certificates,
* the 1.25% class B-2 certificates,
* the 0.80% class B-3 certificates,
* the 0.50% privately offered class B-4 certificates,
* the 0.35% privately offered class B-5 certificates, and
* the 0.70% 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 also
reflect the quality of the underlying mortgage collateral,
strength of the legal and financial structures, and the servicing
capabilities of National City Mortgage Corporation Co., which has
a primary servicer rating as 'RPS2-' for alt-A by Fitch.
The mortgage loans will be divided into four groups, which are
cross-collateralized, consisting of 3,679 conventional, 15- and
30-year fixed-rate mortgage loans secured by first liens on one-
to four-family residential properties with an aggregate principal
of $555,449,299. The average principal balance of the loans in
this pool is approximately $150,978. The loans in the trust have
a weighted average remaining term to maturity of 341 months. The
mortgage pool has a weighted average original loan-to-value ratio
-- OLTV -- of 76.03%. The weighted average FICO score is 729.
The states with the largest concentrations are:
* California (20.31%),
* Texas (7.74%),
* Virginia (6.80%),
* Maryland (5.81%), and
* Florida (5.04%).
All other states represent less than 5% concentration of the total
mortgage pool.
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/
U.S. Bank National Association will serve as trustee. Citigroup
Mortgage Loan Trust, Inc., a special purpose corporation,
deposited the loans in the trust, which issued the certificates.
For federal income tax purposes, an election will be made to treat
the trust as a real estate mortgage investment conduit.
COVANTA ENERGY: Asks Court to Disallow Federal's Remaining Claims
-----------------------------------------------------------------
Federal Insurance Company issued a surety bond guaranteeing
performance of the Covanta Energy and its debtor-affiliates'
obligations relating to their engineering, procurement and
construction contract with Tampa Bay Water. As of July 13, 2004,
Federal has made payments under the Bond to subcontractors and
materialmen for unpaid services and invoices. Federal also
incurred certain legal and expenses relating the Bond.
Federal filed Claim No. 4618 for previous payments under the Bond
as well as for potential related claims. Claim No. 4618 was filed
as a contingent and partially unliquidated claim.
The Debtors and Federal previously agreed that Federal would
retain its subrogation and equitable lien rights. Those rights
will attach to the Final Settlement Payment pursuant to the Tampa
Bay Water Settlement Agreement.
In another Court-approved stipulation, the Debtors and Federal
agree that Claim No. 4618 will be liquidated, fixed and allowed
for $275,000. The Claim will be paid in full from the Final
Settlement Payment.
Before the Petition Date, Federal Insurance Company, at Covanta
Energy Corporation's request, issued numerous surety bonds under
various agreements on behalf of several Debtors to collateralize
or guarantee performance of the Debtors' obligations due and owing
to various obligees.
Christine L. Childers, Esq., at Jenner & Block, in Chicago,
Illinois, relates that prior to the bond issuance, Covanta
executed and delivered to Federal Insurance a General Agreement of
Indemnity dated August 6, 1984. Under the Indemnity Agreement,
Covanta agreed to indemnify and hold Federal Insurance harmless
from any and all loss, damage or expense, which Federal Insurance
may incur by reason of its execution or delivery of any bond
issued on behalf of Covanta or its subsidiaries.
Federal Insurance filed multiple claims against the Debtors for
obligations arising under the Bonds and the Indemnity Agreement.
On the Effective Date of Covanta's Plan, Covanta rejected the
Indemnity Agreement and entered into various stipulations fixing
and resolving certain of Federal Insurance's Claims.
Currently, Federal Insurance has 12 proofs of claim pending claims
against the Debtors totaling more than $125 million.
These Remaining Claims are contingent, unliquidated claims by way
of Federal Insurance's rights of equitable subrogation with
respect to:
-- the contracts underlying the Bonds;
-- the contractor's rights against property of the Debtor
pledged to secure payment of the contracts underlying the
bonds; or
-- certain claims asserted against Covanta, by way of
Covanta's indemnification obligations under the Indemnity
Agreement.
Ms. Childers tells the Court that all material contracts and
guarantees relating to projects to which the Bonds relate and
which the Debtors retained under the Covanta's Second
Reorganization Plan have been assumed. Furthermore, any defaults
existing under the contracts have been cured and the Debtors are
continuing to perform in accordance with the contracts.
Ms. Childers also notes that the prior stipulations and consent
orders between the parties have fixed Federal Insurance's Claims
as to losses already incurred under the Bonds. No other claims
against the Bonds have been made. Therefore, Ms. Childers
contends that the 12 Remaining Claims constitute contingent claims
that must be disallowed under Section 502(c)(1) or 502(e)(1) of
the Bankruptcy Code.
Accordingly, the Debtors ask Judge Blackshear to disallow and
expunge the Remaining Claims without prejudice or impact on
Federal Insurance's rights of equitable subrogation with respect
to the contracts underlying the Bonds.
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: Inks Pact to Acquire Arizona Home & Healthcare
-------------------------------------------------------------
Crdentia Corp. (OTC Bulletin Board: CRDE), a leading U.S. provider
of healthcare staffing services, has entered into an agreement to
acquire Arizona Home & Healthcare, a per diem and private duty
healthcare staffing provider serving the Phoenix and Tucson metro
market regions.
Founded in 2000, Arizona Home & Healthcare's per diem and private
duty healthcare staffing businesses have nearly 300 nurses under
contract serving a diverse base of more than 100 Arizona based
clients. The company's contracts represent Arizona's predominant
areas of medical staffing needs including workers' compensation,
hospital staffing, behavioral health, prisons, corrections and
private duty home care. Arizona Home & Healthcare will continue
to operate under the direction of founder William Campbell Crocker
who has joined Crdentia's senior management team as Senior Vice
President.
"We are extremely pleased that Arizona Home & Healthcare will join
the Crdentia family," said Chairman and Chief Executive Officer
James D. Durham. "The company is very well respected in our
industry and enjoys a virtually unmatched presence in the markets
it serves. William Crocker has built a premium operation that
will substantially expand our pool of staff on contract, increase
our client base in desirable markets and enhance our geographic
footprint in Arizona."
Arizona Home & Healthcare founder William C. Crocker commented,
"Crdentia and Arizona Home & Healthcare have a shared vision for
healthcare staffing that marries the top line synergies of travel
and per diem nursing to offer qualified nurses and licensed
professional staff better options and opportunities. We operate
in attractive, high demand markets where we will recognize
immediate competitive value through Crdentia's diverse product
line. This is an exciting opportunity to immediately enhance our
position in the markets we serve through Crdentia's strong
resources and vast industry expertise."
Commenting on Crdentia's acquisition strategy, President Pamela
Atherton stated, "Our acquisition of Arizona Home & Healthcare
clearly exemplifies our strategic geographic focus on serving
large, metropolitan markets with critical masses of temporary
medical staff and affluent, aging populations with strong demand
for healthcare services. Arizona's population nearly doubles
during the winter when migration to the warm desert climate is at
its peak. The transitory nature of the population coupled with
the affluence of the regions surrounding Phoenix and Tucson
equates to an extremely attractive market area. Arizona Home &
Healthcare is a premiere agency with a strong, established
customer base, and their integration will add tremendous value to
Crdentia's expanding network."
As reported in the Troubled Company Reporter yesterday, Crdentia
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.
Arizona Home & Healthcare represents one of several acquisitions
planned by Crdentia during 2004 focusing on per diem and private
duty staffing. Founded in August 2002, Crdentia successfully
integrated four acquisitions in 2003 and, upon completion of the
Arizona Home & Healthcare transaction, will staff over 500 nurses
through seven domestic offices and one office in the Philippines.
The closing of the transaction, which is subject to customary
closing conditions, is expected in early September. Crdentia
currently ranks among the 10 largest healthcare staffing providers
in the U.S. market.
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/
Financial Challenges
Crdentia Corp.'s auditors expressed doubt about the company's
ability to continue as a going concern when they reviewed the
company's 2002 financial statements. At Dec. 31, 2003, the
company's balance sheet showed a $1.2 million working capital
deficit. Crdentia posted a $2.9 million net loss in the half-year
ending June 30, 2004, eroding shareholder equity by more than 50%
from what it was at Dec. 31, 2003, to $1.9 million.
CREST G-STAR: Fitch Rates Limited Partnership Interest Certs. B
---------------------------------------------------------------
Fitch rates this note issued by CREST G-STAR 2001-1, LP and CREST
G-STAR 2001-1 Corp.:
-- $30,377,167 limited partnership interest certificates 'B';
The rating on the limited partnership interest certificates
addresses the likelihood that investors will receive the ultimate
stated balance of principal by the legal final maturity date. The
limited partnership interest certificates are the lowest priority
in the liability structure and are paid from excess funds from the
payment account when available. The analysis incorporates
$15,842,528 of distributions paid to date to the limited
partnership interest certificates.
The ratings are based upon the capital structure of the
transaction, the quality of the collateral, the stable performance
of the transaction, and the overcollateralization -- OC -- and
interest coverage tests provided for within the transaction
documents. Additionally, the ratings address the experience and
capabilities of GMAC Institutional Advisors, LLC, as the
investment manager. GIA is a Fitch 'CAM1' rated structured
finance CDO asset manager.
The transaction is collateralized by a diversified investment
portfolio consisting of approximately 51% in real estate
investment trust -- REIT -- securities, 41% in commercial
mortgage-backed securities -- CMBS, 4% in commercial mortgage
loans, and 2% in a real estate CDO. The collateral supporting the
structure is static with no reinvestment or discretionary trading
and has a Fitch weighted average rating factor -- WARF -- of 8.49
('BBB-/BB+'). On the breach of a coverage test as outlined in the
governing documents, the notes will start the process of paying
down principal sequentially beginning with class A principal.
The investment manager, GIA, manages all investments for the
portfolio on behalf of the co-issuers, which are special purpose
companies incorporated under the laws of the Cayman Islands and
Delaware, respectively.
For additional information on structural and others features of
CREST G-STAR 2001-1, LP/Corp. see the Fitch Ratings new issue
report, available on the Fitch Ratings Web site at
http://www.fitchratings.com/
CREST G-STAR: Fitch Affirms Low-B Ratings on $20M & $15M Notes
--------------------------------------------------------------
Fitch Ratings affirms six classes of notes issued by CREST G-STAR
2001-1, LP and CREST G-STAR 2001-1 Corp. These affirmations are
the result of Fitch's review process. These rating actions are
effective immediately:
-- $316,875,313 class A notes affirmed at 'AAA';
-- $60,000,000 class B-1 notes affirmed at 'A-';
-- $15,000,000 class B-2 notes affirmed at 'A-';
-- $20,000,000 class C notes affirmed at 'BB';
-- $15,000,000 class D notes affirmed at 'B';
-- $30,377,165 limited partnership interest certificates rated
'B' to principal only.
Since November of 2003, the collateral has continued to perform.
The weighted average rating has stayed the same from origination
at 'BBB-/BB+' with a current WARF of 8.49. The class A, B, and C
overcollateralization ratios are all currently passing at 144.55%,
116.88%, and 111.21% as of the most recent trustee report dated
June 30, 2004, respectively. Triggers for the class A, B, and C
overcollateralization tests are set at 126.0%, 106.0%, and 104.0%,
respectively. As of the most recent trustee report available,
there are no defaulted or credit risk assets. Assets currently
rated 'BB+' or lower represents approximately 41.2% of the
collateral securities as compared with 39.4% as of closing.
The rating of the class A notes addresses the likelihood that
investors will receive full and timely payments of interest, as
well as the stated balance of principal by the legal final
maturity date, as per the governing documents. The ratings of the
class B-1, B-2, C, and D notes address the likelihood that
investors will receive ultimate and compensating interest
payments, as well as the stated balance of principal by the legal
final maturity date, as per the governing documents. The rating
of the limited partnership interest certificates addresses the
likelihood that investors will receive the ultimate stated balance
of principal by the legal final maturity date.
CREST G-STAR 2001-1, LP and CREST G-STAR 2001-1 Corp. is a
collateralized debt obligation -- CDO -- managed by GMAC
Institutional Advisors, LLC, which closed Sept. 6, 2001. CREST
G-STAR 2001-1 is a static CDO composed of REITs, CMBS, commercial
mortgage loans, and a real estate CDO. Included in this review,
Fitch discussed the current state of the portfolio, including loan
level performance of the CMBS securities. In addition, Fitch
conducted cash flow modeling utilizing various default timing and
interest rate scenarios.
GIA's ABS collateral asset manager rating is currently CAM1 by
Fitch. Fitch will continue to monitor CREST G-STAR 2001-1 closely
to ensure accurate ratings. For more information on the GIA's
collateral asset manager rating, see report 'GMAC Institutional
Advisors LLC,' dated March 15, 2004, available on the Fitch
Ratings web site at http://www.fitchratings.com/
Fitch conducted cash flow modeling utilizing various default
timing and interest rate scenarios to measure the breakeven
default rates relative to the minimum cumulative default rates
required for the rated liabilities. For more information on the
Fitch Vector Model, see 'Global Rating Criteria for Collateralised
Debt Obligations,' dated Aug. 1, 2003, available on Fitch's web
site at http://www.fitchratings.com/ As a result of this
analysis, Fitch has determined that the original ratings assigned
to the class A, B-1, B-2, C, D notes, and the limited partnership
interest certificates still reflect the current risk to
noteholders.
Fitch will continue to monitor and review this transaction for
future rating adjustments.
CSFB MORTGAGE: S&P Slashes Certificate Class I-M-2 Rating to D
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its rating on class
I-M-2 from Credit Suisse First Boston Mortgage Securities Corp.'s
mortgage pass-through certificates series 2002-18 to 'D' from 'B'.
Concurrently, ratings on 11 other classes from the same series are
affirmed.
The rating of class I-M-2, which is part of loan group one, was
lowered as a result of the $201,192.72 principal write-down
realized by the class in the July 2004 remittance period. Despite
a small increase in overcollateralization -- o/c -- during the
August 2004 remittance period, where the transaction rebuilt its
o/c to about $2,900 from $0, current collateral performance will
likely continue to result in losses that out pace the excess
spread in the transaction.
Presently, approximately 15% of loan group one is delinquent with
approximately 13% in the severely delinquent categories (90-plus
days, foreclosure, and REO). It is anticipated that monthly
losses will generally continue to exceed excess interest as the
outstanding balance of the pool pays down and that the principal
loss amount will not be recoverable. Cumulative realized losses
to date were approximately 0.74% of original principal balance.
The performance of loan group one will continue to be monitored
closely.
The affirmed ratings reflect adequate actual and projected credit
support percentages. Total delinquencies for loan group two was
11.37% with approximately 9.50% in the severely delinquent
categories. Cumulative realized losses to date were approximately
0.06% of original principal balance. Credit support for loan
group one is provided by subordination, o/c, and excess interest
cash flow. Subordination provides credit support for loan group
two. The collateral consists of fixed-rate, fist-lien mortgage
loans secured by one- to four-family residential properties. The
mortgage loans have original maturities of not more than 30 years
from origination.
Rating Lowered
Credit Suisse First Boston Mortgage Securities Corp.
Mortgage-backed pass-thru certs series 2002-18
Rating
Class To From
----- -- ----
I-M-2 D B
Ratings Affirmed
Credit Suisse First Boston Mortgage Securities Corp.
Mortgage-backed pass-thru certs series 2002-18
Class Rating
----- ------
I-A-4, I-A-5, I-A-IO, II-A-1 AAA
I-PP, II-PP, II-X AAA
I-M-1, II-B-1 AA
II-B-2 A-
II-B-3 BBB
DELTA AIR: Extends Consent Solicitations to September 9
-------------------------------------------------------
Delta Air Lines (NYSE: DAL) has extended the expiration time for
the consent solicitations it launched on August 18, 2004 in
respect of certain equipment trust certificates and pass through
certificates listed below from 5:00 pm, New York City time, on
August 31, 2004 to 5:00 pm, New York City time, on September 9,
2004.
Delta is soliciting consents from holders of the ETCs and PTCs to
remove any contractual restrictions on Delta's ability to purchase
or hold those securities in order to provide Delta with greater
flexibility to effect a successful out-of-court restructuring.
Holders of the ETCs and PTCs are urged to read the ETC Consent
Solicitation Statement dated August 18, 2004 and the PTC Consent
Solicitation Statement dated August 18, 2004, as applicable, the
other documents to which they refer and Delta's press release
containing a Q&A dated August 26, 2004, in order to understand
fully the terms of the consent solicitations.
Equipment Trust Certificates
CUSIP ISIN
Securities Number Number
---------- ------ ------
1988 Equipment Trust Certificates, Series A 247361EY0 US247361EY06
247361FK9 US247361FK92
247361FS2 US247361FS29
247361FV5 US247361FV57
247361GC6 US247361GC67
1988 Equipment Trust Certificates, Series B 247361EZ7 US247361EZ70
247361FL7 US247361FL75
247361FT0 US247361FT02
247361FW3 US247361FW31
247361GD4 US247361GD41
1988 Equipment Trust Certificates, Series C 247361FA1 US247361FA11
247361FM5 US247361FM58
247361FU7 US247361FU74
247361FX1 US247361FX14
247361GE2 US247361GE24
1989 Equipment Trust Certificates, Series A 247361NR5 US247361NR53
247361PL6 US247361PL65
247361PW2 US247361PW21
247361QD3 US247361QD31
247361QH4 US247361QH45
CUSIP ISIN
Securities Number Number
---------- ------ ------
1989 Equipment Trust Certificates, Series B 247361PM4 US247361PM49
247361PX0 US247361PX04
247361QE1 US247361QE14
247361QJ0 US247361QJ01
247361QM3 US247361QM30
1989 Equipment Trust Certificates, Series C 247361NS3 US247361NS37
247361PA0 US247361PA01
247361PC6 US247361PC66
247361PN2 US247361PN22
247361PY8 US247361PY86
247361QF8 US247361QF88
247361QK7 US247361QK73
1989 Equipment Trust Certificates, Series D 247361NT1 US247361NT10
247361PB8 US247361PB83
247361PD4 US247361PD40
247361PP7 US247361PP79
247361PZ5 US247361PZ51
247361QG6 US247361QG61
247361QL5 US247361QL56
1989 Equipment Trust Certificates, Series E 247361NN4 US247361NN40
247361NX2 US247361NX22
247361PH5 US247361PH53
247361PT9 US247361PT91
1989 Equipment Trust Certificates, Series F 247361NP9 US247361NP97
247361NY0 US247361NY05
247361PJ1 US247361PJ10
247361PU6 US247361PU64
1989 Equipment Trust Certificates, Series G 247361NQ7 US247361NQ70
247361NZ7 US247361NZ79
247361PK9 US247361PK82
247361PV4 US247361PV48
1989 Equipment Trust Certificates, Series H 247361NK0 US247361NK01
247361NU8 US247361NU82
247361PE2 US247361PE23
247361PQ5 US247361PQ52
247361QA9 US247361QA91
1989 Equipment Trust Certificates, Series I 247361NL8 US247361NL83
247361NV6 US247361NV65
247361PF9 US247361PF97
247361PR3 US247361PR36
247361QB7 US247361QB74
1989 Equipment Trust Certificates, Series J 247361NM6 US247361NM66
247361NW4 US247361NW49
247361PG7 US247361PG70
247361PS1 US247361PS19
247361QC5 US247361QC57
1990 Equipment Trust Certificates, Series A 247361VA3 US247361VA37
247361VH8 US247361VH89
247361VT2 US247361VT28
1990 Equipment Trust Certificates, Series B 247361VB1 US247361VB10
247361VJ4 US247361VJ46
247361VU9 US247361VU90
CUSIP ISIN
Securities Number Number
---------- ------ ------
1990 Equipment Trust Certificates, Series C 247361VC9 US247361VC92
247361VK1 US247361VK19
247361VV7 US247361VV73
1990 Equipment Trust Certificates, Series D 247361VD7 US247361VD75
247361VL9 US247361VL91
247361VW5 US247361VW56
1990 Equipment Trust Certificates, Series E 247361VE5 US247361VE58
247361VM7 US247361VM74
247361VX3 US247361VX30
1990 Equipment Trust Certificates, Series F 247361VZ8 US247361VZ87
247361VN5 US247361VN57
247361VY1 US247361VY13
1990 Equipment Trust Certificates, Series G 247361VF2 US247361VF24
247361VP0 US247361VP06
247361VR6 US247361VR61
1990 Equipment Trust Certificates, Series H 247361VG0 US247361VG07
247361VQ8 US247361VQ88
247361VS4 US247361VS45
1990 Equipment Trust Certificates, Series I 247361WD6 US247361WD66
1990 Equipment Trust Certificates, Series J 247361WE4 US247361WE40
1990 Equipment Trust Certificates, Series K 247361WF1 US247361WF15
1991 Equipment Trust Certificates, Series A 247361WJ3 US247361WJ37
247361WR5 US247361WR52
1991 Equipment Trust Certificates, Series B 247361WK0 US247361WK00
247361WS3 US247361WS36
1991 Equipment Trust Certificates, Series C 247361WL8 US247361WL82
247361WP9 US247361WP96
1991 Equipment Trust Certificates, Series D 247361WM6 US247361WM65
247361WQ7 US247361WQ79
1991 Equipment Trust Certificates, Series E 247361WN4 US247361WN49
247361WT1 US247361WT19
1991 Equipment Trust Certificates, Series F 247361WV6 US247361WV64
247361XD5 US247361XD57
1991 Equipment Trust Certificates, Series G 247361XB9 US247361XB91
247361XE3 US247361XE31
1991 Equipment Trust Certificates, Series H 247361WW4 US247361WW48
247361XC7 US247361XC74
1991 Equipment Trust Certificates, Series I 247361WX2 US247361WX21
247361XF0 US247361XF06
1991 Equipment Trust Certificates, Series J 247361WY0 US247361WY04
247361XG8 US247361XG88
1991 Equipment Trust Certificates, Series K 247361WZ7 US247361WZ78
247361XH6 US247361XH61
CUSIP ISIN
Securities Number Number
---------- ------ ------
1991 Equipment Trust Certificates, Series L 247361XA1 US247361XA19
247361XJ2 US247361XJ28
1992 Equipment Trust Certificates, Series A 247361XK9 US247361XK90
247361XR4 US247361XR44
1992 Equipment Trust Certificates, Series B 247361XL7 US247361XL73
247361XS2 US247361XS27
1992 Equipment Trust Certificates, Series C 247361XM5 US247361XM56
247361XT0 US247361XT00
1992 Equipment Trust Certificates, Series D 247361XN3 US247361XN30
247361XU7 US247361XU72
1992 Equipment Trust Certificates, Series E 247361XP8 US247361XP87
247361XV5 US247361XV55
1992 Equipment Trust Certificates, Series F 247361XQ6 US247361XQ60
247361XW3 US247361XW39
Pass Through Certificates
1992 Pass Through Certificates, Series A2 247367AB1 US247367AB19
1992 Pass Through Certificates, Series B1 247367AC9 US247367AC91
1992 Pass Through Certificates, Series B2 247367AD7 US247367AD74
1993 Pass Through Certificates, Series A1 247367AE5 US247367AE57
1993 Pass Through Certificates, Series A2 247367AF2 US247367AF23
1996 Pass Through Certificates, Series A1 247367AL9 US247367AL90
1996 Pass Through Certificates, Series A2 247367AM7 US247367AM73
Questions concerning the terms of the ETC and PTC Solicitations or
requests for additional copies of the ETC and PTC Consent
Solicitation Statements, the ETC and PTC Consent Forms or other
related documents should be directed to the Solicitation Agents:
Merrill Lynch & Co.
4 World Financial Center
New York, New York 10080
Attn: Liability Management
(212) 449-4914
(800) ML4-TNDR (toll free)
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Attn: Credit Liability Management
(212) 357-3019
(800) 828-3182 (toll free)
Morgan Stanley
1585 Broadway
New York, New York 10036
Attn: Patrick Sieb
(212) 761-1864
(800) 624-1808 (toll free)
Requests for assistance in completing the ETC and PTC Consent
Forms should be directed to the Tabulation and Information Agent:
The Tabulation and Information Agent for the ETC and PTC
Solicitations is:
Global Bondholder Services Corporation
65 Broadway
New York, New York 10006
Banks and Brokers call: (212) 430-3774
Toll free (866) 470-3700
By facsimile:
(For Eligible Institutions only):
(212) 430-6683
(212) 430-6684
(212) 430-6685
(212) 430-6686
Confirmation:
confirm@gbsc-usa.com
By Mail/Overnight Carrier/Hand:
65 Broadway
New York, New York
10006
* * *
As reported in the Troubled Company Reporter on August 23, 2004,
Standard & Poor's Ratings Services lowered Delta Air Lines, Inc.'s
corporate credit rating and the ratings on Delta's equipment trust
certificates and pass-through certificates to 'CCC'. Any out-of-
court restructuring of bond payments or a coercive exchange would
be considered a default and cause the company's corporate credit
rating to be lowered to 'D' -- default -- or 'SD' -- selective
default, S&P noted. Ratings on Delta's enhanced equipment trust
certificates, which are considered more difficult to restructure
outside of bankruptcy, were not lowered.
A Committee of Senior Secured Aircraft Creditors of Delta Air
Lines, Inc., holding $1.4 billion of senior secured debt and
represented by the law firm of Bingham McCutchen LLP, has asked
Delta for more information. Delta hasn't been forthcoming, the
Committee indicated earlier this week.
DT IND'S: U.S. Trustee Appoints 6-Member Creditors' Committee
-------------------------------------------------------------
The United States Trustee for Region 9 appointed six creditors to
serve on an Official Committee of Unsecured Creditors in DT
Industries, Inc., and its debtor-affiliates' Chapter 11 cases:
1. Bauer Associates, Inc.
Attn: Kristi R. Eidt
3915 Research Park Drive, Building A-7
Ann Arbor, Michigan 48108
Phone: 734-663-9143, Fax: 734-663-6219
2. Dysinger Incorporated
Attn: Gregory M. Dysinger
2324 East River Road
Dayton, Ohio 45439
Phone: 937-297-7761, Fax: 937-297-7763
3. Electro-Matic Products, Inc.
Attn: JoAnn Koenig
23409 Industrial Park Court
Farmington Hills, Michigan 48335
Phone: 248-615-3922, Fax: 248-478-1472
4. Gemel Precision Tool Co.
Attn: Klaus Gehlert
31 Industrial Drive
Ivyland, Pennsylvania 18974-1499
Phone: 215-355-2174, Fax: 215-355-9274
5. Pyxis Technologies, LLC
Attn: Jeff Wickens
12070 Farmington Road
Livonia, Michigan 48150
Phone: 734-458-2141, Fax: 734-458-2151
6. VNH Properties, LLC
Attn: VanBuren Hansford
3 Sherwood Drive
Greenwich, Connecticut 06831
Phone: 561-843-7747, Fax: 561-243-2027
Official creditors' committees have the right to employ legal and
accounting professionals and financial advisors, at the Debtors'
expense. They may investigate the Debtors' business and financial
affairs. Importantly, official committees serve as fiduciaries to
the general population of creditors they represent. Those
committees will also attempt to negotiate the terms of a
consensual chapter 11 plan -- almost always subject to the terms
of strict confidentiality agreements with the Debtors and other
core parties-in-interest. If negotiations break down, the
Committee may ask the Bankruptcy Court to replace management with
an independent trustee. If the Committee concludes reorganization
of the Debtors is impossible, the Committee will urge the
Bankruptcy Court to convert the Chapter 11 cases to a liquidation
proceeding.
Headquartered in Dayton, Ohio, DT Industries, Inc.
-- http://www.dtindustries.com/-- is an engineering-driven
designer, manufacturer and integrator of automated systems and
related equipment used to manufacture, assemble, test or package
industrial and consumer products. The Company, along with its
affiliates, filed for chapter 11 protection (Bankr. S.D. Ohio Case
No. 04-34091) on May 12, 2004. Ronald S. Pretekin, Esq., at
Coolidge Wall Womsley & Lombard, represents the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors, they listed $150,593,000 in assets and
$142,913,000 in liabilities.
ECHOSTAR COMMS: Elects to Redeem 10-3/8% Senior Notes Early
-----------------------------------------------------------
EchoStar DBS Corporation, a subsidiary of EchoStar Communications
Corporation (Nasdaq: DISH) has elected to retire all its
outstanding 10-3/8 percent Senior Notes due 2007, three years
early pursuant to its optional early redemption right.
In accordance with the terms of the indenture governing the notes,
the $1 billion principal amount of the notes will be redeemed
effective Oct. 1, 2004, at a redemption price of 105.188 percent
of the principal amount, for a total of approximately $1.052
billion. Interest on the notes will be paid through the
Oct. 1, 2004, redemption date. The trustee for the notes is the
U.S. Bank Trust National Association, telephone 800-934-6802.
This announcement is neither a request nor an offer for tender of
securities of EchoStar Communications Corporation or EchoStar DBS
Corporation.
About EchoStar Communications
EchoStar Communications Corporation (NASDAQ: DISH) serves over
10.1 million satellite TV customers through its DISH Network(TM)
and is a leading U.S. provider of advanced digital television
services. DISH Network's services include hundreds of video and
audio channels, Interactive TV, HDTV, sports and international
programming, together with professional installation and 24-hour
customer service. DISH Network is the leader in the sale of
digital video recorders (DVRs). EchoStar has been a leader for 23
years in digital satellite TV equipment sales and support
worldwide. EchoStar is included in the Nasdaq-100 Index (NDX) and
is a Fortune 500 company. Visit EchoStar's Web site at
http://www.echostar.com/or call 800-333-DISH (3474).
At June 30, 2004, EchoStar Communications' balance sheet showed a
$1,739,832,000 stockholders' deficit, compared to a $1,032,524,000
at December 31, 2003.
EES COKE: Moody's Upgrades Series B Secured Notes Rating to Ba3
---------------------------------------------------------------
Moody's Investors Service upgraded the rating for EES Coke Battery
Company, LLC's (EES Coke or the project) Series B Secured Notes
due 2007 to Ba3 from B2. The rating outlook is stable.
This rating action reflects the improved certainty of cash flow
resulting from a long-term contractual coke supply arrangement
recently executed with five steel manufacturing facilities wholly-
owned by International Steel Group, Inc., (ISG: senior implied
Ba2). Collectively, these steel facilities represent the bulk of
ISG's manufacturing capacity. The payment obligations are from
the various steel manufacturing facilities without parental
support from ISG.
Contractual arrangements with the ISG steel manufacturing
facilities, combined with existing contractual arrangements with
United States Steel Corporation (USS: senior implied Ba3) for coke
and coke oven gas, account for the project's total production
capacity for a period that extend beyond the tenor of the bonds.
In addition, robust demand for coke has resulted in advantageous
contractual pricing and Moody's expects the project's annual debt
service coverage in all remaining years to exceed two times.
The stable rating outlook reflects the EES Coke's strong operating
performance and the credit quality of its contractual
counterparties. Bondholders benefit from an unconditional,
irrevocable guarantee from DTE Energy Company (senior unsecured
Baa2) equal to six months of debt service.
EES Coke Battery Company, LLC is an indirect wholly owned
subsidiary of DTE Energy Company and is based in Ann Arbor,
Michigan.
ENRON: Insurance Companies Want Stay Lifted to Pay Defense Costs
----------------------------------------------------------------
Twin City Insurance Company and Greenwich Insurance Company ask
the Court to lift the automatic stay to advance or pay under
certain insurance policies:
(a) covered defense costs being incurred in pending and
future lawsuits, proceedings and investigations against
present and former officers and directors of the Debtors,
subject to Twin City's and Greenwich's full reservation of
their rights and defenses and the execution of a written
undertaking by each of the covered Insureds to repay any
amounts advanced if it is ultimately determined that the
Insureds are not entitled to coverage; and
(b) covered settlement amounts on the Insureds' behalf,
subject to the same full reservation of Twin City's and
Greenwich's rights and execution of an undertaking.
The D&O Liability Insurance
Louis A. Scarcella, Esq., at Scarcella Rosen & Slome, LLP, in
Uniondale, New York, relates that in 2000, Enron Corporation
purchased an Excess Financial Products Insurance Policy from Twin
City, as amended, to cover the period from July 15, 2000 to
September 1, 2002. The Twin City Excess Policy provides
$25,000,000 of excess insurance coverage on account of covered
"Claims" in excess of:
(1) A Directors and Officers Liability Insurance Policy from
Associated Electric & Gas Insurance Services Limited,
which provided $35,000,000 of primary insurance coverage;
(2) An Excess Directors and Officers Liability Indemnity
Policy from Energy Insurance Mutual, which provided
$65,000,000 of insurance coverage; and
(3) An Excess Directors and Officers Liability Insurance
Policy from Federal Insurance Company, which provided
$25,000,000 of insurance coverage.
In 2001, Enron purchased an Excess Policy from Greenwich for the
policy period from September 1, 2001 to September 1, 2002. The
Greenwich Excess Policy provides $25,000,000 of excess insurance
coverage on account of covered "Claims" in excess of the AEGIS
D&O Policy, EIM Excess Policy, Federal Excess Policy and Twin
City Excess Policy.
According to Mr. Scarcella, coverage under the Twin City and
Greenwich Policies for certain defense costs, settlements and
judgments is provided directly to or on behalf of present and
former directors, officers and employees of the Debtors if the
Loss is not reimbursed by the Debtors through indemnification
payments. The Policies also insure the Debtors to the extent
they indemnify their present and former officers and directors
for covered Loss. Furthermore, the Policies insure the Debtors
for certain Claims asserted against them and for certain expenses
incurred by the Debtors.
The Debtors supplemented the coverage provided under the Policies
with additional excess policies from a number of different
insurance carriers. Total insurance coverage under all of the
D&O Policies was $350,000,000.
Twin City acknowledges that it would pay or advance covered
Defense Costs and settlement amounts to various Individual
Defendants upon exhaustion of the limits of liability of the
AEGIS D&O Policy and the Federal Excess Policy, subject to Twin
City's reservation of rights and other standard conditions.
Greenwich acknowledges that it would pay or advance covered
Defense Costs and settlement amounts to various Individual
Defendants upon exhaustion of limits of liability of the AEGIS
D&O Policy, the EIM Excess Policy, the Federal Excess Policy and
the Twin City Excess Policy, subject to its full reservation of
rights and other standard conditions.
The Lawsuits
Mr. Scarcella reports that the Debtors and their present and
former directors, officers and employees have submitted for
coverage under the Policies more than 240 class action and
individual lawsuits, investigations and proceedings against 64
former and current officers, directors and employees of the
Debtors. Most of the Lawsuits allege violations of federal and
state securities laws and have been consolidated before Judge
Melinda Harmon of the United States District Court for the
Southern District of Texas.
Pursuant to several orders, the parties have:
(a) established a massive document depository and are
continually evaluating the documents, which have been and
are continuing to be deposited;
(b) conducted extensive investigations and analysis of
innumerable factual and legal issues;
(c) extensively briefed numerous motions and otherwise filed
numerous pleadings in the many different Lawsuits; and
(d) commenced extensive deposition discovery of scores of
witnesses and parties at facilities in Houston, Texas and
New York, New York.
The Defense Costs
The Individual Defendants have incurred -- and likely will
continue to incur -- significant Defense Costs with respect to
the Lawsuits. Mr. Scarcella tells the Court that AEGIS has
exhausted its limit of liability under the AEGIS D&O Policy by
the advancement of Defense Costs. EIM has exhausted its limit of
liability under the EIM Excess Policy by the advancement of
Defense Costs and payment of settlements. As of July 27, 2004,
Federal authorized the advancement under the Federal Excess
Policy of $24,555,818 in Defense Costs and other Loss. Of that
amount, the Individual Defendants already received $18,233,675 as
interim payment or advancement from Federal.
Twin City anticipates that the coverage under the Federal Excess
Policy will soon be exhausted and that the Individual Defendants
will then turn to it to advance Defense Costs under the terms and
conditions of the Twin City Excess Policy. Also, Greenwich
anticipates that the coverage under the Twin City Excess Policy
will eventually be exhausted and that the Individual Defendants
will then turn to it to advance Defense Costs.
Settlement Demands
From time to time, certain Insureds have presented to AEGIS, EIM
and Federal confidential settlement demands. Since many of the
Lawsuits were filed two or more years ago, Mr. Scarcella says
that it is likely that additional settlement demands will be
submitted to Twin City and then to Greenwich.
Twin City and Greenwich understand that the settlement demands
submitted to AEGIS, EIM and Federal are conditioned on the
existence and terms of the specific demands and any resulting
settlement being held in strict confidence. To the extent
settlement demands are made to Twin City and Federal, they would
not be at liberty to disclose anything about the settlement
demands.
Mr. Scarcella assures the Court that consistent with Twin City's
and Greenwich's rights and obligations under the Policies, any
settlement demand submitted to Twin City and Greenwich will be
evaluated both regarding its reasonableness under the
circumstances and its coverage under the Twin City or Greenwich
Excess Policies. Twin City and Greenwich will consent to any
demand only if they determine that the proposed settlement is
reasonable and covered under the Twin City and Federal Excess
Policies.
Automatic Stay Must be Lifted
In prior Court filings, Mr. Scarcella notes that the Debtors and
several objectors presented arguments regarding whether or not
the AEGIS D&O Policy and its proceeds are assets of the Debtors'
bankruptcy estate. Twin City and Greenwich do not take a
position on that issue. Instead, Twin City and Greenwich ask the
Court to lift the automatic stay to the extent the Twin City and
Greenwich Excess Policies and their proceeds may be assets of the
Debtors' estate so that Twin City and Greenwich can fulfill their
contractual obligations under the Policies to the Individual
Defendants. If the stay is not lifted, Mr. Scarcella contends
that Twin City and Greenwich will each be placed in the
impossible dilemma of either advancing or not the Defense Costs
under the Policies.
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)
FACTORY 2-U: Liquidation Sales on 172 Stores Begins Today
---------------------------------------------------------
Going Out of Business liquidation sales will begin today,
September 3, in all 172 Factory 2-U stores located in Arizona,
California, New Mexico, Nevada, Oregon, Texas and Washington.
Factory 2-U stores sell branded casual apparel for the family, as
well as selected domestics and household merchandise at prices
which are often significantly lower than prices offered by its
discount competitors. Beginning tomorrow, all merchandise in
these 172 stores will be discounted to facilitate immediate
liquidation.
San Diego-based Factory 2-U had announced in mid-August that it
had agreed to sell substantially all of its assets to Factory 2-U
Acquisition, LLC, a company headed by an affiliate of National
Stores, Inc., of Gardena, California, The Alamo Group, Garcel
Inc., dba The Great American Group, and The Ozer Group LLC.
Yesterday, the U.S. Bankruptcy Court in Wilmington, Delaware
approved the consortium's deal, and this consortium will now be
managing the Going Out of Business sales, as well as managing the
disposition of the 172 store leases.
Projections are for a brief sale, with each store remaining open
only until the inventory is sold. Existing sales staff in each
store will be retained for the sale duration. Each store has an
average of 25 employees.
Frank Morton, Managing Director of The Ozer Group, noted, "Factory
2-U had a significant amount of fall merchandise in the pipeline
which is still hitting these stores. Additionally we'll be
emptying their warehouses and moving that merchandise into the
stores as quickly as we can. This means these stores will be
packed with the newest fall fashions, all of which will be
discounted as part of these going out of business liquidations."
Harvey M. Yellen, CEO of The Great American Group, added "This is
a great time for consumers to stock up because these going out of
business sales will deliver some amazing values. Although the mix
varies by store, people will find great savings on brands like
Levi's, Gap, Polo Sport, Converse, Starter and more. We expect
this merchandise will sell quite quickly and that these sales
won't last very long."
The 172 closing stores include 25 in Arizona, 51 in California, 6
in Nevada, 6 in New Mexico, 10 in Oregon, 15 in Texas and 9 in
Washington. The complete addresses of the 172 closing stores can
be found at http://www.ozer.com/factory2ustorelist
Headquartered in San Diego, California, Factory 2-U Stores, Inc.
-- http://www.factory2-u.com/-- operates a chain of off-price
retail apparel and housewares stores in 10 states, mostly in the
western and southwestern US, sells branded casual apparel for the
family, as well as selected domestics, footwear, and toys and
household merchandise. The Company filed for chapter 11
protection on January 13, 2004 (Bankr. Del. Case No. 04-10111).
M. Blake Cleary, Esq., and Robert S. Brady, Esq., at Young Conaway
Stargatt & Taylor, LLP, represent the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors, they listed $136,485,000 in total assets and
$73,536,000 in total debts.
FAIR GROUNDS: Files Chapter 11 Plan of Reorganization in Louisiana
------------------------------------------------------------------
Fair Grounds Corporation filed its Chapter 11 Plan of
Reorganization, together with a Disclosure Statement explaining
that Plan, with the U.S. Bankruptcy Court for the Eastern District
of Louisiana. A full-text copy of the Debtor's Disclosure
Statement explaining the Plan is available for a fee at:
http://www.researcharchives.com/download?id=040812020022
The Plan provides for the liquidation of the company's Gaming
Assets and distribution of the sale proceeds to creditors. The
Plan honors and respects all creditors' liens and relative
priorities.
The Plan groups the creditors and equity holders in five classes
and describes their treatment:
Class Treatment
----- ---------
1 - Unsecured State, Paid in full out of the sale of the
Federal and County gaming assets.
Tax Claims
2 - First Bank & Trust The Winning Bidder either pays
Secured Claims the holder of this Allowed Claim:
(i) out of the proceeds of the
sale of the Gaming Assets; or
(ii) pursuant to the Financing
Option.
3 - General Allowed The balance of proceeds
Unsecured Claims (after payment of Claims in
Classes 1 and 2) from the sale of
the Gaming Assets and the
liquidation of the Executed Assets
will be shared Pro Rata among the
holders
4 - City of New Orleans' The Winning Bidder either pays the
Allowed Secured Claim holder:
(i) out of the proceeds of the
sale of the Gaming Assets; or
(ii) pursuant to the Financing
Option.
5 - Equity Interests The holders will retain their
interest.
Headquartered in New Orleans, Louisiana, Fair Grounds, filed for
chapter 11 protection on August 15, 2003 (Bankr. E.D. La. Case No.
03-16222). Clayton T. Huff, Esq., Greta M. Brouphy, Esq., et al.,
at Heller, Draper, Hayden, Patrick & Horn represent the Debtor in
its restructuring efforts. When the Debtor filed for protection
it listed above $10 million in estimated assets and debts.
FAIR GROUNDS: Churchill Downs Offers $47 Mil. to Buy Race Course
----------------------------------------------------------------
Churchill Downs Incorporated (Nasdaq: CHDN) has agreed to terms
with Fair Grounds Corporation and other parties to acquire Fair
Grounds Race Course for $47 million, pending approval of the U.S.
Bankruptcy Court, Eastern District of Louisiana.
Thomas H. Meeker, CDI's president and chief executive officer,
stated: "We are excited to have agreed on terms that will inure
to the benefit of all parties involved. From the outset, we have
endeavored to reach an agreement with the horsemen and to maximize
the value of the asset for the racetrack's creditors and
shareholders. We believe the agreement accomplishes this, and we
are satisfied that all constituents now share a common goal. It
is paramount to all parties to bring the deal to closure as
quickly as possible, well in advance of the upcoming race meet."
"Fair Grounds, with its rich tradition and winter-race schedule,
is an excellent strategic fit for CDI and will benefit greatly
from our operational expertise, industry-leading brand and
simulcast network," Mr. Meeker added. "We look forward to working
with racetrack President Bryan Krantz and the Louisiana horsemen
to deliver an outstanding meet in November and in the years to
come. We are eager to become a part of the New Orleans
community."
Before the agreement is consummated, the bankruptcy court must
confirm the terms of the deal in the form of an amended bankruptcy
plan. The parties anticipate the court will hold a final
confirmation hearing to consider approval of the amended plan on
Sept. 24.
Churchill Downs Incorporated, headquartered in Louisville,
Kentucky, owns and operates world-renowned horseracing venues
throughout the United States. The Company's racetracks in
California, Florida, Illinois, Indiana and Kentucky host 114
graded-stakes events and many of North America's most prestigious
races, including the Kentucky Derby and Kentucky Oaks, Hollywood
Gold Cup and Arlington Million. CDI racetracks have hosted nine
Breeders' Cup World Thoroughbred Championships -- more than any
other North American racing company. CDI also owns off-track
betting facilities and has interests in various television
production, telecommunications and racing services companies that
support CDI's network of simulcasting and racing operations. CDI
trades on the Nasdaq National Market under the symbol CHDN and can
be found on the Internet at http://www.churchilldownsincorporated.com/
Headquartered in New Orleans, Louisiana, Fair Grounds, filed for
chapter 11 protection on August 15, 2003 (Bankr. E.D. La. Case No.
03-16222). Clayton T. Huff, Esq., Greta M. Brouphy, Esq., et al.,
at Heller, Draper, Hayden, Patrick & Horn represent the Debtor in
its restructuring efforts. When the Debtor filed for protection
it listed above $10 million in estimated assets and debts.
FAIRFAX FINANCIAL: Does Not Maintain a Relationship with Fitch
--------------------------------------------------------------
Fairfax Financial Holdings Limited confirms that it maintains
relationships with four major ratings agencies, in the course of
which it meets with those agencies and provides them all
information necessary or requested by them in order to permit them
to perform their ratings functions. The information given by a
company to ratings agencies necessarily involves a level of detail
beyond its public disclosures, which provide all material
disclosure relating to the company's results and financial state.
According to Fairfax, it does not maintain a relationship with
Fitch Ratings. Fairfax has not met with Fitch or provided
information to Fitch since the spring of 2003 and since that time
has requested Fitch to withdraw its ratings on Fairfax.
Fairfax Financial Holdings Limited is a financial services holding
company, which, through its subsidiaries, is engaged in property,
casualty and life insurance and reinsurance, investment management
and insurance claims management.
As reported in the Troubled Company Reporter on September 2, 2004,
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, Fitch said, largely reflected 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'
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.
FISHER COMMUNICATIONS: Moody's Puts B2 Rating on $150 Mil. Notes
----------------------------------------------------------------
Moody's Investors Service assigned a B2 rating to Fisher
Communications, Inc.'s $150 million in senior unsecured notes due
2014. In addition, Moody's assigned Fisher a B2 senior implied
rating, B2 senior unsecured issuer rating, and SGL-2 speculative
grade liquidity rating. The proceeds from the note offering will
be used to refinance existing bank facilities and settle a
variable forward sale agreement. The B2 rating reflects Fisher's
high financial leverage and poor operating performance relative to
its peer group balanced by meaningful underlying asset value
relative to the debt burden and the liquidity provided by its
approximately $145 million common equity investment in Safeco
(Baa1). The SGL-2 rating reflects the company's good liquidity
position. This is the first time Moody's has assigned ratings to
Fisher Communications, Inc.
Moody's assigned these ratings to Fisher Communications, Inc.:
i) a B2 rating to $150 million in senior unsecured notes due
2014;
ii) a B2 senior implied rating;
iii) an SGL-2 speculative grade liquidity rating; and
iv) a B2 unsecured issuer rating.
The rating outlook is stable.
The ratings are also constrained by Fisher's lack of geographic
diversity. Fisher draws all of its revenue and cash flow from the
Northwest where pockets of economic weakness have existed for the
better part of the last four years. The decline that the
company's markets experienced during the recession of 2001 was
deeper than that of the broader economy and the pace of the
recovery has been much slower in the years since. This puts the
company at a competitive disadvantage against its larger, better
capitalized, more diversified peers who can look to other markets
for support until the Northwest recovery gains greater traction.
The lack of market diversity further exacerbates the risks
associated with operating with high financial leverage. With the
Debt/EBITDA in excess of 9 times, the company is particularly
vulnerable to the negative impact of economic cycles. In
addition, it is worth noting that the company made a large number
of accounting adjustments in 2003. The company's independent
auditor concluded that a significant deficiency existed in the
company's internal controls during 2003. This weakness adds to
the overall risk profile of the company.
However, the ratings draw support from the high underlying asset
value of the company's station portfolio, particularly the
Portland and Seattle markets which are both top 25 DMAs. It is
also important to note that Fisher is expected to experience some
limited relief in the form of political advertising revenue,
particularly in markets where its stations rank among the top two
news providers. The ratings draw further support from the
company's good liquidity position which is bolstered by its
approximately $145 million investment in Safeco. Further,
Fisher's management has demonstrated a willingness to monetize
non-core assets to reduce debt to provide some balance sheet
relief in the past.
The stable outlook incorporates the expectation that Fisher's
markets will remain weak over the near to medium term, balanced by
the likelihood that the company's liquidity is ample to meet any
funding requirements should operating cash flow fall short of
covering fixed charges. If the company is not able to sustain
neutral free cash flow over the intermediate term, a negative
rating action would be warranted. Further, the cash flow forecast
relies on the company's ability to lease its new Seattle office
complex. Failure to execute in this area would also lead to a
negative rating action. Substantial cash flow growth or a
sizeable de-leveraging event would be necessary before a positive
outlook would be considered.
The SGL-2 reflects Fisher's good liquidity position and
incorporates the likelihood that the company will be free cash
flow neutral over the next 12 to 18 months balanced by the
company's investment in Safeco which will be unencumbered
following the settlement of the variable forward sale agreement
and could be sold at good value to provide an alternative source
of liquidity if needed. Further, the company is not expected to
rely on its liquidity facility and is expected to remain in
compliance with all of its covenants.
As of June 30, 2004 financial leverage is high with Debt/EBITDA of
9.1 times and cash flow coverage is inadequate with (EBITDA-
CapEx)/Interest of .8 time pro forma for the announced
transaction. It is worth noting that Moody's has added back $5.5
million of one time charges to EBITDA but does not include
dividends Fisher receives from its common stock portfolio.
Moody's expects operating cash flow to improve in the near-term
resulting from growth in political advertising and rising capacity
utilization in Fisher Plaza, the company's downtown Seattle office
complex. Planned capital investment should abate with the
completion of the Fisher Plaza construction project. The
combination of these factors is expected to improve the company's
credit metrics through the remainder of 2004. However, the company
is likely to experience difficulty growing revenue significantly
enough in 2005 to replace 2004 political revenue.
The notes are unsecured, rank senior to any future subordinated
indebtedness, and benefit from subsidiary guarantees. This
instrument is the only class of rated debt and will sit behind a
$20 million revolving credit facility in the capital structure.
This warrants placing the rating on par with the B2 senior implied
rating.
Fisher Communications, Inc., headquartered in Seattle, Washington
is a television and radio broadcasting company comprised of
stations located in the Northwest.
FLEMING COS: Court Approves Grace Foods Settlement Agreement
------------------------------------------------------------
U.S. Bankruptcy Court for the District of Delaware approves the
settlement agreement between Fleming Companies, Inc., and its
debtor-affiliates and Grace Foods, Inc.
As reported in the Troubled Company Reporter on August 23, 2004,
Christopher J. Lhulier, Esq., at Pachulski, Stang, Ziehl, Young,
Jones & Weintraub, PC, in Wilmington, Delaware, relates that
Grace Foods, Inc., owe the Debtors $982 in accounts receivable for
goods delivered and services rendered by the Debtors.
The Debtors sold its wholesale grocer distribution business to C&S
Acquisition, LLC. As a result, C&S holds two promissory notes due
and owing from Grace Foods for $5,476,655.
The parties agree on a global compromise that will resolve all
outstanding amounts owing to the Debtors. The primary terms of
their Settlement Agreement are:
(a) Grace Foods will pay the Debtors the full amount of the
A/R Balance;
(b) The Debtors will release Grace Foods' personal property
that is the subject of any and all mortgages, security
agreements, liens and encumbrances placed on the personal
property by any agreement between the Debtors and Grace
Foods;
(c) The Debtors and C&S authorize Grace Foods, at its own
expense, to prepare and record any release with respect
to any and all security agreements, liens and
encumbrances placed on the assets of Grace Foods; and
(d) The parties will grant each other a general release from
all claims or causes of action arising under or in
connection with the Debtors' cases or any business
dealings between the Debtors and Grace Foods.
Mr. Lhulier notes that with the Settlement Agreement, the Debtors
receive 100% of the outstanding A/R balance in return for the
General Release. The Debtors do not believe that they are
relinquishing any bona fide claims. The Debtors will also avoid
further litigation costs.
Headquartered in Lewisville, Texas, Fleming Companies, Inc. --
http://www.fleming.com/-- is the largest multi-tier distributor
of consumer package goods in the United States. The Company filed
for chapter 11 protection on April 1, 2003 (Bankr. Del. Case No.
03-10945). Judge Walrath confirmed Fleming's Third Amended Plan
on July 26, 2004, under which Core-Mark Holding Company, Inc.,
emerged as a rehabilitated company owned by Fleming's unsecured
creditors on August 23, 2004. Richard L. Wynne, Esq., Bennett L.
Spiegel, Esq., Shirley Cho, Esq., and Marjon Ghasemi, Esq., at
Kirkland & Ellis, represent the Debtors in their restructuring
efforts. When the Debtors filed for protection from their
creditors, they listed $4,220,500,000 in assets and $3,547,900,000
in liabilities.
The Debtors emerged from Chapter 11 on August 23, 2004 and is not
known as Core-Mark Holding Company, Inc. (Fleming Bankruptcy
News, Issue No. 42; Bankruptcy Creditors' Service, Inc., 215/945-
7000)
FOSTER WHEELER: Subsidiary Wins 400 MW Power Plant Deal in Italy
----------------------------------------------------------------
Foster Wheeler Ltd.'s (OTCBB:FWLRF) subsidiary Foster Wheeler
Italiana S.p.A. has been awarded a lump-sum turnkey contract by
SET S.r.l. for the engineering, procurement, and construction
(EPC) of a 400 MW grassroots combined-cycle plant to be built at
Teverola, Italy.
SET is a project company. Its majority shareholder is Ratia
Energie AG, a Swiss utility company, and its minority shareholder
is Merloni S.p.A.
The terms of the contract were not disclosed, and the booking is
included in the second-quarter.
"This award is a major win for Foster Wheeler and confirms our
leading position in executing major EPC projects in the power-
generation sector," said Umberto della Sala, president and CEO,
Foster Wheeler Italiana.
"This new facility will be built in an area where Foster Wheeler
Italiana, in partnership with Merloni, already owns and operates a
150 MW combined-cycle cogeneration plant," added Gianfranco
Brustia, Director of Foster Wheeler Italiana's Power Division,
"which reconfirms Foster Wheeler's position as one of the major
players in this strategic market."
The plant is a natural gas-fired power station and will produce
electricity to be delivered to the Italian National Grid.
The power island includes a multi-shaft arrangement consisting of
a gas turbine, a heat recovery steam generator -- HRSG, and a
steam turbine, connected to an air-cooled condenser.
Foster Wheeler Italiana will provide engineering, materials
supply, erection, construction supervision, pre-commissioning,
commissioning, start-up, and testing, up to commercial operation.
Foster Wheeler Italiana's Equipment Division will design and
supply the HRSG. General Electric will supply the power package,
which includes the gas turbine, the steam turbine, the associated
generators, and auxiliary equipment.
The plant is expected to be fully operational by the end of 2006.
About Foster Wheeler
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.
FRIEDMAN'S: Bank Lender Talks Continue
--------------------------------------
Friedman's, Inc., (OTC: FRDM.PK) reported that the Company and its
existing lenders are continuing to meet in Pasadena, California,
to work towards completion of an Amended and Restated Credit
Facility which, if closed, would provide for total commitments of
$135 million, comprised of a $75 million senior revolving loan and
a $60 million junior term loan. Under the terms of the commitment
agreements for the proposed restructuring, and a related
forbearance agreement with the Company's existing lenders, the
negotiation and execution of definitive documentation and the
satisfaction of closing conditions were to have been completed
Tuesday, Aug. 31.
Closing meetings on the restructured credit facility commenced in
Pasadena on Aug. 30 and are continuing day-to-day. The Company
stated that although Friedman's remains in active discussions with
Farallon and its other senior lenders, there can be no assurance
that the proposed transactions will be consummated or that the
Company's lenders would continue to forbear from exercising
remedies in connection with the Company's existing credit
facilities.
As previously announced on August 5, 2004, the Company had entered
into a commitment letter with Farallon Capital Management, L.L.C.,
an affiliate of one of the lenders under the Company's existing
secured credit facility, which could provide as much as $25 to
$30 million of additional availability to the Company under its
credit facility.
As previously announced on August 20, 2004, the Company's other
existing lenders agreed to the terms of the restructuring of the
Company's existing secured credit facility contemplated by the
Farallon commitment letter and also entered into a forbearance
agreement with the Company under its existing amended and restated
credit agreement. The forbearance agreement provided that the
lenders would forbear from exercising their remedies with respect
to any existing default until the earlier of August 31, 2004, or
the occurrence of a new default.
Under both agreements, Friedman's was required to complete the
proposed restructuring transaction by August 31, 2004. Assuming
that the closing of the pending financing transaction is
consummated, Friedman's believes that the revised terms and
structure of the facility, together with vendor support, should
provide adequate liquidity to move forward, assuming that the
required agreements with the Company's lenders and vendors can be
reached promptly to provide adequate time to obtain the inventory
required for Friedman's holiday season sales plan.
Friedman's Inc. is a leading specialty retailer of fine jewelry
based in Savannah, Georgia. The Company is the leading operator
of fine jewelry stores located in power strip centers. At
December 29, 2003, Friedman's Inc. operated a total of 710 stores
in 20 states, of which 482 were located in power strip centers and
228 were located in regional malls. Friedman's Class A Common
Stock is traded on the New York Stock Exchange (NYSE Symbol, FRM).
As of December 8, 2003, Crescent Jewelers, the Company's west
coast affiliate, operated 179 stores in six western states, 102
of which were located in regional malls and 77 of which were
located in power strip centers. On a combined basis, Friedman's
and Crescent operate 889 stores in 25 states of which 559 were
located in power strip centers and 330 were located in regional
malls.
* * *
As reported in Troubled Company Reporter's January 2, 2003
edition, the Company was notified by its lenders that it is in
default under certain provisions of its credit agreement. The
Company's lenders continue to provide the Company with the
benefits of its credit agreement, with certain limited
exceptions, although they have the right to terminate their
support at any time.
The company's most recently published balance sheet -- dated
June 28, 2003 -- shows $496 million in assets and $190 million in
liabilities. The Company explains that its year-end closing
process was delayed because of an investigation by the Department
of Justice, a related informal inquiry by the Securities and
Exchange Commission, and its Audit Committee's investigation into
allegations asserted in a August 13, 2003, lawsuit filed by
Capital Factors Inc., a former factor of Cosmopolitan Gem
Corporation, a former vendor of Friedman's, as well as other
matters. Ernst & Young has been working on a restatement of the
company's financials. The company's signaled that a 17% or
greater increase to allowances for accounts receivable can be
expected.
Also, Friedman's Inc. has been notified that the New York Stock
Exchange (NYSE) has made a determination to delist the company's
Class A Common Stock that traded under the ticker symbol FRM on
the NYSE effective May 11, 2004. Friedman's is evaluating an
appeal of the decision of the NYSE.
The Company noted that while it is disappointed with the NYSE's
decision, the delisting from the Exchange does not affect
Friedman's day-to-day business operations. The Company also
noted that although its common stock is not eligible for trading
on the NASD over-the-counter bulletin board (OTC), the Company
understands that market makers have independently begun to make
market in the company's common stock on the Pink Sheets under
the symbol "FRDM."
GENERAL MILLS: Moody's Assigns Ba1 Rating to $5.9B Preferred Stock
------------------------------------------------------------------
Moody's Investors Service affirmed the Baa2 senior unsecured and
Prime-2 short term ratings for General Mills. In addition,
Moody's assigned a new prospective (P)Baa3 subordinated rating and
(P)Ba1 preferred stock rating to the company's new $5.9 billion
multi-seniority shelf registration.
The shelf registration statement has not yet been declared
effective. The rating outlook remains stable.
The affirmation of General Mills' ratings reflects:
* the company's strong brand equity,
* leading market shares,
* diverse portfolio of packaged food products,
* generally strong and stable cash flows, and
* the near-term priority it has placed on leverage reduction.
The ratings also reflect the mature and highly competitive
marketplace in which General Mills competes, its relatively high
leverage for its rating category, and continuing uncertainty
surrounding the impact of an SEC investigation into its sales
practices and accounting.
The Stable outlook on General Mills' ratings assumes the company
continues to reduce leverage and improve its debt protection
measures. Over the longer term, further improvement in the
company's debt protection measures, coupled with evidence of
strengthening operating performance and resolution of the
uncertainty caused by the SEC investigation could result in upward
momentum in the outlook on the company's rating. An upgrade would
require General Mills to be able to sustain retained cash
flow/adjusted debt of at least 15%. Conversely, the company's
ratings could come under downward pressure if its weak operating
performance or a material acquisition were to result in a
deterioration of key credit metrics, such as retained cash
flow/adjusted debt below 10%. A pickup in share repurchase
activity in advance of its meeting debt reduction targets could
also initiate downward rating pressure.
The prospective (P)Baa3 subordinated rating and (P)Ba1 preferred
rating are lower than General Mills' senior unsecured rating
reflecting the lower position in the company's capital structure
that such securities would have if issued. Moody's notes that the
shelf registration contemplates that General Mills could issue
some form of equity-linked securities in an effort to assist
Diageo PLC in selling a large block of General Mills stock that
Diageo owns. General Mills' ratings assume that any such
transaction, if undertaken, will not have a material impact on the
company's capital structure.
Ratings Affirmed:
* Senior unsecured at Baa2;
* Senior unsecured shelf at (P)Baa2;
* Short term rating at Prime-2;
Ratings assigned:
* Subordinated shelf at (P)Baa3;
* Preferred shelf at (P)Ba1;
General Mills, headquartered in Minneapolis, Minnesota, is leading
manufacturer of packaged food products.
GS MORTGAGE: Fitch Rates $14.64 Mil. Privately Offered Class BB+
----------------------------------------------------------------
GS Mortgage Securities Corp. 2004-AR2 is rated by Fitch as
follows:
-- $754.33 million classes A-1A, A-1B, A-2A, A-2B, A-3A, A3-B,
A3-C certificates 'AAA';
-- $45.87 million class M-1 certificates 'AA+';
-- $31.72 million class M-2 certificates 'AA';
-- $18.05 million class M-3 certificates 'AA-';
-- $14.64 million class M-4 certificates 'A+';
-- $15.13 million class M-5 certificates 'A';
-- $16.10 million class M-6 certificates 'A-';
-- $16.59 million class B-1 certificates 'BBB+';
-- $12.20 million class B-2 certificates 'BBB';
-- $9.76 million class B-3 certificates 'BBB-';
-- $14.64 million privately offered class B-4 certificates
'BB+'.
Credit enhancement for the 'AAA' rated class A certificates
reflects the 19.95% subordination provided by classes M-1 through
M-6, classes B-1 though B-4, monthly excess interest, and initial
overcollateralization -- OC -- of 2.75%.
Credit enhancement for the 'AA+' rated class M-1 certificates
reflects the 15.25% subordination provided by classes M-2 through
M-6, B-1 through B-4, monthly excess interest, and initial OC.
Credit enhancement for the 'AA' rated class M-2 certificates
reflects the 12.00% subordination provided by classes M-3 through
M-6, B-1 through B-4, monthly excess interest, and initial OC.
Credit enhancement for the 'AA-' rated class M-3 certificates
reflects the 10.15% subordination provided by classes M-4 through
M-6, B-1 through B-4, monthly excess interest, and initial OC.
Credit enhancement for the 'A+' rated class M-4 certificates
reflects the 8.65% subordination provided by classes M-5, M-6, B-1
through B-4, monthly excess interest, and initial OC.
Credit enhancement for the 'A' rated class M-5 certificates
reflects the 7.10% subordination provided by classes M-6, B-1
through B-4, monthly excess interest, and initial OC.
Credit enhancement for the 'A-' rated class M-6 certificates
reflects the 5.45% subordination provided by classes B-1 through
B-4, monthly excess interest, and initial OC.
Credit enhancement for the 'BBB+' rated class B-1 certificates
reflects the 3.75% subordination provided by classes B-2 through
B-4, monthly excess interest, and initial OC.
Credit enhancement for the 'BBB' rated class B-2 certificates
reflects the 2.50% subordination provided by classes B-3, B-4,
monthly excess interest, and initial OC. Credit enhancement for
the 'BBB-' rated class B-3 certificates reflects the 1.50%
subordination provided by classes B-4, monthly excess interest,
and initial OC.
Credit enhancement for the privately offered 'BB+' rated class B-4
certificates reflects the monthly excess interest and initial OC.
In addition, the ratings reflect the integrity of the
transaction's legal structure as well as the capabilities of
Countrywide Home Loans Servicing LP as master servicer. Deutsche
Bank National Trust Company will act as trustee.
The mortgage pool consists of closed-end, first lien subprime
mortgage loans that may or may not conform to Freddie Mac and
Fannie Mae loan limits. As of the cut-off date (Aug. 1, 2004),
the mortgage loans have an aggregate balance of $981,456,677. The
weighted average loan rate is approximately 7.057%. The weighted
average remaining term to maturity is 356 months. The average
cut-off date principal balance of the mortgage loans is
approximately $181,684. The weighted average original loan-to-
value ratio is 88.53% and the weighted average Fair, Isaac & Co.
-- FICO -- score was 616. The properties are primarily located
in:
* California (28.70%),
* Florida (11.25%), and
* New York (6.30%).
The loans were originated or acquired by Argent Mortgage Company,
LLC and Olympus Mortgage Company. Both mortgage companies are
subsidiaries of Ameriquest Mortgage Company. Ameriquest Mortgage
Company is a specialty finance company engaged in the business of
originating, purchasing, and selling retail and wholesale subprime
mortgage loans. Both Argent and Olympus focus primarily on
wholesale subprime mortgage loans.
GSAA HOME: Fitch Assigns BB Rating to $1.581 Mil. Class B-2 Certs.
------------------------------------------------------------------
GSAA Home Equity Trust 2004-7, asset-backed certificates, series
2004-7, are rated by Fitch as follows:
-- Classes AV-1, AF-2, AF-3, AF-4, AF-5 (senior certificates;
$272,752,000) 'AAA';
-- Class M-1 ($5,598,000) 'AA';
-- Class M-2 ($3,875,000) 'A';
-- Class B-1 ($3,301,000) 'BBB';
-- Class B-2 ($1,581,000) 'BB'.
The 'AAA' rating on the senior certificates reflects the 5.50%
total credit enhancement provided by:
* the 1.95% class M-1,
* the 1.35% class M-2,
* the 1.15% class B-1,
* the 0.55% privately offered class B-2, and
* the 0.50% target overcollateralization -- OC.
In addition, all certificates have the benefit of monthly excess
cash flow to absorb losses. The ratings also reflect:
(i) the quality of the mortgage collateral,
(ii) the strength of the legal and financial structures, and
(iii) the master servicing capabilities of Wells Fargo Bank,
NA., which is rated 'RMS1' by Fitch.
The certificates represent ownership interest in a trust fund
consisting of a pool of 15- and 30-year alt-A, fixed rate, fully
amortizing, first lien residential mortgage loans. The mortgage
loans were purchased from various seller-servicers in accordance
with such originator's respective underwriting standards and
guidelines. All statistical information on the mortgage loans is
based on July 1, 2004 (statistical calculation date). The pool
consists of loans originated by:
-- National City Mortgage Co. (60.33%),
-- GreenPoint Mortgage Funding, Inc. (20.57%),
-- Wells Fargo Bank, NA (16.79%), and
-- Countrywide Home Loans, Inc. (2.31%).
The mortgages have:
* an aggregate principal balance of approximately $290,801,045,
* a weighted average original loan-to-value ratio of 75.28%,
* a weighted average coupon of 6.410%, and
* a weighted average remaining term of 344 months.
The average unpaid principal balance of the mortgage loans is
$175,287, and the weighted average FICO score is 719. Rate/term
and cashout refinances represent 18.46% and 30.26%, respectively,
of the mortgage loans. The states that represent the largest
geographic concentration of mortgaged properties are:
* California (26.22%),
* New York (8.66%), and
* Florida (5.17%).
All other states constitute fewer than 5% of properties in the
pool.
None of the mortgage loans are 'high cost' loans as defined under
any local, state, or federal laws.
GS Mortgage Securities Corp. purchased the mortgage loans from
each seller and deposited the loans in the trust, which issued the
certificates, representing undivided and beneficial ownership in
the trust. For federal income tax purposes, the securities
administrator will cause multiple REMIC elections to be made for
the trust. Wells Fargo Bank, NA will serve as the master servicer
and as securities administrator. Deutsche Bank National Trust
Company will act as trustee.
HANGER ORTHOPEDIC: Moody's Cuts Debt Ratings & Junks Preferreds
---------------------------------------------------------------
Moody's Investors Service downgraded the ratings of Hanger
Orthopedic Group, Inc., and changed the outlook to negative.
Moody's downgraded the company's ratings as a result of the
continued deterioration in performance. The particularly weak
results for the second quarter ended June 30, 2004 caused the
company to violate the total leverage covenant under its bank
credit facilities. The company has obtained a waiver and is in
the process of amending the credit facilities. The one notch
downgrade on all the ratings assumes Hanger will be successful in
negotiating the amendment. These ratings were affected:
* $100 Million Revolver due 2007 -- downgraded to B2 from B1;
* $150 Million Term Loan B due 2009 -- downgraded to B2 from
B1;
* $200 Million 10.375% Senior Notes due 2009 -- downgraded to
B3 from B2;
* $53 Million (accreted value) 7% Redeemable Preferred Stock
due 2010 -- downgraded to Caa2 from Caa1;
* Senior Implied Rating -- downgraded to B2 from B1;
* Senior Unsecured Issuer Rating -- downgraded to Caa1 from B3;
The outlook for the company is negative.
The ratings reflect:
* the deterioration in performance,
* the company's high leverage,
* the company's high reliance on government funds and
Medicare's recent decision to freeze rates for three years,
* pricing pressure from large commercial payors,
* a competitive environment, and
* weakening industry utilization and growth trends.
Moody's concerns over these issues are compounded by the number of
other problems that have arisen at the company recently, including
billing discrepancies at the West Hempstead center and the
accounting error related to uncollectible receivables recently
uncovered.
Credit strengths recognized include:
* the company's dominant market position and competitive
advantages including the ability to obtain greater purchase
discounts,
* national contracting capability and access to new technology,
* the company's conservative operations-focused strategy and
minimal reliance on acquisitions,
* the geographic diversification of revenues through over 600
patient care centers, and
* positive long term demographics and industry growth trends.
Moody's also took into consideration the potential for significant
sales and EBITDA growth in 2005 related to the company's Linkia
subsidiary.
The negative outlook reflects the risk that near-term fundamentals
for the industry may remain weak and may lead to a continued
decline in performance for a longer period that the company is
predicting. The negative outlook also incorporates Moody's
concern that the projected turnaround in Hanger's performance
depends highly on the company's ability to grow a new business.
There is considerable uncertainty over whether the company will be
able to sign up additional contracts (at reasonable prices) and
generate the profitability and cash flow anticipated.
If Hanger is unsuccessful in starting up Linkia and other sales
initiatives fail to generate improved same store growth, Moody's
may consider further downgrading the company's ratings. Moody's
notes that while certain targeted near-term expense reductions may
boost profitability, such measures can only temporarily boost
performance and thus may not prevent a downgrade.
Moody's will consider upgrading the company's outlook or ratings,
if:
* Hanger is successful:
-- in reversing same store sales trends,
-- in signing additional Linkia contracts, and
-- in reducing expenses, and
* Hanger demonstrates that it can improve leverage as measured
by the free cash flow coverage of debt for a sustained
period.
Moody's generally required a minimum of 5% free cash flow coverage
of debt for a B1 rated company. Moody's decision to change
Hanger's rating will depend primarily on whether the company
achieves and sustains its free cash flow targets. That, in turn,
will depend on whether growth and the fundamentals for the
industry improve.
Due to the weak performance in recent quarters, Hanger's leverage
has increased by a material amount. Free cash flow coverage of
debt declined to 4.8% for the twelve-month period ended
June 30, 2004 from 8.5% coverage for the year ended
December 31, 2003. This ratio is expected to weaken through the
rest of 2004. The ratio of adjusted Debt to EBITDAR increased to
6.2 times from 5.5 times over the same period, while the ratio of
EBITDA to Interest declined to 2.4 times from 2.6 times. In
calculating these ratios, Moody's treated the company's preferred
stock as debt. Additionally, Moody's notes that the use of EBITDA
and related EBITDA ratios as a single measure of cash flow without
consideration of other factors can be misleading (see Moody's
Special Comment, "Putting EBITDA in Perspective", dated June
2000).
Hanger Orthopedic Group, Inc., headquartered in Bethesda,
Maryland, is the leading provider of orthotic and prosthetic
patient-care services. The company owns and operates 614 patient
care centers in 44 states and the District of Columbia.
HARCO COMPANY: Voluntary Chapter 11 Case Summary
------------------------------------------------
Debtor: Harco Company of Jacksonville, LLC
2600 Art Museum Drive
Jacksonville, Florida 32207
Bankruptcy Case No.: 04-09020
Chapter 11 Petition Date: August 31, 2004
Court: Middle District of Florida (Jacksonville)
Judge: George L. Proctor
Debtor's Counsels: Nina M. LaFleur, Esq.
Richard R. Thames, Esq.
Stutsman & Thames
121 West Forsyth Street Suite 600
Jacksonville, Fl 32202-3848
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
The Debtor did not file a list of its 20-Largest Creditors.
HAYES LEMMERZ: Balks at GE Capital's "Stipulated Loss Value" Claim
------------------------------------------------------------------
Thomas G. Macauley, Esq., at Zuckerman Spaeder, LLP, in
Wilmington, Delaware, relates that General Electric Capital
Corporation filed two applications for allowance and payment of an
$8 million administrative expense in 2003 in the chapter 11 cases
of Hayes Lemmerz International, Inc. and its debtor-affiliates and
subsidiaries. GE Capital alleged that each of the 51 machines
subject to the equipment leases rejected by the Debtors and two
expired leases sustained a "Casualty Occurrence" giving rise to
the Debtors' obligation to pay the contractual "stipulated loss
value" for each machine.
Mr. Macauley tells the U.S. Bankruptcy Court for the District of
Delaware that 25 of the machines were in operating condition on
the Petition Date and on the date they were returned to GE
Capital. Nine additional machines that required repair on the
Petition Date suffered no further damage postpetition. Therefore,
there is no evidence that a Casualty Occurrence took place on 34
machines after the Petition Date.
Mr. Macauley contends that, as a matter of law, GE Capital cannot
recover an administrative expense for the 51 machines. GE Capital
must first show that the machines sustained a Casualty Occurrence.
Under the leases, an equipment sustains a Casualty Occurrence if
it is "worn out," "irreparably damaged," or "permanently rendered
unfit for use". In other words, the machine must be incapable of
being restored to functionality.
None of the 51 machines meets that stringent test, Mr. Macauley
says. The inspection reports on which GE Capital bases its
administrative expense claim show no significant problems with
many of the machines.
GE Capital Objects
Julianne E. Hammond, Esq., at Blank Rome, LLP, in Wilmington,
Delaware, asserts that there is material, relevant evidence that
each of the 51 manufacturing machines General Electric Capital
Corporation leased to the Debtors suffered a "Casualty
Occurrence" during the Exposure Period. The Exposure Period
covers from February 3, 2002, which is the 60th day after the
Petition Date, until the rejection of a particular lease schedule.
Even if the Court finds that the worn out, deteriorated, damaged,
or cannibalized condition of the machines does not rise to the
level of a "Casualty Occurrence" under the Master Lease
Agreement, Ms. Hammond insists that GE Capital is still entitled
to compensatory damages because the Debtors:
-- failed to properly maintain and repair the machines after
the Petition Date;
-- cannibalized the parts from the machines postpetition; and
-- failed to comply with the return provisions of the Master
Lease Agreement.
The Debtors admit that six of the machines were in a severe state
of disrepair, were missing parts, or were worn out as of the
Petition Date. The Debtors rejected all of the relevant schedules
containing the machines after February 3, 2002, and admitted that
none of the machines were maintained, repaired, or rebuilt
postpetition. Therefore, the Debtors breached the Master Lease
Agreement with respect to each of the machines. Thus, GE Capital
is entitled to recover the Stipulated Loss Value and all other
amounts due under the lease with respect to those machines,
pursuant to the Master Lease Agreement.
The Debtors alleged that they did not receive "written notice of
default and an opportunity to cure" from GE Capital. Ms.
Hammond, however, points out that as early as February 7, 2002,
the Debtors were provided written notice that GE Capital intended
to enforce the maintenance and return provisions of the Master
Lease Agreement with respect to all machines on the schedules
rejected by the Debtors. GE Capital believed that the Debtors
were not maintaining and repainting the machines in accordance
with the terms of the Master Lease Agreement.
Ms. Hammond tells Judge Walrath that summary judgment is not
appropriate because:
(a) The Debtors' brief fails to comply with Rule 7.1.3(b)(E)
of the Local Rules of Bankruptcy Practice and Procedures
of the United States Bankruptcy Court for the District of
Delaware;
(b) The brief does not contain a "concise statement of facts,
with supporting references to appendices or record,"
presenting succinctly the alleged "undisputed" material
facts that the Debtors allege entitle them to summary
judgment; and
(c) The Debtors failed to carry the burden to produce
competent, admissible evidence establishing their
entitlement to summary judgment. Much of the alleged
"evidence" proffered by the Debtors is inadmissible
hearsay and lacks proper foundation.
On the other hand, GE Capital has produced competent, admissible,
relevant evidence to controvert the alleged evidence presented by
the Debtors.
Ms. Hammond reiterates that genuine issues of material fact remain
to be determined at trial, and the Debtors have not established
that they are entitled to judgment as a matter of law.
Therefore, GE Capital asks the Court to deny the Debtors' request.
(Hayes Lemmerz Bankruptcy News, Issue No. 53; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
HIGHWOODS PROPERTIES: Richmond Division Wins Saxon Contract
-----------------------------------------------------------
Highwoods Properties, Inc.'s (NYSE: HIW) Richmond division has
been awarded a 115,000-square foot build-to-suit lease by Saxon
Capital, Inc. (NASDAQ:SAXN), an existing customer that currently
leases approximately 35,000 square feet in the Highwoods Two
building at Innsbrook. Under the terms of the agreement,
Highwoods will build a new, four-story Class "A" office building
adjacent to Highwoods Two. Highwoods will invest approximately
$15.0 million in this new building which will be 100% occupied by
Saxon under a long-term lease. Saxon has also extended the lease
on their current space at Highwoods Two.
Ed Fritsch, president and chief executive officer, commented, "We
are pleased to be selected by Saxon to build a new facility for
its planned headquarters expansion. Paul Kreckman, vice president
of our Richmond division, and his entire team have done an
outstanding job of establishing, nurturing and expanding our
relationship with this valued customer and demonstrating that
Highwoods was clearly the best developer for this important
project. Richmond continues to be a vibrant and attractive office
market greatly complemented by this long-term commitment by an
outstanding company such as Saxon."
Since its founding in 1978 Highwoods has developed close to 17
million square feet of office and industrial properties throughout
the Southeast for a wide range of customers, including Capital One
Financial Corporation, Caterpillar, International Paper,
Metropolitan Life and Verizon Communications.
About Highwoods Properties
Highwoods Properties, Inc., a member of the S&P MidCap 400 Index,
is a fully integrated, self-administered real estate investment
trust that provides leasing, management, development, construction
and other customer-related services for its properties and for
third parties. As of June 30, 2004, the Company owned or had an
interest in 527 in-service office, industrial and retail
properties encompassing approximately 41.6 million square feet.
Highwoods also owns approximately 1,255 acres of development land.
Highwoods is based in Raleigh, North Carolina, and its properties
and development land are located in Florida, Georgia, Iowa,
Kansas, Maryland, Missouri, North Carolina, South Carolina,
Tennessee and Virginia. For more information about Highwoods
Properties, visit http://www.highwoods.com/
* * *
As reported in the Troubled Company Reporter on August 10, 2004,
Standard & Poor's Ratings Services placed its ratings on Highwoods
Properties, Inc., and its affiliate, Highwoods Realty L.P., on
CreditWatch with negative implications.
The CreditWatch placements, which impacts roughly $460 million in
rated senior notes, a $250 million revolver, and $347 million of
preferred stock, follows the delayed release of second quarter
financial results and uncertainty regarding reference to an
abandoned strategic transaction. Prior to these CreditWatch
placements, the outlook on the corporate credit rating was
negative due primarily to continued weakness in the company's core
markets and higher secured debt levels that have reduced financial
flexibility.
The company has delayed the release of its second quarter results
because it expects to restate previously reported financial
results for fiscal years 2001 through 2003, as well as for the
first quarter of 2004. Management indicated that these
restatements focus on a number of previously executed real estate
sales transactions and the accounting presentation of discontinued
operations. The likely result will be the consolidation of joint
ventures, which will now be considered financial arrangements
rather than dispositions. Standard & Poor's has historically
fully consolidated these ventures for analytical purposes, and it
appears likely that the restatement will have a negligible impact
on earnings and cash flow for the impacted periods.
Recent general market trends have pointed to modestly improved
leasing velocity in some of Highwoods' more competitive
Southeastern office markets, and the company's recently revamped
management team appears to be prudently focusing on very
aggressively managing the core portfolio. Highwoods' current
liquidity position is adequate and the company does not face a
material debt maturity until December 2005, at which time a
$120 million unsecured term loan matures.
However, until second quarter results are released, it remains
unclear whether the company's same store portfolio trends have
clearly turned the corner. In addition, the company's secured
debt levels remain very close to Standard & Poor's notching
threshold (which requires differentiating between the corporate
credit and the unsecured debt rating), and the revelation that a
strategic transaction was being contemplated adds another element
of uncertainty to current ratings.
Standard & Poor's will review Highwoods' restated financials once
they are filed and meet with management to discuss expectations
for future secured debt levels as well as the potential for a
potential strategic transaction. The range of likely outcomes
could include the affirmation of the corporate credit rating, but
a lowering of the unsecured rating is possible due to continued
higher secured debt levels.
Ratings Placed On Creditwatch Negative
Highwoods Properties Inc./Highwoods Realty L.P.
Rating
To From
-- ----
Corporate credit rating BBB-/Watch Neg BBB-/Negative
Senior unsecured notes BBB- BBB-
Preferred stock BB+ BB+
HILB ROGAL: S&P Raises Counterparty Credit Rating One Notch to BB
-----------------------------------------------------------------
Standard & Poor's Ratings Services raised its counterparty credit
rating on Hilb, Rogal & Hobbs (NYSE:HRH) to 'BB' from 'BB-'
because of continued strong operating results and the mitigation
of integration risks associated with the successful acquisition of
Hobbs Group, LLC.
Standard & Poor's also said that the outlook on HRH is stable.
Hilb Rogal's announcement of its acquisition of insurance broker
Frank F. Haack & Associates, Inc., and the previously announced
T.J. Adams acquisition are within Standard & Poor's expectations.
"The rating is based on [Hilb Rogal's] strong operating results,
the company's limited but improving financial flexibility, and the
successful integration to date of multiple acquisitions,
particularly Hobbs in July 2002," noted Standard & Poor's credit
analyst Donovan Fraser. "Offsetting these strengths are the
company's marginal though improved competitive position, which
Standard & Poor's believes contains above-average risk because of
its reliance on an aggressive acquisition pace to achieve
strategic and financial goals."
Standard & Poor's believes Hilb Rogal's operating performance
could be more susceptible to a prospective soft market environment
given the company's acquisition-based business model. However,
Standard & Poor's expects the company to maintain an ROR of more
than 22% through 2006.
Hilb Rogal, the seventh-largest domestic insurance broker, has
completed more than 200 independent agency acquisitions since it
was founded in 1982, the most significant of which was the July
2002 acquisition of Hobbs. At the time, the acquisition led to an
increase in annual revenues of about 30%.
Standard & Poor's believes that the company's business model,
which is to double revenues and earnings every three to five
years, is an aggressive strategy that contains above-average risk
because of its reliance on acquisitions. Though to date the
company has been able to meet its top- and bottom-line goals and
appears to have successfully managed the Hobbs acquisition,
Standard & Poor's believes that Hilb Rogal will be hard-pressed to
continue to meet the same goals in a softening rate environment.
Standard & Poor's believes that reliance on acquisition targets as
the engine of growth is fraught with the execution risk that comes
with such a strategy. Furthermore, given the company's current
market position, acquisition opportunities with the potential to
increase scale measurably might be scarce. Nevertheless, Standard
& Poor's believes that the company has enhanced its competitive
position by acquiring, integrating, and re-branding the former
Hobbs companies, allowing the combined entity to become a greater
player in middle-market, top-tier commercial and industrial large
accounts and specialty lines segments.
HOLLINGER INT'L: Committee Report Not Objective, Radler Says
------------------------------------------------------------
In a response to the report published by the Hollinger
International Special Committee, Josh Pekarsky, a spokesman for F.
David Radler, Hollinger's former COO, issued this statement:
"Contrary to its assertions, the Special Committee's report
is not an objective review of the evidence in its possession. It
is a highly inaccurate and defamatory diatribe written more like a
novel than a serious report. Far from objectively reporting facts
gleaned from an investigation that has already cost International
tens of millions of dollars, it twists the substantial evidence in
its possession to reach pre-ordained conclusions.
"For example, with respect to the payments made by
International to Ravelston for management fees - which account for
the majority of the Special Committee's alleged damages - the
Report confirms, but then disregards, the fact that the payments
now in dispute were made with the knowledge and approvals of
International's Audit Committee and Board.
"Moreover, it continually excuses the conduct of one of the
most sophisticated Board and Audit Committees to govern a
corporation in history, including an Audit Committee headed by the
Chairman of one of the country's leading law firms.
"International's auditors, KPMG, repeatedly reviewed and
confirmed that payments now being challenged were appropriately
disclosed and approved.
"Moreover, the management structure of International -
including the executive arrangement with Ravelston - was well
known to all of the major investors in the Company and all
payments to Ravelston were fully disclosed to and specifically
approved by the Audit Committee and the Board. As KPMG
specifically confirmed, all information requested by the Board
regarding the Ravelston fees was provided to KPMG and the Audit
Committee. Thus, the attempts now to claim that these payments
were concealed or not approved is baseless. The Special
Committee's allegations concerning the compensation received by
Mr. Radler personally are false, as the facts will show that his
personal compensation was entirely appropriate.
"The allegations that Horizon acquired valuable papers from
Hollinger at fire sale prices are equally groundless. The papers
involved were fully marketed by Morgan Stanley. The simple fact
is that there were no genuine offers for these papers, which were
left over after Hollinger sold other papers that were marketable.
Having largely exited the community newspaper business, the papers
that remained could not be run profitably by International and
their purchase by Horizon clearly benefited International
financially.
"As for the non-compete payments challenged by the Special
Committee, the Report repeatedly mischaracterizes Mr. Radler's
role. With respect to the largest of the non-compete payments,
the Report concedes that the purchaser, CanWest, specifically
insisted on receiving a non-competeagreement from Mr. Radler.
This agreement required Mr. Radler to sign away his ability to
practice his profession in a territory that spanned 70% of his
native country. Contrary to the irresponsible allegations of the
Report, it is prudent - not extraordinary - under the law for a
buyer to seek and pay for an individual non-compete under these
circumstances.
"The allegations of improprieties involving charitable
contributions by International on its own behalf and in Mr.
Radler's name are blatantly misleading and inappropriate.
"Moreover, using the Special Committee's novel interpretation
of the law, myriad major corporations that make charitable
contributions to good causes would be branded as criminals.
"In an effort to resolve these issues, Mr. Radler agreed to
the Special Committee's request that he repay several of the non-
compete payments.
"Moreover, Mr. Radler has repeatedly cooperated with the
Special Committee's requests for information and has repeatedly
offered to mediate the entire dispute, so that International and
all concerned could be spared the enormous financial burdens and
disruption resulting from the Special Committee's spurious
allegations. Unfortunately, the Special Committee has refused to
participate in a mediation with Mr. Radler and the others it has
sued, despite specifically being urged to do so by Vice Chancellor
Strine in Delaware.
"Instead, the Special Committee has insisted on proceeding to
cause International to spend tens of millions of dollars for
litigation that could and should have been resolved, and now for
this highly irresponsible "report" which will serve only to damage
International and the individuals who ran this fundamentally sound
company well for so long."
Mr. Radler is being represented in this matter by three law firms:
* Weil, Gotshal & Manges LLP
* Stetler & Duffy Ltd and
* Jenner & Block, LLC.
As reported in the Troubled Company Reporter on September 1, 2004,
Hollinger International, Inc.'s (NYSE: HLR) Special Committee of
its Board of Directors filed with the U.S. District Court for the
Northern District of Illinois its Report of findings of its
investigation into allegations raised by certain of the Company's
shareholders and other matters uncovered in the course of the
Special Committee's work.
A full-text copy of the 513-page Report is available at no charge
at:
http://www.sec.gov/Archives/edgar/data/868512/000095012304010413/y01437exv99
w2.htm
The Company said that the Special Committee filed the Report with
the Court consistent with the terms of the Consent Judgment
entered into by the Company and the U.S. Securities and Exchange
Commission on January 16, 2004. As previously announced, the
Special Committee has filed a lawsuit on the Company's behalf in
the Court against defendants including certain directors and
former directors and officers, as well as the Company's
controlling shareholder and its affiliated companies.
Gordon A. Paris, Interim Chairman and Chief Executive Officer and
Chairman of the Special Committee, said, "The Report . . . is the
result of extensive investigation and analysis by the Special
Committee and its advisors. It is an important step forward in
our pursuit of restitution for funds and assets inappropriately
taken from the Company's coffers and in our efforts to
significantly improve corporate governance at Hollinger
International."
The Special Committee's work, including the retention of Richard
C. Breeden & Co. and O'Melveny & Myers LLP, will continue through
the conclusion of the litigation based on its investigation.
As reported in the Troubled Company Reporter on August 20, 2004,
certain management and other insiders of the Company are currently
subject to a cease trade order in respect of securities of the
Company issued by the Securities Commission on June 1, 2004. The
cease trade order results from the delay in filing the Company's
annual financial statements for the year ended December 31, 2003,
its interim financial statements for the three months ended
March 31, 2004 and its Annual Information Form -- AIF - by the
required filing dates. The cease trade order will remain in place
until two business days following receipt by the Securities
Commission of all filings that the Company is required to make
pursuant to Ontario securities laws.
On July 20, 2004, the Company did not anticipate that it would be
in a position to file its interim financial statements for the
six-month period ended June 30, 2004 by the filing date required
by applicable Canadian securities legislation, since it was not
expected that the final report of the Special Committee would be
available sufficiently in advance of that time. The Company
confirms that those interim financial statements have not been so
filed.
The Company believes that it needs to review the final report of
the Special Committee established by the Company before it can
complete and file the financial statements and the AIF in
question. The work of the Special Committee is ongoing and it
final report has not yet been issued. The Company will continue
to provide bi-weekly updates, as contemplated by the OSC Policy,
until the financial statements and AIF have been filed.
Hollinger International Inc. is a newspaper publisher with
English-language newspapers in North America and Israel. Its
assets include The Chicago Sun-Times and a large number of
community newspapers in the Chicago area, The Jerusalem Post and
The International Jerusalem Post in Israel, as well as a portfolio
of new media investments and a variety of other assets.
INDYMAC BANCORP: Appoints Stuart A. Gabriel to Board of Directors
-----------------------------------------------------------------
IndyMac Bancorp, Inc., (NYSE:NDE) appointed Stuart A. Gabriel to
serve on the Board of Directors of IndyMac Bank(R), F.S.B., a
subsidiary of IndyMac Bancorp, Inc. The appointment fulfills
IndyMac Bank's stated plan to have two Directors who are
independent of the holding company and exclusively focus on
IndyMac Bank.
Dr. Gabriel is Director and Lusk Chair in Real Estate at the
University of Southern California Lusk Center for Real Estate. He
also serves as Professor of Finance and Business Economics at the
Marshall School of Business, University of Southern California,
and the USC School of Policy, Planning and Development, and he is
Co-Director of the USC Ross Minority Program in Real Estate.
Prior to joining the USC faculty, Dr. Gabriel served on the
economics staff of the Federal Reserve Board in Washington, D.C.,
more recently he has been a Visiting Scholar at the Federal
Reserve Bank of San Francisco.
"We are extremely pleased to welcome Stuart to the IndyMac Bank
Board of Directors. His expertise in the mortgage banking, real
estate and banking industries will bring added strength to our
Board," commented Senator John Seymour (ret.), Chairman of
IndyMac's Nominating and Governance Committee.
Dr. Gabriel holds a Ph.D. in Economics from the University of
California, Berkeley. His current research focuses on mortgage
prepayment and default risk, urban housing and labor markets,
population mobility and quality-of-life issues, and housing market
adjustment mechanisms.
Dr. Gabriel serves on the Editorial Boards of numerous academic
journals, including Real Estate Economics, Journal of Real Estate
Finance and Economics, Journal of Housing Economics, Journal of
Housing Research, Housing Policy Debate and the Journal of Real
Estate Research. He is currently the elected President of the
American Real Estate and Urban Economics Association.
Dr. Gabriel also is a Fellow of the Homer Hoyt Institute for
Advanced Real Estate Studies, an independent, non-profit research
and educational foundation established in 1968, which contributes
to improving the quality of public and private real estate
decisions.
IndyMac Bancorp, Inc., is the holding company for IndyMac Bank,
the largest savings and loan in Los Angeles and the 10th largest
nationwide (based on assets). Through its hybrid thrift/mortgage
bank business model, IndyMac is in the business of designing,
manufacturing, and distributing cost-efficient financing for the
acquisition, development and improvement of single-family homes.
IndyMac also provides financing secured by single-family homes to
facilitate consumers' personal financial goals and strategically
invests in single-family mortgage-related assets.
IndyMac utilizes its award-winning e-MITS(R) technology platform
to facilitate automated underwriting, risk-based pricing and rate
lock of home loans on a nationwide basis via the Internet at the
point of sale. IndyMac provides mortgage products and services
through its business relationship division, IndyMac Mortgage Bank,
and its consumer direct division, IndyMac Consumer Bank, and
invests in certain of its mortgage loan production and mortgage
servicing for long-term returns through its Investment Portfolio
and Home Equity Divisions. IndyMac's mortgage website is ranked
the number one overall mortgage website by Watchfire(R)
GomezPro(TM), an internet quality measurement firm, a position it
has held for seven of eight measurement periods since Fall 2000.
IndyMac Bank also offers a wide array of Web-enhanced banking
services, including deposits, competitive CD and money market
accounts, and online bill payment services. IndyMac Bank is FDIC
insured.
IndyMac's total annualized return to shareholders for the period
1993 through August 31, 2004 of 24%, under its current management
team, has exceeded the comparable returns of 12% and 10% for the
Dow Jones Industrial Average and S&P 500, respectively, for the
same period.
* * *
As reported in the Troubled Company Reporter's June 24, 2004
edition, Fitch has taken rating actions on the following IndyMac
ABS, Inc., home equity issues as follows:
Series SPMD 2000-A group 2:
--Class AV-1 affirmed at 'AAA';
--Class MV-1 affirmed at 'AA';
--Class MV-2 affirmed at 'A';
--Class BV affirmed at 'BBB' and removed from
Rating Watch Negative.
Series SPMD 2000-C group 1:
--Class AF-5, AF-6, R affirmed at 'AAA';
--Class MF-1 affirmed at 'AA';
--Class MF-2 downgraded to 'BB' from 'BBB';
--Class BF downgraded to 'C' from 'CCC'.
Series SPMD 2001-B:
--Class AV, AF-6, R affirmed at 'AAA';
--Class MF-1 affirmed at 'AA';
--Class MF-2 affirmed at 'A';
--Class BF downgraded to 'BB' from 'BBB', and
removed from Rating Watch Negative.
The affirmations on the above classes reflect credit enhancement
consistent with future loss expectations.
The negative rating action on series 2000-C group 1 class MF-2
and series 2001-B class BF is the result of adverse collateral
performance and the deterioration of asset quality outside of
Fitch's original expectations.
Indymac SPMD 2000-C group 1 contained 12.65% of manufactured
housing collateral at closing, and as of April 2004, the
percentage of MH increased to 33.6%. To date, MH loans have
exhibited very high historical loss severities, causing Fitch to
have concerns over the available enhancement in this deal.
This deal was structured with mortgage insurance policies
provided by both the lender and the borrower on approximately
91.4% of the mortgage pool.
Series 2000-C group 1 has had no overcollateralization amount
since the May 2003 distribution, and class BF has taken further
write-downs, with an ending balance of $2,395,665.85 as of the
May 2004 distribution. The twelve-month average monthly loss for
this deal is approximately $245,000. Series 2001-B has
$1,301,270.46 OC outstanding as of the May 2004 distribution. The
twelve-month average monthly loss for this deal is approximately
$223,600.
The structure in the 2000-C transaction is not cross-
collateralized so excess spread cannot be shared by the groups.
Both 2000-C and 2001-B transactions are also structured such that
bonds that were written down due to losses can be written back up.
INTEGRATED ELECTRICAL: Gets Waiver on $175 Million Credit Facility
------------------------------------------------------------------
Integrated Electrical Services, Inc., (NYSE: IES) reported the
amendment of its $175 million credit facility led by Bank One, NA
as administrative agent. The lenders under the facility,
consisting of a $50 million term loan and $125 million revolving
line of credit, have approved an amendment effective
August 16, 2004, waiving IES' requirement to provide certified
financial reporting documents for the fiscal third quarter. This
waiver is effective until the earlier of December 15, 2004 or the
date IES receives notice from either the trustee or 25% of the
holders of its senior subordinated notes that a default has
occurred. At this time, IES has not received any notice that a
default has occurred. In the event IES does receive such notice,
the company will have 30 days to obtain a waiver from its
subordinated note holders to resolve any default.
The amendment to the credit facility also reduces the borrowing
base calculation, however, only during the period prior to the
time the company files its fiscal 2004 Third Quarter Report on
Form 10-Q. IES believes that the new borrowing base in
conjunction with available cash provides adequate liquidity until
the company can file its fiscal 2004 Third Quarter Report on Form
10-Q. In addition, the amendment limits acquisitions based upon
the financial performance of the company and states that a default
under the company's indemnity agreement with its surety bond
provider would result in a default under the credit facility. The
company is currently in compliance with the requirements of its
surety bond provider. A copy of the amendment to the company's
credit facility will be filed September 1, 2004 on Form 8-K with
the Securities and Exchange Commission.
The company currently anticipates that its delayed Third Quarter
Report on Form 10-Q will be filed concurrently with the filing of
its year-end financial statements.
Integrated Electrical Services, Inc., is the leading national
provider of electrical solutions to the commercial and industrial,
residential and service markets. The company offers electrical
system design and installation, contract maintenance and service
to large and small customers, including general contractors,
developers and corporations of all sizes.
* * *
As reported in the Troubled Company Reporter on August 19, 2004,
Standard & Poor's Ratings Services lowered its corporate credit
and senior secured bank loan ratings on Houston, Texas-based
Integrated Electrical Services, Inc., to 'BB-' from 'BB', and its
subordinated debt rating to 'B' from 'B+'.
The ratings remain on CreditWatch with negative implications,
where they were placed on June 23, 2004.
"We are maintaining the CreditWatch listing because the company
recently announced that it will not be able to file its June 30
fiscal third quarter 10-Q on time and that it has withdrawn its
earnings expectations for fiscal 2004," said Standard & Poor's
credit analyst Heather Henyon. "As a result, it is unlikely that
Integrated Electrical will be able to meet our prior expectations
of funds from operations to total debt of around 20% or total debt
to EBITDA in the 3x-3.5x range for several quarters. Furthermore,
the delay in filing could cause a default under the company's debt
agreements."
An internal investigation has uncovered internal control and
financial reporting issues at two subsidiaries on a couple of
complex projects. Integrated Electrical' external auditors will
do further testing to see if these issues were isolated incidents
or if there is a systemic problem, which could have an adverse
effect on the credit profile.
Standard & Poor's will meet with management to discuss the
controls, organizational reporting lines, policies and training
that Integrated Electrical is putting in place to improve its
accounting and reporting procedures. In addition, Standard &
Poor's will review any potential amendment or waiver needed by
Integrated Electrical, as well as the company's prospects in the
near to intermediate term.
INTERSTATE BAKERIES: 10K Filing Delay Prompts Moody's Junk Ratings
------------------------------------------------------------------
Moody's Investors Service downgraded Interstate Bakeries' senior
implied and senior secured ratings to Caa1 from B2. The ratings
downgrade follows the company's announcement that it is further
delaying the filing of its fiscal 2004 (ending May 29, 2004) 10K
because implementation of new financial reporting systems in June
2004 has resulted in deficient information on performance since
the company's fiscal year end. As a result, unless sufficient
information becomes available for analysis, the company's
independent auditors may issue a qualified opinion with the
company's fiscal 2004 audited financials. If the company does not
file its 10K by September 26 or files a 10K with a qualified
opinion, the company would need to seek waivers from its debt
holders.
The downgrade reflects uncertainty about the company's financial
position and liquidity pending effective implementation of the new
financial reporting systems and filing of its FY04 10K, combined
with continued negative sales and earnings trends and tight
liquidity under bank covenants going forward. The downgrade also
takes into account the risks associated with the company's process
of significantly restructuring its operations to reduce costs,
while, at the same time, operating in a very competitive business
environment with weak category demand trends, much better
resourced competitors, and tight liquidity.
Although there is significant uncertainty about the company's
financial position, the ratings outlook is stable, reflecting
Moody's view that, in the event of a default, the senior secured
credit facilities are largely supported by asset values. However,
the company's challenges in generating adequate information to
effectively support an appropriate operational restructuring may
lead to negative ratings pressure, particularly if negative sales
and earnings trends persist or if restructuring initiatives fail
to sustain asset values. Given the near term liquidity
uncertainties and ongoing operational challenges that Interstate
Bakeries faces, an upgrade is unlikely over the medium term.
Moody's ratings actions for Interstate Bakeries are:
* Senior Secured Revolver, maturing 2006 -- to Caa1 from B2;
* Senior Secured Term Loan A, maturing 2006 -- to Caa1 from B2;
* Senior Secured Term Loan B, maturing 2007 -- to Caa1 from B2;
* Senior Implied -- to Caa1 from B2;
* Unsecured Issuer Rating -- to Caa3 from B3.
* Ratings Outlook -- Stable.
Moody's does not rate the company's Senior Secured Term Loan C,
maturing 2006. Each tranche of the senior secured credit
facilities is cross-guaranteed by Interstate Bakeries Corporation
(parent), Interstate Brands Corporation, and Interstate Brands
West Corporation. In addition, Moody's does not rate the
$100 million of 6% senior subordinated convertible notes that were
privately placed on August 12, 2004. The notes are guaranteed on
a subordinated basis by the company's subsidiaries.
Interstate Bakeries raised $100 million with the recent senior
subordinated convertible notes, proceeds of which were applied to
pay down bank term loans ($59 million) and revolver outstandings.
The company also obtained an amendment of financial covenants
under its bank facilities. However, near term liquidity is
dependent upon filing its 10K by September 26, with an unqualified
audit opinion, or obtaining waivers under its bank facilities. In
addition, amended financial covenants under its bank facilities
tighten again after the current fiscal quarter, and will likely
need further amendment or waiver unless earnings strengthen and
are sustained at higher levels.
In addition to its uncertain near term liquidity profile,
Interstate Bakeries' ratings also are limited by an industry
environment with excess capacity and weak category demand trends.
Excess capacity has resulted from industry development of extended
shelf life products, and demand has weakened with the growth of
low carbohydrate diets among consumers. Retail channel
consolidation along with bakery industry consolidation by larger
food companies (such as Sara Lee, Weston, and Bimbo) keep
competition intense and make it difficult to recoup increases in
commodity input and other costs such as energy and employee-
related expenses. Initiatives undertaken by Interstate Bakeries
to decrease its cost base and better position its product
offerings will take time to fully implement. To date, realized
cost savings have not been sufficient to avoid declines in margins
and earnings. In addition, price increases to pass on higher
labor, energy and direct production costs have been more than
offset by lower volumes. Interstate Bakeries' channel and product
mix also have contributed to the pressures on its earnings. From
a channel perspective, sales to retail supermarkets, an important
outlet for the company, have been pressured by the growth of
Wal-Mart. From a product perspective, within the fresh bread
category, Interstate Bakeries is heavily focused on the branded
white bread and private label segments, where category volume
declines are concentrated. Until recently, the company has lacked
super premium and low carbohydrate products, which are bread
segments that have shown growth.
Interstate Bakeries' ratings also are constrained by the
considerable up-front spending (at least $55 million over three
years) and execution challenges of Project Soar, which is a
comprehensive re-engineering initiative targeted to provide the
company with a more cost-effective infrastructure and more
sophisticated computer systems that enhance the company's ability
to operate more effectively. In addition, the ratings take into
account the company's high operating and financial leverage,
including its large operating lease rental obligations
(approximately $65 million estimated for FY04). Proceeds from the
company's recent convertible subordinated note issue have prepaid
the bulk of its scheduled debt amortization in FY05 (ending May
2005), but significant scheduled amortization requirements resume
again in FY06, along with the need to refinance its revolving
credit.
Interstate Bakeries' ratings are supported by its portfolio of
well-known national and regional brands, the geographic coverage
of its operations, its extensive distribution infrastructure, and
its diverse customer base. The ratings also recognize that the
company remained modestly cash flow positive for the LTM ending
March 6, 2004 (F3Q) and reduced debt from $585 million at the end
of FY03 (ending 5/31/03) to $540 million as of 3/6/04. The
company discontinued its dividend ($12.5 mm in the LTM ending
3/6/04) in fiscal 4Q04 (ending 5/29/04). The ratings also
consider that the company is moving aggressively to reduce costs
and upgrade systems, and that its re-engineering initiatives
(project SOAR) have generated meaningful cost savings in some
areas.
Interstate Bakeries had $540 million of debt outstanding at March
6, 2004 (F3Q), yielding Debt/LTM EBITDA of 3.7x. Lease adjusted
leverage was 5.1x EBITDAR, while F3Q EBITR coverage of interest
expense and operating lease rentals was 1.1x. In addition to
direct drawings ($40 million at 3/6/04), the company's
$300 million revolving credit supports approximately $150 million
of letters of credit. The company recently reported revenues of
$3.5 billion for its fiscal year 2004 (ending May 29), down 1.7%
from the prior year. F4Q04 sales were $803 million, down 1.8%
from the prior year. Since the end of its fiscal year, the
company has continued to experience declines in sales and unit
volumes in both cakes and bread, although it has indicated that
its unit share erosion in bread has stopped. Margins have been
low (F3Q LTM EBITDA margin of 4.2%) and have declined from the 7%
to 8% levels earned a few years ago. The company recently
reported that fiscal 2004 operating earnings also were down from
the prior fiscal year and fiscal 4Q earnings were down from the
prior fiscal fourth quarter. With weak volume and earnings
trends, leverage is increasing and coverage weakening. Free cash
flow after dividends and capital spending was positive but modest
in the LTM ending March 6, 2004 (approximately 6% of debt), but is
pressured by weak sales and earnings trends. The company's asset
base of $1.6 billion has a modest level of intangibles (25%). Low
returns on assets (about 3% based on EBIT), however, indicate a
likelihood of asset write-downs as the company restructures.
Interstate Bakeries Corporation has headquarters in Kansas City,
Missouri.
KAISER GROUP: John Grigsby, Jr. Resigns as Chief Executive Officer
------------------------------------------------------------------
John T. Grigsby, Jr. decided to resign as Chief Executive Officer
of Kaiser Group Holdings, Inc., (OTC Bulletin Board: KGHI)
effective when a successor is named, probably this month. Mr.
Grigsby is also resigning as a member of the Board of Directors of
Kaiser Group Holdings and the Board of Managers of Kaiser-Hill
Company, LLC. Mr. Grigsby will remain available to consult with
the Company over the next year.
Mr. Grigsby became Chief Executive Officer of Kaiser Group after
it emerged from the bankruptcy of its predecessor, Kaiser Group
International, in December 2000. During his tenure the Company
has resolved nearly all of the remaining claims resulting from the
Kaiser Group International bankruptcy. In addition, the Company
has benefited from recoveries under several substantial claims and
witnessed continued successful performance by Kaiser-Hill Company,
LLC, the general contractor at the U.S. Department of Energy's
Rocky Flats site near Denver, Colorado, in which the Company owns
a 50% interest.
Mr. Grigsby explained: "With the Kaiser Group International
bankruptcy claims resolved and having obtained a number of
recoveries on behalf of the Company, I have achieved the goals and
objectives which the Board and I defined when I joined Kaiser
Group in late 2000. I am also pleased that Kaiser-Hill continues
its successful performance under the DOE closure contract for the
Rocky Flats site. With these achievements in place, it is time
for me to pursue other challenges, and so I have decided to resign
in a manner that provides for a smooth transition."
James J. Maiwurm, Chairman of the Kaiser Group Board of Directors,
stated: "We appreciate John's significant contributions to Kaiser
Group and wish him well as he pursues other interests. We are
grateful for the transition arrangements John has agreed to."
About the Company
Kaiser Group Holdings, Inc., is a Delaware holding company formed
on December 6, 2000 for the purpose of owning all of the
outstanding stock of Kaiser Group International, Inc. Kaiser
Group International, Inc., continues to own the stock of its
remaining subsidiaries. On June 9, 2000, Kaiser Group
International, Inc., and 38 of its domestic subsidiaries
voluntarily filed for protection under Chapter 11 of the United
States Bankruptcy Code in the District of Delaware (case nos. 00-
2263 to 00-2301). Kaiser Group International, Inc. emerged from
bankruptcy with a confirmed Plan of Reorganization (the Second
Amended Plan of Reorganization that was effective on December 18,
2000.
In its Form 10-K for the fiscal year ended December 31, 2003,
Kaiser Group Holdings, Inc. further states:
"The effectiveness of the Plan as of December 18, 2000 did not in
and of itself complete the bankruptcy process. The process of
resolving in excess of $500 million of claims initially filed in
the bankruptcy is ongoing. By far the largest class of claims
(Class 4) was made up of creditor claims other than trade creditor
and equity claims. Class 4 claims included holders of Kaiser Group
International, Inc.'s senior subordinated notes due 2003 (Old
Subordinated Notes). Holders of allowed Class 4 claims received a
combination of cash and our preferred (New Preferred) and common
stock (New Common) in respect of their claims. Such holders
received one share of New Preferred and one share of New Common
for each $100 of claims. However, the number of shares of New
Preferred issued was reduced by one share for each $55.00 of cash
received by the holder of an allowed Class 4 claim.
"Pursuant to the terms of the Plan, we were required to complete
our initial bankruptcy distribution within 120 days of the
effective date of the Plan. Accordingly, on April 17, 2001, we
effected our initial distribution of cash, New Preferred and New
Common to holders of Class 4 claims allowed by the Bankruptcy
Court. At that time, there were approximately $136.8 million of
allowed Class 4 claims. The amount of unresolved claims remaining
at April 17, 2001 was approximately $130.5 million.
"To address the remaining unresolved claims, the Bankruptcy Court
issued an order on March 27, 2001 establishing an Alternative
Dispute Resolution -- ADR -- procedure whereby the remaining
claimants and we produce limited supporting data relative to their
respective positions and engage in initial negotiation efforts in
an attempt to reach an agreed claim determination. If necessary,
the parties were thereafter required to participate in a non-
binding mediation before a mediator pre-selected by the Bankruptcy
Court. All unresolved claims as of March 27, 2001 became subject
to the ADR process. Since April 17, 2001, the date of the initial
distribution, $123 million of asserted claims have been withdrawn,
negotiated or mediated to an agreed amount, resulting in cash
payments approximating $2.2 million and issuances of 683 shares of
New Preferred and 823 shares of New Common.
"As of March 26, 2004, the amount of unresolved claims was
approximately $7.5 million. We expect to resolve the remaining
claims in the first six months of 2004 and currently believe that
the total amount of Class 4 claims ultimately to be allowed in the
Old Kaiser bankruptcy proceeding will not exceed $142.5 million.
As demonstrated by the claim settlements completed since April 17,
2001, and based on the belief that it is in the Company's and its
shareholders' best interest, we have been settling certain
remaining Class 4 claims entirely for cash payments in lieu of the
combination of cash and New Preferred and New Common as
contemplated in the Plan. We intend to continue to use this
settlement alternative during its resolution of remaining Class 4
claims.
"From time to time in the future, as remaining unresolved claims
are resolved, excess cash from the 'reserve' fund (including cash
added to 'reserve' fund in payment of pro forma dividends,
classified as interest expense subsequent to July 1, 2003, on
retained shares of New Preferred) must be used to redeem
outstanding shares of New Preferred. In January 2003, we redeemed
282,000 shares of outstanding New Preferred by using $8.9 million
and $5.2 million of restricted and unrestricted cash,
respectively. In October 2003, we redeemed 113,530 shares of
outstanding New Preferred by using $1.6 million and $4.6 million
of restricted and unrestricted cash, respectively. In February
2004, we redeemed 95,932 shares of New Preferred by using
$3.2 million of restricted cash and $2.1 million of unrestricted
cash."
LA QUINTA: Declares Dividend on 9% Series A Preferred Stock
-----------------------------------------------------------
The Board of Directors of La Quinta Properties, Inc. declared a
dividend of $0.5625 per depositary share on its 9% Series A
Cumulative Redeemable Preferred Stock for the period from July 1,
2004 to September 30, 2004. Shareholders of record on September
15, 2004 will be paid the dividend of $0.5625 per depositary share
of Preferred Stock on September 30, 2004.
Dividends on the Series A Preferred Stock are cumulative from the
date of original issuance and are payable quarterly in arrears on
March 31, June 30, September 30 and December 31 of each year (or,
if not a business date, on the next succeeding business day) at
the rate of 9% of the liquidation preference per annum (equivalent
to an annual rate of $2.25 per depositary share).
About La Quinta Corporation
Dallas based La Quinta Corporation (NYSE: LQI) and its controlled
subsidiary, La Quinta Properties, Inc., a leading limited service
lodging company, owns, operates or franchises more than 380 La
Quinta Inns and La Quinta Inn & Suites in 33 states. Today's news
release, as well as other information about La Quinta, is
available on the Internet at http://www.LQ.com/
* * *
As reported in the Troubled Company Reporter on July 19, 2004,
Fitch Ratings has affirmed the senior unsecured ratings of La
Quinta at 'BB-' following LQI's recent announcement that it will
acquire the limited service lodging business of Marcus Corporation
for $395 million in cash. Structured as an asset sale, the
acquisition entails 178 properties or roughly 16,837 rooms, which
include 84 owned Baymont hotels, seven owned Woodfield hotels, one
owned Budgetel hotel, seven joint venture interests and management
contracts; and 84 existing Baymont franchises. Baymont branded
hotels account for 85% of acquired EBITDA. The proposed
transaction represents a 12 times (x) multiple of LTM pro forma
EBITDA of approximately $33 million, or approximately $38,000 per
room. In the event that certain liabilities are assumed, the
purchase price would be reduced accordingly. The purchase price
appears to be in line with recent limited service hotel
transactions, and well below estimated replacement cost. The
Rating Outlook is Stable.
The acquisition will initially be financed with cash-on-hand of
$291 million and committed debt financing of $150 million.
Committed debt financing will take the form of either a term bank
loan or senior notes, and may be upsized to $200 million to meet
additional financing requirements. The acquisition can be
accommodated within existing financial covenants, but required a
waiver under the current credit agreement which limited
acquisition spending to $300 million. The acquisition is expected
to close sometime in late-summer or early-autumn 2004. In the
event that the deal is not completed, Fitch would continue to
regard LQI's acquisition appetite as overhang to the rating
despite credit metrics that are relatively strong for the rating.
LEHMAN ABS: Moody's Puts Class B-2 Cert. Ba3 Rating Under Review
----------------------------------------------------------------
Moody's Investors Service is placing on review for possible
downgrade the ratings on the mezzanine and subordinate classes
from the Lehman ABS Manufactured Housing Contract Trust 2002-A
securitization.
The ratings review is prompted by the weaker-than-anticipated
performance of the collateral pool. Delinquencies and losses have
exceeded original expectations. As of the August 2004 remittance
report, more than 7.5% of the pool balance had been delinquent for
30 or more days. In addition, net losses equaled 2.69% with a
pool factor of 74.5%.
The complete rating actions are:
Lehman ABS Manufactured Housing Contract Senior/Subordinate
Asset Backed Certificates, Series 2002-A
* 1 Month Libor+1.25% Class M-1 Certificates rated Aa2, on
review for possible downgrade
* 1 Month Libor+2.25% Class M-2 Certificates rated A2, on
review for possible downgrade
* 1 Month Libor+4.00% Class B-1 Certificates rated Baa2, on
review for possible downgrade
* 1 Month Libor+7.25% Class B-2 Certificates rated Ba3, on
review for possible downgrade
The manufactured housing collateral was originated by GreenPoint
Financial Corp. In January 2002, GreenPoint announced that it
would discontinue originating contracts to buyers of manufactured
houses. As a part of its exit strategy, GreenPoint sold to Lehman
ABS Corporation approximately $114 million of manufactured housing
loans, which are backing the certificates in this securitization.
GreenPoint Credit, LLC, services the manufactured housing
contracts in the securitized pool. Wells Fargo Bank Minnesota,
National Association is the backup servicer for the
securitization.
MEDIACOM COMMS: S&P Puts BB Credit Rating on Negative CreditWatch
-----------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on cable TV
system operator Mediacom Communications Corp. (including the 'BB'
corporate credit rating) and subsidiaries on CreditWatch with
negative implications.
"The action is based on concerns about the company's weakened
business profile, reflected by a 4.4% year-over-year loss of basic
video subscribers as of June 30, 2004," said Standard & Poor's
credit analyst Eric Geil. "Customer erosion stems from rising
availability of direct-to-home -- DTH -- satellite-delivered local
broadcast TV channels, which reach 89% of Mediacom's homes passed,
up from 62% at year-end 2003 and 15% in the latter part of 2002."
Mediacom's credit measures are less supportive of the ratings
given rising competition. Increased promotional and subscriber
retention efforts, which include service discounts, may weigh on
profitability in the near term. Longer-term results of these
initiatives are uncertain because customer churn could rise after
discounts expire. These factors could stall credit improvement.
High-speed data has been an important growth driver, but revenue
increases could decelerate because of maturing demand and rising
competition from local phone companies jointly selling bundled
data, voice, and video services with DTH companies. Mediacom's
recent introduction of a lower-priced, lower-speed data service
may suggest limited further growth potential for the full-priced
service, despite the company's industry-lagging 12% penetration of
data-capable homes. Customer resistance to high-speed data could
stem from lower income levels in the company's franchise areas
than in larger markets. Internet-based phone service should
improve Mediacom's competitive position when the company launches
it in 2005, but phone cash flow will be initially limited by
start-up costs and related capital spending.
Standard & Poor's will resolve the CreditWatch listing after
reviewing Mediacom's operating and financial plans. Any potential
downgrade of the corporate credit rating would be limited to one
notch.
MEDICAL DISCOVERIES: Eliminates Additional $540,000 Secured Debt
----------------------------------------------------------------
As a result of several negotiated transactions, Medical
Discoveries, Inc., (OTC Bulletin Board: MLSC) was able to
eliminate approximately $540,000 of secured debt from its balance
sheet. The transactions converted secured promissory notes to
common stock, in the original principal amounts of $387,500 plus
accrued interest.
"We are pleased with our progress at carrying out our 2004 goal of
reducing the liabilities on the balance sheet," said President &
Chief Executive Officer Judy M. Robinett. "We are continuing to
reduce our leverage, streamline our capital structure and advance
our proprietary drug MDI-P through preclinical development toward
an IND."
About the Company
Formed in 1991, Medical Discoveries, Inc., is a publicly traded
(OTC Bulletin Board: MLSC) development-stage biopharmaceutical
research company (as defined in SFAS No. 7) engaged in the
research, development and validation of its patented anti-
infective technology. MDI's electrolyzed solution of free
radicals represents a novel approach to treating its initial
target indication, HIV.
At June 30, 2004, Medical Discoveries, Inc.'s balance sheet showed
a $3,455,665 stockholders' deficit, compared to a $3,430,816
deficit at December 31, 2003.
METALLURG INC: S&P Withdraws Junk Ratings at Company's Request
--------------------------------------------------------------
Standard & Poor's Rating Services withdrew its ratings on
Metallurg, Inc., and its parent Metallurg Holdings Inc. at the
company's request.
As reported in the Troubled Company Reporter on August 24, 2004,
Standard & Poor's Rating Services raised its corporate credit
rating on New York, New York-based Metallurg, Inc., and its parent
Metallurg Holdings, Inc., to 'CCC' from 'D'. At the same time,
Standard & Poor's raised its ratings on Metallurg's 11% senior
unsecured notes due 2007 to 'CC' from 'D' and Metallurg Holdings'
12.75% senior discount notes due 2008 to 'CC' from 'D'. The
outlook is negative.
The upgrade follows the recent $1.5 million interest payment made
by Metallurg Holdings to public holders of its 12.75% senior
discount notes due 2008 within the 30-day grace period provided
under the bond indenture, and the refinancing of Metallurg's
credit facility. The new credit facility consists of a $21
million letter of credit facility and a $10 million term loan at
Metallurg and a $1.7 million term loan at Metallurg Holdings, all
maturing on Aug. 31, 2007. The term loan at Metallurg Holdings
was used to help make an interest payment on its 12.75% notes.
"The ratings reflect an onerous debt burden, limited liquidity,
and dependence on favorable industry conditions," said Standard &
Poor's credit analyst Dominick D'Ascoli.
Metallurg produces and markets metal alloys used by manufacturers
of steel, aluminum, and superalloys from production facilities
located in the U.S., U.K., and Brazil. The company's poor
financial condition resulted from high financial leverage and a
downturn in its end markets, including steel, aluminum, and
aerospace.
MICROTEC ENTERPRISES: Lenders Agree to Forbear Until Oct. 29
------------------------------------------------------------
Microtec Enterprises, Inc., obtained from its secured lenders a
forebearance of the payment of its existing credit facilities
until October 29, 2004. This forebearance has been obtained in
the context of the negotiation of the proposal announced on
August 20, 2004.
It may be necessary for the company to require from its creditors,
an extension of the forebearance beyond October 29, 2004 in order
to be able to close that transaction. There can be no assurance as
to the final outcome of these negotiations and the company's
ability to obtain an additional extension of the
forebearance.
Solidly established in Canada, Microtec Enterprises, Inc.,
provides a wide range of security and home automation services
that ensure the protection and well-being of its residential and
commercial customers. The Company is building on its strong
position in the industry by developing new products and services,
expanding its subscriber base, and creating strategic alliances.
* * *
As reported in the Troubled Company Reporter on August 12, 2004,
Microtec has pursued for many months various initiatives to reduce
its debt and once again have the necessary leeway to maintain
sustained growth.
Last week, the company received a $15.5 million equity offer,
which, in the management opinion, was meeting the main initial
objectives. This proposal was presented to Microtec's lenders but
didn't received their unanimous support. Microtec's management is
also looking at an alternative proposal.
Microtec's bank credits having matured on August 5th, the overall
debt of Microtec is now payable. The company pursues discussions
with its lenders for a delay in the repayment of its credits in
order to be able to conclude its recapitalization.
There can be no assurance as to the final outcome of these
negotiations and the company's ability to implement this new
capital structure.
At March 31, 2004, borrowings under the Company's revolving term
loan and swing line facilities was $50,358,000.
The Company indicated that its ability to continue as a going
concern is dependent on, amongst other things, the successful
completion of negotiations towards the completion of the
refinancing plan and the continued financial support of existing
secured creditors during the contemplated refinancing operation.
MIRANT: Gets Court Nod to Pay John Ragan $292,912 Separation Pay
----------------------------------------------------------------
From September 2003 through the present, John W. Ragan has served
as Senior Vice President and Chief Executive Officer of Mirant's
International Operations. In that role, Mr. Ragan had profit-
and-loss responsibility for all of Mirant's assets and investments
in the Philippines and the Caribbean. In addition, Mr. Ragan was
a member of Mirant's Management Council, which sets corporate
policy and directs the company's overall strategy. Prior to that
time, Mr. Ragan served in a variety of positions with the Debtors
since 1996.
To recall, the U.S. Bankruptcy Court for the Northern District of
Texas instructed that severance for members of the Management
Council should be presented and reviewed on a case-by-case basis.
Although Mr. Ragan has provided the Debtors with valuable services
and provided dedicated service to Mirant, as part of the Debtors'
reorganizing and streamlining of the corporate structure, Robin E.
Phelan, Esq., at Haynes and Boone, LLP, in Dallas, Texas, tells
the Court that Mr. Ragan's services are no longer necessary to the
Debtors.
Because of Mr. Ragan's dedicated service, Mirant Corporation and
its debtor-affiliates believe that it is appropriate to pay Mr.
Ragan $292,912 as severance, which is equivalent to nine months
salary -- $232,500 -- and the value of his prepetition non-
qualified benefits --$60,412. In exchange for the Severance
Payment, Mr. Ragan will be required to sign a release and waiver
of any and all claims that he might hold or be entitled to assert
against the Debtors; provided that he will not be required to
waive claims under his Retention Agreement or claims for
indemnification and claims covered by the Debtors' Directors and
Officers Insurance Policy. Upon receipt of the Severance Payment,
Mr. Ragan will be deemed to have waived any right to treatment as
an administrative claim any claims arising under his Retention
Agreement.
The Debtors believe that the Severance Payment is modest in
comparison to payments regularly received by senior executives of
multinational corporations similar to Mirant and substantially
similar to the separation payments that the Debtors have provided
to other similarly situated employees.
Accordingly, the Debtors sought and obtained the Court's authority
to release Mr. Ragan severance payment.
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 Nos. 39 & 42; Bankruptcy Creditors' Service, Inc., 215/945-
7000)
MISSISSIPPI CHEMICAL: Files Amended Plan of Reorganization
----------------------------------------------------------
Mississippi Chemical Corporation (OTC Bulletin Board: MSPIQ) filed
an amended plan of reorganization with the U.S. Bankruptcy Court
for the Southern District of Mississippi. Subject to court
approval, the company's amended plan implements the matters
described in the August 9, 2004, press release announcing the
proposed transaction for the sale of the company's nitrogen
operations to Terra Industries Inc. The amended plan also
includes separate treatment of the company's ongoing phosphate
business and the companies that formerly operated the company's
potash business, and facilitates the separation of those
businesses from Mississippi Chemical prior to the closing of the
Terra transaction.
For details of the company's amended plan of reorganization, a
copy of the plan is available at http://www.bmccorp.net/misschem
The company intends to file the related disclosure statements with
the court by September 10, 2004.
Headquartered in Yazoo City, Mississippi, Mississippi Chemical
Corporation produces nitrogen and phosphorus products used as crop
nutrients and in industrial applications. Production facilities
are located in Mississippi, Louisiana, and through Point Lisas
Nitrogen Limited, in The Republic of Trinidad and Tobago. On May
15, 2003, Mississippi Chemical Corporation, together with its
domestic subsidiaries, filed voluntary petitions seeking
reorganization under Chapter 11 of the U.S. Bankruptcy Code
(Bankr. S. Miss. Case No. No.: 03-02984). James W. O'Mara, Esq.,
and Doug Noble, Esq., at Phelps Dunbar, LLP, represent the Debtors
in their restructuring efforts. When the Debtors filed for
protection from its creditors, they listed $552,934,000 in assets
and $462,496,000 in debts.
NASH FINCH: Fitch Affirms B+ Bank Debt & B- Sr. Sub. Debt Ratings
-----------------------------------------------------------------
Fitch Ratings changed its Rating Outlook on Nash Finch Company to
Stable from Negative. The senior secured bank credit facility
rating of 'B+' and the subordinated notes rating of 'B-' are
affirmed. Approximately $320 million of debt is affected.
The change in Rating Outlook was prompted by the company's
turnaround in operating and financial strategies. Nash Finch
announced in May that it would close over 20 underperforming
stores, several open just one year and discontinue the roll out of
2 new store concepts (Avanza and Buy n Save). This decision was
related to operating in an intensely competitive environment and
high costs associated with operating in new markets. As a result,
capital expenditures are expected to decline substantially from
previously anticipated levels and remain in line with historical
amounts.
With a reduction in store spending, Nash Finch's focus is now on
debt retirement. Through the first half of 2004 the company
retired $60 million and Fitch anticipates further debt retirement
for the remainder of the year. As such, the company's credit
ratios have improved with total adjusted debt/EBITDAR now 3.6
times (x) for the last twelve months ended June 2004 vs. 4.3x for
FY 2002 and EBITDAR/total interest plus rents of 2.9x vs. 2.7x for
the same time periods.
Going forward, Fitch will be focusing on the company's ability to
improve cash flow, reduce long-term debt and develop its wholesale
business, roughly 50% of company sales. The company is developing
opportunities to garner new business outside of its traditional
independent retail base.
Risks continue to be a highly competitive operating environment,
less financially stable customer base and potential for
acquisitions.
Nash Finch is a food wholesale company supplying products to
independent supermarkets and military bases in approximately 30
states. The company owns and operates approximately 85 retail
supermarkets throughout the Midwest.
NATIONAL CENTURY: CSFB Appealing Court Order on Rule 2004 Exam
--------------------------------------------------------------
Credit Suisse First Boston, LLC, informs Judge Calhoun of the U.S.
Bankruptcy Court for the Southern District of Ohio that it will
take an appeal of the Bankruptcy Court Order authorizing the
Unencumbered Asset Trust to conduct its second round of Rule 2004
discovery to the United States District Court for the Southern
District of Ohio, Eastern Division.
As reported in the Troubled Company Reporter on September 2, 2004,
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 COAL: Pays $5.5 Mil for Robert Clear Coal's Mining Rights
------------------------------------------------------------------
National Coal Corporation, a wholly-owned subsidiary of National
Coal Corp. (OTCBB:NLCP), has signed an agreement to purchase the
mining rights and permits on 7,000 acres of land from Robert Clear
Coal Corporation, a coal mining company located in the Elk Valley
area of Eastern Tennessee. Consummation of the transaction is
subject to customary closing conditions. National Coal expects to
close the transaction within 60 days.
Upon the closing of the transaction, National will replace $3.9
million of the seller's reclamation and other bonds and will also
acquire all leases, permits and mining equipment for approximately
$5.5 million, plus the assumption of some current liabilities.
National expects to commence mining operations on all approved and
permitted sites immediately upon close of this transaction. When
fully operational, the mines are expected to generate more than
40,000 tons of coal per month.
Reclamation work currently associated with the site, as well as
all future mining operations, will be guided by the Company's
environmentalist to ensure that all reclamation and mining is
performed in accordance with National's high standards.
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.
OWENS CORNING: Court Okays Comm.'s Limited Retention of Dr. Churg
-----------------------------------------------------------------
At the May 18 hearing on the application of the Official Committee
of Unsecured Creditors of the chapter 11 cases of Owens Corning
and its debtor-affiliates, Jane S. Parver, Esq., at Kaye Scholer,
LLP, in New York, clarifies that James J. McMonagle, as Legal
Representative for Future Asbestos Claimants, does not object to
the retention of Dr. Andrew M. Churg as the Committee's asbestos
medical advisor in connection with the claims estimation.
However, the Futures Representative objects to the Commercial
Committee's use of "the testimony by the doctors and services
provided by the doctors with respect to, again, developing or
criticizing the claim procedure in the excessive trust." The
Commercial Committee, according to Ms. Paver, lacks standing "once
the buckets have been set up to provide testimony or criticism or
anything else with respect to what the excessive claimants have
negotiated."
On the Commercial Committee's behalf, Stephen H. Case, Esq., at
Davis Polk & Wardwell, in New York, insists that there might be
medical criteria in the trust distribution scheme about who has
what symptoms that make them entitled to money. Mr. Case points
out that, pending the Commercial Committee's request for an
Asbestos Claims Bar Date, present asbestos claim holders cannot
vote or recover under the Plan unless they file claims. In this
regard, the Commercial Committee is entitled to medical advice
about whether it has basis to object to those asbestos claims or
the way they are treated in the Plan.
"We're not asking physicians for advice about funding," Mr. Case
says.
Court Finds Retention Premature
Since no Asbestos Claims Bar Date has been set, Judge Fitzgerald
of the U.S. Bankruptcy Court for the District of Delaware rules
that to the extent Dr. Churg is to provide services regarding
medical criteria which will be set forth in the trust distribution
procedures in connection with potential objections to present
asbestos personal injury claims, the Commercial Committee's
application is premature. Accordingly, Judge Fitzgerald denies
Dr. Churg's retention for services beyond estimation, without
prejudice in the event that an Asbestos Claims Bar Date is set.
Judge Fitzgerald also notes that she would not approve the
Commercial Committee's Application at the expense of the estates'
funds. "If the committee chooses to use these folks at their own
dime for that, that's up to them, but this estate will not be held
responsible for those services," Judge Fitzgerald says.
The Court directs Stephen H. Case, Esq., at Davis Polk & Wardwell,
in New York, the Committee's counsel, to circulate a proposed
order to reflect the Court's ruling.
Futures Representative Objects to Proposed Order
James J. McMonagle, as Legal Representative for Future Asbestos
Claimants, observes that the Commercial Committee's proposed order
does not state that:
-- any testimony to be provided by an expert should be clearly
limited to the services approved by the Order; and
-- the denial of Dr. Churg's services beyond estimation is
without prejudice to renewal only after a Claims Bar Date
is set for present asbestos personal injury claims.
The Futures Representative wants the Commercial Claimants'
proposed order to address these concerns.
As reported in the Troubled Company Reporter on March 16, 2004, on
January 13, 2004, the Committee selected Dr. Andrew M. Churg to
provide them with asbestos medical consulting services during the
pendency of these Chapter 11 cases. The Commercial Committee
selected Dr. Churg as an asbestos medical consultant because of
his extensive and diverse experience, knowledge and reputation in
the field of pathology, especially with regard to asbestos-related
illness, and because the Commercial Committee believes that Dr.
Churg is well-qualified to provide the asbestos medical consulting
services and expertise that are required by the Commercial
Committee in these Chapter 11 cases. Dr. Churg's experience
includes extensive research of lung-related diseases and
mesothelioma. Dr. Churg has written numerous medical journal
articles and books regarding the pathology of asbestos related
disease.
The Commercial Committee believes that Dr. Churg's services are
both necessary and appropriate and will assist them with
evaluating and responding to the plan of reorganization, including
formulating and developing an estimate of future asbestos-related
injury claims and the appropriate medical standards for evaluating
the claims.
Accordingly, the Commercial Committee seeks the Court's permission
to retain Dr. Churg as an asbestos medical consultant, nunc pro
tunc to January 13, 2004, to provide expert services regarding
exposure to, identification of, and treatment for asbestos-related
injuries.
As consultant, Dr. Churg will be:
(1) providing advice with respect to the pathology of
asbestos-related illness;
(2) assisting in the development of medical standards to be
used in claims procedures in any future trust;
(3) assisting the Commercial Committee's counsel in preparing
for expert depositions;
(4) testifying on behalf of the Commercial Committee, if
necessary; and
(5) performing any other necessary services as the Commercial
Committee or the Commercial Committee's counsel may
request from time to time with respect to any asbestos-
related issue.
Headquartered in Toledo, Ohio, Owens Corning --
http://www.owenscorning.com/-- manufactures fiberglass
insulation, roofing materials, vinyl windows and siding, patio
doors, rain gutters and downspouts. The Company filed for chapter
11 protection on October 5, 2000 (Bankr. Del. Case. No. 00-03837).
Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meagher & Flom
represents the Debtors in their restructuring efforts. At
June 30, 2004, the Company's balance sheet shows $7.3 billion in
assets and a $4.3 billion stockholders' deficit. (Owens Corning
Bankruptcy News, Issue No. 82 Bankruptcy Creditors' Service, Inc.,
215/945-7000)
PARMALAT USA: Court Extends Preliminary Injunction to Nov. 30
-------------------------------------------------------------
Judge Drain of the U.S. Bankruptcy Court for the Southern District
of New York enjoins and restrains all persons subject to the
jurisdiction of the U.S. court from commencing or continuing any
action to collect a prepetition debt against Parmalat SpA and its
affiliates and subsidiaries without obtaining permission from the
Bankruptcy Court.
Judge Drain holds that the Civil and Criminal District Court of
the City of Parma, Italy, will have exclusive jurisdiction to:
-- hear and determine any action, claim or proceeding, other
than the lawsuit commenced by the Securities and Exchange
Commission; and
-- settle all disputes which may arise out of:
(a) the construction or interpretations of the
restructuring plan filed by Parmalat before the Italian
Ministry of Productive Activities and the Court of
Parma; or
(b) any action taken or omitted to be taken by any entity
in connection with the administration of the Italian
Plan.
Judge Drain will convene a hearing on November 30, 2004 at 10:00
a.m. to consider whether to continue the terms of the Preliminary
Injunction beyond that date. Any party-in-interest, nonetheless,
may seek to terminate or limit the terms of the Preliminary
Injunction.
As reported in the Troubled Company Reporter on July 2, 2004,
Marcia L. Goldstein, Esq., at Weil, Gotshal & Manges, LLP, in New
York, appeared before Judge Drain in the United States Bankruptcy
Court for the Southern District of New York to obtain a Temporary
Restraining Order and Preliminary Injunction, enjoining and
restraining U.S. creditors from seizing the U.S. assets of
Parmalat Finanziaria SpA and 22 foreign subsidiaries and
affiliates.
Ms. Goldstein appeared on behalf of Dr. Enrico Bondi, in his
capacity as the extraordinary commissioner of Parmalat.
The Parmalat affiliates are:
(1) Parmalat SpA,
(2) Parmalat Netherlands B.V.,
(3) Parmalat Finance Corporation B.V.,
(4) Parmalat Capital Netherlands B.V.,
(5) Dairies Holding International B.V.,
(6) Parma Food Corporation B.V.,
(7) Parmalat Soparfi S.A.,
(8) Olex S.A.,
(9) Eurolat SpA,
(10) Lactis SpA,
(11) Coloniale SpA,
(12) Parmatour SpA,
(13) Hit SpA,
(14) Hit International SpA,
(15) Nuova Holding, SpA,
(16) Contal S.r.l.,
(17) Geslat S.r.l.,
(18) Newco S.r.l.,
(19) Eliair S.r.l.,
(20) Centro Latte Centallo S.r.l.,
(21) Panna Elena S.r.l., and
(22) Parmengineering S.r.l.
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)
PLY GEM: S&P Assigns B+ Rating to $126 Million Senior Bank Loan
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B+' bank loan
rating and its recovery rating of '3' to Kearney, Missouri-based
Ply Gem Industries Inc.'s $126 million of incremental senior
secured bank credit facilities.
The 'B+' rating is the same as the corporate credit rating; this
and the '3' recovery rating indicate that bank lenders can expect
meaningful (50% to 80%) recovery of principal in the event of a
default. This addition to the existing $255 million facility is
comprised of a $111 million term loan C due 2011 and a $15 million
add-on to the company's existing $55 million revolving credit
facility due 2009.
At the same time, Standard & Poor's assigned its 'B-' subordinated
debt rating to Ply Gem's $135 million add-on to the existing
$225 million of 9% subordinated notes due 2012. The notes will be
issued under Rule 144a with registration rights. All other
ratings were affirmed. The outlook is stable.
"The ratings on [Ply Gem] reflect very aggressive debt leverage,
customer concentration risks, exposure to volatile raw-material
costs, and cyclical end markets," said Standard & Poor's credit
analyst Pamela Rice. These negatives overshadow the company's
solid position in favorable exterior building products markets,
healthy operating margins, and low capital spending requirements.
Proceeds from the new term loan, the add-on subordinated notes,
$34 million of equity securities, plus $40 million from other
sources of cash were used to finance PGI's $320 million
acquisition of MW Manufacturers, Inc., from Investcorp. Following
this transaction, Ply Gem's debt, including capitalized operating
leases, is about $730 million, with debt to pro forma EBITDA in
the mid-5x area, similar to the pro forma leverage following PGI's
sale to equity sponsor, Caxton-Iseman Capital, Inc., in
February 2004.
MW, which manufactures vinyl, clad-wood, vinyl wood, wood, and
composite windows and patio doors, had about $250 million in net
sales for the 12 months ended June 30, 2004. Standard & Poor's
believes the acquisition should benefit PGI's business profile by
broadening its revenue base and geographic diversity, as well as
providing cross-selling opportunities. The transaction should
also enable PGI to capitalize on increasing demand for vinyl
window and door products in the regions currently served by MW.
Ply Gem's products primarily are used in residential repair and
remodeling and new construction markets, with sales pro forma for
the MW transaction split about equally to each segment. The
company focuses on maintenance-free vinyl products and operates
through three divisions:
* siding and accessories;
* windows and doors; and
* fencing, railing, and decking.
QUESTERRE: 90%+ of Creditors Approves CCAA Plans of Arrangement
---------------------------------------------------------------
At meetings of the unsecured creditors of Questerre Energy
Corporation (QEC:TSX) and its wholly owned subsidiary, Questerre
Beaver River, Inc., held on August 31, 2004, the proposed plans of
arrangement were voted on by creditors representing $8.9 million
or 95% of the total claims outstanding. Excluding creditors that
had filed a claim against both companies, 100% of the creditors of
Questerre and 98% of the creditors of Questerre Beaver by dollar
value approved the respective plans. Including the A-5 Claimants,
the Questerre Plan was approved by 91% of its voting creditors
representing 71% of the Questerre claims by dollar value.
Including the A-5 Claimants, the Questerre Beaver Plan was
approved by 97% of its voting creditors representing 82% of the
Questerre Beaver claims by dollar value.
Questerre and Questerre Beaver intend to emerge from CCAA
protection before September 30, 2004 following a Court sanction
hearing that will be scheduled before September 10, 2004.
Questerre Energy Corporation is a Calgary-based independent
resource company actively engaged in the exploration for and
development, production and acquisition of large-scale natural gas
projects in Canada.
* * *
As reported in the Troubled Company Reporter on August 11, 2004,
pursuant to the plans of arrangement proposed by Questerre Energy
and Questerre Beaver, unsecured creditors will have the option of
accepting a cash payment equal in value to the lesser of their
entire claim or $2,000. Alternatively, they can elect to receive
a cash dividend of $0.05 plus one Common Share of Questerre Energy
for each dollar of their claim. The Common Shares of Questerre
Energy will be subject to a hold period and released in two equal
installments on the four and eight-month anniversary of the date
the plans receive final Court approval.
Questerre Energy has been made aware that some unsecured creditors
entitled to receive Common Shares under the plans of arrangement
wish to immediately dispose of these Common Shares for cash. To
facilitate this disposition, Questerre Energy has arranged for a
liquidity option. Unsecured creditors that elect to participate
in the liquidity option will receive $0.05 for each dollar of
their claim, and will also receive an additional $0.07 for each
dollar of their claim in exchange for forgoing each Common Share
of Questerre Energy they would have otherwise received. This
would result in a cash settlement of $0.12 per dollar of claim
outstanding - an amount that exceeds the maximum liquidation value
unsecured creditors would receive as estimated by the Monitor,
Ernst & Young Inc.
The Common Shares that would otherwise have been issued to these
unsecured creditors will be issued to Terrenex Acquisition
Corporation pursuant to the terms of a Liquidity Option Agreement.
Under the Liquidity Option Agreement, Terrenex will establish a
fund to finance the liquidity option up to a maximum of $668,500,
representing the maximum number of Common Shares of Questerre
Energy to be issued under the plans of arrangement multiplied by
$0.07. In consideration for providing this liquidity option,
Terrenex will receive 300,000 Common Shares of Questerre Energy.
It will also be issued Common Shares of Questerre Energy that, but
for the election of the unsecured creditors to participate in the
liquidity option, would have been issued to the creditors of
Questerre Beaver and Questerre Energy. These Common Shares that
would be issued to Terrenex, will be subject to the same hold
obligations were they issued to the creditors of Questerre Beaver
and Questerre Energy.
Terrenex is a public investment company listed on the TSX Venture
Exchange. Terrenex, directly and indirectly, holds 9,522,421
Common Shares of Questerre Energy, representing approximately 21%
of the issued and outstanding capital. All the Directors of
Terrenex serve as directors or officers of Questerre.
QUESTERRE: Names David Mallory as CFO & Jason D'Silva VP
--------------------------------------------------------
Questerre Energy Corporation (QEC:TSX) appointed David Mallory as
Chief Financial Officer and Jason D'Silva as Vice President,
Finance and Treasurer. Mr. Mallory was formerly Chief Financial
Officer of Flowing Energy Corporation, a junior exploration and
production company, from September 2000 to April 2004. Mr.
Mallory is a Director of Questerre and has served as Chief
Financial Officer of the Company from November 2000 to August
2004. Mr. D'Silva has served as Treasurer since May 2003. The
Company also reported that it has accepted the resignation of
Jackie Cugnet as Chief Financial Officer, effective
September 1, 2004. Questerre would like to thank Ms. Cugnet for
her contribution over the last year and wish her success in her
future endeavors.
Questerre Energy Corporation is a Calgary-based independent
resource company actively engaged in the exploration for and
development, production and acquisition of large-scale natural gas
projects in Canada.
At meetings of the unsecured creditors of Questerre Energy
Corporation (QEC:TSX) and its wholly owned subsidiary, Questerre
Beaver River, Inc., held on August 31, 2004, the proposed CCAA
plans of arrangement were voted on by creditors representing $8.9
million or 95% of the total claims outstanding.
Questerre and its wholly owned subsidiary, Questerre Beaver River,
Inc., intend to emerge from CCAA protection before September 30,
2004 following a Court sanction hearing that will be scheduled
before September 10, 2004.
QUESTERRE ENERGY: Implements Employee Retention Plan
----------------------------------------------------
Questerre Energy Corporation (QEC:TSX) implemented an employee
retention plan to recognize and reward the efforts of employees
during the restructuring process. Subject to the successful
completion of the restructuring, the Company proposes to issue
850,000 Common Shares and $75,000 in cash to employees. The
Common Shares will be subject to a contractual escrow for a
minimum of four months and will be released on the achievement of
corporate objectives as determined by the Board of Directors.
Questerre Energy Corporation is a Calgary-based independent
resource company actively engaged in the exploration for and
development, production and acquisition of large-scale natural gas
projects in Canada.
At meetings of the unsecured creditors of Questerre Energy
Corporation (QEC:TSX) and its wholly owned subsidiary, Questerre
Beaver River, Inc., held on August 31, 2004, the CCAA proposed
plans of arrangement were voted on by creditors representing $8.9
million or 95% of the total claims outstanding.
Questerre and and its wholly owned subsidiary, Questerre Beaver
River, Inc., intend to emerge from CCAA protection before
September 30, 2004 following a Court sanction hearing that will be
scheduled before September 10, 2004.
R.H. DONNELLEY: Completes $1.4B Directory Publishing Acquisition
----------------------------------------------------------------
R.H. Donnelley Corporation (NYSE: RHD) completed the acquisition
of SBC Communications Inc.'s (NYSE: SBC) directory publishing
business in Illinois and Northwest Indiana, for $1.41 billion in
cash, after working capital adjustments and the settlement of a
$30 million liquidation preference related to the DonTech
partnership.
As part of the transaction, RHD has also acquired SBC's interest
in DonTech, the partnership for local sales into the Illinois and
Northwest Indiana SBC yellow pages. Under the terms of the
transaction, RHD received a 50-year exclusive license to publish
SBC-branded directories in Illinois and Northwest Indiana. RHD
and SBC also signed a separate five-year agreement under which RHD
will sell local advertising onto SMARTpages.com in Illinois and
Northwest Indiana. RHD now controls and publishes 389 yellow page
directories serving 260,000 local and national advertisers.
"This transaction completes our transformation into a fully
integrated yellow pages publishing and directional media company
and gives us control over all of our assets," said David C.
Swanson, RHD's Chairman and Chief Executive Officer. "As owner-
operators, we will be able to fully leverage our experienced
management team to direct all aspects of our business, and expect
to capitalize on market opportunities in Illinois using the same
business processes that have succeeded in our Sprint operations."
The acquired business will be integrated into Donnelley Media
alongside the former Sprint Publishing and Advertising business
acquired last year. Donnelley Media is led by industry veteran
Peter J. McDonald, who also directed the integration of the Sprint
directory publishing business. Prior to re-joining RHD in 2002,
McDonald was President of SBC Directory Operations and also served
as President of DonTech, RHD's partnership in Illinois with SBC,
in the mid-1990s.
About R.H. Donnelley
R.H. Donnelley is a leading yellow pages publisher and directional
media company. Directional media is where consumers go to find
who sells the goods and services they are ready to purchase. R.H.
Donnelley publishes approximately 260 directories under the Sprint
Yellow Pages(R) brand in 18 states, with major markets including
Las Vegas, Orlando, and Lee County, Florida. The Company also
offers online city guides and search web sites in these major
markets under the Best Red Yellow Pages brand at
http://www.bestredyp.com/ In addition, R.H. Donnelley also
publishes 129 SBC directories under the SBC(R) Yellow Pages brand
in Illinois and Northwest Indiana. R.H. Donnelley serves more
than 260,000 local and national advertisers. For more
information, visit R.H. Donnelley at http://www.rhd.com/
* * *
As reported in the Troubled Company Reporter on August 12, 2004,
Standard & Poor's Ratings Services affirmed its 'BB' corporate
credit ratings on R.H. Donnelley Corp. (RHD) and its operating
subsidiary, R.H. Donnelley Inc. (RHDI), as well as RHDI's 'B+'
subordinated debt rating. In addition, Standard & Poor's placed
its 'B+' senior unsecured debt rating on RHDI on CreditWatch with
positive implications. The outlook is stable.
The ratings affirmations follow RHD's agreement to acquire SBC
Communications Inc.'s directory publishing business in Illinois
and northwest Indiana, including SBC's 50% interest in the DonTech
partnership, for $1.42 billion in cash or about 8.3x acquired 2004
EBITDA. The purchase price is after the settlement of a $30
million liquidation preference related to DonTech, which is an
existing partnership between SBC and RHD for local sales into the
Illinois and northwest Indiana SBC yellow pages. The acquisition
will be financed with an amendment and increase in RHD's existing
credit facilities. The transaction is expected to close in the
2004 third quarter, subject to regulatory approval and certain
closing conditions. RHD is expected to have about $3.4 billion of
debt outstanding following the acquisition.
The CreditWatch listing of RHDI's $325 million 8.875% senior notes
due 2010 reflects the plan that this debt will be secured ratably
with the senior secured credit facilities in connection with the
transaction. This rating will be raised to 'BB' and removed from
CreditWatch when the SBC acquisition is completed.
RCN CORP: Reorganized Debtors Valued at $1.2BB in Chapter 11 Plan
-----------------------------------------------------------------
In conjunction with the Plan, RCN Corp. and its debtor-affiliates
determined that it was necessary to estimate post-Confirmation
going concern enterprise value for the Reorganized Debtors as of
the Effective Date. Accordingly, the Debtors directed The
Blackstone Group, LP, to prepare a valuation analysis of the
Reorganized Debtors.
Blackstone estimates the Reorganized Debtors' value at the
Effective Date, including cash in excess of amounts needed to
fund the business plan, to be between $1,100,000,000 and
$1,300,000,000, with $1,200,000,000 as the midpoint value. The
long-term funded indebtedness is projected to be $480,000,000.
Taking this into consideration, the Reorganized Debtors' total
equity value is estimated to be between $620,000,000 and
$820,000,000.
The valuation does not give effect to any possible dilution of
the equity value due to the issuance of the Management Incentive
Options or the New Warrants.
Blackstone used three methodologies to derive the reorganization
value of the Reorganized Debtors:
(a) A comparison of the Reorganized Debtors and their
projected performance to how the market values comparable
companies;
(b) A comparison of the Reorganized Debtors and their
projected performance to values of comparable companies in
precedent private market acquisitions; and
(c) A calculation of the present value of the free cash flows
under the Debtors' financial projections, including an
assumption for the value of the Reorganized Debtors at the
end of the projection period.
The market-based approaches involve identifying:
-- A group of publicly traded companies whose businesses or
product lines are comparable to those of the Reorganized
Debtors as a whole or significant portions of the
Reorganized Debtors' operations; and
-- Comparable precedent private market acquisitions, and then
calculating ratios of various financial results or
statistics to the market/acquisition values of these
companies or transactions.
The ranges of ratios derived are then applied to the Reorganized
Debtors' historical and projected financial results or statistics
to derive a range of implied values.
The discounted cash flow approach involves deriving the unlevered
free cash flows that the Reorganized Debtors would generate
assuming the Projections were realized. In addition, a valuation
is assumed for the Reorganized Debtors at the end of the
Projections using a methodology consistent with the market-based
approaches -- the terminal value. These cash flows and the
terminal value are discounted to the present at the Reorganized
Debtors' estimated post-restructuring weighted average cost of
capital to determine the Reorganized Debtors' enterprise value.
In addition, a value was determined for the Reorganized Debtors'
prepetition net operating losses based on the expected
utilization of the net operating losses during and subsequent to
the Projections. The value determined for the Reorganized
Debtors' prepetition net operating losses was discounted to the
present at the Reorganized Debtors' estimated post-restructuring
weighted average cost of capital. The value was added to the
value determined from the market-based and discounted cash flow
approaches.
A value was also determined for the Reorganized Debtors' joint
venture equity ownership positions based on the valuation
techniques. The value was added to the value determined from the
market-based and discounted cash flow approaches.
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)
RCP ENTERTAINMENT: Case Summary & 7 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: R C P Entertainment, LLC
fka Mountasia
fka Funntasia
1211 Wheaton Court
Lady Lake, Florida 32162
Bankruptcy Case No.: 04-09820
Chapter 11 Petition Date: August 30, 2004
Court: Middle District of Florida (Orlando)
Judge: Arthur B. Briskman
Debtor's Counsel: William M. Reed, Esq.
William M. Reed PA
P.O. Box 120280
Clermont, FL 34712
Tel: 352-394-1194
Fax: 352-242-3886
Total Assets: $405,075
Total Debts: $2,158,261
Debtor's 7 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Margaret Kring, et. al $591,152
c/o John D. Tomlinson, Esq.
Fletcher, Clark, Tomlinson,
Fealko & Monaghan, P.C.
522 Michigan Street
Port Huron, MI 48060
Scott Demerau $571,793
[address not stated]
Capital Crossing Bank $567,496
101 Summer Street
Boston, MA 02110
Judith Demerau $358,820
[address not stated]
James R. Currier, Esq. $18,000
Funtasia of Mobile, LLC $6,000
Greenburg, Traurig $2,000
RIVERSIDE FOREST: Board Member George L. Malpass Resigns
--------------------------------------------------------
Riverside Forest Products Limited (TSX: RFP) reported the
resignation, effective immediately, of George L. Malpass from its
Board of Directors.
Mr. Malpass also advised Riverside that he has concurrently
resigned as a director of International Forest Products Limited,
which has notified Riverside that it could have an interest in
considering a potential transaction involving Riverside. Mr.
Malpass resigned to avoid becoming subject to conflicting
obligations to both Riverside and Interfor.
Gordon W. Steele, Riverside Chairman, President and Chief
Executive Officer, said, "We would like to thank George for his
invaluable service to Riverside and its Board. We understand and
respect his decision to step down from the Board at this time."
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.
ROBECO CBO: S&P Puts Low-B Rating Classes D & E on Positive Watch
-----------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on the class
B, C, D, and E notes issued by Robeco CBO I Ltd., a high-yield
arbitrage CBO transaction managed by Robeco Institutional Asset
Management B.V., on CreditWatch with positive implications. At
the same time, the rating on the class A notes is affirmed.
The CreditWatch placement reflects factors that have positively
affected the credit enhancement available to support the notes
since the last rating action on Nov. 12, 2002. These factors
mainly include an increase in the level of overcollateralization
available to support the rated notes.
Standard & Poor's will be reviewing the results of current cash
flow runs generated for Robeco CBO I Ltd. to determine the level
of future defaults the rated tranches can withstand under various
stressed default timing and interest rate scenarios, while still
paying all of the rated interest and principal due on the notes.
The results of these cash flow runs will be compared with the
projected default performance of the transaction's current
collateral pool to determine whether the ratings assigned are
commensurate with the level of credit enhancement currently
available.
Ratings Placed on Creditwatch Positive
Robeco CBO I Ltd.
Rating
To From
-- ----
Class B AA/Watch Pos AA
Class C BBB+/Watch Pos BBB+
Class D BB/Watch Pos BB
Class E B/Watch Pos B
Rating Affirmed
Robeco CBO I Ltd.
Rating
------
Class A AAA
Transaction Information
Issuer: Robeco CBO I Ltd.
Co-issuer: Robeco CBO (Delaware) I Corp.
Current manager: Robeco Institutional Asset Management B.V.
Underwriter: JP Morgan Securities
Trustee: JPMorganChase Bank
Transaction type: Arbitrage Corporate HY CBO
Tranche Initial Last Current
Information Report Action Action
----------- ------- ------ -------
Date (MM/YYYY) 08/2000 11/2002 08/2004
Cl. A note rtg. AAA AAA AAA
Cl. A note bal. $180.00mm $167.02mm $130.75mm
Cl. B note rtg. AA AA AA/Watch Pos
Cl. B note bal. $25.50mm $25.50mm $25.50mm
Cl. A/B par value test 148.1% 141.3% 153.2%
Cl. A/B par value min. 132.0% 132.0% 132.0%
Cl. C note rtg. A- BBB+ BBB+/Watch Pos
Cl. C note bal. $45.00mm $45.00mm $45.00mm
Cl. C par value test 121.5% 114.5% 119.0%
Cl. C par value min. 113.0% 113.0% 113.0%
Cl. D note rtg. BBB BB BB/Watch Pos
Cl. D note bal. $9.00mm $9.00mm $9.00mm
Cl. D par value test 117.3% 110.3% 113.9%
Cl. D par value min. 111.0% 111.0% 111.0%
Cl. E note rtg. BB B B/Watch Pos
Cl. E note bal. $7.50mm $7.50mm $7.50mm
Cl. E par value test 114.0% 107.1% 109.9%
Cl. E par value min. 109.1% 109.1% 109.1%
Portfolio Benchmarks Current
-------------------- -------
S&P wtd. avg. rtg. (excl. defaulted) B+
S&P default measure (excl. defaulted) 3.33%
S&P variability measure (excl. defaulted) 2.43%
S&P correlation measure (excl. defaulted) 1.12%
Wtd. avg. coupon (excl. defaulted) 9.30%
Oblig. rtd. 'BBB-' and above 14.26%
Oblig. rtd. 'BB-' and above 43.69%
Oblig. rtd. 'B-' and above 92.51%
Oblig. rtd. in 'CCC' range 3.89%
Oblig. rtd. 'CC', 'SD', or 'D' 3.59%
Oblig. on Watch Neg (excl. defaulted) 9.31%
S&P Rated Current
O/C (ROC) Rating Action
--------- -------------
Cl. A notes 139.50% (AAA)
Cl. B notes 129.51% (AA/Watch Pos)
Cl. C notes 105.73% (BBB+/Watch Pos)
Cl. D notes 106.50% (BB/Watch Pos)
Cl. E notes 104.08% (B/Watch Pos)
For information on Standard & Poor's CDO Portfolio Benchmarks and
Rated Overcollateralization -- ROC -- Statistic, see "ROC Report
August 2004," published on RatingsDirect, Standard & Poor's Web-
based credit analysis system, and on the Standard & Poor's Web
site at http://www.standardandpoors.com/ Go to "Credit Ratings,"
under "Browse by Business Line" choose "Structured Finance," and
under Commentary & News click on "More" and scroll down to the
desired articles.
SECURED DIVERSIFIED: Selling 1.4MM Shares to London Investment Co.
------------------------------------------------------------------
Secured Diversified Investment, LTD. (OTCBB:SCDI) has signed an
agreement with a private investment company in London, England,
for the purchase by the investment company of 1,400,000 shares of
Secured Diversified common shares in exchange for shares of the
investment company.
The investment company will apply for its shares to be admitted to
trading on the London Stock Exchange as an investment trust. The
investment company has been established specifically to invest in
U.S. micro cap companies with long term growth potential. The
investment company expects its shares to be trading on the London
Stock Exchange by September 30, 2004.
"This investment will enhance our balance sheet, increase our
access to cash and also improve our ability to acquire additional
properties," said Clifford L. Strand, President of Secured
Diversified Investment.
The investment company has entered into a "lock-up" agreement with
Secured Diversified Investment pursuant to which it has agreed not
to trade Secured Diversified shares it will receive as a result of
this transaction for a period of one year from the closing date.
Secured Diversified Investment has agreed to file a registration
statement with the SEC allowing the public resale of the common
shares by the investment company, commencing at the expiration of
the "lock-up" period. In full payment for the shares of Secured
Diversified, the investment company will issue to Secured
Diversified unrestricted ordinary at a price per share valued at
one pound sterling.
Thirty percent of the investment company's shares will be held in
escrow for one year following their issuance to protect the
investment company against a decline in the price of the Secured
Diversified Investment common stock. For each one percent decline
in the closing price of Secured Diversified Investment common
stock, the investment company shall be entitled to receive one
percent of the escrowed shares. The remaining shares held in
escrow shall be released to Secured Diversified Investment in one
year from the close of the transaction. The closing of this
transaction is subject to certain contingencies, including the
listing of the investment company shares on the London Stock
Exchange on or before September 30, 2004.
About Secured Diversified Investment, LTD.
Secured Diversified Investment, LTD. is a diversified real estate
holding and financial services company. It is diverse in its
industry segment by acquiring and owning/managing office
buildings, shopping centers, hotels, apartment buildings and self
storage buildings. The company estimates that the net fair value
of its portfolio is in excess of $10 million.
The company intends to build a portfolio of income generating
assets that will be, as a whole, less sensitive to economic
downturns in any particular region of the United States or in any
particular industry. Presently, the focus is on acquiring
properties valued in the $5-20 million range.
* * *
As reported in the Troubled Company Reporter on July 29, 2004, the
Board of Directors of Secured Diversified Investment, Ltd.,
dismissed Cacciamatta Accountancy Corporation as the Company's
independent accountants. At the same time, the Board appointed
the firm of Kabani & Company, Inc., to serve as independent public
accountants of the Company for the fiscal year ending December 31,
2004.
CAC's report on the Company's consolidated financial statements
for the fiscal years ended December 31, 2003 and 2002 were
modified to include an explanatory paragraph expressing
substantial doubt about the Company's ability to continue as a
going concern.
SOLUTIA INC: Turns Over $3,218,846 to Anniston Educational Fund
---------------------------------------------------------------
Solutia, Inc., currently owns and operates a chemical
manufacturing plant encompassing 70 acres of land just west of
downtown Anniston, Alabama. The Anniston Plant was conveyed to
Solutia in 1997 by the former Monsanto Company, now known as
Pharmacia Corporation, as part of the spin-off that created
Solutia. Between 1929 and 1971, the Anniston Plant manufactured
polychlorinated biphenyls.
Subsequent to Solutia's spin-off from Monsanto, the United States
Environmental Protection Agency notified Solutia and Pharmacia of
their potential liability under the federal environmental laws for
PCB contamination at both the Anniston Plant and the sites
surrounding the Plant. The EPA also requested reimbursement for
the EPA's past and future costs of investigation and cleanup
around the Anniston Plant. The EPA also required Solutia and
Pharmacia to commence cleanup and removal of PCB contamination
from the residential properties in and around Anniston.
On March 25, 2002, the EPA filed a lawsuit under the Comprehensive
Environmental Response, Compensation and Liability Act against
Solutia and Pharmacia before the Alabama District Court. The EPA
sought:
(a) remediation of alleged PCB contamination; and
(b) reimbursement of past and future response costs incurred
or to be incurred by the EPA with respect to the Anniston
Site.
The West Anniston Educational Foundation
Solutia, Pharmacia and the EPA subsequently entered into a Consent
Decree. The Consent Decree requires the creation and funding of
the West Anniston Education Foundation "to provide special
education, tutoring, or other supplemental educational services
for the children of West Anniston that have learning disabilities
or otherwise need additional educational assistance."
The Consent Decree requires Solutia and Pharmacia to fund
$3,218,846 to the West Anniston Educational Foundation over a
12-year period. The first payment to the West Anniston
Educational Foundation, amounting to $214,221, was due
August 4, 2003, while subsequent payments are to be paid each year
thereafter every January.
The West Anniston Educational Foundation Payment
Although the Foundation Payment was due by August 4, 2003, the
Foundation had not been established at that time. As a result, on
October 3, 2003, Solutia deposited the Foundation Payment into a
segregated bank account -- Account No. 8900052015 -- at The Bank
of New York located at 48 Wall Street, in New York. On the same
day, Craig R. Branchfield, Manager of Remediation Projects at
Solutia, sent a letter to Pamela J. Langston Scully, Remedial
Project Manner at the EPA, confirming the establishment of the
Foundation Account in accordance with the Consent Decree.
While the Branchfield Letter states that the Foundation Payment
was deposited into an "escrow account for the benefit of the
Foundation," in accordance with Consent Decree, the Foundation
Account is not an irrevocable escrow account and arguably
constitutes property of Solutia's estate pursuant to Section 541
of the Bankruptcy Code. Nonetheless, Solutia intended for the
Foundation Payment to be transferred to the West Anniston
Educational Foundation at the time of deposit and that it be
divested of all interest in the deposit. Moreover, Solutia has
consistently maintained that the Foundation Payment has been paid
for the benefit of the West Anniston Educational Fund, which is
evidenced by both the Branchfield Letter and documents previously
filed with the Bankruptcy Court.
Recently, the special master who has been appointed to carry out
the terms of the Consent Decree asked Solutia to transfer the
Foundation Payment to an interest bearing account to be opened by
the claims administrator in the case of Tolbert, et al. v.
Monsanto Company, et al., Civil Action No. 01-C-1407-S. In
addition, the United States District Court for the Northern
District of Alabama required the transfer of the first installment
owing to the West Anniston Educational Foundation by
August 26, 2004.
The Foundation Payment may not be property of Solutia's Chapter 11
estate because it was set aside in a segregated account before the
Petition Date to comply with the Consent Decree. The Foundation
Payment, thus, may be subject to the imposition of a constructive
or resulting trust in favor of the West Anniston Educational
Foundation.
Even if the Foundation Payment is property of Solutia's estate,
failure to turnover the Foundation Payment could cause significant
litigation and disruption to Solutia's business. The Alabama
District Court held that the automatic stay does not apply to any
of Solutia's obligations under the Consent Decree.
In this regard, Solutia sought and obtained the Bankruptcy Court's
authority to turn over and pay the Foundation Payment for the
benefit of the West Anniston Educational Foundation in accordance
with the Consent Decree and further orders of the Alabama District
Court.
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)
STATE STREET: Creditors Must File Proofs of Claim by Dec. 27
------------------------------------------------------------
The United States Bankruptcy Court for the Northern District of
New York set December 27, 2004, as the deadline for all creditors
owed money by State Street Houses, Inc., on account of claims
arising prior to May 21, 2004, to file their proofs of claim.
Creditors must file written proofs of claim on or before the
December 27 Claims Bar Date and those forms must be delivered to:
Richard G. Zeh
Clerk of the Bankruptcy Court
Alexander Pirnie Federal Building
10 Broad Street, Room 230
Utica, New York 13502
The Bar Date applies to all non-governmental claims.
For governmental claims, the deadline to file claims is
November 27, 2004.
Headquartered in Utica, New York, State Street Houses, Inc. is a
New York Corporation and legal title holder of Kennedy Plaza
Apartments in Utica, New York. The Company and its debtor-
affiliate, filed for chapter 11 protection on May 21, 2004 (Bankr.
N.D. N.Y. Case No. 04-63672). Camille Wolnik Hill, Esq., at
Hancock & Estabrook, LLP, represents the Debtors in its
restructuring efforts. When the Debtor filed for protection from
its creditors, it listed both estimated debts and assets of over
$10 million.
STERICYCLE INC: Moody's Lifts Rating on Senior Sub. Notes to B2
---------------------------------------------------------------
Moody's Investors Service upgraded the ratings of Stericycle, Inc.
The affected debt includes:
* $50.8 million of senior subordinated notes due 2009, upgraded
to B2 from B3;
* Senior Implied Rating, upgraded to Ba3 from B1; and
* Issuer Rating, upgraded to B1 from B2.
The rating outlook remains stable.
The upgrade reflects:
* the company's improved profitability margins, and
* cash generation and debt reduction despite continued
acquisitions.
The improvement reflects the success of management directives to
increase sales penetration and multiple product sales to the
higher-margin, small account sector as well as the upgrading or
closure of lower-margin large accounts.
The upgrade also incorporates the 180 basis point improvement in
the company's EBIT return on average assets since 2002 (18% for
the twelve months ended June 30, 2004) notwithstanding a weak
balance sheet with intangible assets at 68% of total assets, and
negative, but improving, tangible equity of approximately $42
million at June 30, 2004.
The ratings continue to incorporate the company's dominant
position as the largest provider of regulated medical waste
services in the U.S. and its diversified customer base. The
ratings are constrained by the company's acquisition growth
strategy, a lack of improvement in treatment structure capacity
utilization in spite of asset write downs (between 67% and 70%
since 1999), and the modest component of revenue growth that
corresponds to base organic growth.
The stable outlook incorporates the company's improving operating
margins and limited leverage in a highly competitive industry.
Sustained improvements in organic growth, profitability, and cash
generation may affect the ratings positively. However, diversion
from the core, medical waste treatment business through
acquisition and increased leverage may negatively impact the
ratings.
The B1 rating on the guaranteed subordinated notes reflects the
effective subordination of the notes to $157 million outstanding
under a secured and guaranteed senior credit facility due 2007 and
approximately $15 million of acquisition related promissory notes.
Revenue for the six months ended June 30, 2004 increased 7.1% or
$15 million. Of this growth, about 46.5% was generated from
acquisitions less than a year old and 37.1% was generated from
equipment sales. The remainder represents organic growth, which
increased 9% for small quantity generators and declined 7% for
large quantity generators. Moody's remains concerned by the
relatively small component of revenues that represents base
internal growth.
The company's EBIT margin increased from 28% at December 31, 2003
to 28.8% for the last twelve months ended June 4, 2004. The
improvement came from the increased sales of equipment and growth
in small quantity accounts, which was somewhat offset by higher
SG&A. The improved EBIT margin and the lower interest cost on
debt contributed to an improvement in fixed charge coverage,
measured as EBIT for the last twelve months over interest plus
one-third rents. The fixed charge coverage improved to 6.7 times
for the twelve months ended June 30, 2004 from 5.6 times for the
twelve months ended December 31, 2003.
Steady improvements in cash from operations over the past few
years have allowed the company to significantly reduce debt.
Leverage, measured as the ratio of cash from operations for the
twelve months less capex to total debt, improved from 36% for the
twelve months ended December 31, 2002 to 60% for the twelve months
ended December 31, 2003. However, the trend reversed during the
six months ended June 30, 2004. Debt increased because of the
2004 financing of While Rose Environmental for $64 million. In
addition, tax payables and higher receivables led to a significant
use of working capital in the second quarter of 2004. Thus
leverage for the last twelve months ended June 30, 2004 rose to
38%. Likewise, an increase in operating leases in 2003 increased
lease adjusted leverage. Measured as total debt plus eight times
rent to EBITDAR, the company's leverage increased from 1.9 times
for the twelve months ended December 31, 2003 to 2.1 times for the
twelve months ended June 30, 2004.
The company had about $135 million of availability (not including
letters of credit) under its revolver at June 30, 2004 and it has
the ability to increase the revolver commitment by $18 million.
The company expects to utilize about $50 million of this
availability to repurchase the remaining outstanding subordinated
notes when they become callable in November 2004. The size of
future domestic or international business expansions will dictate
whether the company may fund acquisitions internally or whether
they will seek to increase the bank debt.
The company has benefited from the multiple conversions of the
initial $75 million issue of PIK preferred stock to common stock
over the past three years. The private equity sponsors sold their
common stock in January 2004 but still have representatives on the
company's board of directors.
Stericycle, Inc., based in Lake Forest, Illinois, is a leading
provider of fully integrated services for the management of
regulated medical waste. Its services include collection,
transportation, treatment, recycling, and disposal, together with
related consulting, training and education services and products.
Sales for the twelve months ended June 30, 2004 were $469 million.
TENET HEALTHCARE: Paul Hastings Advising Centinela in Transaction
-----------------------------------------------------------------
Paul, Hastings, Janofsky & Walker LLP, an international law firm,
is the principal legal advisor to the newly created Centinela
Freeman HealthSystem. Centinela Freeman HealthSystem has signed a
definitive purchase agreement to take over ownership of three
hospitals from subsidiaries of Tenet Healthcare Corporation (NYSE:
THC), including Centinela Hospital Medical Center and Daniel
Freeman Memorial Hospital in Inglewood, and Daniel Freeman
Memorial Hospital in Marina del Rey.
Centinela Freeman HealthSystem was formed to own and operate these
three hospitals as one unified system to provide continued health
services to the community. The ownership of the system will
include physicians, Los Angeles-based private investment firm
Westridge Capital, members of current hospital management, and
local community leaders.
"This is a fresh approach to community-based healthcare, and we
are thrilled that our client and Westridge made Paul Hastings part
of the Centinela Freeman HealthSystem team for this innovative
transaction," said Dan Higgins, co-chair of Paul Hastings
Healthcare Group. "We work on many complex health care
transactions, and this unique combination of community, physician,
and management participation, coupled with private equity capital,
shows that there is still room for intelligent innovation in
health care M&A. Hats off to Tenet also, as it was consistently
willing to explore new approaches, and we feel that we have
reached a win-win outcome."
Paul Hastings Mergers and Acquisitions Practice: Recently named
"M&A Law Firm of the Year" by Mergers & Acquisitions Advisor, Paul
Hastings advises companies involved in the entire spectrum of
merger, acquisition, disposition and joint venture activities
involving public and private companies. The firm's corporate and
tax attorneys represent acquirers and targets in strategically as
well as financially-motivated transactions involving purchase and
sale of both domestic and foreign companies. Transactions handled
include friendly and unsolicited acquisitions, tender offers,
proxy contests, mergers, exchanges of securities, strategic and
other minority investments, recapitalizations, "going private"
transactions, leveraged buyout and joint ventures.
Paul, Hastings, Janofsky & Walker LLP, founded in 1951, is an
international law firm, representing Fortune 500 companies with
more than 950 attorneys located in 15 offices: Atlanta, Beijing,
Brussels, Hong Kong, London, Los Angeles, New York, Orange County,
Paris, San Diego, San Francisco, Shanghai, Stamford, Tokyo and
Washington, DC.
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.
UNIVERSAL ACCESS: Stock Trades at OTC Bulletin Board Today
----------------------------------------------------------
Universal Access Global Holdings Inc. (Nasdaq: UAXSQ) received
notice from the Nasdaq Listing Qualifications Panel stating that
the Company's securities will be delisted from effective with the
open of business today,
September 3, 2004.
The Company previously announced on July 1, 2004 that it received
a Nasdaq Staff Determination on June 28, 2004 indicating that the
Company failed to satisfy the stockholder's equity, earnings or
market value of publicly held shares requirements for continued
listing set forth in Marketplace Rule 4310(c)(2)(B), and that its
securities were, therefore, subject to delisting from The Nasdaq
SmallCap Market. In response to the June 28, 2004 determination,
the Company requested an oral hearing before a Nasdaq Listing
Qualifications Panel to review the Staff's determination. A
hearing was held on July 29, 2004. In addition, the Company
previously announced on August 10, 2004 that it received a notice
from Nasdaq on August 4, 2004 indicating that, pursuant to
Marketplace Rule 4450(f), Nasdaq had additional concerns regarding
the continued listing of the Company's securities. Rule 4450(f)
provides Nasdaq with the authority to suspend or terminate the
securities of an issuer that has filed for bankruptcy.
Thereafter, on August 23, 2004, the Company was notified that it
had failed to evidence a closing bid price of at least $1.00 per
share for thirty consecutive business days as required by
Marketplace Rule 4310(c)(4).
The Company's shares will not be immediately eligible to trade on
the OTC Bulletin Board because the Company is the subject of a
bankruptcy proceeding. The Company's shares may become eligible
if a market maker makes application to register and quote the
Company's securities in accordance with SEC Rule15c2-11, and such
application is cleared.
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.
US AIRWAYS: Court Closes Seven Out of Eight Chapter 11 Cases
------------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Virginia
closed seven of the eight Chapter 11 cases of US Airways, Inc.,
and its debtor-affiliates:
Debtor Case No.
------ --------
US Airways, Inc. 02-83985
Allegheny Airlines, Inc. 02-83986
PSA Airlines, Inc. 02-83987
Piedmont Airlines, Inc. 02-83988
MidAtlantic Airways, Inc. 02-83989
US Airways Leasing and Sales, Inc. 02-83990
Material Services Company, Inc. 02-83991
As reported in the Troubled Company Reporter on August, 19, 2004,
effective July 1, 2004, Allegheny Airlines, Inc., was merged into
Piedmont Airlines, Inc. US Airways Services Corporation, Inc.,
formerly known as MidAtlantic Airways, Inc., and US Airways
Leasing and Sales, Inc., were merged into US Airways, Inc.
Therefore, three of the pending cases pertain to Affiliate Debtors
that no longer have a separate corporate existence.
The only remaining task is the resolution of disputed claims and
making a final distribution to the holders of allowed claims.
Approximately 105 claims remain disputed and unresolved.
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. (US Airways Bankruptcy News, Issue No. 61; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
VSOURCE: Launches Preferred Stock Offering for Subsidiary Interest
------------------------------------------------------------------
Vsource, Inc., (OTC Bulletin Board: VSCE) intends to initiate an
exchange offer under which holders of its Series 1-A, 2-A and 4-A
preferred stock could exchange their preferred stock for the
shares of a new wholly-owned special purpose vehicle holding
Vsource's 61.2% interest in its operating subsidiary, Vsource Asia
Berhad.
Vsource had been informed by Symphony House Berhad, a Malaysian
company that holds 30.3% of Vsource Asia, that Symphony House
would simultaneously be making a cash offer of $15.8 million for
all of the shares of the SPV, which will be subject to several
conditions.
Holders of over 90% of Vsource's outstanding Series 4-A Preferred
Stock, and 10.5% of the outstanding Series 1-A Preferred Stock,
have already agreed to participate in the exchange offer, subject
to completion of all of the related transactions. In addition,
holders of over 79% of the Series 4-A Preferred Stock and 10.5% of
the outstanding Series 1-A Preferred Stock have already agreed to
sell their shares of the SPV received in the exchange offer to
Symphony.
"Our board of directors believes this will simplify our cumbersome
and complex capital structure by eliminating some or all of the
preferred stock that currently ranks senior to our common stock,"
said Phil Kelly, Chairman and Chief Executive Officer of Vsource.
"We also believe it will eliminate some restrictive provisions in
our stockholders agreements with holders of preferred stock which
impair Vsource's ability to raise new capital."
Dennis Smith, Vsource's Vice-Chairman and Chief Financial Officer,
added "Vsource's preferred stock currently has a senior
liquidation preference of $39.2 million, meaning that if Vsource
were acquired or liquidated, the preferred shareholders would be
entitled to receive $39.2 million of the proceeds before the
common stockholders would receive anything. Also, holders of our
Series 4-A preferred stock have the right to put their preferred
stock back to Vsource after March 31, 2006 for an aggregate
purchase price of $52.1 million if certain conditions are not met
before then. If this were to happen, Vsource could potentially be
forced into liquidation at that time, which has created future
financial uncertainty that has deterred some prospective financing
sources and clients. Our board of directors has determined that
the exchange offer would greatly reduce, or even eliminate, both
of these issues."
Under the terms of the announced transaction, Vsource will
transfer its entire interest in Vsource Asia to the SPV. It will
then initiate an exchange offer with the holders of its preferred
stock at the following exchange ratios:
* each share of Series 1-A Preferred Stock can be exchanged
for 6.639 shares of the SPV;
* each share of Series 2-A Preferred Stock can be exchanged
for 17.818 shares of the SPV; and
* each share of Series 4-A Preferred Stock can be exchanged
for 5,059.217 shares of the SPV.
These ratios were set so that if all of Vsource's preferred stock
is exchanged in the exchange offer, substantially all of the
shares of the SPV, and therefore all of Vsource's interest in
Vsource Asia, will be issued to the holders of preferred stock.
Holders of record of Vsource's preferred stock as of
August 10, 2004, will be eligible to participate in the exchange
offer.
Symphony has informed Vsource that it will be simultaneously
making a cash offer to purchase all of the shares of the SPV for
approximately $15.8 million, or $0.158 per SPV share. Symphony
has also informed Vsource that any holders of SPV shares who
tender their shares of the SPV to Symphony for cash will be
provided with the opportunity to purchase, on a pro rata basis, up
to an aggregate of 16.5% of Vsource Asia. Vsource understands
that the terms of Symphony's offer will be sent directly to
Vsource's preferred stockholders.
Symphony has also informed Vsource that prior to announcing its
cash offer, it had entered into an agreement with several holders
of Vsource's preferred stock to purchase the Vsource common stock
and certain warrants to purchase Vsource common stock held by such
holders. Symphony is purchasing these additional securities to
assist these preferred stockholders in qualifying to treat the
exchange offer as a sale for U.S. income tax purposes and to
encourage these preferred stockholders to participate in the
transaction. Certain of these holders are officers and directors
or major shareholders of Vsource. The purchase price will be
$0.50 per share for common stock and $0.25 per warrant held by
such shareholders. If this purchase of the common stock and
warrants is completed, Symphony will hold approximately 32.0% of
Vsource's outstanding common stock at completion (assuming that
all of the preferred stock is exchanged for SPV shares) and 50.3%
on a fully diluted basis (assuming that the warrants purchased
will be exercised according to their terms on or after
April 1, 2005 and assuming that no additional shares of Vsource
are issued prior to such exercise).
Vsource intends to complete the exchange offer on October 31, 2004
or soon thereafter, but in no event later than November 30, 2004.
The exchange offer and related transactions were approved by
written consent of shareholders holding a majority of the
outstanding voting stock of Vsource, and an information statement
explaining the matters voted upon will be mailed to all
shareholders of Vsource. Completion of the transactions is
subject to certain conditions, including the following:
* The offer from Symphony to purchase the shares of the SPV
must not have been revoked or withdrawn for any reason;
* The holders of at least 51% of the outstanding shares of
each class of preferred stock must elect to participate in
the exchange offer and waive certain rights in connection
with the exchange offer;
* The holders of at least 75% of the shares of the SPV must
agree to tender their shares to Symphony;
* Vsource must obtain certain Malaysian regulatory approvals
and waivers; and
* Symphony must obtain certain Malaysian regulatory
approvals and waivers and shareholder approval.
All shares of Series 4-A Preferred Stock that are not exchanged
for SPV shares will automatically be converted into common stock
upon the completion of the transaction.
In fiscal 2004, Vsource Asia generated approximately 99% of
Vsource's combined revenues. After the exchange offer is
completed, Vsource will not retain any ownership in Vsource Asia
and Vsource's primary asset will be the cash which it will retain.
Vsource will have only a limited staff and limited operations The
amount of cash which Vsource will retain will depend on how many
shares of the SPV are sold by preferred shareholders to Symphony
and how many are sold by Vsource to Symphony. If all shares of
preferred stock are exchanged for SPV shares, then Vsource will
not receive any proceeds from the Symphony purchase offer and
anticipates that it will have approximately $3.0 million of cash
and cash equivalents on hand. Following completion of the
exchange offer, Vsource will primarily be focused on managing its
remaining liabilities, continuing to provide certain consulting
services to third parties and support services to Vsource Asia,
and determining how to utilize its remaining resources. Senior
management and the Board of Directors of Vsource have decided to
defer any decisions regarding its future activities and the use of
its cash resources until after the exchange offer has been
completed.
The exchange offer is being completed pursuant to an exception
from the registration requirements of the Securities Act of 1933,
as amended. In order to participate in the exchange offer a
holder of preferred stock must be either an "accredited investor"
or a "non-U.S. Person". Furthermore, the shares of SPV to be
issued in the exchange offer will not be registered under the
Securities Act, or any state securities laws, and may not be
offered or sold in the United States absent registration under, or
an applicable exemption from, the registration requirements of the
Securities Act, and applicable state securities laws.
VSource, Inc. provides enterprise-wide, Internet-based
applications. The Company's Virtual Source Network allows
companies to create an Internet-based procurement system to
automate all aspects of corporate procurement. VSource's network
accommodates electronic sending, receiving, approval and payment
of supplier invoices.
At January 31, 2004, VSource, Inc.'s balance sheet showed a
$16,591,000 stockholders' deficit, compared to a $5,445,000 in
positive equity at January 31, 2003.
WESTERN REFINING: S&P Places B+ Credit Rating on CreditWatch
------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'B+' corporate
credit rating on Western Refining Co. L.P. on CreditWatch with
positive implications.
The CreditWatch placement follows Western's announcement that it
has sold the Kaston Pipeline Co. to Kinder Morgan Energy for about
$100 million in cash.
Standard & Poor's expects that Western will use a portion of the
proceeds to repay its outstanding term loan (about $80 million),
which would fortify Western's financial profile.
A ratings upgrade could follow pending meetings with Western's
management to discuss in greater detail the expected use of
proceeds and Western's business development plans.
WESTPOINT: Resolving Dispute with R2 Top Hat Over $525M Claim
-------------------------------------------------------------
On June 18, 2003, the United States Bankruptcy Court for the
Southern District of New York entered an uncontested order
providing for adequate protection to R2 Top Hat, Ltd., on its own
behalf and on behalf of certain other holders of the senior bank
debt of WestPoint Stevens, Inc. -- the First Lien Lenders. At
that time, the Debtors believed -- and implicitly represented to
the Court -- that WestPoint had an enterprise value in excess of
$1,000,000,000. Based on the assumed enterprise value and claims
of WestPoint's senior lenders totaling approximately $525,000,000,
the First Lien Lenders:
(a) accepted without objection an adequate protection package
comprised of replacement liens and the current payment of
interest and fees; and
(b) did not object to the Debtors' making available an
identical adequate protection package to the holders of
the Debtors' junior bank debt -- Second Lien Lenders.
To date, the First Lien Lender Group has been paid more than $52.7
million in interest and fees. The Second Lien Lenders have been
paid more than $31 million in interest and fees.
The Debtors have conceded that many of the assumptions they held
on the Petition Date about their businesses and prospects were
"invalid." Dennis F. Dunne, Esq., at Milbank, Tweed, Hadley &
McCloy, LLP, in New York, relates that the Debtors are currently
revising their business plan and corresponding valuation, which
will not be completed until August 2004 at the earliest, and which
will show that the Debtors were and are worth substantially less
than the more than $1 billion implied by the unfundable "agreement
in principle" the Debtors had in hand on the Petition Date. The
New Business Plan will also finally begin to acknowledge
fundamental changes in the textile industry arising out of the
imminent elimination of textile quotas on January 1, 2005. Other
companies in the industry had been preparing for those changes for
years but the Debtors had just begun to address them. The Debtors
will need to expend substantial capital over the next several
years to adapt its business model to rapidly changing industry
conditions.
According to Mr. Dunne, the First Lien Lenders believe that the
Debtors' enterprise value was on the Petition Date and remains
today sufficient to satisfy little more than the claims of the
First Lien Lender Group.
As previously reported, R2 Top Hat, Ltd., with the support of
Satellite Asset Management, L.P., CP Capital Investments, LLC,and
Contrarian Capital Management, LLC, sought additional adequate
protection from the Debtors and requested the termination of
adequate protection payments to the lenders under the Second Lien
Credit Facility, dated June 29, 2004.
The Parties have entered into a stipulation to resolve the
dispute. The Parties retained Wells Fargo Bank, N.A., to serve as
escrow agent.
With the Court's consent, the Parties agree on these terms and
conditions:
A. Deposit With Escrow Agent
(1) All Second Lien Interest Payments due and payable to
Wilmington Trust Company, as administrative agent to the
Second Lien Credit Facility, for the ratable benefit of
the Second Lien Lenders, will be deposited with the Escrow
Agent to be maintained in accordance with the terms and
conditions set forth in the Stipulation and the Escrow
Agreement;
(2) The Second Lien Interest Payments to be deposited with the
Escrow Agent will not include:
(a) the reasonable fees, charges, and expenses of the
Second Lien Agent;
(b) the reasonable fees and expenses of Kramer, Levin,
Naftalis & Frankel, LLP, as counsel to the Second Lien
Agent; and
(c) the reasonable fees and expenses incurred by the
Second Lien Agent for other professionals, retained by
or for the benefit of the Second Lien Lenders, which
Professional Expenses will continue to be paid monthly
until presentation of the Release Order to the Escrow
Agent or issuance of the Release Instruction;
(3) The deposit with the Escrow Agent of the Second Lien
Interest Payments will not constitute "cash payments made
by the Borrower as adequate protection" to the Second Lien
Lenders, so that the Second Lien Agent and Second Lien
Lenders would be "entitled to retain and apply" the
payments to indebtedness under the Second Lien Credit
Facility, as otherwise contemplated by Section 2.4(g) of
the Intercreditor Agreement unless and until the Release
Order or the Release Instruction authorizes the release of
funds held by the Escrow Agent to the Second Lien Agent
for application to claims held by the Second Lien Lenders,
and then only to the extent authorized;
(4) Bank of America, N.A., as administrative and collateral
agent under the DIP Agreement, on its own behalf and on
behalf of the DIP Lenders, will:
(a) retain the liens and superpriority claims granted
under the Final DIP Order with respect to the Escrowed
Interest Payments;
(b) refrain from exercising any rights and remedies
available under the Final DIP Order as a result of
liens and superpriority claims with respect to the
Escrowed Interest Payments until presentation of the
Release Order to the Escrow Agent or issuance of the
Release Instruction;
(c) seek to exercise rights and remedies only after having
made reasonably diligent efforts to satisfy any
amounts outstanding under the DIP Credit Facility out
of all other collateral available to the DIP Lenders
under the Final DIP Order; and
(d) retain all rights and remedies granted to it and the
DIP Lenders under the Final DIP Order unaltered and
unaffected by the execution of the Stipulation.
B. Release from Escrow
(1) The Escrowed Interest Payments will remain on deposit
with, and will not be released by, the Escrow Agent until:
(a) an order has been entered:
* adjudicating the rights of the First Lien Lender
Group, the Second Lien Lenders, the DIP Lenders and
the Debtors with regard to the Escrowed Interest
Payments;
* allocating the Escrowed Interest Payments in
accordance with those rights;
* expressly providing that none of the Escrowed
Interest Payments will be released to the First Lien
Lender Group or the Debtors until all amounts
outstanding under the DIP Credit Facility will have
been paid in full and all commitments are
terminated; and
* requiring disbursement to the DIP Agent of any
portion of the Escrowed Interest Payments that is
not allocated to the Second Lien Lenders, for
application to any amounts then outstanding under
the DIP Credit Facility, but only if all commitments
under the DIP Credit Facility have been terminated
and amounts remain outstanding under the DIP Credit
Facility and the DIP Agent has made reasonably
diligent efforts to satisfy the outstanding amounts
out of all other collateral available to the DIP
Lenders under the Final DIP Order;
(b) the order remains in full force and effect after
either:
* the time to appeal, seek reconsideration or other
review of that order has expired; or
* any appeal or request for reconsideration or other
review has been finally resolved with no further
appeal, reconsideration or other review available,
at which point that order will be deemed a "Release
Order"; and
(c) the Escrow Agent receives a copy of the Release Order,
together with either:
* a written certificate signed by the First Lien
Agent, the Second Lien Agent, and the DIP Agent; or
* if the First Lien Agent, the Second Lien Agent, and
the DIP Agent cannot agree on a written certificate,
a further Court order confirming that the conditions
set forth have been satisfied.
(2) Alternatively, at any time before the presentation of
Release Order to the Escrow Agent, the Escrowed Interest
Payments may be released without further Court order on
the joint instruction of:
(a) the First Lien Agent,
(b) members of the First Lien Lender Group holding in the
aggregate at least 50.1% of the principal amounts
outstanding under the First Lien Credit Facility,
(c) the Second Lien Agent; and
(d) the DIP Agent, which Release Instruction will
expressly allocate Escrowed Interest Payments among
the First Lien Lender Group, the Second Lien Lenders
or the Debtors, subject to the rights of the DIP Agent
and DIP Lenders;
(3) Upon receipt of notice of the Release Order or the Release
Instruction, the Escrow Agent will:
(a) distribute the principal amount of the funds on
deposit with the Escrow Agent in accordance with the
allocation set forth in the Release Order or the
Release Instruction; and
(b) allocate any interest or investment gain accrued with
respect to the Escrowed Interest Payments while on
deposit with the Escrow Agent among the First Lien
Lender Group, the Second Lien Lenders, or the Debtors
in accordance with the same allocation scheme used to
distribute the principal amounts, subject to the
rights of the DIP Agent and DIP Lenders pursuant to
the Stipulation and the Final DIP Order;
(4) No Escrowed Interest Payments will be released to the
Debtors or any other party except pursuant to a Court
order entered after notice to all parties, after all
amounts outstanding under the DIP Credit Facility will
have been paid in full and all commitments under it
terminated and all amounts owing to the First Lien Agent,
the First Lien Lender Group, the Second Lien Agent and the
Second Lien Lenders under the First Lien Credit Facility
and Second Lien Credit Facility have been paid in full and
in cash, and all commitments under it terminated.
C. Withdrawal of Adequate Protection Motion
(1) The Adequate Protection Motion will be deemed withdrawn,
without prejudice to re-filing it at a future date.
However, in no event will:
(a) the First Lien Lenders re-notice for hearing the
Adequate Protection Motion or notice for hearing or
trial any motion or adversary proceeding seeking
protection relating exclusively to adequate protection
rights that would affect the present or past
entitlement of the Second Lien Lenders to adequate
protection under the Adequate Protection Order and the
relevant provisions of the Bankruptcy Code or the
allocation or application of the Escrowed Interest
Payments; or
(b) the Second Lien Lenders notice for hearing a motion
seeking additional adequate protection for the Second
Lien Lenders or notice for hearing or trial any motion
or adversary proceeding seeking protection relating
exclusively to adequate protection rights that would
affect the present or past entitlement of the First
Lien Lenders to adequate protection under the Adequate
Protection Order and the relevant provisions of the
Bankruptcy Code or the allocation or application of
the Escrowed Interest Payments, on any date prior to
the earlier of the Sale Hearing, the Confirmation
Hearing, and the Conversion Hearing. Both the First
Lien Lenders and the Second Lien Lenders may, after
the date of the Sale Hearing, the Confirmation Hearing
or the Conversion Hearing has been set, file any
motion or adversary proceeding sufficiently in advance
of the Sale Hearing, the Confirmation Hearing, or the
Conversion Hearing so as to permit a 45-day period for
pre-hearing discovery under the Federal Rules of
Bankruptcy Procedure;
(2) The Sale Hearing will be the hearing on a motion filed by
the Debtors pursuant to Section 363 of the Bankruptcy
Code, seeking approval of the sale of all or substantially
all of the Debtors' assets, and will not be the hearing on
a motion by the First Lien Lenders or any other party-in-
interest seeking to compel the Debtors to commence a sale
process.
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)
WORLDCOM INC: Tishman Technologies Holds $7.1 Million Claim
-----------------------------------------------------------
On December 19, 2002, Tishman Technologies Corp. filed
Claim No. 6548 against MCI WorldCom Communications, Inc., as a
secured claim for $7,162,566. The Debtors subsequently objected
to and sought to disallow and expunge Tishman's Claim.
To resolve their dispute without unnecessary litigation, the
Debtors and Tishman stipulate that:
(a) Tishman's Claim will be modified and:
(1) 109 Morgan, Plainsboro, New Jersey, will be
reclassified as an unsecured claim for $1,446,363;
(2) 32 Avenue of Americas, New York, will allowed as
an unsecured claim for $614,086;
(3) 3020 Thompson Ave., LLC, will be reclassified as
unsecured for $2,533,622;
(4) 101 Hudson St., New Jersey, will be classified as an
Other Class Three Secured Claim for $28,198;
(5) 1309 Noble St., Pennsylvania, will be classified as an
Other Class Three Secured Claim for $8,211;
(6) Westmont, Illinois, will be classified as an Other
Class Three Secured Claim for $20,826;
(7) Riverdale, Illinois, will be classified as an Other
Class Three Secured Claim for $328,991;
(8) D Street, Boston, Massachusetts, will be classified as
an Allowed Unsecured Claim for $2,214; and
(9) Waltham, Massachusetts will be classified as an
Allowed Unsecured Claim for $81,326 and will be paid
by Debtors to Tishman in accordance with the Confirmed
Plan; and
(b) Tishman's other claims filed against the Debtors will be
deemed withdrawn with prejudice to any future action.
Accordingly, Judge Gonzalez approves the Stipulation.
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: 150 Employee Reduction Lowers Payroll Expense by 25%
----------------------------------------------------------------
Z-Tel Technologies, Inc., (Nasdaq/SC:ZTEL) reduced its workforce
by approximately 150 employees, lowering its payroll expense by
more than 25%.
Trey Davis, Z-Tel's Acting Chief Executive Officer, commented,
"Wednesday's announcement is a direct result of the previously
discussed transition Z-Tel is undergoing to become a facilities-
based provider of voice, data and broadband services. As a result
of this transition, we are streamlining the Company due to our
reduced need for continuing significant investments in new
technology and software development. We expect this workforce
reduction to produce approximately $12 million in annual
compensation savings, as well as additional savings in occupancy
expenses as we consolidate certain of our operations in Atlanta
and Tampa into our facility in Atmore, Alabama. These and other
savings will contribute to our ongoing efforts to produce positive
cash flow. We expect to incur a charge for the third quarter of
2004 related to the reduction of approximately $2.5 million, and
we will continue a thorough, company-wide evaluation of our other
ongoing operating expenses."
As reported in the Troubled Company Reporter on September 2, 2004,
Z-Tel Technologies, Inc., 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, 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.
* Gabelli Asset Management Names Michael R. Anastasio CFO
---------------------------------------------------------
Gabelli Asset Management, Inc., (NYSE: GBL) named Michael R.
Anastasio, Jr., CPA, Chief Financial Officer. Mr. Anastasio
joined the firm in May 2001 as CFO of Gabelli & Partners, LLC, the
Gabelli alternative investment group, and became Chief Accounting
Officer of Gabelli Asset Management, Inc., in September 2003.
"During the three years he's been with us, Mike has consistently
proven his ability to understand and interpret the complex
accounting dynamics that impact our business on a daily basis,"
said Mario J. Gabelli, Chief Executive Officer of Gabelli Asset
Management. "Mike has served us well as Chief Accounting Officer
and has earned the opportunity of being Chief Financial Officer."
Mr. Anastasio began his career with Ernst & Young, managing and
coordinating the audits of financial services firms. He also
provided consulting services as a senior manager in the firm's
risk management and regulatory practice. Prior to joining
Gabelli, he was Chief Financial Officer at a financial services
firm specializing in alternative investments.
Mr. Anastasio graduated summa cum laude from St. John's University
with a B.S. degree in accounting, and received his MBA in finance
with honors from Columbia University Graduate School of Business.
Gabelli Asset Management, Inc., through its subsidiaries, manages
approximately $27 billion in assets of private advisory accounts,
mutual funds and closed-end funds (Gabelli Funds, LLC), and
partnerships and offshore funds (Alternative Investment Group).
* Matthews & Branscomb Lawyers Join Cox & Smith to Create New Firm
------------------------------------------------------------------
Lawyers of Matthews and Branscomb's San Antonio office joined Cox
& Smith Incorporated to form Cox Smith Matthews Incorporated. The
Firm consists of 120 lawyers across 17 practice areas, creating
the largest business and commercial law firm based in South Texas.
"Both firms are known for providing excellent representation to
clients, whether they be individuals or publicly held,
multinational companies. This combination of talented lawyers and
complementary practices deepens and expands upon the existing
strengths of the separate firms," said Steve Seidel, Managing
Director of Cox Smith Matthews Incorporated. "Both groups
recognized the compelling range of services and experience this
combination could provide to our clients, and that's the
opportunity we're focused on."
Client service is a primary focus for both firms, according to Dan
Elder, a shareholder of Cox Smith Matthews Incorporated and former
president of Matthews and Branscomb. "From the onset of our
discussions to the announcement we are making today, a priority
has been ensuring that our mutual commitment to outstanding client
and community service will be maintained."
The combination places Cox Smith Matthews Incorporated among the
top business and commercial law firms in Texas and positions it as
the largest law firm in San Antonio. The Firm's litigation, tax
and corporate and securities groups will be the largest in San
Antonio. The Firm's combined real estate and commercial finance
practice will benefit from additional experienced practitioners
and a more diversified client base. The Matthews group brings
significant experience and industry knowledge in public utilities,
nuclear energy, water law, municipal law, and campaign finance,
and the Firm's existing natural resources, labor and employment,
bankruptcy and intellectual property practices will expand the
available services for the Matthews' clients. Notably, both firms
were recently honored by Corporate Board Members magazine as top
corporate law firms in San Antonio.
"As a client of both Cox & Smith and Matthews and Branscomb, we
are pleased that they have joined together in San Antonio to offer
additional resources to help meet our legal needs," said Kim
Bowers of Valero Energy Corporation. "Both firms have
consistently provided us with excellent legal counsel and we look
forward to continuing our relationship with the new Firm."
Cox Smith Matthews Incorporated is headquartered in San Antonio,
Texas with an office in Austin. The Firm employs 120 attorneys
who provide a full spectrum of legal services to regional,
national and international clients. For more information, visit
http://www.coxsmith.com/
* Perry Glantz Leads Bohm Francis' New Los Angeles Office
---------------------------------------------------------
The Orange County, California-based law firm of Bohm, Francis,
Kegel & Aguilera, LLP has opened a Los Angeles office.
Perry L. Glantz, formerly a partner in Holland & Hart, will head
the Los Angeles office as its managing partner and will continue
to practice in the area of environmental and business litigation.
Jeffery P. Boykin has also joined the firm as a partner. Mr.
Boykin will continue to practice in the area of insurance
litigation and products liability. Jane J. Ju, Ricia Hager and
Julie Muller joined the firm as associates.
Bohm, Francis, Kegel & Aguilera,LLP is a full service civil law
firm with practice areas including, business law and litigation,
governmental entity defense, products liability, insurance law and
litigation, labor law and litigation, employment law, creditor's
rights and bankruptcy, wills, estates and trusts, probate, tax,
asset protection, real estate, business entity formation,
environmental, and energy law.
"We are all very excited about our Los Angeles office," said James
G. Bohm, Bohm, Francis, Kegel & Aguilera, LLP's managing partner.
"The addition of the office increases the firm's ability to
service its clients in new and expanded practice areas with the
focus on quality, value and convenience," Bohm said. Glantz,
revealed, "I am very pleased to be bringing my environmental and
business litigation practice to the firm and look forward to
making this office an integral part of the firm's expanded
presence in California." Bohm, Francis, Kegel & Aguilera LLP also
has offices in Costa Mesa, California and Dallas, Texas.
* BOOK REVIEW: AMEX: A History of the American Stock Exchange
-------------------------------------------------------------
Author: Robert Sobel
Publisher: Beard Books
Hardcover: 382 pages
List Price: $34.95
Order your personal copy at
http://www.amazon.com/exec/obidos/ASIN/1893122484/internetbankrupt
Robert Sobel is well-known to those in the business field. He's
written more than fifty books and hundreds of articles on just
about every topic in the field. "AMEX - A History of the American
Stock Exchange, 1921-1971" evidences all the characteristics which
have made his writing appealing and informative to business
readers--sound research and expert knowledge put in a colorful,
readable style. Writing about individuals and events, Sobel makes
business come alive.
He begins his history of the AMEX when it was known as the "Curb
Market" in the 1800s. The name is not a catch phrase, but is a
literal designation of where the activity of this market was
conducted--namely, on a curb on Broad Street under the windows of
the established New York Stock Exchange. The origins of the Curb
Market, or Curb Exchange as it is also called, are traced to the
California Gold Rush of 1849. It played an important part in the
many financial transactions and new businesses, particularly
mining operations, which rapidly grew out of the Gold Rush.
The AMEX was not given its name until 1953. Sobel leads up to this
in his early chapters by covering the practices, operations, and
representative individuals of the Curb Market which influenced the
founding of the AMEX and left their imprint down to today. Unable
to compete with the N. Y. Stock Exchange and with no ambition to
rival it or replace it anyway, the Curb Exchange traders were
enterprising and unconventional. For example, if a trader wanted
to become a "specialist" in handling the stock of a particular
company, he might buy some of its stock for himself and begin
trading it on the Curb Exchange. Most of the stocks handled by
the Curb Exchange were from "young companies or marginal firms,
many of which would disappear through mergers, bankruptcy, or
other means." Some would eventually move to the Big Board. But
the precursor to the AMEX also traded in stock of companies such
as Standard Oil, U. S. Tobacco, and United States Sugar. Such
major corporations, many owned by families, preferred the Curb
Exchange because they did not have to file regular reports or
financial information as they would with the N. Y. Exchange.
The Curb Exchange played an important part in the rampant
capitalism of the late 1800s. As the economic and political
environment of the country changed into the decades of the 1900s,
so did it change. In 1921, the Exchange moved indoors on Trinity
Place in New York City. It had its share of difficulties along
with those of the rest of the country in the time of the
Depression. But the Exchange survived the poor economic times,
new government regulations, lackluster leadership, and even a
scandal involving two of its most powerful members in the 1930s.
Under the strong leadership of Edward McCormick in the 1950s, the
Curb was able to put its troubles behind it and finally, after
about a century of tentative existence, become established as a
major trading institution. With his academic credentials,
relationships with members of the SEC, experience in the field of
finance, and saviness about the media, McCormick resembled the
prominent individuals associated with the New York Stock Exchange.
One of the most important steps in McCormick's historic activity
was the change of the organization's name to the American Stock
Exchange on January 5, 1953.
Sobel wrote "AMEX" to fill in what he saw as a blank space in most
persons' knowledge and understanding of the structure of American
financial markets and the purposes of its major parts. In the
book, he successfully answers such questions as why the AMEX
exists? why and how had it developed? and what is its relationship
to the New York Stock Exchange? Even readers who know something
about the answers will learn more about the major institution of
the AMEX to increase their understanding of it, and along with
this, their understanding of the nature and workings of the
American economic system.
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania,
USA, and Beard Group, Inc., Frederick, Maryland USA. Yvonne L.
Metzler, Emi Rose S.R. Parcon, Bernadette C. de Roda, Rizande B.
Delos Santos, Jazel P. Laureno, Cherry Soriano-Baaclo, Marjorie
Sabijon and Peter A. Chapman, Editors.
Copyright 2004. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers. Information contained
herein is obtained from sources believed to be reliable, but is
not guaranteed.
The TCR subscription rate is $675 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same firm
for the term of the initial subscription or balance thereof are
$25 each. For subscription information, contact Christopher
Beard at 240/629-3300.
*** End of Transmission ***