/raid1/www/Hosts/bankrupt/TCR_Public/040930.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, September 30, 2004, Vol. 8, No. 211
Headlines
ACCESS FINANCIAL: Moody's Junks Two Certificate Classes
ADELPHIA COMMS: Has Until December 13 to Decide on Leases
ADELPHIA COMMS: Has Until March 21 to Remove State Court Actions
ADELPHIA COMMS: Amends Compensation & Retention Programs
ALLEGHENY ENERGY: Inks Pact to Sell Lincoln Generating Facility
AMERICAN COLOR: Moody's Cuts $280M Senior Notes' Rating to Caa1
AMERICAN TOWER: Moody's Junks 7-1/8% $300 Million Senior Notes
BANC ONE: S&P Upgrades Class H Certificate Rating to BB+ from B
CAESARS ENTERTAINMENT: Fitch's Double-B Ratings on Watch Positive
CALPINE CORPPORATION: Notifies Acadia of Tolling Accord Default
CATHOLIC CHURCH: Classification of Claims Under Tucson's Plan
CHL MORTGAGE: Moody's Rates $4.656M Class B-3 Certificates at Ba2
CIT GROUP: S&P Pares Ratings on 7.65% Class B Certificates to Ba1
CITICORP MORTGAGE: Fitch Puts Low-B Ratings on Two Cert. Classes
COMMERCE ONE: Plans to Sell Some Assets to Investment Group
CONE MILLS: Plan Objections Must Be Filed by Oct. 6
DAN RIVER: Files Joint Plan of Reorganization in Georgia
DAN RIVER: Wants Until Dec. 27 to Make Lease-Related Decisions
DELTA AIR: CEO Shares Cost Saving Measures with Employees
DELTA AIR: Names Carolyn Ezzell VP for Airport Customer Service
DELTA AIR: Taps James Sarvis to Lead Latin America & the Caribbean
DLJ COMMERCIAL: Fitch Affirms Low-B Ratings on Four Cert. Classes
DLJ COMMERCIAL: Fitch Puts Low-B Ratings on Five Cert. Classes
DOCKSIDE REFRIGERATED: Judge Confirms Plan of Reorganization
ENRON CORP: ENA Asks Court to Okay ECS Sale of Compression Pacts
ENRON CORP: Gas Transmission Wants $2.9 Million Admin Expense Paid
EQUIFIN INC: Inks Pact to Sell Equinox Portfolio to Keltic Fin'l
EQUITY ONE: Moody's Places Ba1 Rating on $7.11M Class B-3 Certs.
EVERGREEN RESOURCES: Completes $2.1 Billion Merger with Pioneer
EXIDE TECH: Lead Claimants Want Referee to Distribute Funds
FEDERAL-MOGUL: Asbestos PD Committee Wants $30,000 Fee Cap Lifted
FEDERAL-MOGUL: Sureties Want to Speed Up Discovery on Estimation
FOOTSTAR INC: Completes $20 Million Gaffney Sale to Automated Data
GLOBAL CROSSING: Nasdaq Extends Filing Compliance to Oct. 8
GOLF TRUST: Delays Form 8-K/A Filing on Record Unit Ownership
HAYMOND NAPOLI DIAMOND PC: Voluntary Chapter 11 Case Summary
HILL COUNTRY: 2005 Budget Prompts S&P to Hack Rating to CC from A-
HORIZON RESOURCES: Venable's Efforts Helped Cut Labor Costs $800MM
INDYMAC HOME: Moody's Reviewing Ba2 & Caa3 Ratings & May Downgrade
INTERSTATE BAKERIES: Look for Bankruptcy Schedules by Nov. 21
INTERSTATE BAKERIES: Cash Management System Will Remain Intact
KMART CORP: Wants to Replace Trumbull with BSI as Claims Agent
LEHMAN ABS: Moody's Junks Two Certificate Classes
LIFEPOINT HOSPITALS: Hart-Scott-Rodino Waiting Period Expires
METUCHEN HEART: Case Summary & 15 Largest Unsecured Creditors
NATIONAL CENTURY: Court Refuses to Quash July Subpoena to PwC
NEWAVE INC: Forms New Subsidiary to Penetrate eBay Market
NEXTEL PARTNERS: Raises Adjusted EBITDA Guidance to $370 Million
OWENS CORNING: Files Post-Hearing Substantive Consolidation Brief
OWENS CORNING: Lenders Brief Substantive Consolidation Issue
PENTHOUSE INT'L: Inks Settlement Agreement with PET Capital
POPE & TALBOT: Moody's Holds Low-B Senior Implied & Unsec. Ratings
QUIGLEY COMPANY: Futures Representative Hires Asbestos Expert
RCN CORP: Court Sets Disclosure Statement Hearing on Oct. 5
SEROLOGICALS CORP: Moody's Confirms B1 Senior Implied Rating
SOLECTRON CORP: Posts $45 Million 2004 Fourth Quarter Net Loss
SYCAMORE CBO: S&P Puts Class A-3 Rating on CreditWatch Positive
TRIMAS CORPORATION: S&P Affirms BB- Corporate Credit Rating
TRIUMPH HEALTHCARE: Moody's Places B2 Ratings on $115M Facilities
UBIQUITEL OPERATING: Moody's Junks $135M 9.875% Senior Notes
UNITED COMPANIES: Moody's Junks Seven Certificate Classes
US AIRWAYS: Gets Engineers' Union's Support on Cost Savings
US AIRWAYS: Wants to Employ Donlin Recano as Claims Agent
US AIRWAYS: Gets Court Nod to Employ Ordinary Course Professionals
US AIRWAYS: Court Bars Utilities from Cutting their Services
USGEN: Inks Pact to Sell Hydro Assets to TransCanada for $505 Mil.
VERTIS INC: Moody's Affirms Low-B & Junk Ratings
VICTORY EQUIPMENT: Case Summary & 20 Largest Unsecured Creditors
VIVA INT'L: Confirms Aircraft Agreement with Seabird & Viva Air
W.R. GRACE: Buying Flexia Roof-Underlayment Biz for CN$16.1 Mil.
*********
ACCESS FINANCIAL: Moody's Junks Two Certificate Classes
-------------------------------------------------------
Moody's Investors Service confirmed the ratings on 4 classes of
senior and mezzanine certificates and downgraded the ratings on 4
classes of subordinate certificates from Access Financial's
manufactured housing securitizations. The rating action concludes
Moody's rating review, which began on April 23, 2004.
The ratings actions are prompted by the continued deterioration in
the performance of Access Financial's manufactured housing pools,
and the resulting erosion in credit support.
In 1997, Access added a $15 million letter of credit to the 1995-1
and 1996-1 securitizations because delinquencies and repossessions
far exceeded original expectations. Since then, both deals
continued to experience high losses resulting in both letters of
credit being drawn down completely. The 1996-1 securitization is
currently undercollateralized while overcollateralization in the
1995-1 transaction is almost completely eroded.
As of the September 15, 2004 remittance report, cumulative losses
and cumulative repossessions for the 1995-1 transaction were
22.65% and 34.20%, respectively, with approximately 29% of pool
balance outstanding. Cumulative losses and cumulative
repossessions for the 1996-1 transaction equaled 23.99% and
36.01%, respectively, with approximately 32% of pool balance
outstanding.
The complete ratings action is:
Issuer: Access Financial Manufactured Housing Contract Trust,
* Series 1995-1
-- 7.100% Class A-3 Certificates, confirmed at Aaa
-- 7.625% Class A-4 Certificates, confirmed at Aa3
-- 7.650% Class B-1 Certificates, downgraded from Baa3 to Ba2
-- 9.375% Class B-2 Certificates, downgraded from Ba2 to C
* Series 1996-1
-- 7.575% Class A-5 Certificates, confirmed at Aaa
-- 7.975% Class A-6 Certificates, confirmed at Aa3
-- 8.040% Class B-1 Certificates, downgraded from Baa3 to Caa2
-- 10.125% Class B-2 Certificates, downgraded from Ba2 to C
Access Financial Lending Corp. is a wholly owned subsidiary of
Cargill Financial Services Corporation. Access is headquartered
in Minneapolis, Minnesota. The loans are currently serviced by
Vanderbilt Mortgage & Finance.
ADELPHIA COMMS: Has Until December 13 to Decide on Leases
---------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
extended the period within which Adelphia Communications
Corporation and its debtor-affiliates can elect to assume, assume
and assign or reject their unexpired leases and executory
contracts until December 13, 2004
Judge Gerber further rules that if the Debtors seek to reject
that certain lease with Steamtown Mall Partners, L.P., governing
the premises located at the Mall at Steamtown in Scranton,
Pennsylvania, at any time between September 7, 2004, and
January 31, 2005, the effective date of the rejection will be no
earlier than January 31, 2005.
Headquartered in Coudersport, Pennsylvania, Adelphia
Communications Corporation (OTC: ADELQ) is the fifth-largest cable
television company in the country. Adelphia serves customers in
30 states and Puerto Rico, and offers analog and digital video
services, high-speed Internet access and other advanced services
over its broadband networks.
The Company and its more than 200 affiliates filed for Chapter 11
protection in the Southern District of New York on June 25, 2002.
Those cases are jointly administered under case number 02-41729.
Willkie Farr & Gallagher represents the ACOM Debtors. (Adelphia
Bankruptcy News, Issue No. 69; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
ADELPHIA COMMS: Has Until March 21 to Remove State Court Actions
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
extended the deadline before which Adelphia Communications
Corporation and its debtor-affiliates can file notices of removal
of the state court actions until the later of:
(a) March 21, 2005; or
(b) 30 days after entry of an order terminating the automatic
stay with respect to a particular action sought to be
removed.
Headquartered in Coudersport, Pennsylvania, Adelphia
Communications Corporation (OTC: ADELQ) is the fifth-largest cable
television company in the country. Adelphia serves customers in
30 states and Puerto Rico, and offers analog and digital video
services, high-speed Internet access and other advanced services
over its broadband networks.
The Company and its more than 200 affiliates filed for Chapter 11
protection in the Southern District of New York on June 25, 2002.
Those cases are jointly administered under case number 02-41729.
Willkie Farr & Gallagher represents the ACOM Debtors. (Adelphia
Bankruptcy News, Issue No. 69; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
ADELPHIA COMMS: Amends Compensation & Retention Programs
--------------------------------------------------------
Adelphia Communications Corporation and its debtor-affiliates
notify the U.S. Bankruptcy Court for the Southern District of New
York that they are further amending portions of the Proposed
Compensation and Retention Programs, particularly as it relates to
the severance component.
The Severance Component, as modified, provides:
(a) an enhanced severance benefit for each eligible director-
level employee equal to 26 weeks of the employee's base
salary; and
(b) continued healthcare coverage for each eligible employee
serving as director, vice president or senior vice
president for a period equal to the length of that
employee's severance benefits.
According to Brian E. O'Connor, Esq., at Willkie Farr & Gallagher,
in New York, the Severance Component modifications could cost the
ACOM Debtors a maximum of $5.723 million if each eligible
director, vice president and senior vice president were
terminated.
Court Approves Modifications
Finding that the Debtors' request is supported by sound business
judgment, Judge Gerber approves the Proposed Retention Programs as
amended in August 2004, and its Severance Component as modified in
September 2004.
The ACOM Debtors previously modified their Proposed Compensation
and Retention Programs as reported in the Troubled Company
Reporter on September 08, 2004:
A. Removal of the EVPs
As urged by the Objectors, the ACOM Debtors will remove Chief
Financial Officer Vanessa Wittman and General Counsel Brand
Sonnenberg -- the EVPs -- from the Amended Severance Plan and
Continuity Program. Instead, the ACOM Debtors will defer and
reformulate the EVPs' retention packages along with William
Schleyer and Ronald Cooper. The ACOM Debtors estimate saving
$5.65 million from the adjustment.
B. Altering the Proposed Continuity Program
The ACOM Debtors will modify the Proposed Continuity Program
by proportionately decreasing and deferring the funding of the
Stay Bonuses and enhancing the Sale Bonuses for the remaining
eligible employees. Specifically, the Debtors will:
* decrease the $20 million aggregate Stay Pool to
$10 million; and
* defer the proposed payout from two 50% payments to a
one-time payout nine months from notification of
participation.
With the Proposed Continuity Program adjustments, the ACOM
Debtors expect an $18 million increase in the Sale Pool from
$11 million, which would only be paid if a sale were
consummated.
According to Mr. Shalhoub, the adjustments are responsive to
the Objectors' arguments that incentives must focus more on a
sale outcome and weight the Sale Bonuses.
C. Decreasing the CEO's Discretionary Pool
The ACOM Debtors intend to further decrease the potential cost
of the Proposed Compensation and Retention Programs by
decreasing the Chief Executive Officer's $6 million
Discretionary Pool, from which to grant supplemental bonuses,
to $3 million.
Headquartered in Coudersport, Pennsylvania, Adelphia
Communications Corporation (OTC: ADELQ) is the fifth-largest cable
television company in the country. Adelphia serves customers in
30 states and Puerto Rico, and offers analog and digital video
services, high-speed Internet access and other advanced services
over its broadband networks.
The Company and its more than 200 affiliates filed for Chapter 11
protection in the Southern District of New York on June 25, 2002.
Those cases are jointly administered under case number 02-41729.
Willkie Farr & Gallagher represents the ACOM Debtors. (Adelphia
Bankruptcy News, Issue No. 69; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
ALLEGHENY ENERGY: Inks Pact to Sell Lincoln Generating Facility
---------------------------------------------------------------
Allegheny Energy Supply Company, LLC, a subsidiary of Allegheny
Energy, Inc. (NYSE:AYE), signed an agreement to sell for
approximately $173 million its 672-megawatt Lincoln Generating
Facility, in Manhattan, Illinois, together with an associated
tolling agreement, to an affiliate of ArcLight Capital Partners,
LLC. Proceeds from the sale will be used to reduce debt.
Allegheny expects to record a loss relating to the sale of
approximately $210 million (approximately $130 million, net of
income taxes) in the third quarter of 2004.
In addition, Allegheny retained Banc of America Securities as a
financial advisor to assist in the sale of its two remaining
Midwest natural gas-fired peaking facilities, located in Indiana
and Tennessee. As a result of these events and in light of
current market conditions, the Company expects to take a non-cash
impairment charge on the remaining two facilities of approximately
$440 million (approximately $280 million, net of income taxes) in
the third quarter of 2004.
"With the sale of this non-core asset and the potential sale of
our other Midwest assets, Allegheny takes another step forward in
reducing debt, improving earnings and regaining financial
strength," stated Paul J. Evanson, Chairman and CEO. "Excluding
the loss and charges for these Midwest peaking facilities, we
still expect to report positive earnings from core operations for
the third quarter."
The Lincoln sale is subject to certain closing conditions, federal
regulatory approvals and third-party consents. Allegheny
anticipates that the transaction will close in the fourth quarter
of 2004.
In addition to the Lincoln facility, Allegheny's natural gas-fired
Midwest generating facilities include:
* the Wheatland Generating Facility (512 MW), in Wheatland,
Indiana, and
* the Gleason Generating Facility (526 MW), in Gleason,
Tennessee.
The three peaking facilities were built in June 2000 and acquired
by Allegheny in May 2001.
The Buyer
The buyer is an affiliate of ArcLight Capital Partners, LLC, one
of the world's leading energy infrastructure investing firms.
ArcLight invests throughout the energy industry value chain in
hard assets that produce current income as well as capital
appreciation.
Headquartered in Greensburg, Pennsylvania, Allegheny Energy is an
energy company consisting of two major businesses, Allegheny
Energy Supply, which owns and operates electric generating
facilities, and Allegheny Power, which delivers low-cost, reliable
electric service to customers in Pennsylvania, West Virginia,
Maryland, Virginia and Ohio. More information about Allegheny
Energy is available at http://www.alleghenyenergy.com/
* * *
As reported in the Troubled Company Reporter on Sept. 14, 2004,
Fitch Ratings revised the Rating Outlook of Monongahela Power
Company to Stable from Negative. Approximately $838 million of
debt securities are affected. At the same time, Fitch has affirmed
the existing ratings of Allegheny Energy, Inc. and subsidiaries.
The Rating Outlooks for all issuers in the Allegheny Energy group
are Stable.
The revision of Monongahela's Outlook to Stable is based on the
successful execution of additional coal supply contracts for 2005
and 2006, the return to service of baseload coal-fired generation
units at the Hatfield's Ferry and Pleasants plants prior to the
start of peak seasonal demand, and the expectation that operating
and maintenance expenses will trend down. The new coal supply
contracts increase the hedged percentage of 2005 and 2006 coal
supply needs to 90% and 50%, respectively, and alleviate near term
commodity price risk. The all-in average prices for the locked in
portion of coal supply are approximately $34 for 2005 and Fitch
estimates it will be approximately $36.10 for 2006, which are well
below the current spot market price of Appalachian coal. While
the restoration of the major coal-fired units to service ended the
cash losses associated with purchasing replacement power at higher
cost, the company continues to be at risk for any future outages
under Monongahela's current retail tariffs. Monongahela is unable
to recover the costs of replacement supply in either West Virginia
or Ohio, and no near-term change is expected. A successful
closing of the recently announced sale of Mountaineer Gas would be
positive for credit quality. Mountaineer Gas has been a persistent
drag on profitability and the proceeds from any sale are
anticipated to be used for debt reduction. However, the closing
of the transaction is subject to material regulatory
contingencies.
The affirmation of the 'BB-' senior unsecured rating and Stable
Rating Outlook of the group parent, Allegheny, reflects the new
management's ongoing progress in restructuring efforts and debt
reduction and adequate parent company liquidity, as well as the
high consolidated leverage and weak cash flow coverage ratios.
Allegheny's rating reflects Fitch's expectation that Allegheny
would continue to provide support to the leveraged Allegheny
Energy Supply subsidiary as well as the cash flow from the
stronger, more stable regulated utility subsidiaries. Execution
of the remainder of the $1.5 billion debt reduction plan by year-
end 2005, improvement in cash flow generation at Supply,
improvements in plant operating performance and expense control,
and rate relief would improve credit quality. Credit concerns
include the risks of extended plant outages, rising environmental
compliance costs, adverse regulatory or judicial decisions, and
commodity price exposure (2006 and beyond).
The affirmation of Supply's 'B-' senior unsecured rating and
Stable Rating Outlook is based on the generation company's high
leverage and weak profitability. Improvement in credit quality is
dependent on the success of debt reduction and cost reduction
efforts. Historically, Supply produced insufficient cash flow to
cover interest expense and has therefore been dependent upon
parent support. The $1.25 billion bank credit facilities, which
closed in March 2004 and mature in 2011, reduce interest expense
and provide liquidity. Supply benefits from a strategically
located fleet of mostly coal-fired generation plants in PJM West
and affiliate contracts that provide a large degree of certainty
to revenues for the next several years. However, Supply bears the
risks of extended plant outages, increases in fuel prices after
2005, and emissions-related issues.
The affirmation of the 'BBB-' senior unsecured ratings and Stable
Rating Outlooks of West Penn Power Company and Potomac Edison
Company reflects their low business risk as transmission and
distribution utilities, as well as the ratings constraint stemming
from business and financial linkages with the Allegheny group.
The location of their service territories in the robust PJM market
bodes well for the breadth of future power purchase opportunities.
Concerns include the risk that regulators may extend rate caps
beyond the current transition periods at levels that are below the
cost of power supply.
Ratings affirmed are:
Allegheny Energy, Inc.
-- Senior unsecured debt 'BB-';
-- 11 7/8% notes due 2008 'B+'.
Allegheny Capital Trust I
-- Trust preferred stock 'B+'.
Allegheny Energy Supply Company LLC
-- Senior unsecured notes 'B-'.
Allegheny Generating Company
-- Senior unsecured debentures 'B-'.
Allegheny Energy Supply Company LLC
-- Pollution control bonds (MBIA-Insured) 'AAA'.
West Penn Power Company
-- Medium-term notes and senior unsecured 'BBB-'.
Potomac Edison Company
-- First mortgage bonds 'BBB';
-- Senior unsecured notes 'BBB-'.
Monongahela Power Company
-- First mortgage bonds 'BBB';
-- Medium-term notes 'BBB-';
-- Pollution control revenue bonds (unsecured) 'BBB-';
-- Preferred stock 'BB+'.
AMERICAN COLOR: Moody's Cuts $280M Senior Notes' Rating to Caa1
---------------------------------------------------------------
Moody's Investors Service downgraded all ratings for American
Color Graphics, Inc., including its:
* $280 million Senior Secured Second Priority Notes due 2010 -
to Caa1 from B3
* Senior Implied rating -- to B3 from B2
* Issuer rating -- to Caa2 from Caa1
The rating outlook has been changed to negative from stable.
This downgrade reflects Moody's heightened concern regarding
American Color's declining top line performance, which has been
worsened by declining volume, thin margins and a fiercely
competitive pricing environment. American Color remains highly
vulnerable to the increasing commoditization of the long-run
insert printing business. While the printing sector as a whole
has shown some signs of rebound following the 2001 business slump,
American Color's attempts to regain traction have been hampered by
three major account losses.
Ratings are supported by American Color's moderate level of
liquidity, manageable debt amortization profile, and its well
established customer relationships. Moody's also recognizes
management's success in rationalizing capacity, managing costs,
and extending the company's debt maturity profile so that no
significant debt maturities occur before 2008.
At the end of June 2004, American Color recorded debt of $305
million, representing leverage of 6.4 times debt-to-LTM EBITDA,
which is up from 5.6 times at the end of the prior quarter.
Including $29 million in letters of credit and $27 million in
unfunded pension obligations (as of March 2004), leverage is
higher at approximately 7.6 times adjusted debt-to-EBITDA.
Recent performance metrics continue to reflect the impact of a
troubled operating environment, characterized by overcapacity and
competitive pricing pressure. For the quarter ended June 30,
2004, print volume declined by 14%, print sales were off by 10%,
and EBITDA declined by 27% over the prior year quarter. These
declines were caused in part by major contract losses to rivals.
The Caa1 rating assigned to the $280 million 10% senior secured
second priority notes is notched down from the senior implied
rating to reflect the weak asset protection metrics that are
afforded to second secured noteholders. In a distress scenario,
Moody's considers that asset values would be insufficient to
provide for full recovery to second secured noteholders whose
security claims are subordinated to those of lenders under
American Color's unrated $70 million senior secured revolving
credit facility.
The negative outlook reflects Moody's expectation that sales and
cash flow will remain constrained by competitive elements for the
near-term and that American Color's financial performance will
remain challenged by volume pressure and tight pricing.
At the end of June 2004, American Color's liquidity comprised
approximately $32 million in undrawn availability under its
revolving credit facility.
American Color's operations are highly seasonal, generally using
cash in the first half of the fiscal year and replenishing
liquidity in the second half. Moody's expects that the company's
near term results will benefit from a seasonal pick-up in
collections during the quarter ending March 30, 2005. American
Color's ratings could feel further pressure if its second half
fiscal 2005 operations are unable to generate sufficient cash to
reduce its revolver by March 31 2005 in order to allow for its
first half fiscal 2006 cash needs. Ratings lift is unlikely as
long as the company is unable to reverse the protracted trend of
volume decline and commoditized pricing pressure.
American Color Graphics, a leading provider of print and pre-media
services, recorded fiscal 2004 sales of $471 million. The company
is based in Brentwood, Tennessee.
AMERICAN TOWER: Moody's Junks 7-1/8% $300 Million Senior Notes
--------------------------------------------------------------
Moody's Investors Service assigned a Caa1 rating to the
$300 million 7-1/8% senior notes offering by American Tower
Corporation. Moody's also affirmed the company's senior implied
rating of B2, and other debt ratings. The outlook for all ratings
is positive.
The affected ratings are:
-- American Tower Corporation
* $300 million of 7-1/8% Senior Notes due 2014 -- Caa1
(assigned)
* Senior Implied -- B2 (affirmed)
* Speculative Grade Liquidity -- SGL-2 (affirmed)
* $225 million of 7.5% Senior Notes due 2012 -- Caa1
(affirmed)
* $636 million of 9.375% Senior Notes due 2009 -- Caa1
(affirmed)
* $298 million of 5.0% Convertible Notes due 2010 -- Caa1
(affirmed)
-- American Towers, Inc. (ATI)
* $808 million (face value) of 12.25% Senior Subordinated
Discount Notes due 2008 -- B3 (affirmed)
* $400 million of 7.25% Senior Subordinated Notes due 2011
-- B3 (affirmed)
-- American Tower, LP and American Towers, Inc. (co-borrowers)
* $400 million senior secured revolving credit facility
expiring 2011 -- B1 (affirmed)
* $300 million senior secured term loan A maturing 2011 --
B1 (affirmed)
* $400 million senior secured term loan B maturing 2011 --
B1 (affirmed)
The B2 senior implied rating continues to reflect the high
leverage of the company as the $164 million of LTM free cash flow
represents 5% of the company's total debt balance at the end of
2Q04. Nonetheless, Moody's recognizes the steadily improving free
cash flow profile of the company, which we expect will continue.
The positive outlook indicates Moody's acknowledgment of the
likelihood of a ratings upgrade in the near-to-intermediate term.
Proceeds from the current $300 million senior unsecured note
issuance will be used to:
* further reduce the company's outstandings of the 9.375%
senior unsecured notes due 2009;
* provide the company with lower interest expense and extend
maturities by approximately 4 years.
Previously in the 3Q04, the company successfully reduced the
9.375% outstandings by $337 million after it issued 3% convertible
notes due 2012 (unrated). Proforma for the senior unsecured notes
offering, the company will record approximately $360 million of
9.375% senior unsecured notes.
The Caa1 rating on the new and existing senior unsecured debt at
the ultimate parent holding company reflects their junior position
in the capital structure behind the higher rated obligations at
subsidiaries closer to the assets and cash flows of the company.
The B1 rating on the senior secured credit facilities reflects
their priority position in the company's capital structure, and
their relatively modest proportion of the company's total debt
capital (21% at 2Q04). These obligations are secured by the stock
and assets of the borrowers and their primary operating
subsidiaries, and also benefit from upstream guarantees from those
subsidiaries. The B3 rating for the unsecured debt at the
intermediate ATI level reflects the effective subordination of
these securities to the secured bank borrowings and other
liabilities of the company's operating subsidiaries. The SGL-2
liquidity rating continues to reflect the good liquidity profile
of the company with healthy cash balances, good free cash flows,
and significant covenant cushion under its credit facilities.
The positive rating outlook reflects Moody's opinion that should
the company continue to generate higher levels of free cash flow
the ratings are likely to be upgraded in the next 12 to 18 months.
Over the last twelve months ended June 20, 2004, American Tower
generated over $211 million of cash provided by operations and
spent approximately $48 million on capital expenditures. Going
forward, Moody's expects cash from operations to continue to grow,
capital spending to remain roughly flat, and acquisition and
investment spending to decline significantly. Longer term,
Moody's remains concerned that capital spending will have to
increase as 2003 spending represented only 27% of depreciation
expense for the year. Risks to this outlook are acquisition and
investment spending above expected levels that would divert free
cash flow from debt reduction, higher than anticipated capital
spending, or slower growth in cash provided by operations.
Headquartered in Boston, American Tower Corporation is an
independent owner and operator of wireless communications and
broadcast towers in the U.S., Mexico, and Brazil with last twelve
months revenue of
$758 million.
BANC ONE: S&P Upgrades Class H Certificate Rating to BB+ from B
---------------------------------------------------------------
Standard & Poor's Ratings Services raised its ratings on six
classes of Banc One/FCCC Commercial Mortgage Loan Trust's
commercial mortgage pass-through certificates from series 2000-C1.
Concurrently, ratings are affirmed on two other classes from the
same transaction.
The rating actions reflect, under various stress scenarios:
-- Stable performance of the pool;
-- Large increase in credit support since origination;
-- Successful payoff history of the loan pool with only minor
losses to date;
-- Low delinquency rate; and
-- Large percentage of recourse loans.
The strengths are offset by:
-- Significant geographic concentrations;
-- Near-term refinancing risk and loans past maturity; and
-- Lack of data for most of the pool.
As of the September 20, 2004 remittance report, the collateral
pool consisted of 221 loans with an aggregate principal balance of
$125 million, down from 1,099 loans totaling $857.1 million at
issuance, representing an 85% paydown. Predecessors of Bank One
N.A. originated most of the loans, with the earliest origination
at issuance dating back to 1978. The average loan size is small
at under $600,000, which minimizes the impact of a loss on the
pool from any one particular loan. Because of the age and size of
most of the loans, much of the traditional securitization and
reporting information, such as debt service coverage, is not
required and unavailable. The master servicer, Midland Loan
Services L.P., provided December 31, 2003 net cash flow -- NCF --
debt service coverage -- DSC -- figures for 34% of the pool.
Based on this information, Standard & Poor's calculated a weighted
average DSC of 1.45x.
The top 10 loans have an aggregate outstanding balance of
$31.5 million (25%). The weighted average DSC for the top 10
loans is 1.37x, excluding the largest and seventh-largest loans
for nonreporting. Standard & Poor's reviewed property inspections
provided by Midland for all of the assets underlying the top 10
loans and all were characterized as "excellent" or "good."
The lack of reporting information is mitigated by several factors.
First, the mortgages in the pool are well seasoned, as evidenced
by the age of the pool and the origination dates of the loans.
Also, 878 mortgage loans have paid off to date, with only four
realized losses totaling $702,473, which suggests that the loans
were underwritten conservatively. The fact that 87% of the
remaining mortgages are full recourse and 15% are fully amortizing
also supports the upgrades. Finally, there are only three
delinquent loans ($2 million, 2%) in the pool. Two ($1.8 million)
are 30-days delinquent and one ($183,223) is 60-days delinquent.
Lennar Partners, Inc., is special servicing five loans
($4.4 million, 4%) including the aforementioned 60-days delinquent
loan, which was transferred on September 13, 2004. Three of the
loans ($1.9 million) are specially serviced because of maturity
defaults and all of the borrowers are currently seeking
refinancing. The remaining loan ($2.4 million) is current while
the borrower seeks to obtain an approval of a new Master
Lease from its Lender. Midland reported 32 loans ($22.1 million,
18%) on its watchlist. The loans are on the watchlist due to
vacancy, low DSC, pending maturity, or delinquency.
The trust collateral is located across seven states with Illinois
(73%), Ohio (10%), and Indiana (10%) accounting for more than 10%
of the pool balance. All of the pool balance located in the state
of Illinois is within the Chicago metropolitan statistical area.
The geographic concentration risk is heightened by the fact that
Chicago's economy, while posed for recovery, continues to
struggle, largely reflecting the national economic situation.
Property concentrations greater than 10% of the pool balance are
found in these property types:
* multifamily (35%),
* mixed use (25%),
* retail (20%), and
* office (16%).
Standard & Poor's stressed various loans with credit issues as
part of its pool analysis. The resultant credit enhancement
levels support the revised ratings.
Ratings Raised
Banc One/FCCC Commercial Mortgage Loan Trust
Commercial mortgage pass-thru certificates series 2000-C1
Rating
------
Class To From Credit Enhancement
----- -- ---- ------------------
C AAA AA- 67.99%
D AAA A+ 61.14%
E AAA BBB+ 49.14%
F AAA BBB 42.29%
G A BB 23.43%
H BB+ B 11.44%
Ratings Affirmed
Banc One/FCCC Commercial Mortgage Loan Trust
Commercial mortgage pass-thru certificates series 2000-C1
Class Rating Credit Enhancement
----- ------ ------------------
B AAA 95.41%
X AAA N/A
N/A - Not applicable.
CAESARS ENTERTAINMENT: Fitch's Double-B Ratings on Watch Positive
-----------------------------------------------------------------
Fitch Ratings affirmed the senior unsecured and subordinated debt
ratings of Harrah's Entertainment ('BBB-/BB+'; Stable Outlook).
Caesars Entertainment ('BB+/BB-') remains on Rating Watch Positive
by Fitch.
The action follows the September 27, 2004 announcement that
Harrah's Entertainment and Caesars Entertainment reached an
agreement to sell two properties each to an affiliate of Colony
Capital for $1.24 billion in cash or 8.5x LTM EBITDA. Harrah's
Entertainment properties include Harrah's East Chicago and
Harrah's Tunica, and Caesars Entertainment properties include the
Atlantic City Hilton and Bally's Tunica.
Proceeds from the sale will be used to reduce debt at both
Harrah's Entertainment and Caesars Entertainment prior to their
pending merger. Net of asset sales, Fitch estimates the pro forma
leverage of the combined entity will be in the 4.5 times (x)
range, assuming a fiscal year-end 2004 close. Notably, this level
of asset sales and debt repayment was contemplated in Fitch's
original review in July of the potential merger of Harrah's
Entertainment-Caesars Entertainment. While initial leverage is
high for the category, Fitch expects leverage to decline to a more
acceptable range within twelve-eighteen months. Fitch projections
suggest that the combined entity will have the capacity to reduce
leverage to below 4.0x by FYE 2005. Discretionary capex is
expected to remain heavy through 2005, but falls off in 2006,
producing $600-$700 million in free cash flow.
Fitch believes the sales alleviate a level of regulatory risk in
completing the merger. In Indiana, the sale of Harrah's East
Chicago allows the combined entity to comply with the legal limit
of two licenses. In Atlantic City, where Harrah's Entertainment
would own five of twelve properties, and Tunica, where the company
would own five of nine, the sales should lessen potential anti-
trust concerns of the FTC and state regulators. Strategically,
Fitch views lower exposure in these regions as a positive given
significant new competitive threats in Atlantic City (The Borgata
and legalized gambling in Pennsylvania) and stagnant growth of the
Tunica market over the last several years.
CALPINE CORPPORATION: Notifies Acadia of Tolling Accord Default
---------------------------------------------------------------
Late Monday, Acadia Power Partners LLC, a joint venture between
subsidiaries of Cleco Corporation and Calpine Corp., received a
letter from Calpine Energy Services, LP, claiming to be a notice
of default under the tolling agreements for the Acadia Power
Project. Calpine Energy Services holds tolling agreements for the
entire output of the natural gas-fired 1,160 MW Acadia plant,
located just south of Eunice, Louisiana.
In response to a recent request by Calpine Energy Services for
Acadia Power to perform a simultaneous capacity test of both
Acadia Power power blocks, Acadia Power declined to conduct the
tests in the manner requested by Calpine Energy Services because
the request was not supported by the terms of the tolling
agreements. Calpine Energy Services is claiming in a letter dated
September 27 that Acadia Power's refusal to conduct the requested
capacity test is a default under the tolling agreements. Calpine
Energy Services also stated in this letter that if the default is
not cured within 30 days, then Calpine Energy Services will pursue
its available remedies.
"We believe that [Calpine Energy Services] requested the
simultaneous testing as a basis to reduce its capacity payments
under the agreements. Acadia Power has a very sound legal
position, and the contracts are unambiguous on this issue," said
Cleco President and Chief Executive Officer David Eppler. "We
plan for Acadia Power to vigorously defend its rights under the
contracts."
Cleco Corp. is an energy services company headquartered in
Pineville, Louisiana. It operates a regulated electric utility
that serves 264,000 customers across Louisiana. Cleco also
operates a wholesale energy business that has approximately 2,100
megawatts of generating capacity, including the Perryville plant,
a 718-megawatt plant whose sale to a subsidiary of Entergy is
pending. For more information about Cleco, visit
http://www.cleco.com/
Calpine Corporation, is a North American power company dedicated
to providing electric power to customers from clean, efficient,
natural gas-fired and geothermal power facilities. The company
generates power at plants it owns or leases in 21 states in the
United States, three provinces in Canada and in the United
Kingdom. Calpine is also the world's largest producer of
renewable geothermal energy, and owns or controls approximately
one trillion cubic feet equivalent of proved natural gas reserves
in the United States and Canada. For more information about
Calpine, visit http://www.calpine.com/
* * *
As reported in the Troubled Company Reporter on Sept. 27, Standard
& Poor's Ratings Services assigned its 'B+' rating to Calpine
Corp.'s $785 million first-priority senior secured notes due in
2014, which is one notch higher than the company's corporate
credit rating. Standard & Poor's also assigned its '1' recovery
rating to the notes, indicating a high expectation of full
recovery of principal if a default occurs.
The rating on Calpine (B/Negative/--), a San Jose, California-
based corporation engaged in the development, acquisition,
ownership, and operation of power generation facilities, reflects
Calpine's credit statistics are weak.
CATHOLIC CHURCH: Classification of Claims Under Tucson's Plan
-------------------------------------------------------------
In accordance with Section 1122(a) of the Bankruptcy Code, the
Diocese of Tucson's Reorganization Plan groups claims against the
Diocese into 10 classes:
Class Description Recovery Under the Plan
----- ------------ -----------------------
N/A Administrative Paid in full, in cash
Claims
N/A Priority Paid in full, in cash
Unsecured Claims
N/A Priority Paid in full, in cash
Tax Claims
1 Prepetition To be satisfied by the Diocese
Employee Claims assuming and honoring policy
after the Effective Date
Estimated date of distribution
is varied depending on the
Employee's status and use of
vacation and sick leave time
Estimated amount of Allowed Claims
not to exceed $364,000
Impaired
2 Prepetition Paid in full, with half of the
Property Tax amount paid 30 days after the
Secured Claims Effective Date and the remaining
half paid six months after the
Effective Date
Estimated amount of Allowed Claims
not to exceed $8,754
Impaired
3 Other Secured Paid in full, which will be paid on
Claims January 24, 2007 -- the due date of
the Promissory Note payable to the
Escrow Agent
Estimated amount of Allowed Claims
not to exceed $3,300,000
Unimpaired
4 General Unsecured $500 will be distributed per claim
Convenience Claims which will be paid 30 days after the
Effective Date or applicable Claim
Payment Due
Estimated amount of Allowed Claims
not to exceed $2,000
Impaired
5 Parish Guaranty No distribution
Claims
Parishes will continue to pay in
accordance with terms
Estimated amount of Allowed Claims
not to exceed $6,900,000
Unimpaired
6 Parish Unsecured Estimated distribution is unknown
Claims
Interest only at the rate of 2.5%
per annum, monthly payments of
$44,738 until paid in full
Estimated amount of Allowed Claims
not to exceed $7,100,000
Impaired
7 General Unsecured Paid in full, in installments
Claims beginning 30 days after the
Effective Date and monthly after
that until paid in full.
Obligations bear Interest at
4.5% per annum
Estimated amount of Allowed Claims
not to exceed $2,100,000
Impaired
8 Other Tort and Estimated distribution is unknown
Employee Claims
To be paid from proceeds of
applicable insurance to the extent
available; otherwise, no
distribution
Estimated amount of Allowed Claims
is unknown
Impaired
9 Tort Claims Estimated distribution is unknown
To be paid from proceeds of
Settlement Trust and Litigation
Trust
Settling Tort Claimants will have
Claims determined by Special Master
and placed in Tiers.
Distribution will depend on Tier in
which Tort Claim is placed and
aggravating or mitigating factors
Non-Settling Tort Claimants share
Pro Rata in proceeds of Litigation
Trust
Estimated amount of Allowed Claims
is unknown
Impaired
10 Penalty Claims Estimated distribution is $0
Estimated amount of Allowed Claims
is unknown
Impaired
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 debtor in its restructuring efforts. In its
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)
CHL MORTGAGE: Moody's Rates $4.656M Class B-3 Certificates at Ba2
-----------------------------------------------------------------
Moody's Investors Service assigned a rating of Aaa to the senior
certificates issued in the CHL Mortgage Pass-Through Trust 2004-20
securitization of prime-quality negative amortization loans
secured by first liens on one- to four-family residential
properties. Ratings of Aa2, A2, Baa2 and Ba2 were assigned to the
mezzanine and subordinate classes.
According to Moody's analyst Amita Shrivastava, the ratings of the
certificates are based on the quality of the underlying mortgage,
the credit support provided through subordination, the legal
structure of the transaction, as well as Countrywide's capability
as a servicer of mortgage loans.
The underlying collateral consists of adjustable rate negative
amortization mortgage loans. The mortgage loans are divided into
three groups.
Group 1 loans have an average current principal balance of
$203,420 with a weighted average FICO score of 714 and weighted
average loan to value ratio of 74.5%.
Group 2 loans have an average current principal balance of
$595,048 with weighted average FICO score of 709 and weighted
average loan to value ratio of 72.4%.
Group 3 loans have an average current principal balance of
$569,065 with weighted average FICO score of 714 and weighted
average loan to value ratio of 71.9%.
Countrywide Home Loans Servicing LP will be the Master Servicer of
the mortgage loans. Countrywide is considered to be a highly
capable servicer of prime quality mortgage loans. Countrywide
Servicing was established by Countrywide Home Loans -- CHL -- in
February 2000 to service loans originated by CHL. Moody's has
assigned Countrywide Home Loans, Inc., servicer ratings of SQ1,
Moody's highest servicer quality rating, for servicing of
Prime/Alt-A loans.
The complete rating actions are:
Issuer: Countrywide Mortgage Pass-Through Trust 2004-20
Depositor: CWMBS, Inc.
Master Servicer: Countrywide Home Loans Servicing LP
Class Amount Rating
----- ------ ------
Class 1-A-1 $291,984,000 Aaa
Class 2-A-1 96,991,000 Aaa
Class 2-A-2 115,000,000 Aaa
Class 3-A-1 225,736,000 Aaa
Class X Interest Only
Principal Only Aaa
Class A-R 100 Aaa
Class M 14,747,000 Aa2
Class B-1 10,867,000 A2
Class B-2a 6,762,000 Baa2
Class B-2b 1,000,000 Baa2
Class B-3 4,656,000 Ba2
CIT GROUP: S&P Pares Ratings on 7.65% Class B Certificates to Ba1
-----------------------------------------------------------------
Moody's Investors Service downgraded the ratings on two classes of
the subordinate certificates of the CIT Series 1995-1 and 1995-2
manufactured housing securitizations. The rating action concludes
Moody's rating review, which began on August 16, 2004.
The rating actions are prompted by the weaker-than-anticipated
performance of these pools, with delinquency and repossession
rates exceeding original expectations. As of the Sept. 15, 2004
remittance report, cumulative losses and cumulative repossessions
for the 1995-1 transaction equalled 9.09% and 17.05%,
respectively, with 21.18% of the pool outstanding. Cumulative
losses and cumulative repossessions for the 1995-2 deal totalled
9.30% and 18.50%, respectively, with 29.75% of the pool remaining.
Loss severities in the recent months for both securitizations were
close to 80%.
The Class A-5 subordinate certificates from the 1995-1 deal are
backed by an unlimited guarantee from CIT Group, Inc., to cover
all interest and principal due to the Class A-5 investors.
Currently CIT's senior debt rating is A2. The rating of Class A-5
certificates was downgraded to A2 because these certificates
primarily rely on the guaranty to support the rating.
Similarly, the original Baa2 rating of the Class B certificates
from the 1995-2 deal reflects the availability of credit support
at that time in addition to a limited guarantee from CIT Group,
Inc., to cover all interest due and a portion of principal due to
investors. The guaranteed principal equals 3.0% of the current
pool balance, remains constant when it becomes 0.5% of the initial
pool balance, and finally decreases when it equals the current
Class B principal balance. The rating of Class B certificates was
downgraded to Ba1 because the performance of the underlying loans
and available excess spread were not sufficient to support a Baa2
rating.
The complete rating action is:
Issuer: CIT Group Securitization Corporation II
Series: 1995-1
* 9.05% Class A-5 Certificates, downgraded from Aa2 to A2
Series: 1995-2
* 7.65% Class B Certificates, downgraded from Baa2 to Ba1
CIT Group, Inc., (long-term senior unsecured rating of A2), which
commenced operations in 1908, is a diversified finance company.
In April 2002, CIT discontinued the origination of manufactured
home financing.
CITICORP MORTGAGE: Fitch Puts Low-B Ratings on Two Cert. Classes
----------------------------------------------------------------
Citicorp Mortgage Securities, Inc.'s (CMSI) REMIC pass-through
certificates, series 2004-6, is rated by Fitch:
-- Class IA-1 through IA-11, IA-PO, IIA-1, and IIA-PO
($454.8 million) 'AAA';
-- Class B-1 ($5.1 million) 'AA';
-- Class B-2 ($2.6 million) 'A';
-- Class B-3 ($1.4 million) 'BBB';
-- Class B-4 ($932,000) 'BB';
-- Class B-5 ($466,000) 'B'.
The 'AAA' rating on the senior certificates reflects the 2.40%
subordination provided by:
* the 1.10% class B-1,
* the 0.55% class B-2,
* the 0.30% class B-3,
* the 0.20% privately offered class B-4,
* the 0.10% privately offered class B-5, and
* the 0.15% privately offered class B-6.
In addition, the ratings reflect the quality of the mortgage
collateral, strength of the legal and financial structures, and
CitiMortgage, Inc.'s servicing capabilities (rated 'RPS1' by
Fitch) as primary servicer.
The mortgage loans have been divided into two pools of mortgage
loans.
Pool I, with an unpaid aggregate principal balance of
$375,479,622, consists of 710 recently originated, 20- to 30-year
fixed-rate mortgage loans secured by one- to four-family
residential properties located primarily in California (34.45%)
and New York (25.05%). The weighted average current loan to value
ratio -- CLTV -- of the mortgage loans is 67.03%. Condo
properties account for 5.31% of the total pool, and co-ops account
for 8.37%. Cash-out refinance loans represent 9.96% of the pool,
and there are no investor properties. The average balance of the
mortgage loans in the pool is approximately $528,845. The
weighted average coupon of the loans is 6.15%, and the weighted
average remaining term is 358 months.
Pool II, with an unpaid aggregate principal balance of
$90,517,637, consists of 171 recently originated, 13- to 15-year
fixed-rate mortgage loans secured by one- to four-family
residential properties located primarily in California (37.71%)
and New York (18.40%). The weighted average CLTV of the mortgage
loans is 56.07%. Condo properties account for 4.10% of the total
pool, and co-ops account for 4.45%. Cash-out refinance loans
represent 21.62% of the pool, and there are no investor
properties. The average balance of the mortgage loans in the pool
is approximately $529,343. The weighted average coupon of the
loans is 5.501%, and the weighted average remaining term is 178
months.
None of the mortgage loans are 'high cost' loans as defined under
any local, state, or federal laws. For additional information on
Fitch's rating criteria regarding predatory lending legislation,
see the press release 'Fitch Revises Rating Criteria in Wake of
Predatory Lending Legislation,' dated May 1, 2003, available on
the Fitch Ratings web site at http://www.fitchratings.com/
The mortgage loans were originated or acquired by CMI and in turn
sold to CMSI. A special purpose corporation, CMSI, deposited the
loans into the trust, which then issued the certificates. U.S.
Bank National Association will serve as trustee. For federal
income tax purposes, an election will be made to treat the trust
fund as one or more real estate mortgage investment conduits.
COMMERCE ONE: Plans to Sell Some Assets to Investment Group
-----------------------------------------------------------
Commerce One (NASDAQ: CMRC) entered into a non-binding letter of
intent to sell its SRM Division and certain of its other assets to
an investment group composed of ComVest Investment Partners II LLC
and DCC Ventures, LLC. ComVest and DCC are Commerce One's largest
creditors. The parties intend to negotiate a definitive asset
purchase agreement that will be entered into in connection with a
planned filing by Commerce One for Chapter 11 bankruptcy
protection. The date of the filing has not yet been determined.
"We are pleased that ComVest and DCC have signaled their intent to
maintain our core businesses. The SRM Division continues to be
staffed by skilled, dedicated personnel, and we appreciate their
efforts as well as the support of the division's many loyal
customers. In addition, the transaction includes the sale of our
Conductor line of business and provides an avenue for this
technology to create a positive impact in the future," said Mark
Hoffman, President and CEO of the Company. Hoffman also added
that "the sale, when completed will be beneficial for our
customers and employees by bringing both stability and better
capitalization to those business operations while maximizing
recoveries to our creditors."
The non-binding letter of intent includes an exclusive negotiating
period. The definitive asset purchase agreement presently being
negotiated by the parties will include certain conditions to
closing, including bankruptcy court approval and a bankruptcy
court-supervised overbidding process, permitting Commerce One to
seek higher and better offers for the assets to be sold. Commerce
One reiterated that whether this transaction with ComVest and DCC
is consummated or not, the Company does not expect to have
sufficient funds to meet all of its debts and obligations or to
make any payments to its preferred or common stockholders.
About ComVest Investment Partners
ComVest Investment Partners is a premier investment management
organization focused on investing and managing growth businesses
in the information technology, healthcare, natural resources, and
telecommunication industries. Since its founding in 1988, ComVest
and its affiliates have raised and invested over $1.4 billion in
capital. ComVest currently manages three investment portfolios
totaling over $850 million in assets and has offices New York
City, New York, and West Palm Beach, Florida. For additional
information on ComVest visit http://www.comvest.com/
About DCC Ventures LLC
DCC Ventures LLC is a privately held investment company located in
Minneapolis, Minnesota.
About Commerce One
From its initial roots in Internet-based software applications,
Commerce One, Inc. -- http://www.commerceone.com/-- defined many
of the open standards and protocols established for business
networks and their 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.
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.
CONE MILLS: Plan Objections Must Be Filed by Oct. 6
---------------------------------------------------
On August 20, 2004, the United States Bankruptcy Court for the
District of Delaware approved the First Amended Disclosure
Statement explaining Cone Mills Corporation and its debtor-
affiliates' Second Amended Chapter 11 Plan of Liquidation.
The Honorable Mary F. Walrath will convene a hearing to consider
confirmation of the Plan, on October 18, 2004 at 2:00 p.m.
(Eastern Time).
Objections, if any, to confirmation of the Plan must:
-- be in writing;
-- comply with the Federal Rules of Bankruptcy Procedure and
General Orders of the Court;
-- set forth the name of the objector, and the nature and
amount of any claim or interest asserted by the objector
against the estates or properties of the Debtors
-- state with particularity the legal and factual basis for
such objections; and
-- be filed with the Clerk of the Bankruptcy Court, together
with proof of service, and served on:
Counsel for the Debtors:
Andrew N. Rosenberg, Esq.
Paul, Weiss, Rifkind, Wharton & Garrison LLP
1285 Avenue of the Americas
New York, New York 10019-6064
-- and --
Pauline K. Morgan, Esq.
Young Conaway Stargatt & Taylor, LLP
The Brandywine Building
1000 West Street, 17th Floor
P.O. Box 391
Wilmington, Delaware 19899-0391
Counsel for the Creditors' Committee:
Mark S. Indelicato, Esq.
Hahn & Hessen LLP
488 Madison Avenue
14th and 15th Floor
New York, New York 10022
-- and --
Mark E. Felger, Esq.
Cozen O'Connor
Chase Manhattan Centre
1201 North Market Street, Suite 1400
Wilmington, Delaware 19801
Counsel for the Ad hoc Bondholder Committee:
Paul D. Leake, Esq.
Jones Day
222 East 41st Street
New York, New York 10017
Counsel for the Debtors' Postpetition Bank Lenders:
Richard D. Feintuch, Esq.
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
-- and --
Mark D. Collins, Esq.
Richards, Layton & Finger, P.A.
One Rodney Square
920 N. King Street
P.O. Box 551
Wilmington, Delaware 19899
Counsel for The Prudential Insurance Company:
Barry N. Seidel, Esq.
King & Spalding LLP
1185 Avenue of the Americas
New York, New York 10036
-- and--
Robert J. Dehney, Esq.
Morris, Nichols, Arsht & Tunnell
1201 North Market Street
P.O. Box 1347
Wilmington, Delaware 19899
Counsel for the Indenture Trustee:
Glenn E. Siegel, Esq.
Dechert LLP
30 Rockefeller Plaza
New York, New York 10112
-- and --
Kevin Gross, Esq.
Rosenthal, Monhait, Gross & Goddess, P.A.
919 Market Street, Suite 1401
P.O. Box 1070
Wilmington, Delaware 19899
Office of the United States Trustee:
Joseph J. McMahon
U.S. Trustee for the District of Delaware
844 King Street, Room 2207
Wilmington, Delaware 19801
to be received no later than 4:30 p.m. on October 6, 2004.
Headquartered in Greensboro, North Carolina, Cone Mills
Corporation was one of the leading denim manufacturers in North
America.
The Company, with its debtor-affiliates filed for chapter 11
protection on September 24, 2003 (Bankr. Del. Case No. 03-12944).
Cone Mills filed a Chapter 11 Liquidation Plan following a sale of
substantially all of the company's assets to WL Ross & Co. in
March 2004, for $46 million plus assumption of certain
liabilities. WL Ross, in turn, merged Cone Mills' assets with
Burlington Industries' assets to form International Textile Group.
Pauline K. Morgan, Esq., at Young, Conaway, Stargatt & Taylor
represents the Debtors. When the Company filed for protection
from its creditors, it listed $318,262,000 in total assets and
$224,809,000 in total debts.
DAN RIVER: Files Joint Plan of Reorganization in Georgia
--------------------------------------------------------
Dan River Inc. and its debtor-affiliates filed a Joint Plan of
Reorganization with the U.S. Bankruptcy Court for the Northern
District of Georgia, Newnan Division. A full-text copy of the
Plan is available for a fee at:
http://www.researcharchives.com/download?id=040812020022
The Plan groups in a single class all claims against all of the
Debtors regardless of whether the claim can be asserted against
one or more Debtors.
The Plan groups claims and interests in seven classes and
describes the treatment of each:
Class Treatment
----- ---------
1 - Other Secure Claims Unimpaired. Unless agreed
otherwise by the holder and the
Debtors:
a) claims will be treated as a
legal, equitable and
contractual rights which
will be reinstated and the
holder paid in accordance with
such legal, equitable and
contractual rights;
b) the Debtors will surrender all
collateral securing such claim
to the holder in full
satisfaction without
representation or warranty by
or recourse against the Debtors
or Reorganized Debtors.
Any default with respect to any
Class 1 claim that occurred before
or after the commencement of the
chapter 11 cases shall be deemed
cured upon the Effective Date.
2 - Priority Claims Unimpaired. Unless otherwise
agreed by the holders of Class 2
claims and the Debtors:
a) to the extent then due and
owing on the Effective Date,
claims will be paid fully paid
in cash;
b) to the extent not due and owing
on the Effective Date, claims
will be fully paid in cash when
and such claims becomes due and
owing in the ordinary course of
business; or
c) claims will be treated in any
other manner so as to render it
unimpaired.
3 - American National Impaired. On the Effective Date,
Bank Claim the Bank will receive an amended,
modified and restated promissory
note.
4 - General Unsecured Claim Impaired. Will receive in full and
final satisfaction on:
i) the Initial Distribution Date;
or
ii) the first Distribution Date
after the date on which Class
4 claims become Allowed
Claims, such claims will share
pro-rata on the New Common
Stock.
5 - Unsecured Convenience Impaired. On the later of the
Claim Initial Distribution Date or the
date on which Class 5 becomes an
Allowed Claim, each holder
Will receive in full and final
satisfaction of cash payment equal
to 30% of Class 5 claim.
6 - Subordinated Claims Impaired. Will be cancelled and
fully extinguished on the
Effective Date of the Plan.
7 - Interests a) Dan River - Impaired. Will be
cancelled and fully
extinguished on the Effective
Date;
b) Bibb Interests - Unimpaired;
c) Dan River
International - Unimpaired;
d) Dan River Factory
Stores - Unimpaired.
Headquartered in Danville, Virginia, Dan River Inc.
-- http://www.danriver.com/-- is a designs, manufactures and
markets textile products for the home fashions, apparel fabrics
and industrial markets.
The Company and its debtor-affiliates filed for chapter 11
protection on March 31, 2004 (Bankr. N.D. Ga. Case No. 04-10990).
James A. Pardo, Jr., Esq., at King & Spalding represents the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $441,800,000 in
total assets and $371,800,000 in total debts.
DAN RIVER: Wants Until Dec. 27 to Make Lease-Related Decisions
--------------------------------------------------------------
Dan River, Inc., and its debtor-affiliates ask the U.S. Bankruptcy
Court for the Northern District of Georgia, Newnan Division, to
extend until December 27, 2004, the period within which they can
elect to assume, assume and assign, or reject unexpired leases of
nonresidential real property.
Because management's efforts are focused on the confirmation of
their Chapter 11 Plan, the operation of their businesses, and on
the orderly management of their chapter 11 cases, the Debtors have
not been able to evaluate all of the leases thoroughly to
determine which leases should be assumed or rejected in connection
with their restructuring.
Before making lease-related decisions, the Debtors want to solicit
the views of the members of the Official Committee of Unsecured
Creditors regarding the appropriate treatment of each lease.
Without an extension, the Debtors risk prematurely and
improvidently assuming leases that might later become a burden to
the estate or rejecting leases that might become critical to their
reorganization efforts.
Headquartered in Danville, Virginia, Dan River Inc.
-- http://www.danriver.com/-- is a designer, manufacturer and
marketer of textile products for the home fashions, apparel
fabrics and industrial markets.
The Company filed for chapter 11 protection on March 31, 2004
(Bankr. N.D. Ga. Case No. 04-10990). James A. Pardo, Jr., Esq.,
at King & Spalding represents the Debtors in their restructuring
efforts. When the Debtors filed for protection from their
creditors, they listed $441,800,000 in total assets and
$371,800,000 in total debts.
DELTA AIR: CEO Shares Cost Saving Measures with Employees
---------------------------------------------------------
Delta Air Lines' (NYSE: DAL) CEO, Gerald Grinstein, leads the way
in cutting the carrier's payroll costs by declining his salary for
the rest of the year.
Following the release of its transformation plan -- now dubbed The
Delta Solution -- on Sept. 8, Mr. Grinstein highlighted four key
components of the plan:
-- an across-the-board pay reduction of 10 percent for
executives, supervisory and administrative, and frontline
employees (with smaller reductions for some entry-level
positions);
-- increases to the shared cost of health care coverage;
-- a five-week, instead of a six-week, maximum annual vacation
accrual; and
-- the elimination of the Delta subsidy for retiree and
survivor health care coverage at age 65 and after, effective
for those retiring after January 1, 2006.
The pay and benefit changes for non-contract employees will not
take effect until January 1, 2005. To minimize the number of
involuntary reductions, the carrier will offer two voluntary exit
programs:
-- an early retirement medical option; and
-- a travel-based exit package.
The carrier is also developing an Employee Reward Program that
will provide a combination of equity, profit sharing, and
incentive payouts tied to employee performance.
Since last year, Delta's officer ranks have been reduced by 20
percent. Delta's executive compensation costs are projected to
drop 25 percent to 45 percent from 2003 to 2004.
These announced changes, together the key initiatives outlined in
Delta's transformation plan, are intended to result in more than
$1 billion of the more than $5 billion in total annual savings
targeted for 2006 as compared to 2002.
"We have a small window of opportunity available to us to avoid
Chapter 11 that some other carriers do not have," Mr. Grinstein
said in a statement. "It is in everyone's best interest that we
protect Delta's future by taking these steps together now."
Delta's pilots said Tuesday that they ratified an agreement
allowing Delta to employ newly retired pilots to prevent staffing
shortages, according to a report from the Associated Press.
"The same sense of urgency and spirit of cooperation needs to be
applied now to reach agreement on the $1 billion in permanent,
annual cost-savings Delta needs from its pilot group. These pilot
savings are part of a comprehensive cost reduction program, which
includes contributions from all of our employees, key stakeholders
and anticipated benefits from our Transformation Plan and Profit
Improvement Initiatives," Mr. Grinstein said.
Delta reported that its fuel bill this year will be $680 million
more than last year. The unrelenting pricing pressures and
internet fare shopping have taken a further toll on the Delta's
earnings.
About the Company
Delta Air Lines -- http://delta.com/-- is the world's second
largest airline in terms of passengers carried and the leading
U.S. carrier across the Atlantic, offering daily flights to 493
destinations in 87 countries on Delta, Song, Delta Shuttle, the
Delta Connection carriers and its worldwide partners. Delta's
marketing alliances allow customers to earn and redeem frequent
flier miles on more than 14,000 flights offered by SkyTeam,
Northwest Airlines, Continental Airlines and other partners.
Delta is a founding member of SkyTeam, a global airline alliance
that provides customers with extensive worldwide destinations,
flights and services.
* * *
As reported in the Troubled Company Reporter on Sept. 16, 2004,
Delta Air Lines filed a Form 8-K with the Securities and Exchange
Commission to make changes in its Annual Report on Form 10-K for
the year ended December 31, 2003.
The Annual Report is being revised so it may be incorporated into
another document. Since Delta filed the Annual Report with the
SEC, significant events have occurred which have materially
adversely affected Delta's financial condition and results of
operations. These events, which have been reported in Delta's
subsequent SEC filings, include a further decrease in domestic
passenger mile yield and near historically high levels of aircraft
fuel prices. The Annual Report has been revised to disclose these
events and the possibility of a Chapter 11 filing in the near
term. Additionally, as a result of Delta's recurring losses,
labor and liquidity issues and increased risk of a Chapter 11
filing, Deloitte & Touche LLP, Delta's independent auditors, has
reissued its Independent Auditors' Report to state that these
matters raise substantial doubt about the company's ability to
continue as a going concern.
As reported in the Troubled Company Reporter on August 23, 2004,
Standard & Poor's Ratings Services lowered Delta Air Lines, Inc.'s
corporate credit rating and the ratings on Delta's equipment trust
certificates and pass-through certificates to 'CCC'. Any out-of-
court restructuring of bond payments or a coercive exchange would
be considered a default and cause the company's corporate credit
rating to be lowered to 'D' -- default -- or 'SD' -- selective
default, S&P noted. Ratings on Delta's enhanced equipment trust
certificates, which are considered more difficult to restructure
outside of bankruptcy, were not lowered.
DELTA AIR: Names Carolyn Ezzell VP for Airport Customer Service
---------------------------------------------------------------
Delta Air Lines (NYSE: DAL) named Carolyn Ezzell as Vice President
- Airport Customer Service, East Region, effective Oct. 16. In
this position, Ms. Ezzell will oversee all aspects of Airport
Customer Service operations in 44 airports served by Delta along
the eastern United States, including growth in service North-to-
South on the east coast, one of Delta's key competitive strengths.
Ms. Ezzell replaces Joe Licitra who retired June 1, 2004.
"As part of Delta's transformation, we're growing service in the
East Region to better meet our customers' travel needs," said Rich
Cordell, senior vice president, Airport Customer Service.
"Carolyn is a customer service professional with the skills and
experience to guide the region through this growth and take Delta
into the future."
Since 2001, Ms. Ezzell guided sustained profitable growth and high
operational performance in Delta's Atlantic Region as Vice
President. She managed the region through expanded service
between the U.S. and London; flights to four new destinations in
Italy, and doubled frequencies to Paris. Ms. Ezzell also played
an important role in Delta's growing relationships with Air
France, Alitalia, Czech Airlines and KLM through the SkyTeam
alliance. During her tenure, the region implemented new customer
programs and services including:
-- expansion of international e-ticketing;
-- SkyBonus, Delta's global corporate online travel rewards
program; and
-- the delta.com tailored micro site for the UK.
Ms. Ezzell began her career at Delta in 1979 as a Methods Analyst
moving quickly to assume greater responsibility in various
operational roles.
Ms. Ezzell holds a Master of Arts from the University of North
Carolina and a Bachelor of Arts from Vanderbilt University.
About the Company
Delta Air Lines -- http://delta.com/-- is proud to celebrate its
75th anniversary in 2004. Delta is the world's second largest
airline in terms of passengers carried and the leading U.S.
carrier across the Atlantic, offering daily flights to 493
destinations in 87 countries on Delta, Song, Delta Shuttle, the
Delta Connection carriers and its worldwide partners. Delta's
marketing alliances allow customers to earn and redeem frequent
flier miles on more than 14,000 flights offered by SkyTeam,
Northwest Airlines, Continental Airlines and other partners.
Delta is a founding member of SkyTeam, a global airline alliance
that provides customers with extensive worldwide destinations,
flights and services.
* * *
As reported in the Troubled Company Reporter on Sept. 16, 2004,
Delta Air Lines filed a Form 8-K with the Securities and Exchange
Commission to make changes in its Annual Report on Form 10-K for
the year ended December 31, 2003.
The Annual Report is being revised so it may be incorporated into
another document. Since Delta filed the Annual Report with the
SEC, significant events have occurred which have materially
adversely affected Delta's financial condition and results of
operations. These events, which have been reported in Delta's
subsequent SEC filings, include a further decrease in domestic
passenger mile yield and near historically high levels of aircraft
fuel prices. The Annual Report has been revised to disclose these
events and the possibility of a Chapter 11 filing in the near
term. Additionally, as a result of Delta's recurring losses,
labor and liquidity issues and increased risk of a Chapter 11
filing, Deloitte & Touche LLP, Delta's independent auditors, has
reissued its Independent Auditors' Report to state that these
matters raise substantial doubt about the company's ability to
continue as a going concern.
As reported in the Troubled Company Reporter on August 23, 2004,
Standard & Poor's Ratings Services lowered Delta Air Lines, Inc.'s
corporate credit rating and the ratings on Delta's equipment trust
certificates and pass-through certificates to 'CCC'. Any out-of-
court restructuring of bond payments or a coercive exchange would
be considered a default and cause the company's corporate credit
rating to be lowered to 'D' -- default -- or 'SD' -- selective
default, S&P noted. Ratings on Delta's enhanced equipment trust
certificates, which are considered more difficult to restructure
outside of bankruptcy, were not lowered.
DELTA AIR: Taps James Sarvis to Lead Latin America & the Caribbean
------------------------------------------------------------------
Delta Air Lines (NYSE: DAL) promoted James Sarvis to director of
its Latin America & Caribbean business unit. Mr. Sarvis, a 30-
year Delta veteran and former field director for International
Services at Deltas Atlanta airport operation, replaces Jorge
Fernandez, who was recently named Delta's vice president
International and Alliances. The promotion is effective
October 4, 2004, and Mr. Sarvis will be based at Delta's world
headquarters in Atlanta, Georgia.
As director, Mr. Sarvis will have full operational and strategic
responsibility for Delta's growing Latin America & Caribbean
region, which currently offers more than 40 nonstop flights to
25 cities in 19 countries, including all airport customer service,
finance, human resources, marketing, reservations, sales and
corporate representation issues.
"James brings to the region a wealth of operational experience,
proven leadership skills and in-depth knowledge of the culture
that will be essential to Delta as it implements its
Transformation Plan, which calls for growing our top performing
Latin America & Caribbean business unit," said Mr. Fernandez.
Mr. Sarvis, 50, joined Delta in 1974 in San Juan, Puerto Rico and
since then has held positions of increasing responsibility and
leadership across the United States in operations and customer
services.
Most recently, Mr. Sarvis served as field director for the
carrier's international services at its primary hub in Atlanta,
where he:
* ensured the highest levels of customer service and safety for
all international flights originating in Atlanta;
* administered the ground-handling contracts for seven
international and domestic airlines;
* served as a liaison with the U.S. Department of Homeland
Security; and
* managed Deltas Atlanta airport safety program for 637 daily
flights and 4,400 employees.
Born in Philadelphia, Pennsylvania, and raised in San Juan, Puerto
Rico, Mr. Sarvis attended the University of Puerto Rico and speaks
English and Spanish fluently.
About the Company
Delta Air Lines -- http://delta.com/-- is proud to celebrate its
75th anniversary in 2004. Delta is the world's second largest
airline in terms of passengers carried and the leading U.S.
carrier across the Atlantic, offering daily flights to 493
destinations in 87 countries on Delta, Song, Delta Shuttle, the
Delta Connection carriers and its worldwide partners. Delta's
marketing alliances allow customers to earn and redeem frequent
flier miles on more than 14,000 flights offered by SkyTeam,
Northwest Airlines, Continental Airlines and other partners.
Delta is a founding member of SkyTeam, a global airline alliance
that provides customers with extensive worldwide destinations,
flights and services.
* * *
As reported in the Troubled Company Reporter on Sept. 16, 2004,
Delta Air Lines filed a Form 8-K with the Securities and Exchange
Commission to make changes in its Annual Report on Form 10-K for
the year ended December 31, 2003.
The Annual Report is being revised so it may be incorporated into
another document. Since Delta filed the Annual Report with the
SEC, significant events have occurred which have materially
adversely affected Delta's financial condition and results of
operations. These events, which have been reported in Delta's
subsequent SEC filings, include a further decrease in domestic
passenger mile yield and near historically high levels of aircraft
fuel prices. The Annual Report has been revised to disclose these
events and the possibility of a Chapter 11 filing in the near
term. Additionally, as a result of Delta's recurring losses,
labor and liquidity issues and increased risk of a Chapter 11
filing, Deloitte & Touche LLP, Delta's independent auditors, has
reissued its Independent Auditors' Report to state that these
matters raise substantial doubt about the company's ability to
continue as a going concern.
As reported in the Troubled Company Reporter on August 23, 2004,
Standard & Poor's Ratings Services lowered Delta Air Lines, Inc.'s
corporate credit rating and the ratings on Delta's equipment trust
certificates and pass-through certificates to 'CCC'. Any out-of-
court restructuring of bond payments or a coercive exchange would
be considered a default and cause the company's corporate credit
rating to be lowered to 'D' -- default -- or 'SD' -- selective
default, S&P noted. Ratings on Delta's enhanced equipment trust
certificates, which are considered more difficult to restructure
outside of bankruptcy, were not lowered.
DLJ COMMERCIAL: Fitch Affirms Low-B Ratings on Four Cert. Classes
-----------------------------------------------------------------
DLJ Commercial Mortgage Corp.'s commercial mortgage pass-through
certificates, series 1998-CG1, are upgraded by Fitch Ratings:
-- $78.2 million class A-3 to 'AA+' from 'AA';
-- $23.5 million class A-4 to 'AA-' from 'A+';
-- $70.4 million class B-1 to 'A-' from 'BBB+'.
In addition, Fitch affirms these classes:
-- $18.7 million class A-1A at 'AAA';
-- $835.3 million class A-1B at 'AAA';
-- $39.1 million class A-1C at 'AAA';
-- Interest-only class S at 'AAA';
-- $39.1 million class A-2 at 'AAA';
-- $23.5 million class B-2 at 'BBB';
-- $15.6 million class B-3 at 'BBB';
-- $66.5 million class B-4 at 'BB';
-- $15.6 million class B-5 at 'BB-';
-- $27.4 million class B-6 at 'B';
-- $15.6 million class B-7 at 'B-'.
Fitch does not rate the $14.9 million class C certificates.
The rating upgrades reflect the transaction's paydown which has
resulted in increased credit enhancement. As of the Sept. 2004
distribution date, the pool's aggregate certificate balance has
decreased by 16.0% since issuance, to $1.28 billion from
$1.56 billion.
Wachovia Securities, the master servicer, collected YE 2003
borrower operating statements for 89% of the pool's outstanding
balance. The weighted average DSCR for YE 2003 increased to 1.49
times (x) from 1.46x at issuance. Currently, there are six loans
(3.4%) in special servicing. The largest loan in special
servicing (1.5%), which is current, is collateralized by a
multifamily property located in Atlanta, Georgia. The second
largest loan (0.8%) is a retail property located in Austin, Texas.
The theatre space at the property remains vacant.
The three credit assessed loans (11.3% of the pool) remain
investment grade. Fitch reviewed operating statements analysis
reports and other performance information provided by Wachovia.
The DSCR for the loans are calculated based on a Fitch adjusted
net cash flow -- NCF -- and a stressed debt service based on the
current loan balance and a hypothetical mortgage constant.
The Rivergate Apartments (6.8%) is secured by a 706-unit apartment
building located in Manhattan, New York. As of YE 2003 the Fitch
NCF decreased 20.6% since YE 2002 and 9.6% since issuance. The
corresponding DSCR as of YE 2003 was 1.28x compared to 1.53x as of
YE 2002 and 1.36x at issuance. The decline was due to increased
concessions offered in 2003 and increased real estate taxes and
insurance since issuance. As of July 2004 the property reported
100% occupancy with no concessions offered.
The Camargue (2.0%) is secured by a 261-unit apartment building
located in Manhattan, New York. The YE 2003 Fitch NCF has dropped
slightly from YE 2002 but increased 16.9% since issuance. The
decline year-to-year was due to tenants vacating due to repairs.
The borrower has completed repairs and expects NCF to improve in
2004. The YE 2003 DSCR was 1.61x compared to 1.60x as of YE 2002
and 1.37x at issuance.
The Resurgens Plaza (2.3%) is secured by a 388,000 square foot
office building located in the Buckhead submarket of Atlanta,
Georgia. Occupancy as of YE 2003 was 88.5% compared to 89.6% as of
YE 2002 and 96.0% at issuance. Fitch will continue to monitor the
leasing activity at the property.
DLJ COMMERCIAL: Fitch Puts Low-B Ratings on Five Cert. Classes
--------------------------------------------------------------
DLJ Commercial Mortgage Corp.'s, series 1999-CG1, commercial
mortgage pass-through certificates are downgraded by Fitch:
-- $12.4 million class B-8 to 'CCC' from 'B-'.
In addition, Fitch affirms these classes:
-- $117.7 million class A-1A at 'AAA';
-- $686.2 million class A-1B at 'AAA';
-- Interest-only class S at 'AAA';
-- $58.9 million class A-2 at 'AA';
-- $65.1 million class A-3 at 'A';
-- $18.6 million class A-4 at 'A-';
-- $46.5 million class B-1 at 'BBB';
-- $15.5 million class B-2 at 'BBB-';
-- $37.2 million class B-3 at 'BB+';
-- $21.7 million class B-4 at 'BB';
-- $9.3 million class B-5 at 'BB-';
-- $12.4 million class B-6 at 'B+';
-- $12.4 million class B-7 at 'B'.
The $17.9 million class C is not rated by Fitch.
The downgrade of class B-8 is due to an increase in the amount of
expected losses on two of the specially serviced loans. As of the
September 2004 distribution date, four loans (3%) are in special
servicing. Of the four, one is current, one is real-estate owned
-- REO, one is in foreclosure, and one is 90 plus days delinquent.
As of the September 2004 distribution date, the pool's aggregate
principal balance has been reduced 8% to $1.13 billion from $1.24
billion at issuance. Wachovia Securities, the master servicer,
collected year-end 2003 borrower operating statements for 98% of
the pool's outstanding balance. The weighted average debt service
coverage ratio - DSCR -- for YE 2003 remained stable at 1.38x,
compared with 1.42x at issuance. To date, there has been $6.9
million in realized losses.
The largest specially serviced loan (1.2%), a limited-service
hotel located in Metaire, Louisiana is currently under contract
for sale. The sale price indicates a significant loss. The
second largest specially serviced loan (0.9%) is a retail property
located in Roanoke Rapids, North Carolina. The space vacated by
Kmart in June 2002 remains vacant, and the mall continues to
compete unfavorably with a nearby Wal-Mart Supercenter. The
special servicer is in negotiations with the borrower for a deed-
in-lieu of foreclosure.
The transaction contains one Fitch credit assessed loan. The
Winston hotel portfolio (5.7%) maintains a below investment-grade
credit assessment. The loan is secured by 14 limited service
hotels located in nine states. As of year-end 2003, the Fitch-
adjusted net cash flow -- NCF -- declined 38.9% since issuance.
The decline is attributed to a drop in the weighted average
occupancy to 66.5% as of YE 2003, compared with 78.7% at issuance.
As of YE 2003, the Fitch-adjusted DSCR was 1.36 times (x),
compared with 2.51x at issuance, based on the current loan balance
and a hypothetical mortgage constant. Fitch will continue to
monitor the performance of the collateral, as well as the
submarkets in which they are located.
DOCKSIDE REFRIGERATED: Judge Confirms Plan of Reorganization
------------------------------------------------------------
The Honorable Mary F. Walrath of the U.S. Bankruptcy Court for the
District of Delaware confirmed the Liquidating Plan of
Reorganization filed by Dockside Refrigerated Warehouse, Inc., and
its debtor-affiliates.
The Plan, filed on dated May 26, 2004, groups claims and interests
into 8 classes and describes the treatment of each:
Class Treatment
----- ---------
1 - Priority Non-Tax On the Distribution Date, each
Claims holder of an Allowed Class 1 will be
distributed on account of such claim a
cash payment equal to the amount of
its Allowed Priority Non-Tax Claim.
2 - Bank of New York Pursuant to the Global Settlement
Secured Claim Agreement, BNY waived any claims,
including deficiency claims that they
had or may have against the Debtor.
3 - FUNB Secured Claim FUNB waived and released all claims
against the Debtor after the
resolution of their adversary
proceeding.
4 - National Union National Union waived and released
Secured Claim all claims against the Debtor after
the resolution of their adversary
proceeding.
5 - Thomas Holt Senior On the Distribution Date or as soon
Secured Claim as applicable, Claim will be paid pro
rata of the remaining funds after
paying Classes 1-4.
6 - General Unsecured Will receive pro rata payment in cash
Claim on the later of the Distribution Date
or the date such claim becomes Allowed
by final order. No payment or
distribution will be paid to a
contested claim until such claim
becomes an Allowed Claim.
7 - Insider Claims On the Distribution Date or as soon as
practicable, will be paid together
with Class 5 its pro rata portion of
the remaining funds after payments to
Classes 1-4.
8 - Interests Will be cancelled on the Effective
Date.
Headquartered in Wilmington, Delaware, Dockside Refrigerated
Warehouse Inc., is a warehousing and storage company.
The Company and its debtor-affiliates filed for chapter 11
protection on May 21, 2001 (Bankr. D. Del. Case No. 01-00933).
Raymond H. Lemisch, Esq., Bradford J. Sandler, Esq., et al. at
Adelman Lavine Gold and Levin represent the Debtor in their
restructuring efforts.
ENRON CORP: ENA Asks Court to Okay ECS Sale of Compression Pacts
----------------------------------------------------------------
Enron North America Corp., an Enron Corporation debtor-affiliate
seeks the permission of the U.S. Bankruptcy Court for the Southern
District of New York to consent to the sale of certain assets
belonging to wholly owned non-debtor subsidiary, Enron Compression
Services Company, free of liens, claims and encumbrances to
Paragon ECS Holdings, LLC, subject to higher and better offers.
Specifically, the Assets to be sold are Compression Services
Agreements entered into by ECS with Transwestern Pipeline Company
and Florida Gas Transmission Company. The Assets will also
include the associated agreements necessary in the performance of
the obligations under the Transwestern and Florida Gas
Compression Services Agreements.
The Transwestern Assets
Pursuant to a Court-approved Settlement Agreement dated
April 30, 2004, Transwestern and ECS entered into three amended
and restated Compression Services Agreements:
1. Bisti Compression Services Agreement, effective June 1,
2004;
2. Bloomfield Compression Services Agreement, effective
June 1, 2004; and
3. Gallup Compression Services Agreement, effective June 1,
2004.
To perform its obligations under the Transwestern Compression
Services Agreements, ECS is also a party to 16 agreements with
Transwestern:
A. Transwestern Operations and Maintenance Agreements:
(1) the Amended and Restated O & M Agreement, effective
June 1, 2004, related to the compressor station
located in Bisti, New Mexico;
(2) the Amended and Restated O & M Agreement, effective
June 1, 2004, related to the compressor station
located in Bloomfield, New Mexico; and
(3) the Amended and Restated O & M Agreement, effective
June 1, 2004, related to the compressor station
located in Gallup, New Mexico;
B. Transwestern Leases:
(1) the Electric Motor Lease Agreement at the Bisti
Compressor Station entered into on May 28, 2004;
(2) the Electric Motor Lease Agreement at the Bloomfield
Compressor Station entered into on May 28, 2004; and
(3) the Electric Motor Lease Agreement at the Gallup
Compressor Station entered into on May 28, 2004;
C. Transwestern Power Purchase Agreements:
(1) the Power Sales Agreement dated September 9, 1996,
between ENA, as buyer, and the Navajo Tribal Utility
Authority, an enterprise of the Navajo Nation, as
seller, and subsequently assigned, through a series of
assignments, to ECS;
(2) the Electric Service Agreement dated March 20, 1999,
between Continental Divide Electric Cooperative, as
seller, and ECS, as buyer, and subsequently, through a
series of assignments, reassigned to ECS; and
(3) the General Service Agreement dated April 8, 1996,
between the City of Farmington Electric Utility System
of the City of Farmington, San Juan County, New Mexico,
as seller, and ENA, as buyer, and subsequently
assigned, through a series of assignments to ECS;
D. The Gallup Operational Control Agreement dated February 11,
2000, as amended and restated on June 1, 2004;
E. The Bisti Right-of-Way Letter Agreement dated July 30,
1996, with respect to the payments to be reimbursed by
Transwestern and paid to ENA in connection with the right-
of-way at the Bisti Station;
F. Transwestern Netting Agreements:
(1) the Netting Agreement at the Bisti Compressor Station
entered into on May 28, 2004;
(2) the Netting Agreement at the Bloomfield Compressor
Station entered into on May 28, 2004; and
(3) the Netting Agreement at the Gallup Compressor Station
entered into on May 28, 2004;
G. The Transwestern Expansion Letter Agreement dated May 28,
2004, between Transwestern and ECS regarding the expansion
of Gallup, Bisti and Bloomfield Compressor Stations; and
H. The Operating Procedure Agreement dated September 6, 1996,
among Public Service Company of New Mexico, Navajo Tribal
Utility Authority, Transwestern and ENA.
The Florida Gas Assets
ECS and Florida Gas are parties to that certain Amended and
Restated Compression Services Agreement at Compressor Station
13A, effective July 1, 2001, pursuant to which ECS provided
natural gas compression services to Florida Gas at the Compressor
Station 13 located in Washington County, Florida.
To perform its obligations under the Florida Gas Compression
Services Agreement, ECS is also a party to seven other agreements
with Florida Gas:
A. Florida Gas Operations and Maintenance Agreement at the
Florida Gas Station 13, entered into on March 20, 2000;
B. Florida Electric Motor Lease Agreement at the Florida Gas
Station 13, entered into on March 20, 2000;
C. Florida Gas Netting Agreement at Compressor Station 13A,
effective November 1, 2002;
D. Florida Gas Electric Service Purchase Agreement dated
February 13, 2001, between Gulf Power Company as seller and
ECS as buyer;
E. Contract Extension Letter Agreement dated January 7, 2003,
among Gulf Power, ECS and ENA on the extension of service
to electric compression associated with Florida Gas Station
13;
F. Line Extension Letter Agreement dated February 13, 2001,
among Gulf Power, ECS and ENA on the extension of electric
compression associated with Florida Gas Station 13; and
G. Redundant Transformer Letter Agreement dated February 13,
2001, among Gulf Power, ECS and ENA on the redundant
transformation facilities.
Marketing Efforts
Herbert K. Ryder, Esq., at LeBoeuf, Lamb, Greene & MacRae, LLP,
in New York, relates that since the Spring of 2004, ENA and ECS
have been marketing the Transwestern and Florida Gas Assets to
third parties. Because of the unique nature and location of the
Assets, the number of parties who would have interest in and use
for those agreements was somewhat limited. ENA initially
contacted approximately 150 interested companies or those who
will likely purchase the Assets. ENA received several bids for
only the Transwestern Assets or only the Florida Gas Assets.
Paragon offered the highest and best bid for the Assets, Mr.
Ryder states. On September 21, 2004, ECS and Paragon executed a
Purchase Agreement.
From their marketing efforts, ENA and ECS believe that:
(i) a prompt sale of the Assets is the best way to maximize
value; and
(ii) the sale of the Assets to Paragon under the terms and
conditions of the Purchase Agreement constitutes the
highest and best offer received so far.
The Purchase Agreement
The principal terms of the Purchase Agreement include:
A. Purchase Price
The Purchase Price will be equal to:
* $51,622,000 -- the Base Purchase Price; plus
* the assumption certain liabilities in accordance
with the provisions of the Purchase Agreement.
The Base Purchase Price will be adjusted at Closing.
B. Deposit
Paragon will deposit $51,622,000. The Deposit will either be:
* applied as a deposit towards the Purchase Price;
* returned to Paragon together with accrued interest in the
event that the Purchase Agreement is terminated in
certain limited circumstances; or
* paid to ECS in the event that the Purchase Agreement is
terminated in other certain limited circumstances.
C. Purchase Price Adjustment
The Base Purchase Price will be adjusted from July 30, 2004,
to the Closing Date due to forward price curve changes for
natural gas at Henry Hub as published by NYMEX for July 30,
2004.
D. Retained Liabilities
ECS retains responsibility for and agrees to pay, perform and
discharge certain liabilities, to the extent arising from or
attributable to certain reserved assets that are excepted from
the sale of the Assets.
E. Assumed Liabilities
In addition to the payment of the Purchase Price, at the
Closing, Paragon will assume and agree to pay, perform and
discharge when due, certain liabilities, including those
relating to the ownership, development, operation, use or
maintenance of the Assets.
F. Retained Liabilities
Paragon retains responsibility for the discharge of all
liabilities for payment of certain amounts, all liabilities
for all Taxes of ECS and all other liabilities, to the extent
arising from or attributable to the Reserved Assets.
G. Closing
The Closing will take place at the offices of LeBoeuf, Lamb,
Greene & MacRae, LLP, at 1000 Main Street, Suite 2550,
Houston, Texas 77002 at 10:00 a.m., local time, on the last
business day of the month after the conditions to Closing have
been satisfied or waived by the party entitled to waive, or at
another place, date and time as the parties may agree.
H. Termination
The Purchase Agreement may be terminated prior to the Closing
under certain circumstances including:
* at any time prior to the Closing, by the written consent
of both ECS and Paragon;
* by either ECS or Paragon if the Closing has not occurred
on or before December 31, 2004, provided that the
terminating party is not in default of its obligations
under the Purchase Agreement in any material respect;
* by either ECS or Paragon, if there will be any applicable
law that makes consummation of the transactions illegal
or prohibited; or
* by ECS, at any time after the Court approves an
alternative transaction, or Paragon, upon, but not
prior to, the financial closing of an Alternative
Transaction.
Mr. Ryder points out that Court approval is required as a
condition precedent to Closing.
Mr. Ryder tells the Court that ECS no longer has need of or use
for the Assets. ENA believes that the proposed sale of the
Assets and Assumed Liabilities to Paragon is preferable to ECS'
continued operation of the Assets.
The Purchase Agreement was negotiated at arm's length and in good
faith, and in ENA's business judgment represents fair market
value for the Assets. Accordingly, Mr. Ryder asserts that the
Court must permit ENA to consent to the sale of the Assets and
Assumed Liabilities to Paragon.
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. 126; Bankruptcy Creditors' Service, Inc., 15/945-7000)
ENRON CORP: Gas Transmission Wants $2.9 Million Admin Expense Paid
------------------------------------------------------------------
Gas Transmission Northwest Corporation, formerly known as PG&E
Gas Transmission Northwest Corporation, seeks payment for an
administrative expense claim resulting from postpetition
obligations due to certain transportation agreements with Enron
North America Corp. Gas Transmission asserts an administrative
expense claim for $2,881,345, which consists of:
-- $482,120 for postpetition gas transportation services;
-- $323,151 for postpetition "parking" of gas on its pipeline
and "usage" of its gas pursuant to a lending contract; and
-- $2,076,074 for reserved, firm, postpetition capacity on its
pipeline.
Gas Transmission asserts that it is entitled to receive immediate
payment of all postpetition amounts owed under the Transportation
Agreements. In the alternative, if Gas Transmission is not
allowed an administrative expense claim, it is entitled to a
general unsecured claim for the postpetition obligations and to
use ENA's parked gas to setoff a portion of the balance owed.
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)
EQUIFIN INC: Inks Pact to Sell Equinox Portfolio to Keltic Fin'l
----------------------------------------------------------------
EquiFin, Inc., (OTC BB:EQUI) signed a letter of intent for the
sale of the loan portfolio of its 81% owned subsidiary Equinox
Business Credit Corp., to Keltic Financial Partners, a private
commercial finance group based in Rye, New York. The sale is at
par value for the approximately $8.5 million dollar portfolio.
The consummation of the transaction is subject to certain
conditions including the finalization of a definitive purchase
agreement, which the parties expect to complete over the next
10 days, and to be in a position to close the proposed sale early
in November.
About EquiFin, Inc.
EquiFin, Inc., (AMEX:II AND II,WS) is a commercial finance company
providing a range of capital solutions to small and mid-size
business enterprises.
* * *
Going Concern Doubt
In its Form 10-KSB for fiscal year ended December 31, 2003 filed
with the Securities and Exchange Commission, Equifin, Inc.'s
independent public accountants reports:
"The Company incurred net losses and negative cash flows from its
operating activities during 2003 and 2002. As of March 12, 2004,
the Company did not have any other source of funds to replace the
funds provided by the credit facility when it expires in December
2004. Such matters raise substantial doubt about the Company's
ability to continue as a going concern."
EQUITY ONE: Moody's Places Ba1 Rating on $7.11M Class B-3 Certs.
----------------------------------------------------------------
Moody's Investors Service assigned a credit rating of Aaa to the
senior certificates issued in the Equity One Mortgage Pass-Through
Trust 2004-3, a securitization of subprime fixed-rate and
adjustable-rate residential mortgage loans. In addition, Moody's
assigned ratings ranging from Aa2 to Ba1 to the mezzanine and
subordinate classes of certificates.
According to Moody's analyst Amita Shrivastava, the credit quality
of the underlying loans is weaker than average for subprime
sector. The ratings of the certificates are based primarily on
the credit enhancement available from subordination,
overcollateralization, and excess spread.
The loan pool underlying the transaction consists of subprime
fixed- and adjustable-rate mortgage loans originated or purchased
by Equity One, Inc. The FRM loans make up 67% of the aggregate
pool and the ARM loans account for the other 33%.
The loans have weaker than average credit quality because of their
high loan to value -- LTV -- ratios. The pool's average combined
LTV of 84% is about 5% higher than what is typical for the
product. About 60% of the loans in the pool has LTV ratio greater
than 80%, with about 20% of the loans with combined LTV ratio
between 95% and 100%. The risk associated with the weaker
distribution of LTV ratios is partially offset by better borrower
quality. The pool's average FICO score of 645 is higher than that
of a typical subprime pool.
Issuer: Equity One Mortgage Pass-Through Trust 2004-3
Securities: Mortgage Pass-Through Certificates, Series 2004-3
Class Amount Rating
----- ------ ------
Class AF-1 $149,220,000 Aaa
Class AF-2 37,640,000 Aaa
Class AF-3 45,490,000 Aaa
Class AF-4 43,000,000 Aaa
Class AF-5 17,629,000 Aaa
Class AF-6 20,700,000 Aaa
Class AV-1 179,385,000 Aaa
Class AV-2 34,668,000 Aaa
Class M-1 41,040,000 Aa2
Class M-2 34,580,000 A2
Class M-3 10,340,000 A3
Class M-4 8,730,000 Baa1
Class B-1 8,080,000 Baa2
Class B-2 6,790,000 Baa3
Class B-3 7,110,000 Ba1
Equity One, Inc., is the primary servicer of the loans. The
company has headquarters in Marlton, New Jersey and is a wholly
owned subsidiary of Popular North America, Inc. As of
May 31, 2004, Equity One and its subsidiaries provided servicing
for approximately 72,342 loans with aggregate unpaid principal
balance of approximately $7.3 billion. Equity One is an average
primary servicer of residential mortgage loans. The company is
rated SQ3 by Moody's in the primary servicer category.
EVERGREEN RESOURCES: Completes $2.1 Billion Merger with Pioneer
---------------------------------------------------------------
Pioneer Natural Resources Company (NYSE:PXD) and Evergreen
Resources, Inc., (NYSE:EVG) completed their $2.1 billion merger in
which Evergreen has become a subsidiary of Pioneer and Evergreen
stockholders will receive new shares of Pioneer common stock and
cash. The transaction was completed after both Pioneer and
Evergreen obtained the required stockholder approvals for the
transaction at special meetings held today. Pioneer will continue
to be headquartered in Dallas and will retain Evergreen's Denver
offices as its base of operations in the Rockies.
"These new Rockies assets are a perfect fit for Pioneer," stated
Scott D. Sheffield, Pioneer's Chairman and CEO. "The Raton Basin
natural gas field expands our long-lived reserve foundation,
provides significant low-risk opportunity to add both reserves and
production and complements our growing exploration and
international portfolios."
The merger agreement permitted Evergreen stockholders to elect,
prior to the completion of the merger, among three types of
consideration for a share of Evergreen common stock:
(1) 1.1635 shares of Pioneer common stock, subject to
allocation and proration;
(2) $39.00 cash, subject to allocation and proration; or
(3) 0.58175 shares of Pioneer common stock and $19.50 in cash.
Evergreen stockholders who did not make an election prior to
completion of the merger will be deemed to have elected to receive
0.58175 shares of Pioneer common stock and $19.50 in cash per
Evergreen share. In addition, Evergreen stockholders will receive
additional cash consideration of $0.48 per share of Evergreen
common stock, which represents the pro rata gross proceeds less
transaction costs from Evergreen's sale of its Kansas properties
on September 27, 2004.
The merger agreement provides that the aggregate number of shares
of Pioneer common stock to be issued in the merger and the
aggregate amount of cash to be paid in the merger, excluding cash
paid with respect to Evergreen's Kansas properties, are each
subject to a limit that depends on the number of shares of
Evergreen common stock outstanding immediately prior to the
merger.
Immediately prior to the merger, there were 43.6 million shares of
Evergreen common stock outstanding. As a result, the aggregate
number of shares of Pioneer common stock to be issued in the
merger is 25.4 million and the aggregate amount of cash to be paid
in the merger is $871.4 million (including the consideration for
the Kansas properties). The elections made and deemed made by
Evergreen stockholders to receive shares of Pioneer common stock
as merger consideration exceeded the maximum number of Pioneer
shares issuable in the merger pursuant to the merger agreement.
Accordingly, the holders of Evergreen common stock who made
elections to receive all cash will receive, for each share of
Evergreen common stock, $39.00 in cash plus the $0.48 cash payment
with respect to the Kansas properties, and holders who made
elections to receive all Pioneer common stock will instead
receive, for each share of Evergreen common stock, 0.83746 shares
of Pioneer common stock and $10.93 in cash plus the $0.48 cash
payment with respect to the Kansas properties.
Pursuant to the terms of the merger agreement, stockholders who
elected to receive, for each share of Evergreen common stock,
0.58175 shares of Pioneer common stock and $19.50 in cash, plus
the $0.48 per share cash payment for the Kansas properties, will
receive the form of payment that they elected, and stockholders
who made no election will receive 0.58175 shares of Pioneer common
stock and $19.50 in cash, plus the $0.48 payment with respect to
the Kansas properties.
Two of Evergreen's directors -- Mark S. Sexton and Andrew D.
Lundquist -- will join Pioneer's board of directors. Mr. Sexton
will be a Class I director (term expiring at Pioneer's annual
meeting of stockholders in 2007). Mr. Lundquist will be a Class
III director (term expiring at Pioneer's annual meeting of
stockholders in 2006) and will serve on the compensation
committee.
About the Companies
Pioneer Natural Resources (BBB-/Negative/--) is a large
independent oil and gas exploration and production company with
operations in the United States, Argentina, Canada, Equatorial
Guinea, Gabon, South Africa and Tunisia. Pioneer's headquarters
are in Dallas. For more information, visit Pioneer's website at
http://www.pioneernrc.com/
Evergreen Resources (BB+/Watch Pos/--) is an independent energy
company engaged in the exploration, development, production,
operation and acquisition of unconventional natural gas
properties. Evergreen is one of the leading developers of coal
bed methane -- CBM -- reserves in the United States. Evergreen's
current operations are principally focused on developing and
expanding its coal bed methane project located in the Raton Basin
in southern Colorado. Evergreen has initiated a CBM project in
Alaska and is also in the process of acquiring unconventional
natural gas prospects in the Forest City Basin of eastern Kansas,
the Piceance Basin of western Colorado, the Uintah Basin of
eastern Utah, and Canada.
EXIDE TECH: Lead Claimants Want Referee to Distribute Funds
-----------------------------------------------------------
Antoine Dodd and 108 lead claimants are parties to a global
settlement reached just before confirmation of the Exide
Technologies and its debtor-affiliates' reorganization plan.
Pursuant to the global settlement, the aggregate amount of the
Dodd Claimants' claims was fixed in a single aggregate dollar
amount. The aggregate claim is an allowed Class P4-A Claim under
the confirmed Plan.
In essence, the settlement provides a fund comprised of the Dodd
Claimants' allocable amount of the stock and warrants being
distributed, and to be distributed in the future, to holders of
Allowed Class P4-A Claims. The Fund will be the source of
recovery for the 109 individual claims of the Dodd Claimants.
Thus, the Dodd Claimants want to:
(a) set mechanisms to allocate the Fund among them;
(b) preserve the value of the Fund with a professional
financial trustee; and
(c) make the ultimate distribution to the individual claimants
or their legal representatives.
Steven K. Kortanek, Esq., at Klehr, Harrison, Harvey, Branzburg &
Ellers, LLP, in Wilmington, Delaware, relates that the Dodd
Claimants comprise a unique group in that their claims result
from injuries received while minors. As a result, the Dodd
Claimants seek a process that fairly adjudicates these rights
and, on completion, allows final confirmation of the individual
distributions in the courts of general jurisdiction where the
claims arose.
Many of the Dodd Claimants are parties to numerous separate
prepetition lawsuits against the Debtors, which are pending in
three states. Those who had not filed suit as of the Petition
Date are nonetheless minors for whom some proceedings would be
necessary in state court with respect to the disposition of their
claims. Mr. Kortanek asserts that the Bankruptcy Court is the
only tribunal that can implement a procedure that covers each of
the Dodd Claimants in all three of the affected states.
Appointment of Special Referee
The Dodd Claimants propose to appoint a Special Referee that will
analyze and report to the Bankruptcy Court on the allocation of
the Fund among them. Mr. Kortanek explains that the Special
Referee needs to be able to access all available evidence
pertaining to the lead claims, interview the claimants and
relevant liability and damages witnesses, and ultimately provide
to the Bankruptcy Court a plan of distribution to each claimant.
Bankruptcy Court approval of the Distribution Plan must be
subject to a full disclosure to each individual claimant and the
right of each claimant to object to it. On receipt of the
Distribution Plan, and after a final hearing, the Dodd Claimants,
in the aggregate, would ask the Bankruptcy Court to approve the
Distribution Plan.
By this motion, the Dodd Claimants ask Judge Carey to approve
these procedures with respect to the mandate of the Special
Referee:
* The Court will appoint a Special Referee, whose
qualification include civil personal injury trial
experience, training and certification as a
mediator/arbitrator, and experience in resolving the
competing interests of multiple claimants drawing from a
common settlement fund;
* The Referee will be authorized to obtain all available
information and evidence concerning the claims of each
individual claimant. The Referee will have the authority
to interview the attorneys for the Dodd Claimants and have
access to all file information. In addition, the Referee
will have the authority to interview individual claimants,
review lay and expert witness testimony, and if necessary,
interview those witnesses;
* Upon conclusion of the Referee's investigation, the Referee
will be authorized to submit a preliminary written report,
which will include his plan and reasoning for the proposed
individual distributions of the Fund assets;
* The Preliminary Report will be mailed to each of the Dodd
Claimants and their attorneys, who will have 30 days to file
any written objections to the proposed distribution;
* The Referee will respond in writing to all written
objections without further delay. The response would be in
the form of a final report filed with the Bankruptcy Court
together with proof of service to all Dodd Claimants and
their counsel;
* Service of all required written notifications to the Dodd
Claimants and their attorneys will be deemed sufficient by
delivering via certified mail to the claimant's address;
* Not less than 20 days after the filing and service of the
Final Report, the Court will hold a hearing on notice to the
Dodd Claimants and their counsel. Objections to the Final
Report would be due no later than a week before the hearing;
* The Special Referee will have full authority to contact all
objectors to make reasonable attempts to resolve any
objections;
* At the hearing on the Final Report, the Bankruptcy Court
would consider the Report of the Referee, his testimony if
necessary, and the testimony and evidence of any objections.
Upon conclusion of the hearing, the Court will rule on the
proposed Distribution Plan set forth in the Final Report
based on the evidence and other submissions provided. The
Court will exercise its authority to accept, reject or alter
the distribution in the Final Report;
* Upon approval of the Final Report, the Bankruptcy Court
will authorize the Referee to submit the approved
Distribution Plan to the trustee for disbursement of funds.
If necessary, the Referee will be empowered to assist in
obtaining approval of funds disbursed to a minor in the
appropriate court;
* The Referee will be compensated at $250 per hour. In
addition, the Referee will be reimbursed all reasonable
expenses incurred. The Referee's fees and expenses will be
approved by the Bankruptcy Court on a monthly basis, with
any final bill to be submitted for approval within 45 days
after the Distribution Plan approval, unless good cause
exists for extension of the time period; and
* The Referee's completion of work to the point of submitting
a final Distribution Plan should occur no later than
October 18, 2004. The Bankruptcy Court may grant extensions
within its discretion.
The Dodd Claimants propose that James Watson be appointed as
Special Referee. Mr. Watson has substantial qualifications as a
litigator, with over 35 years experience, and a certified
mediator and arbitrator. He has received court appointments in
the past wherein he has served in capacities similar to those
proposed by the Dodd Claimants. Mr. Watson is a South Carolina
resident familiar with the jurisdiction from which the vast
majority of the lead claims emanate.
Establishment of a Trust
and Appointment of a Trustee
Since the Dodd Claimants collectively have a liquidated claim in
a total fixed sum, to be paid through the pro rata issuance of
stock and warrants, the Dodd Claimants ask the Bankruptcy Court
to establish a trust to receive and hold the entire Fund pending
the final resolution of the allocation process carried out by the
Special Referee. The Dodd Claimants also ask Judge Carey to
appoint a trustee with relevant experience in financial services
and investment advice.
Due to the very nature of the plan distributions, Mr. Kortanek
explains that the Trustee must be vested with the authority to
protect the value of Fund according the standards of a
professional trust fiduciary. The Trustee should be granted the
authority to sell stocks and warrants when necessary to preserve
the maximum value of the Trust. If sales of stock or warrants
occur during the life of the Trust, the trustee should be
authorized to marshal all amounts received into an account owned
by the Trust and administered by the Trustee. To protect the
minor claimants, the Trustee should be appropriately bonded.
Upon recommendation of the Special Referee as to the allocation
of trust assets to individual claimants and upon receiving any
necessary court approvals, the Trustee should be empowered to
distribute the funds, whether in the form of stocks, warrants, or
cash a combination of these to the individual claimants.
The Dodd Claimants propose that A.G. Edwards Trust Company FSB be
appointed as Trustee. Counsel to the Dodd Claimants has
interviewed representatives from Edwards Trust Company and
believes that the Firm is well qualified for the Trustee
position.
Headquartered in Princeton, New Jersey, Exide Technologies is the
world-wide leading manufacturer and distributor of lead acid
batteries and other related electrical energy storage products.
The Company filed for chapter 11 protection on April 14, 2002
(Bankr. Del. Case No. 02-11125). Matthew N. Kleiman, Esq., and
Kirk A. Kennedy, Esq., at Kirkland & Ellis, represent the Debtors
in their restructuring efforts. On April 14, 2002, the Debtors
listed $2,073,238,000 in assets and $2,524,448,000 in debts.
(Exide Bankruptcy News, Issue No. 53; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
FEDERAL-MOGUL: Asbestos PD Committee Wants $30,000 Fee Cap Lifted
-----------------------------------------------------------------
As previously reported, the Official Committee of Unsecured
Creditors appointed in the chapter 11 cases of Federal-Mogul
Corporation and its debtor-affiliates objected to the retention of
J.H. Cohn, LLP, by the Official Committee of Asbestos Property
Damage Claimants. The Creditors Committee alleged that the
services to be performed by J.H. Cohn were duplicative of services
rendered by its financial advisors.
To resolve the objection and in light of the possibility of a
consensual plan, the PD Committee and the Creditors Committee
agreed that J.H. Cohn will be retained subject to:
-- certain limits on the tasks to be performed to minimize
duplication, and
-- a $30,000 monthly limit.
The Court subsequently approved J.H. Cohn's retention subject to
those conditions, and without prejudice to any future request by
the PD Committee to seek a modification in the event circumstances
change.
Change In Circumstances
"Circumstances have now changed substantially," Asbestos PD
Committee Co-Chairman Daniel Speights tells Judge Lyons. "Since
the entry of [that] Order, the PD Committee has been unable to
reach agreement on a consensual plan with the Debtors and the
Committee."
The Plan structure is principally based on a compromise between
the Official Committee of Asbestos Personal Injury Claimants and
the Creditors Committee whereby the Noteholders will receive 49.9%
and asbestos personal injury claimants will receive 50.1% of the
common stock of Reorganized Federal-Mogul. Under the Plan,
asbestos property damage claims are classified as "General
Unsecured Claims" against either the U.S. Debtors or the U.K.
Debtors. General unsecured claimants with claims against the U.S.
Debtors will receive an estimated 35% of their claim under the
Plan. Claimants with claims against the U.K. Debtors will receive
an estimated recovery in a range between 3.8% and 7.2%, depending
on the U.K. Debtor estate involved and the outcome of the U.K.
Administration Proceeding.
Mr. Speights points out that the PD Committee was not a
participant in the negotiations that led to the compromise between
the Creditors Committee and the statutory committee of Asbestos
Bodily Injury Claimants, and does not support the Plan. Thus, the
PD Committee requires financial advisory services more complex
than contemplated under the Order to adequately represent the
interests of asbestos property damage claimants in opposing the
Plan.
In light of the proposed Plan and the proposed treatment of
property damage claims, the PD Committee wants J.H. Cohn to:
(1) advise the PD Committee and its counsel with respect to
the plan of reorganization process, including
investigation and testing of the valuations, projections,
claims estimates, and creditor recoveries on which the
Plan is premised;
(2) provide consulting and testifying expert services in
connection with any objection by the PD Committee to the
Plan; and
(3) advise the PD Committee with respect the U.K.
Administration Proceedings.
Mr. Speights adds that J.H. Cohn's current services have not been
duplicative of work performed on behalf of the Creditors Committee
by its professionals. J.H. Cohn will continue to avoid any
duplication of effort by utilizing work performed by other
professionals retained in Federal-Mogul's Chapter 11 cases
whenever appropriate.
Therefore, the PD Committee asks the Court to amend J.H. Cohn's
retention in these proceedings, by lifting the $30,000 monthly
financial restriction.
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)
FEDERAL-MOGUL: Sureties Want to Speed Up Discovery on Estimation
----------------------------------------------------------------
R. Karl Hill, Esq., at Seitz, VanOgtrop & Green, P.A., in
Wilmington, Delaware, relates that certain of the Federal-Mogul
Corporation Debtors and other companies formed the Center For
Claims Resolution in 1988, to administer, negotiate and settle
asbestos-related personal injury claims and wrongful death claims
brought against participants in CCR. After a year, CCR required
its members, including certain of the Debtors, to provide
assurance of payment of certain financial obligations to CCR. A
surety bond was considered an appropriate assurance of payment.
At the Debtors' request, in December 2000, four Sureties issued
surety bonds on their behalf in favor of CCR for $250 million:
(1) Safeco Insurance Company of America,
(2) Travelers Casualty and Surety Company of America,
(3) National Fire Insurance Company of Hartford, and
(4) Continental Casualty Company.
Pursuant to the terms of the Bonds, the maximum penal sum of the
Bonds reduced automatically and permanently semi-annually in
accordance with a schedule. As of the chapter 11 petition date,
the aggregate penal amount of the Bonds had reduced to
$225 million:
Surety Bond Amount
------ -----------
National Fire $67,500,000
Safeco 67,500,000
Travelers 90,000,000
To secure the Debtors' obligations under the Bonds and the
Debtors' applicable contractual and state law indemnity
obligations in connection with the Bonds, the Sureties were
granted certain liens on and security interests in the assets of
certain Debtors, including substantially all of the United States
assets of the U.S. Debtors.
The CCR Litigation
On November 23, 2001, the Debtors commenced an action against CCR
and the Sureties seeking a determination that any draw on the
Bonds by CCR or any payments on the Bonds by the Sureties would
violate the automatic stay under Section 362 of the Bankruptcy
Code. The CCR Litigation has been consolidated with similar
adversary proceedings against CCR and certain sureties commenced
in other Delaware bankruptcy cases by Armstrong World Industries,
Inc., and USG Corporation.
Judge Alfred M. Wolin, who had been assigned to the five asbestos-
related bankruptcy cases pending in the United States Bankruptcy
Court for the District of Delaware, including the Debtors'
bankruptcy cases, withdrew the reference with respect to the CCR
Litigation and the other consolidated adversary proceedings.
Case management orders entered in the CCR Litigation in March and
June 2002 provides that:
(a) All draws on the Bonds were enjoined through the
conclusion of a trial in the CCR Litigation or other Court
order; and
(b) "Phase One" issues in the CCR Litigation involved whether
CCR had a right to draw on the Bonds and "Phase Two"
issues involved the specific amounts that CCR would be
entitled to draw on the Bonds if it prevailed on the Phase
One issues.
The parties filed cross-motions for summary judgment on the Phase
One issues, with the Sureties supporting the Debtors' position
that CCR was prevented from drawing on the Bonds.
On March 28, 2003, Judge Wolin issued a partial summary judgment
on the issue of whether CCR could draw on the Bonds for
prepetition amounts, which are determined to be due under the
terms of the Bonds and related agreements. Judge Wolin found that
CCR could not draw on the Bonds until CCR's prepetition claim is
determined in Phase Two of the CCR Litigation.
Each of the Sureties filed proofs of claim against the Debtors
obligated on the Sureties' claims, which arise out of or relate to
the Bonds and related agreements. The amount of the Surety Claims
against the Debtors will depend, in part, on the outcome or
resolution of Phase Two of the CCR Litigation.
Therefore, until the CCR Litigation is fully and finally resolved
including all appeals, CCR could assert claims under the Bonds up
to the $225 million aggregate penal amount under the Bonds.
Based on the positions of the Plan Proponents and CCR, the
Sureties' claims against the Debtors in connection with the Bonds
could range from less than $30 million to $183 million, or higher.
Under the proposed Plan, the Surety Claims could be treated as
secured, unsecured or partially secured and partially unsecured
claims against the Debtors depending on the result of the CCR
Litigation and the Avoidance Litigation.
According to the Voting Procedures Order, proofs of claim that
have not yet been disallowed or that are not the subject of a
pending objection, and that are filed as wholly unliquidated,
contingent, or disputed, will be entitled to only a $1 claim for
voting purposes.
Mr. Hill asserts that the Surety Claims are not subject to a
pending objection but as a result of the CCR Litigation, were
filed as unliquidated, contingent and disputed. The Voting
Procedures Order also recognizes the applicability of Rule 3018(a)
of the Federal Rules of Bankruptcy Procedure, which is to
temporarily allow claims of creditors in a different amount than
that which is proposed by the Debtors under the Voting Procedures
Order.
Therefore, for the limited purpose of voting on the Plan, the
Sureties ask the Court to temporarily allow the Surety Claims:
-- in the aggregate amount of up to $183 million plus the
attorney's fees and costs incurred in connection with the
Bonds; and
-- as a Class C-Secured Claim and as a Class H Unsecured Claim
in amounts to be determined by the Court against each of
the Debtors obligated on the Surety Claims except T&N
Limited and Gasket Holdings, Inc., against whom the Surety
Claims will only be a Class H-Unsecured Claim.
Sureties Seek to Expedite Discovery
According to Neal Levitsky, Esq., at Fox, Rothschild, LLP, in
Wilmington, Delaware, although settlement negotiations involving
the Plan Proponents, the Center for Claims Resolution, Inc., and
the Sureties continue, no resolution has been reached. The
Sureties currently anticipate that the Plan Proponents will
contest the Estimation Motion.
The Estimation Motion will require a determination, for voting
purposes only, of the amount of the Sureties' claims and the
secured and unsecured nature of those claims. The issues likely
to be addressed in making those determinations will be extensive
and will include:
(a) analyses of the status of thousands of alleged settlements
of asbestos claims arranged prepetition by CCR; and
(b) the valuation of the assets and liabilities of at least 18
of the Debtors.
The Sureties will be serving discovery, including document
requests and interrogatories, on various parties, including
certain of the Plan Proponents and CCR, since:
(a) much of the information necessary to resolve the
Estimation Motion is not within the possession or control
of the Sureties;
(b) the information and documents requested are anticipated to
be voluminous; and
(c) the issues to be resolved are complex.
The Sureties also anticipate taking depositions once the responses
to the written discovery are received, Mr. Levitsky advises.
With the impending November 3, 2004, voting and objection deadline
and December 9, 2004, Confirmation Hearing, the Sureties asks the
Court to establish an expedited discovery schedule concerning the
Estimation Motion.
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)
FOOTSTAR INC: Completes $20 Million Gaffney Sale to Automated Data
------------------------------------------------------------------
Footstar, Inc., completed the sale of its distribution center in
Gaffney, South Carolina to Automated Distribution Systems, L.P., a
third party distribution and logistics solutions provider. The
gross value of the sale transaction was $20,250,000, and net
proceeds to Footstar after fees were approximately $18,800,000.
On August 20, 2004, the Company had announced an agreement,
subject to a Court-supervised auction and Bankruptcy Court
approval, to sell the Gaffney facility to ADS for approximately
$15 million. Following an auction held on September 14, 2004, the
Court last week approved the sale of the Gaffney facility to ADS
for $20.25 million after ADS emerged as the highest bidder in the
auction process. Footstar had wound down its operations at the
Gaffney distribution center following the sale of the Company's
athletic footwear business in May 2004.
Headquartered in West Nyack, New York, Footstar Inc., retails
family and athletic footwear. As of August 28, 2004, the Company
operated 2,373 Meldisco licensed footwear departments nationwide
in Kmart, Rite Aid and Federated Department Stores. The Company
also distributes its own Thom McAn brand of quality leather
footwear through Kmart, Wal-Mart and Shoe Zone stores.
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.
GLOBAL CROSSING: Nasdaq Extends Filing Compliance to Oct. 8
-----------------------------------------------------------
Global Crossing (Nasdaq: GLBCE) said the NASDAQ Listing
Qualifications Panel granted the company's request for an
extension until October 8, 2004, to return to full compliance with
NASDAQ listing and Securities Exchange Commission filing
requirements.
As previously announced, Global Crossing expects to return to
compliance with SEC filing requirements by Friday, Oct. 8, 2004.
As reported in the Troubled Company Reporter on Sept. 22, Grant
Thornton LLP informed Global Crossing's Audit Committee that it
currently anticipates it will be in a position to reissue its
audit reports on the company's 2001 and 2002 financial statements
and the company's restated 2003 financial statements, subject to
its satisfaction with the results of certain additional procedures
and management representations.
In this regard, Grant Thornton has advised the Audit Committee
that it can no longer rely on representations made by a senior
officer in the company's finance department. The officer has been
reassigned to a position outside of the company's financial
reporting function. Global Crossing has engaged FTI Consulting
Inc., an independent authority on accounting matters, to assist
the company in performing additional procedures and providing
additional support for management's representations to Grant
Thornton. The company expects that these actions will be
completed by October 8, 2004.
Headquartered in Florham Park, New Jersey, Global Crossing Ltd.
-- http://www.globalcrossing.com/-- provides telecommunications
solutions over the world's first integrated global IP-based
network, which reaches 27 countries and more than 200 major cities
around the globe. Global Crossing serves many of the world's
largest corporations, providing a full range of managed data and
voice products and services.
The Company filed for chapter 11 protection on January 28, 2002
(Bankr. S.D.N.Y. Case No. 02- 40188). When the Debtors filed for
protection from their creditors, they listed $25,511,000,000 in
total assets and $15,467,000,000 in total debts. Global Crossing
emerged from chapter 11 on Dec. 9, 2003.
GOLF TRUST: Delays Form 8-K/A Filing on Record Unit Ownership
-------------------------------------------------------------
Golf Trust of America, Inc. (AMEX:GTA) expects that the filing of
its amended Form 8-K relating to the Westin Innisbrook Golf Resort
will be delayed.
The Company filed a Form 8-K on July 29, 2004, describing certain
events related to the settlement of a number of issues involving
the Resort. As described in that Form 8-K, a subsidiary of the
Company took ownership of the Resort pursuant to a settlement
agreement among the parties as described therein following the
default of Golf Host Resorts, Inc., on the $79 million loan made
by Golf Trust of America, L.P., an affiliate of the Company, to
the Borrower.
The Company's July Form 8-K stated that the required financial
statements and pro forma financial information related to the
transactions described therein would be filed by Sept. 28, 2004,
as required by applicable federal securities laws. In order to
file the required financial statements and pro forma information
related to the transactions, the Company must allocate the
implicit purchase price of the Resort and the related entities
acquired. Allocating the implicit purchase price requires the
Company to record all of the assets and liabilities of the Resort
and the related entities acquired on the opening balance sheets of
the legal entities established for the purpose of holding the
assets and liabilities of the Resort and the related entities.
As part of the process of allocating the implicit purchase price
of the Resort and related entities acquired, management determined
that it was necessary to review and update, if necessary, the
estimate of the Resort's fair value. The Resort's fair market
value is currently estimated to be $44.2 million based on a study
that was commissioned in July of 2003, as described more fully in
the Company's public filings.
The Company engaged its financial advisors to update the study of
the fair value of Resort's real estate and the Resort's intangible
value. Pursuant to the Company's management agreement with
Westin, Westin will submit to the Company by not later than
November 1, 2004, a proposed operating plan and budget for 2005
together with annualized projections of certain financial
categories for the two operating years thereafter and a five-year
plan for the Resort. Therefore, the Company's management has
elected to delay the filing of the amendment to the July Form 8-K
so that the Company's management and financial advisors have the
benefit of this information in updating the study of fair value of
the Resort completed in July of 2003.
The Company believes that this information will enable the Company
to communicate more accurate information to its stockholders when
it files by amendment the financial statements and pro forma
financial information related to the transactions described in the
July Form 8-K. As consistently stated in the Company's prior
filings with the Securities and Exchange Commission, its
assessment of the Resort's fair value may decline at some future
date, based on facts and circumstances prevailing at that time,
and that the asset may be written-down in the future.
The Company expects to file an amendment to the July Form 8-K to
include the required financial statements and pro forma financial
information prior to such time as its Form 10-Q for the third
quarter of 2004 must be filed.
Subsequent to its most recent report on Form 10-Q, the Company
consummated the closings of the disposition of two of its five
remaining assets, Black Bear Golf Club and Wekiva Golf Course.
The Company does not at the present time anticipate a change in
the plan of liquidation described in that report on Form 10-Q with
respect to the Resort and the other two remaining assets, other
than a possible adjustment of the valuation of the Resort
resulting for management's consideration of a variety of factors,
the single most important of which is the updated study of the
Resort.
About the Company
Golf Trust of America, Inc., formerly a real estate investment
trust, is now engaged in the liquidation of its interests in golf
courses in the United States pursuant to a plan of liquidation
approved by its stockholders. After the sale, the Company owns an
interest in three properties (7.0 eighteen-hole equivalent golf
courses). Additional information regarding Golf Trust of America,
Inc., is available in Golf Trust's filings with the Securities and
Exchange Commission and on the Company's website at
http://www.golftrust.com/
HAYMOND NAPOLI DIAMOND PC: Voluntary Chapter 11 Case Summary
------------------------------------------------------------
Debtor: Haymond Napoli Diamond, PC
aka Hochberg Napoli Diamond
950 North Kings Highway, Suite 101
Cherry Hill, New Jersey 08034
Bankruptcy Case No.: 04-40905
Type of Business: Five-lawyer law firm with offices in New Jersey,
Pennsylvania and Connecticut, representing
plaintiffs in personal injury cases.
Chapter 11 Petition Date: September 27, 2004
Court: District of New Jersey (Camden)
Judge: Judith H. Wizmur
Debtor's Counsel: Benjamin Reich, Esq.
Pace, Reich P.C.
726 Meetinghouse Road
Elkins Park, Pennsylvania 19027
Tel: (215) 887-0130
Estimated Assets: $100,000 to $500,000
Estimated Debts: $1 Million to $10 Million
The Debtor did not file a list of its 20 largest unsecured
creditors.
HILL COUNTRY: 2005 Budget Prompts S&P to Hack Rating to CC from A-
------------------------------------------------------------------
Standard & Poor's Ratings Services lowered its rating on Hill
Country Juvenile Facility Corp., Texas' lease revenue bonds
outstanding, supported by Kerr County, Texas, 13 notches to 'CC'
from 'A-' due to the county commissioners' adoption of a fiscal
2005 budget that fails to appropriate funds to pay debt service on
the lease revenue bonds. The outlook is negative.
The rating agency also lowered its rating on the county's general
obligation bonds outstanding four notches to 'BBB-' from 'A' based
on this action by the county commissioners. The outlook is stable.
The 'CC' rating indicates that the facility corporation's lease
revenue bonds are highly vulnerable to nonpayment.
The last lease payment was made on Aug. 15, 2004; and the next
lease payment is due on Feb. 15, 2005. Currently, the debt
service reserve fund has a roughly $410,000 balance, which can be
used by the bond trustee to satisfy fiscal 2005 debt service
payments.
Management expected lease payments to be made from revenues
received through the facility's operation, subject to annual
appropriation by the county. Payments received through contracts
between Kerr County Juvenile Board and other Texas counties for
juvenile detention were the primary revenue source to make lease
payments, but management could have used other revenue sources to
make lease payments. Since revenue is now significantly lower
than was originally projected due to state funding cuts and a
decline in demand, county officials would have needed to
supplement the facility's operation had they decided to keep the
facility open.
The negative outlook on the facility corporation's lease revenue
bonds reflects the expectation that there will not be any
available funds to pay debt service after fiscal 2005. The stable
outlook on the county's general obligation bonds reflects the
county's credit characteristics.
The rating actions affect roughly $5 million of revenue debt
outstanding and roughly $430,000 of general obligation debt
outstanding.
HORIZON RESOURCES: Venable's Efforts Helped Cut Labor Costs $800MM
------------------------------------------------------------------
Horizon Natural Resources' $786 million asset sale to an investor
group led by Wilbur Ross -- scheduled to close yesterday but
blocked by U.S. District Court Judge Henry Wilhoit, Jr., at the
request of the United Mine Workers of America -- is predicated on
obtaining relief from $800 million in labor, pension and health
care obligations. Lawyers in Venable LLP's Labor Group were
instrumental in obtaining those reductions.
The transaction would likely not have occurred had attorneys from
Venable LLP, acting as special labor counsel for the bankrupt
estate, not been able to obtain approximately $800 million in
relief from labor and long-term pension and health care
obligations. The elimination of these liabilities was approved in
a decision on August 6 issued by the U.S. Bankruptcy Court for the
Eastern District of Kentucky.
"The Bankruptcy Code affords a business with overwhelming short-
and long-term labor costs the opportunity to resurrect the value
of its assets," said Venable labor partner David Smith, Esq., who
led the negotiations with Horizon's key union.
Venable's Labor Group, utilizing Section 1113 and Section 1114 of
the U.S. Bankruptcy Code, developed a collective bargaining
strategy and timetable for the purpose of either obtaining a
concessionary agreement with the relevant union or positioning the
Debtor-In-Possession to obtain significant relief from the court.
Following intense and complex union negotiations, a petition was
filed with the Bankruptcy Court to relieve Horizon's ten unionized
subsidiaries of obligations under their individual labor contracts
and statutory retiree health care benefits.
The Bankruptcy Court granted the petition in full by authorizing
rejection of all of the collective bargaining agreements and
termination of the retiree medical benefits paid directly by these
companies. The decision was significant in that the court
embraced an important legal theory favorably reconciling two
competing federal statutes.
If you would like a copy of the decision contact Robin Brassner at
rbrassner@aol.com or Lisa DeFrank at ladefrank@venable.com
As one of The American Lawyer's top 100 law firms, Venable LLP has
lawyers practicing in all areas of corporate and business law,
complex litigation, intellectual property and government affairs.
Venable serves corporate, institutional, governmental, nonprofit
and individual clients throughout the U.S. and around the world
from its base of operations in and around Washington, DC.
U.S. Bankruptcy Judge William S. Howard confirmed Horizon
Natural Resources' plan of reorganization on Sept. 1, 2004.
The plan divides Horizon into two new entities, International Coal
Group and Old Ben Coal Company. Wilbur L. Ross, Jr., Chairman of
International Coal Group said, "With the cooperation of the Office
of Surface Mining and the states of Kentucky, West Virginia,
Illinois, Indiana and Tennessee, we have created the fifth largest
U.S. coal company, an enterprise free of contingent liabilities.
Our one billion tons of steam coal reserves and $600 million of
highly profitable projected 2005 revenues will provide a basis for
consolidating other producers. Furthermore, Old Ben has been
provided with resources estimated to be adequate to deal with its
reclamation liabilities and to continue mining those properties
that have economically recoverable reserves. We are proud that the
plan meets the regulators' primary objective of leaving no permit
behind."
Daniel J. Geiger has been appointed CEO of Old Ben Coal Company.
He had been Vice President, Engineering of James River Coal
Company since 1982. He holds a B.S. in Civil Engineering from Ohio
State University.
Headquartered in Ashland, Kentucky, Horizon Natural Resources
(f/k/a AEI Resources Holding, is one of the United States' largest
producers of steam (bituminous) coal. The Company filed for
chapter 11 protection on February 28, 2002 (Bankr. E.D. Ky. Case
No. 02-14261). Ronald E. Gold, Esq., at Frost Brown Todd LLC,
represents the Debtor in its restructuring efforts. When the
Company filed for protection from its creditors, it listed over
$100 million in total assets and total debts.
The United Mine Workers of America's appeal to the U.S. District
Court is docketed as Case No. 04-CV-171 (E.D. Ky.).
INDYMAC HOME: Moody's Reviewing Ba2 & Caa3 Ratings & May Downgrade
------------------------------------------------------------------
Moody's Investors Service placed under review for possible
downgrade five certificates previously issued by IndyMac Home
Equity Mortgage Loan Asset Backed Trust, Series SPMD 2000-C. The
securitization is backed by subprime mortgage and manufactured
housing loans that were originated by IndyMac Bank F.S.B.
The certificates were previously downgraded in April 2003 due to
higher-than-anticipated rates of default on the loans backing the
certificates and by the low rates of recovery currently realized
on the sale of repossessed manufactured homes. The erosion of
credit support and continued pipeline of seriously delinquent
loans could jeopardize the current ratings associated with the
certificates being placed on review.
The transaction has lender-paid mortgage insurance, which will
reduce the severity of loss associated with many of the riskier
loans, including the manufactured housing loans. However, the
mortgage insurance may not fully insulate investors against the
losses associated with defaulted loans.
IndyMac Bank F.S.B. is servicing the transaction and Deutsche Bank
National Trust Company is the trustee.
Moody's complete rating actions are:
Issuer: IndyMac Home Equity Mortgage Loan Asset Backed Trust,
Series SPMD 2000-C
Depositor: IndyMac ABS, Inc
Review for Downgrade:
* Series 2000-C; Class MF-1, current rating A2, under review
for possible downgrade
* Series 2000-C; Class MF-2, current rating Baa2, under review
for possible downgrade
* Series 2000-C; Class BF, current rating Caa3, under review
for possible downgrade
* Series 2000-C; Class MV-2, current rating Baa2, under review
for possible downgrade
* Series 2000-C; Class BV, current rating Ba2, under review for
possible downgrade
INTERSTATE BAKERIES: Look for Bankruptcy Schedules by Nov. 21
-------------------------------------------------------------
Section 521(1) of the Bankruptcy Code requires all Chapter 11
debtors to prepare and deliver to the Court comprehensive
schedules of assets and liabilities and a statement of financial
affairs disclosing a variety of prepetition transactions. Rule
1007 of the Federal Rules of Bankruptcy Procedure requires a
debtor to deliver these documents to the Clerk's office within 15
days following the Petition Date.
Paul M. Hoffman, Esq., at Stinson Morrison Hecker, LLP, in Kansas
City, Missouri, tells Judge Venters that Interstate Bakeries and
its debtor-affiliates, besides having several thousands of
creditors and parties-in-interest, operate their businesses from
over 2,000 locations. Moreover, as a result of Program SOAR --
Systems Optimization And Re-engineering -- which largely
centralizes the Debtors' administrative operations, much of the
information necessary to complete the Statements and Schedules
remains at the Debtors' 54 bakeries, 1,000 depots, and 1,200
thrift stores.
Mr. Hoffmann believes that while the Debtors have commenced the
task of gathering the necessary information to prepare and
finalize what will be voluminous Schedules and Statements, the
15-day automatic extension of time to file these Schedules and
Statements provided by Bankruptcy Rule 1007(c) will not be
sufficient to permit completion of the Schedules and Statements.
Thus, the Debtors sought and obtained an extension of the filing
deadline to November 21, 2004.
Headquartered in Kansas City, Missouri, Interstate Bakeries
Corporation is a wholesale baker and distributor of fresh baked
bread and sweet goods, under various national brand names,
including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R),
Merita(R) and Drake's(R). The Company employs approximately 32,000
in 54 bakeries, more than 1,000 distribution centers and 1,200
thrift stores throughout the U.S.
The Company and seven of its debtor-affiliates filed for chapter
11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No.
04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at
Skadden, Arps, Slate, Meagher & Flom LLP represent the Debtors in
their restructuring efforts. When the Debtors filed for
protection from their creditors, they listed $1,626,425,000 in
total assets and $1,321,713,000 (excluding the $100,000,000 issue
of 6.0% senior subordinated convertible notes due August 15, 2014
on August 12, 2004) in total debts. (Interstate Bakeries
Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
INTERSTATE BAKERIES: Cash Management System Will Remain Intact
--------------------------------------------------------------
Interstate Bakeries Corporation and its debtor-affiliates sought
and obtained the Court's authority to continue using their
existing cash management system, as it may be modified in
connection with their DIP financing.
Paul M. Hoffmann, Esq., at Stinson Morrison Hecker, LLP, in
Kansas City, Missouri, relates that before the Petition Date, in
the ordinary course of their business, the Debtors used an
automated and integrated cash management system to collect,
transfer, and disburse funds generated by their operations and to
accurately record all these transactions as they are made.
The Debtors' centralized Cash Management System was designed to
facilitate the flow of funds collected by deliverymen and
bakeries to the main concentration account. Payments are
collected from customers via checks, cash, and wire transfer
payments to various accounts. Sales receipts are collected
by route delivery representatives, retail stores, and bakeries.
The funds are deposited in local bank accounts and transferred to
bakery bank accounts. The funds in the bakery bank accounts are
then transferred to the concentration account held by Interstate
Brands at UMB Bank, N.A.
Deposits and Receivables
(a) Local Bank Accounts
The Debtors maintain hundreds of bank accounts at the
local level with various financial institutions. The
Local Bank Accounts are used as a daily depository for the
funds collected by RDRs and thrift store sales.
Approximately 20% of daily deliveries are collected in
cash, with approximately 80% of the deliveries billed by
the local bakery to the customer. Each day, funds at the
Local Bank Accounts are transferred through an ACH
transfer or a depository transfer check is written on the
Local Bank Accounts and the funds collected for the day
are transferred to bank accounts maintained by the
bakeries.
(b) Bakery Depository Accounts
Each bakery maintains one or more depository accounts, and
in addition may utilize lockbox accounts. Each bakery is
responsible for collecting accounts receivable for sales
to customers within its region. The bakery accounts
receivable are collected by RDRs at the time of delivery
or through invoices distributed by the bakery to the
customer. Some customers will remit payments to a bakery
lockbox account or plant delivery account. Each day the
bakeries notify the Debtors of the amount collected and
deposited in the Bakery Accounts. The Debtors will then
initiate an electronic ACH transaction to transfer all of
the funds in the Bakery Accounts to the Interstate Brands
Concentration Account held at UMB.
(c) California Bank Accounts
The Debtors maintain bank accounts in California with Bank
of America for collecting all receipts from RDRs and
bakeries located in California. In addition, sales from
the dry goods division and Mrs. Cubbison's Foods, Inc.,
are deposited in a California Bank of America account.
RDRs and bakeries deposit funds they have collected at a
local branch of Bank of America on a daily basis. The
funds deposited at the local branches are transferred to a
concentration account maintained at Bank of America.
Payroll and workers compensation disbursements are made to
employees located in California from two accounts drawn on
Bank of America.
(d) General Office Account
Interstate Brands maintains a bank account with U.S. Bank
in Kansas City, Missouri, for the deposit of miscellaneous
receipts, like rebate checks from vendors, accounts
receivable erroneously submitted to the headquarters of
Interstate Brands, or checks cashed by employees. Funds
in the General Office Depository Account are transferred
to the Concentration Account periodically.
(e) National Account Collection
Interstate Brands maintains centralized billing practices
for some large customers with national accounts.
Interstate Brands coordinates the accounts receivable
collection for national customers. The funds remitted by
the national customers are deposited directly into the
Concentration Account.
Disbursements and Payables
Mr. Hoffmann informs the Court that the Debtors' disbursements
and payables accounts are, for the most part, controlled
centrally at Interstate Brands. Vendor invoices are submitted to
Interstate Brands where wire transfers or checks are cut.
Payroll checks are processed at the local level, but the checks
are drawn on a controlled disbursement account maintained at
either UMB and funded by the Concentration Account for non-
California bakery employees, or Bank of America for California
bakery employees.
(a) Disbursement Accounts
The Debtors maintain eight active disbursement accounts at
UMB. The disbursement accounts are maintained at UMB
specifically for payroll, certain employee benefit plan
payments, certain tax payments, and certain accounts
payable. The disbursement accounts are funded from the
Concentration Account. In addition to the Disbursement
Accounts, the Debtors allow certain parties to withdraw
funds from the Concentration Account through ACH transfer.
CIGNA pays health care claims on behalf of the Debtors
through ACH transfers from the Concentration Account.
Likewise, ACE USA, Travelers, Broadspire, and
Kemper/Lumbermen's pay workers' compensation and liability
claims on behalf of the Debtors through ACH transfers from
the Concentration Account. The Debtors also allow their
third party administrators for freight to withdraw funds
from the Concentration Account through ACH transfer.
(b) Payroll Accounts
The Debtors maintain three accounts for payroll. Payroll
disbursements to bakery employees in California are made
through an account maintained by a California branch of
Bank of America. The Bank of America Payroll Account is
funded by the Bank of America Concentration Account, or
otherwise funded by the Concentration Account at UMB.
Payroll disbursements to the remaining non-California
bakery employees are made through a zero balance
disbursement account maintained at UMB. Payroll
disbursements to employees at the Debtors' corporate
headquarters are made through a separate UMB zero balance
controlled disbursement account. The Debtors do not
utilize direct deposit at this time.
(c) Vendor Accounts Payable
The Debtors maintain multiple accounts for certain vendor
accounts payable. The Debtors maintain disbursement
accounts at UMB for the accounts payable of their current
enterprise resource planning software vendor (SAP) and
their legacy system (CDIS). In addition, the accounts
payable for the dry goods division and Mrs. Cubbison's
Foods, Inc., are paid through two separate disbursement
accounts maintained by the Debtors at UMB. The Debtors
also allow their freight auditor and administrator (DLT)
to withdraw amounts for the payment of certain of the
Debtors' freight and shipping vendors, through an ACH
transfer.
(d) Sales and Use Tax
The Debtors maintain an account at UMB for the payment of
Sales and Use Tax. The Debtors' tax advisor, Ernst &
Young, calculates the sales and use tax payable and is
responsible for making payment directly to the taxing
authorities for the amount of sales and use tax payable
from this account.
Present Cash Management System Must be Maintained
Mr. Hoffmann states that the Cash Management System includes
accounting controls needed to enable the Debtors, as well as
creditors and the Court, if necessary, to trace funds through the
system and ensure that all transactions are adequately documented
and readily ascertainable.
Moreover, the cash management procedures utilized by the Debtors
are ordinary, usual and essential business practices, and are
similar to those used by other large corporate enterprises. The
Cash Management System provides significant benefits to the
Debtors, including the ability to reduce administrative expenses
by facilitating the movement of funds and the development of more
timely and accurate balance and presentment information. Mr.
Hoffmann contends that requiring the Debtors to adopt new cash
management systems at this critical stage of their Chapter 11
cases would be expensive, would create unnecessary administrative
burdens and problems, and would likely disrupt and adversely
impact the Debtors' ability to reorganize successfully.
Requiring Cash Management System changes could irreparably harm
the Debtors, their estates and their creditors by creating cash
flow interruptions while systems are changed.
Headquartered in Kansas City, Missouri, Interstate Bakeries
Corporation is a wholesale baker and distributor of fresh baked
bread and sweet goods, under various national brand names,
including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R),
Merita(R) and Drake's(R). The Company employs approximately 32,000
in 54 bakeries, more than 1,000 distribution centers and 1,200
thrift stores throughout the U.S.
The Company and seven of its debtor-affiliates filed for chapter
11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No. 04-
45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at
Skadden, Arps, Slate, Meagher & Flom LLP represent the Debtors in
their restructuring efforts. When the Debtors filed for
protection from their creditors, they listed $1,626,425,000 in
total assets and $1,321,713,000 (excluding the $100,000,000 issue
of 6.0% senior subordinated convertible notes due August 15, 2014
on August 12, 2004) in total debts. (Interstate Bakeries
Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
KMART CORP: Wants to Replace Trumbull with BSI as Claims Agent
--------------------------------------------------------------
As previously reported, Kmart Corporation and its debtor-
affiliates sought to employ AlixPartners, LLC, as Claims and
Noticing Agent replacing The Trumbull Group, LLC, for the
remainder of their Chapter 11 cases. The Debtors amends their
request to replace Trumbull with Bankruptcy Services, LLC,
instead.
As Claims and Noticing Agent, Bankruptcy Services will:
(a) maintain a register of all proofs of claim and proofs of
interest filed in the Debtors' bankruptcy cases, which
will include, for each creditor or interest holder:
-- the name and address of the creditor or interest
holder;
-- the date the proof of claim or interest was received
by Trumbull or Bankruptcy Services;
-- the claim number assigned to the proof of claim or
interest;
-- the asserted amount and classification of the claim;
and
-- the applicable debtor against which the claim or
interest is asserted;
(b) maintain custody of the original proofs of claim and
proofs of interest and ballots submitted by creditors and
interest holders in the Debtors' Chapter 11 cases;
(c) provide access to the public for examination or copies of
the proofs of claim or interest filed in the Debtors'
cases without charge during regular business hours;
(d) provide a copy of the claims register, or of any proof of
claim or ballot, on request by the Clerk of the Bankruptcy
Court or any party-in-interest;
(e) record on the claims register any notices of transfers of
claims;
(f) prepare and serve notices in the Debtors' cases and,
without further delay, file with the Clerk's office a
certificate or affidavit of service;
(g) implement necessary security measures to ensure the
completeness and integrity of the claims registers;
(h) maintain an up-to-date mailing list for all entities that
have filed proofs of claim or interest and make the list
available upon request to the Clerk's office or any
party-in-interest;
(i) prepare affidavits or other statements from data,
documents and files received from Trumbull or otherwise
maintained or filed in the Debtors' cases, regarding the
service of any notice or pleading and any other matters
reflected in the document and files; and
(j) perform other functions and duties in the Debtors' cases
as performed by Trumbull or as generally performed by
claims agents in other bankruptcy cases.
The Debtors has not previously employed Bankruptcy Services for
any purpose and Bankruptcy Services has not been engaged to
perform any services in the Debtors' Chapter 11 cases.
To date, about 57,000 Proofs of Claim have been filed against the
Debtors in the Chapter 11 cases. As of July 20, 2004, about
7,000 claims remain unresolved. William J. Barrett, Esq., at
Barack, Ferrazzano, Kirschbaum, Perlman & Nagelberg, LLC, in
Chicago, Illinois, relates that due to the large number of claims
filed, it would be an enormous burden on the Clerk's office to
process and maintain the claims.
The Debtors believe that the most effective and efficient manner
by which to accomplish the process of docketing, maintaining and
scanning the Proofs of Claim is for them to employ a qualified
service firm to serve as Claims and Noticing Agent of the
Bankruptcy Court.
Because the Debtors' Chapter 11 cases are winding down, the volume
of work that must be performed by the Claims and Noticing Agent
has declined and will continue to decline. Thus, Mr. Barrett
notes, substantial cost savings can be achieved by replacing
Trumbull with Bankruptcy Services.
Bankruptcy Services is a large, claims processing firm that
currently or recently served as claims and noticing agent to AMF
Bowling, Adelphia Communications, Bethlehem Steel, Enron Corp.,
Spiegel, Inc., and Zenith Industries.
The Debtors will pay Bankruptcy Services' professionals at these
rates:
Professional Rate per hour
------------ -------------
Kathy Gerber $210
Senior Consultants 185
Programmer 130 to 160
Associate 135
Data Entry/Clerical 40 to 60
Headquartered in Troy, Michigan, Kmart Corporation (n/k/a KMART
Holding Corporation) -- http://www.bluelight.com/-- is the
nation's second largest discount retailer and the third largest
merchandise retailer. Kmart Corporation currently operates
approximately 2,114 stores, primarily under the Big Kmart or Kmart
Supercenter format, in all 50 United States, Puerto Rico, the U.S.
Virgin Islands and Guam.
The Company filed for chapter 11 protection on January 22, 2002
(Bankr. N.D. Ill. Case No. 02-02474). Kmart emerged from chapter
11 protection on May 6, 2003. John Wm. "Jack" Butler, Jr., Esq.,
at Skadden, Arps, Slate, Meagher & Flom, LLP, represented the
retailer in its restructuring efforts. The Company's balance
sheet showed $16,287,000,000 in assets and $10,348,000,000 in
debts when it sought chapter 11 protection. (Kmart Bankruptcy
News, Issue No. 81; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
LEHMAN ABS: Moody's Junks Two Certificate Classes
-------------------------------------------------
Moody's Investors Service downgraded the ratings of six senior and
all mezzanine and subordinate certificates from the Lehman 2001-B
manufactured housing securitization. The Class A-7 certificates
are not being downgraded as they benefit from an insurance policy
issued by Ambac Assurance Corporation. The rating action
concludes Moody's rating review, which began on August 12, 2004.
The rating action was prompted by the weaker-than-anticipated
performance of this pool. Delinquencies and repossessions have
exceeded original expectations. As of the September 15, 2004
remittance report, cumulative losses and cumulative repossessions
for the transaction totaled 5.43% and 9.36%, respectively, with
68.41% of the pool still outstanding. Loss severities for the
past 6 months have been close to 70%.
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: Lehman ABS Manufactured Housing Contract
Senior/Subordinate Asset-Backed Certificates
Series: 2001-B
* Notional, 1.10% Class A-IO2 Certificates, downgrade from Aaa
to A1
* Notional, Variable Rate Class A-IOC Certificates, downgraded
from Aaa to A1
* 3.01% Class A-1 Certificates, downgraded from Aaa to A1
* 3.70% Class A-2 Certificates, downgraded from Aaa to A1
* 4.35% Class A-3 Certificates, downgraded from Aaa to A1
* 5.27% Class A-4 Certificates, downgraded from Aaa to A1
* 5.87% Class A-5 Certificates, downgraded from Aaa to A1
* 6.47% Class A-6 Certificates, downgraded from Aaa to A1
* 6.63% Class M-1 Certificates , downgraded from Aa2 to Baa3
* 7.17% Class M-2 Certificates, downgraded from A2 to B2
* 7.82% Class B-1 Certificates, downgraded from Baa2 to Caa2
* 7.93% Class B-2 Certificates, downgraded from Ba2 to Caa3
The contracts in the pool were originated by The CIT Group/Sales
Financing, Inc., and The CIT Group/Consumer Finance, Inc. In
April 2002, CIT discontinued the origination of manufactured home
financing.
LIFEPOINT HOSPITALS: Hart-Scott-Rodino Waiting Period Expires
-------------------------------------------------------------
LifePoint Hospitals, Inc., (NASDAQ:LPNT) and Province Healthcare
Company (NYSE:PRV) jointly said the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 expired with
respect to LifePoint Hospital's pending acquisition of Province
Healthcare. Completion of the transaction remains subject to
approvals of each company's stockholders, receipt of necessary
financing and certain other conditions. The transaction is
expected to close in the first quarter of 2005.
As previously announced on August 16, 2004, LifePoint Hospitals
has agreed to acquire Province Healthcare for approximately
$1.7 billion in cash, stock and the assumption of debt. The
transaction will create a leading hospital company focused on
providing healthcare services in non-urban communities, with 50
hospitals, approximately 5,263 beds and combined revenues of
approximately $1.7 billion in 2003. Of the combined 50 hospitals,
47 will be in markets where LifePoint Hospitals will be the sole
community hospital provider.
About Province Healthcare
Province Healthcare, a provider of healthcare services in
attractive non-urban markets in the United States, owns or leases
20 general acute care hospitals in 12 states with approximately
2,492 licensed beds.
About LifePoint Hospitals
LifePoint Hospitals, a provider of healthcare services in
attractive non-urban markets in the United States, owns 30 general
acute care hospitals in nine states with approximately
2,771 licensed beds.
Important Legal Information
In connection with the proposed transaction, LifePoint Hospitals
and Province Healthcare intend to file with the Securities and
Exchange Commission a joint proxy statement/prospectus, as part of
a Registration Statement on Form S-4, and other relevant
materials. The joint proxy statement/prospectus will be mailed to
the stockholders of LifePoint Hospitals and Province Healthcare.
Investors and security holders are advised to read the joint proxy
statement/prospectus, registration statement and other relevant
materials when they become available, as well as any amendments or
supplements to those documents, because they will contain
important information about LifePoint Hospitals, Province
Healthcare and the proposed transaction. In addition, the joint
proxy statement/prospectus, registration statement and other
relevant materials filed by LifePoint Hospitals or Province
Healthcare with the SEC may be obtained free of charge at the
SEC's web site at http://www.sec.gov/ In addition, investors and
security holders may obtain free copies of the documents filed
with the SEC by LifePoint Hospitals by contacting:
LifePoint Hospitals, Inc.
Investor Relations
103 Powell Court, Suite 200
Brentwood, Tennessee, 37027
Phone: (615) 372-8500
and by Province Healthcare by contacting:
Province Healthcare Company
Investor Relations
105 Westwood Place, Suite 400
Brentwood, Tennessee, 37027
Phone: (615) 370-1377.
LifePoint Hospitals and Province Healthcare, and their respective
directors and executive officers, may be deemed to be participants
in the solicitation of proxies from their respective stockholders
with respect to the transactions contemplated by the merger
agreement. Information about the directors and executive officers
of LifePoint Hospitals, and their interests in the transactions
contemplated by the merger agreement, including their ownership of
LifePoint Hospitals common stock, is set forth in the proxy
statement for LifePoint Hospitals' 2004 annual meeting, which was
filed with the SEC on April 28, 2004. Information about the
directors and executive officers of Province Healthcare, and their
interests in the transactions contemplated by the merger
agreement, including their ownership of Province Healthcare common
stock, is set forth in the proxy statement for Province
Healthcare's 2004 annual meeting, which was filed with the SEC on
April 20, 2004. Investors and security holders may obtain
additional information regarding the interests of such potential
participants by reading the joint proxy statement/prospectus and
the other relevant documents filed with the SEC when they become
available.
* * *
As reported in the Troubled Company Reporter on August 25, 2004,
Moody's Investors Service placed the ratings of LifePoint
Hospitals, Inc., LifePoint Hospital Holdings, Inc., and Province
Healthcare Company on review for possible downgrade. The rating
action follows the announcement by LifePoint that it has entered
into an agreement to purchase Province in a transaction valued at
approximately $1.7 billion including the assumption of Province's
debt by LifePoint. The ratings placed on review for possible
downgrade are:
LifePoint Hospitals, Inc. (parent)
-- Ba3 senior implied rating
-- B2 senior unsecured issuer rating
-- $250 million 4.5% convertible subordinated notes due
2009, rated B3
LifePoint Hospital Holdings, Inc. (operating company)
-- $200 million senior secured revolving credit facility
due 2006, rated Ba2
Province Healthcare Company
-- Ba3 senior implied rating
-- $210 million senior secured revolving credit facility
due 2006, rated Ba3
-- B2 senior unsecured issuer rating
-- $200 million senior subordinated notes due 2013,
rated B3
-- $172.5 million convertible subordinated notes due 2008,
rated B3
Moody's review will primarily focus on LifePoint's ability to
service its new, and significantly higher, debt burden with free
cash flow from operations. While the combination of LifePoint and
Province will diversify LifePoint's revenues and cash flows,
Moody's will consider the capital needs of the combined company
going forward. Specifically, Moody's is concerned about the
existing capital projects in development at Province and the
effect these capital projects will have on free cash flow in the
face of significantly higher debt loads at LifePoint.
Upon completion of its review and the closing of the transaction,
Moody's would likely withdraw the ratings of Province. This
assumption is based on the fact that LifePoint has stated its
intention to refinance or force conversion for all of Province's
existing debt.
METUCHEN HEART: Case Summary & 15 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Metuchen Heart Associates, PA
aka South Brunswick Family Practice
fka ECP Heart
fka Sleep Disorder Center
fka Diagnostic Vascular Imaging Associates
481 Memorial Parkway
Metuchen, New Jersey 08840
Bankruptcy Case No.: 04-40930
Type of Business: Physician's office with diagnostic
laboratories.
Chapter 11 Petition Date: September 27, 2004
Court: District of New Jersey (Newark)
Judge: Chief Judge Rosemary Gambardella
Debtor's Counsel: Bruce D. Buechler, Esq.
Lowenstein Sandler PC
65 Livingston Avenue
Roseland, New Jersey 07068
Tel: (973) 597-2308
Total Assets: $526,450
Total Debts: $2,557,731
Debtor's 15 largest unsecured creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Jerome Dreskin Personal/Business $100,000
Loan
Joseph Tabak Personal/Business $85,822
Loan
Phillips Medical Capital Business Debt $56,392
Heller, Horowitz & Feit Lindenfeld Court $45,000
Attorney for Lindenfeld Settlement
Department of Treasury Taxes $25,057
Mironov, Sloan & Parziale LLC Legal $25,000
Internal Revenue Service 1997 Taxes $15,812
Komoroski & Smorol Mortgage/Lease $14,794
The Travelers AMD Trade Debt $14,127
South Brunswick Township Real Estate and $14,000
Tax Collectors Office Sewer Taxes
Department of Revenue & Taxes $13,154
Finance
Caligor Physician & Hospital Trade Debt $12,465
Supply
Wuersch and Gareng LLP Legal $12,207
Image First Business Debt $12,181
fka Nixon Uniform Service
InfoCure/VitalWorks Business Debt $11,670
NATIONAL CENTURY: Court Refuses to Quash July Subpoena to PwC
-------------------------------------------------------------
Judge Calhoun of the U.S. Bankruptcy Court for the Southern
District of Ohio denies the request of PricewaterhouseCoopers to
quash the Rule 2004 subpoena of the 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 PwC.
The Debtors asserted that PricewaterhouseCoopers did not properly
explain why the topics for deposition are inappropriate.
"[T]there is no requirement that information sought from a party
be relevant only as to claims against that party; indeed, many of
the targets of Rule 2004 discovery are asked for information in
their possession but are not themselves likely targets of claims,"
Ms. Ballesteros says. "If after appropriate diligence, they do
not have knowledge on a topic, they can answer simply that they do
not have knowledge sufficient to answer the questions propounded."
As reported in the Troubled Company Reporter on Sept. 01, 2004,
PwC asked the Court to quash the Debtors' Rule 2004 subpoena for
the oral examination of a Civil Rule 30(b)(6) corporate
representative of PwC.
PricewaterhouseCoopers, LLP, was the predecessor auditor for
National Century Financial Enterprises, Inc., and has audited
NCFE's financial statements for the years ended 1995, 1996, 1997
and 1998. PwC's last audit opinion was dated August 10, 1999,
more than three years before the Petition Date. Hence, PwC
asserted that it is much removed from the events that precipitated
the Debtors' collapse.
Tiffany C. Miller, Esq., at Bailey Cavalieri, Esq., in Columbus,
Ohio, told the U.S. Bankruptcy Court for the Southern District of
Ohio that despite the passage of time since PwC's audit engagement
ended, PwC has been a recurring target of the Debtors' efforts to
obtain discovery pursuant to Rule 2004 of the Federal Rules of
Bankruptcy Procedure. In response, PwC has produced to the
Debtors over 29,000 pages of documents consisting of all of PwC's
workpapers on the engagements it performed for NCFE. Ms. Miller
relates that the Debtors have impermissibly made these materials
available to civil plaintiffs who have already sued PwC and have
used the documents to their benefit in the Multidistrict
Litigation currently pending before Judge Graham.
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)
NEWAVE INC: Forms New Subsidiary to Penetrate eBay Market
---------------------------------------------------------
NeWave, Inc., (OTC Bulletin Board: NWAV) formed a new subsidiary,
Auction Liquidator, Inc., to pursue opportunities within the eBay
"drop-off" store arena.
NeWave Chairman Michael Novielli stated, "The evolution of eBay
continues with the dawn of consignment or drop-off stores.
Customers wishing to sell their goods on eBay but either lacking
technical knowledge or desiring convenience are now able to drop
off the items at a "soon to be announced" retail location near
their home and Auction Liquidator will take it from there. The
items will be shipped at our cost to our fulfillment center in
Long Beach, California, where they will be detailed, prepped and
subsequently auctioned on eBay. Once the item is sold, a check
from the sale proceeds will be forwarded to the customer, less
commissions to Auction Liquidator and eBay. Should the auction be
unsuccessful, the item is returned to the customer at no cost."
NeWave CEO Michael Hill commented, "Our research has indicated
that there are a number of companies which have recently entered
this market with great fanfare, but few currently have the ability
to actually deliver as advertised, as they lack the
infrastructure, logistics capacity or traffic to achieve critical
mass. We plan to launch Auction Liquidator by leveraging our
current membership at Online Supplier as well as the approximately
7,000 new inquiries Online Supplier receives every day. We
believe our in-house customer database give us a tremendous
competitive advantage over the many upstarts vying for this
business. We are continuing to develop new strategies for
diversifying our model and adding to our top-line growth."
eBay.com is a worldwide marketplace with over 100 million
registered users who utilize the internet to buy and sell a wide
array of products. eBay itself commissioned a consultant to study
the potential market of gross merchandise sales generated by drop-
off stores and concluded that it was approximately $5-$10 billion
annually.
Auction Liquidator is scheduled to begin operations by
November 1, 2004.
About NeWave, Inc.
NeWave, Inc., through its wholly owned subsidiary
Onlinesupplier.com offers a comprehensive line of products and
services at wholesale prices through its online club membership.
Additionally, NeWave's technology allows both large complex
organizations and small stand-alone businesses to create, manage,
and maintain effective website solutions for e-commerce. To find
out more about NeWave, visit http://www.newave-inc.com/or
http://www.onlinesupplier.com/
* * *
As reported in the Troubled Company Reporter's June 8, 2004,
edition, Kabani & Company's report on the Company's consolidated
financial statements for the fiscal years ended December 31, 2003,
and December 31, 2002, included an explanatory paragraph
expressing substantial doubt about NeWave's ability to continue as
a going concern.
NEXTEL PARTNERS: Raises Adjusted EBITDA Guidance to $370 Million
----------------------------------------------------------------
Nextel Partners, Inc., (Nasdaq:NXTP) is increasing its full-year
2004 Adjusted EBITDA guidance by approximately 9% from
$340 million to $370 million, implying a 101% increase in Adjusted
EBITDA over the company's 2003 Adjusted EBITDA of $183.8 million.
"The preliminary year-to-date results indicate that Nextel
Partners is tracking very well with respect to our annual guidance
and is meaningfully exceeding previous expectations for Adjusted
EBITDA in 2004," said Rowan. "We look forward to sharing further
details with you on our third quarter earnings call next month."
About the Company
Nextel Partners was established to construct and operate digital
wireless communications services under Nextel Communications'
brand name in midsize and smaller cities throughout the U.S. Many
of these markets are contiguous to Nextel Communications' existing
properties. Like Nextel Communications, Nextel Partners
exclusively uses Motorola's iDEN technology, which allows wireless
services to be provided over lower special mobile radio
frequencies. At the end of first-quarter 2004, there were about
1.3 million subscribers, with a substantial mix of these in the
construction, transportation, manufacturing, government, and
services sectors. Although Nextel Communications owns about 31%
of Nextel Partners, it does not provide any credit support to the
company.
At June 30, 2004, Nextel Partners, Inc.'s balance sheet showed a
$19,322,000 stockholders' deficit, compared to a $13,296,000
deficit at December 31, 2003.
* * *
As reported in the Troubled Company Reporter on May 26, 2004,
Standard & Poor's Rating Services assigned its 'B+' bank loan
rating, along with a recovery rating of '3', to the $800 million
senior secured credit facility of Nextel Partners Operating Corp.,
a wholly owned subsidiary of Kirkland, Washington-based wireless
carrier Nextel Partners Inc.
In addition, a 'B-' rating has been assigned to Nextel Partners'
$25 million 8.125% senior notes due 2011, issued under Rule 144A
with registration rights.
The rating on Nextel Partners' senior unsecured debt was affirmed
at 'B-' and removed from CreditWatch, where it was placed with
positive implications May 7, 2004. The 'B+' corporate credit
rating also was affirmed. The outlook remains stable.
"The rating on Nextel Partners is dominated by financial risks
associated with the company's still aggressive leverage, which was
about 5.5x debt to annualized EBITDA (about 5.8x after adjusting
for operating leases) for the quarter that ended in March 2004,"
said Standard & Poor's credit analyst Michael Tsao. "The high
leverage is mainly a legacy of the company's use of substantial
debt to finance the building of a network and operating losses
that typically occur in the early stages of a business. Somewhat
mitigating these risks is Nextel Partners' good competitive
position, and solid EBITDA and free cash flow prospects."
OWENS CORNING: Files Post-Hearing Substantive Consolidation Brief
-----------------------------------------------------------------
Owens Corning and its debtor-affiliates along with the Official
Committee for Asbestos Personal Injury Claimants and the Official
Representative for Future Asbestos Claimants filed in the U.S.
District Court for the District of Delaware their post-hearing
brief on the issue of substantive consolidation of the Debtors
assets as contemplated in their Fourth Amended Plan of
Reorganization.
Norman L. Pernick, Esq., at Saul Ewing, LLP, in Wilmington,
Delaware, relates that while the parties agreed at the outset that
the Auto-Train test would govern the substantive consolidation
proceedings, their understandings of the test and of what facts
are most significant in its application could not be further
apart:
(1) The Bank Claimants misconstrue the test by insisting that,
in the absence of creditor consent, it would permit
substantive consolidation only on proof of fraud,
misconduct, or hopeless financial entanglement. The Plan
Proponents advocate a straightforward application of the
Auto-Train test, which has no limitations;
(2) In considering substantial identity, the Bank Claimants
insist that legal formalities observed by the subsidiaries
are sufficient, including holding occasional board
meetings and keeping some minute books, whereas the Plan
Proponents look to the manner in which the Debtors
controlled assets for the benefit of the entire enterprise
without regard for the separate interests of the guarantor
subsidiaries; and
(3) The Bank Claimants suggest that obtaining guaranties from
certain of the Debtors' subsidiaries by itself
demonstrates reliance and defeats the case for substantive
consolidation. The Proponents, by contrast, demonstrate
that:
-- as a matter of law, the mere existence of guaranties
cannot defeat substantive consolidation or else that
remedy would never have been granted in certain cases;
and
-- the actual terms and conditions of the 1997 Credit
Agreement under which the guaranties were granted and
the parties' conduct demonstrate that the lenders did
not reasonably rely on the separate credit and
creditworthiness of the guarantor subsidiaries.
The Plan Proponents ask the Court to focus on the manner in which
the Debtors managed and controlled the affairs of the entire
enterprise as a single economic unit as well as the nature of the
promises exchanged with the lenders when they extended the credit.
Substance must rule over form, Mr. Pernick asserts. In addition,
the Bank Claimants' suggestion that granting substantive
consolidation in the Debtors' bankruptcy cases will upset
financial markets is nothing but hollow rhetoric.
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 CORNING: Lenders Brief Substantive Consolidation Issue
------------------------------------------------------------
The prepetition lenders of Owens Corning and its debtor-affiliates
pursuant to a 1998 Credit Agreement filed their post-hearing brief
on against substantive consolidation pushed by the Debtors and
their co-proponents of the Fourth Amended Plan of Reorganization,
the Official Committee for Asbestos Personal Injury Claimants and
the Official Representative for Future Asbestos Claimants.
Rebecca L. Butcher, Esq., at Landis, Rath & Cobb, in Wilmington,
Delaware, argues that to use consolidation in the Debtors' cases
is to destroy the Banks' bargained-for contract rights. It would
be unprecedented and would violate bedrock principles of corporate
separateness and respect for creditor rights.
The Debtors cite little case law, because no case has ever imposed
consolidation in circumstances remotely like Owens Corning's
cases, Ms. Butcher relates. The Debtors chiefly rely on Drabkin
v. Midland-Ross Corp. (In re Auto-Train), 810 F.2d 270 (D.C. Cir.
1987), which requires them to prove both:
-- "substantial identity" between Owens Corning and its
subsidiaries; and
-- a genuine necessity for substantive consolidation arising
from fraud or hopeless entanglement of assets.
As to substantial identity, Ms. Butcher argues that:
(1) The Debtors' endless saga proves only that their corporate
structure is typical of virtually every large American
company. It has many domestic and foreign subsidiaries
established for operational, tax, liability-protection,
and regulatory purposes, and the parent company controls
its subsidiaries. If this establishes substantial
identity, then the requirement might as well not exist.
(2) The Debtors ignore the Third Circuit's recent decision in
Nesbit v. Gears Unlimited, Inc., 347 F.3d 72 (3d Cir.
2003), cert. denied, 124 S. Ct. 1714 (2004), which
requires financial, rather than operational, entanglement
to impose consolidation in the bankruptcy context. The
record overwhelmingly establishes that there is no
financial entanglement:
-- The books and records of the Debtors and its
subsidiaries are well maintained; and
-- The assets and liabilities of the Debtors' guarantor
subsidiaries are separately identified and known.
(3) The Debtors' factual presentation is distorted. For
example, OCFT, IPM, and Exterior, currently the three
most valuable subsidiary guarantors:
-- were created and maintained for legitimate and
important corporate purposes;
-- rigorously observed corporate formalities;
-- maintained their own complete and accurate books and
records; and
-- owned extremely valuable, readily identifiable assets
against which the Banks have clear, enforceable
contract rights.
As to necessity, Ms. Butcher asserts that:
(1) The record contains no evidence that the Debtors cannot,
absent substantive consolidation, propose and confirm a
joint Chapter 11 plan for all the Debtors that maintain
the overall value of the Debtors' enterprise while paying
the Banks the full value of their primary and guarantee
claims;
(2) The Debtors' claim that consolidation is necessary to
achieve prompt confirmation of a plan violates the clear
rule that substantive consolidation cannot be employed
merely to hasten emergence from bankruptcy by depriving a
creditor of its right to recover from the assets of each
of its own debtors and of its vote and fair say in the
process of approving a reorganization plan for each
debtor;
(3) The Debtors fail to demonstrate hopeless financial
entanglement, arguing only that consolidation is necessary
to avoid the need to resolve potential intercompany claims
that it does not even identify with specificity, much less
prove to exist. Even if the existence of the claims were
established, this is simply not a legitimate purpose for
consolidation. Where intercompany claims may be resolved
without substantially consuming the estate, consolidation
is not justified;
(4) The Debtors argue that consolidation is "necessary" to
avoid:
-- its having to prove the baseless fraudulent conveyance
claim subject to the Banks' long-pending motion to
dismiss; and
-- the need to adjudicate "successor liability" claims
against the subsidiaries that the tort claimants
vaguely threatened to bring but never have.
Ms. Butcher asserts that this is the ultimate in
bootstrapping -- float baseless claims and then use
substantive consolidation to attain the relief that the
claims could seek without actually having to prove them;
and
(5) The Debtors fail to confront the fact that any purported
benefits of consolidation are heavily outweighed by the
massive harm that consolidation would cause to the Banks,
rendering consolidation plainly inappropriate. Invocation
of consolidation for the express purpose of harming the
Banks is illegitimate.
Even if the Debtors had met their burden of establishing
substantial identity and necessity, Ms. Butcher asserts that the
Debtors' request would still fail because of the dramatic harm
consolidation would inflict on the Banks and the Banks' clear
reliance on the guarantees. The Debtors' distorted factual
presentation fails to undermine the Banks' showing that they
bargained for, obtained, and relied on clear, direct contract
rights against specifically identified, distinct entities that the
Banks knew in 1997 were worth more than $900 million and had no
asbestos exposure or other significant debt. The Debtors cite not
a single case requiring anything more to show reliance on the
separate credit of a debtor. In sum, Ms. Butcher says, the record
and the applicable legal principles do not permit destruction of
the Banks' contract rights through substantive consolidation,
under Auto-Train or any other authority.
Thus, Credit Suisse First Boston, as Agent for the prepetition
institutional lenders to Owens Corning and its debtor-affiliates,
asks the Court to deny the Debtors' request for substantive
consolidation.
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)
PENTHOUSE INT'L: Inks Settlement Agreement with PET Capital
-----------------------------------------------------------
Penthouse International, Inc., (Pink Sheets:PHSL) and Dr. Molina
entered into a Settlement Agreement with PET Capital Partners, LLC
and their affiliates.
Details of the Settlement Agreement were not disclosed.
As reported in the Troubled Company Reporter on Sept. 26, 2004,
Penthouse entered into a definitive stock purchase agreement with
Care Concepts (AMEX:IBD) under which Care Concepts agreed to
acquire Internet Billing Company LLC from Penthouse. As
consideration for the sale, Penthouse will receive securities
convertible into 49.9% of the fully diluted common stock of Care
Concepts. Closing of the iBill acquisition is subject to certain
securities filings by Care Concepts and AMEX approval. However,
even if the exchange does not approve the transaction, Penthouse
and Care Concepts agreed to close the iBill acquisition by not
later than January 21, 2005 and, if necessary, re-list the Care
Concept common stock on NASDAQ or another exchange.
Care Concepts also reported the proposed purchase of 48.3% of the
common stock of General Media, Inc., publisher of Penthouse
Magazine, and entered into a non-binding letter of intent for the
acquisition of 100% of Best Candy and Tobacco, Inc., a distributor
of candy and tobacco products. Closing of the General Media
investment is scheduled to occur in October upon emergence of
General Media and its subsidiaries from Chapter 11 Bankruptcy.
Subject to execution of definitive agreements and due diligence,
IBD also anticipates that it will complete the Best acquisition in
approximately 30 days.
Until the effectiveness of General Media's Fourth Amended Plan of
Reorganization, Penthouse is a direct equity owner of 99.5%
General Media common stock behind approximately $70 million in
General Media debts. The terms of the Fourth Amended Plan, which
was confirmed by the bankruptcy court on August 12, 2004, provide
for no recovery to Penthouse for its equity. However, as a result
of the transactions, rather than losing its equity, Penthouse is
now expected to be an indirect owner of General Media (to be known
as Penthouse Media Group) through its pending shareholdings in
Care Concepts. The reorganized General Media will also benefit
from $36 million in new long-term debt with no principal or
interest payments for three years. The plan sponsor is also
providing up to a $20 million working capital credit line, if
needed, to General Media.
"To retain a 100% equity ownership in General Media, the plan of
reorganization originally sponsored by PHSL would have required
approximately $70 million in cash that would have been highly
dilutive to Penthouse shareholders," said Claude Bertin, executive
vice president of Penthouse. "[Penthouse] has avoided this direct
dilution by becoming a major shareholder of [Care Concepts] and
supporting the plan sponsored by the Bell/Staton Group, thereby
benefiting from a continued investment in the future of Penthouse
Magazine without issuing additional PHSL stock."
For its year ended December 31, 2003, iBill had unaudited revenue
of approximately $43.0 million. Best had 2003 unaudited revenue
of $52.9 million. General Media results will not be consolidated
on its financial statements, but IBD will record its 48.3% equity
interest as an investment in accordance with GAAP.
Care Concepts is currently a holding company with investments in
online auctions and radio with annual revenues of less than
$2 million. Upon the completion of the transactions, Care
Concepts will have expected consolidated revenues in excess of
$100 million. Upon completion of the transactions, Care Concepts
is expected to change its name to reflect the new scope of its
business investments in iBill, Best Candy and General
Media/Penthouse Media Group.
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 Oct. 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.
About Penthouse International, Inc.
Penthouse International, Inc., through its subsidiaries General
Media, Inc., Del Sol Investments LLC and PH Realty Associates LLC
and iBill, is a brand-driven global entertainment business founded
in 1965 by Robert C. Guccione. General Media's flagship PENTHOUSE
brand is one of the most recognized consumer brands in the world
and is widely identified with premium entertainment for adult
audiences. General Media caters to men's interests through
various trademarked publications, movies, the Internet, location-
based live entertainment clubs and consumer product licenses.
Internet Billing Company (iBill) sells access to online services
and other downloadable products (music, games, videos, personals,
etc.) to consumers through proprietary Web-based payment
applications. The iBill online payments systems manage
transaction authorization on the global financial networks such as
Visa(R) and MasterCard(R) and simultaneously provide password
management controls for the life of the subscribing consumer. On-
demand CRM (Customer Relationship Management) applications are
provided to registered independent merchants, typically small and
medium-sized businesses seeking a cost-effective technology
platform to outsource non-core banking and finance functions.
Since 1996, iBill has established a trusted brand with consumers
and online businesses with 27 million customers in 38 countries.
Balance Sheet Upside-Down
In its latest Form 10-Q filed with the Securities and Exchange
Commission for the period ended September 30, 2003, Penthouse
International reported a $69,854,000 stockholders' deficit.
New Auditors & Delayed Financials
Penthouse has not filed its Form 10-K Annual Report for the fiscal
year ended December 31, 2003, because, the Company says, it
recently hired Stonefield Josephson, Inc., as its new auditors and
it has effected a number of significant transactions, including a
change of control, a significant acquisition and private
financings -- all of which need to be reviewed by the new auditors
and properly disclosed in a "subsequent events" footnote in the
2003 financial statements.
POPE & TALBOT: Moody's Holds Low-B Senior Implied & Unsec. Ratings
------------------------------------------------------------------
Moody's Investors Service affirmed the Ba2 senior implied, Ba3
issuer and Ba3 senior unsecured ratings of Pope & Talbot, Inc.
The rating outlook continues to be stable. The affirmation of the
company's ratings and outlook acknowledges its sequentially
improving financial performance resulting from the ongoing
commodity price recovery. The financial performance reverses a
trend that included periodic negative cash flow and, as well,
reduces pressure from potentially increased capital and pension
spending and the uncertainties concerning the magnitude and
sustainability of the commodity price recovery.
Ratings Affirmed:
* Ba3 for the US$75 million of 8.375% debentures and
US$50.8 million of 8.375% senior notes, both due
June 1, 2013,
* Ba2 for Pope & Talbot's senior implied rating, and
* Ba3 for its senior unsecured issuer rating.
With the nearly three year commodity price trough and the negative
impact of duties on Canadian-based softwood lumber imports to the
key United States market, Pope & Talbot has not been able to
consistently generate sufficient cash flow to cover all of its
operating, capital and acquisition activities. Given its
participation in the very volatile pulp and lumber sectors, wide
swings in profitability and cash generation are expected. The
company experienced negative FCF in each of 2001, 2002 and 2003.
Moody's does, however, expect positive FCF to be recorded in 2004
and 2005. While softwood pulp and lumber prices have increased
from cyclical lows and cash generation is sequentially improving,
the pulp market is experiencing some softness and the lumber
market may be vulnerable to a near term retreat from recent highs.
However, Moody's believes the recent pulp price retreat is a pause
in the rally and not a permanent impairment, and, given the
company's adequate position in the relevant markets, expects
sequentially improving cash flow over the next several quarters,
implying that Pope & Talbot's credit metrics will continue to
improve and therefore solidify the existing Ba2 senior implied
rating. The Ba3 rating on the company's senior unsecured notes is
based on the notes' structural subordination to the company's
secured bank and lease obligations.
Pope & Talbot's liquidity arrangements are adequate for its needs.
Liquidity is provided from three sources:
a) C$150 million Canadian revolving bank line;
b) US$25 million revolving line of credit; and
c) US$30 million off-balance sheet evergreen accounts
receivable securitization program.
Moody's estimates the company had approximately US$100 million of
available liquidity at June 30, 2004. The C$150 million line of
credit consists of two extendable revolving credit facilities
(recently renewed through July 31, 2005). Drawings are
convertible into term loans if the revolving periods are not
extended. The line is secured by the company's Canadian pulp
mill, land, equipment and certain inventory and accounts
receivable. Financial covenants include a maximum leverage ratio,
net worth test and minimum interest coverage ratio. In March
2004, the Company implemented a new three-year US$25 million
agreement to support US-based operations. Security includes
certain accounts receivable and inventories. At June 30, the
company was in compliance with covenants for its respective credit
facilities and, with financial performance expected to be strong
over the near term, continued compliance is anticipated.
As noted, there are uncertainties concerning the magnitude and
sustainability of the ongoing commodity price recovery. However,
Moody's believes the current uncertainty relates more to potential
limitations on the upside than to material price declines. A
near-term return to cyclical lows appears to be very unlikely,
and, for the next several quarters, Moody's expects Pope &
Talbot's performance to be well above the approximate 15% RCF/TD
and 5% FCF/TD through-the-cycle measures that would generally be
representative of a Ba2 senior implied rating. Consequently,
while Pope & Talbot's recent financial performance has been
extremely poor, there appears to be a balance of factors that
suggest the rating is not vulnerable to variation over the near
term. Accordingly, the rating outlook is stable.
Over time, the company's ratings and outlook are not expected to
be raised unless Pope & Talbot engages in material debt reduction
and implements more conservative acquisition and financial
policies. Lower ratings could result from either or both of
renewed weakness in commodity prices and debt-financed acquisition
activity that would cause Moody's to view through-the-cycle
RCF/Debt as being less than 15% with the commensurate FCF/Debt
being less than 5%. A material deterioration in the company's
liquidity arrangements would also result in a ratings action.
Pope & Talbot, Inc. is headquartered in Portland, Oregon, and
produces pulp and wood products from manufacturing facilities in
the northwestern United States and western Canada.
QUIGLEY COMPANY: Futures Representative Hires Asbestos Expert
-------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
gave Albert Togut, Esq., the Legal Representative for future
asbestos personal injury claimants of the estate of Quigley
Company, Inc., permission to employ Hamilton, Rabinovitz &
Alschuler, Inc., as his claims evaluation consultants.
Mr. Togut tells the Court that the services of Hamilton Rabinovitz
are necessary and that the Firm has extensive experience and
knowledge in asbestos consulting and familiarity with asbestos-
related liability issues.
Hamilton Rabinovitz will:
a) consult with respect to the estimation of the number and
value in total and by disease of present and future
asbestos related claims;
b) develop financial models of the assets for the assets of
administration and payments by a claims resolution
trust;
c) analyze and respond to issues relating to notice
procedures concerning asbestos related claimants and
assist in the development of such notice procedures;
d) assess proposals made by other parties, including
without limitation proposals from Quigley Company and
any statutory committees that may be appointed regarding
the estimation of claims and the formulation and cost of
the section 524(g) trust;
e) assist the Legal Representative in negotiations with
Quigley Company and other parties in interest regarding
the estimation of claims;
f) render expert testimony as required by the Legal
Representative;
g) assist the Legal Representative in the preparation of
testimony or reports he is required to make and in the
evaluation of reports and testimony by other experts and
consultants;
h) obtain all previously filed public data regarding
estimations against other defendants in asbestos related
proceedings;
i) analyze and evaluate other ongoing asbestos related
litigation, including, if necessary, tobacco related
litigation; and
j) other advisory services as may be requested by the Legal
Representative from time to time;
Ms. Francine Rabinovitz, Dr. Rob Sims, and Mr. Paul Honig are the
lead expert consultants performing services for the Legal
Representative. For their professional services, Ms. Rabinovitz
will bill the Legal Representative $500 per hour, while Dr. Sims
will charge at $375 per hour and Mr. Honig will charge $250 per
hour.
Ms. Rabinovitz reports Hamilton Rabinovitz professionals bill:
Designation Hourly Rate
----------- -----------
Senior Partners $500
Junior Partners 400
Managing Directors 375
Principals 300
Directors 275
Managers 250
Senior Analysts 175
Analysts 150
Research Associates 100
Hamilton Rabinovitz does not have any interest adverse to the
Legal Representative, the future claimants represented by the
Legal Representative, and the Debtor or its estate.
Headquartered in Manhattan, New York, Quigley Company Inc., is a
subsidiary of Pfizer, Inc., which used to produce and market a
broad range of refractories and related products to customers in
the iron, steel, glass and other industries.
The Company filed for chapter 11 protection on September 3, 2004
(Bankr. S.D.N.Y. Case No. 04-15739) to resolve legacy asbestos-
related liability. When the Debtor filed for protection from its
creditors, it listed assets of $155,187,000 and debts of
$141,933,0000.
Pfizer agreed to contribute $405 million to an Asbestos Claims
Settlement Trust over 40 years through a note, contribute
approximately $100 million in insurance and forgive a $30 million
loan to Quigley. Michael L. Cook, Esq., at Schulte Roth & Zabel
LLP, represents the Company in its restructuring efforts.
RCN CORP: Court Sets Disclosure Statement Hearing on Oct. 5
-----------------------------------------------------------
Judge Drain will convene a hearing to consider the approval of
RCN Corporation and its debtor-affiliates' Disclosure Statement on
October 5, 2004, at 10:00 a.m. At the hearing, Judge Drain will
determine whether the Disclosure Statement contains adequate
information as required by Section 1125 of the Bankruptcy Code to
enable hypothetical creditors to make informed decisions on
whether to vote to accept or reject the Debtors' Plan.
Headquartered in Princeton, New Jersey, RCN Corporation --
http://www.rcn.com/-- provides bundled Telecommunications
services. The Company, along with its affiliates, filed for
chapter 11 protection (Bankr. S.D.N.Y. Case No. 04-13638) on
May 27, 2004. Frederick D. Morris, Esq., and Jay M. Goffman,
Esq., at Skadden Arps Slate Meagher & Flom LLP, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $1,486,782,000 in
assets and $1,820,323,000 in liabilities. (RCN Corp. Bankruptcy
News, Issue No. 12; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
SEROLOGICALS CORP: Moody's Confirms B1 Senior Implied Rating
------------------------------------------------------------
Moody's Investors Service confirmed the ratings of Serologicals
Corporation -- B1 senior implied, concluding a rating review for
possible downgrade initiated on September 7, 2004. At the same
time, Moody's assigned a Ba3 rating to Serologicals' new
$80 million senior secured term loan facility due 2011 and a Ba3
rating to the $30 million revolving credit facility maturing in
2009. Serologicals is entering the new credit agreement in
conjunction with its pending acquisition of Upstate Biotech, Inc.,
for $205 million. Following these rating actions, the rating
outlook is stable.
Moody's confirmation of Serologicals' ratings is based on the
assumption that the Upstate deal will be consummated and financed
as planned, with funding sources comprised of approximately
$100 million of equity, $30 million of existing cash on hand, and
the new $80 million term loan, with the revolver undrawn at close.
If the final details differ materially from these assumptions,
such as through higher bank loan amounts, the ratings could be
downgraded.
The rating confirmation reflects Moody's belief that:
(1) despite higher leverage, Serologicals will generate free
cash flow to debt in the 5-10% range for 2004;
(2) cash flow to debt will improve because of good prospects
for earnings and cash flow growth; and
(3) the company's long term targeted capital structure remains
at 3.0 times debt/EBITDA.
Other factors supporting the B1 rating include:
(1) the company's solid customer base with long-term contracts;
(2) growth opportunities provided by its life sciences
products,
(3) relatively high barriers to entry, and limited
reimbursement pressures typically associated with many
healthcare companies in the B1 rating category.
In addition, Moody's believes that the acquisition of Upstate will
provide Serologicals with revenue diversity, greater market share
in protein reagents, and a new growth platform in kinase screening
services offered to the pharmaceutical and biotech industries.
The rating also recognizes:
(1) the significant barriers to entry in Serologicals' key
markets,
(2) the successful integration of previous acquisitions, and
(3) the continued growth of drug research spending, which
supports demand for its products.
However, offsetting concerns include the additional leverage
associated with the Upstate transaction, pro forma for the
acquisition, Moody's expects that total leverage, as measured by
debt/EBITDA will exceed 4.0 times, significantly outside Moody's
prior expectation that leverage would not exceed 3.0 times.
In addition, we believe Upstate's current cash flow is very
limited relative to the incremental debt associated with the
transaction. Moody's further notes that Serological's own rate of
cash flow has been somewhat constrained and volatile, when
adjusting for the sale of the company's plasma collection business
in 2003. Serologicals reported $12.5 million of cash flow from
operations in the first quarter of 2004, and only $1.7 million
during the second quarter of 2004. Moody's believes that working
capital issues, stemming from the timing of some large sales late
in the quarter, can create volatility in the company's quarterly
cash flow. On an LTM basis through 2Q2004, Moody's estimates that
exclusive of the plasma business Serologicals generated
approximately $27.2 million of cash flow from operations, and only
$2.5 million of free cash flow after capital expenditures.
Moody's believes, however, that the overall trend in Serological's
cash flow from operations is positive, based on favorably
underlying growth rates in key products, and that Serologicals
should achieve free cash flow to debt in excess of 5% for 2004.
As a result of higher leverage and limited immediate cash flow
benefit from the Upstate acquisition, Serologicals is positioned
more weakly within the B1 rating category, leaving little room in
the current rating for additional debt-financed acquisitions in
the near term. The stable rating outlook reflects:
(1) Moody's expectation that leverage will decline as cash flow
improves;
(2) that the company is not contemplating any additional large
acquisitions until leverage improves; and
(3) that a near term downgrade is not likely.
However, if cash flow does not expand as Moody's is expecting, or
if the company assumes additional debt, the ratings could be
downgraded. Moody's does not believe the ratings are likely to
face upward rating pressure until the company demonstrates its
commitment to a more conservative capital structure, and until
cash flow benefits of the Upstate transaction have been realized.
The company's liquidity is provided by the new $30 million
revolving credit facility, and cash on hand, which Moody's expects
will decline to about $30 million after the Upstate acquisition.
Moody's believes that this level of liquidity appears appropriate,
given the volatility in quarterly cash flow.
The Ba3 rating on the senior secured bank credit facilities
reflects:
(1) their senior position in the capital structure,
(2) the guarantees from subsidiaries,
(3) collateral consisting of:
(a) a perfected first priority security interest in all
tangible and intangible assets including intellectual
property,
(b) the capital stock of each of Serologicals' direct and
indirect domestic subsidiaries, and
(c) 66% of the capital stock of first tier foreign
subsidiaries, but excluding real property.
Moody's believes that even in a distress scenario Serologicals'
enterprise value, supported by the perceived strength of its life
sciences products, would provide strong recovery prospects for
bank lenders. The B2 issuer rating reflects its unsecured
position in the capital structure. Moody's does not rate
Serologicals senior subordinated convertible debentures due 2033.
Ratings confirmed:
* Serologicals Corporation -- B1 senior implied, B2 issuer
rating
Ratings assigned:
* Serologicals Coropration -- Ba3 senior secured term loan due
2011, Ba3 senior secured
revolving credit facility due
2009
Based in Norcross, Georgia, Serologicals Corporation (NASDAQ:
SERO) is a worldwide provider of biological products and enabling
technologies used for the research, development and manufacturing
of biologically based life science products.
SOLECTRON CORP: Posts $45 Million 2004 Fourth Quarter Net Loss
--------------------------------------------------------------
Solectron Corporation (NYSE:SLR) reported sales of $3.01 billion
in the fourth quarter of fiscal 2004, up 23.4 percent from
$2.44 billion in the fourth quarter of last year. Sales in the
third quarter of 2004 were $3.04 billion.
The company reported a GAAP net loss from continuing operations in
the fourth quarter of $45 million, compared with a GAAP net loss
from continuing operations of $163 million in the year-earlier
quarter.
Non-GAAP net income from continuing operations was $41 million, or
4 cents per share on a fully diluted basis, in the fourth quarter
of fiscal 2004.
"Our strong performance in the fourth quarter, including non-GAAP
net income of $41 million and positive operating cash flow of
approximately $124 million, capped a turnaround year for
Solectron," said Mike Cannon, president and chief executive
officer. "We improved our financial metrics throughout the year,
and we enter fiscal 2005 a much stronger company."
During the quarter, the company completed the sale of Force
Computers and its interest in U.S. Robotics. The company also
announced an agreement to sell its Microtechnology business, which
is expected to be completed in the first quarter of fiscal 2005.
With that, Solectron will have completed its divestiture plans
announced a year ago.
As reported in the company's Form 8-K filed with the Securities
and Exchange Commission on Sept. 15, Solectron took incremental
restructuring charges of $20 million during the fourth quarter,
and also recorded a $47 million intangible impairment charge. In
addition, the company recorded a $15 million loss to other
expense, net, related to the sale of its minority interest in ECS
Holdings Limited.
Fiscal 2004 Financial Results
Sales for 2004 were $11.64 billion, compared with $9.83 billion in
fiscal 2003. For the year, the company reported a GAAP net loss
from continuing operations of $252 million, compared with a GAAP
net loss of $3.02 billion in fiscal 2003.
Improvements from Q4 2003 to Q4 2004:
-- Sales increased by 23.4 percent.
-- Gross margins improved from 4.8 percent to 5.4 percent.
-- Operating expenses declined from 5.3 percent to 3.8 percent.
-- Non-GAAP operating margin improved from -0.5 percent to
1.6 percent.
-- Cash-to-cash cycle improved from 59 days to 49 days.
-- Debt decreased from $2.79 billion to $1.25 billion.
-- Debt-to-capital ratio improved from 66 percent to 34
percent.
First-Quarter 2005 Guidance
Fiscal first-quarter guidance is for sales of $2.9 billion to
$3.1 billion, and for non-GAAP EPS from continuing operations to
range from 4 cents to 6 cents, on a fully diluted basis.
About Solectron
Solectron Corporation -- http://www.solectron.com/-- provides a
full range of worldwide manufacturing and integrated supply chain
services to the world's premier high-tech electronics companies.
Solectron's offerings include new-product design and introduction
services, materials management, product manufacturing, and product
warranty and end-of-life support. The company is based in
Milpitas, California, and had sales from continuing operations of
$11.64 billion in fiscal 2004.
* * *
As reported in the Troubled Company Reporter on Sept. 1, 2004,
Standard & Poor's Ratings Services assigned its 'B+' bank loan
rating and its '2' recovery rating to Milpitas, California-based
Solectron Corp.'s $500 million senior secured revolving credit
facility due 2007.
"The bank loan rating--which is rated the same as the company's
corporate credit rating--and the company's recovery rating reflect
Standard & Poor's expectation for substantial recovery of
principal (80%-100%) by lenders in the event of a default or
bankruptcy," said Standard & Poor's credit analyst Emile Courtney.
At the same time, Standard & Poor's affirmed Solectron's corporate
credit and other ratings. The outlook is positive.
SYCAMORE CBO: S&P Puts Class A-3 Rating on CreditWatch Positive
---------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on the class
A-1, A-2, and A-3 notes issued by Sycamore CBO (Cayman) Ltd., an
arbitrage corporate high-yield CBO transaction, on CreditWatch
with positive implications.
The positive CreditWatch placements reflect an increase in the
level of
overcollateralization available to support the notes since the
last rating action (Sept. 24, 2002). The transaction has paid down
a total of $64.761 million since the last rating action was taken,
$24.860 million of which was paid on the August 2004 payment date.
Standard & Poor's will be reviewing the results of the current
cash flow runs generated for Sycamore CBO (Cayman) Ltd. to
determine the level of future defaults the rated tranches can
withstand under various stressed default timing and interest rate
scenarios, while still paying all of the rated interest and
principal due on the notes. The results of these cash flow runs
will be compared with the projected default performance of the
transaction's current collateral pool to determine whether the
ratings assigned are commensurate with the level of credit
enhancement currently available.
Ratings Placed On Creditwatch Positive
Sycamore CBO (Cayman) Ltd.
Rating
Class To From
----- -- ----
A-1 A+/Watch Pos A+
A-2 A+/Watch Pos A+
A-3 BB+/Watch Pos BB+
Transaction Information
Issuer: Sycamore CBO (Cayman) Ltd.
Current Manager: 4086 Advisors
Underwriter: Deutsche Bank
Trustee: JPMorganChase Bank
Transaction type: Arbitrage corporate high-yield CBO
Tranche Initial Last Current
Information Report Action Action
----------- ------- ------ -------
Date (MM/YYYY) 11/1999 09/2002 09/2004
Class A-1 note rtg. AAA A+ A+/Wtch Pos
Class A-1 note bal $140.000mm $122.997mm $72.905mm
Class A-2 note rtg. AAA A+ A+/Wtch Pos
Class A-2 note bal $41.000mm $36.021mm $21.350mm
Class A-3 note rtg. AA BB+ BB+/Wtch Pos
Class A-3 note bal $37.000mm $37.000mm $37.000mm
Class A OC ratio 137.28% 114.34% 115.5%
Class A OC ratio min 127.0% 127.0% 127.0%
Portfolio Benchmarks Current
-------------------- -------
S&P Wtd. Avg. Rtg.(excl. defaulted) B+
S&P Default Measure(excl. defaulted) 3.70%
S&P Variability Measure (excl. defaulted) 2.54%
S&P Correlation Measure (excl. defaulted) 1.21
Wtd. Avg. Coupon (excl. defaulted) 9.18%
Wtd. Avg. Spread (excl. defaulted) N/A
Oblig. Rtd. 'BBB-' and Above 8.39%
Oblig. Rtd. 'BB-' and Above 41.14%
Oblig. Rtd. 'B-' and Above 85.83%
Oblig. Rtd. in 'CCC' Range 7.18%
Oblig. Rtd. 'CC', 'SD' or 'D' 6.99%
Obligors on Watch Neg (excl. defaulted) 3.39%
S&P Rated OC (ROC) Current
------------------ -------
Class A-1 notes 118.76% (A+/Watch Pos)
Class A-2 notes 118.76% (A+/Watch Pos)
Class A-3 notes 109.33% (BB+/Watch Pos)
For information on Standard & Poor's CDO Portfolio Benchmarks and
Rated
Overcollateralization (ROC) Statistic, see "ROC Report Sept.
2004," published on RatingsDirect, Standard & Poor's Web-based
credit analysis system, and on the Standard & Poor's Web site at
http://www.standardandpoors.com/ Go to "Credit Ratings," under
"Browse by Business Line" choose "Structured Finance," and under
Commentary & News click on "More" and scroll down to the desired
articles.
TRIMAS CORPORATION: S&P Affirms BB- Corporate Credit Rating
-----------------------------------------------------------
Standard & Poor's Ratings Services affirmed its ratings on TriMas
Corporation, including the 'BB-' corporate credit rating, and
removed them from CreditWatch. The ratings had been placed on
CreditWatch with positive implications on March 26, 2004,
following the company's announcement and filing of an S-1 for an
IP0 of common stock.
The outlook is negative. At June 30, 2004, total debt outstanding
was about $800 million.
"Because of unfavorable market conditions, TriMas has not yet
proceeded with the IPO," said Standard & Poor's credit analyst
John Sico. "If in the future the company proceeds with the IPO,
we would reassess TriMas' credit profile. Ratings will be lowered
if TriMas fails to make steady progress over the next year in
strengthening the financial profile."
TriMas has about $1 billion in sales from products with leading
positions in several niche markets. It manufactures engineered
products serving niche markets in a diverse range of commercial,
industrial, and consumer applications:
-- transportation towing systems,
-- packaging systems,
-- fastening systems,
-- industrial specialty products
The company pursued niche acquisitions on an opportune basis. At
the same time, recent acquisitions have increased financial risk
by pushing debt levels much higher. Debt, adjusted for operating
leases) to EBITDA for the 12 months ended June 30, 2004, was about
7x, well above Standard & Poor's expectations of around 4x. There
is little debt capacity for acquisitions, and no further
acquisitions are expected as the company integrates its
acquisitions and focuses on debt reduction.
Liquidity is adequate, with about $6 million cash on hand and a
mostly unused $150 million revolving credit facility as of
June 30, 2004.
TRIUMPH HEALTHCARE: Moody's Places B2 Ratings on $115M Facilities
-----------------------------------------------------------------
Moody's Investors Service assigned a rating of B2 to Triumph
Healthcare LLP's $115 million senior secured bank credit
facilities comprised of:
* a $25 million senior secured revolving credit facility; and
* a $90 million senior secured term loan.
In addition, Moody's assigned a senior implied rating of B2 and a
senior unsecured issuer rating of B3. The outlook for the ratings
is stable.
The rating action follows the announcement by the company that the
new credit facilities along with $20 million of subordinated debt
and $34.5 million of equity contributed by TA Associates, Inc. and
$19.5 million of roll over equity contributed by certain existing
shareholders of Triumph will be used to fund the purchase of
Triumph from its current shareholders.
Ratings assigned:
* $25 million senior secured revolving credit facility due
2009, rated B2
* $90 million senior secured term loan due 2010, rated B2
* B2 senior implied rating
* B3 senior unsecured issuer rating
The outlook for the ratings is stable.
The ratings reflect:
(i) Triumph's reliance on a single geographic market for its
long-term acute care hospitals;
(ii) Moody's concern about the sustainability of high
occupancy levels for Triumph facilities, particularly in
certain facilities exceeding 85%;
(iii) the significant amount of leverage being considered in
the transaction resulting in weaker cash flows;
(iv) the short track record of operations for several of the
company's recently opened facilities;
(v) the risks of operating in a new prospective payment
system for Medicare reimbursement for long term acute
care providers;
(vi) a weaker liquidity position with only $1 million of cash
and access to a $25 million revolving credit facility
during a period of rapid growth for the company;
(vii) new senior management's short tenure with the company
coupled with the expected turnover at the chief executive
officer and chief financial officer level;
(viii) the continued development of new facilities that will
cause a drag on earnings during their ramp-up stage; and
(ix) the potential for operational or financial disruption
caused by a new majority owner upon completion of the
proposed transaction.
The ratings also reflect:
(i) the company's leading market position in the long term
acute care marketplace in Houston, Texas;
(ii) the compelling demographic and industry dynamics in the
Houston marketplace including the underserved long term
acute care hospital -- LTACH -- market;
(iii) Triumph's business model allowing the company to meet the
needs of a currently underserved marketplace;
(iv) favorable industry dynamics caused by an aging population
and the symbiotic relationship with the acute care
market;
(v) the potential for increased earnings as a result of
growth in Medicare reimbursement;
(vi) Triumph's focus on the free standing LTACH model, which
insulates the company from regulations surrounding the
hospital in hospital model;
(vii) the company's focus on a physician joint venture model
aligning profit and operating incentives for both
parties;
(viii) the company's successful albeit short track record of
growth in revenues and cash flow;
(ix) the minimal capital requirements needed for existing
facilities thus improving free cash flow; and
(x) the good track record of healthcare services investments
by TA Associates.
In Moody's view, the ratings would come under pressure if Triumph
were to incur additional indebtedness for development practices or
to meet working capital needs in excess of Moody's projections.
If the company's transition to the Medicare prospective payment
system does not produce the earnings projected, the ratings would
also come under pressure. However, in the medium term
(12 to 18 months), if the company shows stability in its
operations and generates operating cash flow to adjusted debt in
the range of 10% to 15% and free cash flow to adjusted debt in the
range of 5% to 10%, Moody's would likely upgrade the ratings.
Moody's expects Triumph to develop four additional long-term acute
care hospitals over the next several years. As a result of this
development, Moody's would expect Triumph to incur start up losses
associated with the development of these new hospitals. If these
hospitals do not ramp up in a similar manner to the company's
existing facilities resulting in a continued drag to cash flow,
Moody's would likely downgrade the ratings. However, if Triumph
is successful in its development activities resulting in increased
cash flow from newly opened facilities and maintenance of
operating margins in excess of 15%, Moody's would likely upgrade
the ratings.
Pro forma for the proposed transaction and giving effect to the
new credit facilities, Triumph will have cash flow coverage of
debt that is strong for the B2 category. For the twelve months
ending December 31, 2004, Triumph's projected operating cash flow
to debt is expected to be in the range of 8% to 10%. Maintenance
capital expenditures for the business are approximately 1% of
revenues, which would result in a projected free cash flow to debt
in the range of 6% to 9% for the twelve months ending
December 31, 2004. Moody's projects that cash flow coverage of
debt is expected to be approximately 10.5% for the company's
fiscal year ended December 31, 2005, while free cash flow coverage
of debt is expected to be approximately 8.4%.
Coverage metrics for Triumph projected through December 31, 2004
will be moderate. EBIT coverage of interest is expected to be
3.1 times for the year ending December 31, 2004 while EBIT less
maintenance capital expenditures to interest is expected to be
2.9 times for the year ending December 31, 2004. For purposes of
the preceding ratios, Moody's has deducted minority interest from
EBIT. Total debt to total book capitalization pro forma for the
transaction is expected to be approximately 75% at Dec. 31, 2004.
Following the issuance of the senior secured credit facilities and
pro forma for the transaction for the year ending Dec. 31, 2004,
Triumph's leverage is expected to be moderate for the B2 rating
category. Pro forma debt to EBITDA is expected to be 3.8 times
for the year ending December 31, 2004. Pro forma adjusted debt to
EBITDAR is expected to be 4.1 times for the year ending
December 31, 2004.
Interest coverage for the B2 category would be moderate. Pro
forma EBITDA to interest is expected to be 3.6 times while EBITDA
less capex to interest is expected to be approximately 3.4 times
for the year ending December 31, 2004.
In calculating pro forma EBITDA, Moody's has assumed that the
Medicare rate increase effective October 1, 2004 would have been
in effect for the proceeding twelve months. Moody's has also
deducted minority interest from EBITDA for purposes of these
calculations. Moody's notes that the use of EBITDA and related
EBITDA ratios as a single measure of cash flow without
consideration of other factors can be misleading.
In addition to the senior secured facilities, Triumph will also
issue $20 million of senior subordinated notes to be held by TA
Associates. Moody's notes that the subordinated debt has
restrictions not found in publicly held subordinated debt. Most
concerning of these restrictions are financial covenants that will
be set with a cushion to the senior secured debt covenants. In
the event these covenants are breached, the company will be
required to not only amend its senior secured credit agreement but
also its subordinated debt indenture.
Moody's expects Triumph to have adequate liquidity pro forma for
the acquisitions and incurrence of debt. Triumph will only have
approximately $1 million of cash, but the company will have access
to a $25 million revolving credit facility. Additionally, given
adequate cash flow generation, liquidity will improve for the
company over time. Liquidity will be tighter for the first two
years post closing of the transaction because the drag on cash
flow that Triumph will experience from the company's proposed
development activities.
The senior secured rating is placed at the senior implied rating
as a result of the senior secured debt representing more than 80%
of total debt capitalization, in addition to weak collateral
coverage. The senior unsecured rating is notched one level below
the senior implied rating reflecting the unsecured nature of these
obligations. The ratings are subject to Moody's review of final
documentation for the transaction.
Headquartered in Houston, Texas, Triumph Healthcare operates of 4
long-term acute care freestanding hospitals and 1 hospital in
hospital LTACH all in the Houston Texas marketplace. The company
primarily operates freestanding facilities, which it leases on a
long-term, lease basis. For the twelve months ended June 30, 2004
Triumph generated revenues of $155 million.
UBIQUITEL OPERATING: Moody's Junks $135M 9.875% Senior Notes
------------------------------------------------------------
Moody's Investors Service assigned a Caa1 rating to the pending
$135 million add-on offering of 9.875% Senior Notes due 2011 by
UbiquiTel Operating Company. Moody's also affirmed the company's
senior implied rating and will be withdrawing the senior and
subordinated debt ratings in conjunction with the proposed add-on
transaction. The rating outlook is stable.
* Senior Implied Rating -- B3 (affirmed)
* Issuer Rating -- Caa1 (affirmed)
* $270 million 9.875% Senior Notes due 2011 -- Caa1 (affirmed)
* $31 million 14% Senior Discount Notes due 2010 -- rating to
be withdrawn
* $100 million 14% Subordinated Discount Notes due 2010 --
rating to be withdrawn
The B3 senior implied rating reflects the very high financial
leverage of the company, as well as the fact that free cash flow-
to-total debt remains in the low-to-mid single digits as a
percentage of total debt, and debt per subscriber is high at
$1,071. Implicit in the B3 senior implied rating is the
assumption that UbiquiTel will be able to continue to grow
revenues rapidly and expand margins.
The add-on offering of $135 million of 9.875% Senior Notes will be
used to retire both issues of the 14% Discount Notes due 2010.
Moody's views the benefit of this transaction will be to reduce
overall interest expense by approximately $5 million as well as
push maturities out by a year. However, cash interest expense
will increase in the near term by roughly $4 million (subordinated
notes were non-cash pay until October 2005). This transaction
cleans up the company's capital structure being that the 9.875%
senior notes will be the only issue outstanding. We do note that
this will have a negative affect on leverage, as the discount
notes are not fully accreted, raising total financial leverage
from 7.6 times to 7.95 times for the last twelve months ended
June 30, 2004. Conversely, interest coverage (EBITDA divided by
total debt) will nominally benefit being that the higher interest
subordinated debt is being retired, changing from 1.18 times to
1.27 times for the last twelve months ended June 30, 2004.
The Caa1 rating for the add-on 9.875% senior unsecured debt
reflects the relative rank and priority of claim of this layer of
debt in the context of the company's consolidated capital
structure; it is currently the only piece of debt that the company
has outstanding. The indenture to the 9.875% senior notes permit
the incurrence of a new secured credit facility in an amount up to
1.5 times the annualized amount of the last two quarters EBITDA.
Moody's does not believe that UbiquiTel will seek to put such a
secured credit facility in place in the near to medium term, but
given the opportunities in the Sprint PCS affiliate sector for
acquisition and rationalization, Moody's expects that the company
would look to utilize this secured credit facility carve-out to
help finance any such potential transaction. The rating for the
14% Subordinated Discount Notes due 2010 will be withdrawn in
conjunction with this add-on offering.
The stable rating outlook reflects Moody's opinion that the
ratings are unlikely to move, either up or down, over the
intermediate term. Although UbiquiTel's financial and operating
risks have been somewhat mitigated by good performance, the
pending refinancing and the amendment of the company's operating
agreements with Sprint PCS, these risks remain substantial. As
the ratings assume continued strong growth in revenues and cash
flows, shortfalls relative to expectations would likely put
downward pressure on the ratings. The ratings could be improved
if the company were able to grow cash flows comfortably higher
than its capital and debt service requirements.
One noteworthy potential weakness in the company's business plan
is the assumed growth in wholesale revenues. While UbiquiTel will
be the beneficiary of roaming traffic from other Sprint PCS
resellers, such as Virgin Mobile and Qwest, as well as from other
CDMA carriers, the main driver of wholesale revenue growth will
come from increased travel revenues from Sprint PCS customers.
While the rate UbiquiTel receives from Sprint is fixed through
December 2006, the expected volume growth is not likely to
continue at its current rapid pace.
Additionally, since UbiquiTel is one of the least mature of the
Sprint PCS affiliates, it may have the strongest prospects for
continued subscriber growth. However, Moody's cautions that, as
the industry matures, growth becomes more difficult to realize for
all carriers.
For UbiquiTel to maintain or improve its ratings, the company must
continue to grow its subscriber base at above-average rates, while
continuing to improve subscriber retention rates, in addition to
benefiting from continued rapid growth in wholesale revenues.
Headquartered in Conshohocken, Pennsylvania, UbiquiTel is a
network partner of Sprint PCS whose network covers 7.9 million
people and had 366,000 subscribers at June 30, 2004 with LTM
revenues of $319 million.
UNITED COMPANIES: Moody's Junks Seven Certificate Classes
---------------------------------------------------------
Moody's Investors Service downgraded the ratings of 16 classes of
senior, mezzanine and subordinate certificates and has confirmed 2
classes of senior certificates of selected manufactured housing
securitizations of United Companies Financial Corporation. The
rating action concludes Moody's rating review, which began on
May 13, 2004.
Moody's last downgraded the ratings of several senior and
subordinate certificates of United Companies' 1996-1, 1997-1,
1997-2, 1997-3, 1997-4, 1998-1, and 1998-2 manufactured housing
securitizations in August 2003. The rating actions were based
primarily on the significantly weaker-than-anticipated performance
of the manufactured housing loans.
The current rating actions are prompted by the continued
deterioration in the performance of these manufactured housing
pools and thus the high cumulative losses. In addition, the
available excess spread is not sufficient to cover the high
losses; thus, subordination continues to erode. Furthermore, many
of the mezzanine and subordinate certificates have had interest
shortfalls.
The complete rating action is:
Issuer: UCFC Funding Corporation
* Series 1996-1
-- 7.575% Class A-5 Certs., downgraded from Aa3 to A2
-- 8.020% Class A-6 Certs., downgraded from Aa3 to A2
-- 7.900% Class M Certs., downgraded from B3 to Ca
* Series 1997-1
-- 7.450% Class A-4 Certs., downgraded from Aa3 to A1
-- 7.675% Class M Certs., downgraded from B3 to Ca
* Series 1997-2
-- 7.380% Class M Certs., downgraded from Baa1 to B2
-- 7.370% Class B-1 Certs., downgraded from Ca to C
* Series 1997-3
-- 6.975% Class A-4 Certs., downgraded from A1 to Baa2
-- 7.115% Class M Certs., downgraded from B3 to Ca
* Series 1997-4
-- 6.585% Class A-3 Certs., confirmed at A3
-- 6.995% Class A-4 Certs., downgraded from A3 to B1
-- 7.095% Class M Certs., downgraded from B3 to Ca
* Series 1998-1
-- 6.710% Class A-3 Certs., downgraded from A3 to Baa3
-- 6.980% Class M Certs., downgraded from B3 to Ca
* Series 1998-2
-- 6.080% Class A-2 Certs., confirmed at A3
-- 6.163% Class A-3 Certs., downgraded from A3 to Ba2
-- 6.587% Class A-4 Certs., downgraded from A3 to Ba2
-- 6.726% Class M-1 Certs., downgraded from B3 to Ca
United Companies Funding, Inc., was a wholly owned subsidiary of
United Companies Financial Corporation and was primarily
responsible for originating and servicing United Companies
Financial Corporation's manufactured housing loans.
On March 1, 1999 United Companies Financial Corporation filed for
reorganization under Chapter 11 of the United States Bankruptcy
Code. Servicing of the loans was transferred to EMC in
December 2000.
US AIRWAYS: Gets Engineers' Union's Support on Cost Savings
-----------------------------------------------------------
US Airways and the Transport Workers Union (TWU) Local 546,
representing approximately 25 flight simulator engineers, 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.
"This decision to reach into our pockets and give again did not
come easily. However, we fully recognize how important it is for
everyone to participate to ensure the success of the company. We
have done our part," said Rob Lenhart, president of TWU local 546.
"The TWU simulator engineers have shown great determination in
their efforts to keep this company on a forward course and we
thank them for their perseverance in reaching this agreement,"
said Jerrold A. Glass, US Airways senior vice president of
employee relations.
Ratification of this agreement is expected to be completed within
one week and requires approval by the bankruptcy court. This is
the third of three agreements now reached by the TWU.
Meetings with the Air Line Pilots Association -- ALPA, the
Association of Flight Attendants -- AFA, the Communications
Workers of America -- CWA, and the International Association of
Machinists -- IAM, 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: Wants to Employ Donlin Recano as Claims Agent
---------------------------------------------------------
Bruce R. Lakefield, US Airways President and Chief Executive
Officer, relates that the Debtors have tens of thousands of
creditors, potential creditors and other parties-in-interest to
whom notices must be sent. The office of the Clerk of the
Bankruptcy Court for the Eastern District of Virginia, Alexandria
Division, is not equipped to docket and maintain the large number
of proofs of claim that will be filed in these cases.
In addition, for the Debtors to solicit votes on a Reorganization
Plan, they will forward ballots, a disclosure statement, a copy of
the Plan and related solicitation materials to thousands of
creditors. The Debtors will also have to record and tabulate
ballots that are returned by creditors.
To address this concern, Judge Mitchell authorizes the Debtors to
employ Donlin, Recano & Company, Inc., as claims and noticing
agent.
Donlin Recano is a claims management services firm that
specializes in noticing, claims processing, and other
administrative tasks in Chapter 11 cases. Donlin Recano is well
qualified to provide the services, expertise, consultation and
assistance. Donlin Recano has assisted and advised numerous
Chapter 11 debtors in noticing, claims administration and
reconciliation, and administration of plan votes.
Under the Services Agreement, Donlin Recano will, at the request
of the Debtors or the Clerk's Office:
(a) Prepare and serve notices, including:
(1) A notice of the commencement and the initial meeting
of creditors under Section 341(a) of the Bankruptcy
Code;
(2) A notice of the claims bar date;
(3) Notices of objections to claims;
(4) Notices of disclosure statement hearings and
confirmation hearings; and
(5) Other miscellaneous notices as the Debtors or the
Court may deem necessary;
(b) Within 5 business days after mailing a notice, file with
the Clerk's Office a certificate or affidavit of service
that includes:
(1) a copy of the notice served;
(2) an alphabetical list of persons and their addresses,
to whom the notice was served, and
(3) the date and manner of service;
(c) Maintain copies of proofs of claim and proofs of interest;
(d) Maintain official claims registers by docketing all proofs
of claim and proofs of interest in a claims database that,
for each claim, includes:
(1) The name and address of the claimant or interest
holder;
(2) The date the proof of claim or proof of interest was
received by Donlin Recano or the Court;
(3) The claim number assigned to the proof of claim or
proof of interest;
(4) The asserted amount and classification of the claim;
and
(5) The applicable Debtor against which the claim or
interest is asserted;
(e) Implement security measures to ensure the completeness and
integrity of the claims registers;
(f) Maintain a mailing list for all entities that have filed
proofs of claim or proofs of interest and make the list
available to the Clerk's Office or any party-in-interest;
(g) Provide access to the public for examination the proofs of
claim or proofs of interest;
(h) Record all transfers of claims pursuant to Rule 3001(e)
of the Federal Rules of Bankruptcy Procedure and provide
notice of transfers;
(i) Comply with applicable federal, state, municipal and local
statutes, ordinances, rules, regulations, orders and other
requirements;
(j) Comply with further conditions and requirements as the
Clerk's Office or the Court may prescribe;
(k) Provide balloting and solicitation services, including
preparing ballots, producing personalized ballots and
tabulating creditor ballots;
(l) Provide other noticing, disbursing and administrative
services as required by the Debtors;
(m) Oversee the distribution of solicitation material to
holders of a claim against or interest in the Debtors;
(n) Respond to mechanical and technical distribution and
solicitation inquiries;
(o) Receive, review and tabulate the ballots cast; and
(p) Certify the results of the balloting to the Court.
Donlin Recano's fees and expenses will be treated as an
administrative expense of the Debtors' Chapter 11 estates and will
be paid in the ordinary course of business. Every month, Donlin
Recano will submit to the Office of the United States Trustee
copies of the invoices it submits to the Debtors for services
rendered.
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. 65;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
US AIRWAYS: Gets Court Nod to Employ Ordinary Course Professionals
------------------------------------------------------------------
Brian P. Leitch, Esq., at Arnold & Porter, in Denver, Colorado,
relates that US Airways customarily retains the services of
attorneys, accountants, and other professionals in the ordinary
course of business. The Debtors employ Ordinary Course
Professionals for services on tax preparation and other tax
advice, employee relations and compensation, corporate legal
advice, legal representation on issues like personal injury and
commercial matters, real estate consulting, and other matters
requiring expertise and assistance. During the course of these
bankruptcy cases, additional Ordinary Course Professionals have
been and may be retained.
Accordingly, the Debtors seek the Court's authority to:
-- employ the Ordinary Course Professionals pursuant to
Sections 105(a) and 327 of the Bankruptcy Code; and
-- compensate the Ordinary Course Professionals for services
rendered, without additional Court approval.
Mr. Leitch explains that the request will streamline the
professional compensation process and enable the Court and other
parties to monitor the Professionals' fees. Otherwise, it will
be too costly and inefficient for the Debtors to submit
individual application and proposed retention orders of the
numerous Ordinary Course Professionals. In addition, many
Ordinary Course Professionals may be unwilling to render services
if they may be paid only through a formal fee application
process.
If the expertise and background knowledge of these Ordinary
Course Professionals are lost, the Debtors' estates will incur
additional and unnecessary expenses as they are forced to retain
other professionals that are not as familiar with the business
and operations. It will take additional time and effort to
orient other professionals.
In lieu of a formal fee application process, each Professional
will present to the Debtors, their counsel, the United States
Trustee and the Official Committee of Unsecured Creditors, a
detailed statement of services rendered and expenses incurred for
the prior month. If there is no objection, the Debtors will pay
85% of the fees, with a 15% holdback, and 100% of the monthly
expenses. The payments will be subject to Court approval
approximately every 120 days.
On or before the last day of the month following the month for
which compensation is sought, each Professional will submit a
monthly statement to:
* US Airways, Inc.
2345 Crystal Drive
Arlington, Virginia 22227
Attn: Elizabeth K. Lanier
* Arnold & Porter
555 Twelfth Street, NW
Washington, D.C. 20004
Attn: Brian P. Leitch
* McGuireWoods LLP
1750 Tysons Boulevard, Suite 1800
McLean, Virginia 22102-4215
Attn: Lawrence E. Rifken
* The United States Trustee
115 South Union Street, Plaza Level, Suite 210
Alexandria, Virginia 22314
* Counsel to the Debtors' postpetition lenders
* Counsel to the Creditors Committee
The Notice Parties will have 20 days to review the Monthly
Statement and object to the fees. If any of the Parties object,
then the Ordinary Course Professionals will be required to submit
a formal application to the Court.
The Debtors ask the Court to establish a Joint Fee Review
Committee consisting of:
(a) a representative of the U.S. Trustee;
(b) Elizabeth K. Lanier, Esq., Executive Vice President of
Corporate Affairs, General Counsel and Secretary of US
Airways, Inc. and US Airways Group, Inc.;
(c) David M. Davis, Chief Financial Officer of US Airways, Inc.
and US Airways Group, Inc.;
(d) Brian P. Leitch, Esq., counsel to the Debtors;
(e) Lawrence E. Rifken, Esq., counsel to the Debtors;
(f) the chairperson or one of the co-chairpersons designated by
the Committee; and
(g) the lead counsel selected by the Committee to represent the
Committee.
The Fee Committee will meet prior to November 30, 2004, and
establish a monthly fee review protocol to be implemented no
later than the December 2004 fees and expenses review. The first
report of the Fee Committee will include a summary description of
the protocol.
* * *
Judge Mitchell authorizes the Debtors to employ all Ordinary
Course Professionals except for American Appraisal Associates,
Inc. The Debtors are authorized to make monthly payments of up
to $45,000 for compensation and reimbursement of expenses to each
of the Ordinary Course Professionals.
The Order is conditional. Any party-in-interest may object to
the Application until September 25, 2004. The U.S. Trustee and
the Creditors Committee have until October 1, 2004, to object.
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. 65;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
US AIRWAYS: Court Bars Utilities from Cutting their Services
------------------------------------------------------------
Section 366 of the Bankruptcy Code protects a debtor against
termination of its utility service immediately upon the
commencement of its Chapter 11 case. At the same time, Section
366 also provides adequate assurance of payment to utility
companies.
Section 366 provides that:
(a) A utility may not alter, refuse, or discontinue service
to, or discriminate against, the trustee or the debtor
solely on the basis of the commencement of a bankruptcy
case or that a debt owed by the debtor to a utility for
service rendered before the Petition Date was not paid
when due;
(b) The utility may alter, refuse, or discontinue service if
neither the trustee nor the debtor, within 20 days after
the Petition Date, furnishes adequate assurance of
payment, in the form of a deposit or other security, for
service after the date. On request of a party-in-
interest and after notice and a hearing, the court may
order reasonable modification of the amount of the
deposit or other security necessary to provide adequate
assurance of payment.
In the normal conduct of its business operations, US Airways
obtains natural gas, water, electric, telephone, fuel, sewer,
cable, telecommunications, internet, paging, cellular phone, and
other services from hundreds of utility companies and other
providers. The Utility Companies service the Debtors' corporate
offices, operations and numerous facilities around the country.
Uninterrupted utility services are essential to ongoing
operations and to the success of the Debtors' reorganization.
Should the Utility Companies refuse or discontinue service, even
for a brief period, the Debtors' business operations would be
severely disrupted. The impact on the Debtors' businesses
operations and revenue would be extremely harmful and would
jeopardize the Debtors' reorganization efforts.
At the Debtors' request, Judge Mitchell enjoins and prohibits the
Utility Companies from altering, refusing or discontinuing
services because of the Debtors' Chapter 11 filing or any unpaid
prepetition invoice.
Judge Mitchell finds that the Utility Companies already have
adequate assurance of future payment as required by Section
366(b) of the Bankruptcy Code.
According to Brian P. Leitch, Esq., at Arnold & Porter, in
Denver, Colorado, adequate assurance exists due to:
(a) the Debtors' lack of any prepetition default to the
Utility Companies;
(b) the Debtors' record of regular and timely payment of
prepetition invoices to the Utility Companies;
(c) the Debtors' adequate liquidity to pay future utility
bills through ongoing operations; and
(d) the Utility Companies' right to seek administrative
expense priority treatment under Sections 503(b) and
507(a)(1).
Mr. Leitch asserts that the Debtors' history of consistent and
regular payment to the Utility Companies, coupled with their
demonstrated ability to pay future utility bills from ongoing
operations and postpetition financing, constitute adequate
assurance of payment for future utility services within the
meaning of Section 366 -- without the need to provide additional
security deposits, bonds or any other payments to the Utility
Companies.
If any Utility Company submits a request for additional assurance
of future payment that the Debtors believe is unreasonable, and a
consensual resolution cannot be reached, the Debtors will ask the
Court to render a determination.
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. 65;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
USGEN: Inks Pact to Sell Hydro Assets to TransCanada for $505 Mil.
------------------------------------------------------------------
USGen New England, Inc., and an affiliate of TransCanada
Corporation (NYSE: TRP; Toronto) signed an Asset Purchase
Agreement for TransCanada to purchase hydroelectric generation
assets with a total generating capacity of 567 megawatts for
$505 million in cash.
The assets include generating systems on two rivers in New
England:
* the 484 MW Connecticut River system in New Hampshire and
Vermont; and
* the 83 MW Deerfield River system in Massachusetts and
Vermont.
The systems include 13 dams with 41 hydroelectric generating
units. On a ten-year average, the generating systems produced
approximately 1.4 million MW-hours of electricity annually. The
output is not subject to long-term contracts.
USGen New England voluntarily filed for protection under Chapter
11 of the U.S. Bankruptcy Code in July 2003. The sale will be
subject to bankruptcy court approval. Through a court-sanctioned
auction process in accordance with customary bidding procedures,
USGen New England will seek offers that are higher or otherwise
better than the TransCanada agreement.
As part of its agreement, TransCanada is granted certain
protections, subject to court approval, most notably a break fee
and expense reimbursement if another bid is accepted. TransCanada
also retains the right to amend its offer should USGen New England
receive an offer, which is superior to its existing agreement with
TransCanada. The agreement contemplates that final bankruptcy
court approval of the sale will be obtained about 75 days after
signing of the agreement. The sale is also subject to U.S. anti-
trust and other regulatory reviews.
TransCanada is a leading North American energy company. The
company is focused on natural gas transmission and power services
with employees who are expert in these businesses. The network of
approximately 39,000 kilometres (24,200 miles) of pipeline
transports the majority of Western Canada's natural gas production
to the fastest growing markets in Canada and the United States.
TransCanada owns, controls or is constructing nearly 4,700
megawatts of power -- an equal amount of power can meet the needs
of about 4.7 million average households. The company's common
shares trade under the symbol TRP on the Toronto and New York
stock exchanges. Visit the company on the Internet at
http://www.transcanada.com.
Headquartered in Bethesda, Maryland, USGen New England, Inc., an
affiliate of PG&E Generating Energy Group, LLC, owns and operates
several electric generating facilities in New England and
purchases and sells electricity and other energy-related products
at wholesale.
The Debtor filed for Chapter 11 protection on July 8, 2003 (Bankr.
D. Md. Case No. 03-30465). John E. Lucian, Esq., Marc E.
Richards, Esq., Edward J. LoBello, Esq., and Craig A. Damast,
Esq., at Blank Rome, LLP, represent the Debtor in their
restructuring efforts. When it sought chapter 11 protection, the
Debtor reported assets amounting to $2,337,446,332 and debts
amounting to $1,249,960,731.
TransCanada also has an agreement with NEGT to purchase Gas
Transmission Northwest Corporation.
VERTIS INC: Moody's Affirms Low-B & Junk Ratings
------------------------------------------------
Moody's Investors Service affirmed all ratings of Vertis Inc.,
including its:
* $250 million Senior Secured Revolving Credit Facility -- B2
* $342 million 9.75%Senior Secured Second Lien notes due 2005
-- B2
* $348 million 10.875% Senior Notes due 2009 -- B3
* $272 million 13.5% Senior Subordinated Notes due 2009 -- Caa1
* Senior Implied rating -- B2
* Issuer rating -- B3
The ratings outlook has been changed to negative from stable.
The ratings reflect Vertis':
(i) high leverage,
(ii) competitive pricing pressure,
(iii) thin margins, and
(iv) the dependency of its business upon customer insert and
direct mail spending which has only recently show signs
of recovery following a protracted slowdown since 2001.
The ratings are supported by:
(i) Vertis' scale,
(ii) its recent success in growing EBITDA (largely through
cost-cutting measures),
(iii) its solid market position in the newspaper insert and
direct mail businesses, and
(iv) the strength of its well-established customer
relationships.
Vertis' total debt-to-EBITDA stood at approximately 7.1 times at
the end of June 2004. Including the securitization facility,
parent mezzanine debt, and unfunded pension obligations, leverage
stood at 8.0 times, which represents a fully leveraged profile.
Based upon a valuation of 6.5 times, recovery prospects are
questionable for all debtholders, especially junior debtholders,
in a distress scenario.
Because Vertis can largely pass on newsprint costs to its
customers, it has been buffered against the full impact of recent
paper price increases, nevertheless it operates in a market
characterized by commoditized products, fierce price competition
and overcapacity.
At the end of June 2004, Vertis recorded liquidity of $46 million
comprising $10 million in cash equivalents and $36 million in
undrawn bank availability. This liquidity is augmented by the
proceeds of a recently terminated Austrian leveraged lease, which
totaled $31 million.
Moody's expects that the company will need to amend or refinance
its existing credit facility during 2004, since it matures at the
end of 2005. In addition, the company's $130 million off-balance
sheet securitization matures in 2005. There can be no assurance
that Vertis will be successful in addressing its looming
refinancing requirements on satisfactory terms and conditions.
The negative outlook incorporates Moody's expectation that sales
and cash flow will remain pressured by competitive elements for
the near-term and that the effects of volume growth will continue
to be offset by tighter pricing. Importantly, Vertis' UK
operations have produced poor financial results and Moody's will
carefully monitor the results of the recent UK restructuring
initiatives.
There are few factors liable to provide near-term ratings lift.
On the contrary, a worsening of Vertis' already tight liquidity
situation, any roadblocks to the successful refinancing of its
bank debt over the next few months, or major account losses
resulting from predatory competition, could all result in a
downgrade of ratings. Moody's expects that the company should be
able to reduce leverage to below seven times debt to EBITDA by the
end of 2004. Vertis' ability to demonstrate sustained recovery
should be most observable during the upcoming holiday season,
which is typically Vertis' strongest quarter for cash generation.
Vertis, Inc., a leading provider of integrated advertising
products and marketing services, recorded 2003 revenues of
$1.6 billion. The company is headquartered in Baltimore,
Maryland.
VICTORY EQUIPMENT: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Victory Equipment Rental & Sales, Inc.
2031 South Boulevard
Brewton, Alabama 36426
Bankruptcy Case No.: 04-15613
Type of Business: The Debtor is engaged in the equipment rental
and sales business.
Chapter 11 Petition Date: September 27, 2004
Court: Southern District of Alabama (Mobile)
Judge: Margaret A. Mahoney
Debtor's Counsel: Robert M. Galloway, Esq.
P.O. Box 16629
Mobile, AL 36616-0629
Tel: 251-476-4493
Total Assets: $304,274
Total Debts: $1,350,925
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Textron Financial Deficiency on loan $800,000
701 Xenia Avenue South regarding repossessed
Suite 300 equipment
Golden Valley, MN 55416
New Holland Credit Backhoe 4x4 extend $86,000
Post Office Box 0507 a hoe $21,000
Carol Stream, IL 60132 secured value:
$50,000
John Deere Credit 13,500/14200,4300 $85,000
Dept. 77039 tractor w/loader
Post Office Box 77000 8500 1 LT Riding
Detroit, MI 48277-0039 tractor $900
secured value:
$55,000
Internal Revenue Service 941 2001 taxes $35,000
Bobcat Financial 773 Bobcat Skdsteer $33,000
secured value:
$6,500
Starling Financial Mixers $1200, $26,000
miscellaneous small
equipment $2800
secured value:
$3,500
State of Alabama 2002 unemployment $26,000
taxes
Pawnee Leasing Trencher barretto $20,000
$2500
secured value:
$5,500
Allmand Bros 2 mini backhoe's 20 $18,136
H.P. Gases values
$9712 & $12,294
secured value:
$4,500
MultiQuip 2001 account $18,000
Bill Salter Signs 2001 account $17,730
Gasden Scaffolding Co., Inc. 2001 account $15,000
M.D. Moody & Sons 2001 account $15,000
National Insurance 2001 account $14,000
Specialist
MIA Distributors 2001 account $10,000
Brand Scaffold 2001 account $10,000
Staff USA 2001 account $10,000
Rental Service Corporation 2001 account $9,660
Better Built Trailers 2001 account $7,500
New Holland Credit 2001 account $7,414
VIVA INT'L: Confirms Aircraft Agreement with Seabird & Viva Air
---------------------------------------------------------------
Viva International, Inc., (OTCBB:VIVI) said new revenue
opportunities have been proposed to Viva, in a show of confidence
for Viva's aggressive efforts in meeting the filing requirements
for its Dominican Republic certificate. Consequently, committing
itself to these new opportunities and in support of Viva's forward
looking business plan, Viva has reached a mutual agreement between
Seabird World Airways and Viva Air Dominicana, S.A.
A Company spokesman responding to a direct query stated, "Viva and
Seabird have concluded formal negotiations and are documenting the
commitment of two Boeing 747-269B aircraft into contractual form.
We anticipate the contract to be executed within the window of the
Dominican Republic certification period and to be followed by
agreements for new cargo and tour operations with South American
and Dominican Republic commercial representatives".
The spokesman added, "Viva projects that the recent proliferation
of open trade agreements between major South American and Asian
countries will accelerate the growth of commercial and investment
ventures to the Southern Hemisphere. Viva anticipates that these
new opportunities as are being presently proposed to Viva will
also accelerate the revenue generating ability of the Viva airline
business plan."
The spokesman confirmed, "As previously announced, Viva continues
to concentrate all of its efforts on the company's aviation
operation and business. Viva is continually approached with
opportunities for business joint ventures from active
organizations in the airline business. Any prospect to enhance
shareholder value is welcome and shall be entertained, however,
Viva management is devoted to pursuing primarily those
opportunities which will allow the execution of Viva's airline
business plan. Further details of the agreements to utilize the
747 aircraft as well as the contracts and/or agreements for cargo
and tour operation revenues will soon follow."
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., 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.
W.R. GRACE: Buying Flexia Roof-Underlayment Biz for CN$16.1 Mil.
----------------------------------------------------------------
W.R. Grace & Co., and its debtor-affiliates engage in specialty
chemicals and materials businesses, operating on a worldwide
basis. The Debtors predominantly operate through two business
units: Davison Chemicals and Performance Chemicals.
The Debtors' Specialty Building Materials unit is part of
Performance Chemicals. SBM sells waterproofing products, on a
worldwide basis, to both the residential and non-residential
construction industry. For over 30 years, the Debtors, through
SBM, have pioneered waterproofing products like Ice and Water
Shield(R) for sale to residential home-builders and roofing
contractors. SBM's domestic business is conducted through Debtor
W.R. Grace & Co.-Conn.
David W. Carickhoff, Jr., Esq., at Pachulski, Stang, Ziehl, Young,
Jones & Weintraub, P.C., tells the Court that Grace has
experienced significant annual revenue-growth from its Ice and
Water Shield sales in North America. Moreover, the residential
waterproofing product line, including Grace's line of Vycor(R)
Tapes -- tapes for waterproofing windows and doors -- has been a
very profitable segment of SBM's business, particularly due to the
popularity of products to prevent water infiltration into
residential structures. This segment's recent growth and
profitability have led the Debtors to pursue additional business
opportunities within the business segment.
Flexia Corporation, a Quebec company based in Brantford, Ontario,
has developed a synthetic, roof-underlayment product-line marketed
under the Trademark Tri-Flex 30(R). Tri-Flex is rapidly
displacing the standard roofing underlayments that have
traditionally been used on the parts of residential roofs where
Ice and Water Shield are not used. Thus, acquiring the Tri-Flex
product-line would increase Grace's revenues and serve as a
strategic and complementary fit with Grace's current line of
residential waterproofing products. Furthermore, since Tri-Flex
is distributed through the same channels as Grace's residential
waterproofing products, an acquisition would also provide Grace
with channel and brand leverage. Importantly, Tri-Flex sales have
doubled over the last three years, and, because current market
penetration is low, double-digit growth rates are anticipated for
the foreseeable future. Tri-Flex's penetration includes "big-box"
retailers like The Home Depot. Most of Tri-Flex's sales are in
the United States.
Grace or one of its subsidiaries proposes to enter into an asset
purchase agreement to acquire the Target Business. Specifically,
Grace intends to purchase the formulations, technology, know-how,
customers lists, trademarks and goodwill of the Target Business.
Once acquired, Grace will use the formulations, technology and
know-how to construct a production line for the manufacture of
Tri-Flex products at Grace's Chicago facility. During the
associated transition period, Flexia will continue to manufacture
Tri-Flex products for Grace at Flexia's production facilities in
Brantford Ontario, and Langley, British Columbia, under the terms
of a contract manufacturing agreement.
In addition, Grace will acquire Flexia's established sales
network. Grace also anticipates offering employment to a key
Flexia employee. Grace will not assume any pre-closing
liabilities or obligations of the Target Business, other than
those associated with the post-closing obligations under certain
sales representative contracts to be specifically assumed. In
this regard, Flexia would agree to indemnify Grace for pre-
closing liabilities, including those relating to any potential
environmental issues. Grace does not anticipate conducting any
prospective manufacturing activities in any former Flexia
facilities.
The purchase price for the acquisition would be approximately
CN$16.1 million -- of which CN$12 million in cash would be paid at
closing. If during the 12-month period beginning with the first
full month after the closing, Grace's sales of Tri-Flex products
through big box customers meet Flexia's 2005 fiscal forecast, then
Grace would be required to pay Flexia an additional CN$4,100,000.
If sales of Tri-Flex products, to this channel during this period,
are less than CN$14 million, the price adjustment to Flexia would
be less based on a pre-determined formula.
By this motion, the Debtors seek the Court's authority to:
(i) acquire the Target Business from Flexia for up to
CN$16.1 million, including post-closing adjustments;
(ii) enter into a contract manufacturing agreement with
Flexia; and
(iii) construct a Tri-Flex production line.
Mr. Carickhoff relates that the acquisition fits well with the
Debtors' existing residential waterproofing business and provides
immediate sales growth in the fast-growing segment. The Debtors
anticipate that SBM's residential business sales will increase
nearly 20% after the closing, and the Debtors anticipate further
enhancing growth in several segments of the residential building
products sector through the synergies provided by the Debtors'
manufacturing, technical services and research and development
capabilities. In particular, Grace would utilize SBM's existing
U.S. residential waterproofing sales force, which consists of more
than 20 people.
According to Mr. Carickhoff, the CN$16.1 million purchase price is
a fair and reasonable consideration for Flexia's Synthetic Roof
Underlayment business, and it reflects the result of independent,
good faith negotiations between the Debtors and Flexia because:
(a) The price-to-sales ratio of the proposed transaction is
0.7 and the earning-before-interest-tax-depreciation-
amortization ratio of the proposed transaction is 6.0.
These ratios each compare favorably with similar, recent
transactions in the construction chemicals and allied
products sectors.
(b) The Debtors project incremental sales will continue to
grow at historical rates by leveraging the combined
strengths of each business' products and customer
relationships, and immediate cost savings of $0.8 million
per year through the consolidation of overhead. Moreover,
this cost savings is expected to increase as self-
manufacturing begins at Chicago. The Tri-Flex product,
technology, know-how and strong sales, combined with the
Debtors' profitable operations, will increase the Debtors'
revenues, profits and market presence.
(c) The Debtors expect that the acquisition will be cash
accretive to their estates within the second year
following the closing of the transaction, thus increasing
the value of their estates for the benefit of all
stakeholders.
Headquartered in Columbia, Maryland, W.R. Grace & Co., --
http://www.grace.com/-- supplies catalysts and silica products,
especially construction chemicals and building materials, and
container products globally.
The Debtors filed for chapter 11 protection on April 2, 2001
(Bankr. Del. Case No: 01-01139). James H.M. Sprayregen, Esq., at
Kirkland & Ellis and Laura Davis Jones, Esq., at Pachulski, Stang,
Ziehl et al. represent the Debtors in their restructuring efforts.
(W.R. Grace Bankruptcy News, Issue No. 71; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
*********
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
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Each Tuesday edition of the TCR contains a list of companies with
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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
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Copyright 2004. All rights reserved. ISSN: 1520-9474.
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