/raid1/www/Hosts/bankrupt/TCR_Public/040928.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Tuesday, September 28, 2004, Vol. 8, No. 209
Headlines
A.B. DICK: Objects to Jefferies as Committee's Financial Advisor
AAIPHARMA INC: Athlon Pharmaceuticals Subpoenas E&Y Work Papers
AIR CANADA: Inks Pact to Buy 90 Bombardier CRJ Regional Jets
ALL AMERICAN FOOD: Case Summary & 20 Largest Unsecured Creditors
AMERICREDIT CORP: Moody's Revises Outlook to Stable from Negative
ANC RENTAL: Court Approves Aon Risk Settlement Agreement
ARMSTRONG WORLD: Proxicom's Holds an Allowed $1.1 Million Claim
BALLY TOTAL: Bank Lenders Okay Nov. 1 Extension for Q2 Financials
BARLEX INC: Case Summary & 11 Largest Unsecured Creditors
BERWALD PARTNERSHIP: Creditors Must File Proofs of Claim by Jan. 6
CARE CONCEPTS: Rescinds iBill Closing & Delays Acquisition
CATHOLIC CHURCH: Tucson Wants to Hire Keegan as Accountant
CELESTICA INC: Inks Pact to Sell Power Systems to C&D Technologies
CITATION CORP: Wants Burr & Forman as Bankruptcy Counsel
CLYDESDALE: Moody's Lifts Rating on $47M Secured Class to Caa3
COEUR D'ALENE: Canadian Regulators Okays Wheaton River Acquisition
COLLATERALIZED SYNTHETIC: S&P Puts Mezzanine Class on CreditWatch
COLORADO EDUCATIONAL: S&P Upgrades Revenue Bonds' Rating to B
COMMERCE ONE: Anticipates Liquidation Due to Continuing Losses
COUNTRYWIDE HOME: Fitch Assigns Low-B Rating to Five Classes
CSFB MORTGAGE: Fitch Places BB Rating to $10.0M Class SC Cert.
CSK AUTO: Soft Sales Prompt S&P to Revise Outlook to Stable
DEVON MOBILE: Trustee Wants Until March 28 to Object to Claims
DUESENBERG: S&P Puts Class D's B+ Rating on CreditWatch Negative
EIGHT THREE ONE: Case Summary & 7 Largest Unsecured Creditors
ENERGY CONVERSION: Complies with Nasdaq Marketplace Rule
ENRON CORP: Wants Court to Enforce Stay Against Tittle Plaintiffs
EURAMAX: S&P Affirms BB- Corp. Credit Rating with Stable Outlook
FEDERAL-MOGUL: Want to Expand PwC's Employment as IT Consultant
FEDERATION OF PRESCHOOL: Case Summary & 21 Largest Creditors
FIBERMARK: Judge Approves Exclusivity Extension Until Nov. 26
FOOTSTAR INC: Court Approves Gaffney Facility Sale for $20.25M
FOSTER WHEELER: Closes Equity for Debt Exchange Offer
GITTO GLOBAL CORP: Case Summary & 20 Largest Unsecured Creditors
HEALTH & NUTRITION: Form 10-Q Contains Chapter 11 Warning
HM PUBLISHING: S&P Shaves Corporate Credit Rating to B+
HUNTSMAN LLC: S&P Assigns B Rating to $715M Term Loan Facility
INDYMAC: Moody's Slashes Ratings on Eight Classes to B1 from Aa3
INTELLIGROUP INC: Executes Pact for $15 Million Equity Investment
INTELLIGROUP: Undertakes Review & Restates Prior Period Results
INTERNET I SHOP: Case Summary & 19 Largest Unsecured Creditors
INVESCO CBO: Fitch Places BB- Rating on $8 Million Class B-2 Notes
MEDMIRA INC: Stockholders' Deficit Widens to $5.874M at July 31
METRIS COS: Will Discuss 3rd Qtr. Earnings Release on Oct. 20
METROMEDIA INT'L: Closes Sale on Remaining Radio Businesses
MIRANT CORPORATION: Court Approves Confidentiality Protocol
MORTGAGE CAPITAL: Fitch Affirms Low-B Ratings on Four Classes
NATIONAL CENTURY: Court Says Creditors' Trust Can Depose Deloitte
NEW WORLD: Wants Exclusivity Right to File Plan Through Jan. 10
OAKWOOD HOMES: S&P Puts Low-B Ratings on 28 Classes & Junks 23
OCEANVIEW: Fitch Puts BB Ratings on Two Classes & Junks One Class
OWENS CORNING: Asks Court Okay to Extend & Modify DIP Financing
OWENS-ILLINOIS: Fitch Junks Sr. Unsecured Notes & Preferred Stock
PRIME HOSPITALITY: Inks Stockholder Litigation Settlement Pact
PROVIDIAN GATEWAY: Moody's Rates $68.113M Class E Notes Ba3
RAILAMERICA: Moody's Assigns Ba3 Rating to Senior Secured Facility
RESIDENTIAL ACCREDIT: Fitch Puts Low-B Ratings on 21 Classes
RIVERSIDE FOREST: Tolko Talks to Shareholders About Six Key Issues
SOTHEBY'S HOLDINGS: S&P Puts B+ Rating on CreditWatch Positive
SPRING AIR PARTNERS: Emerges from Chapter 11 Bankruptcy Protection
SUN PRAIRIE: Oct. 15 Court Hearing on Restructured Payment Plan
STAINLESS STEEL: Case Summary & 20 Largest Unsecured Creditors
STELCO INC: Court Extends CCAA Stay Until November 26, 2004
STELCO INC: Court Approves CHT Steel Sale for $3.25 Million
STRUCTURED ASSET: Fitch Junks Certificate Class IIB-5
TECHNEGLAS INC: Gets Court Nod to Hire PwC as Financial Adviser
TRUMP HOTELS: Donald Trump In Talks to Give Bondholders Control
UAL CORP: Tennis Association Wants $700,000 Admin. Claim Paid
UNITED AIRLINES: Lawmakers Urge to Fund Pensions
US AIRWAYS: Gets Limited Court Approval to Use Cash Collateral
US AIRWAYS: Asks Court for Relief from Collective Bargaining Pacts
US AIRWAYS: Reaches Tentative Cost Savings Pact with Instructors
US AIRWAYS: Honors Prepetition Customer Obligations
VENSTAR INC: Terminates Employees & Liquidates Assets
VIVA INTERNATIONAL: Discusses Plans to Shed Subsidiaries
WASTE SERVICES: Inks Pact to Adjust Florida Recycling Buying Price
WEDTECH CORP.: Notice of Returned Distributions
WINROCK GRASS: U.S. Trustee Meeting With Creditors on October 28
WORLDCOM: Thornburgh Wants His Appointment as Examiner Terminated
* Large Companies with Insolvent Balance Sheets
*********
A.B. DICK: Objects to Jefferies as Committee's Financial Advisor
----------------------------------------------------------------
A.B. Dick Company and its debtor-affiliates object to the
retention of Jefferies & Company, Inc., as financial advisor to
the Official Committee of Unsecured Creditors.
The Debtors complain to the U.S. Bankruptcy Court for the District
of Delaware that Jefferies' fees will burden the estates with
hundreds of thousands of dollars in unnecessary administrative
debt.
According to the Debtors, the Committee's lawyer, GianClaudio
Finizio, Esq., at The Bayard Firm, flatly refused to describe
Jefferies & Company's engagement letter or the fees when asked.
When the Committee filed its application to retain Jefferies, the
Debtors discovered that Jefferies proposes to charge $100,000 per
month, with a guaranteed minimum payment of $300,000 without
crediting. That's four times what the Debtors' financial advisor
is charging, Frederick B. Rosner, Esq., at Jaspan Schlesinger
Hoffman LLP tells Judge Case.
The Debtors relate that the Jefferies Fee Structure proposed by
the Committee is the same Fee Structure to which the Committee
objected when the Debtors proposed to hire Candlewood Partners LLC
as their investment banker and financial advisor.
The Debtors don't contend that the Committee shouldn't have a
financial advisor and say that Jefferies is a fine firm. What the
Debtors object to is Jefferies' excessive fee structure
considering the limited and passive role it will play in these
cases.
A.B. Dick also questions Jefferies' "disinterestedness" because of
its role as a market maker for Presstek, Inc. -- on if A.B. Dick's
creditors.
Headquartered in Niles, Illinois, A.B.Dick Company --
http://www.abdick.com/-- is a global supplier to the graphic
arts and printing industry, manufacturing and marketing equipment
and supplies for the global quick print and small commercial
printing markets. The Company, along with its affiliates, filed
for chapter 11 protection (Bankr. D. Del. Lead Case No. 04-12002)
on July 13, 2004. Frederick B. Rosner, Esq., at Jaspen
Schlesinger Hoffman, and H. Jeffrey Schwartz, Esq., at Benesch,
Friedlander, Coplan & Aronoff LLP represent the Debtors in their
restructuring efforts. When the Debtor filed for protection from
its creditors, it listed over $10 million in estimated assets and
over $100 million in estimated liabilities.
AAIPHARMA INC: Athlon Pharmaceuticals Subpoenas E&Y Work Papers
---------------------------------------------------------------
Athlon Pharmaceuticals, Inc., subpoenaed Ernst & Young LLP's
working papers, which support both the original financial
statement and the restated financial statement of aaiPharma Inc.
In a separate development, Athlon Pharmaceuticals received and
complied with an inquiry from the U.S. Securities & Exchange
Commission concerning the fraud aspect of Athlon's claim against
aaiPharma.
Athlon Pharmaceuticals recently amended its $36 million
counterclaim against aaiPharma for its breach of the Service
Agreement entered into on July 16, 2003, to include fraudulent
inducement.
Athlon alleges that aaiPharma had undisclosed liabilities and
contingencies at the time of the execution of the Service
Agreement, which has precluded aaiPharma from meeting its
financial obligations to Athlon Pharmaceuticals. This allegation,
if proven, will entitle Athlon to punitive damages for this civil
tort.
Athlon believes that its position is very similar to that of CIMA
Labs, Inc., a company, which develops and manufactures
pharmaceuticals. CIMA recently filed a lawsuit against aaiPharma.
The suit alleges that CIMA never would have considered a merger if
it had known about aaiPharma's true financial condition. "Had
aaiPharma's financial results as restated have been public, we
would not have entered into a merger agreement with the company,"
announced CIMA Chairman Steven B. Ratoff commented in its press
release. Likewise, Athlon would have never entered into a Service
Agreement and Asset Purchase Agreement with aaiPharma if it had
known about aaiPharma's true financial condition
Athlon filed a separate lawsuit against aaiPharma for its breach
of the company's Asset Purchase Agreement entered into on
July 16, 2003. The suit asserted aaiPharma has breached the Asset
Purchase Agreement for non-payment of royalties and disclosure of
information prescribed in the Asset Purchase Agreement.
About Athlon Pharmaceuticals
Athlon Pharmaceuticals is a specialty branded pharmaceutical
company that focuses its business strategies on under-promoted
products in the areas of pain management and respiratory
illnesses. Established in 2001, Athlon Pharmaceuticals is a
privately held entity with a presence in over 25 states. The
company continues to seek new business opportunities through
licensing, development and acquisitions.
* * *
As reported in the Troubled Company Reporter's on April 29, 2004,
Standard & Poor's Ratings Services affirmed its 'CCC' corporate
credit and 'CC' subordinated debt ratings on aaiPharma, Inc. At
the same time, Standard & Poor's removed the ratings on the
Wilmington, North Carolina-based specialty pharmaceutical company
from CreditWatch.
S&P's outlook on aaiPharma is negative.
"The low speculative-grade ratings reflect the company's improved
but still limited liquidity given the lack of visibility of
aaiPharma's profitability and cash flow generation," said Standard
& Poor's credit analyst Arthur Wong.
AIR CANADA: Inks Pact to Buy 90 Bombardier CRJ Regional Jets
------------------------------------------------------------
Bombardier Aerospace (TSX:BBD.A) (TSX:BBD.B) signed a contract
with Air Canada for the sale of up to 90 Bombardier CRJ aircraft:
-- 45 orders of which 30 are firm orders (15 Bombardier CRJ700
Series 705 and 15 Bombardier CRJ200) and fifteen conditional
orders (Bombardier CRJ200);
-- 45 options.
Air Canada ordered the Bombardier CRJ regional jets for its wholly
owned regional airline, Air Canada Jazz. The contract is
contingent upon Air Canada's emergence from bankruptcy protection
under the Companies' Creditors Arrangement Act -- CCAA.
This contract has a potential value of approximately
$2.45 billion. The firm order portion of the agreement has a
value of approximately $821.2 million.
Deliveries of the CRJ200 model are scheduled to commence in 2004,
with deliveries of the CRJ700 Series 705 model commencing in 2005.
"Air Canada and Air Canada Jazz have had tremendous success with
the current fleet of 25 Bombardier CRJ100 and 10 CRJ200 aircraft,"
said Steven A. Ridolfi, President, Bombardier Regional Aircraft.
"We are fully confident that Air Canada's new CRJ200 and CRJ700
Series 705 aircraft will help grow their business further."
"We welcome these new CRJ aircraft into our fleet," said Joseph D.
Randell, President and Chief Executive Officer, Air Canada Jazz.
"They are the most efficient type of aircraft to serve many of our
current and future markets. We also look forward to having
Executive Class seats available to our passengers in the CRJ700
Series 705."
The CRJ200 aircraft ordered for Air Canada Jazz feature 50 seats
in Hospitality Class Service (R). The CRJ700 Series 705 aircraft
feature a dual-class configuration of ten Executive Class(R) seats
at an ample 38-inch (96.5 cm) pitch and 65 Hospitality Class
Service(R) seats at a comfortable 34-inch (86.5 cm) pitch.
Air Canada Jazz will be the first operator of the Bombardier
CRJ700 Series 705 LR aircraft. Powered by two General Electric
CF34-8C5 turbofan engines, the Series 705 LR has a maximum take-
off weight (MTOW) of 84,500 pounds (38,330 kg) with a range
capability of over 2,200 miles (3,500 km) and cruising speed of
547 mph (880 km/h).
Air Canada and Air Canada Jazz are members of Star Alliance.
Other Star Alliance partners operating CRJ aircraft include Adria
Airways, Austrian arrows, Lufthansa Regional, United Express and
US Airways Express. Bombardier Q400 turboprop airliners are
operated by Lufthansa Regional, Austrian arrows, and also Star
Alliance partners SAS Commuter and Air Nippon Network Ltd., while
US Airways Express carriers operate Dash 8 aircraft. Air Canada
Jazz also operates a fleet of 71 Dash 8 aircraft.
Firm orders for the CRJ family of regional jets -- the most
successful regional aircraft program in history -- as of
August 31, 2004 stood at 1,380 aircraft. Conditional orders and
options could increase the program total to 2,520 CRJ Series
aircraft.
About Bombardier
A world-leading manufacturer of innovative transportation
solutions, from regional aircraft and business jets to rail
transportation equipment, Bombardier, Inc., is a global
corporation headquartered in Canada. Its revenues for the fiscal
year ended Jan. 31, 2004 were $15.5 billion US and its shares are
traded on the Toronto, Brussels and Frankfurt stock exchanges
(BBD, BOM and BBDd.F). News and information are available at
www.bombardier.com.
ALL AMERICAN FOOD: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: All American Food Kits, Inc.
2450 North Lark Industrial Drive
Fenton, Missouri 63026
Bankruptcy Case No.: 04-52112
Type of Business: The Debtor manufactures cooking items,
condiments and sauces.
See http://www.foodkits.com/
Chapter 11 Petition Date: September 23, 2004
Court: Eastern District of Missouri (St. Louis)
Judge: James J. Barta
Debtor's Counsel: Spencer P. Desai, Esq.
Polsinelli, Shalton et al.
100 South Fourth Street, Suite 1100
St. Louis, MO 63102
Tel: 314-889-8000
Fax: 314-231-1776
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
SEMCO Plastics Co., Inc. Trade debt $212,897
Superfoss Packaging Trade debt $187,982
IPL Products Trade debt $172,356
Riverdale Packaging Corp. Trade debt $138,298
AZAD International Trade debt $128,329
American Express Trade debt $103,258
Copper & Brass Sales, Inc. Trade debt $85,145
Pete Tashie Sales Trade debt $84,129
Masterpac Corp. Trade debt $82,120
Prime Packaging & Label Trade debt $72,214
E & M Advertising Trade debt $71,813
John Stark Printing Trade debt $55,988
Blumenfeld Kaplan & Trade debt $53,739
Sandweiss
Telebrands Trade debt $50,000
Peerless Industries, Inc. Trade debt $48,988
Adcom Advertising Trade debt $48,254
Loy-Lange Box Co. Trade debt $45,683
Indiana Sugars Trade debt $37,267
Bakemark Trade debt $32,659
Brubex Enterprises, Inc. Trade debt $28,549
AMERICREDIT CORP: Moody's Revises Outlook to Stable from Negative
-----------------------------------------------------------------
Moody's Investors Service changed to stable from negative the
rating outlook of AmeriCredit Corp. (senior unsecured at B1).
Moody's said that the change in outlook reflected the substantial
improvement in the company's liquidity, asset quality, and
profitability. This improvement is attributable to the right-
sizing measures taken and the more balanced growth strategy
adopted by the company following the difficulties it encountered
during its fiscal year ended June 2003. The company's performance
has also been aided by the turnaround in economic conditions,
Moody's added.
After a $500 million equity issue in the fourth quarter of 2002,
the company implemented a plan to scale back originations, tighten
underwriting standards, downsize its workforce and contract its
branch network. As a result of these measures, Moody's believes
AmeriCredit now has a more rational business model. The firm's
managed assets have declined to $11.9 billion and its effective
leverage to 5.3 times as of June 30, 2004, having been as high as
$16.2 billion at the end of December, 2002 and 12.6 times at the
end of June, 2002 respectively. Growth expectations have been
tempered.
Moody's noted that cash continues to be trapped as additional
credit enhancement on some older FSA insured securitization trusts
whose performance triggers have been breached, which does
constrain the flow of cash to the company from these trusts.
Nevertheless, Moody's believes the changes the company made to its
business model have created conditions for sustainable and
profitable growth going forward.
The rating agency added that further positive rating actions could
be taken if the company demonstrates consistent asset quality and
risk adjusted profitability, all the while maintaining good
liquidity. Conversely, renewed volatility in earnings or asset
quality, constrained liquidity or outsized growth could put
negative pressure on the rating.
AmeriCredit Corp. (NYSE:ACF) is an independent auto finance
company headquartered in Fort Worth, Texas with managed assets of
$11.9 billion at the end of June 30, 2004.
ANC RENTAL: Court Approves Aon Risk Settlement Agreement
--------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware approved
the Settlement Agreement entered into by ANC Rental and its
debtor-affiliates with Aon Risk Services, Inc.
As reported in the Troubled Company Reporter on September 9, 2004,
prior to the Petition Date, the Debtors self-insured against
employee, workers compensation and certain general liability
claims. The Debtors created two entities -- Rental Liability
Management, Inc., and Post Retirement Liability
Management, Inc. -- which assumed certain obligations and
administered certain claims arising in connection with the
Debtors' self-insurance program and provided certain retirement
and health benefits.
Also, prior to the Petition Date, Aon Risk Services, Inc., Aon
Risk Services of Mexico, Inc., Combined Specialty Insurance
Company, Virginia Surety Company, Inc., and their affiliates
assisted the Debtors in administering their self-insurance and
benefits programs. After the formation of the Liability
Management Companies, Aon purchased a minority equity interest in
each Liability Management Company. The Debtors retained the
remaining majority equity interest. The Liability Management
Companies are both debtors in these Chapter 11 proceedings.
On January 13, 2003, Aon filed Claim No. 6967 for $600,000, and
Claim No. 6968 for $350,000. The Aon Claims are based on alleged
breaches by the Debtors of a stock repurchase agreement.
On October 30, 2003, the Debtors commenced an adversary proceeding
seeking to avoid two transfers made to Aon in the 90 days prior to
the Petition Date, each amounting $51,250.
The Debtors are currently in the process of winding down their
affairs and preparing to dissolve their remaining corporate
entities. To wind down and dissolve the Liability Management
Companies in the most efficient manner, the Debtors and
Liquidating Trustee want to resolve their pending disputes with
Aon by acquiring the Aon Interest.
Accordingly, the parties arduously negotiated a settlement
agreement to resolve all of the issues between them, including the
Aon Claims, the Aon Adversary Proceeding, and the Debtors'
acquisition of the Aon Interest.
Joseph Grey, Esq., at Stevens & Lee, in Wilmington, Delaware,
reports that pursuant to the Settlement Agreement:
(a) Claim No. 6967 will be allowed for $600,000 and Claim
No. 6968 will be allowed for $350,000;
(b) The Aon Adversary Proceeding will be dismissed with
prejudice; and
(c) The Aon Interest will be transferred to the Debtors.
Headquartered in Fort Lauderdale, Florida, ANC Rental Corporation,
is the world's third-largest publicly traded car rental company.
The Company filed for chapter 11 protection on November 13, 2001
(Bankr. Del. Case No. 01-11200). On April 15, 2004, Judge Walrath
confirmed the Debtors' 3rd amended Chapter 11 Liquidation Plan, in
accordance with Section 1129(a) and (b) of the Bankruptcy Code.
Upon confirmation, Blank Rome, LLP, and Fried, Frank, Harris,
Shriver & Jacobson, LLP, withdrew as the Debtors' counsel. Gazes
& Associates, LLP, and Stevens & Lee, PC, serve as substitute
counsel to represent the debtors' post-confirmation interests.
When the Company filed for protection from their creditors, they
listed $6,497,541,000 in assets and $5,953,612,000 in liabilities.
(ANC Rental Bankruptcy News, Issue No. 60; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
ARMSTRONG WORLD: Proxicom's Holds an Allowed $1.1 Million Claim
---------------------------------------------------------------
The U.S. Bankruptcy Court for the District approved the settlement
agreement between Armstrong World Industries, Inc. and Proxicom,
Inc., allowing Proxicom a unsecured, non-priority claim for
$1,100,000.
As reported in the Troubled Company Reporter on Sept. 1, 2004,
Armstrong World Industries, Inc. retained Proxicom, Inc., as e-
business consultant to improve its information technology
infrastructure in August 1999. On November 29, 1999, Proxicom and
AWI entered into a Professional Services Agreement. On February
11, 2000, Proxicom and AWI entered into the Armstrong eBusiness
Transformation Statement of Work No. 6503-01142000.
Pursuant to the Proxicom Contract, Proxicom was employed to
consolidate AWI's 11 Web sites into a single residential and
commercial Web site to serve as an "umbrella" site, or gateway, to
the full family of Armstrong products, providing Armstrong.com Web
site users with a new user and brand experience.
Between March 10, 2000 and September 26, 2000, AWI paid Proxicom
$2,357,727 pursuant to the Proxicom Contract for a total of 9,372
hours of personnel charges and expenses incurred between January
2000 and June 2000.
The Proxicom Claim and AWI Counterclaim
On August 31, 2001, Proxicom filed a proof of claim against AWI,
asserting a prepetition, general unsecured liability for
$2,539,938. Proxicom sought payment for the hourly fees and
expenses it incurred between July and November 2000. Proxicom
also sought recovery of an additional 9,950 billable hours,
$145,879 in reimbursable business expenses, $28,838 in prompt
payment discounts that Proxicom alleged were improperly deducted
by AWI, and $26,913 in finance charges.
On May 9, 2003, AWI filed an objection to the Proxicom Claim,
disputing the amount due under the Proxicom Contract and asserting
a counterclaim in an amount to be determined by the Court based on
Proxicom's alleged breach of the Contract. According to AWI,
Proxicom breached the Contract by:
* failing to provide AWI with certain specified key
documentation;
* failing to complete the project by the August 2000 deadline;
* exceeding the estimated hours to be expended in completing
the project without authorization; and
* failing to meet the design specifications in accordance with
the terms of the Proxicom Contract.
On November 1, 2003, the U.S. Bankruptcy Court for the District of
Delaware modified the automatic stay to allow the parties to
liquidate the Proxicom Claim and the AWI Claim. On Mar. 30, 2004,
AWI filed a demand for arbitration of the AWI Claim with the
American Arbitration Association.
Settlement of AWI and Proxicom Claims
The parties engaged in good faith, arm's-length negotiations to
resolve the Proxicom Claim and the AWI Claim on a consensual
basis. These efforts have culminated in a Settlement Agreement and
Release.
The parties agree that the Proxicom Claim will be reduced and
allowed as an unsecured, non-priority claim for $1,100,000. AWI
will withdraw its Counterclaim with prejudice. AWI and Proxicom
will grant the other a full release of all obligations in
connection with their Claims.
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. 67; Bankruptcy Creditors' Service, Inc., 215/945-7000)
BALLY TOTAL: Bank Lenders Okay Nov. 1 Extension for Q2 Financials
-----------------------------------------------------------------
Bally Total Fitness Corp. (NYSE: BFT), a subsidiary of Bally Total
Fitness Holding Corp., obtained an extension to November 1, 2004
for delivering its second quarter financial statements from its
revolving credit lenders. The Company obtained an initial
extension in August when it announced that it was delaying the
reporting of its second quarter results.
Bally also agrees to deliver financial statements for the fiscal
months ended July 31, 2004, and August 31, 2004, to the Lenders by
the Nov. 1 deadline.
As reported in the Troubled Company Reporter on Aug. 11, 2004,
Bally Total Fitness Holding Corporation (NYSE: BFT) postponed the
release of its financial results for the second quarter ended June
30, 2004, and the filing of its Form 10-Q quarterly report with
the Securities and Exchange Commission. The delay, Bally said,
was "due to an examination of certain accounting issues."
As previously announced, KPMG LLP succeeded Ernst & Young LLP as
the Company's independent auditor on May 18, 2004, and is
conducting its initial quarterly review of the Company's financial
statements. The Company also previously announced it is being
investigated by the Securities and Exchange Commission Division of
Enforcement and is fully cooperating with this investigation.
The Company expected to restate prior periods to record a
liability that has accumulated to approximately $5 million as of
June 30, 2004 related to repayment obligations due in 2015 or
later on membership contracts sold by a subsidiary before Bally
acquired it in the late 1980s. The effect on prior income
statements is the addition of non-cash annual interest charges of
between $231,000 and $472,000 in each of the years 1996 through
2003. Among other accounting issues being examined, the Company is
also considering changing the balance sheet presentation of its
installment contract receivables, which would also change an equal
amount of deferred revenue so as not to report these amounts on
the balance sheet. It is possible that this or one or more of the
accounting issues being examined by the Company may require
further restatement of prior period financial statements.
JPMORGAN CHASE BANK, Deutsche Bank Trust Company Americas, and
U.S. Bank National Association, are the lenders under a CREDIT
AGREEMENT, dated as of November 18, 1997, as amended and restated
as of July 2, 2003, among BALLY TOTAL FITNESS HOLDING CORPORATION,
as Borrower, and 49 affiliated Guarantors.
About Bally Total Fitness
Bally Total Fitness is the largest and only nationwide, commercial
operator of fitness centers, with approximately four million
members and 440 facilities located in 29 states, Mexico, Canada,
China, Korea and the Caribbean under the Bally Total Fitness(R),
Crunch Fitness(SM), Gorilla Sports(SM), Pinnacle Fitness(R), Bally
Sports Clubs(R) and Sports Clubs of Canada(R) brands. With an
estimated 150 million annual visits to its clubs, Bally offers a
unique platform for distribution of a wide range of products and
services targeted to active, fitness-conscious adult consumers.
* * *
As reported in the Troubled Company Reporter on August 19, 2004,
Standard & Poor's Ratings Services lowered its ratings on Bally
Total Fitness Holding, Corp., including its corporate credit
rating to 'B' from 'B+', and placed them on CreditWatch with
negative implications based on increasing debt leverage and delays
in releasing of the second quarter financial results.
The Chicago, Illinois-based fitness club operator's total debt
outstanding at March 31, 2004, was $731.8 million.
"The rating action reflects Bally's rising debt leverage and the
expectation that the company is not likely to de-lever in the near
term," said Standard & Poor's credit analyst Andy Liu. Although
the company's new membership enrollment trend is encouraging, with
three consecutive quarters of year-over-year increases, these
higher enrollments have not yet translated into higher EBITDA.
"Over the medium term, Bally's debt leverage could gradually
decrease if the positive membership enrollment trend is sustained,
membership duration remains steady, and new members improve
earnings mix."
The CreditWatch listing is based on Bally delaying the release of
its financial results for the second quarter ended June 30, 2004,
and postponing the filing of its Form 10-Q quarterly report with
the Securities Exchange Commission.
The resolution of CreditWatch would depend on Bally releasing its
second quarter financial results and filing its Form 10-Q with the
SEC prior to September 30, 2004, and the nature of any restatement
or other unexpected items. Ratings could be lowered further if
bondholders send a notice of default to bond trustees.
BARLEX INC: Case Summary & 11 Largest Unsecured Creditors
---------------------------------------------------------
Debtor: Barlex Inc.
401 North Brand Boulevard, Suite 550
Glendale, California 91203
Bankruptcy Case No.: 04-30501
Type of Business: The Company offers online and conventional
auctions, liquidations, appraisals, asset
management, and real estate auctions.
See http://www.barlex.com/
Chapter 11 Petition Date: September 23, 2004
Court: Central District of California (Los Angeles)
Judge: B. Russell
Debtor's Counsel: Jilbert Tahmazian, Esq.
Law Offices Jilbert Tahmazian
1518 West Glenoaks Boulevard
Glendale, California 91201
Tel: 818-242-8201
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 11 largest unsecured creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
L3 Communications Pending Litigation $550,000
997 Lenox Drive, Building 3
Lawrenceville, NJ 08648
Aegis El Monte Realty, LP Pending Litigation $360,000
2331 West Lincoln Avenue
Anaheim, California 92801
Aegis Financial Group, Inc. Pending Litigation $360,000
2331 West Lincoln Avenue
Anaheim, California 92801
BizTel, Inc. Pending Litigation $360,000
2331 West Lincoln Avenue
Anaheim, California 92801
Nextpath Environmental Judgement $55,000
Service
Craig W. Christensen Attorney's Fees $22,000
McCusker, Anselmi Attorney's Fees $11,657
Rosen, et. al.
Steven A. Finegood Attorney's Fees $9,152
Jennifer Baxter Pending Lawsuit $1,700
Daniel H. Lidman Attorney's Fees $1,549
Venture Capital Judgement $950
Management LLC
BERWALD PARTNERSHIP: Creditors Must File Proofs of Claim by Jan. 6
------------------------------------------------------------------
The United States Bankruptcy Court for the District of South
Dakota set January 6, 2005, as the deadline for all creditors owed
money by Berwald Partnership on account of claims arising prior to
August 23, 2004, to file their proofs of claim.
Creditors must file their written proofs of claim on or before the
January 6 Claims Bar Date and those forms must be delivered to:
Clerk of the Bankruptcy Court
District of South Dakota
225 S Pierre Street, Room 203
Pierre, South Dakota 57501
Headquartered in Toronto, South Dakota, Berwald Partnership filed
for chapter 11 protection on August 23, 2004 (Bankr. S.D.D. Case
No. 04-10273). Clair R. Gerry, Esq., at Stuart, Gerry &
Schlimgen, LLP, represents the Company in its restructuring
efforts. When the Debtor filed for protection from its creditors,
it estimated more than $10 million is assets and debts.
CARE CONCEPTS: Rescinds iBill Closing & Delays Acquisition
----------------------------------------------------------
Care Concepts I, Inc., (AMEX:IBD) rescinded the closing of its
acquisition of Media Billing Company, LLC, and its wholly owned
subsidiary Internet Billing Company, LLC, that was purchased from
Penthouse International, Inc., in August 2004. On Sept. 20, 2004,
the Company received a notice from the AMEX of its intention to
de-list the Company's Common Stock from trading on the exchange,
pending a hearing requested by the Company. By agreeing to
rescind the closing of the iBill acquisition unless and until the
Company has satisfactorily resolved all listing eligibility issues
and receives all necessary AMEX approvals related to the iBill
transaction, the staff of the AMEX has agreed to withdraw its
notice of intent to de-list the Company's securities. There can
be no assurance that the Company will be able to satisfactorily
resolve all listing issues or that it will receive all such AMEX
approvals associated with the iBill transaction.
The notice from the staff provides that in the opinion of the
staff the Company was not in compliance with applicable continued
listing standards as follows:
1. The Company has not fully furnished information requested by
the Exchange related to the acquisition of Media Billing
Company, LLC (iBill);
2. The Company's acquisition of iBill raises public interest
concerns pursuant to Section 1003(f)(iii);
3. The Company has issued or authorized its transfer agent to
issue additional shares of its common stock without the
Exchange's approval;
4. The Company issued 20% or more of its currently outstanding
shares of common stock without obtaining prior approval of
its shareholders;
5. The disclosure in the Company's 8-KA dated September 2, 2004
regarding the number of shares of common stock issued to
Penthouse in the iBill acquisition contained material
omissions and inconsistencies, and;
6. The Company completed an acquisition, the net effect of
which was that the Company was acquired by an unlisted
company and the Company did not provide adequate information
to the staff for it to determine whether the post
transaction company meets the initial listing standards as
required by Section 341 of the Company Guide.
The Company intends to furnish the information on a timely basis
and is hopeful that the staff of the AMEX will, upon receipt and
review of such information, provide all necessary approvals for
the iBill acquisition to be completed. If for any reason,
however, that AMEX approval has not been obtained by
January 21, 2005, the Company will nevertheless close the
acquisition, withdraw from the AMEX and seek to re-list its common
stock on an alternate stock exchange.
The Company's common stock was halted for trading on Tuesday,
September 21, 2004. The management of the Company believes that
there may have been a disclosure of certain material non-public
information.
In commenting on the restructure of the iBill acquisition, Gary
Spaniak, Jr., the Company's President stated, "It is the Company's
clear objective to resolve with the AMEX all issues relating to
the iBill acquisition and to permit the continued trading of its
stock on the AMEX for the benefit of its shareholders." Mr.
Spaniak also stated that the Company intends to engage a ompliance
officer with respect to the corporate governance operation of the
Company and in compliance with the provisions of the Sarbanes
Oxley Act. The stock is expected to resume trading Monday morning
on the American Stock Exchange.
About the Internet Billing Company
Internet Billing Company (iBill) sells access to online services
and other downloadable products (music, games, videos, personals,
etc.) to consumers through proprietary web-based payment
applications. The iBill online payments systems manage
transaction authorization on the global financial networks such as
Visa(R) and Master Card(R) and simultaneously provide password
management controls for the life of the subscribing consumer. On-
demand CRM -- Customer Relationship Management -- applications are
provided to registered independent merchants, typically small and
medium sized businesses seeking a cost effective technology
platform to outsource non-core banking and finance functions.
Since 1996, iBill has established a trusted brand with consumers
and online businesses with 27 million customers in 38 countries.
Prior to its acquisition by the Company iBill was a subsidiary of
Penthouse International, Inc. (OTCBB:PHSL). In March 2004
Penthouse acquired iBill from InterCept, Inc., a NASDAQ NMS
company.
About Care Concepts I, Inc.
Care Concepts I, Inc., (AMEX:IBD) is a media and marketing holding
company with assets including: Forster Sports, Inc., a sports-
oriented, multi-media company that produces sports radio talk
shows; and iBidUSA.com, a popular website which showcases products
and services in an auction format starting with an opening bid of
about 30% percent of the retail value. Internet Billing Company
(iBill), which sells access to online services and other
downloadable products (music, games, videos, personals, etc.) to
consumers through proprietary web-based payment applications.
Since 1996, iBill has established a trusted brand with consumers
and online businesses with 27 million customers in 38 countries.
Care Concepts I, Inc., actively and regularly pursues additional
acquisition opportunities to enhance its portfolio holdings and
iBill.
For the three months ended June 30, 2004, Care Concepts reported
an $833,016 net loss compared to a $900,257 net loss in June 2003.
Auditors Express Doubt
On January 15, 2003, Care Concepts dismissed Angell & Deering as
is principal accountants and auditors. A&D's report on the
Company's financial statements expressed substantial doubt about
the Company's ability to continue as a going concern. On January
15, 2003, William J. Hadaway was hired to review the Company's
2002 financial statements. On October 30, 2003, Care Concepts
dismissed WJH. WJH shared A&D's doubts. Effective October 30,
2003, the Company engaged the accounting firm of Jewett, Schwartz
& Associates as its new independent accountants to audit the
financial statements for the fiscal year ending December 31, 2003.
CATHOLIC CHURCH: Tucson Wants to Hire Keegan as Accountant
----------------------------------------------------------
The Roman Catholic Church of the Diocese of Tucson seeks Judge
Marlar's permission to hire Keegan, Linscott & Kenon, P.C., as its
accountants and consultants.
"Keegan Linscott has the experience, expertise, and resources
needed to provide the professional accounting and related
financial services needed by the Diocese," Reverend Gerald F.
Kicanas, D.D., the Bishop of the Diocese of Tucson, says.
Bishop Kicanas points out that Keegan Linscott has accountants and
consultants who are familiar with the intricacies and issues
associated with religious non-profit corporations. Moreover,
Keegan Linscott has considerable experience in Chapter 11 cases.
As accountants and consultants, Keegan Linscott will:
-- analyze the Diocese's operations;
-- consult with respect to the Diocese's accounting systems
and procedures;
-- develop reorganization and liquidation models;
-- analyze financing and financial alternatives for the
Diocese; and
-- consult on, and assist in, developing a plan of
reorganization.
The Diocese will pay Keegan Linscott based on the firm's customary
hourly rates:
Director $195
Manager 125
Supervisor 100
Senior 85
Staff 50 - 75
The Diocese will also reimburse the firm of its actual, necessary
expenses.
Christopher G. Linscott, an accountant at Keegan Linscott,
discloses that the firm:
-- performed initial analysis and accounting work for the
Diocese prior to Tucson's Petition Date;
-- performs audit work for Catholic Community Services, Inc.,
an affiliated entity;
-- performed audit and consulting services for the Diocese of
Tucson Catholic Cemeteries, Inc., for the year ended
June 30, 2003; and
-- performed occasional bookkeeping services for St. Cyril's
Parish in 2003 and 2004.
Mr. Linscott asserts that no conflict of interest arises from
these relationships that would outweigh the inherent efficiencies
of representing the Diocese in its Chapter 11 case.
Mr. Linscott assures Judge Marlar that Keegan Linscott is a
"disinterested person" as defined in Section 101(14) of the
Bankruptcy Code, and does not hold or represent an interest
adverse to the Diocese's estate.
The Roman Catholic Church of the Diocese of Tucson filed for
chapter 11 protection (Bankr. D. Ariz. Case No. 04-04721) on
September 20, 2004, and delivered a plan of reorganization to the
Court on the same day. Susan G. Boswell, Esq., Kasey C. Nye,
Esq., at Quarles & Brady Streich Lang LLP, represent the Tucson
Diocese. The Archdiocese of Portland in Oregon filed for
chapter 11 protection (Bankr. Ore. Case No. 04-37154) on July 6,
2004. Thomas W. Stilley, Esq. and William N. Stiles, Esq. of
Sussman Shank LLP represent the Portland Archdiocese in its
restructuring efforts. Portland's Schedules of Assets and
Liabilities filed with the Court on July 30, 2004, the Portland
Archdiocese reports $19,251,558 in assets and $373,015,566 in
liabilities. (Catholic Church Bankruptcy News, Issue No. 6;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
CELESTICA INC: Inks Pact to Sell Power Systems to C&D Technologies
------------------------------------------------------------------
Celestica, Inc., (NYSE, TSX: CLS) signed a definitive agreement to
divest its Power Systems business to C&D Technologies, a leading
global provider of solutions for power conversion and storage of
electrical power, in an all-cash transaction, the terms of which
were not disclosed. The transaction is expected to close within
30 days.
Under the agreement, Celestica will divest its Power Systems
assets and transfer its employees to C&D Technologies. The
purchase of Celestica's Power Systems business will enable C&D
Technologies to offer a greater range of power solutions and
deeper breadth of capability to its customers.
Celestica Power Systems is a Toronto, Ontario-based manufacturer
with sales of approximately $94 million for the twelve months
ending June 30, 2004. Celestica Power Systems develops DC/DC and
AC/DC power supplies which are sold on a direct basis to large
computing and communications OEMs.
In addition, the companies have signed a three-year supply
agreement for Celestica to manufacture certain C&D Technologies
power products. Under this agreement, Celestica's customers will
continue to benefit from Celestica's expertise in supply chain
management and high-quality, low-cost manufacturing.
"The strategic alliance we are forming with C&D Technologies will
provide Celestica's customers with an extensive portfolio of
leading power products," said Marvin MaGee, president, Celestica.
"This relationship brings strengths from both companies' core
business to the forefront, enabling customers to continue to
leverage the manufacturing strength of Celestica, while taking
advantage of the extensive product portfolio of C&D Technologies."
Wade H. Roberts, Jr., president and chief executive officer of C&D
Technologies, stated, "We are pleased to have identified another
well-fitting acquisition, the third this year. The combination of
Celestica's Power division, Datel, Celab, and C&D Power
Electronics is expected to establish the Division as a worldwide
leader with a broad product offering, diverse channels to market
and one of the most capable engineering teams in the industry. We
look forward to welcoming the talented employees, loyal customers,
and experienced management team from Celestica to the C&D family.
Additionally, a supply agreement entered into with Celestica
concurrent with this transaction should ensure a reliable supply
of high-quality merchandise for power systems customers."
The transaction is subject to customary closing conditions and is
expected to close within the next 30 days. When completed, C&D
Technologies expects the transaction to be immediately accretive
to earnings. C&D Technologies' bank group, led by Bank of
America, has expanded the company's revolving line of credit to
$200 million to fund the acquisition.
C&D Technologies plans to hold a conference call after the
closing. Details will be provided at a later date.
Celestica, Inc. -- http://www.celestica.com/-- is a world leader
in the delivery of innovative electronics manufacturing services -
- EMS. Celestica operates a highly sophisticated global
manufacturing network with operations in Asia, Europe and the
Americas, providing a broad range of integrated services and
solutions to leading OEMs (original equipment manufacturers).
Celestica's expertise in quality, technology and supply chain
management, enables the company to provide competitive advantage
to its customers by improving time-to-market, scalability and
manufacturing efficiency.
* * *
As reported in the Troubled Company Reporter on Sept. 20, 2004,
Standard and Poor's Ratings Services said it placed its long-term
corporate credit rating on Toronto, Ontario-based Celestica, Inc.,
on CreditWatch with negative implications based on revised
guidance and poor operating performance that has not met Standard
& Poor's expectations.
As reported in the Troubled Company Reporter on March 31, 2004,
Standard & Poor's Ratings Services lowered it long-term corporate
credit rating and unsecured debt on Celestica Inc. to 'BB' from
'BB+'. At the same time, Standard & Poor's lowered its
subordinated debt rating on the company to 'B+' from 'BB-'. The
outlook is negative. "The ratings on Celestica reflect the
continued difficult end- market conditions and sub par operating
performance in the highly competitive electronic manufacturing
services -- EMS -- sector," said Standard & Poor's credit analyst
Michelle Aubin. These factors are partially offset by the
company's tier-one position in the EMS sector and longer-term
trends favoring electronic manufacturing outsourcing.
CITATION CORP: Wants Burr & Forman as Bankruptcy Counsel
--------------------------------------------------------
Citation Corporation and its debtor-affiliates ask the United
States Bankruptcy Court for the Northern District of Alabama for
permission to retain Burr & Forman LLP as their bankruptcy
counsel.
The Debtors tell the Court that they have consulted with Burr &
Forman regarding restructuring issues since June 2004 and the
Firm, therefore, is familiar with the Debtor's corporate structure
and businesses.
Burr & Forman is expected to:
a) counsel and represent the Debtors in connection with
general bankruptcy rules administration in their chapter
11 cases as well as general corporate, finance,
litigation, employee benefits, labor, tax, customer
issues, vendor issues and insurance;
b) assist the Debtors on matters relating to local
bankruptcy customs and practices;
Michael Leo Hall, Esq., and Rita H. Dixon, Esq., are the lead
attorneys in the Debtors' restructuring. Mr. Hall discloses that
that the Debtor paid a $350,000 retainer.
Mr. Hall reports that Burr & Forman professionals bill:
Designation Hourly Rate
----------- -----------
Partner $285 - 350
Associates 175 - 265
Legal Assistants 120 - 140
To the best of the Debtors knowledge, Burr & Forman is
"disinterested" as the term is defined in Section 101(14) of the
Bankruptcy Code.
Headquartered in Birmingham, Alabama, Citation Corporation --
http://www.citation.net/-- designs, develops and manufactures
cast, forged and machined components for the capital and durable
goods industries, including the automotive and industrial markets.
Citation uses aluminum, steel, gray iron, and ductile iron as the
raw materials in its various manufacturing processes. The Debtors
filed for protection on Sept. 18, 2004 (Bankr. N.D. Ala. Case No.
04-08130). When the Company and its debtor-affiliates filed for
protection from their creditors, they estimated more than
$100 million in assets and debts.
CLYDESDALE: Moody's Lifts Rating on $47M Secured Class to Caa3
--------------------------------------------------------------
Moody's Investors Service upgraded its rating of the following
Class of Notes issued by Clydesdale CBO I, Ltd., a collateralized
debt obligation issuance:
* $47,000,000 Senior Secured Class B Fixed Rate Notes
due 2011 from Caa3 to Caa1.
The rating action reflects improvement in the credit quality of
the underlying collateral pool, which consists primarily of non-
investment grade corporate debt obligations. The Class B Notes
have also benefited from significant improvement in
overcollateralization.
Moody's stated that as a result of these factors, the rating
assigned to the Class B Notes, prior to the rating action taken
today, is no longer consistent with the credit risk posed to
investors.
Rating Action: Upgrade
Issuer: Clydesdale CBO I, Ltd.
Class Description: U.S. $47,000,000 Senior Secured Class B Fixed
Rate Notes due 2011 from Caa3 to Caa1
COEUR D'ALENE: Canadian Regulators Okays Wheaton River Acquisition
------------------------------------------------------------------
Coeur d'Alene Mines Corporation (NYSE: CDE) reported that it has
received the approval of the Minister of Industry under the
Investment Canada Act for its offer to purchase all of the
outstanding common shares of Wheaton River Minerals Ltd. (TSX:
WRM, Amex: WHT). In approving the acquisition, the Minister
determined that the transaction is likely to be of "net benefit to
Canada" for purposes of the Investment Canada Act.
The Commissioner of Competition under the Competition Act (Canada)
has granted Coeur an advance ruling certificate, which constitutes
compliance with the notification and waiting period requirements
under the Competition Act (Canada). As a result, Coeur has now
received all necessary Canadian regulatory approvals to proceed
with the acquisition of Wheaton River.
Dennis E. Wheeler, Chairman and Chief Executive Officer of Coeur,
said, "We are pleased that we have now received all necessary
Canadian regulatory approvals for our offer to acquire Wheaton
River. This represents another step toward the completion of a
Coeur-Wheaton River combination."
Coeur's tender offer is open for acceptance until 5:00 pm (EDT) on
September 30, 2004, unless extended.
CIBC World Markets Inc. and J.P. Morgan Securities Inc. are acting
as dealer managers for the offer. Wheaton River shareholders can
obtain more information about the offer by contacting MacKenzie
Partners, Inc., which is serving as information agent, by calling
(800) 322-2885 (toll-free) or (212) 929-5500 (collect).
Coeur d'Alene Mines Corporation is the world's largest primary
silver producer, as well as a significant, low-cost producer of
gold. The Company has mining interests in Nevada, Idaho, Alaska,
Argentina, Chile and Bolivia.
* * *
As reported in the Troubled Company Reporter on June 3, 2004,
Standard & Poor's Ratings Services placed its B- corporate credit
and senior unsecured debt ratings on Coeur D'Alene Mines Corp. on
CreditWatch with positive implications following the company's
announcement that it intends to acquire precious metals mining
company Wheaton River Minerals Ltd. in a stock and cash
transaction valued at approximately $1.8 billion.
"The CreditWatch action reflects what is likely to be a meaningful
improvement in Coeur's business and financial profile upon the
successful acquisition of lower-cost producer Wheaton," said
Standard & Poor's credit analyst Paul Vastola. Standard & Poor's
expects that its ratings on Coeur would likely be raised several
notches. Standard & Poor's will continue to monitor the
transaction for any potential revisions to the deal.
COLLATERALIZED SYNTHETIC: S&P Puts Mezzanine Class on CreditWatch
-----------------------------------------------------------------
Standard & Poor's Ratings Services placed its rating on the
mezzanine class of Collateralized Synthetic Obligation's credit
default swap series 2000-1 (due September 2005) on CreditWatch
with negative implications. The rating on the junior mezzanine
class remains on CreditWatch negative, where it was placed
April 23, 2004.
The rating action reflects the lowering of Delta Air Lines Inc.'s
issuer credit rating to 'CC'. Delta is one of the reference
entities in the underlying $1 billion pool of reference credits.
Rating Placed On Creditwatch Negative
Collateralized Synthetic Obligation 2000-1
Rating
Class To From
----- -- ----
Mezzanine B/Watch Neg B
Rating Remaining On Creditwatch Negative
Collateralized Synthetic Obligation 2000-1
Class Rating
----- ------
Junior Mezzanine CCC-/Watch Neg
COLORADO EDUCATIONAL: S&P Upgrades Revenue Bonds' Rating to B
-------------------------------------------------------------
Standard & Poor's Ratings Services raised its rating on Colorado
Educational and Cultural Facilities Authority's charter school
revenue bonds outstanding three notches to 'B' from 'CCC',
supported by Renaissance School Building Corp., due to a new lease
between the building corporation and Douglas County School
District No. RE-1 ('AA-' long-term general obligation debt
rating).
The new lease agreement requires more notice to be given in the
event of nonappropriation and a one-year renewal option, and it
also allows the building corporation and trustee more access to
the facility to show it to prospective buyers.
"The rating, however, remains in the speculative-grade category
due to the school district's continued explicit statements that
the lease does not represent a financial commitment by the
district beyond the lease's current one-year term and that the
school's future closure remains an option," said Standard & Poor's
credit analyst James Breeding.
Douglas County School District No. RE-1's history in renewing the
lease for the current year provides some indication that the
former charter school, now converted into a magnet school, has
retained public support.
Previously, the school district had subleased the building from
Renaissance Charter School through a lease that was renewed
annually with lease payments appropriated by the school board.
Earlier this year, the school board dissolved the charter school
making it necessary to enter into a lease directly with the
building corporation, which is effectively a lease directly with
the current bondholders.
Under the new lease, which has a one-year renewal option beyond
the June 2005 termination date, the district must notify
bondholders by March 1, 2005, if it intends not to renew the lease
for fiscal 2006. In addition, the bondholders will have access to
the facility and will be allowed to show the property to
prospective buyers.
In the past, the school district has explicitly expressed to
Standard & Poor's the possibility of closing the school and not
renewing its sublease agreement. For this reason, we believe the
school district's credit support is not available to these bonds.
This resulted in the rating being lowered to 'CCC' on May 16,
2003.
The rating action affects roughly $3 million of revenue debt
outstanding.
COMMERCE ONE: Anticipates Liquidation Due to Continuing Losses
--------------------------------------------------------------
Commerce One, Inc. (NASDAQ: CMRC), a leading provider of service-
oriented solutions for automating and integrating business
processes across an enterprise network of customers, suppliers,
and partners, anticipates filing for bankruptcy protection under
chapter 7 or 11 of the United States Bankruptcy Code after it
reported continuing losses and deficits in the successive quarters
and efforts to raise additional equity failed.
"We are currently considering our alternatives, including a
significant reduction or discontinuation of our operations, other
expense reductions, and/or a sale of all or a portion of our
assets. We are currently pursuing discussions with potential
buyers of our assets, including our supplier relationship
management business. We anticipate that we will eventually wind-
down our business and may file for bankruptcy under Chapter 11 or
7 of the United States Bankruptcy Code. In any such event, we do
not expect that the amounts available to us will be sufficient to
meet all of our debts and obligations, or that any amounts will be
paid to our stockholders," the Company told federal regulators in
a Form 8-K filing with the Securities and Exchange Commission.
At June 30, 2004, Commerce One, Inc.'s balance sheet showed a
$10,391,000 stockholders' deficit, compared to a $3,028,000 at
December 31, 2003. As of September 22, 2004, the Company reported
an unrestricted cash balance of approximately $700,000.
Cuts 56 Jobs to Preserve Cash
On September 24, 2004, the Company laid-off approximately 56
employees in order to preserve its remaining limited cash.
Following the payment of layoff costs and the payment of other
payroll and payroll-related expenses, the Company expects to have
less than $300,000 of unrestricted cash to fund its operations.
Following the layoff, the Company will have approximately 36
employees, most of whom are employed by our supplier relationship
management (SRM) business unit.
Management Realignment
Peter Seidenberg joined the Company's executive team as its new
Chief Financial Officer, on a permanent basis, following the
resignation of Interim CFO, Todd Hagen.
Mr. Seidenberg most recently served as Director of Finance and
Corporate Controller for Plumtree Software, Inc., where he also
served as Director of Finance and Business Development.
Seidenberg was instrumental at helping Plumtree grow from less
than $3 million in annualized revenues to over $80 million. Prior
to joining Plumtree Software, Seidenberg served as Manager of
Financial Operations at Allied Signal Inc.
"We are delighted to add Peter to the Commerce One team," said
Mark Hoffman, President and CEO of Commerce One. "Given Peter's
successful track record, he will be a valuable addition to
Commerce One."
Consistent with the revised NASDAQ listing standards recently
approved by the U.S. Securities and Exchange Commission, Commerce
One stated that on September 8, 2004, Mr. Seidenberg received a
non-statutory option grant to purchase 400,000 shares of Commerce
One stock at an exercise price of $.61 per share, which was the
closing price of the Company's stock on September 8, 2004. After a
six-month cliff, the options will begin vesting on a monthly basis
over a four-year period in accordance with the terms of the
Commerce One 2004 Inducement Plan.
About Commerce One
From its initial roots in Internet-based software applications,
Commerce One, Inc. -- http://www.commerceone.com/-- has
consistently been at the forefront of delivering advanced
technologies that help global businesses collaborate with their
partners, customers and suppliers over the Internet. Commerce One
has defined many of the open standards and protocols established
for business networks today and our global customer base includes
leaders in a wide range of industries. The Commerce One ConductorT
platform and industry-specific Process Accelerators represent the
next generation of business process management solutions that
enable enterprises to optimize their existing technology
investments and enhance functionality of existing applications and
processes.
COUNTRYWIDE HOME: Fitch Assigns Low-B Rating to Five Classes
------------------------------------------------------------
The transactions below were recently reviewed and the class B4
certificates for each transaction were categorized Rating Watch
Negative pending Fitch's receipt and analysis of further
information from the servicer. Fitch already received the
information and evaluated expected loss and credit enhancement
levels, Fitch affirmed seventeen classes and downgraded one class,
and in doing so removed the three classes from Rating Watch
Negative status from these Countrywide Home Loans, Inc.
residential mortgage-backed securitizations:
* CWMBS (Countrywide Home Loans, Inc.), mortgage pass-through
certificates, series 1999-6 (Alt 1999-1)
-- Class A affirmed at 'AAA';
-- Class M affirmed at 'AAA';
-- Class B1 affirmed at 'AAA';
-- Class B2 affirmed at 'A+';
-- Class B3 affirmed at 'BB';
-- Class B4 downgraded to 'CCC' from 'B,' and removed from
Rating Watch Negative.
* CWMBS (Countrywide Home Loans, Inc.), mortgage pass-through
certificates, series 2001-21 (Alt 2001-10)
-- Class A affirmed at 'AAA';
-- Class M affirmed at 'AAA';
-- Class B1 affirmed at 'AAA';
-- Class B2 affirmed at 'A';
-- Class B3 affirmed at 'BB';
-- Class B4 affirmed at 'B,' and removed from Rating Watch
Negative.
* CWMBS (Countrywide Home Loans, Inc.), mortgage pass-through
certificates, series 2002-13 (Alt 2002-8)
-- Class A affirmed at 'AAA';
-- Class M affirmed at 'AAA';
-- Class B1 affirmed at 'A+';
-- Class B2 affirmed at 'BBB+';
-- Class B3 affirmed at 'BB';
-- Class B4 affirmed at 'B,' and removed from Rating Watch
Negative.
The affirmations reflect credit enhancement deemed adequate in
light of future loss expectations and affect $266,642,506 of
outstanding certificates. The negative rating action on series
1999-6 (Alt 1999-1), class B-4 is taken due to the losses incurred
and the current level of non-performing loans in relation to the
applicable credit support levels, and affect $1,042,706 of
outstanding certificates.
As of the August 25th distribution period, series 1999-6 (Alt
1999-1) had over $2.5 million in the 90+ delinquency bucket. With
$511,908 remaining in the B5 class (not rated by Fitch), Fitch
feels the credit enhancement of .93% being provided to the B4
class may not be adequate to cover future losses. Classes A, M,
B1, B2, and B3 remain at the ratings previously taken on
July 14, 2004.
As of the August 25th distribution period, series 2001-21
(Alt 2001-10) and series 2002-13 (Alt 2002-8) had $1,619,581 and
$1,307,081 remaining in the B5 classes (not rated by Fitch).
Fitch believes the current enhancement these classes provide to
the B4 are adequate to cover expected losses. For both series,
classes A, M, B1, B2, and B3 remain at the ratings previously
taken on August 11, 2004.
Fitch will continue to continue to closely monitor these deals.
CSFB MORTGAGE: Fitch Places BB Rating to $10.0M Class SC Cert.
--------------------------------------------------------------
Fitch Ratings upgrades CS First Boston Mortgage Securities Corp.'s
commercial mortgage pass-through certificates, series 1995-MF1, as
follows:
-- $5.5 million class SB to 'AAA' from 'A';
-- $10.0 million class SC to 'A' from 'BB'.
Fitch does not rate classes PL-C, PL-D, and SD. There are 11
fixed-rate loans secured by multifamily properties that
collateralize classes PL-C, SB, SC, and SD. The upgrades are
attributed to the increase in subordination levels due to loan
payoffs and amortization.
As of the September 2004 distribution date, the pool's aggregate
certificate balance has paid down 85% to $37.5 million from
$251.1 million at issuance and the number of loans from 74 to 11.
GMAC Commercial Mortgage Corp., the master servicer, collected
operating statements for 77% of the outstanding pool by current
loan balance. The YE 2003 weighted-average debt service coverage
ratio -- DSCR -- for these loans is 1.19 times (x), compared with
1.44x at issuance.
Fitch is concerned with the increasing concentration of the pool;
however, all remaining loans are performing. Four loans (30.9%)
have a YE 2003 DSCR below 1.0x. No losses are expected on these
loans as the loan balance per unit at each property is minimal.
Fitch will continue to monitor the performance of this
transaction.
CSK AUTO: Soft Sales Prompt S&P to Revise Outlook to Stable
-----------------------------------------------------------
Standard & Poor's Ratings Services revised the outlook on CSK
Auto, Inc., to stable from positive due to weaker-than-anticipated
second quarter comparable sales results and expectations that
sales will continue to be soft.
At the same time, Standard & Poor's affirmed its ratings on the
Phoenix, Arizona-based automotive parts and accessories retailer,
including its 'B+' corporate credit rating.
While operating performance improved over the past two years with
same-store sales increases of 7% and 6% for its 2003 and 2004
fiscal years (ended February), recent trends are deteriorating.
Comparable sales declined 2.5% in the second quarter, after 5%
growth in the first quarter. Although some of the decline
reflects a drop in hot weather-related replacement products (such
as air conditioning, cooling accessories, batteries, and starters)
due to a cool summer, prospects for the balance of the year are
not good. Management anticipates that same store sales will
decline 2.0% to 3.5% in the third quarter and be flat to negative
in the fourth quarter of 2004. Operating profit was also
negatively affected in the second quarter as expenses were not cut
in time to offset the lower revenues. "Hence, the anticipated
improvement in credit measures is not likely, rather, they are
expected to remain at levels consistent with current ratings over
the next year," said Standard & Poor's credit analyst Stella
Kapur.
DEVON MOBILE: Trustee Wants Until March 28 to Object to Claims
--------------------------------------------------------------
Devon Mobile Communications, LP's Liquidating Trustee, Buccino &
Associates, Inc., asks the U.S. Bankruptcy Court for the District
of Delaware to extend the deadline by which it must object to
administrative and other proofs of claim filed in Devon's Chapter
11 cases. The Trustee wants the deadline extended to March 28,
2005.
Michael R. Nestor, Esq., at Young, Conaway Stargatt & Taylor, LLP,
in Wilmington, Delaware, states that regardless of the Devon
Trustee's best efforts in claims resolution, there are still a
number of outstanding claims. The Devon Trustee wants more time
to effectively evaluate outstanding claims, prepare and file
additional objections to claims and consensually resolve disputed
claims, Mr. Nestor adds. Furthermore, prudence and caution
dictate that an extension of the deadline to object to claims and
interests is warranted.
The Devon Trustee assures the Court that it has not shirked from
its duties under the Plan but rather has worked diligently to
evaluate the remaining claims in a timely and efficient manner and
is prosecuting the claims objections. Devon filed for Chapter 11
protection in Delaware on August 19, 2002 under case no. 02-12431.
Saul Ewing, LLP, is representing the Debtor. Devon is 49% owned by
Adelphia Communications Corporation. (Adelphia Bankruptcy News,
Issue No. 64; Bankruptcy Creditors' Service, Inc., 215/945-7000)
DUESENBERG: S&P Puts Class D's B+ Rating on CreditWatch Negative
----------------------------------------------------------------
Standard & Poor's Ratings Services placed its rating on Duesenberg
CSO 2001-3 LLC's class D notes due August 2006 on CreditWatch with
negative implications.
The CreditWatch placement reflects the lowering of Delta Air Lines
Inc.'s issuer credit rating to 'CC'. Delta is one of the
reference entities in the underlying $1 billion portfolio of
reference obligations.
The CreditWatch placement reflects the credit quality of the
reference credits, the level of credit enhancement provided by
subordination, and Duesenberg CSO 2001-3 LLC's ability to meet its
payment obligations as issuer of the credit-linked notes.
Rating Placed On Creditwatch With Negative Implications
Duesenberg CSO 2001-3 LLC
Credit-linked notes
Rating
Class To From
----- -- ----
D B+/Watch Neg B+
EIGHT THREE ONE: Case Summary & 7 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Eight Three One, Inc.
1811 South Ruth Street
Sulphur, Louisiana 70663
Bankruptcy Case No.: 04-21237
Chapter 11 Petition Date: September 24, 2004
Court: Western District of Louisiana (Lake Charles)
Judge: Gerald H. Schiff
Debtor's Counsel: D. Bruce Jones, Esq.
700 First Avenue
Sulphur, LA 70663
Tel: 318-528-3314
Total Assets: $1,092,511
Total Debts: $774,315
Debtor's 7 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Mary Jo Hoke $161,000
Internal Revenue Service Payroll Taxes $25,777
Calcasieu Parish School Sales and Use Taxes $22,000
Board
Hibernia National Bank Revolving Charge $17,900
State of Louisiana Sales and Use Taxes $15,061
State of Louisiana Withholding $577
GMAC Value of Colateral: $21,500
$21,400
ENERGY CONVERSION: Complies with Nasdaq Marketplace Rule
--------------------------------------------------------
Energy Conversion Devices, Inc., (Nasdaq: ENER) disclosed that, in
compliance with Nasdaq Marketplace Rule 4350(b)(1)(B), the
independent audit report included in the Company's Annual Report
on Form 10-K for the fiscal year ended June 30, 2004 contained an
explanatory paragraph relating to the Company's ability to
continue as a going concern. The disclosure in this press release
is required under the above Nasdaq rule and does not represent any
change to the Company's Annual Report on Form 10-K filed on
September 13, 2004, with the Securities and Exchange Commission.
The report of Grant Thornton LLP, the independent registered
public accounting firm auditing the Company's financial statements
for the fiscal year ended June 30, 2004, expressed that "the
Company's recurring losses from operations and need for additional
working capital raise substantial doubt about its ability to
continue as a going concern." The Company has recurring losses
from operations and is actively engaged in discussions to obtain
the needed additional working capital.
The explanatory paragraph is not new, as the independent auditor
report relating to the Company's financial statements for the
fiscal year ended June 30, 2003, included the same explanatory
paragraph.
On November 14, 2003, the Audit Committee of the Company's Board
of Directors engaged the public accounting firm of Grant Thornton
LLP as the Company's independent auditors after Deloitte & Touche
LLP declined to stand for reelection as the Company's independent
auditors on Oct. 29, 2003.
About the Company
Energy Conversion Devices, Inc., is a technology, product
development and manufacturing company engaged in the invention,
engineering, development and commercialization of new materials,
products and production technology in the fields of alternative
energy technology and information technology. Based upon the
fundamental and pioneering inventions of Stanford R. Ovshinsky,
principal inventor, we have established a leadership role in the
development of proprietary materials, products and production
technology based on our atomically engineered amorphous and
disordered materials using chemical and structural disorder to
provide multiple degrees of freedom that result in our ability to
make many new materials.
ENRON CORP: Wants Court to Enforce Stay Against Tittle Plaintiffs
-----------------------------------------------------------------
Two years after the Court lifted the automatic stay to permit the
Tittle Plaintiffs to liquidate their claims seeking damages for
Enron's alleged breaches of fiduciary duty, the Tittle Plaintiffs
amended their pleadings by filing a Second Amended Complaint, and
brought for the first time a claim seeking a declaration from the
District Court directing the recalculation of benefits under
Enron's retirement plans. "This additional claim not only has
turned the Tittle Action on its head, and has virtually no
commonality with the claims [the Bankruptcy Court] allowed to go
forward in the District Court pursuant to the Lift Stay Order,
but also sidetracked other parties, including the Pension Benefit
Guaranty Corporation, from fulfilling the goals designated by the
Court pursuant to other issued orders," Melanie Gray, Esq., at
Weil, Gotshal & Manges, LLP, in New York tells Judge Gonzalez.
Specifically, Ms. Gray says, the declaratory relief sought in
Count VI interferes directly with the consummation of the
Debtors' chapter 11 plan and the orderly termination of the Cash
Balance Plan. Count VI and the surrounding issues should not be
litigated separately from the proceedings before the Bankruptcy
Court.
Thus, the Debtors ask the Court to enforce the automatic stay and
the Lift Stay Order, and direct the Tittle Plaintiffs to withdraw
Count VI from their Second Amended Complaint.
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. 125;
Bankruptcy Creditors' Service, Inc., 15/945-7000)
EURAMAX: S&P Affirms BB- Corp. Credit Rating with Stable Outlook
----------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its ratings, including
its 'BB-' corporate credit rating, on Euramax International Inc.
At the same time, Standard & Poor's revised its outlook on the
Norcross, Georgia-based manufacturer to stable from negative. At
June 30, 2004, Euramax had approximately $321 million of debt
outstanding.
"The outlook revision reflects Euramax's increased financial
flexibility and liquidity profile resulting, in part from improved
earnings and cash flow performance and from sufficient capacity
under the company's committed bank credit facility," said Standard
& Poor's credit analyst Joel Levington. "Since Euramax typically
generates a modest amount of annual free cash flow, its liquidity
profile appears satisfactory with its business objectives and
commensurate with stable outlook."
Euramax manufactures various aluminum, steel, vinyl, and glass
fiber products to the building and construction and transportation
markets in the U.S., U.K., The Netherlands, and France. Euramax's
business strategy includes acquisitions that increase its
geographic reach and product breadth, such as the $40 million
acquisition of Berger Holdings Ltd. at the end of 2003.
FEDERAL-MOGUL: Want to Expand PwC's Employment as IT Consultant
---------------------------------------------------------------
David M. Sherbin, Federal Mogul Corporation's Senior Vice
President, General Counsel and Secretary, relates that
PricewaterhouseCoopers, LLP, ceased to act as the Debtors'
financial advisors in the Fall of 2002, when PwC's Business
Recovery Group was acquired by FTI Consulting, Inc. PwC, however,
continued to provide some internal audit and various tax advisory
support services to the Debtors.
The Debtors ask Judge Lyons to approve the scope and supplementing
terms expanding the continued employment of PwC, to include
information technology consulting services, nunc pro tunc to
August 19, 2004.
The Sarbanes-Oxley Act requires that effective internal control
should be in place over financial reporting, including the
information technology systems relied on to generate and report
financial information. Example controls over IT systems would
include segregation of duties, access rights to critical
transactions, and program change controls. According to Mr.
Sherbin, the Debtors must assess, test, and remediate, if
necessary, internal control components of their general control
environment to comply with Sarbanes-Oxley. If the Debtors'
control environment is determined to be ineffective, the Debtors
would be required to publicly disclose the deficiency within its
December 31, 2004 Annual Report on Form 10-K. This could result
in an adverse opinion on the control environment issued by the
Debtors' auditors in accordance with Sarbanes-Oxley.
To bring their General Computer Controls into compliance with
Sarbanes-Oxley, the Debtors require PwC to:
(a) identify control weaknesses, determine how to
appropriately resolve the weaknesses and assist them in
implementing the solutions, all of which must be completed
by December 31, 2004. Through the IT Consulting Services,
PwC will provide the Debtors with:
* guidance on control design,
* user access reviews,
* program changes, and
* compensating controls.
Compensating controls include workaround controls for
systems where control deficiencies are identified but
where, in management's judgment, deficiencies will not be
remedied in time to meet the project deadlines; and
(b) provide guidance and assistance to the Debtors' program
manager in project planning, communication, monitoring and
control.
The IT Consulting Services include:
(a) Recommendations regarding the project approach and plan to
assist the Debtors in meeting the Sarbanes-Oxley Section
404 compliance requirements and project milestone dates;
(b) Assistance with the development of test plans;
(c) Assistance with site assessment and testing;
(d) Identification of control gaps and remediation
recommendations for management's consideration;
(e) Assistance with program management set-up and execution;
and
(g) Recommendations and advice on go forward approaches and
activities.
The Debtors selected PwC to perform the IT Consulting Services
because of the firm's substantial expertise and experience in
providing similar information technology consulting services to
large companies. Moreover, based on PwC's prior work for the
Debtors and its familiarity with the Debtors and their businesses,
the Debtors believe that PwC is well qualified and able to provide
the IT Consulting Services on a cost-effective, efficient, and
timely basis.
PwC will be paid for its IT Consulting Services based on the
firm's hourly rates. Kevin Malley is the lead engagement partner
on the project. Mr. Malley will be joined by the firm's
directors, managers, associates and staff. The rates for PwC's
personnel are:
Professional Hourly Rate
------------ -----------
Partners $500 - 625
Managers/Directors 325 - 495
Associates/Sr. Associates 175 - 325
Administrative Support/Paraprofessionals 85 - 130
PwC will seek reimbursement for reasonable and necessary expenses
incurred or advanced in connection with providing the IT
Consulting Services to the Debtors, including transportation,
lodging, food, telephone, copying and messenger services.
PwC Partner Brian Decker attests that PwC is a "disinterested
person" within the meaning of Section 101(14) of the Bankruptcy
Code, as required by Section 327(a) of the Bankruptcy Code, and
holds no interest adverse to the Debtors and their estates for the
matters for which PwC is to be employed.
PwC is not a "creditor" of any of the Debtors within the meaning
of Section 101(10) of the Bankruptcy Code. No PwC Partner or
Principal is a holder of any shares of Federal-Mogul's stock.
Headquartered in Southfield, Michigan, Federal-Mogul Corporation
-- http://www.federal-mogul.com/-- is one of the world's largest
automotive parts companies with worldwide revenue of some
$6 billion. The Company filed for chapter 11 protection on
Oct. 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan,
Esq., James F. Conlan, Esq., and Kevin T. Lantry, Esq., at Sidley
Austin Brown & Wood and Laura Davis Jones, Esq., at Pachulski,
Stang, Ziehl, Young, Jones & Weintraub, represent the Debtors in
their restructuring efforts. When the Debtors filed for protection
from its creditors, they listed $10.15 billion in assets and $8.86
billion in liabilities. (Federal-Mogul Bankruptcy News, Issue No.
64; Bankruptcy Creditors' Service, Inc., 215/945-7000)
FEDERATION OF PRESCHOOL: Case Summary & 21 Largest Creditors
------------------------------------------------------------
Debtor: Federation of Preschool and Community Education
Centers, Inc.
460 East Carson Plaza Drive, Suite 212
Carson, California 90746-3293
Bankruptcy Case No.: 04-30440
Chapter 11 Petition Date: September 22, 2004
Court: Central District of California (Los Angeles)
Judge: S. Bufford
Debtor's Counsel: Mark T. Young, Esq.
Mayer, Glassman & Gaines
15910 Ventura Boulevard, Suite 1650
Encino, California 91346-2802
Tel: 818-461-3400
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 21 largest unsecured creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Los Angeles County Government Contract $946,185
Office of Education
9300 Imperial Highway
Downey, California 90242-2890
Musick, Peeler & Garrett LLP Legal Services $946,185
1 Wilshire Boulevard for LACOE
Suite 200
Los Angeles, California 90017
Garrison & McInnis LLP Legal Services $23,108
Le Roy Robinson Sick Pay $17,775
Dora Purvis Sick Pay $13,254
Eater Martinez-Jackson Sick Pay $13,249
Ella Fuller Sick Pay $12,846
Anita Y. Mondares Sick Pay $12,809
Maria Carmen Zurita Sick Pay $11,946
J. Gregory Turner, Esq. Legal Services $11,388
Mary Lee Lawson Sick Pay $10,382
Sandra Thompson Sick Pay $10,076
Beata Mariano Sick Pay $9,894
Thelma Best Sick Pay $9,783
Estate of Patricia Mangal Sick Pay $9,780
Shari Chambers Sick Pay $9,486
Carolyn Malcolm Sick Pay $9,378
Pacenia Damasco Sick Pay $9,047
Maria A. Cordova Sick Pay $8,556
Bessie Ervin Sick Pay $8,556
Morena E. Salazar Sick Pay $8,556
FIBERMARK: Judge Approves Exclusivity Extension Until Nov. 26
-------------------------------------------------------------
The Honorable Colleen A. Brown of the U.S. Bankruptcy Court for
the District of Vermont approved FiberMark, Inc., and its debtor-
affiliates' request to extend, until November 26, 2004, the period
within which they have the exclusive right to file a Plan of
Reorganization. The Debtors also obtained an extension of their
exclusive solicitation period to and including January 26, 2005.
The Debtors told the Court that an extension is necessary to
afford them a full and fair opportunity to rehabilitate their
businesses and to negotiate and propose one or more reorganization
plans without the disruption that will be caused by competing
plans of reorganization by non-debtor parties.
Headquartered in Brattleboro, Vermont, FiberMark, Inc.
-- http://www.fibermark.com/-- produces filter media for
transportation applications and vacuum cleaning; cover stocks and
cover materials for books, graphic design, and office supplies and
base materials for specialty tapes, wallcoverings and sandpaper.
The Company filed for chapter 11 protection on March 30, 2004
(Bankr. D. Vt. Case No. 04-10463). Adam S. Ravin, Esq., D. J.
Baker, Esq., et al. at Skadden, Arps, Slate, Meagher & Flom LLP
represent the Debtors in their restructuring efforts. When the
Debtors filed for protection from its creditors, they listed
$329,600,000 in total assets and $405,700,000 in total debts.
FOOTSTAR INC: Court Approves Gaffney Facility Sale for $20.25M
--------------------------------------------------------------
The Honorable Adlai S. Hardin, Jr. of the U.S. Bankruptcy Court
for the Southern District of New York gave his stamp of approval
to the sale of Footstar, Inc., and its debtor-affiliates'
distribution facility located in Gaffney, South Carolina.
The facility was sold free and clear of all liens, claims and
interests for $20.25 million to Automated Distribution Systems,
LP, a leading third party distribution and logistics solutions
provider.
The Court also approved the assumption and assignment of the
Gaffney Lease in connection with the sale, and, to sell industrial
revenue bonds relating to the Gaffney Distribution Center.
Headquartered in West Nyack, New York, Footstar Inc., retails
family and athletic footwear. The Company and its debtor-
affiliates filed for chapter 11 protection on March 3, 2004
(Bankr. S.D.N.Y. Case No. 04-22350). Paul M. Basta, Esq., at Weil
Gotshal & Manges represents the Debtors in their restructuring
efforts. When the Debtor filed for protection it listed
$762,500,000 in total assets and $302,200,000 in total debts.
FOSTER WHEELER: Closes Equity for Debt Exchange Offer
-----------------------------------------------------
Foster Wheeler Ltd. (OTCBB: FWLRF) successfully completed its
equity-for-debt exchange.
The exchange:
-- reduces Foster Wheeler's existing debt by approximately
$447 million;
-- improves the company's consolidated net worth by
approximately $453 million;
-- reduces interest expense by approximately $28 million per
year; and
-- eliminates substantially all material scheduled corporate
debt maturities prior to 2011, when combined with the sale
of new notes to repay amounts currently outstanding under
Foster Wheeler's existing domestic credit agreement.
The exchange of any securities tendered during the company's
ongoing subsequent offering period would have the effect of
improving these results.
"With this major financial milestone behind us, we can now focus
on competing for quality contracts in the world arena and
providing world class products and services to our clients," said
Raymond J. Milchovich, chairman, president, and chief executive
officer. "We truly appreciate the confidence shown by the
investors who have exchanged their debt securities for equity
ownership in our company."
Accounting Treatment
The accounting related to the completed exchange will be described
in detail in Foster Wheeler's Form 10-Q for the third quarter of
2004, which the company expects to file in early November 2004.
The accounting treatment for the exchange is also described in the
registration statement on Form S-4 (File No. 333-107054). The
accounting treatment is dependent, in part, on the market value of
the securities issued in connection with the exchange and on the
results of the ongoing subsequent offering period. The company
believes the preferred shares and the Class A warrants will begin
trading on the OTC market in the near future.
The exchange offer is expected to result in a reduction in
shareholders' deficit of approximately $453 million in the third
quarter of 2004. This results from an aggregate increase in
common and preferred stock and paid in capital of approximately
$623 million related to the issuance of new equity securities in
exchange for debt, offset by a non-cash, after-tax charge to
income of approximately $170 million. The pro forma, non-cash
charge is related primarily to the accounting treatment required
by SFAS 84 for the exchange of the Convertible Subordinated Notes,
and it assumes the price of the company's common stock at market
close Friday ($0.47). Any securities tendered during the current
subsequent offering period would have the effect of further
reducing the company's shareholders' deficit. The results of the
subsequent offering period will be accounted for in the fourth
quarter of 2004.
As a result of the closing of the exchange, the number of shares
of the company's common stock will increase from approximately
41 million shares to the equivalent of approximately 1,200 million
shares. The exchange:
1) assumes the preferred shares issued at the closing of the
exchange are converted into common shares,
2) assumes the exercise of all warrants issued to
(a) holders of record of the company's common stock as of
5:00 p.m. on the day immediately preceding the closing
(Class B Warrants) and
(b) those who tendered their trust preferred securities
prior to 5:00 p.m. on September 21, 2004 (Class A
Warrants), and
3) includes stock options and restricted stock expected to be
issued to management.
Subsequent Offering Period
Foster Wheeler also reminds investors that its subsequent offering
period will expire at 5:00 p.m., New York City time, on Oct. 20,
2004.
Investors and security holders are urged to read the following
documents filed with the SEC, as amended from time to time,
relating to the exchange offer because they contain important
information: (1) the registration statement on Form S-4 (File No.
333-107054) and (2) the Schedule TO (File No. 005-79124). These
and any other documents relating to the exchange offer, when they
are filed with the SEC, may be obtained free at the SEC's Web site
at http://www.sec.gov/or from the information agent.
The references to the exchange offer and any other related
transactions shall not constitute an offer to buy or exchange
securities or constitute the solicitation of an offer to sell or
exchange any securities in Foster Wheeler Ltd. or any of its
subsidiaries.
About the Company
Foster Wheeler, Ltd., is a global company offering, through its
subsidiaries, a broad range of design, engineering, construction,
manufacturing, project development and management, research, plant
operation and environmental services.
At June 25, 2004, Foster Wheeler Ltd.'s balance sheet showed an
$856,601,000 stockholders' deficit, compared to an
$872,440,000 deficit at December 26, 2003. The Company's pro-
forma financial statements contained in the Prospectus detailing
the Exchange Offer projects a $400 million reduction in total debt
and a concomitant increase in shareholder equity.
A full-text copy of that Prospectus is available at no charge at:
http://www.sec.gov/Archives/edgar/data/1130385/000104746904026835/a2142206ze
x-99_a11.htm
* * *
As reported in the Troubled Company Reporter on Sept. 24, Standard
& Poor's Ratings Services lowered its corporate credit rating on
Foster Wheeler Ltd. to 'SD' from 'CCC-'. At the same time,
Standard & Poor's lowered its senior unsecured and subordinated
debt ratings on the Clinton, New Jersey -based engineering and
construction company to 'D' from 'CC'. The senior secured bank
loan ratings were affirmed but will be withdrawn shortly, once the
company's new bank facility is closed.
"The rating actions follow the company's announcement that it has
completed its equity-for-debt exchange offer. Since Foster
Wheeler was able to exchange several of its debt securities for
other financial instruments that, in aggregate, appear to have a
much lower value than par, we view the exchange as coercive and,
thus, a default," said Standard & Poor's credit analyst Joel
Levington.
The corporate credit rating of 'SD' reflects the fact that Foster
Wheeler's senior secured bank facility was not part of the
exchange offer, and the company remains current on that obligation
with respect to interest.
"When that facility is replaced with another bank deal, we will
withdraw the rating," Mr. Levington said.
The exchange offer was necessitated by several years of poor
operating performance -- involving, among other things, bidding
disciplines, change-order management, and risk and control
policies -- all of which led to significant negative cash
generation and charges in excess of $1 billion.
GITTO GLOBAL CORP: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Gitto Global Corporation
140 Leominster-Shirley Road
Lunenburg, Massachusetts 01462
Bankruptcy Case No.: 04-45386
Type of Business: The Debtor manufactures polyvinyl
chloride, polyethylene, polypropylene,
and thermoplastic olefinic compounds.
See http://www.gitto-global.com/
Chapter 11 Petition Date: September 24, 2004
Court: District of Massachusetts (Worcester)
Judge: Joel B. Rosenthal
Debtor's Counsel: Andrew G. Lizotte, Esq.
Hanify & King, P.C.
One Beacon Street
Boston, Massachusetts 02108
Tel: 617-423-0400
Fax: 617-556-8985
Total Assets: $10 Million to $50 Million
Total Debts: $50 Million to $100 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
East Coast Trading $1,806,104
28 Charron Ave., Ste. 2
Nashua, NH 03063
Shawnee Chemical Company $1,643,325
Princeton Forrestal Village
136 Main St., Ste. 300
Princeton, NJ 08540
Shintech $1,383,444
24 Greenway Plaza, Ste. 811
Houston, TX 77046
Exxon Mobil Chemical $1,249,166
13501 Katy Freeway
Houston, TX 77079
BASF Corporation $962,496
c/o Mellon Bank
1640 Phoenix Blvd., Ste. 110
Atlanta, GA 30349
Sumitomo Corp. of America $802,431
P.O. Box 91021
Chicago, IL 60693
Great Lakes Chemical $727,580
P.O. Box 2118
Carol Stream, IL 60132
Ameribrom, Inc. $651,528
2115 Linwood Ave.
Fort Lee, NJ 07024
Momentum Technologies $445,304
17 Battery Place, 6th Fl.
New York, NY 10004
Crompton Sales Co., Inc. $384,143
P.O. Box 7247-8429
Philadelphia, PA 19170
Ferro Corporation $303,885
P.O. Box 5831
Cleveland, OH 44193
Fractal Mechanics Inc. $232,688
The C.P. Hall Company $199,443
Ronald Mark Associates, Inc. $135,900
Nanocor $133,611
Crompton Corp. $133,158
Fleet Business Services $127,000
A.K. Additives $121,158
Resin Distribution $104,143
Aaron Industries $96,248
HEALTH & NUTRITION: Form 10-Q Contains Chapter 11 Warning
---------------------------------------------------------
The Board of Directors of Health & Nutrition Systems
International, Inc., (OTC Bulletin Board: HNNS) entered into an
amendment to its employment contract with Christopher Tisi that
provides for Mr. Tisi to step down as Chief Executive Officer of
the Company in order to consider making, and facilitate the
submission of, a stalking horse bid to acquire substantially all
of the assets of the Company if it determines to seek protection
under Chapter 11 of the federal bankruptcy laws. Although Mr.
Tisi will not serve in any executive capacity with the Company
under the terms of the agreement, he will continue as an employee
of the Company and will continue to assist the Company in
conducting its operations. The Company disclosed in its recent
Form 10-Q filing that they were evaluating the advisability of
seeking protection under the bankruptcy laws.
Mr. James A. Brown, Chairman of the Board, has been elected to
serve as Chief Executive Officer while the Company continues to
examine its strategic options and will continue to serve in that
role should the Company choose to file for reorganization. Mr.
Brown has been Chairman of HNS since May 2003.
Mr. Tisi executed a two-year employment agreement in April 2004,
which provided for Mr. Tisi to serve as the Chief Executive
Officer of the Company through December 31, 2005. The amendment
to the contract provides for a hiatus period through the emergence
of the Company from a reorganization, should a reorganization
occur. During that time, certain provisions of the contract are
suspended while Mr. Tisi considers making a stalking horse bid for
the Company's assets, and, if the Company determines to file for
reorganization, to pursue his possible bid. After the hiatus
period, or upon the Company's emergence from reorganization, the
employment agreement will be reinstated under the terms of the
amendment.
Health & Nutrition Systems International, Inc. -- whose June 30,
2004 balance sheet showed a $1,013,747 stockholders' deficit --
develops and markets weight management products in over 25,000
health, food and drug store locations. The Company's products can
be found in CVS, GNC, Rite Aid, Vitamin Shoppe, Vitamin World,
Walgreens, Eckerd and Wal-Mart. The Company's HNS Direct division
distributes to independent health food stores, gyms and
pharmacies. For more information, visit:
http://www.hnsglobal.com/
* * *
In its Form 10-QSB for the quarterly period ended June 30, 2004,
Health & Nutrition Systems International, Inc., said that based
primarily on:
* the $959,687 loss for the six months ended June 30, 2004,
* the continued dependence on Garden State Nutritionals'
informal extension of favorable payment terms to
finance operations,
* the increased cost of maintaining its status as a public
company,
* the costs of defending an action brought in connection with
the new CortiLess(R) product, and
* objections to the Company's advertising by the National
Advertising Division,
the Company may consider filing for reorganization under the
protection of federal bankruptcy laws.
The quarterly filing also indicated there is substantial doubt
about the Company's ability to continue as a going concern.
HM PUBLISHING: S&P Shaves Corporate Credit Rating to B+
-------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on holding company HM Publishing Corp. to 'B+' from 'BB-'
and its senior unsecured rating to 'B-' from 'B'. Standard &
Poor's also lowered operating company Houghton Mifflin Co.'s
senior unsecured rating to B- from 'B' and its subordinated rating
to 'B-' from 'B'.
At the same time, Standard & Poor's affirmed Houghton Mifflin's
'BB-' bank loan rating and 'BB-' rating on $150 million of senior
secured notes, reflecting their priority status in the capital
structure. A recovery rating of '1' was also assigned to the bank
loan rating and senior secured notes, indicating a high
expectation of a full (100%) recovery of principal in the event of
default.
"The downgrade is based on the company's weak operating outlook
for full-year 2004 and higher debt leverage," said Standard &
Poor's credit analyst Hal F. Diamond. In addition, Standard &
Poor's expects discretionary cash flow will likely be minimal in
2004 because of lower profitability, higher textbook development
spending, and capital requirements for new back-office systems.
The outlook is negative.
The company has provided guidance of roughly a 15%-20% decline in
EBITDA for 2004, reflecting the currently weak phase of the
textbook adoption cycle and an increase in the investment required
for the company to position itself for improving adoption
opportunities over the next several years. Houghton Mifflin
experienced a slight loss in kindergarten-through-12th-grade
(K-12) revenue market share in the first half of 2004, reflecting
reduced scheduled adoptions in its core subject areas and intense
competition. In addition, the company's Edusoft educational
testing technology unit, which was acquired in late 2003, is
incurring modest losses.
HM Publishing Corp.'s ratings also reflect high financial risk
resulting from the $1.66 billion leveraged acquisition of Houghton
Mifflin by Thomas H. Lee Partners L.P., Bain Capital Partners LLC,
and The Blackstone Group in 2002, and the 2003 special dividend of
$150 million. This is partially offset by a good business
position in educational publishing. The company is the fourth-
largest U.S. educational publisher, with long-standing solid
market shares in elementary and secondary school publishing. The
industry has significant barriers to entry because of the high
start-up costs and long lead times required to develop and market
educational programs.
The company intends to leverage its strong market shares by
expanding its product offerings into additional K-12 core
subjects, including elementary social studies and K-12 science.
However, the company may face challenges in diversifying beyond
its core strengths as it faces high barriers to entry and the
competitive nature of the industry. Houghton Mifflin is competing
against larger, well-entrenched publishers with greater financial
resources, which could put the company at a disadvantage.
The business is highly seasonal, with half of sales and the
majority of EBITDA concentrated in the third quarter. The company
is dependent on the K-12 market, which accounts for two-thirds of
its EBITDA. The company's college and educational-testing
divisions provide some operating diversity, although Houghton
Mifflin's position in these competitive segments does not match
its standing in the elementary/secondary area. The college
publishing business faces mature growth prospects, reflecting
price resistance from students and the increased competition from
used books resulting from wider Internet availability.
HUNTSMAN LLC: S&P Assigns B Rating to $715M Term Loan Facility
--------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' rating and a
recovery rating of '3' to Huntsman LLC's proposed $715 million
term loan facility due 2009. The 'B' rating is the same as the
corporate credit rating; this and the '3' recovery rating reflect
the expectation for a meaningful (50%-80%) recovery of principal
in the event of default.
At the same time, Standard & Poor's assigned its 'BB-' rating to
the chemical company's proposed $350 million revolving credit
facility, and a recovery rating of '1', indicating a high
expectation of full recovery of principal in the event of default.
Ratings are based on preliminary terms and conditions. Proceeds
from the new credit facilities will be used to refinance all
borrowings under the existing senior bank credit facilities, and
for fees and expenses related to the transactions.
Pro forma for the completion of the financing, Salt Lake City,
Utah-based Huntsman LLC will have approximately $2 billion of debt
outstanding. Huntsman LLC is among the largest privately held
chemical companies in North America, generating $3.5 billion in
annual sales, prior to consolidation of its 60%-owned subsidiary,
Huntsman International Holdings LLC.
Standard & Poor's also placed the new bank facility ratings on
CreditWatch with positive implications, and said that the
corporate credit ratings and issue ratings for Huntsman LLC and
its affiliates, HMP Equity Holdings Corp., Huntsman International
Holdings LLC and Huntsman Advanced Materials LLC, will remain on
CreditWatch where they were placed on Sept. 14, 2004. Standard &
Poor's placed its ratings on CreditWatch with positive
implications earlier this month, citing the company's announcement
that it expects to file with the SEC to undertake an IPO of common
stock. The size of the proposed offering has not been announced
but substantially all of the proceeds will be applied to reduce
the company's debt burden.
"The successful completion of the proposed debt offerings will
extend the debt maturity profile and provide access to a new $350
million revolving credit facility. These actions, together with
improving operating trends and the pending IPO, as well as the
completion of Huntsman International's refinancing earlier this
year, are supportive of credit quality and will be considered
within the context of the pending CreditWatch resolution," said
Kyle Loughlin, credit analyst at Standard & Poor's.
The CreditWatch listing reflects the potential for an upgrade if
the IPO is successfully completed and debt is significantly
reduced. While the size of the offering would have to be
substantial to warrant an upgrade in isolation, the potential for
meaningful debt reduction taken together with the emerging trend
of operating improvement, may support an upgrade within the next
several months.
Standard & Poor's will complete the review of the Huntsman ratings
as more information about the proposed IPO becomes available. The
ratings will be removed from CreditWatch on completion of the
offering.
INDYMAC: Moody's Slashes Ratings on Eight Classes to B1 from Aa3
----------------------------------------------------------------
Moody's Investors Service downgraded the ratings on the senior and
mezzanine certificates of two IndyMac manufactured housing
securitizations concluding the review that began in June 2004. In
all, 10 classes of certificates are affected.
Moody's last downgraded the ratings of several senior, mezzanine,
and subordinate certificates of IndyMac's manufactured housing
securitizations in June 2003. The rating action was primarily
based on the significantly weaker-than-anticipated performance of
the manufactured housing loans and the resulting erosion in credit
support.
The current rating action is prompted by the continued
deterioration in the performance of these pools. Since the prior
rating action, delinquencies and repossessions have continued to
remain high, leading to significantly high cumulative losses.
Furthermore, the available excess spread is not sufficient to
cover the high losses. Consequently, for both transactions,
overcollateralization has been reduced to zero, the Class B-2
certificates have been fully written down, and the Class B-1
certificates continue to erode.
Similar to other manufactured housing securitizations, the
deteriorating performance is due to weak underwriting standards,
combined with macroeconomic factors, such as high unemployment
levels in the manufacturing sector where many borrowers are
employed. This has placed increased pressure on the industry,
further magnifying repossessions and loss severities.
The complete rating action is:
Issuer: IndyMac Manufactured Housing Contract Pass-Through
Certificates
* Series 1997-1
-- 6.450% Class A-2 Certificates, downgraded from Aa3 to B1
-- 6.610% Class A-3 Certificates, downgraded from Aa3 to B1
-- 6.750% Class A-4 Certificates, downgraded from Aa3 to B1
-- 6.970% Class A-5 Certificates, downgraded from Aa3 to B1
-- 7.265% Class A-6 Certificates, downgraded from Aa3 to B1
-- 7.105% Class M Certificates, downgraded from Ba2 to C
* Series 1998-1
-- 6.370% Class A-3 Certificates, downgraded from Aa3 to B3
-- 6.490% Class A-4 Certificates, downgraded from Aa3 to B3
-- 6.960% Class A-5 Certificates, downgraded from Aa3 to B3
-- 7.110% Class M Certificates, downgraded from Ba3 to C
The loans were originated and are being serviced by IndyMac, Inc.
In 1999, IndyMac exited the manufactured housing sector, but
continues to service the loans from its Pasadena, California
servicing center.
INTELLIGROUP INC: Executes Pact for $15 Million Equity Investment
-----------------------------------------------------------------
Intelligroup, Inc., (Nasdaq: ITIGE), a global provider of
strategic IT outsourcing services, entered into a definitive
agreement pursuant to which SB Asia Infrastructure Fund, L.P., an
affiliate of Softbank Corporation, and Venture Tech Solutions Pvt.
Ltd., will purchase an aggregate of 17,647,058 shares of the
Company's common stock in a private placement at a purchase price
of $0.85 per share for a total purchase price of $15,000,000.
Following completion of the private placement, the purchasers will
own approximately 50.3% of the Company's outstanding common stock.
The agreement will also allow the purchasers to designate a
majority of the Board of Directors of the Company.
The Company determined, after evaluating alternatives, that this
transaction was necessary because its cash position and relative
cash availability under its $15 million revolving credit facility
had become inadequate to fund ongoing operations. This
transaction is subject to customary closing conditions, as well as
an amendment to the cash sweep provisions of the Company's
revolving credit facility and the waiver of certain defaults under
the credit facility. There is no assurance that these conditions
will be satisfied.
The rules of the NASDAQ Stock Market require shareholder approval
of certain transactions, such as this private placement, involving
the issuance of more than 20% of a listed company's common stock.
Due to its immediate cash needs, the Company determined that
delaying the transaction in order to seek shareholder approval
would jeopardize its financial viability. The transaction will
therefore violate NASDAQ listing rules and, as a result, the
Company may be delisted from the NASDAQ Stock Market.
In addition, the Company is in default under its revolving credit
facility as a result of the failure to file its Form 10-Q for the
2004 second quarter in a timely manner, and expects it would also
be in default under certain financial covenants based on likely
second quarter results. The Company is working with its senior
lender to obtain waivers for such defaults. Although the Company
believes at this time that it will obtain waivers of these
defaults from the lender under its revolving credit facility, if
the Company cannot obtain such waivers, the indebtedness
outstanding under its revolving credit facility could be
accelerated.
About Intelligroup
Intelligroup, Inc., is a global provider of strategic IT
outsourcing services. Intelligroup develops, implements and
supports information technology solutions for global corporations
and public sector organizations. The Company's onsite/offshore
delivery model has enabled hundreds of customers to accelerate
results and significantly reduce costs. With extensive expertise
in industry-specific enterprise solutions, Intelligroup has earned
a reputation for consistently exceeding client expectations.
INTELLIGROUP: Undertakes Review & Restates Prior Period Results
---------------------------------------------------------------
Intelligroup, Inc., (Nasdaq: ITIGE), a global provider of
strategic IT outsourcing services, expects to restate its
previously issued financial statements filed on Form 10-K for the
years ended December 31, 2003, 2002 and 2001 and filed on
Form 10-Q for the quarterly periods beginning January 1, 2001 to
date. The expected restatement is based on preliminary results of
an ongoing review conducted by Company management. Until this
review is complete, the Company will not be able to conclude on
the precise impact on prior period financial statements. This
conclusion will also be subject to audit by the Company's external
auditors.
As a result of the recent implementation of an upgraded financial
system, and the recent turnover in key positions in its finance
department, the Company has been undertaking a comprehensive
review of its 2004 second quarter results. This comprehensive
review resulted in a number of accounting adjustments to prior
period financial statements. On September 22, 2004, the Audit
Committee of the Board of Directors reached a definitive
conclusion that the financial statements and the related
independent audit reports for the periods noted above should no
longer be relied upon. Company management and the Audit Committee
have discussed these matters and conclusions with the external
auditors, Deloitte & Touche, LLP.
Adjustments identified to date are expected to reduce revenue by
approximately $0.8 million and net income by approximately
$0.9 million for the year ended December 31, 2003. In addition,
there are certain historical intercompany adjustments totaling
approximately $1.2 million that affect periods prior to 2001. The
impact of these historical adjustments are expected to increase
the accumulated deficit account for the years ended
December 31, 2003, 2002 and 2001, as well as all quarterly
financial periods beginning January 1, 2001. There is also a
remaining unreconciled difference of approximately $0.6 million in
the Company's intercompany accounting records that has yet to be
fully investigated, which may result in additional adjustments.
Reconciliation of this difference and the determination of the
proper accounting treatment and period of impact of the
restatement are the primary reasons for the further delay in
filing the 2004 second quarter Form 10-Q.
The ongoing review of the Company's financial statements may
result in additional adjustments and information. Any further
adjustments may be material.
As a result of the uncertainties surrounding the restatements, the
Company is withdrawing all previous forward-looking guidance for
the 2004 second quarter and full year, without limitation.
In addition, the Company is in default under its revolving credit
facility as a result of the failure to file its Form 10-Q for the
2004 second quarter in a timely manner, and expects it would also
be in default under certain financial covenants based on likely
second quarter results. The Company is working with its senior
lender to obtain waivers for such defaults. Although the Company
believes at this time that it will obtain waivers of these
defaults from the lender under its revolving credit facility, if
the Company cannot obtain such waivers, the indebtedness
outstanding under its revolving credit facility could be
accelerated.
About Intelligroup
Intelligroup, Inc., is a global provider of strategic IT
outsourcing services. Intelligroup develops, implements and
supports information technology solutions for global corporations
and public sector organizations. The Company's onsite/offshore
delivery model has enabled hundreds of customers to accelerate
results and significantly reduce costs. With extensive expertise
in industry-specific enterprise solutions, Intelligroup has earned
a reputation for consistently exceeding client expectations.
INTERNET I SHOP: Case Summary & 19 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Internet I Shop Corporation
2198 Pomona Boulevard
Pomona, California 91768
Bankruptcy Case No.: 04-30415
Type of Business: The Company is a computer retailer and offers
a comprehensive selection of brand name computer
hardware and peripherals, software, office
products and supplies.
See http://www.internetishop.com/
Chapter 11 Petition Date: September 22, 2004
Court: Central District of California (Los Angeles)
Judge: B. Bluebond
Debtor's Counsel: Robert S. Altagen, Esq.
1111 Corporate Center Drive #201
Monterey Park, California 91754
Tel: 323-268-9588
Total Assets: $500,000
Total Debts: $2,440,417
Debtor's 19 largest unsecured creditors:
Entity Claim Amount
------ ------------
EliteGroup Computer Systems, Inc. $628,614
45401 Research Avenue
Fremont, California 94539
Tel: 510-771-0234
Max Group Corporation $293,928
17011 Green Drive
City of Industry, California 91745-1812
Tel: 626-935-0050
LASERTECH Computer District, Inc. $246,903
20480 East Business Parkway
City of Industry, California 91789
Tel: 909-859-8600
CaeEdge Inc. $188,779
AOPEN American, Inc. $185,976
ViewEra $180,687
Netron Tech, Inc. $138,000
United Parcel Service $90,393
LA Sky Hawk Computers Inc. $86,800
Leadtek Research Inc. $52,275
ISMART Media Inc. $34,890
Auditek $32,544
Google $28,149
PC Magazine $27,744
Swissbit NA, Inc. $26,957
Datapro Corporation $23,276
American Computer $19,610
BMA Industrial Inc. $12,340
SPG Plastics Group, Inc. $11,820
INVESCO CBO: Fitch Places BB- Rating on $8 Million Class B-2 Notes
------------------------------------------------------------------
Fitch Ratings affirms all of the rated notes issued by Invesco CBO
2000-1 Ltd. The affirmation of these notes is a result of Fitch's
rating review process. These rating actions are effective
immediately:
-- $59,000,000 class A-1L notes affirmed at 'AAA';
-- $78,000,000 class A-2L notes affirmed at 'AAA';
-- $26,000,000 class A-3 notes affirmed at 'AAA';
-- $19,500,000 class B-1L note affirmed at 'BBB-';
-- $8,000,000 class B-2 notes affirmed at 'BB-'.
Invesco CBO, a collateralized bond obligation that closed on
Oct. 26, 2000, is managed by Invesco Institutional (N.A.), Inc.
The fund was established to invest in a portfolio of primarily
corporate high yield bonds and loans. Included in its review of
Invesco CBO, Fitch discussed the current state of the portfolio
with Invesco, as well as their portfolio management strategy.
Since the last rating action on June 4, 2003, the class A and
class B overcollateralization test have improved by approximately
200 bps while maintaining the weighted average spread requirement.
Another structural feature that maintains value for the
noteholders is the additional coverage test -- ACT. The ACT
haircuts the value of CCC assets, capturing not only deterioration
due to defaults, but also from rating migration. During the
revolving period when the ACT ratio falls below 107.75%, excess
interest is diverted to purchase additional collateral. The ACT
has been failing since Dec. 2, 2001 and is currently still failing
as of the Aug. 2, 2004 trustee report with a ratio of 107.41%.
The overall performance of the collateral has remained stable
since the last rating action on June 4, 2003. The weighted
average coupon has decreased slightly from 9.509% to 9.349% in the
most recent trustee report dated Aug. 2, 2004, and the weighted
average margin has remained stable from 3.070% to 3.031%. Assets
rated 'CCC+' or lower increased modestly, and defaulted securities
declined from approximately $13.3 million to $4.8 million.
Overall, the collateral has performed within expectations.
The rating of the class A notes addresses the likelihood that
investors will receive full and timely payments of the periodic
interest amount, as per the governing documents, as well as the
stated balance of principal by the legal final maturity date. The
ratings of the class B notes address the ultimate payments of the
cumulative interest amount and principal by the legal final
maturity date.
As a result of this analysis, Fitch has determined that the
current ratings assigned to the class A and B notes still reflect
the current risk to noteholders.
Fitch will continue to monitor and review this transaction for
future rating adjustments. For more information on the Fitch
VECTOR Model, see 'Global Rating Criteria for Collateralised Debt
Obligations,' dated Sept. 13, 2004, available on the Fitch Ratings
web site at http://www.fitchratings.com/
MEDMIRA INC: Stockholders' Deficit Widens to $5.874M at July 31
---------------------------------------------------------------
MedMira, Inc. (TSX Venture: MIR,NASDAQ: MMIRF) reported its
financial results for the three months and year ended
July 31, 2004.
"We are beginning to see our business grow with revenue doubling
from 2003 and our operating losses continuing to decline," said
Stephen Sham, Chairman and CEO of MedMira. During the past year,
we have taken significant steps towards opening the China market
and near the end of our fiscal year 2004 we launched a new FDA
approved version of our test, the Reveal(TM) G2 Rapid HIV-1
Antibody Test, in the United States. These initiatives position
us well for continued growth in 2005," continued Sham.
Product sales in the fourth quarter were $577,000 down from
$1.05 million in the same quarter last year. The net loss for the
quarter was $938,000 or $0.02 per share compared with $717,000 or
$0.02 per share in the same period last year.
For the year ended July 31, 2004 product sales were $2.44 million,
up from $1.18 million for the same period in the previous year, a
107% increase. The net loss for 2004 was $3.99 million compared
to $4.62 million in the previous year, a decline of 14%.
Sham also pointed out that margins were maintained during the past
year. Overall gross margin in the fourth quarter was 59%,
compared with 58% in the same period last year. For the year
ended July 31, 2004 gross margin was 53% compared with 36% in the
prior year. The margins achieved are in keeping with the
company's expectations and industry norms.
Operating expenses for the fourth quarter were $1.28 million,
compared to $1.47 million last year, a decline of 13%. For the
year ended July 31, 2004, operating expenses remained relatively
constant at $5.32 million compared to $5.19 million in 2003.
At July 31, 2004 the Company had total assets of $1.69 million,
compared with $2.36 million in total assets at July 31, 2003. Cash
flow used in operations increased to $1.30 million in the fourth
quarter of 2004, up from $720 thousand for the same period last
year. For the year ended July 31, 2004 cash flow used in
operations remained relatively constant at $3.08 million compared
to $2.99 million in 2003.
Subsequent to year end the company raised a total of $3.2 million
through the issue of $2.5 million in convertible debentures and
$0.7 million in equity. This infusion of cash significantly
improves the cash and working capital position of the company.
A conference call with analysts to discuss these fourth quarter
results will be held on October 22, 2004.
As of July 31, 2004, MedMira's stockholders' deficit widened to
$5,874,000 compared to a $2,187,000 deficit at July 31, 2003.
MedMira, Inc., manufactures and markets vitro rapid diagnostic
tests for the clinical laboratory market. MedMira's tests provide
reliable, rapid diagnosis in just 3 minutes for the detection of
human antibodies in human serum, plasma or whole blood for
diseases such as HIV. The United States FDA and the SFDA in the
People's Republic of China have approved MedMira's Reveal(TM) and
MiraWell(TM) Rapid HIV Tests, respectively. For more information
visit MedMira's website at www.medmira.com.
MedMira's Reveal(TM) and MiraWell(TM) rapid HIV tests are
currently used in clinical laboratories where professional
counseling and patient treatment are immediately available.
MedMira markets its rapid tests worldwide in United States, Canada
and China.
METRIS COS: Will Discuss 3rd Qtr. Earnings Release on Oct. 20
-------------------------------------------------------------
Metris Companies, Inc., (NYSE:MXT) will announce its third quarter
2004 earnings on Wednesday, October 20, after the market closes.
Management will host a live conference call on Thursday, October
21 at 11:00 a.m. Eastern Time. The press and public are invited
to listen to a live webcast of the call by registering at
http://www.metriscompanies.com/Click on the Investor Relations
icon to participate. A replay of the webcast will be available
from October 21 at 2:00 p.m. Eastern Time through October 28 at
midnight.
Metris Companies, Inc., based in Minnetonka, Minnesota, is one of
the largest bankcard issuers in the United States. The company
issues credit cards through Direct Merchants Credit Card Bank,
N.A., a wholly owned subsidiary headquartered in Phoenix, Arizona
For more information, visit http://www.metriscompanies.com/or
http://www.directmerchantsbank.com/
* * *
As reported in the Troubled Company Reporter on May 11, 2004,
Standard & Poor's Ratings Services raised its ratings on Metris
Cos. Inc., including Metris' long-term counterparty rating, which
was raised to 'CCC' from 'CCC-.' At the same time, the ratings
were removed from CreditWatch, where they were placed on
April 20, 2004. The outlook is stable.
"The rating change was driven by positive operational and
financial developments at the Minnetonka, Minnesota-based credit
card company," said Standard & Poor's credit analyst Jeffrey Zaun.
Seasonal factors and noninterest expenses resulting from funding
initiatives will pressure Metris' earnings in the short term.
Standard & Poor's will monitor the firm's situation vis-.-vis
regulatory investigations and look to earnings in the second half
of 2004 as an indication of Metris' ability to demonstrate a
competitive advantage in the credit card industry.
METROMEDIA INT'L: Closes Sale on Remaining Radio Businesses
-----------------------------------------------------------
Metromedia International Group, Inc., (currently traded as:
OTCPK:MTRM - Common Stock and OTCPK:MTRMP - Preferred Stock), the
owner of interests in various communications and media businesses
in Russia and the Republic of Georgia, completed its previously
announced transaction with Communicorp Group Limited the sale of
the Company's wholly owned radio business unit, Metromedia
International Inc., and received an additional $13.0375 million
from Communicorp. Metromedia International Inc., held the
Company's interests in seventeen radio businesses, which operate
radio broadcast stations in Bulgaria, the Czech Republic, Estonia,
Finland and Hungary.
The Transaction stipulated an aggregate cash purchase price for
Metromedia International Inc., of $14.25 million, of which $500
thousand was paid in July 2004, $13.0375 million was paid at
closing and the remaining $712.5 thousand will be paid six months
after closing subject, to Communicorp not having incurred actual
damages within the six month period after closing as a result of
Metromedia International Group's breach of any of the warranties
it made to Communicorp in the sale purchase agreement. In the
unlikely event of any such damages being incurred by Communicorp
in this manner, the second payment to Metromedia International
Group will be reduced by the amount of the damages.
The Transaction also provides for an adjustment to the cash
purchase price if the consolidated net assets of Metromedia
International, Inc., as of closing differ by more than two percent
from the projected amount the Company had previously provided to
Communicorp. The Company does not currently anticipate a material
adjustment to the purchase price as a result of the true up for
net assets at closing and presently expects that it will be in
compliance with the warranties that it had made to Communicorp.
The Company anticipates that the sale of Metromedia International,
Inc., will result in the recognition of a modest US GAAP book
gain. However, the Company will likely recognize a US tax basis
loss on the sale since the Company's tax basis is significantly
higher than the projected net cash proceeds.
About Metromedia International Group
Through its wholly owned subsidiaries, the Company owns
communications and media businesses in Russia and the Republic of
Georgia. These include mobile and fixed line telephony businesses
and wireless and wired cable television networks. The Company has
focused its principal attentions on continued development of its
core telephony businesses in Russia and the Republic of Georgia,
and has substantially completed a program of gradual divestiture
of its non-core media businesses. The Company's core telephony
businesses include PeterStar, the leading competitive local
exchange carrier in St. Petersburg, Russia, and Magticom, the
leading mobile telephony operator in the Republic of Georgia. The
Company's remaining non-core media businesses consist of one radio
business operating in Hungary, Radio Szeged and one cable
television network in Lithuania, Vilsat.
Balance Sheet Insolvency
At June 30, 2004, Metromedia International Group's balance sheet
showed an $11,469,000 stockholders' deficit, compared to a
$13,155,000 deficit at December 31, 2003.
MIRANT CORPORATION: Court Approves Confidentiality Protocol
-----------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Texas
approved the proposed confidentiality procedures regarding the
request of the Official Committee of Unsecured Creditors of Mirant
Americas Generation, LLC, to compel Mirant Corporation and its
affiliated debtors to cause Mirant Mid-Atlantic, LLC, to enter
into certain types of risk-reducing hedging transactions:
(a) Any party-in-interest, except a Permitted Person, seeking
access to the Confidential Information of the Debtors,
whether through deposition testimony, discovery, motions,
responses, affidavits or other pleadings, will sign the
form of confidentiality agreement;
(b) Upon tendering a properly executed Confidentiality
Agreement to the Debtors' counsel and filing the same
with the Court, the Requesting Party will be allowed
access to the Debtors' Confidential Information relating
solely to the Contested Matters; and
(c) Only Permitted Persons and those parties having tendered
and filed a properly-executed Confidentiality Agreement
will be permitted to be present during the conduct of
depositions or hearings regarding the Contested Matters.
To safeguard the Confidential Information while affording parties-
in-interest a full and fair opportunity to be heard on issues
affecting their rights, Judge Lynn orders that:
(a) Any party violating the terms of the Confidentiality Order
may be subject to sanction, contempt or other penalty;
(b) Each of these entities or persons is designated as a
"Permitted Person" for all purposes under the
Confidentiality Order:
(1) Morgantown OL1 LLC, Morgantown OL2 LLC, Morgantown OL3
LLC, Morgantown OL4 LLC, Morgantown OL5 LLC,
Morgantown OL6 LLC, Morgantown OL7 LLC, Dickerson OL1
LLC, Dickerson OL2 LLC, Dickerson OL3 LLC, and
Dickerson OL4 LLC, in their capacity as "Owner
Lessors" of the Debtors, and their legal counsel,
agents and advisors;
(2) U.S. Bank National Association, in its capacity as
"Lease Indenture Trustee" and "Pass Through Trustee,"
and its legal counsel, agents, and advisors; and
(3) Certain attorneys, paraprofessionals, and staff
employed by Kirkland & Ellis, LLP, and Hurt & Lily,
LLP, in their capacity as counsel for the Ad Hoc
Committee of Bondholders of Mirant Americas
Generation, LLC; and
(c) To the extent possible, at any deposition or hearing in
which Confidential Information is to be disclosed, the
parties to the deposition or hearing will instruct the
court reporter to prepare separate transcripts:
-- A complete, confidential transcript containing the
Confidential Information; and
-- A second, non-confidential transcript containing blank,
consecutively numbered pages corresponding to the pages
in the complete transcript containing the Confidential
Information; and
(d) During any portion of a deposition or hearing at which
Subject Material is to be introduced into evidence,
discussed, presented, or otherwise revealed, only the
Permitted Persons will be allowed to be present in person
or by telephone in the courtroom.
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. Case
No. 03-46590). Thomas E. Lauria, Esq., at White & Case LLP
represent the Debtors in their restructuring efforts. When the
Company filed for protection from their creditors, they listed
$20,574,000,000 in assets and $11,401,000,000 in debts. (Mirant
Bankruptcy News, Issue No. 45; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
MORTGAGE CAPITAL: Fitch Affirms Low-B Ratings on Four Classes
-------------------------------------------------------------
Mortgage Capital Funding, Inc.'s mortgage pass-through
certificates, series 1998-MC2, are upgraded as follows:
-- $48 million class B to 'AAA' from 'AA';
-- $58 million class C to 'A+' from 'A'.
These classes are removed from Rating Watch Negative (RWN) and
affirmed:
-- $25.3 million class G 'BB';
-- $7.6 million class H 'BB-';
-- $15.1 million class J 'B-'.
These classes are affirmed:
-- $14.0 million class A-1 at 'AAA';
-- $514.2 million class A-2 at 'AAA';
-- Interest-only class X at 'AAA';
-- $60.6 million class D at 'BBB';
-- $37.9 million class E at 'BBB-';
-- $12.6 million class F at 'BB+';
-- $7.6 million class K at 'CCC'.
Fitch does not rate the $4.4 million class L certificates.
The upgrades to classes B and C reflect the increased credit
enhancement levels from loan payoffs and amortization.
Classes G, H, and J are removed from RWN. While the performance
of the Minneapolis City Center loan (12%) remains rather weak as
the retail space remains only 61.9% leased, the master servicer
holds several reserve accounts and letters of credit for debt
service and leasing costs. The sponsor, Brookfield Properties, is
currently initializing a $15 million renovation to the retail
portion, including conversion of the third floor of retail to
office space.
The master servicer and special servicer, ORIX Capital Markets,
LLC, is recouping approximately $980,000 in legal expenses, which
will cause interest shortfalls on classes G, H, J, and K (below-
investment grade classes). The interest shortfalls are expected
to be repaid between February and July of 2005.
As of the September 2004 distribution date, the pool's aggregate
certificate balance has decreased 21% to $797.0 million from
$1.1 billion at issuance. There are currently two loans (0.67%)
in special servicing. The real estate owned (REO) loan (0.48%) is
secured by two industrial properties in Milford, Ohio and Nashua,
New Hampshire; losses are expected. The second loan (0.19%),
collateralized by a hotel property in Greer, South Carolina, is
current. The borrower is trying to refinance the loan.
ORIX collected year-end 2003 operating statements for 93% of the
transaction. The YE 2003 weighted average debt service coverage
ratio -- DSCR -- is 1.44 times (x), compared with 1.56x at
issuance for the same loans.
Fitch reviewed the credit assessments for these loans:
* 375 Hudson Street (19.5% of the pool),
* Minneapolis City Center (12.3%), and
* Wellpoint Office Complex (5.5%).
Minneapolis City Center is secured by a mixed-use property
consisting of 1.1 million square feet office space and 370,000 SF
retail space. Recently Target expanded its leased space to 51.7%
of NRA from 43.0% bringing the building to 74.4% leased as of
June 30, 2004. Overall, the property is 69.2% leased as of
June 30, 2004. Due to the 20.6% office vacancy rate and the high
concessions currently offered in the Minneapolis downtown office
market, the property is not expected to stabilize for several
years. The servicer reports that the net cash flow debt service
coverage ratio -- DSCR -- was 0.49x as of March 31, 2004 and 0.66x
as of Dec. 31, 2003. The credit assessment of the loan has been
lowered and remains below investment grade.
Fitch maintains an investment-grade credit assessment on the two
remaining loans. The 375 Hudson Street loan is secured by a class
A office building located in Manhattan. The rating of the loan is
dependent upon the rating of the parent company of the largest
tenant in the building, Saatchi & Saatchi. The rating of
Wellpoint Office Complex loan is also dependent upon the rating of
the lease guarantor, Wellpoint Health Networks, which remains
investment grade. The loan is secured by a 13-story office tower
and three single story buildings.
NATIONAL CENTURY: Court Says Creditors' Trust Can Depose Deloitte
-----------------------------------------------------------------
Judge Calhoun of the U.S. Bankruptcy Court for the Southern
District of Ohio denies the request of Deloitte & Touche, LLP, to
quash the Rule 2004 subpoena of Unencumbered Asset Trust, the
successor-in-interest to certain rights and assets of National
Century Financial Enterprises, Inc., and its debtor-affiliates,
for the oral examination of a Civil Rule 30(b)(6) corporate
representative of Deloitte.
The Debtors insisted that the topics for deposition are perfectly
legitimate and appropriate, relevant to the numerous matters
easily within the purview of Rule 2004 of the Federal Rules of
Bankruptcy Procedure. The Debtors contend that Deloitte offered
no sufficient evidence for the Court to grant its request.
As reported in the Troubled Company Reporter on August 31, 2004,
Deloitte asked the Court to quash the Rule 2004 subpoena of the
Unencumbered Asset Trust, for the oral examination of a Civil
Rule 30(b)(6) corporate representative of Deloitte.
Robert J. Sidman, Esq., at Vorys, Sater, Seymour & Pease, LLP, in
Columbus, Ohio, relates that Gibbs & Bruns, LLP, represents
certain plaintiffs who allegedly own $1.6 billion in outstanding
notes issued by National Century Financial Enterprises' affiliates
-- the Arizona Noteholders. The Arizona Noteholders have filed
three lawsuits that are now consolidated with several other
lawsuits in a multidistrict litigation proceeding pending before
Judge Graham in the U.S. District Court for the Southern District
of Ohio. The Judicial Panel on the MDL decided to consolidate the
Arizona Noteholders and other NCFE-related cases into an MDL
proceeding to "eliminate duplicative discovery, prevent
inconsistent pretrial rulings, and conserve the resources of the
parties, their counsel, and the judiciary." Judge Graham has
stayed all substantive discovery in the MDL pending resolution of
the motions to dismiss.
Although it has been unable to engage in discovery in the MDL
proceedings, Mr. Sidman relates that Gibbs & Bruns has taken every
opportunity to do so under the auspices of Rule 2004 of the
Federal Rules of Bankruptcy Procedure. Gibbs & Bruns sought
documents from 38 individuals and entities, including Deloitte.
Pursuant to Bankruptcy Rule 2004 and the terms of the Agreed
Protective Order, Deloitte produced over 30,000 pages of documents
to Gibbs & Bruns in January 2004.
Six days after the Court authorized the Rule 2004 depositions,
Gibbs & Bruns did exactly what Deloitte and the other discovery
targets predicted it would do with Rule 2004 discovery. On
May 10, 2004, Gibbs & Bruns used its Rule 2004 discovery to seek
to amend the Arizona Noteholders' complaint in the MDL proceeding.
On August 2, 2004, three months after the Court authorized Gibbs &
Bruns to take the deposition of Deloitte, Gibbs & Bruns served
Deloitte with a subpoena. Far from "reasonable and focused," the
Subpoena includes a designation of 28 overbroad topics, not
including many sub-topics.
On August 10, 2004, Deloitte sent a letter to Gibbs & Bruns
suggesting a more efficient way to approach the Trust's
deposition. Deloitte, like other discovery targets, suggested that
the deposition be coordinated with deposition discovery in the MDL
proceeding. Deloitte's letter further requested that G&B narrow
the scope of the Subpoena. Finally, Deloitte offered to enter
into a tolling agreement with the Trust as an attempt to alleviate
any purported timing concerns that the Trust would face if its
deposition of Deloitte were delayed and consolidated with
discovery in the MDL proceeding. Without explanation, Gibbs &
Bruns rejected Deloitte's proposal.
Headquartered in Dublin, Ohio, National Century Financial
Enterprises, Inc. -- http://www.ncfe.com/-- is the market leader
in healthcare finance focused on providing medical accounts
receivable financing to middle market healthcare providers. The
Company filed for Chapter 11 protection on November 18, 2002
(Bankr. S.D. Ohio Case No. 02-65235). The healthcare finance
company prosecuted its Fourth Amended Plan of Liquidation to
confirmation on April 16, 2004. Paul E. Harner, Esq., at Jones Day
represents the Debtors. (National Century Bankruptcy News, Issue
No. 46; Bankruptcy Creditors' Service, Inc., 215/945-7000)
NEW WORLD: Wants Exclusivity Right to File Plan Through Jan. 10
---------------------------------------------------------------
New World Pasta Company and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Middle District of Pennsylvania to extend
the period within which they have the exclusive right to file a
Plan of Reorganization until January 10, 2005. The Debtors also
want to extend the period to solicit votes until March 10, 2005.
The Debtors tell the Court that due to the size and complexity of
their businesses, they need more time to formulate, promulgate and
build consensus for a chapter 11 plan of reorganization.
The Debtors tell the Court they've made significant progress to
establish a framework to effectuate their rehabilitation. The
extension, they add, will be in the best interests of all the
parties concerned.
Headquartered in Harrisburg, Pennsylvania, New World Pasta Company
-- http://www.nwpasta.com/-- is a pasta manufacturer in the
United States. The Company, along with its debtor-affiliates,
filed for chapter 11 protection (Bankr. M.D. Penn. Case No.
04-02817) on May 10, 2004. Eric L. Brossman, Esq., at Saul Ewing
LLP represents the Company in its restructuring efforts. As of
December 2001, New World listed $426,174,000 in assets and
$430,952,000 in liabilities.
OAKWOOD HOMES: S&P Puts Low-B Ratings on 28 Classes & Junks 23
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on 66
classes of Oakwood Homes Corp.-related manufactured housing
transactions and removed them from CreditWatch negative, where
they were placed Aug. 26, 2004. Concurrently, ratings are
affirmed and removed from CreditWatch on four other Oakwood-
related classes.
The lowered ratings reflect the continued adverse performance
trends exhibited by the underlying pools of manufactured housing
installment sales contracts and mortgage loans and the resulting
deterioration of credit enhancement since Standard & Poor's last
rating actions in March 2004. The unfavorable market conditions
that continue to plague the manufactured housing industry have
contributed to the poor performance of these transactions, with
series issued in more recent vintages continuing to exhibit
greater signs of stress relative to series issued in prior
vintages.
The projected lifetime cumulative net losses for most transactions
have significantly exceeded original expectations, and the current
rating actions reflect revised assumptions about cumulative
lifetime net losses based on actual performance data and
expectations on future trends. The higher losses exhibited by
these transactions continue to be driven by higher-than-expected
defaults and loss severities as most of the underlying collateral
pools have deteriorated during the past few years, with more
significant deterioration observed after Oakwood's Nov. 15, 2002
announcement stating it would file for Chapter 11 bankruptcy
protection. Following the bankruptcy filing, Oakwood adopted a
wholesale liquidation strategy that resulted in a significant
increase in the loss severities.
In April 2004, Clayton Homes, Inc., a subsidiary of Berkshire
Hathaway, Inc., completed its acquisition of Oakwood. Since
Clayton assumed servicing responsibilities on the Oakwood
portfolio, there has been a significant increase in the
disposition of aged inventory, placing downward pressure on
recovery rates due to the large amount of inventory being sold and
the age of that inventory. In addition, Clayton has reinstituted
an extension and loan assumption program, which will help to
mitigate future delinquencies and repossessions. Additionally,
Clayton has revised the principal and interest advance strategy
previously used by Oakwood, which had allowed for up to five
payments on delinquent accounts. Currently, Clayton will only
advance up to two payments of principal and interest, excluding
homes in repossession and bankruptcy.
Ratings Lowered And Removed From Creditwatch Negative
Oakwood Mortgage Investors Inc. Series 1995-A
Rating
Class To From
----- -- ----
B-1 A+ AA/Watch Neg
Oakwood Mortgage Investors Inc. Series 1997-A
Rating
Class To From
----- -- ----
B-1 B- BB/Watch Neg
Oakwood Mortgage Investors Inc. Series 1997-B
Rating
Class To From
----- -- ----
M-1 AA AAA/Watch Neg
B-1 CCC BB-/Watch Neg
Oakwood Mortgage Investors Inc. Series 1997-C
Rating
Class To From
----- -- ----
M-1 A AAA/Watch Neg
B-1 CCC- B+/Watch Neg
Oakwood Mortgage Investors Inc. Series 1998-A
Rating
Class To From
----- -- ----
A-4 AA- AAA/Watch Neg
A-5 AA- AAA/Watch Neg
M-1 BB- A-/Watch Neg
Oakwood Mortgage Investors Inc. Series 1998-B
Rating
Class To From
----- -- ----
A-3 AA AAA/Watch Neg
A-4 AA AAA/Watch Neg
A-5 AA AAA/Watch Neg
M-1 BB BBB+/Watch Neg
M-2 CCC- B-/Watch Neg
Oakwood Mortgage Investors Inc. Series 1998-D
Rating
Class To From
----- -- ----
A BBB+ AA-/Watch Neg
A-1 ARM BBB+ AA-/Watch Neg
OMI Trust 1999-C
Rating
Class To From
----- -- ----
A-2 B BBB+/Watch Neg
M-1 CCC- B-/Watch Neg
OMI Trust 1999-D
Rating
Class To From
----- -- ----
A-1 BB- BBB+/Watch Neg
M-1 CCC B-/Watch Neg
OMI Trust 1999-E
Rating
Class To From
----- -- ----
A-1 B BB/Watch Neg
M-1 CCC CCC+/Watch Neg
OMI Trust 2000-A
Rating
Class To From
----- -- ----
A-2 CCC B/Watch Neg
A-3 CCC B/Watch Neg
A-4 CCC B/Watch Neg
A-5 CCC B/Watch Neg
M-1 CCC- CCC/Watch Neg
OMI Trust 2000-B
Rating
Class To From
----- -- ----
A-1 CCC- B-/Watch Neg
OMI Trust 2000-C
Rating
Class To From
----- -- ----
A-1 B+ BBB+/Watch Neg
M-1 CCC- B/Watch Neg
OMI Trust 2000-D
Rating
Class To From
----- -- ----
A-2 B- BBB-/Watch Neg
A-3 B- BBB-/Watch Neg
A-4 B- BBB-/Watch Neg
M-1 CCC- CCC/Watch Neg
OMI Trust 2001-C
Rating
Class To From
----- -- ----
A-1 CCC BB+/Watch Neg
A-2 CCC BB+/Watch Neg
A-3 CCC BB+/Watch Neg
A-4 CCC BB+/Watch Neg
M-1 D CC
OMI Trust 2001-D
Rating
Class To From
----- -- ----
A-1 B- BB/Watch Neg
A-2 B- BB/Watch Neg
A-3 B- BB/Watch Neg
A-4 B- BB/Watch Neg
M-1 CCC- B-/Watch Neg
OMI Trust 2001-E
Rating
Class To From
----- -- ----
A-1 B- BB-/Watch Neg
A-2 B- BB-/Watch Neg
A-3 B- BB-/Watch Neg
A-4 B- BB-/Watch Neg
M-1 CCC- CCC/Watch Neg
OMI Trust 2002-A
Rating
Class To From
----- -- ----
A-1 BB- BBB/Watch Neg
A-2 BB- BBB/Watch Neg
A-3 BB- BBB/Watch Neg
A-4 BB- BBB/Watch Neg
M-1 CCC B-/Watch Neg
M-2 CCC- CCC/Watch Neg
OMI Trust 2002-B
Rating
Class To From
----- -- ----
A-1 BB BBB-/Watch Neg
A-2 BB BBB-/Watch Neg
A-3 BB BBB-/Watch Neg
A-4 BB BBB-/Watch Neg
M-1 B B+/Watch Neg
M-2 CCC CCC+/Watch Neg
B-1 CCC- CCC/Watch Neg
OMI Trust 2002-C
Rating
Class To From
----- -- ----
A-1 B BB/Watch Neg
M-1 CCC+ B-/Watch Neg
M-2 CCC CCC+/Watch Neg
B-1 CCC- CCC/Watch Neg
Ratings Affirmed And Removed From Creditwatch Negative
Oakwood Mortgage Investors Inc. Series 1995-B
Rating
Class To From
----- -- ----
B-1 BBB BBB/Watch Neg
Oakwood Mortgage Investors Inc. Series 1996-B
Rating
Class To From
----- -- ----
A-6 AAA AAA/Watch Neg
Oakwood Mortgage Investors Inc. Series 1996-C
Rating
Class To From
----- -- ----
A-6 AAA AAA/Watch Neg
Oakwood Mortgage Investors Inc. Series 1997-A
Rating
Class To From
----- -- ----
A-6 AAA AAA/Watch Neg
OCEANVIEW: Fitch Puts BB Ratings on Two Classes & Junks One Class
-----------------------------------------------------------------
Fitch Ratings downgrades the ratings of four classes of notes and
affirms the ratings of three classes of notes issued by Oceanview
CBO I, Ltd. These rating actions are effective immediately:
-- $262,500,000 class A-1A notes affirmed at 'AAA';
-- $70,000,000 class A-1B notes affirmed at 'AAA';
-- $12,500,000 combination securities affirmed at 'AAA';
-- $28,000,000 class A-2 notes downgraded to 'A' from 'AA';
-- $10,000,000 class B-F notes downgraded to 'BB' from 'BBB';
-- $5,000,000 class B-V notes downgraded to 'BB' from 'BBB';
-- $2,523,893 class C notes downgraded to 'CCC+' from 'BB'.
Furthermore, the class A-2, B-F, B-V and C notes are removed from
Rating Watch Negative.
The ratings of the class A-1A, A-1B and A-2 notes address the
likelihood that investors will receive full and timely payments of
interest, as per the governing documents, as well as the stated
balance of principal by the legal final maturity date.
The ratings of the class B-F, B-V and C notes address the
likelihood that investors will receive ultimate and compensating
interest payments, as per the governing documents, as well as the
stated balance of principal by the legal final maturity date.
The rating of the combination securities addresses the likelihood
that investors will receive the stated balance of principal by the
legal final maturity date.
Oceanview is a collateralized debt obligation managed by Deerfield
Capital Management which closed June 27, 2002. Oceanview is
composed of:
* 53.7% residential mortgage-backed securities -- RMBS,
* 14.1% CDOs,
* 11.3% commercial mortgage-backed securities -- CMBS,
* 9.5% asset-backed securities -- ABS),
* 11.2% corporate debt, and
* 0.2% real estate investment trusts -- REITs.
Since the completion of the ramp up period, the collateral has
deteriorated.
As of the most recent trustee report dated August 31, 2004:
Overcollateralization Ratios
Classes From To
------- ---- --
Class A1 115.9% 113.0%
Class A2 107.2 104.5
Class B 103.0 100.4
The class A1 and A2 OC ratios continue to pass their respective
test levels of 108.0% and 105.0% while the class B OC ratio is
failing its test level of 100.5%. As a result of rising interest
rates and a significant cash position in the principal collection
account, the class A1 interest coverage -- IC -- ratio, class A2
IC ratio and the class C IC ratio are failing their respective
test levels of 120.0%, 115.0% and 113.0% with ratios of 112.6%,
102.5% and 91.0%.
The Fitch weighted average rating factor has also deteriorated
from 11.3 ('BBB+'/'BBB') at closing to 16.6 ('BBB'/'BBB-') with a
trigger of 17.
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 Collateralized
Debt Obligations,' dated Aug. 1, 2003, available on Fitch's web
site at http://www.fitchratings.com/
Fitch will continue to monitor and review this transaction for
future rating adjustments.
OWENS CORNING: Asks Court Okay to Extend & Modify DIP Financing
---------------------------------------------------------------
In anticipation of the upcoming expiration of their Postpetition
Credit Agreement, Owens Corning and its debtor-affiliates entered
into discussions with their bank lenders to further extend the DIP
Agreement's termination date.
The Debtors and Bank of America, N.A., as lender and agent, agreed
in principle to the terms of a Second Amendment to their
Postpetition Credit Agreement, providing that:
(a) The termination date of the Postpetition Credit Agreement
will be extended to November 15, 2006;
(b) Merrill Lynch Capital and Deutsche Bank Securities, Inc.,
will be appointed "co-documentation agents." Citigroup
Global Markets, Inc., and Bank of America, N.A., will be
appointed "joint arrangers." Citigroup Global will be
appointed "syndication agent," and Bank of America will
remain the Agent;
(c) The new lenders and their commitments are:
Revolving Pro
Loan Rata
Lender Commitment Share
------ ---------- -----
Bank of America $75,000,000 30%
Citicorp USA, Inc. 75,000,000 30%
Deutsche Bank Trust Company Americas 50,000,000 20%
Merrill Lynch Capital 50,000,000 20%
(d) The New Lenders will become "Lenders" under the Credit
Agreement and the commitments of the Existing Lenders
will terminate;
(e) Bank Products currently includes Bank Products issued only
by Bank of America. The definition of "Bank Products" in
the Postpetition Credit Agreement will be modified to
clarify that the Debtors may obtain Bank Products from
Lenders other than Bank of America;
(f) The method by which the Unused Line Fee is calculated
pursuant to the Postpetition Credit Agreement will be
modified to permit an upward or downward adjustment of the
fee;
(g) Certain inspections are to be permitted "[u]nless the
Borrowers have in excess of $200,000,000 of unrestricted
cash, no Revolving Loans are outstanding and no Event of
Default has occurred and is continuing;"
(h) "[C]onsent to new Liens (other than Permitted Liens)
and/or claims with priority in payment over the
Obligations (other than the Carve Out) in excess of
$200,000,000 in the aggregate or change the definition of
'Permitted Liens'" will be added to the list of waivers
for which approval is required by all Lenders;
(i) The definition of "Attorney Costs" will be modified to
provide for the payment of the reasonable fees and
expenses incurred by any law firm or other counsel engaged
by the New Lenders after a conversion of any of the
Debtors' Chapter 11 cases to a Chapter 7 case;
(j) The definition of "Applicable Margins" will be modified to
provide under certain average daily exposure thresholds a
more favorable interest rate on LIBOR Rate Loans to the
Debtors;
(k) The definition of "Restricted Investment" will be modified
to increase the amount of the "catch-all" exception from
$120 million to $170 million; and
(l) The Debtors must pay Bank of America $375,000 as amendment
fee.
J. Kate Stickles, Esq., at Saul Ewing, LLP, in Wilmington,
Delaware, asserts that approval of the Second Amendment is
beneficial to the continued operation and health of the Debtors'
business and to the Debtors' successful reorganization.
Therefore, the Debtors ask Judge Fitzgerald to approve the
proposed Second Amendment.
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. 84 Bankruptcy Creditors' Service, Inc.,
215/945-7000)
OWENS-ILLINOIS: Fitch Junks Sr. Unsecured Notes & Preferred Stock
-----------------------------------------------------------------
Fitch Ratings affirmed the ratings for Owens-Illinois (NYSE: OI)
as follows:
-- Senior secured credit facilities at 'B+';
-- Senior secured notes at 'B';
-- Senior unsecured notes at 'CCC+';
-- Convertible preferred stock at 'CCC'.
The Rating Outlook is Stable.
The ratings reflect OI's:
* high leverage,
* high capital spending requirements,
* limited free cash flow, and
* asbestos liabilities.
It is offset by strong global market positions and the announced
divestiture of its plastics business. The plastics divesture
should allow OI to reduce debt to levels that were in place before
the BSN acquisition, which prompted Fitch's downgrade in February
2004. However, Fitch does not believe that the debt reduction
will be enough to offset concerns about weak free cash flow and a
margin deterioration trend. High capital expenditures and
asbestos payments are expected to continue to pressure free cash
flow, limiting additional debt reduction in the near term.
OI completed the acquisition of BSN Glasspack S.A. in June for
approximately $1.4 billion, including the assumption of debt, and
the company announced in July that it had entered into a
definitive agreement with Graham Packaging Company to sell its
blow-molded plastic container operations for approximately
$1.2 billion in cash. This divestiture is expected to close in
the fourth quarter of 2004, and net proceeds will be used to
reduce debt. Fitch estimates that the majority of the debt
incurred in the BSN acquisition will be paid down, but Fitch
expects year-end debt to be slightly higher than the 2003 level.
At June 30, 2004, the company had total debt of $6,702 million, up
from $5,426 million at Dec. 31, 2003.
Due to weak operating conditions and higher costs, OI's margins,
although still solid, have declined over the past several years.
EBITDA margin in 2003 was 20%, compared with 23% in 2002, 24% in
2001, and 25% in 2000. The margin deterioration, combined with
higher leverage, has resulted in the weakening of some of its
credit measures. Debt/LTM EBITDA at June 30, 2004 was 5.2x, up
from 4.4x in 2003 and 4.1x in 2002, and debt/cap rose to 86.6% at
the end of June, compared with 84.4% at the end of 2003 and 76.2%
at the end of 2002. On a pro forma basis with the expected
divestiture proceeds, Fitch anticipates year-end credit statistics
will be flat compared with those of 2003. OI's exposure to
floating-rate debt might result in higher interest costs, which
could also negatively affect coverage ratios and free cash flow.
Fitch expects OI to benefit from an increased presence in the
European glass container market through the BSN acquisition, and a
better focused strategy through the divestiture of the blow-molded
plastic business. The European glass markets hold higher growth
opportunities than the North American glass market, and with the
increased focus on the glass business, further operational
improvements -- including cost savings and global procurement --
are expected to contribute to overall operating performance.
The new CEO, Steve McCracken, has brought in some new initiatives,
including a strengthened focus on cash flow generation. As a part
of the cash flow improvement initiatives, working capital
management has improved during the first six months of 2004,
minimizing cash used by working capital to $36 million from
$228 million during the same period one year ago. While Fitch
expects OI to continue to focus on working capital management,
efficiency improvement and cash generation, high capital
requirements, and asbestos payments will continue to limit free
cash flow that is available for debt reduction. OI spent
$432 million on capital expenditures in 2003, and Fitch expects
the spending to remain high in the near term. The large part of
OI's capex is used for rebuilding furnaces and machines for its
glass containers business. As the glass business as a percentage
of total business grows, capex is expected to rise in proportion
as well. Gross asbestos payments have been declining since 2002.
However, the absence of insurance proceeds has resulted in flat
net cash outflow in recent years.
Owens Illinois, with annual revenues of $6 billion, is the largest
manufacturer of glass containers in the world, with leading
positions in Europe, North America, Asia Pacific, and South
America. OI also manufactures plastic packaging products and
closures.
PRIME HOSPITALITY: Inks Stockholder Litigation Settlement Pact
--------------------------------------------------------------
Prime Hospitality Corp., and the other defendants entered into a
memorandum of understanding to settle the purported class action
litigation brought in connection with the Company's acquisition by
BREP IV Hotels Holding L.L.C., an affiliate of The Blackstone
Group. The litigation was brought in the Court of Chancery of the
State of Delaware, New Castle County, against the Company, the
Company's directors and Blackstone.
The settlement will not affect the amount of merger consideration
to be paid in the merger or any other terms of the merger.
In connection with the settlement, the Company has agreed to make
certain additional disclosures to its stockholders, which will be
included in a proxy statement supplement that will be mailed to
stockholders of the Company. Subject to the completion of certain
confirmatory discovery by counsel to the plaintiffs, the
memorandum of understanding contemplates that the parties will
enter into a settlement agreement. The settlement agreement will
be subject to customary conditions including court approval
following notice to the stockholders of the Company and
consummation of the merger. In the event that the parties enter
into a settlement agreement, a hearing will be scheduled at which
the court will consider the fairness, reasonableness and adequacy
of the settlement which, if finally approved by the court, will
resolve all of the claims that were or could have been brought in
the actions being settled, including all claims relating to the
merger, the merger agreement and any disclosure made.
The defendants deny the allegations made in the purported class
action litigation and have agreed to settle the litigation to
avoid the burden and expense of further litigation and to avoid
the risk of delaying the merger.
About Prime Hospitality Corp.
Prime Hospitality Corp., one of the nation's premiere lodging
companies, owns, manages, develops and franchises more than 250
hotels throughout North America. The Company owns and operates
three proprietary brands, AmeriSuites(R) (all suites), PRIME
Hotels & Resorts(R) (full-service) and Wellesley Inns & Suites(R)
(limited service). Also within Prime's portfolio are owned and/or
managed hotels operated under franchise agreements with national
hotel chains including Hilton, Sheraton, Hampton, and Holiday Inn.
Prime can be accessed over the Internet at
http://www.primehospitality.com/
About The Blackstone Group
The Blackstone Group, a private investment firm with offices in
New York, London and Hamburg, was founded in 1985. Blackstone's
Real Estate Group has raised five funds, representing over
$6 billion in total equity, and has a long track record of
investing in hotels and other commercial properties. In addition
to Real Estate, The Blackstone Group's core businesses include,
Private Equity, Corporate Debt Investing, Marketable Alternative
Asset Management, Mergers and Acquisitions Advisory, and
Restructuring and Reorganization Advisory. The Blackstone Group
can be accessed on the Internet at http://www.blackstone.com/
* * *
As reported in the Troubled Company Reporter on August 23, 2004,
Standard & Poor's Ratings Services placed its 'BB-' corporate
credit and 'B' subordinated debt ratings on Prime Hospitality,
Corp., on CreditWatch with negative implications.
Fairfield, New Jersey-based hotel operator had about $223 million
of debt outstanding at the end of June 2004.
"The CreditWatch listing reflects the planned acquisition of Prime
by affiliates of The Blackstone Group for $12.25 per share, or a
total value of more than $790 million including debt," said
Standard & Poor's credit analyst Sherry Cai. The transaction is
expected to close in the fourth quarter of 2004, subject to
shareholder approval and other customary conditions.
PROVIDIAN GATEWAY: Moody's Rates $68.113M Class E Notes Ba3
-----------------------------------------------------------
Moody's Investors Service assigned ratings of Aaa, Aa2, A2, Baa2
and Ba3 to the Class A, Class B, Class C, Class D and Class E
Notes, respectively, issued from the Providian Gateway Owner
Trust, Series 2004-D.
The complete rating action was:
Issuer: Providian Gateway Owner Trust
* $439,800,000 Fixed Rate Class A Asset Backed Notes, Series
2004-D, Rated Aaa
* $50,600,000 Fixed Rate Class B Asset Backed Notes, Series
2004-D, Rated Aa2
* $89,500,000 Fixed Rate Class C Asset Backed Notes, Series
2004-D, Rated A2
* $70,100,000 Fixed Rate Class D Asset Backed Notes, Series
2004-D, Rated Baa2
* $68,113,000 Class E Asset Backed Notes, Series 2004-D, Rated
Ba3
The Class A, Class B, Class and Class D Asset Backed Notes have a
fixed rate coupon payable monthly. These notes have an expected
principal payment date of September 17, 2007 and a legal maturity
date of September 15, 2011. The Class E certificates bear no
coupon and will be retained by Providian National Bank.
Each class of notes benefits from subordination provided by the
more junior tranches. The Class D and Class E notes also benefit
from a segregated spread account. Moody's rating addresses the
likelihood of timely payment of interest and the return of
principal by the legal maturity date.
The assets of the Trust consist of credit card receivables that
were originated by Providian National, which also services the
portfolio. Providian National's principal executive offices are
located in Tilton, New Hampshire. Providian National's long-term
bank deposits are rated Ba2, its other senior obligations are
rated Ba3, and its bank financial strength rating is D. Providian
National is a monoline credit card issuer, ranking ninth in
receivables in the United States.
RAILAMERICA: Moody's Assigns Ba3 Rating to Senior Secured Facility
------------------------------------------------------------------
Moody's Investors Service assigned a Ba3 senior implied rating to
RailAmerica Transportation Corporation and a Ba3 rating to the
company's amended senior secured credit facility. The rating
actions consider the company's use of proceeds from the recent
sale of Freight Australia towards the redemption, by way of a
tender offer, of its $130 million of senior subordinate notes,
demonstrating both significant reduction in leverage as well as
prudent focus on the company's core North American business
activities. Specifically, these ratings have been assigned:
* Ba3 to RailAmerica's amended $450 million senior secured
credit facilities consisting of a $100 million revolving
credit facility due 2010 and a $350 million term loan B due
2011;
* Senior implied rating of Ba3; and
* Issuer rating of B1.
The ratings outlook has been changed to stable from positive.
The B3 rating on the $130 million senior subordinated notes, due
2010, has been confirmed, and will be withdrawn if and when all
such notes are tendered or redeemed. Also, the senior implied and
issuer ratings previously assigned to parent company RailAmerica,
Inc., (B1 and B2, respectively), as well as the Ba3 ratings for
RailAmerica's existing bank credit facilities that are being
replaced by the new facility, have been withdrawn.
The stable rating outlook reflects Moody's expectation that the
company will follow a conservative investment program in the near
term, and that acquisition activity, which is likely to involve
modestly sized transactions, will not result in a significant
increase in financial leverage. Ratings or their outlook could
face downward revision if the company were to increase its
acquisition activities beyond a level of $20-25 million annually,
or if leverage (debt/EBITDA) were to exceed 4x (5x on a lease-
adjusted basis). Conversely, ratings may be positively affected
if operating results and ensuing cash flow generation exceed
expectations while the company grows, resulting in substantial
debt reduction.
In August 2004, RailAmerica completed the sale of its Freight
Australia subsidiary for approximately US $204 million. Moody's
views this divestiture, as well as the February 2004 sale of the
company's equity interest in a Chilean railroad -- Ferronor,
positively as it suggests a focus by the company on its core North
American short line railroad portfolio, eliminating international
operating risks and foreign currency exposure specific to those
regions. At the same time, the company maintains the
diversification benefits derived from a broad line of commodities
hauled and customers served in the U.S. and Canadian markets.
With the proceeds from the sale of Freight Australia, the company
intends to repay, by way of a tender offer, its $130 million of
12-7/8% senior subordinated notes due 2010. This improves both
the company's leverage and its free cash flow generation
capability, as approximately $17 million of annual interest
expense associated with these notes will have been eliminated. Pro
forma for the repayment of notes, debt reduces by about 30%, to
$374 million, which represents about 3.5x LTM pro forma September
2004 EBITDA. However, Moody's notes the company's increasing use
of operating leases as it acquires individual railroads, resulting
in a lease-adjusted debt-to-EBITDAR of about 4.5x, which is high
for this rating category. With the reduction in interest expense
and modestly improving operating performance in 2004, EBIT
coverage of interest improves from about 2.3x (LTM, as of June
2004) to about 4x, pro forma for the notes tender. Free cash
flow, which had been negative for the last three years, is
estimated to be over $25 million in FY 2004. Moody's expects
that, with modest growth and maintenance of operating margins,
RailAmerica should be able to sustain and slightly improve on
these credit metrics over the next few years.
Moody's notes that RailAmerica's revenues and gross profits have
improved over the past few years, owing to acquisition-driven
growth while margins have largely been maintained. Nevertheless,
because ongoing capital spending needs limit free cash flow
generation the rating agency is concerned that continued
aggressive acquisition activity could result in higher leverage.
North American operations grew by about 52% from 2001 through LTM
June 2004, while operating ratios remained fairly steady in the
77-79% range. However, while the company had been earning strong
operating cash flows, capital expenditure requirements (before
acquisitions, but including international operations since sold)
of $60-70 million annually resulted in negative free cash flow
throughout this period. With about $115 million in acquisitions
that the company undertook in 2002-2003, RailAmerica's debt
increased substantially to fund these acquisitions. Going
forward, RailAmerica is expected to pursue further growth through
acquisitions, but at a more modest pace than seen in the last
several years. While the rating would accommodate smaller
acquisitions that can be funded largely from internally generated
cash flow, any more aggressive pace of acquisitions could
adversely affect credit metrics and pressure the rating.
The amended senior secured credit facilities have been rated Ba3,
the same as the senior implied rating, reflecting the fact that
these facilities represent essentially all of the company's debt
after the notes have been tendered. The credit facilities are
secured by a first priority interest in essentially all of the
assets of the company and its subsidiaries. RailAmerica has
approximately $1 billion of assets on its balance sheet. The
majority of this balance (about $860 million) comprises property
plant and equipment, which largely reflects the company's real
estate, rail, and rolling stock holdings. Although realizable
values for these assets could be substantially lower than carrying
costs, especially in a distressed sale scenario, Moody's believes
that the company's large fixed asset base should still provide
ample coverage of debt at current levels and commitments. The
senior subordinated notes' rating remains B3, three notches below
the senior implied rating, reflecting their junior claim to all
existing and future senior debt. Through the amendment to the
indenture provided by the consent solicitation relating to the
tender of these notes, credit protection afforded to this class of
debt has been further weakened by the removal of certain covenants
and provisions originally provided to these notes, in particular
the loss of cross-default protection.
RailAmerica, headquartered in Boca Raton, Florida, is the largest
owner and operator of short line freight railroads in North
America. The company currently owns, leases or operates 46 rail
properties in North America, of which 45 are short line railroads
that provide transportation services for both on-line customers
and Class I railroads that interchange with its rail lines.
RailAmerica had FY 2003 revenues of $358 million.
RESIDENTIAL ACCREDIT: Fitch Puts Low-B Ratings on 21 Classes
------------------------------------------------------------
Fitch has taken action on the following Residential Accredit Loan,
Inc., mortgage-pass through certificates:
* Residential Accredit Loans, Inc., mortgage asset-backed pass-
through certificates, series 1996 -QS4
-- Classes A, R affirmed at 'AAA';
-- Class M-1 affirmed at 'AAA';
-- Class M-2 affirmed at 'AAA';
-- Class M-3 affirmed at 'AAA';
-- Class B-1 affirmed at 'BBB+';
-- Class B-2 affirmed at 'BB'.
* Residential Accredit Loans, Inc., mortgage asset-backed pass-
through certificates, series 1996-QS5
-- Classes A, R affirmed at 'AAA';
-- Class M-1 affirmed at 'AAA';
-- Class M-2 affirmed at 'AAA';
-- Class M-3 upgraded to 'AA+' from 'AA';
-- Class B-1 affirmed at 'BB';
-- Class B-2 affirmed at 'B'.
* Residential Accredit Loans, Inc., mortgage asset-backed pass-
through certificates, series 1996-QS7
-- Classes A, R affirmed at 'AAA';
-- Class M-1 affirmed at 'AAA';
-- Class M-2 affirmed at 'AAA';
-- Class M-3 affirmed at 'AAA';
-- Class B-1 affirmed at 'BBB+';
-- Class B-2 affirmed at 'BB'.
* Residential Accredit Loans, Inc., mortgage asset-backed pass-
through certificates, series 1997-QS8
-- Classes A, R affirmed at 'AAA';
-- Class M-1 affirmed at 'AAA';
-- Class M-2 affirmed at 'AAA';
-- Class M-3 upgraded to 'AA' from 'A+'
-- Class B-1 upgraded to 'A' from 'BBB'
-- Class B-2 affirmed at 'B';
* Residential Accredit Loans, Inc., mortgage asset-backed pass-
through certificates, series 1998-QS1
-- Classes A, R affirmed at 'AAA';
-- Class M-1 affirmed at 'AAA';
-- Class M-2 affirmed at 'AAA';
-- Class M-3 upgraded to 'AA' from 'A+';
-- Class B-1 upgraded to 'A' from 'BBB';
-- Class B-2 affirmed at 'B'.
* Residential Accredit Loans, Inc., mortgage asset-backed pass-
through certificates, series 1998-QS4
-- Classes A, R affirmed at 'AAA';
-- Class M-1 affirmed at 'AAA';
-- Class M-2 affirmed at 'AAA';
-- Class M-3 upgraded to 'AA-' from 'A+';
-- Class B-1 upgraded to 'BBB' from 'BB+';
-- Class B-2 affirmed at 'B'.
* Residential Accredit Loans, Inc. Mortgage Asset Backed Pass-
Through Certificates, series 1998-QS13
-- Classes CB, AP, AV, R affirmed at 'AAA'
-- Class M-1 affirmed at 'AAA'
-- Class M-2 affirmed at 'AAA'
-- Class M-3 affirmed to 'AAA'
-- Class B-1 affirmed to 'A+'
-- Class B-2 affirmed at 'BB'
* Residential Accredit Loans, Inc. mortgage asset-backed pass-
through certificates, series 1998-QS14
-- Classes A, R affirmed at 'AAA';
-- Class M-1 affirmed at 'AAA';
-- Class M-2 affirmed at 'AAA';
-- Class M-3 upgraded to 'AAA' from 'AA+';
-- Class B-1 upgraded to 'A+' from 'BBB+';
-- Class B-2 affirmed at 'B'.
* Residential Accredit Loans, Inc., mortgage asset-backed pass-
through certificates, series 1998-QS15
-- Classes CB, NB, R affirmed at 'AAA';
-- Class M-1 affirmed at 'AAA';
-- Class M-2 affirmed at 'AAA';
-- Class M-3 affirmed to 'AA';
-- Class B-1 affirmed to 'BBB';
-- Class B-2 affirmed at 'B'.
* Residential Accredit Loans, Inc., mortgage asset-backed pass-
through certificates, series 1998-QS17
-- Classes A, CB, NB, R affirmed at 'AAA';
-- Class M-1 affirmed at 'AAA';
-- Class M-2 affirmed at 'AAA';
-- Class M-3 upgraded to 'AAA' from 'AA';
-- Class B-1 upgraded to 'A' from 'BBB-';
-- Class B-2 affirmed at 'B'.
* Residential Accredit Loans, Inc., mortgage asset-backed pass-
through certificates, series 1999-QS3
-- Classes A, R affirmed at 'AAA';
-- Class M-1 affirmed at 'AAA';
-- Class M-2 affirmed at 'AAA';
-- Class M-3 upgraded to 'AA' from 'A';
-- Class B-1 upgraded to 'BB+' from 'BB';
-- Class B-2 affirmed at 'B'.
* Residential Accredit Loans, Inc., mortgage asset-backed pass-
through certificates, series 1999-QS4
-- Classes A, R affirmed at 'AAA';
-- Class M-1 affirmed at 'AAA';
-- Class M-2 upgraded to 'AAA' from 'AA+';
-- Class M-3 upgraded to 'AA-' from 'A+';
-- Class B-1 upgraded to 'BBB+' from 'BBB';
-- Class B-2 affirmed at 'B'.
* Residential Accredit Loans, Inc., mortgage asset-backed pass-
through certificates, series 1999-QS9
-- Classes A, R affirmed at 'AAA';
-- Class M-1 affirmed at 'AAA';
-- Class M-2 affirmed at 'AAA';
-- Class M-3 upgraded to 'A+' from 'BBB+';
-- Class B-1 affirmed at 'BB';
-- Class B-2 affirmed at 'B'.
* Residential Accredit Loans, Inc., mortgage asset-backed pass-
through certificates, series 2000-QS1
-- Classes A, CB, NB, R affirmed at 'AAA';
-- Class M-1 affirmed at 'AAA';
-- Class M-2 affirmed at 'AAA';
-- Class M-3 downgraded to 'BB+' from 'BBB';
-- Class B-1 downgraded to 'CCC' from 'B-'.
* Residential Accredit Loans, Inc., mortgage asset-backed pass-
through certificates, series 2001-QS4
-- Classes A, R affirmed at 'AAA';
-- Class M-1 affirmed at 'AAA';
-- Class M-2 affirmed at 'AA-';
-- Class M-3 affirmed at 'BBB';
-- Class B-1 affirmed at 'BB';
-- Class B-2 affirmed at 'B-'.
* Residential Accredit Loans, Inc., mortgage asset-backed pass-
through certificates, series 2001-QS17
-- Classes A, R affirmed at 'AAA';
-- Class M-1 affirmed at 'AA+';
-- Class M-2 affirmed at 'A';
-- Class M-3 affirmed at 'BBB';
-- Class B-1 affirmed at 'BB';
-- Class B-2 affirmed at 'B'.
* Residential Accredit Loans, Inc., mortgage asset-backed pass-
through certificates, series 2002-QS17
-- Classes CB, NB, AP, AV, R affirmed at 'AAA';
The upgrades reflect an increase in credit enhancement relative to
future loss expectations and affect $37,571,938 of outstanding
certificates. The affirmations reflect credit enhancement
consistent with future loss expectations and affect $574,735,375
of outstanding certificates.
As of the August 2004 distribution date, the pool factor (current
mortgage loans outstanding as a percentage of the initial pool)
for the above securitizations range between 4% and 45%.
The negative rating actions taken on series 2000-QS1, with a
current pool factor of 7%, reflect poor performance of the
underlying collateral, as well as high delinquencies in the
transaction. The poor performance affects $2,404,223 of
outstanding certificates. As of the August 2004 distribution
date, losses totaling $993,862 have been incurred. Currently,
delinquencies are:
30 5.81%
60 5.60%
90 4.09%
FC 3.30%
REO 1.17%
However, forthcoming losses are somewhat mitigated by the fact
that two loans currently in FC have various mortgage insurance
policies. Fitch believes that the M-3 bond will be negatively
affected due to zero credit enhancement remaining below the B-1
bond. However, Fitch also believes the M-2 bond can still
maintain an investment-grade rating and that all other classes
have adequate credit enhancement to be affirmed at this time.
RIVERSIDE FOREST: Tolko Talks to Shareholders About Six Key Issues
------------------------------------------------------------------
Tolko Industries Ltd. formally varied the terms of its offer to
purchase all of the outstanding common shares of Riverside Forest
Products Limited. Tolko has reduced the Minimum Tender Condition
currently contained in the offer from 75% to 51%.
Trevor Jahnig, Tolko's Vice-President of Finance & CFO said: "In
the Notice of Variation, we also responded to important issues
contained in Riverside's Directors' Circular and press release of
September 14, 2004. We believe it is vital that all shareholders
are fully informed and have access to balanced information.
Issues raised by Riverside in previous documentation have been
evaluated and are reflected in our offer."
Some of the issues addressed include:
1. Comparison with recent transactions (West Fraser/Weldwood &
Canfor/Slocan)
Weldwood is significantly larger and has broader, more
diverse product offerings and is not a comparable company
to Riverside. Also, the comparison of Enterprise Value to
EBITDA multiples using a trailing 12 month EBITDA number do
not reflect the highly cyclical nature of the forest sector
where transactions have occurred at different points in the
cycle. Using a more appropriate method such as the
multiple of Enterprise Value to Trend EBITDA shows that
Tolko's offer is consistent with the multiple paid on the
Slocan transaction. Furthermore, we believe both Weldwood
and Slocan have been consistently stronger performers than
Riverside.
2. Riverside's business or growth prospects.
Riverside's recent financial results are not sustainable as
they are being driven by peak of cycle commodity prices for
both lumber and plywood. Looking back across various
commodity price cycles, Riverside has generated a net loss
in four of its last 10 fiscal years.
3. Riverside's substantial cash on hand.
The Riverside Directors' Circular fails to point out that
Riverside has non-investment grade debt outstanding of
$197.0 million, which is in excess of Riverside's current
cash balance.
4. Softwood Duty Refunds
The amount and timing of duty refunds, if any, is highly
speculative.
5. Timber tenure take-back compensation
Riverside estimates that it will receive after-tax
compensation of $28 million ($65/m3 or $100/m3 pre-tax) for
timber tenure take-back from the BC government. The BC
government recently announced they had reached agreement
with Weyerhaeuser to pay $27/m3 (pre-tax) in compensation.
Riverside's estimate assumes it will receive compensation
that is approximately four times higher than the most
recent compensation paid.
6. Access to Riverside's Data Room
Tolko's initial request for access to Riverside's Data Room
was refused. Subsequent to that refusal, access was
offered under terms and conditions Tolko finds unacceptable
especially in light of the fact that we believe we are the
most strategic buyer.
* * *
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.
SOTHEBY'S HOLDINGS: S&P Puts B+ Rating on CreditWatch Positive
--------------------------------------------------------------
Standard & Poor's Ratings Services placed the ratings on Sotheby's
Holdings, Inc., including its 'B+' long-term corporate credit
rating, on CreditWatch with positive implications. Sotheby's had
$272 million of debt outstanding at June 30, 2004.
This action reflects Sotheby's improved credit measures following
a recovery in the art market. Total revenues for the first two
quarters grew 66% year-over-year to $276 million, primarily
reflecting higher auction commission revenues and the sale of
Sotheby's International Realty, Inc., to Cendant. At June 30,
2004, total lease adjusted debt to EBITDA was 2.5x and trailing
12-month EBITDA interest coverage was 3.2x. This compares to more
than 8x debt to EBITDA leverage at the end of 2003. Financial
flexibility has also improved with $147 million of cash at
June 30, 2004, and a $200 million three-year revolving credit
facility that was finalized in the first quarter of 2004.
"We expect to resolve the CreditWatch listing in the next few
weeks. Ratings could be raised one or two notches," said Standard
& Poor's credit analyst Stella Kapur. Factors that will be
considered include stability of the art market and Sotheby's
strategy and financial policy.
SPRING AIR PARTNERS: Emerges from Chapter 11 Bankruptcy Protection
------------------------------------------------------------------
Spring Air Partners North America, Inc., a manufacturer of quality
bedding marketed under the Spring Air and Chattam & Wells product
lines, emerged from Chapter 11 bankruptcy protection in accordance
with the Plan of Reorganization that was confirmed on
June 29, 2004. The Company initially filed its voluntary petition
for reorganization in March 2004.
W. Les Ayers, the Company's Chief Executive Officer and President
stated "The Company's ability to successfully accomplish its
reorganization in six months reflects the strength of our brands,
the on-going support and confidence our suppliers, customers, and
licensor, The Spring Air Company, and the tireless efforts of
hundreds of employees and managers at our plants across the
country. Going forward, our focus will be on continuing to lead
the bedding industry in providing innovation and value, while
further strengthening our position as the supplier of choice in
our chosen markets. Further, with the support of our financial
sponsor, H.I.G. Capital, LLC, the Company is now well positioned
to take full advantage of its core strengths -- quality and
reliability - to reach more customers with our current and
expanding product lines in more markets."
Jim Nation, President and CEO of The Spring Air Company, expressed
his support for the Company stating "The Company, as the largest
licensee of TSAC, has been a strong contributor to the overall
success and brand presence of the Spring Air portfolio of
products. We believe that the financial strength of H.I.G.
Capital, LLC, the new majority owners of the Company, will allow
Spring Air to continue its trend of double-digit growth. We are
excited to have an opportunity to work with H.I.G. Capital, LLC in
connection with our strategic efforts to continue to grow and
expand the Spring Air brand."
John Black, Managing Director of H.I.G. Capital, LLC stated "We
believe that the Company's efficient and comprehensive financial
and operational restructuring provides Spring Air with the ability
to execute its business plan while continuing to offer the service
and range of product offerings that its customers expect. With a
sound financial structure, and the leadership provided by Les
Ayers, its CEO and President, and Robert W. Thompson its CFO, we
believe that the Company is now poised to fully realize its growth
potential while simultaneously enhancing its status as an industry
leader."
The Company, through its subsidiaries, is a manufacturer and
marketer of Spring Air brand mattresses licensed from TSAC, and
has 7 facilities for distribution throughout North America. The
Company sells the full product line offered by TSAC to national
retail chains, sleep shops and furniture stores, and also owns the
exclusive rights to the premium Chattam and Wells brand of
mattresses.
H.I.G. Capital, LLC is a private investment firm with in excess of
$1.5 billion of committed capital focused on providing companies
with debt and equity financing to execute complex business
strategies.
Headquartered in New York, New York, Spring Air Partners - North
America, Inc., -- http://www.springair.com/-- is a bedding
manufacturer in the United States, manufacturing mattresses and
box springs under multiple brand names: Back Supporter(R),
ComfortFlex(R), Four Seasons(R), Chattam and Wells(R), Posture
Comfort(R) and Nature's Rest(R), for sale to local, regional and
national retailers in the United States and Canada. The Company
filed for chapter 11 protection on March 22, 2004 (Bankr. S.D.N.Y.
Case No. 04-11915). Mark A. Broude, Esq., at Latham & Watkins
represents the Debtors in their restructuring efforts. When the
Company filed for protection from their creditors, they listed
estimated assets of more than $10 million and estimated debts of
over $50 million.
SUN PRAIRIE: Oct. 15 Court Hearing on Restructured Payment Plan
---------------------------------------------------------------
STATE OF MINNESOTA FOURTH JUDICIAL DISTRICT
COUNRY OF HENNEPIN DISTRICT COURT
PROBATE/MENTAL HEALTH DIVISION
____________________________________
)
In the Matter of the Trust Created )
Under the Trust Indenture from )
Sun Prairie, a Partnership, as ) Court File No. C6-03-59
Issuer and Star Bank, N.A., (now )
known as U.S. Bank National ) ORDER FOR HEARING
Association) as Trustee, dated as )
of July 15, 1998 )
____________________________________)
The petition of Wells Fargo Bank, National Association, the
Trustee of the above-named trust, is dated August 5, 2004, and has
been filed with is Court. The petition requests an Order setting
a time and place for hearing on the petition and directing the
manner in which and the persons to whom notice of the hearing
shall be given, and that at the hearing the Court makes its
further Order:
1. Authorizing, approving and directing Petitioner, on behalf
of all of the Holders, to enter into the Revised Plan as described
in the Petition, and authorizing, approving and directing
Petitioner to take all steps reasonably necessary to effectuate
the Revised Plan and the intent of the parties, including without
limitation, the following:
(a) Entering into the Agreement, Waiver and Amendment
among Sun Prairie, U.S. Bank and Petitioner;
(b) Accepting the Permitted Payments as identified on the
Amortization Schedule attached as Exhibit A to the Agreement,
Waiver and Amendment among Sun Prairie, U.S. Bank and Petitioner,
specifically accepting cash payments from Sun Prairie to
Petitioner as follows:
(i) $27,625.46 in month 13 and continuing
through month 132,
(ii) $181,957.86 in month 133,
(iii) $191,566.27 beginning in month 134, and
(iv) a final cash payment of $58,959.71 in month 166;
(c) Authorizing Petitioner to reduce the effective
interest rate from 11% to 6% on the currently outstanding
principal if Sun Prairie makes all of the Permitted Payments when
due until the conclusion of the Revised Plan in December 2017;
(d) Authorizing Petitioner to forgo payment of accrued
interest from the date of the Default through the date of Closing;
(e) Authorizing capitalization of interest at the rate of
4% per annum for 12 months following Closing;
(f) Authorizing, allowing and directing Petitioner to
accept that not all interest owing under the Indenture will be
paid in full if Sun Prairie makes all Permitted Payments and
accepting only Permitted Payments as long as there are outstanding
obligations of Sun Prairie to U.S. Bank pursuant to the Amended
Term Loan, and finding that the Revised Plan provides that
Permitted Payments shall constitute a return on principal to the
Holders and that Sun Prairie has agreed to record such Permitted
Payments as a reduction of principal on the books and records of
Sun Prairie;
(g) Authorizing, allowing and directing Petitioner to
forbear from exercising any rights and remedies against Sun
Prairie, its partners, the Guarantors, and the Replacement
Guarantors;
(h) Authorizing and allowing, but not requiring,
Petitioner in Petitioner's sole discretion, to pursue all remedies
available to Petitioner pursuant to the terms of the original
Indenture and to pursue collection from Sun Prairie in an amount
equal to Sun Prairie's obligations pursuant to the terms of the
original Indenture if Sun Prairie fails to make timely Permitted
Payment to Petitioner;
(i) Authorizing and allowing Petitioner complete and
absolute discretion to make distributions to the Holders; and
(j) Entering into the Mutual Release Agreement with Sun
Prairie, U.S. Bank, Mountain Prairie, Hormel and related entities.
2. Authorizing, approving and directing Petitioner to allow
Sun Prairie to incur additional subordinated debt from WhiteStone
and from certain general partners of Sun Prairie;
3. Authorizing, approving and directing Petitioner to permit
the Guarantors who previously provided limited guarantees of the
indebtedness owed by Sun Prairie to restructure the obligation as
Replacement Guarantors and to execute Replacement Guaranty
Agreements substantially in the form attached to the Petition as
Exhibit E;
4. Authorizing, approving and directing Petitioner to release
a Departing Partner from his or her Guaranty Agreement in the
event that such Guarantor gives up his, her or its partnership
interest in Sun Prairie and has satisfied other conditions
precedent to the release imposed by Sun Prairie;
5. Authorizing, approving and directing Petitioner that upon
execution and implementation of the Revised Plan, all relevant
defaults, including the Matured Default, will be cured and
satisfied, and authorizing, approving and directing Petitioner to
not foreclose on the assets of Sun Prairie in connection with such
defaults;
6. Finding that Sun Prairie made reasonable efforts to inform
each Holder of the Revised Plan and that the failure of the
Holders to respond to the Notice sent by Sun Prairie is deemed to
be consent to the Revised Plan for purposes of compliance with the
terms of the Indenture;
7. Authorizing, approving and directing Petitioner to waive
the requirement of receiving the written approval of every Holder
for purposes of complying with the terms of the Indenture;
8. Finding that the information contained in this Petition is
adequate to inform the Holders and that notice of the hearing to
each Holder by mail and by publication in Finance and Commerce,
Plain Dealer and Wall Street Journal was proper and complied with
Minn. Stat. 501B.18; and
9. Finding that this trust is not subject to the continuing
jurisdiction of the Court pursuant to Minn. Stat. 501B.23.
10. Granting such further relief as the Court deems equitable
and just. It appears to the Court that, pursuant to Minn. Stat.
501B.18, at least twenty (20) days' notice by publication and
fifteen (15) days' notice by mail before the date of the hearing
on the petition will be a reasonable and proper notice of the
hearing.
NOW, THEREFORE, upon motion of Faegre & Benson LLP, attorneys
for said petitioner,
It is ordered that the petition be heard and all persons
interested in the matter appear before a Referee of the Court in
Room 400C, Courts Tower, Hennepin County Government Center,
Minneapolis, Minnesota, on the 15th day of October, 2004, at 9:00
a.m., or as soon thereafter as the petition can be heard, and show
cause, if any there be, why the relief requested in the petition
should not be granted.
It is further ordered that notice of the hearing be given by
publishing this Order one time at least twenty (20) days before
the date of the hearing in Finance and Commerce, a legal newspaper
of the Hennepin County, Minnesota, The Wall Street Journal, and
the Cleveland Plain Dealer, and by mailing a copy of this Order to
the persons named in the Petition or known to the Trustee who may
claim an interest in the Trust, at their last-known addresses, at
least fifteen days before the date of the hearing unless notice is
waived.
Dated at Minneapolis, Minnesota, this 20th day of August,
2004.
BY THE COURT:
/s/ Patricia L. Belois
________________________
Judge Patricia L. Belois
FAEGRE & BENSON LLP
Bonnie M. Fleming, Esq.
Dennis M. Ryan, Esq.
2200 Wells Fargo Center
90 South Seventh Street
Minneapolis, Minnesota 55402
Phone: (612) 766-7000
FAX: (612) 766-1600
Attorneys for Wells Fargo Bank, N.A., Successor Trustee
STAINLESS STEEL: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Stainless Steel Systems, Inc.
210 East 6th
South Hutchinson, Kansas 67505
Bankruptcy Case No.: 04-15390
Type of Business: The Debtor manufactures, designs, builds and
installs metal goods.
See http://www.sssytems.com/
Chapter 11 Petition Date: September 24, 2004
Court: District of Kansas (Wichita)
Judge: Robert E. Nugent
Debtor's Counsel: Edward J. Nazar, Esq.
245 North Waco, Suite 402
Wichita, Kansas 67202
Tel: 316-262-8361
Total Assets: $574,342
Total Debts: $2,172,468
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
CNA Western Surety Trade Debt $267,244
CNA Plaza 13 South
Chicago, IL 60685
James E. White LT Note $141,081
Rt 1 Box 103C
Everton, MO 65646
Lloyd Franklin $124,012
5901 Cactus Dr.
Hutchinson, KS 67502
FAMA Inc. Trade Debt $90,315
First Bank Value of Colateral: $89,953
$561,442
Goedecke $76,217
Legasus Group Trade Debt $53,200
JCB Finance LT Note $51,975
Shughart Thomson & Kilroy PC Legal Fees $51,656
Reno County Treasurer $28,559
Ramsey Oil Trade Debt $22,509
MPM LLC Trade Debt $20,696
Earle M. Jorgensen Co. $19,713
Stafford Lumber Co. Trade Debt $18,637
Ernest C. Tennant L Term Note $16,800
Reno County Treasurer $16,078
W W Grainger Inc. Trade Debt $15,420
Cooper Tire Service Inc. Trade Debt $15,408
Pioneer Materials Inc. Trade Debt $14,153
DBS Manufacturing Trade Debt $13,891
STELCO INC: Court Extends CCAA Stay Until November 26, 2004
-----------------------------------------------------------
Stelco, Inc., (TSX:STE) obtained an Order of the Superior Court of
Justice (Ontario) extending the stay period under its Court-
supervised restructuring until November 26, 2004. While the
Company's USWA Locals opposed the application, the Court-appointed
Monitor and the representatives of other stakeholders, including
the Canadian Auto Workers, supported an extension.
Courtney Pratt, Stelco President and Chief Executive Officer,
said, "This reflects the fact that Stelco is insolvent and
requires the protection of the Court-supervised restructuring
process. Despite high steel prices, we can't generate sufficient
funds internally to deal with our obligations without a
restructuring.
"This extension also provides time to determine the options for
raising the capital we need to address our obligations and to fund
our essential capex program. Finding that new capital and funding
those programs is the only way that Stelco can become a viable and
cost competitive steel producer."
The Company will return to the Court on October 18, 2004 to seek
approval of a process for the raising of new capital.
Stelco, Inc., which is currently undergoing CCAA restructuring
proceedings, is a large, diversified steel producer. Stelco is
involved in all major segments of the steel industry through its
integrated steel business, mini-mills, and manufactured products
businesses. Consolidated net sales in 2003 were $2.7 billion.
STELCO INC: Court Approves CHT Steel Sale for $3.25 Million
-----------------------------------------------------------
Superior Court of Justice (Ontario) approved the sale of the real
property of CHT Steel Company Inc., a Stelco, Inc., subsidiary
located in Richmond Hill, Ontario, to a numbered Ontario company
for a price in excess of the $3.25 million list price. It also
approved an amendment to the previously announced sale agreement
in respect of certain assets of Welland Pipe Ltd.
Stelco, Inc., which is currently undergoing CCAA restructuring
proceedings, is a large, diversified steel producer. Stelco is
involved in all major segments of the steel industry through its
integrated steel business, mini-mills, and manufactured products
businesses. Consolidated net sales in 2003 were $2.7 billion.
STRUCTURED ASSET: Fitch Junks Certificate Class IIB-5
-----------------------------------------------------
Fitch Ratings has taken rating actions on these Structured Asset
Mortgage Investments, Inc., mortgage pass-through certificates:
* Series 1999-1 group 1
-- Class I-A affirmed at 'AAA';
-- Class B-1 upgraded to 'AAA' from 'AA';
-- Class B-2 upgraded to 'AAA' from 'A';
-- Class B-3 upgraded to 'AAA' from 'BBB'.
* Series 1999-1 group 2
-- Class II-A affirmed at 'AAA';
-- Class IIB-1 upgraded to 'AAA' from 'AA';
-- Class IIB-2 affirmed at 'A';
-- Class IIB-3 affirmed at 'BBB';
-- Class IIB-4 affirmed at 'BB';
-- Class IIB-5 downgraded to 'CCC' from 'B'.
The upgrades reflect positive pool performance, as well as a
substantial increase in credit enhancement relative to future loss
expectations and affect $4,668,855 of outstanding certificates.
The affirmations reflect credit enhancement consistent with future
loss expectations and affect $15,281,449 of outstanding
certificates. The negative rating action taken on class IIB-5 in
series 1999-1 group 2, representing $195,356 of debt, reflects
concerns due to high levels of nonperforming assets in relation to
diminished credit enhancement provided by class IIB-6 (nonrated).
The group 1 certificates are collateralized by a pool of
conventional, first lien, adjustable-rate mortgage loans secured
by one- to four-family residences and individual condominium and
cooperative units. The loans were originated in accordance with
the underwriting criteria of The Boston Company.
As of the August 2004 distribution date, the pool factor (current
mortgage loans outstanding as a percentage of the initial pool)
for the series 1999-1 group 1 is 6%, and there have been no losses
to date in the pool. There are currently no loans in the 90 plus
delinquency, bankruptcy, foreclosure, or REO buckets.
The group 2 certificates are collateralized by a pool of
conventional, first lien, fixed-rate mortgage loans secured by
one- to four-family residences and individual condominium and
cooperative units. The loans were acquired by Bear Stearns
Mortgage Capital Corp. in the normal course of its business and
through the exercise of 'clean-up' calls of earlier
securitizations of SAMI (82.58%) and The Resolution Trust
Corporation (17.42%).
As of the August 2004 distribution date, the pool factor for
series 1999-1 group 2 is 10%, with cumulative losses (percentage
relative to the original pool balance) amounting to 17%.
Currently, 90 plus delinquencies (including bankruptcies,
foreclosures, and real estate owned) stand at 8.60%, while credit
enhancement for class IIB-5 is 1.44%
Fitch will continue to closely monitor these deals.
TECHNEGLAS INC: Gets Court Nod to Hire PwC as Financial Adviser
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Ohio gave
Techneglas, Inc., and its debtor-affiliates, permission to retain
PricewaterhouseCoopers Corporate Finance LLC, as its financial
adviser and investment banker.
PricewaterhouseCoopers worked for the Debtor since April 2004 and
is familiar with the company's assets, liabilities, accounting
practices, source documentation, personnel and business prospects.
PricewaterhouseCoopers will:
a) review and analyze the Debtor's business, operations and
financial projections;
b) evaluate the Debtor's potential debt capacity in light of
its projected cash flows;
c) assist in the determination of an appropriate capital
structure for the Debtor;
d) determine a range of values for the Debtor on a going
concern basis;
e) advise the Debtor on tactics and strategies for
negotiating with the Stakeholders;
f) render general financial advise to the Debtor and
participate in meetings or negotiations with the
Stakeholders on the Restructuring of the Debtor's
Existing Obligations;
g) advise the Debtor on the timing, nature, and terms of new
securities, other considerations or other inducements to
be offered pursuant to Restructuring;
h) advise and assist the Debtor in evaluating potential
capital markets transactions of public or private debt or
equity offerings by the Debtor, evaluate and contact
potential sources of capital as the Debtor may designate
and assist the Debtor in negotiating such transactions;
i) assist the Debtor in preparing documentation within
PricewaterhouseCoopers area of expertise in connection
with the Restructuring of the Existing Obligations;
j) assist the Debtor in identifying and evaluating
candidates for a potential merger of the Debtor or the
acquisition of all or a significant portion of the Debtor
or its assets, equity, or other interests in connection
with the Restructuring, and advise the Debtor in
connection with negotiations in the consummation of a
Restructuring;
k) advise and attend meetings of the Debtor's core
management team, counsel, Board of Directors, and its
Board committees;
l) provide testimony as necessary in any proceeding before
the Bankruptcy Court.
m) provide financial advise and assistance to the Debtor in
developing and obtaining approval, if necessary, of a
plan of reorganization as it may be modified from time to
time in a Chapter 11 proceeding;
n) assist the Debtor in arranging financing including
debtor-in-possession financing or exit financing; and
o) provide the Debtor with other general restructuring
advise.
Sudhin Roy, Managing Director at PricewaterhouseCoopers Corporate,
discloses that the Firm received a $900,000 retainer since April
2004. Mr. Roy reports that the Debtor will pay a monthly fee of
$150,000 to PricewaterhouseCoopers.
To the best of the Debtor's knowledge, PricewaterhouseCoopers
Corporate is "disinterested" as the term is defined in Section
101(14) of the Bankruptcy Code.
Headquartered in Columbus, Ohio, Techneglas, Inc. --
http://techneglas.com/-- manufactures television glass (CRT
panels, CRT funnels, solder glass and specialty glass), dopant
sources, glass resins and specialty bulbs. The Company and its
debtor-affiliates filed for chapter 11 protection on
September 1, 2004 (Bankr. S.D. Ohio Case No. 04-63788). David L.
Eaton, Esq., Kelly K. Frazier, Esq., and Marc J. Carmel, Esq., at
Kirkland & Ellis, and Brenda K. Bowers, Esq., Robert J. Sidman,
Esq., at Vorys, Sater, Seymour and Pease LLP, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection, they listed more than $100 million in estimated
assets and debts.
TRUMP HOTELS: Donald Trump In Talks to Give Bondholders Control
---------------------------------------------------------------
Christina Binkley at The Wall Street Journal reports that Donald
Trump is "working to cut a deal with his bondholders that would
give them a controlling stake in Trump Hotels & Casino Resorts
Inc., but would allow Mr. Trump to remain chief executive."
Mr. Trump is currently a 56.4% beneficial owner of the Company's
common stock. The deal Mr. Trump's outlining will reportedly give
bondholders 65% of the company and dilute current shareholders'
interests to about 10%.
Citing people familiar with the talks, the Journal says that this
new offer "would include lower interest rates as well as $50
million or so in much-needed cash to refurbish the casinos. The
casinos, laden with $1.8 billion in debt, are becoming rundown
just as they face stiff competition from the snazzy new Borgata
casino and other properties in Atlantic City, N.J."
A deal with Credit Suisse First Boston and DLJ Merchant Banking
Partners III, L.P., calling for a $345 million equity investment
in the Company in connection with a potential restructuring of the
debt securities of the Company's subsidiaries, as previously
reported, fell apart last week.
About the Company
Through its subsidiaries, Trump Hotels & Casino owns and operates
four properties and manages one property under the Trump brand
name. Trump Hotels & Casino's owned assets include Trump Taj
Mahal Casino Resort and Trump Plaza Hotel and Casino, located on
the Boardwalk in Atlantic City, New Jersey, Trump Marina Hotel
Casino, located in Atlantic City's Marina District, and the Trump
Casino Hotel, a riverboat casino located in Gary, Indiana. In
addition, the Company manages Trump 29 Casino, a Native American
owned facility located near Palms Springs, California. Together,
the properties comprise approximately 451,280 square feet of
gaming space and 3,180 hotel rooms and suites. The Company is the
sole vehicle through which Donald J. Trump conducts gaming
activities and strives to provide customers with outstanding
casino resort and entertainment experiences consistent with the
Donald J. Trump standard of excellence. Trump Hotels & Casino is
separate and distinct from Mr. Trump's real estate and other
holdings.
UAL CORP: Tennis Association Wants $700,000 Admin. Claim Paid
-------------------------------------------------------------
The United States Tennis Association, Inc., asks the Court to
compel the Debtors to pay its administrative expense for certain
material benefits UAL Corp. and its debtor-affiliates realized
before rejecting their executory contracts.
The USTA is the national governing body for tennis in the United
States and owns the exclusive rights to all activities related to
the annual U.S. Open tennis tournament held at USTA National
Tennis Center, in Flushing, New York. The USTA is a New York
State not-for-profit organization that qualifies as an exempt
organization under Section 501(c)(6) of the Internal Revenue
Code. The USTA establishes rules of play and standards of
sportsmanship, sanctions and conducts tournaments and
competitions. The USTA conducts its business through a national
headquarters and staff located in White Plains, New York, and
through 17 geographic sectional associations.
The USTA and the Debtors entered into a Sponsorship Agreement
effective January 1, 2001. The Agreement was to run until
December 31, 2005.
Pursuant to the Agreement, the Debtors were to pay the USTA
$1,400,000 in cash, 50% on January 1, 2004, and 50% on June 1,
2004. In addition, the Debtors were to provide "value in kind,"
namely air travel credits, frequent flyer benefits and airport
club memberships. For 2004, the Debtors were to provide the USTA
with $265,000 of value in kind.
The Debtors rejected the USTA contracts, effective May 5, 2004.
However, the Debtors received material benefits for the 2004 US
Open tournament cycle. Specifically, the Debtors convinced the
USTA to publish highly visible advertisements touting the
Debtors' status as an official USTA and US Open sponsor. The
Debtors promised to pay the USTA $700,000, which was due on
January 1, 2004. However, the USTA never received the payment.
In addition, the Debtors failed to honor their pledge to provide
value in kind to the USTA. Specifically, the Debtors received
placement of their official airline sponsor status in two key
USTA publications in full-page advertisements. Despite the
Debtors non-payment and rejection of the contracts, the
advertisements will continue for the balance of the USTA year due
to the nature of printing commitments.
Richard Levy, Jr., at Pryor, Cashman, Sherman & Flynn, in New
York City, asserts that the Debtors should be compelled to pay
the $700,000 administrative expense to the USTA. The Court
should also require the Debtors to credit the USTA for the value
of barter obligations for air travel and related services.
The Debtors already realized the material benefits and amenities
that flow directly from their relationship with the USTA and
their status under the Agreement. The Debtors received favorable
publicity, prominent full-page advertisements and other
notifications. These benefits inured during the postpetition,
pre-rejection period.
Headquartered in Chicago, Illinois, UAL Corporation --
http://www.united.com/-- through United Air Lines, Inc., is the
holding company for United Airlines -- the world's second largest
air carrier. The Company filed for chapter 11 protection on
December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M.
Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq.,
and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the
Debtors in their restructuring efforts. When the Debtors filed for
protection from their creditors, they listed $24,190,000,000 in
assets and $22,787,000,000 in debts. (United Airlines Bankruptcy
News, Issue No. 60; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
UNITED AIRLINES: Lawmakers Urge to Fund Pensions
------------------------------------------------
Twenty-three U.S. senators and 117 U.S. House members signed a
letter authored by Senator Edward Kennedy (D-MA), Congresswoman
Jan Schakowsky (D-IL) and Congressman George Miller (D-CA) urging
United Airlines CEO Glenn Tilton to reconsider the company's
decision to stop funding employee pension plans, which would put
the retirement of nearly 120,000 employees and retirees in
jeopardy.
A portion of the lawmakers' letter reads:
"While we understand that the airline faces difficult
challenges in emerging from bankruptcy, the employees and retirees
have already agreed to job reductions and significant concessions
in their wages and benefits. We strongly believe it is unfair to
insist that their retirement security be sacrificed as well.
"Earlier this year, Congress took specific action to protect
airline pension plans ... because we believed, based upon
representations by you and other airline executives, that this
action was necessary to preserve the pension funds. Now, a few
months later, we learn that United may end its pension obligations
and jeopardize the retirement security of thousands of families in
our states and districts."
The letter to Tilton underlines growing political concerns about
the impact United Airlines employee pension plan terminations
could have on the rest of the airline industry and ultimately on
the overburdened Pension Benefit Guarantee Corporation.
"We are grateful for the overwhelming support from both the
Senate and the House on this crucial issue," said United AFA
Master Executive Council President Greg Davidowitch. "United
Airlines management must be held accountable for their decision to
skip pension payments and put in play a domino effect of
devastation for workers throughout the airline industry. If these
executives are unwilling to make good on promises to employees,
then our government must ensure that no stone is left unturned in
working to preserve the retirement counted on by over 100,000
United employees and retirees, as well as the viability of our
government's pension guarantee agency meant to protect millions of
workers."
More than 46,000 flight attendants, including the 21,000 flight
attendants at United, join together to form AFA, the world's
largest Flight Attendant union. AFA -- http://www.unitedafa.org
-- is part of the 700,000 member strong Communications Workers of
America, AFL-CIO.
Headquartered in Chicago, Illinois, UAL Corporation --
http://www.united.com/-- through United Air Lines, Inc., is the
holding company for United Airlines -- the world's second largest
air carrier. The Company filed for chapter 11 protection on
December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M.
Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq.,
and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $24,190,000,000
in assets and $22,787,000,000 in debts.
US AIRWAYS: Gets Limited Court Approval to Use Cash Collateral
--------------------------------------------------------------
Judge Mitchell allowed US Airways and its debtor-affiliates to use
their lenders' cash collateral on an interim basis.
The Interim Order will remain in effect until the earlier of:
(a) October 15, 2004; or
(b) the entry or denial of the Final Order.
Objections are due by October 12, 2004. Judge Mitchell will
convene a hearing on October 14, 2004, to consider the Debtors'
continued use of the Cash Collateral.
As reported in the Troubled Company Reporter on Sept. 15, 2004, to
finance their first exit from chapter 11, the Debtors obtained a
$1 billion term loan from a consortium of lenders. Under the Air
Transportation Safety and System Stabilization Act, the Air
Transportation Stabilization Board guarantees $900 million of that
loan. The ATSB Loan is guaranteed by each of the Debtors. The
ATSB Loan is also secured by substantially all of USAir's
otherwise unencumbered assets. The Original Loan Agreement has
been amended four times, on December 18, 2003, March 12, 2004,May
21, 2004, and June 30, 2004.
The Debtors owe $717,567,888 under the ATSB Loan. The Tranche A
Lenders are owed $645,811,099 and $71,756,789 is owed to the
Tranche B Lenders. The Tranche B Lenders are Bank of America,
N.A. (which funded $25 million of the Tranche B Loan) and
Retirement Systems of Alabama Holdings LLC (which funded
$75 million).
To continue operating its business in chapter 11, US Airways needs
continued working capital financing. Virtually all of the
company's cash and cash equivalents are pledged to secure
repayment of the prepetition ATSB Loan. The Debtors do not
contest the validity of the Lenders' liens. Without Court
permission to continue using the Lenders' Cash Collateral, the
Debtors will be unable to continue operation of their businesses.
The Lenders have given their consent to limited, continued use of
the Cash Collateral.
BACK Aviation Solutions says that the fair market value of the
assets as of December 31, 2003, was:
Fair Market
Collateral Value
---------- -----------
Airport Slots $355,200,000
Aircraft and Engines 185,000,000
Ground Service Equipment 31,500,000
Spare Parts Inventory 133,700,000
Flight Simulators 36,500,000
Real Property 10,400,000
Airport Gate Leaseholds 97,900,000
------------
Total $850,200,000
American Appraisal Associates, Inc., values the assets at fair
market value and in a distressed scenario, as of Sept. 3, 2004,
at:
Fair Market Distressed
Collateral Value Value
---------- ----------- ----------
Airport Slots $462,200,000 $346,700,000
Aircraft and Engines 160,600,000 121,400,000
Ground Service Equipment 38,200,000 13,600,000
Spare Parts Inventory 154,300,000 61,700,000
Flight Simulators 30,700,000 20,800,000
Real Property 8,500,000 8,000,000
Airport Gate Leaseholds 28,800,000 14,700,000
------------ ------------
Total $883,300,000 $586,900,000
The Debtors' Cash Collateral consists of:
$259,060,000 of high-grade commercial paper issued by
domestic corporations with maturities of less
than 90 days and by issuers that at the time of
acquisition had a Standard & Poor's rating of
at least A-1 or a Moody's rating of at least
P-1;
329,200,000 of United States Treasury bills with maturities
of less than 90 days;
2,622,000 in shares of money market mutual funds
registered with the SEC, guaranteeing same-day
liquidity and with net assets of over one
billion dollars; and
159,471,000 in deposit accounts.
------------
$750,353,000
The Debtors told Judge Mitchell that under any scenario, the
Lenders are overcollateralized and adequately protected. Even to
the extent that the Debtors are authorized to use some portion of
the Cash Collateral, the Debtors say, a substantial portion of the
Cash Collateral will remain unused. The Debtors assure the Court
that there is virtually no risk of a decline in value for that
portion of the Cash Collateral because it is either cash or highly
liquid and secure investments with short-term maturities. To make
the Lenders even more comfortable, the Debtors propose to grant
the Lenders postpetition replacement liens.
The Debtors agreed to restrict their use of the Cash Collateral to
payments for the ordinary and reasonable expenses of operating
their businesses, including, without limitation, payroll and
benefit expenses, aircraft and engine debt and lease payments,
purchase of fuel and supplies, government security and inspection
fees, advertising, utility services, payroll taxes, insurance,
supplies and equipment (excluding the purchase or other
acquisition of aircraft), vendor and supplier services, and other
expenditures as are necessary for operating their businesses, and
to make payments required under other typical First Day Orders.
Additionally, the Debtors agreed to maintain Unrestricted Cash
Balances of no less than:
At the Close of Business Friday Minimum Cash Balance
------------------------------- --------------------
Week Ended 09/17/04 $600,000,000
Week Ended 09/24/04 $600,000,000
Week Ended 10/01/04 $550,000,000
Week Ended 10/08/04 $575,000,000
Week Ended 10/15/04 $585,000,000
The Lenders are represented in this matter by:
Robert Coulter, Esq.
Assistant United States Attorney
Civil Division
- and -
U.S. Department of Justice
Andrea Horowitz Handel, Esq.
Brendan Collins, Esq.
U.S. Department of Justice in Washington
P. O. Box 875
Ben Franklin Station
Washington, D. C. 20044
(202) 307-0358
Steven J. Reisman, Esq.
Daniel R. Lenihan, Esq.
CURTIS, MALLET-PREVOST, COLT & MOSLE LLP
101 Park Avenue
New York, New York 10178-0061
(212) 696-6000
Attorneys for the ATSB as Government Guarantor
of the Tranche A Loans
David S. Walls, Esq.
David L. Eades, Esq.
Stephen E. Gruendel, Esq.
MOORE & VAN ALLEN, PLLC
100 North Tryon St., 47th Floor
Charlotte, N.C. 28202
(704) 331-1000
- and -
Monique D. Almy, Esq.
Steven Tave, Esq.
SWIDLER BERLIN FRIEDMAN, LLP
The Washington Harbour
3000 K Street, NW, Suite 300
Washington, DC 20007
(410) 685-1120
Attorneys for the Collateral Agent, the Agent,
and Bank of America as a Tranche B Lender
Retirement Systems of Alabama Holdings LLC
135 South Union Street
Montgomery, Alabama 36104
Headquartered in Arlington, Virginia, 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.
Under a chapter 11 plan declared effective on March 31, 2003,
USAir emerged from bankruptcy with the Retirement Systems of
Alabama taking a 40% equity stake in the deleveraged carrier in
exchange for $240 million infusion of new capital.
US Airways and its subsidiaries filed another chapter 11 petition
on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian
P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning,
Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and
Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors
in its restructuring efforts. In the Company's second bankruptcy
filing, it lists $8,805,972,000 in total assets and $8,702,437,000
in total debts. (US Airways Bankruptcy News, Issue No. 64;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
US AIRWAYS: Asks Court for Relief from Collective Bargaining Pacts
------------------------------------------------------------------
US Airways Group, Inc., filed a motion seeking interim relief from
the company's collective bargaining agreements with the Air Line
Pilots Association -- ALPA, Association of Flight Attendants --
AFA, Communications Workers of America -- CWA, International
Association of Machinists and Aerospace Workers -- IAM, and
certain units of the Transport Workers of America -- TWU, under
Section 1113(e) of the U.S. Bankruptcy Code.
The motion was filed with the U.S. Bankruptcy Court for the
Eastern District of Virginia, which is overseeing US Airways'
Chapter 11 restructuring.
In its motion, the company emphasized that the request for interim
relief is made in order to maintain US Airways as a going concern
and "preserve approximately 34,000 jobs, preserve air service to
hundreds of communities, build the cash reserves needed for the
winter, give customers comfort that there is adequate cash for
continued operations, and ultimately, avoid the threat of
liquidation."
"We have had constructive discussions this past week with all of
our labor groups and we will continue to seek consensual
agreements with our unions, pending the Court's ruling on the
motion," said Bruce R. Lakefield, US Airways president and chief
executive officer. "Nevertheless, we must move quickly to secure
cost reductions, build cash reserves and send the signal to our
financial partners and our customers that we will actively manage
this restructuring and not allow the company to be swept up in
speculation about our future."
The interim relief request seeks $38 million per month in cost
reductions from labor groups, effective immediately upon the
Court's approval. In addition, US Airways will implement capital
expenditure reductions and a series of actions to be announced
shortly to reduce non-labor and management costs and generate an
additional $5 million per month of savings. These actions do not
require court authorization.
US Airways told the court that it meets the "irreparable harm"
standard for interim relief and must secure cost savings
immediately because financial projections show that in order to
avoid a cash crisis in early 2005, it must accrue roughly
$200 million in additional cash.
"Over the next six months, we will be faced with significant
aircraft lease payments, the traditional seasonal slowdown in both
business and leisure travel, and the likely sustained impact of
high fuel prices. Waiting for a cash crunch to be right in front
of us is simply too late, and if we were forced to implement
interim relief at a later date, the pay cuts would be deeper and
even more painful. While I don't relish asking US Airways
employees to make sacrifices, securing this short-term relief
while we continue to negotiate new permanent labor agreements will
allow us to complete an orderly restructuring and implementation
of our Transformation Plan," said Lakefield.
Headquartered in Arlington, Virginia, 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.
Under a chapter 11 plan declared effective on March 31, 2003,
USAir emerged from bankruptcy with the Retirement Systems of
Alabama taking a 40% equity stake in the deleveraged carrier in
exchange for $240 million infusion of new capital.
US Airways and its subsidiaries filed another chapter 11 petition
on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian
P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning,
Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and
Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors
in its restructuring efforts. In the Company's second bankruptcy
filing, it lists $8,805,972,000 in total assets and $8,702,437,000
in total debts.
US AIRWAYS: Reaches Tentative Cost Savings Pact with Instructors
----------------------------------------------------------------
US Airways and the Transport Workers Union (TWU) Local 547,
representing approximately 65 Flight Crew Training Instructors,
reached a tentative agreement on a new contract to reduce costs in
support of the company's Transformation Plan to become a low-cost
carrier.
Details of the agreement have not been disclosed pending the TWU's
communication of the agreement to its members.
"Our members recognize the need to implement meaningful efficiency
gains and other cost-saving steps in order to keep US Airways
alive and well. While these actions are very difficult for us, we
recognize that our livelihood depends on the successful
restructuring of this airline," said Bill Gray, president of TWU
Local 547. "Our employees have too much time and effort invested
in this fine company to just stand by and watch it fade into the
annals of aviation history."
"The leadership of the Flight Crew Training Instructors has made a
very important decision on behalf of its members in reaching this
agreement to support the company's Transformation Plan," said
Jerrold A. Glass, US Airways senior vice president of employee
relations. "We fully recognize these sacrifices, and that they
bring us one step closer to our goal of becoming a stronger and
more competitive force in the industry."
Ratification of this agreement is expected to be completed within
two weeks and requires approval by the bankruptcy court.
Meetings with the Air Line Pilots Association -- ALPA, the
Association of Flight Attendants -- AFA, the Communications
Workers of America -- CWA, the International Association of
Machinists -- IAM -- and one other TWU group -- Simulator
Engineers, continue.
Headquartered in Arlington, Virginia, 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.
Under a chapter 11 plan declared effective on March 31, 2003,
USAir emerged from bankruptcy with the Retirement Systems of
Alabama taking a 40% equity stake in the deleveraged carrier in
exchange for $240 million infusion of new capital.
US Airways and its subsidiaries filed another chapter 11 petition
on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian
P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning,
Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and
Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors
in its restructuring efforts. In the Company's second bankruptcy
filing, it lists $8,805,972,000 in total assets and $8,702,437,000
in total debts.
US AIRWAYS: Honors Prepetition Customer Obligations
---------------------------------------------------
Brian P. Leitch, Esq., at Arnold & Porter, in Denver, Colorado,
relates that US Airways and its debtor-affiliates' core business
is providing reliable air transportation services to the public.
The Debtors engaged in certain practices to develop and sustain
positive reputations with their customers and in the marketplace.
These practices include ticket sales, transporting cargo,
transporting baggage, frequent flyer programs, barter
arrangements, the US Airways Club and other travel-related
affinity programs. The uninterrupted continuation of these
practices is critical for the Debtors to avert disruption to their
core business.
Ticket Holder Claims
The Debtors want to honor tickets that were purchased prepetition
but have not been used, by providing air transportation or other
related services. Customer confidence and goodwill will be harmed
if the Debtors are prevented from honoring the tickets. Indeed,
honoring ticket claims will benefit all general unsecured
creditors by preserving the going concern value of the Debtors'
business. If the Debtors are unable honor the ticket claims, they
risk alienating their customers, encouraging the customers to
select competing airlines, to the detriment of the Debtors, their
estates, and their creditors.
Cargo Revenue
The Debtors earn cargo revenue by transporting goods and packages
on behalf of third parties. Cargo Revenue is an integral part of
the Debtors' business that generates substantial revenue,
specifically $131,000,000 last year. Mr. Leitch asserts that
goodwill and confidence will be severely harmed if the Debtors are
unable to honor their transportation and service obligations to
their cargo customers. If the Debtors are unable to perform
services to earn Cargo Revenue, they risk alienating a proven
constituency of cargo customers and potentially encouraging these
customers to select competing air carriers.
Frequent Flier Program, Dividend Miles & Credit Cards
In 1985, the Debtors created a frequent flier program now known as
"Dividend Miles." Frequent flier programs have been adopted by
most major air carriers as a marketing tool for developing brand
loyalty and accumulating demographic data on business fliers.
Frequent flier programs are essential to building and maintaining
a loyal customer base, especially among business travelers, who
pay higher fares than leisure travelers.
In connection with its Dividend Miles program, the Debtors offer a
co-branded credit card pursuant to a Co-Branded Card and Merchant
Services Agreement with Bank of America, N.A. (USA). Under the
Agreement, the Debtors permit BofA to makes limited use of the
company's logos, trademarks, trade names, and service marks.
BofA, in turn, agrees to offer credit card products bearing the US
Airways' Marks. BofA purchases Dividend Miles from the Debtors,
subject to marketing requirements and other payments. Holders of
the Co-Branded Cards earn Dividend Miles at set formulas based on
the type of Card -- that is, Classic, Gold, Platinum, or
Signature.
According to Mr. Leitch, honoring Dividend Miles involves minimal
cash outflow. Rather, the Dividend Miles participants receive
only air transportation on flights that would operate in any
event. The Debtors use the incremental cost method to account for
liabilities associated with Dividend Miles. Future travel awards
are valued at the estimated average incremental cost of carrying
one additional passenger. The Debtors have about 4,000,000 active
Dividend Miles participants who had accumulated approximately
7,000,000 potential awards. Because some awards will never be
redeemed, Dividend Miles-related liabilities are based on
approximately 80% of total mileage credits. The Debtors'
customers redeemed 1,200,000 awards for free travel during 2003,
which represents 7% of the Debtors' revenue passenger miles during
the period.
Barter Arrangements
The Debtors maintain barter arrangements with organizations that
provide varied services in return for the Debtors provision of air
transportation. The services provided to the Debtors include
exclusive sponsorship of corporate and sporting events,
advertising, sales promotion, public relations, and other
professional consulting services.
US Airways Club
The US Airways Club provides access to the Debtors' private
lounges and lounges owned by other carriers with which the Debtors
have reciprocal agreements. Memberships to the US Airways Club
are purchased from the Debtors. The US Airways Club Program
offers unique advantages to the Debtors' frequent travelers and
loyal customers. The Debtors wants to honor the US Airways Club
obligations to avoid jeopardizing the confidence and goodwill of
their most valuable customers. Furthermore, if the Debtors were
unable to allow the reciprocal carriers' passengers to utilize the
Debtors' US Airways Club lounges, the Debtors' passengers would
similarly be denied access to the reciprocal carriers' private
passenger lounges.
Other Affinity Programs
The Debtors participate in other Customer Programs. The Debtors
have agreements with travel partners for discounted and combined
travel, like rental car companies, hotels. The Debtors have a
historic commitment to community service through a charitable
program, whereby the Debtors donate travel services and Dividend
Miles to charities, including the Make-A-Wish Foundation and the
National Kidney Foundation. Continued participation in these
affinity programs engenders goodwill with the flying public and
portrays the Debtors as responsible corporate citizens at little
expense.
Judge Mitchell agrees that the continuation of the Debtors'
Customer Programs will protect the Debtors' goodwill and going
concern value and enhance the Debtors' ability to generate
revenue. Accordingly, Judge Mitchell allows the Debtors to:
(a) perform their obligations under the Customer Programs; and
(b) continue, renew, replace, implement new, or terminate
Customer Programs without further application to the Court.
Headquartered in Arlington, Virginia, 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.
Under a chapter 11 plan declared effective on March 31, 2003,
USAir emerged from bankruptcy with the Retirement Systems of
Alabama taking a 40% equity stake in the deleveraged carrier in
exchange for $240 million infusion of new capital.
US Airways and its subsidiaries filed another chapter 11 petition
on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian
P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning,
Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and
Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors
in its restructuring efforts. In the Company's second bankruptcy
filing, it lists $8,805,972,000 in total assets and $8,702,437,000
in total debts. (US Airways Bankruptcy News, Issue No. 64;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
VENSTAR INC: Terminates Employees & Liquidates Assets
-----------------------------------------------------
Venstar, Inc., (VSR.A - TSX Venture), said the employment of all
of its officers and employees has been terminated and that all
members of the Board of Directors have resigned, effective
September 23, 2004. The assets of the Company will be liquidated
under the stewardship of its former Chief Executive Officer, Garry
Marshall, and its former Chief Financial Officer, Ted Emmett, with
the objective of maximizing value for the shareholders.
At June 30, 2004, the Company had a significant working capital
deficiency and has incurred an operating loss in the current
period. The Company's ability to continue operations is dependent
upon obtaining financing and to continue its development
activities to the point that it achieves profitable operations and
positive cash flows. The Company's capacity to generate net
income and positive cash flows in the future is dependent upon
various factors, including the level of market acceptance of its
products, the degree of competition encountered by the Company,
the cost of acquiring new customers, the ability to fund continued
development activities, general economic conditions and regulatory
requirements.
About the Company
Venstar, Inc., is a TSX Venture Exchange-listed company
(TSX:VSR.A) which is engaged in real estate development, sales and
syndication. The shares of the Company were halted for trading on
September 20, 2004.
At June 30, 2004, Venstar Inc.'s balance sheet showed a $1,455,713
stockholders' deficit, compared to a $1,251,864 deficit at
December 31, 2003.
VIVA INTERNATIONAL: Discusses Plans to Shed Subsidiaries
--------------------------------------------------------
Viva International, Inc., (OTCBB:VIVI) intends to address similar
workouts with some if not all of its remaining non-core
subsidiaries following the acquisition efforts of its C T
Industries wholly owned subsidiary by Legends Group Holdings
Corporation also known as Adventure Group Holdings LLC. The
Company management indicated that it is presently in discussion
with groups interested in acquiring the Universal Filtration and
Hardyston Distributors subsidiaries.
A Company spokesman responding to the media stated, "Viva has
determined that their non-core subsidiaries have a greater value
for the benefit of its shareholders by selling or merging with
other operating companies than being left on the shelf or
inactive. There is an ongoing cost of maintaining our inactive
subsidiaries but no currently realizable or residual benefit
either to the Company or its shareholders. Accordingly, we intend
to pursue opportunities to sell or merge our non-core subsidiaries
between now and the end of the year. Company management believes
the most attractive opportunities would be with private companies
that are seeking to go public and are intending to file the
appropriate registrations and filings with the Securities and
Exchange Commission. Accordingly, the opportunity for our
shareholders to become shareholders in other public companies
would be present".
Further commenting, the spokesman said, "Viva wants to concentrate
all of its efforts on developing its Dominican Republic aviation
sector operations and businesses. We believe that our efforts to
date have prepared us for an expedient entrance to the market
place. We are in position, with the new Dominican government's
blessing, to obtain our airline operating certificate and inherent
economic rights and privileges within a short period of time.
Further, we have negotiated various contracts and agreements
providing for utilization of equipment and revenue generation that
will be able to be completed soon after obtaining licensing
approval. Despite a longer than anticipated development process,
the Company management believes that our operational start up is
imminent".
About the Company
Viva International, Inc., is a holding company seeking to provide
passenger and cargo services to various destinations from its
commercial hub in Sto. Domingo, Dominican Republic.
* * *
Liquidity Concerns
At June 30, 2004, Viva International, Inc., had no cash. Since
inception the Company has accumulated a deficit of approximately
$15,113,663.
Viva International, Inc., has previously estimated that it will
require a minimum of $3,000,000 of working capital to complete
Viva Airlines, Inc.'s transition from a development stage company
to full operation. However, Company management has scaled back
its business plan to a level that that will enable it to begin
providing air services so long as it is able to raise a minimum of
$500,000.
Viva International, Inc., does not currently have the funds
necessary to provide working and expansion capital to Viva
Airlines, Inc. Viva International, Inc., will only be able to
provide the needed capital by raising additional funds. As a
result of this scaling back, the Company believes that it has
improved its chances of raising the minimum levels of financing
required.
However, an inability to raise funds or a continued lack of funds
could result in the failure to complete needed acquisitions of
certain aviation assets or payment of certain related expenses
that would delay or prevent the commencement of the operation of
Viva Airlines, Inc.
WASTE SERVICES: Inks Pact to Adjust Florida Recycling Buying Price
------------------------------------------------------------------
Waste Services, Inc. (Nasdaq: WSII) reached an agreement with the
selling shareholders of Florida Recycling Services, Inc., to
adjust the purchase price paid for the shares of FRS when the
acquisition was completed on April 30, 2004. The selling
shareholders have strongly indicated their disagreement with the
conclusions of the consultants but have agreed to a restructuring
to avoid the burden, cost and expense of litigation. The selling
shareholders will pay $7.5 million in cash to Waste Services and
return 500,000 shares of its common stock issued as partial
consideration. Upon completion of the 2,000 ton per day Icehouse
recycling and transfer facility under construction in Orlando,
Florida, the company will receive, for nominal consideration,
title to the facility. While certain of the selling shareholders
will fund the construction of the facility, the company will
manage the construction process.
The company noted that, since the acquisition of FRS, the
performance of its operations had been below expectations. The
company engaged an independent third party to conduct a review of
the aspects of FRS's business in an effort to identify the factors
contributing to the lower than expected level of performance.
Based upon the results of this review it appears that, as reported
in the consolidated statements of operations of FRS for the year
ended December 31, 2003, "Sales" are overstated by an estimated
range of approximately $2.0 to $3.0 million and "Dumping and
hauling" expense understated by an estimated range of
approximately $800,000 to $1.2 million.
Forms 8-K relating to the acquisition of FRS were filed on
May 10, 2004 and June 9, 2004. As required, the company had
included, as an exhibit to Form 8-K, the consolidated financial
statements of FRS for the three months ended March 31, 2004 and
2003 (unaudited) and for the years ended Dec. 31, 2003, 2002 and
2001. The company also included in Form 8-K pro forma financial
statements reflecting the acquisition of FRS as of March 31, 2004
and December 31, 2003 and for the three months ended Mar. 31, 2004
and the twelve months ended December 31, 2003. The Audit
Committee of the Board of Directors has concluded that there were
errors in the consolidated financials statements of FRS, and they
should not be relied upon. Additionally, the pro forma financial
statements, to the extent they were based upon the financial
statements of FRS, should not be relied upon.
The company stated it intends to engage its independent
accountants, BDO Seidman LLP, to perform a re-audit of the FRS
financial statements as of December 31, 2003 and 2002 and for the
years ended December 31, 2003, 2002 and 2001. Until the re-audit
is completed, the company stated it would be unable to fully
estimate the effects of the errors that may exist in the FRS's
consolidated financial statements.
Waste Services Chairman and Chief Executive Officer David
Sutherland-Yoest stated, "We estimate the value of the
consideration to be received will be in the range of $21 to $25
million. We appreciate the assistance and cooperation of the Ward
family in investigating the issues and restructuring the
transaction. We are extremely pleased to have resolved these
issues, enabling us to focus all our efforts on the further
development of our Florida business."
Waste Services, Inc., is a multi-regional integrated solid waste
services company that provides collection, transfer, disposal and
recycling services in the United States and Canada. The company's
web site is http://www.wasteservicesinc.com.
* * *
As reported in the Troubled Company Reporter on August 20, 2004,
Standard & Poor's Ratings Services lowered its corporate credit
and senior secured bank loan ratings on Waste Services, Inc., to
'B-' from 'B+' and its senior subordinated debt rating to 'CCC'
from 'B-'. Simultaneously, Moody's Investors Service:
* cut its ratings WSII's $160 million guaranteed senior secured
credit facility due 2011 to Caa1;
* downgraded its rating on the company's $160 million issuance
of guaranteed senior subordinated notes due 2014 to Ca;
* lowered Waste Service's Senior Implied Rating to Caa1; and
* chopped the company's Senior Unsecured Issuer Rating to Caa3.
WEDTECH CORP.: Notice of Returned Distributions
-----------------------------------------------
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
________________________________
:
In re: : Confirmed Liquidating Chapter 11
:
WEDTECH CORP. f/k/a WELBILT : Case No. 86-B-12366 (RDD)
ELECTRONICS DIE CORP. :
________________________________:
NOTICE OF RETURNED DISTRIBUTIONS
PLEASE TAKE NOTICE that a fifth and final distribution was
issued by the Wedtech Liquidating Trust (the "WLT") on December 5,
2003. Payment checks issued to approximately 200 creditors with a
range of between $0.01 and $490.14 per creditor, aggregating
$2,336.12, were returned to the WLT as being undeliverable by the
post office. Parties in interest may obtain a list setting for
the names of the distributees and the amount of distributions that
were returned to the WLT, by sending a request for such listing to
wlt@angelfrankel.com or
Wedtech Liquidating Trust
c/o Angel & Frankel, P.C.
460 Park Avenue
New York, NY 10022-1906
Unless an entity entitles to such returned distribution contacts
the WLT . . . and thereafter upon its receipt of such list
promptly provides an accurate address and phone number, such
entity shall forfeit all rights to any undeliverable distribution
to which such entity may otherwise be entitles, and to any and all
future distributions. It is not anticipated that there will be
any future distributions.
WINROCK GRASS: U.S. Trustee Meeting With Creditors on October 28
----------------------------------------------------------------
The U.S. Trustee for Region 13 will convene a meeting of Winrock
Grass Farm, Inc., creditors at 1:30 p.m., on October 28, 2004, at
200 W. Capitol, 12th Floor - Room 1225, Little Rock, Arkansas.
This is the first meeting of creditors required under U.S.C. Sec.
341(a) in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Headquartered in Little Rock, Arkansas, Winrock Grass Farm Inc.,
-- http://www.winrockgrass.com/-- produces and markets Meyer
Z-52 in the United States. The Company filed for protection on
September 22, 2004 (Bankr. E.D. Ark. Case No. 04-21283). Charles
Darwin Davidson, Sr., Esq., and Stephen L. Gershner, Esq., at
Davidson Law Firm represent the Debtor in its restructuring
efforts. When the Debtor filed for protection from its creditors,
it estimated more than $10 million in assets and debts.
WORLDCOM: Thornburgh Wants His Appointment as Examiner Terminated
-----------------------------------------------------------------
Richard Thornburgh, the Court-appointed Examiner in WorldCom's
bankruptcy proceedings, advises Judge Gonzalez that:
-- he and the professionals he retained have completed the
investigation mandated by the U.S. Trustee and the
Bankruptcy Court; and
-- he reported to the Court his observations and findings with
respect to the prepetition conduct of the Debtors'
management.
Accordingly, Mr. Thornburgh asks the Court to:
(a) terminate his appointment as Examiner and discharge him
from any commitments or representations with respect to
his duties as Examiner;
(b) authorize him and his professionals to dispose of the
documents provided to him or his professionals during the
course of the investigation; and
(c) prohibit discovery requests to him or his counsel with
respect to information he obtained during the course of
his investigation.
Mr. Thornburgh will continue his role as Examiner solely in
connection with the requested disposition of documents. The
documents are actual hard copy documents and electronic data from
the Debtors, certain federal government agencies, and certain
persons or entities that dealt with the Debtors. Mr. Thornburgh
proposes to return to each of the sources all of the documents,
provided that each source will maintain a set of the documents for
not less than three years given the possibility that some of the
documents may be relevant to ongoing or future litigation.
Mr. Thornburgh also seeks the Court's permission to destroy his
set of documents in instances where the source asks for the
destruction of the documents. In this instance, the source must
first assure the Examiner that it has another complete set of the
documents and it will maintain that set for the required period.
In the event that a source does not provide any assurances to the
Examiner and refuses to accept return of the documents, the
Examiner will deliver the documents to the Debtors' counsel to
maintain for three years.
Within a reasonable time after the Examiner and his professionals
have completed the disposition of the documents, the Examiner will
submit to the Court a fee application, which will include charges
associated with the disposition of the documents and other
incidental services or charges.
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 $45,897,000,000 in
debts. The Bankruptcy Court confirmed WorldCom's Plan on
October 31, 2003, and on April 20, 2004, the company formally
emerged from U.S. Chapter 11 protection as MCI, Inc. (Worldcom
Bankruptcy News, Issue No. 61; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
* Large Companies with Insolvent Balance Sheets
-----------------------------------------------
Total
Shareholders Total Working
Equity Assets Capital
Company Ticker ($MM) ($MM) ($MM)
------- ------ ------------ ------- --------
Airgate PCS Inc. CSA (89) 270 9
Akamai Tech. AKAM (157) 190 55
Alaska Comm. Syst. ALSK (12) 650 85
Alliance Imaging AIQ (50) 641 27
Amazon.com AMZN (791) 1,888 645
AMR Corp. AMR (122) 30,001 (1,784)
Amylin Pharm. Inc. AMLN (11) 429 357
Atherogenics Inc. AGIX (1) 106 94
Blount International BLT (382) 420 (55)
CableVision System CVC (1,546) 11,141 (489)
Cell Therapeutic CTIC (65) 162 72
Centennial Comm CYCL (547) 1,540 13
Choice Hotels CHH (175) 267 (25)
Cincinnati Bell CBB (615) 2,022 (17)
Cogent Inc. COGT (31) 41 (30)
Compass Minerals CMP (132) 647 111
Cubist Pharmacy CBST (58) 172 42
Delta Air Lines DAL (2,671) 24,175 (2,273)
Deluxe Corp DLX (251) 1,531 (987)
Domino Pizza DPZ (677) 449 (33)
Echostar Comm DISH (1,740) 6,037 639
Graftech International GTI (30) 1,036 294
Hawaian Holdings HA (160) 236 (60)
Idenix Pharm. IDIX (1) 77 42
Imax Corporation IMAX (51) 215 9
Indevus Pharm. IDEV (34) 205 164
Inex Pharm. IEX (2) 66 40
Kinetic Concepts KCI (77) 616 201
Lodgenet Entertainment LNET (133) 273 (8)
Lucent Tech. Inc. LU (3,064) 15,970 2,472
Maxxam Inc. MXM (629) 1,040 96
McDermott Int'l MDR (361) 1,246 (34)
McMoRan Exploration MMR (78) 163 49
Memberworks Inc. MBRS (46) 453 (11)
Millennium Chem. MCH (47) 2,331 580
Northwest Airlines NWAC (2,172) 14,391 (290)
Nextel Partner NXTP (19) 1,855 261
ON Semiconductor ONNN (315) 1,262 254
Per-se Tech. Inc. PSTI (34) 157 43
Phosphate Res. PLP (439) 316 5
Pinnacle Airline PNCL (30) 144 20
Qwest Communication Q (1,909) 25,106 (555)
Rightnow Tech. RNOW (12) 38 (9)
SBA Comm. Corp. SBAC (19) 934 5
Sepracor Inc SEPR (669) 718 393
St. John Knits Int'l SJKI (57) 206 77
UST Inc. UST (36) 1,590 518
Valence Tech. VLNC (57) 16 (3)
Vector Group Ltd. VGR (41) 552 105
WR Grace & Co. GRA (169) 2,987 750
Western Wireless WWCA (142) 2,665 1
Young Broadcast YBTVA (1) 799 89
*********
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, Rizande B. Delos Santos, Jazel P.
Laureno, Cherry Soriano-Baaclo, Marjorie Sabijon, Terence Patrick
F. Casquejo 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.
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