/raid1/www/Hosts/bankrupt/TCR_Public/041025.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Monday, October 25, 2004, Vol. 8, No. 232
Headlines
ABITIBI-CONSOLIDATED: Posts $182 Million Profit for 3rd Quarter
ADESA INC: Posts $21.5 Million Net Income for 2004 3rd Quarter
AETNA COMMERCIAL: Fitch Lifts Class J's Rating from BB+ to BBB
ARIS INDUSTRIES: Case Summary & 20 Largest Unsecured Creditors
ARNET REALTY COMPANY: Case Summary & 6 Largest Unsecured Creditors
BABCOCK & WILCOX: Nuclear Insurers Appeal Confirmation Ruling
BANCTEC INC: Moody's Withdraws Junk Ratings for Business Reasons
BERMITE RECOVERY: U.S. Trustee Meeting Creditors on Nov. 9
BETHLEHEM STEEL: Judge Lifland Allows St. Paul's $8.5M Admin Claim
BEULA CHURCH: Judge Drain Says No Transfer Taxes Under Sec. 1146
BOCA RESORTS: S&P Puts B+ Corporate Credit Rating on CreditWatch
BOSTON PROPERTY: Wants to Hire Bayard Firm as Bankruptcy Counsel
CAESARS ENT: Third Quarter Net Income Climbs 21% to $58 Million
CALPINE: Fitch Withdraws Securities' Junk Ratings After Redemption
CALPINE CORP: Completes Redemption of High Tides I & II Securities
CARE CONCEPTS: Completes 39.3% Investment in Penthouse Media
CATHOLIC CHURCH: Tucson Wants Court Nod to Honor Insurance Claims
CELESTICA: Posts $27.4 Million Net Earnings for 2004 3rd Quarter
CELESTICA INC: Weak Performance Cues S&P to Pare Rating to BB-
CHEVY'S INC: Real Mex Inks Agreement to Purchase Restaurants
CHOCTAW RESORT: Moody's Puts Ba3 Rating on $143.8M Sr. Sec. Loan
CINRAM INTERNATIONAL: Will Release 3rd Quarter Results on Nov. 3
CITATION CORP: Hires Finley Colmer as Advisor on Supplier Issues
CITATION CORPORATION: JPMorgan-Backed DIP Loan Gets Court Approval
CLASSIC TOOL: Case Summary & 20 Largest Unsecured Creditors
CONSTELLATION BRANDS: Mondavi Shareholders Challenge Bid
CONTECH CONSTRUCTION: Moody's Rates $350M Senior Facilities Ba3
COUNTRYWIDE HOME: Fitch Holds Low-B Ratings on Four Cert. Classes
COVANTA ENERGY: Reorganized Debtors' 3rd Post-Confirmation Report
CRANE CO: Plans March 2005 Prepack to Resolve Asbestos Claims
CRANE CO: Posts $205 Million Third Quarter Net Loss
DESA HOLDINGS: Plan Proposal Period Stretched to Dec. 21
DURANGO GEORGIA: Judge Davis Denies J. Walter's Amended Claim
ELECTRO-METRICS: Says It Can't Pay $1.5 Mil. Owed to Hayes Corp.
ENRON CORP: Wants to Dip Into $75MM Crime Loss Indemnity Policies
FIBERMARK, INC.: Committee Members Can Trade Debtors' Securities
FIRST UNION: Fitch Slices Rating on Class B Issue to B from BB-
FLIGHTLEASE HOLDINGS: Section 304 Petition Summary
FRATERNAL COMPOSITE: Dist. Ct. Won't Revive Chapter 11 Case
FREESCALE SEMICONDUCTOR: Fitch Rates Senior Unsecured Debt BB+
GENERAL GROWTH: Strike Price for New Warrants is $32.23 Per Share
GERDAU AMERISTEEL: Will Discuss 3rd Quarter Results on Nov. 3
GITTO GLOBAL: U.S. Trustee Meeting with Creditors on Nov. 2
HERITAGE AUTOMOTIVE: Chapter 11 Involuntary Case Summary
HUFFY CORP: Gets Interim Approval of $50 Million DIP Financing
ILLINOIS HEALTH: S&P Pares Rating on Revenue Bonds to BB from BBB
IMCO RECYCLING: S&P Junks Planned $125 Million Senior Notes
INDYMAC ABS: Poor Performance Spurs Fitch to Junk Class BV Issue
INTEGRATED ALARM: S&P Rates Planned $125M Senior Unsec. Notes B-
INTEGRATED HEALTH: Asks Court to Deny Tort Claimants' Appeal
INTERNATIONAL WIRE: Completes Recapitalization & Reduces Debt
INTERSTATE BAKERIES: Moves to Reject Eight Real Property Leases
INTERSTATE BAKERIES: Wants Open-Ended Lease Decision Deadline
INTERSTATE BAKERIES: Gets Final Court Nod on $200MM DIP Financing
J.P. MORGAN: S&P Places Low-B Ratings on Three Certificate Classes
KMART CORP: Wants Stay Lifted to End Footstar Master Agreements
KMART CORP: Walpath Charges Non-Compliance with Chapter 11 Plan
LORAL SPACE: Files Revised Chapter 11 Plan & Disclosure Statement
MARINER: Will Appeal Dismissal of Fulton County Action Against PWC
MASONITE INTERNATIONAL: Announces 3rd Quarter Results
MEDIA SERVICES: Providing Nasdaq Plan for Correcting Deficiency
MEMEC GROUP: Moody's Downgrades Ratings After Review
METROPOLITAN MORTGAGE: Fitch Junks Class M-2 Issue
NATIONAL BENEVOLENT: Retains GaiaTech to Provide Site Assessment
NEW SKIES: Moody's Assigns Single-B & Junk Bank & Bond Ratings
NORTHWESTERN: S&P's Up Rating to BB- After Bankruptcy Emergence
NORTHWESTERN STEEL: Bankr. Court Denies Sale of Un-Issued Shares
NVR INC: S&P Affirms BB+ Ratings with Positive Outlook
PARK PLACE: Fitch Rates Class M-10 Privately Offered Certs. BB+
PENN LANDFILL GAS: Case Summary & 20 Largest Unsecured Creditors
PIONEER NATURAL: To Webcast 3rd Qtr. 2004 Results on Oct. 28
PLAINWELL, INC.: Confirmation Order Improperly Enjoined the IRS
PLATINUM PRESS: Case Summary & 20 Largest Unsecured Creditors
QUESTERRE ENERGY: Successfully Completes Corporate Restructuring
QWEST COMMS: Agrees to Pay $250 Million in Civil Penalty with SEC
RCN CORP: Exclusivity Extension Hearing Slated for Nov. 3
RELIANCE GROUP: Liquidator Moves to Protect Subsidiaries From PBGC
SHAW COMMS: Board of Directors Declares Quarterly Dividend
SHAW COMMS: Posts $28.9 Million Income for Quarter Ended Aug. 31
SILICON VALLEY: Creditor-Proposed Plan Fails Best Interests Test
SK GLOBAL: Declares Chapter 11 Liquidation Plan Effective
SLI INC.: District Court Upholds Plan's Third-Party Releases
SMTC CORPORATION: Will Hold Third Quarter Conference on Nov. 8
SPEIZMAN INDUSTRIES: Exclusive Period Stretched to Nov. 1
STELCO INC.: Court Approves Capital Raising & Asset Sale Process
TACTICA INTERNATIONAL: Case Summary & Largest Unsecured Creditors
TIMKEN CO: North American Subsidiary Increases Tool Steel Prices
TORPEDO SPORTS: Inks Definitive Acquisition Pact with Interactive
TRAVELCENTERS: S&P Rates Planned $575M Senior Secured Facility BB
TRM CORP: Moody's Rates Planned $150M Senior Secured Facility B2
TRW AUTOMOTIVE: S&P Assigns BB+ Rating to $300M Sr. Secured Loan
TXU GAS: Fitch Affirms BB+ Rating on Preferred Stock
UAL CORP: Bridge Assoc. Will Independently Analyze Business Plan
UAL CORP: New Convertible Notes Will Pay Postpetition Interest
US AIRWAYS: ALPA Pilots Ratify Transformation Plan Agreement
USA REIT: Declares CAD$9.45 Per Share Liquidating Distribution
VALLEY MEDIA: Sony Music Pays $1.75 Mil. to Resolve Preference
VISTEON CORP.: Debt-to-Equity Ratio Soars to Nearly 20:1
VIVENTIA BIOTECH: Eyes $14M Financing from New Secured Debentures
WCI STEEL: D.E. Shaw Wants to Put $140M Plan in Creditors' Hands
WORLDCOM INC: Leucadia Sells MCI Stock for $20 Million Profit
WORLDCOM INC: Dist. Ct. Approves 401(K) Suit Against Merrill Lynch
* BOND PRICING: For the week of October 25 - October 29, 2004
*********
ABITIBI-CONSOLIDATED: Posts $182 Million Profit for 3rd Quarter
---------------------------------------------------------------
Abitibi Consolidated, Inc., reported third quarter net earnings of
$182 million, or 41 cents a share, compared to a loss of
$70 million, or 16 cents a share, recorded in the third quarter of
2003 and a loss of $79 million, or 18 cents a share in the second
quarter of 2004. Included in the quarter's results was an
after-tax gain of $194 million on the translation of currencies,
namely the Company's US dollar-denominated debt, as well as a
$5 million after-tax gain on sales of air emission credits;
$6 million in income tax adjustment and a $1 million after-tax
charge related to the Alma start-up.
The operating profit in the third quarter was $82 million compared
with an operating loss of $32 million in the same quarter of 2003.
The major difference year-over-year is higher prices and sales
levels for all of the Company's paper and wood products as well as
lower operating costs. Negatively offsetting these results were a
stronger Canadian dollar as well as increased cost in pension and
other employee future benefits, energy and fibre.
"We continued to chip away at production costs while prices for
all of our products moved higher during the quarter, both
sequentially and year-over-year," said President and Chief
Executive Officer, John Weaver. "The recent newsprint price
increase is taking hold in our North American order book, and when
you combine seasonal tightness with a monthly industry average of
3.5% less domestic production, we're confident the fourth quarter
will show additional market improvement. What's more, demand in
international markets such as Europe, South America and Asia has
improved significantly compared with last year."
Currency
Compared to the third quarter of 2003, the Canadian dollar has
appreciated by 6% against the US dollar. The Company estimates
the unfavourable impact of this appreciation on its operating
results to be approximately $35 million in the third quarter and
$115 million for the first nine months compared to the same
reporting periods of last year.
Capex
Capital expenditures during the quarter came in at $111 million,
as PanAsia's Hebei project to construct a 330,000 tonnes newsprint
mill outside of Beijing, China accounted for $50 million. To
date, the US$300 million project is on budget and on schedule. As
well the conversion at Alma, Quebec from newsprint to produce
Equal Offset(R) was recently completed. The Company also
continued its hydro modernization project at Iroquois Falls,
Ontario and expects that to be complete in November.
"With the Alma project ramping up faster than originally
anticipated, plans for the next Equal Offset(R) conversion are
well underway," added Weaver. "So, while we continue to convert
towards these products, we'll simultaneously grow revenues and
margins. This, combined with Pan Asia's expansion plans in the
Far East, will provide growth and returns to Abitibi-
Consolidated."
Abitibi-Consolidated is a global leader in newsprint & uncoated
groundwood (value-added groundwood) papers as well as a major
producer of wood products, generating sales of CAN $5.4 billion in
2003. The Company owns or is a partner in 27 paper mills,
22 sawmills, 4 remanufacturing facilities and 1 engineered wood
facility in Canada, the US, the UK, South Korea, China and
Thailand. With over 15,000 employees, excluding its PanAsia joint
venture, Abitibi-Consolidated does business in approximately
70 countries. Responsible for the forest management of
17.5 million hectares of woodlands, the Company is committed to
the sustainability of the natural resources in its care.
Abitibi-Consolidated is also the world's largest recycler of
newspapers and magazines, serving 16 metropolitan areas in Canada
and the United States and 130 local authorities in the United
Kingdom, with 14 recycling centres and approaching 20,000 Paper
Retriever(R) and paper bank containers.
* * *
As reported in the Troubled Company Reporter on June 15, 2004,
Standard & Poor's Ratings Services assigned its 'BB' rating to
Montreal, Quebec-based Abitibi-Consolidated Co. of Canada's
US$200 million floating rate notes due 2011, and US$200 million
7.75% notes due 2011. The notes are unconditionally guaranteed by
Abitibi-Consolidated Inc. At the same time, Standard & Poor's
affirmed its 'BB' long-term corporate credit rating on Abitibi.
The outlook is negative.
ADESA INC: Posts $21.5 Million Net Income for 2004 3rd Quarter
--------------------------------------------------------------
ADESA, Inc. (NYSE: KAR), North America's largest publicly traded
provider of wholesale vehicle auctions and used vehicle dealer
floorplan financing, today reported its third quarter financial
results for the period ended September 30, 2004. The Company
reported net income of $21.5 million on revenue of $228.5 million,
or $0.23 per diluted share, which included non-recurring
transaction costs of $8.7 million after-tax, or $0.09 per diluted
share. Excluding the impact of these non-recurring costs and the
results of discontinued operations, the Company would have
reported income from continuing operations of $30.3 million, or
$0.32 per diluted share. When compared to the third quarter of
2003, results for the current quarter also included incremental
after-tax interest and corporate expenses of $2.6 million and
$1.8 million, respectively.
Recent Highlights:
* Achieved third quarter adjusted earnings per share from
continuing operations of $0.32 excluding the non-recurring
transaction costs of $0.09 per share
* Auction and Related Services quarterly net income grew
28 percent
* Dealer Financing quarterly net income grew 13 percent
* Posted third quarter revenue of $228.5 million
* Authorized share repurchase program of up to $130 million
* Announced ADESA's first quarterly dividend of $0.075 per
share to shareholders of record as of November 15, 2004
* Expanded salvage operations in California and opened a new
AFC loan production office in the greater Washington D.C.
market
* Completed spin-off from ALLETE, Inc. resulting in a
distribution of 88.6 million shares of ADESA, Inc. to ALLETE,
Inc. shareholders
* Strengthened senior management team with appointment of
George Lawrence as Executive Vice President and General
Counsel
"Our recent achievements and the double-digit net income growth we
generated at both operating segments in the third quarter are a
testament to the ability of ADESA to generate solid earnings,
expand operations and build long-term value for our shareholders,"
said David Gartzke, ADESA Chairman and Chief Executive Officer.
"With our spin-off from ALLETE completed, ADESA is better
positioned to utilize its North American market position,
value-added business model and solid balance sheet in order to
enhance shareholder value."
Quarterly Consolidated Results
For the third quarter of 2004, the Company reported revenue of
$228.5 million compared with $224.5 million in the third quarter
of 2003. ADESA's revenue growth in the current quarter was a
result of increased revenue per vehicle sold and an increase in
loan transactions, which combined to more than offset a five
percent decline in vehicle volumes.
Net income for the current quarter was $21.5 million, or $0.23 per
diluted share compared with net income of $29.0 million, or $0.33
per diluted share in the third quarter of 2003. Excluding the
non-recurring transaction costs and the results of discontinued
operations, the Company would have reported 2004 third quarter
income from continuing operations of $30.3 million, or $0.32 per
diluted share. ADESA's non-recurring transaction charges relate
to the Company's initial public offering, debt refinancing and
spin-off from its former parent company, ALLETE, Inc. Results for
the current quarter also included incremental after-tax interest
and corporate expenses of $2.6 million and $1.8 million. These
incremental expenses are the result of the debt refinancing and
additional infrastructure required to operate as an independent
publicly traded company. For the quarter ended Sept. 30, 2004,
the Company had approximately 95.1 million shares outstanding on a
weighted average diluted basis, compared with 88.6 million for the
same quarter in 2003. The share increase as compared with the
third quarter of 2003 is primarily the result of the Company's
initial public offering of 6.25 million common shares in the
second quarter of 2004.
Quarterly Segment Results
Net income for Auction and Related Services increased 28 percent
to $25.5 million, as compared with $20.0 million in the third
quarter of 2003, driven primarily by continued emphasis on
controlling costs and an increase in revenue per vehicle sold.
Revenue per vehicle sold for the current quarter, which includes
the Company's used vehicle auctions, salvage auctions, vehicle
inspection services and other ancillary services, was $418 as
compared with $396 for the same quarter in 2003. Results for the
Company's Dealer Financing segment also showed year-over-year
improvement, driven by a 13 percent increase in loan transactions.
Dealer financing net income increased 13 percent to $10.2 million
for the quarter, as compared with $9.0 million in the third
quarter of 2003. Revenue per loan transaction for the current
quarter was $106, consistent with the third quarter of 2003.
Year-to-Date Consolidated Results
For the nine months ended September 30, 2004, the Company reported
revenue of $706.8 million and net income of $83.4 million, or
$0.92 per diluted share, as compared with revenue of
$694.1 million and net income of $90.2 million, or $1.02 per
diluted share for the same period in 2003. Income from continuing
operations was $87.5 million for the nine months ended
September 30, 2004, as compared with $89.9 million in 2003. The
results for the current nine-month period included non-recurring
transaction costs of $10.3 million net of tax, or $0.11 per
diluted share and discontinued operations of $4.1 million net of
tax, or $0.04 per diluted share. Absent these non-recurring costs
and the results of discontinued operations, income from continuing
operations would have been $97.8 million, or $1.07 per diluted
share. Year-to-date 2004 results also included incremental
interest and corporate expenses of approximately $3.2 million and
$4.4 million, net of tax. For the nine months ended
September 30, 2004, the Company had approximately 91.1 million
shares outstanding on a weighted average diluted basis, compared
with 88.6 million for the same period in 2003.
Full Year Outlook
For the full year 2004, ADESA estimates that revenue will range
from $915 million to $925 million. The Company also estimates
2004 full year income from continuing operations will range from
$105 million to $110 million, including estimated non-recurring
transaction costs of approximately $10 million, net of tax.
Absent the estimated non-recurring costs, income from continuing
operations is anticipated to range from $115 million to
$120 million. In addition to the non-recurring costs, estimated
income from continuing operations includes full year estimated
incremental interest and corporate expenses, relative to 2003, of
$6 million and $7 million, net of tax.
About ADESA, Inc.
Headquartered in Carmel, Indiana, ADESA, Inc. (NYSE: KAR) is North
America's largest publicly traded provider of wholesale vehicle
auctions and used vehicle dealer floorplan financing. The
Company's operations span North America with 53 ADESA used vehicle
auction sites, 28 Impact salvage vehicle auction sites and 81 AFC
loan production offices. For further information on ADESA, Inc.,
visit the Company's Web site at http://www.adesainc.com/
* * *
As reported in the Troubled Company Reporter on June 4, 2004,
Standard & Poor's Rating Services assigned its 'B+' rating to
ADESA Inc.'s proposed $125 million senior subordinated notes due
2012, and affirmed its 'BB' corporate credit and senior secured
ratings on the Carmel, Indiana-based operator of wholesale used-
vehicle auctions and provider of used-vehicle floorplan financing.
The outlook is stable.
AETNA COMMERCIAL: Fitch Lifts Class J's Rating from BB+ to BBB
--------------------------------------------------------------
Aetna Commercial Mortgage Trust's, multiclass pass-through
certificates, series 1997-ALIC are upgraded by Fitch Ratings as
follows:
-- $8 million class G to 'AAA' from 'AA+';
-- $14 million class H to 'AA' from 'A';
-- $26.1 million class J to 'BBB' from 'BB+'.
These certificates are affirmed by Fitch:
-- Interest-only class IO 'AAA';
-- $5.8 million class B 'AAA';
-- $68.2 million class C 'AAA';
-- $48.2 million class D 'AAA';
-- $20.1 million class E 'AAA';
-- $44.1 million class F AAA'.
The $20.1 million class K and the $21.7 million class L
certificates are not rated by Fitch.
The upgrades reflect improved credit enhancement levels resulting
from loan payoffs and amortization. As of the October 2004
distribution date, the pool's collateral balance has been reduced
by 66%, to $276.3 million from $802.7 million at issuance.
The master servicer, Midland Loan Services, Inc., provided
year-end 2003 financials for 97% of the pool. The YE 2003
weighted average debt service coverage ratio increased to
1.39 times (x) from 1.21x at issuance.
One loan (3%) is being specially serviced. The loan is secured by
an office building in Overland Park, Kansas. The property is
approximately 60% occupied. The loan was considered 90 days
delinquent as of the October 2004 distribution date; subsequently
the borrower has brought the loan current.
Fitch remains concerned with the third largest loan in the pool
(11%), Court Plaza, secured by an office property in Hackensack,
New Jersey. The property was 58% occupied as of year-end 2003 and
the borrower is trying to lease up the vacant space.
Fitch is closely monitoring the increased concentrations by
property type and loan balance, with office properties
representing 54% and the top five loans 66%.
ARIS INDUSTRIES: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Aris Industries Inc.
525 7th Avenue Suite 701
New York, New York 10018
Bankruptcy Case No.: 04-32026
Type of Business: The Debtor licenses rights to manufacture and
distribute brand name clothing. The Debtor
owns and licenses, among others, the "XOXO" and
"Members Only" trademarks.
Chapter 11 Petition Date: October 15, 2004
Court: Central District of California (Los Angeles)
Judge: Ernest M. Robles
Debtor's Counsel: David B. Golubchik, Esq.
Levene Neale Bender & Rankin LLP
1801 Avenue Of The Stars #1120
Los Angeles, CA 90067
Tel: 310-229-1234
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
426 Broadway Associates, LP Former Landlord $954,479
c/o Sleratzki Ceocarelli &
Weprin
Attn: Joseph P. Leon
Two Wall Street
New York, NY 10005
Phat Fashions, LLC Baby Phat License $874,919
Attn: Russell Simmons
521 7th Ave., 43rd Fl.
New York, NY 10018
Christi A. Wilson Litigation $775,000
Attn: Debra J. Guzon
Guzov Offink & Flink LLP
500 Madison Ave., 14th Fl.
New York, NY 10022
Fashion World - Santa LP Litigation $775,000
9629 Brighton Way, 2nd Fl.
Beverly Hills, CA 90210
CIT Equipment Finance Equipment lease - in $488,142
Attn: Mark Magnozzo litigation
Helfand & Helfand
60 East 42nd St.
New York, NY 10165
Perry Ellis International $350,000
Attn: Geri Mankoff, Esq.
3000 N.W. 107th Ave.
Miami, FL 33172
Skadden, Arps, Slate, Meager Former counsel $300,633
& Flom
Attn: Eileen Nugent, Esq.
4 Times Square, Rm. 45400
New York, NY 10036
Hitch & Trail, Kisoo K. $160,000
Trading Co.
Reuben & Novicoff Legal fees $153,920
Sieman's Financial Services $150,000
Bristol Industrial I, LLC Judgment pending $125,000
Krantz & Berman LLP Legal fees $105,000
GE Capital Corporation Equipment lease $100,000
Texpop Textiles Vendor $87,114
Verizon Telephone $65,000
Cofaco In litigation $65,000
Camper's World $60,000
Medalion Media, Inc. Pending litigation $58,500
against Debtor and
Steven Feiner
Premium Financing Insurance financing $55,300
Specialists, Inc.
AAR-ZEE Services, Inc. Vendor $46,722
ARNET REALTY COMPANY: Case Summary & 6 Largest Unsecured Creditors
------------------------------------------------------------------
Debtor: Arnet Realty Company LLC
Old Waterworks Road
P.O. Box 194
Old Bridge, New Jersey 08857
Bankruptcy Case No.: 04-43573
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
Madison Industries, Inc. 03-51135
Old Bridge Chemicals, Inc. 03-51134
Chapter 11 Petition Date: October 20, 2004
Court: District of New Jersey (Newark)
Judge: Donald H. Steckroth
Debtors' Counsel: Gary N. Marks, Esq.
Norris, McLaughlin & Marcus, P.A.
721 Route 202-206, PO Box 1018
Somerville, New Jersey 08876
Tel: (908) 722-0700
Total Assets: $311,000
Total Debts: $1,574,138
Debtor's 6 largest unsecured creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Estate of Arnold Asman $1,300,000
Attn: Scott A. Steinberg, Esq.
c/o Robinson Brog, et al.
1345 Avenue of the Americas
Suite 3100
New York, New York 10105-0143
Old Bridge Chemicals, Inc. Unknown $260,000
Bruce Bzura, President
Old Water Works Road
PO Box 194
Old Bridge, New Jersey 08857
Township of Old Bridge 4th Quarter $14,138
City of Perth Amboy Unknown
260 High Street
Perth Amboy, New Jersey
New Jersey Department Unknown
Bureau of Hazardous Waste
Compliance
PO Box 407
Trenton, New Jersey 08625-0407
US Environmental Protection Unknown
Agency
Attn: John Osolin
Emergency and Remedial
Response Division
290 Broadway, 19th Floor
New York, New York 10007-1866
BABCOCK & WILCOX: Nuclear Insurers Appeal Confirmation Ruling
-------------------------------------------------------------
American Nuclear Insurers and Mutual Atomic Energy Liability
Underwriters tell the Honorable Sarah Vance of the U.S. District
Court for the Eastern District of Louisiana that she should resist
adopting U.S. Bankruptcy Judge Jerry A. Brown's Proposed Findings
of Fact, Conclusions of Law and Recommendations concerning non-
core matters in connection with the chapter 11 plan he thinks
should be confirmed and under which The Babcock & Wilcox Companies
could emerge from chapter 11.
Prior to filing for chapter 11 protection, The Babcock & Wilcox
Company was named as the defendant in a lawsuit pending in the
United States District Court for the Western District of
Pennsylvania under the Price Anderson Act, 42 U.S.C. Sec. 2210, et
seq., commenced by individuals alleging bodily injury and property
damage arising out of exposure to radiation from two B&W nuclear
fuel fabrication facilities in Western Pennsylvania. The Price
Anderson Act was enacted by Congress under its war, commerce and
bankruptcy powers, and provides an exclusive Federally created
remedy for damages arising out of a nuclear-related injury. Having
established the remedy, the Act and cases decided thereunder
establish the standards for recovery on public liability claims.
American Nuclear Insurers and Mutual Atomic Energy Liability
Underwriters are the sole providers of nuclear liability insurance
in the United States. ANI provides this insurance to licensed
nuclear operators are approved and accepted by the Nuclear
Regulatory Commission and published in the Code of Federal
Regulations. In accordance with its rights and obligations under
the nuclear liability policies, ANI had been directing and funding
the defense of B&W in the public liability action for six years
when B&W filed for bankruptcy. As of that date, ANI's vigorous
defense had resulted in an order by the trial court vacating
verdicts rendered in eight test cases on the basis of prejudicial
errors at trial, and neither B&W nor ANI had paid any compensatory
damages on any of the public liability action claims.
Additionally, the United States Court of Appeals with the most
judicial experience with public liability actions, the Third
Circuit, has issued a number of rulings in another public
liability action ~ the case arising from the well-publicized
incident at the Three Mile Island nuclear power plant -- that
would control the outcome of public liability actions against B&W
and has established evidentiary requirements for recovery under
the Price Anderson Act that the record herein shows cannot be met
by plaintiffs.
B&W's chapter 11 plan proposes to settle all of the pending public
liability claims against B&W for the substantial sum of $110
million and sets aside in a trust an additional $100 million to
compensate any public liability claims that may arise in the
future from exposure to radiation at the two Western Pennsylvania
facilities. Under the proposed plan, ANI's Policies are assigned
to this trust. Notwithstanding ANI's express right under the
nuclear liability policies, in the regulatory prescribed form, to
control the settlement and defense of all public liability claims
against B&W for which coverage is sought, the proposed plan
anticipates funding the vast majority of the $210 million in
compensation for present and future public liability claims from
the proceeds of the ANI policies without requiring ANI's consent
to the settlement and without providing ANI with any control over
the handling of future public liability claims filed with the
trust. Rather, the proposed plan vests authority for handling
future claims in unnamed trustees to be selected by the plan
proponents. Notably, the funds committed under the proposed plan
for the compensation of current and future public liability claims
against B&W exceed by $75 million the total amount of liability
incurred by ANI for the defense and indemnity of all claims
arising from alleged nuclear incidents throughout the United
States since the formation of ANI in 1957, and exceeds by $140
million the total paid by ANI for claims arising from the accident
at Three Mile Island -- the worst nuclear accident in the history
of the United States.
Based upon the plain language of the ANI policies, in the
regulatory prescribed form, ANI says it has the absolute right to
control the defense and settlement of public liability claims
asserted against B&W. Equally clear to ANI is that the terms of
the proposed plan abrogate those rights by:
(1) settling the current public liability claims for
$210 million, over ANI's strenuous objection, and
(2) transferring all future public liability claims to a
trust, eliminating all control rights of ANI under its
contracts and applicable law.
Because the ANI policies are executory contracts, Section 365 of
the Bankruptcy Code requires B&W to either:
(a) reject the policies, or
(b) assume (or assume and assign) both the benefits and
burdens of the policies.
Because B&W has, under the proposed plan, assumed and assigned the
benefits of the policies (the right to proceeds) without assuming
the burdens of the policies (ANI's right to control the defense
and settlement of public liability claims), the proposed plan
violates Secs. 365 and 1129(a)(l) and, ANI argues, may not be
confirmed.
In an effort to overcome this fatal flaw in the proposed plan, the
Bankruptcy Court entertained a non-core "bad faith" claim asserted
by B&W against ANI in the context of the confirmation hearing and
recommends to this Court that ANI be found to have forfeited all
of its policy rights with respect to both the current and future
public liability claims. The Bankruptcy Court's proposed finding
in support of the predicate to its forfeiture conclusion -- that
ANI breached a duty to settle within policy limits, breached its
duty to defend, and effectively denied coverage in bad faith by
commencing coverage litigation to obtain a declaration of the
parties' rights and duties under the policies -- are without any
support in the record and are contrary to controlling law.
At the confirmation hearing, ANI presented testimony from its
chief underwriter concerning the critical importance of ANI's
right to control the defense and settlement of claims to the
ability of underwriters to insure the nuclear energy hazard.
Without this right, the risk would simply not be insurable in the
private insurance market. ANI also presented testimony from an
expert in the field of radiobiology to explain the relationship
between dose and probability of injury that lies at the heart of
the causation requirements for public liability set forth by the
Third Circuit. Finally, ANI presented testimony from in-house
counsel with responsibility for investigating, evaluating and
handling the public liability claims against B&W. This individual
explained the basis for ANI's determination to defend the claims
on the merits, the strategy employed in defending the claims, and
the history of the coverage litigation initiated to resolve a
disagreement between ANI and B&W over the application of the
policy limits and other issues. Nowhere in its 106-page opinion
and recommendation dated October 8, 2004 did the Bankruptcy Court
address any of ANI's evidence; instead, the Bankruptcy Court
proposed findings that have no support in the record and are
directly at odds with ANI's evidence applied under controlling
law.
Based on the facts developed during the confirmation hearing, ANI
tells the District Court, there is simply no basis to hold that
ANI acted in bad faith under controlling Pennsylvania coverage
law. ANI urges the District Court to deny confirmation of the
proposed plan on the basis that it violates Sections 365 and
1129(a)(l) of the Bankruptcy Code.
"While it may be that in this bankruptcy proceeding the public
liability claims are the tail wagging the asbestos dog, the tail
is worth $210 million and comes with significant consequences for
the nuclear industry and national nuclear energy policy," Andrew
S. Amer, Esq., Sean Thomas Keely, Esq., and Timothy Cornell, Esq.,
at Simpson Thacher & Bartlett LLP, counsel to American Nuclear
Insurers and Mutual Atomic Energy Liability Underwriters, tell the
District Court.
The Babcock & Wilcox Company is a subsidiary of McDermott
International, a leading worldwide energy services company.
McDermott's subsidiaries provide engineering, fabrication,
installation, procurement, research, manufacturing, environmental
systems, project management and facilities management services to
a variety of customers in the energy industry, including the U.S.
Department of Energy.
The Babcock & Wilcox Company, together with its debtor-affiliates,
filed for Chapter 11 protection on February 22, 2000, (Bankr. E.D.
La. Case No. 00-10992). Jan Marie Hayden, Esq., at Heller,
Draper, Hayden, Patrick & Horn, L.L.C., represents the debtors in
their restructuring efforts.
BANCTEC INC: Moody's Withdraws Junk Ratings for Business Reasons
----------------------------------------------------------------
Moody's Investors Service has withdrawn all ratings assigned to
BancTec, Inc. for business reasons.
The ratings withdrawn were:
(i) Senior implied rating; previously rated Caa2;
(ii) Senior unsecured issuer rating; previously rated Caa3;
and
(iii) Rating on $94 million 7 1/2% senior notes, due 2008;
previously rated Caa3.
BERMITE RECOVERY: U.S. Trustee Meeting Creditors on Nov. 9
----------------------------------------------------------
The U.S. Trustee for Region 14 will convene a meeting of Bermite
Recovery, L.L.C.'s creditors at 2:00 p.m., on November 9, 2004, at
the Office of the U.S. Trustee, 230 N. First Avenue, Suite 102,
Phoenix, Arizona. This is the first meeting of creditors required
under U.S.C. Sec 341(a) in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Headquartered in Phoenix, Arizona, Bermite Recovery, L.L.C., filed
for chapter 11 protection on September 30, 2004 (Bankr. D. Ariz.
Case No. 04-17294). Alisa C. Lacey, Esq., at Stinson Morrison
Hecker LLP, represents the Debtor in its restructuring efforts.
When the Company filed for protection from its creditors, it
estimated more than $10 million in assets and debts.
BETHLEHEM STEEL: Judge Lifland Allows St. Paul's $8.5M Admin Claim
------------------------------------------------------------------
Prior to the Petition Date, St. Paul Fire and Marine Insurance
Company issued numerous surety bonds on the Bethlehem Steel
Corporation's behalf, including the Coal Act Bond in the original
penal sum amount of $40,932,612, which was issued on behalf of
BethEnergy Mines, Inc., for the benefit of the Trustees of the
UMWA 1992 Benefit Plan.
The Coal Act Bond secured certain of BethEnergy's obligations to
the 1992 Plan under the 1992 Coal Industry Retiree Health Benefit
Act.
St. Paul asserted an administrative expense claim for $9,835,443
and a general unsecured claim for $30,232,612 against the Debtors
based on payments made by St. Paul to the 1992 Plan under the
Coal Act Bond.
The Debtors and International Steel Group, Inc., objected to the
allowance of the administrative expense claim asserted by St. Paul
against the Debtors.
The Bankruptcy Court granted St. Paul an allowed administrative
expense priority claim against the Debtors for $9,835,000 and an
allowed general unsecured claim against the Debtors for
$30,232,612.
Pursuant to the Court's Order, funds, which were to be used to pay
St. Paul's administrative expense claim, were delivered to the
Clerk of the United States Bankruptcy Court for the Southern
District of New York for deposit into an account in the Court
Registry Investment System.
Funds held in the CRIS Account, including accrued interest, will
remain in that account until either:
(i) entry into a stipulation among the Debtors, St. Paul and
ISG resolving the dispute over St. Paul's entitlement to
the administrative expense claim, or
(ii) entry of a final order allowing or disallowing St. Paul's
administrative expense claim in whole or in part.
The Debtors and ISG each filed with the Bankruptcy Court a Notice
of Appeal of the Order.
The Debtors, ISG and St. Paul have engaged in arm's-length
negotiations to settle and resolve the Appeals.
To avoid the expense and time of litigating the Appeals filed by
ISG and the Debtors, St. Paul, the Debtors, and ISG stipulate and
agree that:
(a) St. Paul's allowed administrative expense priority claim
against the Debtors is reduced from $9,835,000, to
$8,500,000, reflecting a reduction of $1,335,000;
(b) With respect to the funds held in the Court Registry
Investment System Account:
-- St. Paul will be entitled to $8,500,000, the amount of
its administrative expense claim, plus any and all
interest that has accrued and that may accrue on the
sum while held in the CRIS Account; and
-- ISG will be entitled to $1,335,000, plus any and all
interest that has accrued and that may accrue on the
sum while held in the CRIS Account;
(c) The Clerk of the United States Bankruptcy Court for the
Southern District of New York will release the funds in
the CRIS Account in accordance with the Stipulation. The
Debtors will take any and all additional necessary steps
to effectuate the release of the funds in the CRIS
Account;
(d) St. Paul's allowed general unsecured claim against the
Debtors remains $30,232,612 and will be paid in accordance
with the terms of the Plan; and
(e) The payment of St. Paul's allowed administrative expense
claim and allowed general unsecured claim are in full,
final and complete satisfaction of any and all claims that
it has or may have against the Debtors arising out of or
related to the Coal Act Bond.
Judge Lifland approves the stipulation.
Headquartered in Bethlehem, Pennsylvania, Bethlehem Steel
Corporation -- http://www.bethlehemsteel.com/-- was the second-
largest integrated steelmaker in the United States, manufacturing
and selling a wide variety of steel mill products including hot-
rolled, cold-rolled and coated sheets, tin mill products, carbon
and alloy plates, rail, specialty blooms, carbon and alloy bars
and large diameter pipe. The Company filed for chapter 11
protection on October 15, 2001 (Bankr. S.D.N.Y. Case No. 01-
15288). Jeffrey L. Tanenbaum, Esq., and George A. Davis, Esq., at
WEIL, GOTSHAL & MANGES LLP, represent the Debtors in their
restructuring, the centerpiece of which was a sale of
substantially all of the steelmaker's assets to International
Steel Group. When the Debtors filed for protection from their
creditors, they listed $4,266,200,000 in total assets and
$4,420,000,000 in liabilities. Bethlehem obtained confirmation of
a chapter 11 plan on October 22, 2003, which took effect on Dec.
31, 2003. (Bethlehem Bankruptcy News, Issue No. 54; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
BEULA CHURCH: Judge Drain Says No Transfer Taxes Under Sec. 1146
----------------------------------------------------------------
The Honorable Robert D. Drain issued a decision last week telling
the New York City Finance Department that Beulah Church Of God In
Christ Jesus, Inc.'s pre-confirmation sale of 23 of its 24
properties located in New York, Kings, Queens and Bronx Counties
are exempt from the New York City real property transfer tax and
the New York City mortgage recording tax.
The City objected to the exemption arguing that the Debtor's
buildings were not sold "under a plan confirmed" within the
meaning of section 1146(c) of the Bankruptcy Code. The Debtor, in
turn, argued that section 1146(c) does not condition exemption
from the Transfer Taxes on confirmation of a chapter 11 plan
before the closing of a sale, but, rather, that the sale may be
exempt provided that the sale is integral to plan confirmation, or
confirmation occurs because of the sale. In the Debtor's
interpretation, therefore, the phrase "under a plan confirmed", as
used in section 1146(c) of the Bankruptcy Code, means that the
sale is in view of, or in accordance with, and subject to, the
anticipated confirmation of a chapter 11 plan.
Judge Drain rejects the City's bright line interpretation of
section 1146(c), and rules that $390,000 sitting in an escrow
account pending this decision will go to Beulah Church's creditors
rather than the New York City Finance Department.
If the precise time of the sale were controlling, Judge Drain
suggests, clever, lucky and tricky lawyers would craft sales
agreements and plans that would make every transaction happen
post-confirmation. "I assume," Judge Drain says, "that Congress
intended the Debtor's approach, because it is reasonable to
conclude that Congress did not intend to impose an arbitrary and
illogical temporal distinction on sales necessary or integral to a
chapter 11 plan."
Beulah Church got involved in real estate and incurred $12 million
of secured debt that precipitated its chapter 11 case by becoming
a participant in a federal loan insurance program, known as the
"203(k) program," administered by the Department of Housing and
Urban Development. In the 203(k) program, the federal government
guarantees mortgage loans to not-for-profit entities for the
purpose of rehabilitating housing stock. Unfortunately, the
program appears to have been susceptible to abuse by contractors,
sometimes in concert with real estate brokers and loan
originators, who induced exorbitant borrowing and overbilled
unsophisticated not-for-profits for shoddy or non-existent
repairs, with the result that loans intended to be serviced by
income from rehabilitated buildings went into default when the
buildings never were rehabilitated. The Debtor launched a sale
process in their chapter 11 case and have proposed a chapter 11
plan that will distribute the sale proceeds to creditors.
Beulah Church of God in Christ Jesus, Inc., filed for chapter 11
protection on Nov. 18, 2003 (Bankr. S.D.N.Y. Case No. 03-42705).
Charles E. Simpson, Esq., at Windels, Marx, Lane & Mittendorf,
LLP, represents the Debtor, assisted by James E. Hurley, Jr.,
Esq., in Manhattan.
BOCA RESORTS: S&P Puts B+ Corporate Credit Rating on CreditWatch
----------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'B+' corporate
credit rating on Boca Resorts Inc. on CreditWatch with developing
implications, following the announcement that it has been acquired
by The Blackstone Group for $24 per share. The total value of the
transaction, including debt, is about $1.25 billion. The
transaction is subject to shareholder approval and other customary
conditions, and is expected to be completed in late 2004 or early
2005.
Boca's Chairman and Chief Executive Officer, H. Wayne Huizenga,
who controls about 98% of the company's voting shares, agreed to
vote in favor of the transaction. Standard & Poor's expects to
withdraw its ratings on the Fort Lauderdale, Florida-based luxury
resorts owner and operator upon consummation of this transaction.
BOSTON PROPERTY: Wants to Hire Bayard Firm as Bankruptcy Counsel
----------------------------------------------------------------
Boston Property Exchange Transfer Company, Inc., asks the U.S.
Bankruptcy Court for the District of Delaware for permission to
employ The Bayard Firm as its bankruptcy counsel.
Bayard Firm is expected to:
a) provide legal advice with respect to the Debtor's powers
and duties as a debtor in possession in the continued
operation of its business and management of its properties;
b) take necessary actions to protect and preserve the Debtor's
estate, including:
(i) assisting in the prosecution of actions on behalf of
the Debtor,
(ii) the defense of any action commenced against the
Debtor,
(iii) negotiations concerning all litigations in which
the Debtor is involved, and
(iv) objecting to claims filed against the Debtor's
estate;
c) prepare on the Debtor's behalf all necessary applications,
motions, responses, objections, orders, reports, and other
legal papers;
d) participate in any litigation commenced against the
Debtors;
e) assist in negotiating and drafting a consensual plan of
reorganization, and all related documents to the plan,
including the disclosure statements and ballots for voting
on the plan;
f) take the necessary steps to confirm and implement the
plan, including implementing modification for the plan and
negotiating financing for the plan; and
g) render other legal services for the Debtor as may be
necessary and appropriate in its bankruptcy proceedings.
Steven M. Yoder, Esq., a Director at Bayard Firm, is the lead
attorney for Boston Property's restructuring. Mr. Yoder discloses
that the Firm received a $35,000 retainer.
Mr. Yoder reports Bayard Firm's professionals bill:
Designation Hourly Rate
----------- -----------
Directors $375 - 540
Associates 190 - 400
Paralegals 100 - 175
Bayard Firm does not have any interest adverse to the Debtor or
its estate.
Headquartered in Stamford, Connecticut, Boston Property Exchange
Transfer Company, Inc., was a qualified intermediary for deferred
like-kind property exchanges used by real estate investors until
in ceased operations in January 2001. The Company filed for
chapter 11 protection on October 1, 20004 (Bankr. D. Del. Case No.
04-12792). Steven M. Yoder, Esq., at The Bayard Firm, represents
the Debtor in its restructuring efforts. When the Debtor filed
for protection from its creditors, it listed estimated assets of
more than $50 million and estimated debts of more than $10
million.
CAESARS ENT: Third Quarter Net Income Climbs 21% to $58 Million
---------------------------------------------------------------
Caesars Entertainment, Inc. (NYSE: CZR) reported financial results
for the quarter and nine months ended September 30, 2004.
Third quarter 2004 results
For the third quarter of 2004, Caesars Entertainment reported net
income of $58 million, up 21 percent from net income of
$48 million, recorded in the third quarter of 2003.
Adjusted net income for the third quarter of 2004 was $68 million.
That represents an increase of 51 percent from adjusted net income
of $45 million reported in the third quarter of 2003.
Adjusted net income for the third quarter of 2004 excludes:
-- $9 million in operating results from the Atlantic City
Hilton and Bally's Tunica (which the company has announced
that it will sell);
-- $9 million in asset impairments related to the write-down of
the book value of Caesars Tahoe, as required by Statement of
Financial Accounting Standards No. 144;
-- $6 million in expense related to the pending merger of
Caesars Entertainment with Harrah's Entertainment, Inc.
(NYSE: HET);
-- $5 million in income tax expense related to the settlement
of a dispute involving Lakes Entertainment, Inc.; and
-- $4 million in pre-opening expense related to the production
of the musical "We Will Rock You" at Paris Las Vegas.
Adjusted net income for the third quarter of 2003 excludes
$3 million of discontinued operations related to operating results
for the Las Vegas Hilton, the Atlantic City Hilton and Bally's
Tunica.
Net revenue for the third quarter of 2004 was $1.119 billion,
compared to $1.073 billion for the third quarter of 2003. Third
quarter EBITDA - earnings before interest, taxes, depreciation and
amortization and non-recurring gains and charges - was $293
million, compared to $262 million in EBITDA in the third quarter
of 2003.
(On September 27, 2004, Caesars Entertainment signed a definitive
agreement to sell the Atlantic City Hilton and Bally's Tunica to
an affiliate of Colony Capital, LLC, of Los Angeles. On June 17,
2004, Caesars Entertainment closed the sale of the Las Vegas
Hilton to an affiliate of Colony Capital. Throughout this press
release, results from the Las Vegas Hilton, the Atlantic City
Hilton and Bally's Tunica are treated as "discontinued
operations." That means results for those properties are excluded
from such financial measures as net revenue, EBITDA, operating
income, interest expense and other items. Had the company included
financial results from the Atlantic City Hilton and Bally's
Tunica, adjusted earnings per diluted share in the third quarter
would have been $0.24 instead of $0.22.)
Results for the First Nine months of 2004
For the first nine months of 2004, Caesars Entertainment reported
net income of $277 million. That compares to net income of $130
million for the nine-month period that ended on September 30,
2003.
Adjusted net income for the first nine months of 2004 was $192
million, compared to adjusted net income of $119 million, or $0.39
per diluted share, for the first nine months of 2003.
Adjusted net income for the first nine months of 2004 excludes:
-- An $87 million gain (included in discontinued operations)
from the sale of the Las Vegas Hilton.
-- $26 million in operating results, classified as discontinued
operations, from the Las Vegas Hilton, the Atlantic City
Hilton and Bally's Tunica.
-- $9 million in asset impairments related to Caesars Tahoe.
-- $7 million in pre-opening expense primarily related the
production of the musical "We Will Rock You" at Paris Las
Vegas.
-- $7 million in income tax expense related to a 2004 Indiana
Tax Court decision involving the deductibility of gaming
taxes.
-- $6 million in expense related to the pending merger of
Caesars and Harrah's.
-- $5 million in income tax expense related to the settlement
of the Lakes Entertainment dispute.
-- $3 million of investment gain associated with the sale of
the company's interest in a Las Vegas office building.
-- $2 million in expense related to executive contract
terminations.
Adjusted net income for the first nine months of 2003 excludes $12
million in operating results from the Las Vegas Hilton, the
Atlantic City Hilton and Bally's Tunica and $1 million in pre-
opening expense associated with the premiere of "A New Day...."
starring Celine Dion at Caesars Palace.
Net revenue for the first nine months of 2004 was $3.305 billion,
up from $3.115 billion for the first nine months of 2003. EBITDA
for the first nine months of 2004 was $863 million, up from $764
million for the first nine months of 2003.
EBITDA Improvements, Margin Growth
Drive Strong Third Quarter
"We recorded an exceptionally strong third quarter, with
significant EBITDA improvement in the West and the Mid-South and
increased EBITDA margins in all three domestic regions," said
Caesars Entertainment President and Chief Executive Officer
Wallace R. Barr.
"We particularly were pleased with the four percent EBITDA
improvement in Atlantic City, where we had forecast a modest
decline. That growth is a strong indicator that our Atlantic City
properties have successfully absorbed the additional supply
created by the Borgata," Barr added.
Third Quarter Financial Highlights
-- The Western Region reported EBITDA of $115 million, a 25
percent increase from the $92 million in EBITDA reported in
the third quarter of 2003. The company's four Las Vegas
Strip resorts reported a 31 percent increase in EBITDA,
primarily driven by strong room rates.
-- In the Eastern Region, EBITDA was $110 million, up three
percent from the $107 million reported for the third quarter
of 2003. The results represent a significant improvement
over the EBITDA decline that the company had forecast.
-- The Mid-South Region recorded EBITDA of $62 million, an
increase of 11 percent from the $56 million in EBITDA
reported for the third quarter of 2003, despite weakened
gaming volumes at the company's two Mississippi Gulf Coast
properties affected by Hurricane Ivan.
-- Company-wide EBITDA margins rose to 26 percent from 24
percent in the third quarter of 2003.
-- The company's Board of Directors accepted an offer from
Harrah's Entertainment to acquire Caesars for approximately
$1.8 billion in cash and 66.3 million shares of Harrah's
common stock. The acquisition is contingent on approval by
shareholders of both companies as well as federal and state
regulatory agencies.
-- The company finalized plans for its first venture into
Europe with a $600-million casino resort in London, to be
built near the reconstructed Wembley National Stadium and
adjacent to the soon-to-be renovated Wembley Arena. Caesars
and its British partner, Quintain Estates and Development
LLC, announced the joint venture on October 12.
-- The company announced a definitive agreement to sell the
Atlantic City Hilton and Bally's Tunica - for approximately
8.5 times trailing twelve-month EBITDA - to an affiliate of
Colony Capital, LLC of Los Angeles. The sale is expected to
result in after-tax proceeds of approximately $480 million.
-- The Big Sandy Band of Western Mono Indians signed formal
agreements with the company that will govern the
development, construction and management of the Tribe's
planned new casino, to be built on Tribal land near Fresno,
California.
-- Caesars Palace debuted Mesa Grill, the first restaurant
outside of New York City to be opened by celebrity chef and
television personality Bobby Flay.
-- The Roman Plaza, the new gateway to Caesars Palace, opened
at the corner of Las Vegas Boulevard and Flamingo Road. The
expansive piazza features a new restaurant, retail space and
an amphitheater for concerts and sporting events.
-- Cascata, the company's signature desert golf course, was
named to Golf Magazine's roster of the "Top 100 Courses You
Can Play." The award-winning course is open to guests at any
of Caesars' Las Vegas casino resorts.
-- The company initiated several new technology initiatives,
including its adoption of Avero's "Slingshot" business-
intelligence software to manage food and beverage operations
across multiple resorts and Manugistics and The Rainmaker
Group's NetWORKS(TM) Hospitality Revenue Optimizer to
increase yield on hotel rooms. Both products convert
information about customer choices into usable business
intelligence intended to drive margin improvements.
-- Construction proceeded on schedule and on budget for the new
949-room hotel tower at Caesars Palace, scheduled for
completion in the summer of 2005. The project, which will
bring total room capacity to nearly 3,400, is the final
component of the current master plan to renovate Caesars
Palace.
Western Region
EBITDA for the Western Region's seven casino resorts was $115
million in the third quarter of 2004, up 25 percent from $92
million in the year-ago quarter. The company's resorts on the Las
Vegas Strip posted a 31 percent increase in EBITDA. The increase
primarily was driven by strong room rates. Revenue Per Available
Room (RevPAR) for Strip resorts rose eight percent. Cash room
rates rose nine percent.
At Caesars Palace, net revenue in the quarter rose to $140 million
from $125 million in the third quarter of 2003. EBITDA was $28
million, an increase of 27 percent from the $22 million reported
for the third quarter of 2003. The EBITDA increase principally was
due to a seven percent increase in RevPAR. Gaming win declined two
percent because of lower baccarat volume and non-baccarat table
game hold.
In early July, Caesars Palace opened its new Roman Plaza, which
provides a direct entrance to the property from the pedestrian
bridges that span Flamingo Road and Las Vegas Boulevard. The
175,000 square-foot expansion of The Forum Shops at Caesars is
scheduled to open tomorrow. The resort's new 949-room, luxury
hotel tower is on schedule for completion next summer.
At Paris Las Vegas, third quarter net revenue was $98 million,
even with the year-ago quarter. Third quarter EBITDA was $27
million, up four percent from $26 million reported in the third
quarter of 2003. The increase was due largely to room revenues.
RevPAR increased seven percent, driven by higher cash room rates.
Gaming win declined 15 percent.
At Bally's, net revenue in the third quarter rose six percent, to
$71 million, from the third quarter of 2003. EBITDA was $21
million, up 50 percent from the third quarter of 2003. Gaming win
rose eight percent due to a 25 percent increase in slot win.
RevPAR rose five percent, driven by higher room rates and
occupancy.
At the Flamingo Las Vegas, net revenue for the third quarter was
$93 million, up 24 percent from the year-ago quarter. EBITDA rose
61 percent, to $29 million, from the third quarter of 2003. The
results were driven by an 11 percent increase in gaming win, a 10
percent increase in RevPAR and the inclusion of results from the
new Margaritaville cafe, which held its grand opening in January
of this year.
Other Nevada properties - the Reno Hilton, Caesars Tahoe and
Flamingo Laughlin - recorded combined EBITDA of $10 million in the
third quarter, compared to $12 million in the third quarter of
2003. (Financial results of the Las Vegas Hilton are not included
in either year's figures.)
Eastern Region
Third quarter EBITDA from Caesars Entertainment's Atlantic City
casino resorts (excluding results from the Atlantic City Hilton)
and management fees from its Dover Downs slot operation was $110
million, up three percent from the $107 million reported for the
third quarter of 2003. The results reflect a significant
improvement over the modest EBITDA decline that the company had
forecast.
At Caesars Atlantic City, third quarter net revenue was $138
million, even with the year-ago quarter. EBITDA was $47 million,
compared to $49 million in the third quarter of 2003. Gaming win
declined less than one percent, while RevPAR rose seven percent.
Work continues on schedule for Caesars' new 3,200-space, $75-
million parking garage and The Pier at Caesars. The Pier, which
will create 325,000 square feet of new retail, restaurant and
nightclub space, is scheduled to open next year. The project is
being financed and developed by an affiliate of The Gordon Group
of Greenwich, Connecticut.
At Bally's Atlantic City, net revenue for the third quarter was
$182 million, compared to $183 million for the third quarter of
2003. EBITDA for the third quarter rose 11 percent, to $62
million, from the $56 million reported in the third quarter of
2003. While gaming win declined two percent as a result of lower
gaming volumes, RevPAR rose four percent, driven by a ten percent
increase in cash room rates.
Mid-South Region
Caesars Entertainment's casino resorts in Indiana, Mississippi and
Louisiana (excluding Bally's Tunica) reported third quarter EBITDA
of $62 million, an 11 percent increase over the $56 million
reported for the third quarter of 2003. The improvement came
despite the effects of Hurricane Ivan, which impacted the Gulf
Coast of Mississippi in mid-September and forced the company to
close its Gulf Coast casinos for three days.
Caesars Indiana reported third quarter net revenue of $81 million,
up seven percent from $76 million in the third quarter of 2003.
EBITDA rose 24 percent, to $21 million, from $17 million in the
third quarter of 2003. Results were driven by a nine percent
increase in slot win and a 20 percent rise in RevPAR. The
increased slot win resulted from improvements in both volume and
hold, while the rise in RevPAR was due to increases in occupancy
and room rate. The average cash room rate rose 10 percent.
On the Gulf Coast, third quarter net revenue at Grand Casino
Biloxi was $60 million, even with the year-ago quarter. EBITDA was
$15 million, up 15 percent from the $13 million recorded in the
third quarter of 2003. Declines in gaming volumes resulted in
gaming win increasing only one percent.
Third quarter net revenue at Grand Casino Gulfport was $48
million, even with the third quarter of 2003. EBITDA was $9
million, down from $10 million in the third quarter of 2003,
largely because of increases in health care costs. Gaming win
declined two percent on lower volumes, as higher room rates drove
a 14 percent increase in RevPAR. The average cash room rate rose
37 percent from the year-ago quarter.
In Northern Mississippi, Grand Casino Tunica reported net revenue
of $52 million, compared to $53 million in the third quarter of
last year. EBITDA was $10 million, down from $11 million in the
third quarter of 2003. Gaming win declined three percent as a
result of lower volumes and hold.
Net revenue at Sheraton Tunica was $19 million, even with the
third quarter of 2003. EBITDA was $7 million, up from $5 million
in the year-ago quarter.
International
The company's ten international properties reported combined net
revenue of $35 million, up from $27 million in the third quarter
of 2003. EBITDA was $18 million, up 20 percent from the $15
million recorded in the third quarter of last year.
Capital expenditures
The company invested $183 million of capital during the third
quarter of 2004. Maintenance capital expenditures were $47 million
and investments in growth projects were $136 million. In the first
nine months of 2004, the company invested $402 million of capital
- $147 million for maintenance and $255 million for growth
projects. The company currently expects to spend $642 million on
capital investments in 2004. This includes maintenance capital
investments of $274 million and growth capital of $368 million.
The 2004 budget for growth capital includes $202 million for the
luxury room tower and meeting space addition at Caesars Palace;
$42 million for the garage at Caesars Atlantic City; $36 million
for the purchase of land behind Bally's Las Vegas; $25 million for
the Roman Plaza project at Caesars Palace; and $12 million related
to development of Native American projects in New York and
California.
The remaining budget for growth projects includes $17 million for
selected projects at Caesars Palace; $9 million related to "We
Will Rock You" at Paris Las Vegas; $8 million at Caesars Atlantic
City, principally for new dining and entertainment venues,
renovation of the facade and construction of the bridge connecting
the second floor of the casino to The Pier at Caesars; and $2
million related to a new hotel revenue management system.
Other items
Depreciation and amortization in the third quarter was $106
million, compared to $103 million in the third quarter of 2003.
Pre-opening expense in the quarter was $4 million, related to the
production of "We Will Rock You" at Paris Las Vegas.
The line item "Impairment loss, merger costs and other expenses"
in the quarter included expenses related to the $9 million write
down of the company's Caesars Tahoe assets and $6 million in
merger related costs.
Corporate expense in the third quarter was $12 million, compared
to $8 million in the third quarter of 2003. The increase is
primarily related to legal and development activity.
Equity in earnings of unconsolidated affiliates primarily consists
of earnings from the company's ownership interests in Conrad Punta
del Este in Uruguay (through August 31, 2004), Caesars Gauteng
near Johannesburg, South Africa and Windsor Casino Limited, the
company that manages Casino Windsor in Windsor, Canada. For the
third quarter, this item was unchanged from prior year at $3
million.
Net interest expense in the quarter was $69 million, down from $78
million in the third quarter of 2003, due to lower borrowing rates
and lower debt balances. Capitalized interest was $3 million in
the third quarter, compared to $1 million in the year-ago quarter.
The effective tax rate in the third quarter was 48.0 percent,
compared to 41.8 percent in the third quarter of 2003. The
effective tax rate in the third quarter was impacted by a $5
million charge arising from Caesars' settlement of a dispute
involving a 1998 tax allocation and indemnity agreement entered
into by a Caesars subsidiary and Lakes Entertainment, Inc.
Balance sheet
As of September 30, 2004, the company had a cash balance of
$318 million and a debt balance of $4.2 billion.
The company had $1.3 billion available on its credit facility,
subject to covenant restrictions. Its leverage ratio, as defined
by its credit facility, was 3.7 times EBITDA.
The number of diluted shares outstanding was 316 million at the
end of the third quarter.
Other events
In the quarter, the company utilized a portion of its cash on hand
to retire a $325 million, 7% senior note issue due July 15.
On July 14, 2004, the company, Harrah's Entertainment, Inc., and
Harrah's Operating Company, Inc., a wholly-owned subsidiary of
Harrah's, entered into an Agreement and Plan of Merger, providing
for the merger of Caesars with and into Harrah's Operating
Company, Inc., which would be the surviving corporation. Following
the approval and adoption of the Agreement and Plan of Merger by
the stockholders of Caesars and Harrah's and upon the receipt of
all necessary gaming and other approvals, and the satisfaction or
waiver of all other conditions precedent, each outstanding share
of common stock of Caesars will be exchanged for either $17.75 in
cash or 0.3247 shares of Harrah's common stock, at the election of
each Caesars stockholder, subject to pro-ration as provided for in
the Agreement and Plan of Merger.
During the quarter, Caesars successfully reorganized the ownership
structure of its Conrad resort in Punta del Este, Uruguay. The
reorganization increased Caesars' ownership interest in the
property from 46 percent to approximately 86 percent. Since
September 1, operating results of this property have been
consolidated into the company's financial statements.
In California, the Pauma Yuima Band of Luiseno Mission Indians has
withdrawn from negotiations with Caesars Entertainment to develop
and manage a Caesars-branded casino in northern San Diego County.
On October 1, members of Local 54 of the Hotel Employees and
Restaurant Employees International Union began a strike against
seven Atlantic City casino resorts, including the three operated
by Caesars Entertainment.
Guidance
The company is providing the following guidance based on the
current competitive, economic, regulatory, tax and political
environment and current expectations for Caesars Entertainment
property performance. Changes in any of these factors as well as
other factors that may or may not be currently known to management
will affect this guidance.
Guidance will be revised when management becomes aware that
financial results have been affected and reasonably believes that
the company will no longer achieve the guidance range outlined
below.
The guidance for adjusted earnings per share is a non-GAAP
financial measure. This measure excludes items considered non-
recurring from an operating perspective.
In the past, examples of items that have not been included in
adjusted earnings per share are pre-opening expenses, asset
impairments and write-downs, investment gains and losses,
discontinued operations, contract and litigation settlements and
other items.
Guidance for the fourth quarter of 2004 reflects the
classification of results from the Atlantic City Hilton and
Bally's Tunica as "Discontinued operations."
Non-GAAP financial measures
Adjusted net income, adjusted earnings per share and EBITDA are
non-GAAP financial measurements. EBITDA is earnings before
interest, taxes, depreciation and amortization (including
depreciation from unconsolidated subsidiaries), pre-opening
expense, asset impairments, write-downs, contract and litigation
settlements, investment gains and losses, discontinued operations
and other non-recurring items.
Adjusted net income, adjusted earnings per share and EBITDA are
presented as supplemental disclosures because this is how the
company reviews and analyzes its performance and the performance
of its properties. These measures are used widely within the
gaming industry as indicators of performance and of the value of
gaming companies.
This information should not be considered as an alternative to any
measure of performance as promulgated under accounting principles
generally accepted in the United States, such as operating income,
net income or net cash provided by operating activities.
Caesars Entertainment's calculation of adjusted net income,
adjusted earnings per share and EBITDA may be different from the
calculation used by other companies and therefore comparability
may be limited. The company has included schedules in the tables
that accompany this release that: 1) Reconcile EBITDA to operating
income and net income and 2) Reconcile net income to adjusted net
income.
About Caesars Entertainment
Caesars Entertainment, Inc. (NYSE: CZR) -- http://www.caesars.com/
-- is one of the world's leading gaming companies. With $4.5
billion in annual net revenue, 28 properties on four continents,
26,000 hotel rooms, two million square feet of casino space and
52,000 employees, the Caesars portfolio is among the strongest in
the industry. Caesars casino resorts operate under the Caesars,
Bally's, Flamingo, Grand Casinos, Hilton and Paris brand names.
The company has its corporate headquarters in Las Vegas.
In July 2004, the Board of Directors of Caesars Entertainment
approved an offer from Harrah's Entertainment to acquire the
company for approximately $1.8 billion and 66.3 million shares of
Harrah's common stock. The offer must be approved by shareholders
of both companies and federal and state regulators before the
transaction can close.
* * *
As reported in the Troubled Company Reporter on Sept. 30, 2004,
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: Fitch Withdraws Securities' Junk Ratings After Redemption
------------------------------------------------------------------
Fitch Ratings has withdrawn the 'CCC' rating and Stable Rating
Outlook for Calpine Corp.'s 5.75% High Tides I and 5.50% High
Tides II trust preferred securities. The rating withdrawal
reflects the full redemption of these securities.
CALPINE CORP: Completes Redemption of High Tides I & II Securities
------------------------------------------------------------------
Calpine Corporation (NYSE: CPN) completed the redemption of its
outstanding 5-3/4% HIGH TIDES I preferred securities and 5-1/2%
HIGH TIDES II preferred securities. The redemption price paid per
each $50 principal amount of HIGH TIDES was $50 plus accrued and
unpaid distributions to the redemption date in the amount of
$0.6309 with respect to HIGH TIDES I and $0.6035 with respect to
HIGH TIDES II.
All rights of the holders of the HIGH TIDES have ceased, except
the right of the holders to receive the redemption price, which
was deposited with The Depository Trust Company, and the HIGH
TIDES have ceased to be outstanding.
In connection with the redemption of the HIGH TIDES, the entire
outstanding principal amount of Calpine's convertible subordinated
debentures held by Calpine Capital Trust and Calpine Capital Trust
II were also redeemed and have ceased to be outstanding. Calpine
intends to cause both Trusts to be terminated.
Calpine Corporation is a North American power company dedicated to
providing electric power to customers from clean, efficient,
natural gas-fired and geothermal power plants. 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, founded in 1984, is listed on the S&P 500 and
was named FORTUNE's 2004 Most Admired Energy Company. Calpine is
publicly traded on the New York Stock Exchange under the symbol
CPN. For more information, visit http://www.calpine.com/
* * *
As reported in the Troubled Company Reporter on Oct. 13, 2004,
Standard & Poor's Ratings Services assigned its 'CCC+' rating to
Calpine Corp.'s (B/Negative/--) $736 million unsecured convertible
notes due 2014. The rating on the notes is the same as Calpine's
existing unsecured debt and two notches lower than the corporate
credit rating. The outlook is negative.
As reported in the Troubled Company Reporter on Oct. 6, 2004,
Fitch Rates Calpine Corp.'s:
-- $785 million first priority senior secured notes due
2014 'BB-';
-- $736 million senior unsecured convertible notes due 2014
'CCC+';
-- outstanding second priority senior secured notes 'B+';
-- outstanding senior unsecured notes to 'CCC+' from 'B-'.
CARE CONCEPTS: Completes 39.3% Investment in Penthouse Media
------------------------------------------------------------
Care Concepts I, Inc. (AMEX:IBD) has completed the purchase from
PET Capital Partners, LLC, and its affiliates of 39.3% of the
equity of Penthouse Media Group, Inc., formerly known as General
Media, Inc., which (together with its subsidiaries) emerged from
Chapter 11 protection on Oct. 5, 2004 under the control of PET
Capital Partners, LLC, an affiliate of Marc Bell Capital Partners,
LLC. The Company's investment is in the form of non-voting common
stock. The stock purchased by IBD does not vote, is identical in
all other respects to the voting common stock and represents 39.3%
of the currently outstanding common stock of Penthouse Media
Group.
Messrs. Marc H. Bell and Daniel C. Staton are managing and have
assumed day to day operations of Penthouse Magazine and the
related Penthouse Media businesses. The Bell/Staton Group has
advised that it intends to alter the editorial direction of the
publications in order to broaden the overall appeal, expand the
circulation, increase advertising revenues and enhance the brand
name for ongoing licensing opportunities.
As a shareholder of Penthouse Media Group, the Company will have
the right to designate one member to the board of directors of the
reorganized Penthouse Media Group and have the right of first
refusal to utilize the PENTHOUSE(TM) brand name for auction
websites, lifestyle resorts (excluding casinos) and travel
agencies and travel related websites. The Company also was
granted certain rights to enable it to participate with the
Bell/Staton Group in certain significant transactions, including
financings of Penthouse Media Group.
The investment by the Company was subject to the emergence from
reorganization, the effect of which was a series of material
changes in the capital structure and operations of Penthouse Media
Group. The reorganized Penthouse Media Group issued $38.0 million
of senior debt in cancellation of approximately $50.0 million
Series C senior notes and approximately $11.0 million in unsecured
debt. In addition, the Bell/Staton Group has provided a new $20.0
million credit facility to Penthouse Media Group.
In connection with the transaction, all pending litigation among
the Bell/Staton Group, PHSL Worldwide, Inc. (formerly, Penthouse
International, Inc.) (Pink Sheets:PHSL), and certain affiliates of
PHSL, including Dr. Luis Enrique Fernando Molina, were settled and
dismissed.
"Marc Bell and Daniel Staton bring financial credibility and
assurance that PENTHOUSE will continue to remain one of the most
widely recognized consumer brands in the world," said Gary
Spaniak, Jr., the Company's President. "Our equity interest in
Penthouse Media Group provides the Company with an opportunity for
financial appreciation and, subject to our negotiation of mutually
satisfactory licenses with Penthouse Media Group, should enhance
our existing businesses by providing global branded travel
offerings and leveraging on the Penthouse brand name."
"We are pleased that we have been able to resolve all the issues
with PHSL and its controlling shareholder, Dr. Molina, to enable
the PENTHOUSE(TM) Magazine and related media businesses to go
forward as a financially viable enterprise. We have high
expectations for its future," commented Marc H. Bell, Managing
Partner of Marc Bell Capital Partners LLC.
Dr. Molina said, "We are also pleased with this resolution which
will give PHSL and its stockholders an ongoing equity interest in
Penthouse Media Group and an opportunity to build the brand in
certain foreign markets, including Mexico. In the course of our
prior litigation a number of inflammatory allegations were made
which we believe were the product of our intense competition with
the Bell/Staton Group for control of Penthouse Media Group. These
comments were an unfortunate part of litigation 'gamesmanship'.
However, we have now had the opportunity to work with Messrs. Bell
and Staton in a productive manner regarding the future of the
Penthouse Media Group and have come away with a high regard for
both their business acumen and ethics. We expect that
PENTHOUSE(TM) will flourish under their very capable leadership."
About Care Concepts I, Inc.
Care Concepts I, Inc. (AMEX:IBD) is a media and marketing holding
company with interests in online auctions and radio programming
and, through the transaction disclosed above, owns an equity
interest in Penthouse Media Group, Inc., an established media,
entertainment and licensing company. Other operating companies
are 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% of the retail value.
Auditors Express Doubt
On January 15, 2003, Care Concepts dismissed Angell & Deering as
its principal accountants and auditors. A&D's report on the
Company's financial statements expressed substantial doubt about
the Company's ability to continue as a going concern. On
January 15, 2003, William J. Hadaway was hired to review the
Company's 2002 financial statements. On October 30, 2003, Care
Concepts dismissed WJH. WJH shared A&D's doubts. Effective
October 30, 2003, the Company engaged the accounting firm of
Jewett, Schwartz & Associates as its new independent accountants
to audit the financial statements for the fiscal year ending
December 31, 2003.
CATHOLIC CHURCH: Tucson Wants Court Nod to Honor Insurance Claims
-----------------------------------------------------------------
The Roman Catholic Church of the Diocese of Tucson provides
certain administrative services to the 75 parishes that are within
the territory of the Diocese and other entities associated with
the Diocese. Each of the Parishes is, under canon law, a separate
entity. Similarly, under civil law, each Parish is, among other
things, an unincorporated association. There are also other
entities related to the mission and ministry of the Diocese but
are separate corporations for whom the administrative services are
provided by the Diocese. Each Parish and each Other Entity:
-- has its own employees and its own employer identification
number;
-- pays its own employees;
-- files the necessary tax and other reporting forms; and
-- pays its own operating expenses from bank accounts each
entity maintains.
However, there are certain administrative services and pooling
arrangements that occur with the Diocese, the Parishes and related
entities, both for convenience and expense reasons. For example,
the Parishes, the Diocese and certain other entities associated
with the Diocese are insured for liability and property and
casualty under the same insurance policy, and the Diocese provides
workman's compensation insurance to the Parishes and other
participating entities.
The Diocese, under the Insurance Program, self-insures for the
first $75,000. The balance of the coverage is provided by third
party excess insurance carriers. The insured entities are billed
for their proportionate share of the insurance expense including a
premium for the self-insured portion of the policy. The Insured
Entities pay a premium to the Diocese for the Insurance Program
which, on a comprehensive basis, is less than the Diocese and the
Insured Entities would pay if the first dollar insurance was
provided by a third party insurance carrier.
Worker's Compensation Insurance
The Diocese is self-insured for worker's compensation up to a
limit of $75,000 per claim. It, in turn, provides that same
insurance to the Insured Entities. The amount of the premiums
paid by each Insured Entity is determined by an annual audit of
each Insured Entity's payroll and is allocated proportionately.
Before the Petition Date, the State of Arizona required the
Diocese to post a $300,000 letter of credit in favor of the
Industrial Commission of Arizona to continue to maintain its self-
insured status. The letter of credit could be drawn upon to pay
claims in the event the Diocese was unable to pay those worker
compensation claims. The letter of credit was issued by Bank One,
N.A., and is secured by three certificates of deposit in a total
amount, which actually exceeds the exposure of Bank One, under the
letter of credit.
The certificates of deposit are property of the estate. However,
if the letter of credit is drawn upon, Bank One will have a right
to look to the proceeds of the certificates of deposit as payment
as a secured creditor.
As of the Petition Date, there were 405 open prepetition worker's
compensation claims against the Diocese, which the Diocese was
paying on a periodic basis. The aggregate amount reserved for all
Worker's Compensation Claims varies but as of August 31, 2004,
this totaled $312,743, although that does not mean that each
claimant will be paid the total amount reserved. The monthly
amount paid by the Diocese for the Worker's Compensation Claims
varies on a monthly basis but in August 2004, the monthly payment
was $______. If the Diocese ceases to pay the Worker's
Compensation Claims, the State of Arizona would have the right to
draw on the Letter of Credit which would, in turn, reduce the
value of the estate on a dollar for dollar basis.
Paying the Worker's Compensation Claims on an ongoing incremental
basis, on the other hand, would allow the Diocese to preserve the
letter of credit, its self-insured status, and the insured status
of the Insured Entities without diminishing the estate. Thus,
continuing to honor the Worker's Compensation Claims on an
incremental basis is in the best interests of the estate and its
creditors.
Property and Casualty Insurance
The Insurance Program is a combined program which includes
property and casualty insurance. The claims made before the
Petition Date with respect to property or casualty damage for
which the Diocese provides first dollar coverage total $12,110.
Since the program which includes the Worker's Compensation
Insurance and the Property Insurance is, in essence, a combined
program, which is, in the aggregate, cheaper than the alternatives
for the Diocese and the Insured Entities, the Property Insurance
Claims needs to be paid as well. The impact on the estate is not
significant as far as the amount of the Property Insurance Claims.
However, the potential impact of the Diocese having to replace the
Insurance Program and also deal with the claims of the Insured
Entities for its failure to honor its obligations will be more
than the amount of the Property Insurance Claims.
By this motion, the Diocese asks permission from the U.S.
Bankruptcy Court for the District of Arizona to continue to honor
the Worker's Compensation Claims and the Insurance Claims pursuant
to Sections 105(a) and 363(b) of the Bankruptcy Code.
The Roman Catholic Church of the Diocese of Tucson filed for
chapter 11 protection (Bankr. D. Ariz. Case No. 04-04721) on
September 20, 2004, and delivered a plan of reorganization to the
Court on the same day. Susan G. Boswell, Esq., Kasey C. Nye,
Esq., at Quarles & Brady Streich Lang LLP, represent the Tucson
Diocese. The Archdiocese of Portland in Oregon filed for
chapter 11 protection (Bankr. Ore. Case No. 04-37154) on July 6,
2004. Thomas W. Stilley, Esq. and William N. Stiles, Esq. of
Sussman Shank LLP represent the Portland Archdiocese in its
restructuring efforts. Portland's Schedules of Assets and
Liabilities filed with the Court on July 30, 2004, the Portland
Archdiocese reports $19,251,558 in assets and $373,015,566 in
liabilities. (Catholic Church Bankruptcy News, Issue No. 7;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
CELESTICA: Posts $27.4 Million Net Earnings for 2004 3rd Quarter
----------------------------------------------------------------
Celestica Inc. (NYSE, TSX: CLS) reported the financial results for
the third quarter ended September 30, 2004.
Revenue was $2,176 million, up 33% from $1,635 million in the
third quarter of 2003. Net loss on a GAAP basis for the third
quarter was ($22.3) million or ($0.11) per share. The net loss
includes pre-tax charges of $47.7 million primarily associated
with the company's restructuring activities. This aggregate
charge includes $16.6 million in inventory write-downs, reflected
in the cost of sales, associated with restructuring of the
company's 64-bit channel and product development activity, as well
as a gain of $12.0 million associated with the sale of the Power
Systems business. These results compare to a GAAP net loss of
($65.0) million or ($0.30) per share for the same period last
year, which included restructuring and other charges of
$49.1 million.
Adjusted net earnings (loss) -- defined as net earnings (loss)
before amortization of intangible assets, gains or losses on the
repurchase of shares and debt, integration costs related to
acquisitions, option expense and other charges, net of tax -- were
$27.4 million or $0.11 per share for the third quarter of 2004
compared to a loss of ($4.0) million or ($0.04) per share for the
same period last year. These results compare with the company's
revised guidance for the third quarter, announced on
September 14, 2004, of revenue of $2.05 - $2.15 billion and
adjusted net earnings per share of $0.07 to $0.11.
"Despite lower demand this quarter from some of our largest
communications and IT customers, we continued to expand margins,
reduce SG&A spending, improve customer diversity, act on
unprofitable or non-core activities and generate healthy cash flow
from operations," said Steve Delaney, CEO, Celestica. "Though
end-market demand is less stable than earlier in the year, our
focus will remain on delivering steady improvements in our
profitability, driving cash flows and building on the success of
our Lean implementations in order to drive even greater
efficiencies for our customers."
For the nine months ended September 30, 2004, revenue increased
35% to $6,507 million compared to $4,821 million for the same
period in 2003. Net loss on a GAAP basis was ($56.2) million or
($0.20) per share compared to a net loss of ($101.6) million or
($0.45) per share last year. Adjusted net earnings for the first
nine months were $62.3 million or $0.24 per share compared to an
adjusted net loss of ($3.7) million or a loss of ($0.07) per share
for the same period in 2003.
Power Systems Operations Divested
During the quarter, the company completed the divestiture of its
Power Systems business to C&D Technologies, a leading global
provider of solutions for power conversion and storage of
electrical power. The all-cash transaction was valued at
US$52.8 million. Revenues for the operation over the 12-month
period ended June 30, 2004 were $94 million. In addition, the
companies have signed a three-year supply agreement whereby
Celestica will manufacture certain C&D Technologies power
products. Under this agreement, C&D's customers will continue to
benefit from Celestica's expertise in supply chain management and
high-quality, low-cost manufacturing.
Discontinuation of 64-bit channel activities
and reference designs
During the quarter, the company made the decision to refocus its
industry standard design resources to better support the needs of
its largest OEM customers. Celestica will now dedicate its
standard server and high performance computing design teams to the
specific product development initiatives of its major OEM
customers. As a result, Celestica will discontinue creating its
own reference designs and exit its channel distribution activities
for these products.
"Celestica has exceptional 64-bit design and support capabilities
in both Asia and North America and we feel we will generate the
most value for our major customers by dedicating our resources to
their specific needs," said Delaney. "We remain committed to
providing enterprise-wide server solutions to our customers,
including product design services, manufacturing, logistics
services, and after-market services. In addition, we also plan to
partner with established product development firms in order to
offer an even broader range of solutions to our customers than we
could develop ourselves."
Outlook
For the fourth quarter ending December 31, 2004, the company
anticipates revenue to be in the range of $2.075 to $2.325 billion
and adjusted earnings per share ranging from $0.12 to $0.20. The
revenue guidance reflects a softening in end-market demand, which
we expect will mute normal seasonality. The adjusted EPS guidance
reflects the continued improvement in operational efficiencies and
additional cost savings from restructuring activities and exiting
certain businesses.
Celestica, Inc. -- http://www.celestica.com/-- is a world leader
in the delivery of innovative electronics manufacturing services
-- EMS. Celestica operates a highly sophisticated global
manufacturing network with operations in Asia, Europe and the
Americas, providing a broad range of integrated services and
solutions to leading OEMs (original equipment manufacturers).
Celestica's expertise in quality, technology and supply chain
management, enables the company to provide competitive advantage
to its customers by improving time-to-market, scalability and
manufacturing efficiency.
* * *
As reported in the Troubled Company Reporter on Sept. 20, 2004,
Standard and Poor's Ratings Services said it placed its long-term
corporate credit rating on Toronto, Ontario-based Celestica, Inc.,
on CreditWatch with negative implications based on revised
guidance and poor operating performance that has not met Standard
& Poor's expectations.
As reported in the Troubled Company Reporter on March 31, 2004,
Standard & Poor's Ratings Services lowered it long-term corporate
credit rating and unsecured debt on Celestica Inc. to 'BB' from
'BB+'. At the same time, Standard & Poor's lowered its
subordinated debt rating on the company to 'B+' from 'BB-'. The
outlook is negative. "The ratings on Celestica reflect the
continued difficult end-market conditions and sub par operating
performance in the highly competitive electronic manufacturing
services -- EMS -- sector," said Standard & Poor's credit analyst
Michelle Aubin. These factors are partially offset by the
company's tier-one position in the EMS sector and longer-term
trends favoring electronic manufacturing outsourcing.
CELESTICA INC: Weak Performance Cues S&P to Pare Rating to BB-
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its long-term corporate
credit rating on Toronto, Ontario-based Celestica Inc. to 'BB-'
from 'BB.' Standard & Poor's also lowered its ratings on
Celestica's subordinated notes and liquid yield option notes to
'B' from 'B+', based on continued weakness in operating
performance that has not met Standard & Poor's expectations. At
the same time, the ratings on Celestica were removed from
CreditWatch where they were placed Sept. 16, 2004. The outlook is
currently stable.
"The ratings on Celestica reflect the continuing difficult end-
market conditions and subpar operating performance in the highly
competitive electronic manufacturing services sector," said
Standard & Poor's credit analyst Don Povilaitis. This situation
has resulted in free operating cash flow (as at June 30, 2004)
that remains negative and debt to EBITDA in excess of 6x that is
high for the current rating. The company previously lowered its
third-quarter (ended Sept. 30, 2004) guidance for both revenues
and earnings. These factors are partially offset by the company's
tier I position in the EMS sector and stable capital structure.
Celestica is the fourth-largest EMS provider in the world with
trailing 12-month revenues of almost US$8 billion. More than 80%
of Celestica's revenues come from information technology
infrastructure and communication end-markets, which is a higher
concentration than other tier I EMS companies.
Celestica revised downward its third-quarter 2004 revenues to
US$2.05 billion from US$2.15 billion, which at the mid-point of
the range would have implied a revenue decline of about 10%,
combined with an expected net earnings decline of about 35%,
further demonstrating the difficult operating environment for EMS
providers, as several of Celestica's major clients have materially
reduced their orders with the company. The company reported
third-quarter revenues of US$2.18 billion. These foregone
revenues are not likely to be recovered in the current fiscal
year. To mitigate some of the revenue shortfall, Celestica is
focusing more effort on non-top 10 and other market segments such
as industrial, aerospace, and defense. Celestica is on track to
generate US$9 billion in revenues; however, the growth rate of
organic revenues remains at a low single-digit rate.
The stable outlook incorporates the expectation of profitability
improvement over the next few quarters resulting from the
company's substantive restructuring initiatives, and a reduction
in the level of cash burn to render free operating cash flow
positive.
CHEVY'S INC: Real Mex Inks Agreement to Purchase Restaurants
------------------------------------------------------------
Real Mex Restaurants, the Long Beach-parent company of El Torito
Restaurants and Acapulco Mexican Restaurants, has entered into an
agreement to acquire Chevys, Inc.'s Chevys Fresh Mex(R)
Restaurants and Fuzio Universal Pasta(R). With a combined system
volume of over half a billion dollars, Real Mex Restaurants, which
currently operates 124 restaurants, will, upon completion of the
acquisition, become the number one operator of full-service
Mexican Restaurants in the country.
"Both concepts produce outstanding food and provide excellent
service," said Fred Wolfe, President and CEO of Real Mex
Restaurants. "This acquisition will provide our customers with
the widest array of Mexican food options in the United States,
from the Fresh Mex(R) experience of Chevys to the authentic
Mexican cuisine of El Torito and the casual California Mexican
cuisine of our Acapulco Mexican Restaurants."
Chevys, Inc., which operates 69 company-owned Chevys Fresh Mex(R)
restaurants and 37 franchised restaurants located in 16 states,
along with five company-owned Fuzio Universal Pasta(R) Restaurants
and five franchised restaurants located in Northern California,
has been operating as a debtor in possession under Chapter 11 of
the U.S. Bankruptcy Code since October 2003. Following the
closing of the acquisition, Real Mex Restaurants expects that it
will continue to operate the acquired restaurants as Chevys Fresh
Mex(R) Restaurants and Fuzio Universal Pasta(R) Restaurants.
"We are pleased that Chevys and Fuzio will join the Real Mex
family of restaurant businesses," said Chevys' President and CEO,
Ron Maccarone. "The acquisition finalizes our reorganization
process at Chevys and our restaurants and employees will now be
able to benefit from the tremendous resources Real Mex Restaurants
has to offer and the synergies of the combined company."
The closing of the transaction is subject to the satisfaction of
certain conditions, including:
-- the approval of the bankruptcy court,
-- the securing of certain governmental approvals and
-- other customary closing conditions.
Subject to the satisfaction of those conditions, the closing is
expected to occur by the end of the current year.
About Real Mex Restaurants, Inc.
Headquartered in Long Beach, California, Real Mex Restaurants is
one of the largest full-service, casual dining Mexican restaurant
chain operators in the United States, with 124 restaurants in
California and six other states. These include 67 El Torito
Restaurants, 39 Acapulco Mexican Restaurants, 6 El Torito Grill
Restaurants, the Las Brisas Restaurant in Laguna Beach, and
several regional restaurant concepts such as Who-Song & Larry's,
Casa Gallardo, El Paso Cantina, Keystone Grill, Hola Amigos and
GuadalaHARRY'S. Real Mex Restaurants is committed to the highest
standards and is dedicated to serving the freshest Mexican food
with excellent service in a clean, comfortable, and friendly
environment. For more information, please visit the company's
websites at http://www.eltorito.com/and
http://www.acapulcorestaurants.com/
About Chevys, Inc.
Headquartered in Emeryville, California, Chevys, Inc. --
http://www.chevys.com/-- operates and franchises more than 170
restaurants in about 20 states, mostly its flagship Chevys Fresh
Mex and Rio Bravo chains. The Company and its debtor-affiliates
filed for chapter 11 protection on Oct. 10, 2003 (Bankr. N.D. Cal.
Case No. 03-45879). Michael I. Gottfried, Esq., at McDermott,
Will and Emery, represents the Debtors in their restructuring
efforts.
CHOCTAW RESORT: Moody's Puts Ba3 Rating on $143.8M Sr. Sec. Loan
----------------------------------------------------------------
Moody's Investors Service assigned a Ba3 rating to Choctaw Resort
Development Enterprise's new $143.8 million senior secured term
loan due 2011. At the same time, the Enterprise's Ba3 senior
implied rating and B1 long-term issuer rating were affirmed.
Proceeds from the new term facility along with an expected high-
yield note offering will be used to tender for the Enterprise's
existing 9-1/4% senior notes due 2009, repay outstanding revolver
borrowings, and pay related fees and expenses. The outlook is
stable.
The Ba3 senior implied rating considers the Enterprise's stable
operating results and lack of competition in its immediate market
area. The Enterprise's two casinos, the Silver Star Hotel and
Casino and the adjacent Golden Moon Hotel and Casino, also known
as The Pearl River Resort, are surrounded by "dry" counties and
are about 125 miles from the nearest casino competitor. The Tribe
is also the only legal entity authorized to operate land-based
casinos in the State of Mississippi. Positive rating
consideration is also given to the Enterprise's relatively low
leverage. Pro forma for the new senior note and term loan,
debt/EBITDA is about 2.5 times (x). The new term loan facility
limits total debt/EBITDA to 3.0x through September 2005, and 2.75x
after that.
Key credit concerns include the Enterprise's dependence on a
single market area, slower than expected ramp-up at the Golden
Moon which opened in August 2002, and Moody's expectation the
Enterprise will continue to distribute most of its operating cash
flow to the Tribe. For the 12-month period ended June 30, 2004,
the Enterprise distributed approximately $69 million to the Tribe.
This represents about 73% of it net cash from operations for that
same period. The new term loan indenture allows the Tribe to take
out an annual service payment equal to $75 million, increasing 3%
each year after that. In addition to the annual service payment,
the Tribe can receive additional distributions subject to a
restricted payments test. Although there is currently no
contractual relationship governing the annual service payment, in
the event of default, there is nothing to prevent the Tribe from
continuing to receive the annual service payment.
Following a slower than expected ramp-up of the Golden Moon,
revenues and EBITDA have begun to show some improvement. For the
9-month year-to-date period ended June 30, 2004, net revenues
increased 2.8% to $224.8 million, and EBITDA increased to
$89.1 million from $77.7 million. These increases are largely the
result of improved operating efficiencies and cost cutting
activities related to headcount. Additionally, there have been
several mid-level management changes, and the Enterprise is
currently looking to fill the Chief Executive Officer position.
In September 2004, Chief Philip Martin announced that Jay Dorris,
the former CEO, was released from his employment contract.
Although the bank facility is secured by substantially all of the
assets of the Enterprise (other than real property and
improvements), the Ba3 rating on the term loan considers the
likely difficulty senior unsecured bondholders would face in
recovering their investment in a liquidation scenario. The land
that the casino is located on is held in trust by the U.S.
government and is not available to satisfy claims. Additionally,
bondholders do not have recourse to Tribal assets, sovereign
immunity has not yet been tested, and only the Tribe can run the
casino.
The stable rating outlook considers that the Enterprise has a
strong hold on the local market and any serious threat of direct
competition in that market will not happen in the foreseeable
future. The stable rating outlook also acknowledges the expected
benefits of the refinancing which include lower overall interest
costs and extended scheduled debt maturities. In terms of future
capital spending, there are currently no announced plans for
additional development capital expenditures. However, it is worth
noting that the Enterprise's new bank loan facility allows for
development capital expenditures of $100 million compared to the
existing bank facility, which only allows for $25 million of
development capital expenditures.
These new ratings was assigned:
* $143.75 million secured term loan due 2011 -- Ba3.
These existing ratings were confirmed:
* Senior implied rating, at Ba3
* Long-term issuer rating, at B1; and
* $200 million 9.25% senior notes due 2009, at B1.
The Mississippi Band of Choctaw Indians established the Choctaw
Resort Development Enterprise to operate the Silver Star Hotel and
Casino and to develop and operate the Golden Moon Hotel and Casino
along with other related resort amenities. The Tribe is a
federally recognized, self-governing Indian Tribe with a
35 thousand acre reservation in east central Mississippi. The
Choctaw Tribe is the only federally recognized tribe in
Mississippi and the only authorized Indian casino in the state.
The Tribe and the State of Mississippi entered into a compact in
1992 that fully authorizes Class III gaming activities. The
compact is not subject to a specific term and will continue unless
mutually terminated.
CINRAM INTERNATIONAL: Will Release 3rd Quarter Results on Nov. 3
----------------------------------------------------------------
Cinram International Inc. (TSX: CRW) will issue its third quarter
financial results on Wednesday, November 3, 2004. The news
release will be available on Cinram's Web site
http://www.cinram.com/and on http://www.newswire.ca/after 4 p.m.
on November 3.
Conference call
Cinram's management team will host a conference call to review the
results at 11 a.m. on Thursday, November 4. Supplementary
information will also be posted on http://www.cinram.com/shortly
before the call. To participate, dial:
- In Toronto: (416) 640-1907
- Toll-free: 1 800 814-4861
Replay
A replay of the call will be available starting 1 p.m. on Thursday
until midnight on Sunday, November 7. To access the replay, dial:
- In Toronto: (416) 640-1917 (access code 21098818 followed
by the number sign)
- Toll-free: 1 877 289-8525 (access code 21098818 followed by
the number sign)
Webcast
The conference call will also be webcast live, and archived at:
- http://www.cinram.com/
- http://webevents.broadcast.com/cnw/cinram20041104
About Cinram
Cinram International Inc. is the world's largest independent
provider of pre-recorded multimedia products and logistics
services. With facilities in North America and Europe, Cinram
manufactures and distributes pre-recorded DVDs, VHS video
cassettes, audio CDs, audiocassettes and CD-ROMs for motion
picture studios, music labels, publishers and computer software
companies around the world. The Company's shares are listed on
the Toronto Stock Exchange (CRW) and are included in the S&P/ TSX
Composite Index. For more information, visit our Web site at
http://www.cinram.com/
* * *
As reported in the Troubled Company Reporter on Aug. 27, 2004,
Standard & Poor's Ratings Services assigned its 'BB' bank loan
rating and '4' recovery rating to Toronto, Ontario-based Cinram
International, Inc.'s US$668 million secured tranche D term loan
due 2009. The loan is rated the same as the long-term corporate
credit rating. The '4' recovery rating indicates a modest
(25%-50%) recovery of principal in the event of a default or
bankruptcy. The bank loan rating is based on preliminary terms
and conditions and is subject to review once final documentation
is received.
At the same time, Standard & Poor's affirmed its 'BB' long-term
corporate credit rating on Cinram. The company has about
US$953 million in total debt outstanding at June 30, 2004. The
outlook is stable.
CITATION CORP: Hires Finley Colmer as Advisor on Supplier Issues
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Alabama
gave Citation Corporation and its debtor-affiliates permission to
employ Finley, Colmer & Company as their advisor on supplier
issues.
Finley & Colmer will:
a) review information pertaining to the Debtors' vendor and
supply operations;
b) assist the Debtors' management with critical vendor issues
and operations and related supply and vendor issues for
both operational and financial matters;
c) assist the Debtors' management with:
(i) identification of assumptions underlying a forecast
for operations within a bankruptcy context,
(ii) a financial model reflecting projected results of
operations during the forecast period, and
(iii) a descriptive memorandum detailing the Debtors'
liquidity requirements and financing objectives; and
d) assist the Debtors with any other oversight or forecast
functions as may be appropriate, including the development
of a voluntary debt structure and equity conversion
proposal for the Debtors' present lending group.
Peter Colmer, President of Finley Colmer, and Marc Watson are the
lead professionals performing services for the Debtors. Mr.
Colmer discloses that the Firm received a $58,041.28 retainer.
For their professional services, both Mr. Colmer and Mr. Watson
will bill the Debtors $375 per hour.
Mr. Colmer reports that other Finley Colmer's professionals bill:
Designation Hourly Rate
----------- -----------
Senior Associates $250
Junior Associates 110
To the best of the Debtors' knowledge, Finley Colmer is
"disinterested" as the term is defined in Section 101(14) of the
Bankruptcy Code.
Headquartered in Birmingham, Alabama, Citation Corporation --
http://www.citation.net/-- designs, develops and manufactures
cast, forged and machined components for the capital and durable
goods industries, including the automotive and industrial markets.
Citation uses aluminum, steel, gray iron, and ductile iron as the
raw materials in its various manufacturing processes. The Debtors
filed for protection on Sept. 18, 2004 (Bankr. N.D. Ala. Case No.
04-08130). Michael Leo Hall, Esq., and Rita H. Dixon, Esq., at
Burr & Forman LLP, represent the Debtors. When the Company and
its debtor-affiliates filed for protection from their creditors,
they estimated more than $100 million in assets and debts.
CITATION CORPORATION: JPMorgan-Backed DIP Loan Gets Court Approval
------------------------------------------------------------------
The Honorable Tamara O. Mitchell of the U.S. Bankruptcy Court for
the Northern District of Alabama approved Cititaion Corporation
and its debtor-affiliates' request to continue using cash
collateral securing repayment of loans from its prepetition
lenders and draw on $45 million debtor-in-possession financing
package arranged by JPMorgan Chase Bank. The Debtors will use the
proceeds of this postpetition loan to fund their working capital
needs between now and March 31, 2004. The DIP Loans will be
secured by superpriority liens, subject to a $1.5 million carve-
out for payment of professional fees and fees owed to the U.S.
Trustee and Court Clerk.
The Debtors covenant with the Lenders that Consolidated EBITDA
will be no less than:
For the Period From Minimum EBITDA
------------------- --------------
Oct. 1, 2004 through Oct. 31, 2004 $4,400,000
Oct. 1, 2004 through Nov. 30, 2004 $6,900,000
Oct. 1, 2004 through Dec. 31, 2004 $7,100,000
Oct. 1, 2004 through Jan. 31, 2004 $11,100,000
Oct. 1, 2004 through Feb. 29, 2004 $15,000,000
Oct. 1, 2004 through Mar. 31, 2004 $19,300,000
The Debtors covenant with the Lenders that they will limit their
Capital Expenditures (other than tooling expenditures) to:
For the Period From CapEx Limit
------------------- -----------
Oct. 1, 2004 through Oct. 31, 2004 $4,000,000
Oct. 1, 2004 through Nov. 30, 2004 $7,000,000
Oct. 1, 2004 through Dec. 31, 2004 $10,000,000
Oct. 1, 2004 through Jan. 31, 2004 $13,000,000
Oct. 1, 2004 through Feb. 29, 2004 $14,000,000
Oct. 1, 2004 through Mar. 31, 2004 $15,000,000
Tiziana M. Bason, Esq., at Davis Polk & Wardwell, in New York,
represents JPMorgan and the consortium of DIP Lenders.
Headquartered in Birmingham, Alabama, Citation Corporation --
http://www.citation.net/-- designs, develops and manufactures
cast, forged and machined components for the capital and durable
goods industries, including the automotive and industrial markets.
Citation uses aluminum, steel, gray iron, and ductile iron as the
raw materials in its various manufacturing processes. The Debtors
filed for protection on Sept. 18, 2004 (Bankr. N.D. Ala. Case No.
04-08130). Michael Leo Hall, Esq., and Rita H. Dixon, Esq., at
Burr & Forman LLP, represent the Debtors. When the Company and
its debtor-affiliates filed for protection from their creditors,
they estimated more than $100 million in assets and debts.
CLASSIC TOOL: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Classic Tool & Die, Inc.
P.O. Box 1347
White House, Tennessee 37188
Bankruptcy Case No.: 04-12683
Type of Business: The Debtor is engaged in metal fabrication and
tooling. See http://www.classictool.com/
Chapter 11 Petition Date: October 17, 2004
Court: Middle District of Tennessee (Nashville)
Judge: Keith M. Lundin
Debtor's Counsel: Steven L. Lefkovitz, Esq.
Law Offices Lefkovitz & Lefkovitz
618 Church Street, Suite 410
Nashville, TN 37219
Tel: 615-256-8300
Fax: 615-250-4926
Total Assets: $896,827
Total Debts: $2,234,518
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
SBA $531,908
50 Vantage Way #201
Nashville, TN 37228
GE Capital/ Small Business Fin. $489,133
635 Maryville Centre, #120
St. Louis, MO 631411
Union Planters Bank $102,576
GE Capital/ Small Business Fin. $66,000
US Bank $38,426
Advanta Bank Corp. $21,821
Bank One $15,181
Maxson Maxson Nerrie $13,055
Univ. Tennessee Mfg. Extension Program $10,298
Quality Grinding $8,052
Jeffreys Mfg. Solutions $7,924
Maloney Engineering $6,896
Advantage Tool Steel $6,694
Citi Business $6,129
Debruce, Mark $5,000
Shell Oil $4,327
Tenn Calibration Service $3,348
Continential Movers $3,100
TN Dept. Revenue $3,000
Office Depot $2,945
CONSTELLATION BRANDS: Mondavi Shareholders Challenge Bid
--------------------------------------------------------
Law Offices of Brian M. Felgoise, P.C. said a class action has
been commenced on behalf of shareholders of Mondavi Corp. (NASDAQ:
MOND) in connection with the offer by Constellation Brands, Inc.
(NYSE: STZ) (ASX: CBR), to acquire all of the outstanding shares
of MOND public shares not currently owned by Constellation Brands,
Inc.
The case is pending in the State Court of California against
certain key Mondavi officers and directors. The goal of the
lawsuit is to seek the highest possible offer for the public
shares, and does not seek any damages, or make any claims, against
Mondavi itself. It does seek an injunction against completion of
an unfair bid or damages from the named defendants (but not
Mondavi) if the bid is wrongfully accepted.
The action charges that Constellation Brands, Inc., has a
controlling interest in Mondavi and thus is able to control the
Board, and to influence the possible acceptance of an inadequate
cash and stock bid worth approximately $53.00 per share for the
Class A Shareholders and $61.75 per share for the Class B
Shareholders. The action also alleges that the bid was not the
result of arm's length bargaining, and seeks to benefit the
controlling shareholder at the expense of the public shareholders.
As reported in the Troubled Company Reporter on Oct. 21, 2004,
Constellation Brands, Inc., confirmed that it has offered to
acquire The Robert Mondavi Corporation in a transaction in which
Mondavi's Class A shareholders would receive $53.00 per share in
cash and Mondavi's Class B shareholders would receive $61.75 per
share in cash. The difference in prices reflects the premium
allocation between Mondavi's Class A and Class B shares in
connection with the recapitalization Mondavi has proposed.
Constellation's offer represents a premium of 37% over the closing
market price of Mondavi's publicly-traded Class A shares on
Monday, Oct. 11, 2004, the day before the proposal was made. The
total value of this transaction is approximately $1.3 billion,
including approximately $970 million of equity on a fully-diluted
basis plus the assumption of approximately $333 million of Mondavi
net debt.
About the Company
Constellation Brands, Inc., is a leading international producer
and marketer of beverage alcohol brands with a broad portfolio
across the wine, spirits and imported beer categories. Well-known
brands in Constellation's portfolio include: Corona Extra,
Pacifico, St. Pauli Girl, Black Velvet, Fleischmann's, Mr. Boston,
Paul Masson Grande Amber Brandy, Franciscan Oakville Estate,
Estancia, Simi, Ravenswood, Blackstone, Banrock Station, Hardys,
Nobilo, Alice White, Vendange, Almaden, Arbor Mist, Stowells and
Blackthorn.
Standard & Poor's Ratings Services rates Constellation Brands'
senior secured and senior unsecured debt at BB, its subordinated
debt at B+, and gives a B rating to the company's preferred stock
issue. Constellation Brands' Aug. 31, 2004, balance sheet shows
about $2 billion of outstanding debt.
CONTECH CONSTRUCTION: Moody's Rates $350M Senior Facilities Ba3
---------------------------------------------------------------
Moody's Investors Service assigned a Ba3 rating to CONTECH
Construction Products Inc.'s proposed $350 million senior secured
credit facilities. The ratings reflect the company's strong
position in the manufacture and distribution of specialty
construction products sold to the civil engineering infrastructure
sector of the heavy construction industry and the expectation that
demand for the company's products should be less cyclical than
that of the construction industry as a whole. The company's
ratings also reflect the company's high goodwill and increased
leverage. The company has a history of stimulating its organic
growth with acquisitions.
Moody's assigned these ratings:
* $125 million senior secured revolving credit facility, due
2009, rated Ba3;
* $225 million senior secured term loan B, due 2010, rated Ba3.
* Senior Implied, rated Ba3;
* Senior Unsecured Issuer, rated B1.
The ratings outlook is stable.
The ratings are subject to the review of executed documents.
Proceeds from the credit facilities will be applied towards a
$175 million dividend to the company's shareholders and to repay
$52 million of debt, fund permitted acquisitions, and for other
corporate purposes. The revolver's availability at close is
expected to be in the area of $120 million. The revolver will
include a $20 million sub-limit for issuance of letters of credit.
The ratings benefit from low leverage for the ratings category and
from the company's business mix. The company's total debt of
$230 million compares with total revenues of approximately
$500 million and results in an initial debt to EBITDA coverage
ratio of just over 3.0 times. However, as EBITDA is not a true
measure of free cash flow, it is important to note that the
company's free cash flow to debt before acquisitions is expected
to be over 15% in 2005. Furthermore, given the company's
acquisition appetite, its free cash flow may be lower as a result
of acquisitions. The drag from new acquisitions should be limited
by the requirements that any acquired company must have had
positive EBITDA for the last 12 months, and that there must be at
least $15 million available on the company's revolver post an
acquisition. The largest allowable acquisition is $50 million,
and there is a sequential four-quarter limit of $100 million.
There are other restrictions that should also help control the
company's acquisition appetite, including a 50% free excess cash
flow sweep when total debt to EBITDA exceeds 3.0 times.
CONTECH's sales are historically balanced among the highway,
residential and commercial construction markets which has allowed
them to deliver consistent growth. Public highway sector funding
drives approximately 30% of CONTECH's sales. Moody's believes
that the public highway sector should be relatively stable.
Furthermore, the importance of water retention and control
suggests that it will remain an important part of both the public
highway sector's budget and also of the private commercial and
residential business. The company's products often require less
labor input at the building site.
The ratings are constrained by the likelihood that the company's
revenues are affected by swings in the economy given that 70% of
the company's revenues are driven by private commercial and
residential business. The largest single risk that could
significantly pressure the company's financial performance would
be a reduction in highway funding as this would reduce demand for
its environmental storm and sewer business. Moody's notes that
the rating is weak for the ratings category primarily because of
the anticipated impact from potential acquisitions and as a result
of the decapitalization caused by the dividend payment.
CONTECH'S market share is typically under 10% for each of its five
product segments when one considers the overall market. However,
because CONTECH does not operate in all segments of each market,
its market share for its particular segment can be as high as 40%.
The company's five segments are: Storm Water Drainage & Control,
Environmental Storm Damage, Sanitary Systems, Engineered Spans,
Earth Stabilization and Erosion Control. The company's market
position could be adversely affected if certain of its larger
competitors were to merge.
The company's stable outlook reflects expectations that demand for
the company's products will remain strong and that the company's
margins will remain stable or even improve slightly. The ratings
and or outlook could be adversely affected if the company's
acquisitions were to be financed with debt and perform weakly
thereby leading to an increase in leverage without the expected
free cash flow.
The credit facilities benefit from:
(1) a perfected first priority security interest in the capital
stock of the borrower and each existing and subsequently
acquired or organized direct or indirect domestic and
foreign subsidiary of the borrower (65% in the case of
foreign first tier subsidiaries); and,
(2) a perfected first priority security interest in all
tangible and intangible assets of the borrower and each
existing and subsequently acquired or organized domestic
subsidiary with certain exceptions.
All obligations of the borrower under the facilities will be
unconditionally guaranteed by each existing and subsequently
acquired domestic subsidiary of the borrower. Additionally,
CONTECH Holdings Corporation and all domestic subsidiaries provide
downstream and upstream guarantees, respectively, to the credit
facilities on a joint and several basis.
For fiscal year 2005, total debt to EBITDA is estimated at
2.7 times. Adjusting for potential $100 million in acquisitions
and assuming these were to be financed with its revolver, total
debt to EBITDA would possibly increase to 3.3 times. EBITDA
interest coverage is expected to be around 6.6 times before the
impact of acquisitions and 5.3 times post. As of June 30, 2004,
the company had $61 million in net property plant and equipment
and $102 million in goodwill.
The company's acquisition basket is $50 million annually with a
maximum of $100 million over a four fiscal quarter period. If the
company were to acquire the maximum, free cash flow after capital
expenditures would depend highly on the performance of the newly
acquired assets. The ratings currently reflect an expectation
that the acquired assets will contribute to cash flow sufficiently
so as to help maintain the company's Ba3 senior implied level.
CONTECH's covenants, subject to final documentation, are expected
to be comprised of:
-- a total leverage covenant set at a maximum of 4.00 to 1.00;
-- fixed charge coverage covenant set at a minimum of 1.35 to
1.00; and
-- a maximum capital expenditure covenant of $15 million
annually.
Each of these covenants is expected to have step-down/step-up
provisions. Moody's expects the company to be in compliance for,
at least, the next twelve months while maintaining a solid cushion
for each quarter.
Headquartered in Middletown, Ohio, CONTECH manufacture and market
corrugated steel and plastic pipe and fabricated products for use
in highway, residential and commercial construction. The trailing
twelve months revenue ended September 30, 2004 was approximately
$504 million.
COUNTRYWIDE HOME: Fitch Holds Low-B Ratings on Four Cert. Classes
-----------------------------------------------------------------
Fitch Ratings has taken rating actions on these Countrywide Home
Loans, Inc. residential mortgage-backed certificates:
* CWMBS mortgage pass-through certificates, series 2003-1
-- Class A affirmed at 'AAA';
-- Class M upgraded to 'AA+' to 'AA';
-- Class B1 upgraded to 'A+' from 'A';
-- Class B2 upgraded to 'BBB+' from 'BBB';
-- Class B3 affirmed at 'BB';
-- Class B4 affirmed at 'B'.
* CWMBS mortgage pass-through certificates, series 2003-2
-- Class A affirmed at 'AAA';
-- Class M upgraded to 'AA+' to 'AA';
-- Class B1 upgraded to 'A+' from 'A';
-- Class B2 upgraded to 'BBB+' from 'BBB';
-- Class B3 affirmed at 'BB';
-- Class B4 affirmed at 'B'.
The upgrades reflect an increase in credit enhancement relative to
future loss expectations and affect $34,398,575, or 5.48% of
outstanding certificates. The affirmations reflect credit
enhancement consistent with future loss expectations and affect
$589,995,769, or 94.05% of outstanding certificates.
As of the September 25, 2004 distribution, the senior class A
certificates of series 2003-1 are benefiting from 6.73%
subordination (up from 2.90% as of the closing date,
January 30, 2003) provided by the subordinate classes (M, B1 to
B4, and not rated class B5). The current credit enhancement of
classes M, B-1, B-2, B-3, and B-4 is 3.48%, 2.09%, 1.28%, 0.81%,
and 0.46%, respectively. Currently, 58% of the collateral has
paid down. Only 1.46% of the current pool is in the delinquency
bucket, and there are no delinquent loans that reside in
foreclosure or REO. There have been no losses to the pool. The
collateral consists of conventional, fully amortizing, 30-year
fixed-rate mortgage loans, secured by first liens on one-to
four- family residential properties.
As of the September 25, 2004 distribution, the senior class A
certificates of series 2003-2 are benefiting from a 6.84%
subordination (up from 2.90% as of the closing date,
January 31, 2003) provided by the subordinate classes (M, B1 to
B4, and not rated class B5). The current credit enhancement of
classes M, B-1, B-2, B-3, and B-4 is 3.54%, 2.12%, 1.30%, 0.83%,
and 0.47%, respectively. Currently, 59% of the collateral has
paid down. Only 0.79% of the current pool is in the delinquency
bucket, and there are no delinquent loans that reside in
bankruptcy, foreclosure, or REO. There have been no losses to the
pool. The collateral consists of conventional, fully amortizing,
30-year fixed-rate mortgage loans, secured by first liens on one-
to four- family residential properties.
COVANTA ENERGY: Reorganized Debtors' 3rd Post-Confirmation Report
-----------------------------------------------------------------
The Reorganized Debtors, under the Covanta Energy Corporation
Second Joint Reorganization Plan and the Covanta Tampa Amended
Joint Plan of Reorganization, filed their third status report on
October 13, 2004.
The Reorganized Debtors took these steps, in connection with the
consummation of the Second Reorganization Plan and the Tampa
Plan:
(a) In accordance with the Second Reorganization Plan and the
Tampa Plan, the Reorganized Debtors assumed or rejected
their executory contracts and unexpired leases and
continued the process of paying cure amounts with respect
to the assumed executory contracts and unexpired leases.
The Reorganized Debtors continue to resolve disputes
concerning the Cure Amounts;
(b) The Reorganized Debtors continue to engage in the claims
reconciliation process with respect to Disputed Claims
against the Reorganized Debtors and the Remaining Debtors,
including the review of Disputed Claims and the
prosecution of claims objections pursuant to the Second
Reorganization Plan and Tampa Plan. The Reorganized
Debtors have filed three omnibus objections to claims.
All claim objections for the Covanta Debtors have been
filed;
(c) Distributions were made or are in the process of being
made by the Reorganized Debtors in accordance with the
Second Reorganization Plan on account of all currently
allowed Claims in Class 1, Class 3A, Class 3C, Class 4,
Class 7 and Class 8. The Reorganized Debtors continue to
make substantial progress towards making distributions to
holders of Allowed Claims in Classes 4 and 8, and the
second quarterly distribution for both Classes has been
completed. The Reorganized Debtors will not make
distributions to individual holders of Claims in Class 6
until all the claims are actually allowed or disallowed;
(d) Distributions were made by the Reorganized Debtors in
accordance with the Tampa Plan on account of all Allowed
Claims in Class 1, Class 2, and Subclass 3A under the
Tampa Plan;
(e) On September 10, 2004, Covanta Lake II, Inc., a Remaining
Debtor, filed its Plan of Reorganization under Chapter 11
of the Bankruptcy Code and its the Disclosure Statement.
A hearing to consider the adequacy of the Covanta Lake
Disclosure Statement is scheduled for October 20, 2004;
and
(f) On September 10, 2004, the Reorganized Debtors moved to
close the cases of several of the Reorganized Debtors.
The Court promptly entered its Final Decree closing 62 of
the Reorganized Debtors' cases, finding that their estates
have been fully administered.
Headquartered in Fairfield, New Jersey, Covanta Energy Corporation
-- http://www.covantaenergy.com/-- is a publicly traded holding
company whose subsidiaries develop, own or operate power
generation facilities and water and wastewater facilities in the
United States and abroad. The Company filed for Chapter 11
protection on April 1, 2002 (Bankr. S.D.N.Y. Case No. 02-40826).
Deborah M. Buell, Esq., and James L. Bromley, Esq., at Cleary,
Gottlieb, Steen & Hamilton represent the Debtors in their
restructuring efforts. When the Debtors filed for protection from
its creditors, they listed $3,280,378,000 in assets and
$3,031,462,000 in liabilities. On March 10, 2004, Covanta Energy
Corporation and its core subsidiaries emerged from chapter 11 as a
wholly owned subsidiary of Danielson Holding Corporation. Some of
Covanta's non-core subsidiaries have liquidated under separate
chapter 11 plans. (Covanta Bankruptcy News, Issue No. 67;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
CRANE CO: Plans March 2005 Prepack to Resolve Asbestos Claims
-------------------------------------------------------------
Crane Co. (NYSE: CR), a diversified manufacturer of engineered
products, has reached an agreement in principle with attorneys
representing a majority of current claimants and an independent
representative of future claimants to resolve all current and
future asbestos claims against the Company. The Company recorded
the non-cash charge during the third quarter for the comprehensive
settlement of its asbestos liability. The non-cash, after-tax
charge also includes $26 million for environmental cleanup costs
which are based on an agreement with the U.S. Environmental
Protection Agency on the scope of work for further investigation
and remediation for the Company's Goodyear, Arizona Superfund
site. The total charge of $238 million is net of taxes and
estimated insurance recoveries.
"This agreement in principle is a milestone event and a
significant accomplishment for our Company," said Crane Co.
president and chief executive officer, Eric C. Fast, "because it
will resolve all current and future asbestos claims against the
Company, which will remove the cloud of uncertainty about
asbestos, and allow us to focus fully on building long-term
shareholder value. We also reached an agreement with the EPA on a
clean-up plan for our Goodyear, Arizona Superfund site. At the
same time, our businesses continued to show profit improvement in
line with our expectations."
Commenting on the asbestos settlement, Mr. Fast remarked, "The
agreement in principle fulfills the commitment that we made to our
shareholders to evaluate all available alternatives for resolving
our asbestos liability. Crane Co.'s executive management team and
its Board of Directors believe that the steps we are taking are in
the best interests of our shareholders, employees, customers,
vendors and other stakeholders. The comprehensive settlement and
the process of implementation should have minimal impact, if any,
on our operations."
The Company emphasized that there will be no layoffs or changes in
management as a result of implementing the settlement, and wages,
salaries, benefits and pension plans will not be adversely
affected. The Company expects that business with its customers,
distributors, joint venture partners, suppliers and other third
parties will be conducted consistent with current practices. In
addition, management is working with the rating agencies and is
committed to the Company remaining investment grade. The Company
does not expect to change its dividend policy.
Agreement in Principle for Comprehensive Settlement
of Asbestos Liability
The Company has reached an agreement in principle with attorneys
representing a majority of current claimants and an independent
representative of future claimants to resolve all current and
future asbestos claims against the Company. The comprehensive
asbestos settlement will have two components:
-- a trust for settlement of current asbestos claims; and
-- a trust for future claimants, which will be structured and
implemented pursuant to Section 524(g) of the U.S.
Bankruptcy Code.
Enacted by Congress in 1994, Section 524(g) is the only federal
legislation that permits a company to resolve its asbestos
liability with certainty and finality. This law provides that,
with certain requirements, a corporation with asbestos liability
may establish a trust to pay future claimants and obtain an
injunction requiring any person with an asbestos claim to make
that claim against the trust, not against the corporation. As a
result, all future claimants will be "channeled" to the trust to
seek recovery, and upon confirmation of a plan of reorganization
under Chapter 11 of the U.S. Bankruptcy Code, this "channeling
injunction" becomes final and irrevocable.
Settlement of Current Claims
Under the terms of the settlement with current claimants, the
Company will pay $280 million in cash to fund a trust for current
asbestos claims for the payment of up to 90% of the agreed value
of such current claims. The remaining portion of the agreed value
of such current claims will be payable by the trust for future
asbestos claims administered in connection with the provisions of
Chapter 11. The Settlement Trust will be funded over the next
three to four months and it is expected that settlement payments
will be disbursed commencing on or about Feb. 23, 2005. The
Company has the right, in the event that an insufficient number of
claimants accept the settlement plan or if there is a material
change in applicable case law regarding section 524(g) trusts, to
terminate the Settlement Trust prior to any payments being made,
in which event this settlement would become null and void.
Settlement of Future Claims and Implementation
Pursuant to Section 524(g)
With respect to the settlement of future claims, the agreement in
principle contemplates a "pre-packaged" filing under Chapter 11 of
the U.S. Bankruptcy Code by a Crane Co. subsidiary, MCC Holdings,
Inc. and MCC's U.S. fluid handling subsidiaries, which is
anticipated to occur in March of 2005. Upon final Court approval
of a plan of reorganization, the Post- Petition Trust would be
funded with $10 million in cash, $70 million in the form of Crane
Co. stock or cash, at Crane Co.'s option, and a $150 million
twenty-year note from Crane Co. with semi-annual principal
payments and interest at 6% per year. The Company note would
terminate in the event that federal asbestos legislation transfers
the Post-Petition Trust to a federal trust fund.
MCC and all its subsidiaries will continue to operate as Crane Co.
subsidiaries both during the Chapter 11 proceedings and upon
approval of the plan of reorganization by the Court and subsequent
funding of the Post- Petition Trust. The only operations of Crane
Co. that will be included in the pre-packaged Chapter 11 filing
will be those of MCC that comprise the Company's U.S. fluid
handling businesses, including:
-- Crane Valves North America (domestic only),
-- Crane Nuclear (also d/b/a Crane Valve Services),
-- Pacific Valves,
-- Resistoflex-Industrial,
-- Xomox Corporation (domestic only),
-- Crane Pumps & Systems (domestic only) and
-- Crane Environmental (formerly Cochrane).
During the Chapter 11 proceedings, MCC and the other filing
subsidiaries will continue to operate as units of Crane Co. Crane
Co. and all of its other businesses not mentioned above,
specifically all businesses within the Company's:
-- Aerospace and Electronics Segment,
-- Merchandising Systems Segment,
-- Engineered Materials Segment and
-- Controls Segment, as well as its non-U.S.
Fluid Handling businesses, will not be included in the Chapter 11
filing, but would also be protected by the Section 524(g)
channeling injunction.
It is expected that MCC will begin soliciting current asbestos
claimants for formal approval of the proposed settlement and plan
of reorganization in approximately 60 days. As the agreement in
principle was reached with attorneys representing a significant
majority of current claimants, the Company anticipates that a
sufficient number of claimants will accept the plan. With
acceptance from at least 75% of the current asbestos claimants,
MCC, along with the other filing subsidiaries named above, will
file "pre- packaged" Chapter 11 petitions along with a proposed
plan of reorganization. MCC will then seek Bankruptcy Court
approval of the plan of reorganization, which will incorporate the
terms of the comprehensive settlement of asbestos claims. It is
anticipated that the Court will approve the plan within 6 to 12
months from the Chapter 11 filing. Upon Court approval of the
plan, the Company and MCC will fund the Post-Petition Trust for
future claimants, MCC will continue to conduct itself as part of
Crane Co. as it did prior to the filing, and all future asbestos
claims would be channeled to the Post-Petition Trust. Upon
confirmation of the plan of reorganization and the expiration of
the applicable period for appeals, the Section 524(g) "channeling
injunction" would become a permanent injunction.
Crane Co. assured that the pre-packaged Chapter 11 filing would
have no adverse impact upon the Company's creditors or employees.
Other than asbestos claims, all obligations of MCC and the other
filing entities, as well as all other units of Crane Co., will be
satisfied in accordance with contractual commitments and
applicable law. With respect to the filing subsidiaries, upon the
filing, MCC will ask the Court to allow the filing subsidiaries to
continue to pay all suppliers in full on normal terms, as well as
to pay all employee wages, salaries and benefits, without
interruption. Crane Co. anticipates that those requests will be
granted; however, if for some reason the Court does not grant
MCC's requests, Crane Co. will pay in full on normal terms all
supplier obligations of MCC and the other filing subsidiaries, and
all wages, salaries and benefits owed to the employees of MCC and
the other filing subsidiaries.
Conditions to Comprehensive Settlement
The comprehensive settlement is subject to, among other things,
execution of settlement agreements with additional representatives
for current claimants, acceptance of a plan of reorganization by
current claimants and the representative of future claimants, no
material change in case law governing 524(g) trusts and Court
approval.
Environmental Costs
The Company recorded a pre-tax charge of $40 million in the third
quarter 2004 for the estimated costs through 2014 of further
environmental investigation and remediation at its closed facility
in Goodyear, Arizona. After extensive negotiations regarding the
scope of work to be undertaken at this site, the Company estimated
the further investigation and remediation costs at the site based
upon the work plan agreed with the EPA in September. This
agreement is expected to be incorporated into a consent decree
between the Company and the EPA in the near future. Former
operations at this site by a Crane Co. subsidiary included the
manufacturing of compounds for explosives and munitions used as
components for critical military programs for the U.S. Government
under contracts with the Department of Defense and other
government agencies and certain of their prime contractors. The
site was operational from 1962 until site closure in 1993.
Subsequent to site closure, the Company implemented its previously
designed soil and groundwater remediation systems. As previously
disclosed, the Company has asserted claims against the U.S.
Department of Defense and Department of Energy for reimbursement
of past costs and contribution to future costs. These claims are
not resolved at the present time.
Financial Details of Charge for Asbestos Settlement
and Environmental Costs
The aggregate charge in the third quarter 2004 is based on a gross
settlement cost of $510 million, partly offset by anticipated
insurance recoveries of $153 million (using a 30% recovery
assumption) and existing reserves of $103 million. The inclusion
of additional costs of $68 million, for asbestos-related
settlement and defense costs and professional fees and expenses,
resulted in a total pre-tax, non-cash asbestos charge in the third
quarter 2004 of $322 million. After including the pre-tax charge
of $40 million for environmental costs and anticipated tax
benefits of $124 million, the total after-tax charge was
$238 million.
The Company has received a commitment from JPMorgan to underwrite
and arrange $450 million in new credit facilities that will fund
the settlement and provide ongoing liquidity. The Company has
also obtained a waiver from its existing credit facility syndicate
that provides interim liquidity until such time as the new credit
facilities are expected to be in place.
The Company expects that borrowings under these facilities will be
used to fund the $280 million Settlement Trust for current
asbestos claims and that such borrowings will be paid off in
approximately two years through a combination of cash flow
generated from operations and reduced taxes resulting from the
non-cash charge. To be conservative, the Company has assumed no
cash flow benefit from insurance reimbursements during the next
two years. The Post-Petition Trust, which is anticipated to be
funded in mid-2006, will be funded with a combination of cash,
notes and/or stock, giving the Company financial flexibility to
maintain its investment grade credit rating. The Company expects
that it will continue to pay its normal quarterly dividend and to
make capital investments in accordance with past practices.
The Company is retaining its rights under applicable insurance
policies and has initiated discussions with a number of its
insurers regarding their participation in the comprehensive
settlement. The Company anticipates recovering approximately 30%
of the aggregate settlement amount, depending on the timing and
terms of insurer reimbursements.
For more information regarding the asbestos settlement, please
visit the Crane Co. web site, http://www.craneco.com/The Company
has also established a toll free information line to answer any
questions regarding the asbestos settlement. The information line
can be reached at 866-881-2560.
About the Company
Crane Co. is a diversified manufacturer of engineered industrial
products. Crane Co. is traded on the New York Stock Exchange
(NYSE: CR).
CRANE CO: Posts $205 Million Third Quarter Net Loss
---------------------------------------------------
Crane Co. (NYSE: CR), a diversified manufacturer of engineered
products, reports third quarter 2004 net income, before a non-cash
charge, was $33.2 million, compared with net income of
$28.1 million, reported in the third quarter 2003. The third
quarter 2004 results including the non-cash, after-tax charge of
$238 million, was a net loss of $205 million.
Third Quarter 2004 Operating Results
Excluding Asbestos and Environmental Charge
All comparisons below reference the third quarter 2004 versus the
third quarter 2003, unless otherwise specified. Additionally,
discussions of operating profit below refer exclusively to
operating profit before the third quarter 2004 non-cash, asbestos-
related and environmental charge.
The sales increase of $52.0 million, or 12%, included incremental
sales from core businesses of $25.6 million (6%), from
acquisitions of $14.8 million (3%) and from favorable foreign
currency translation of $11.6 million (3%). Continued market
strengthening resulted in new order increases across most of the
Company's businesses compared with the prior year. The increase
in operating profit reflected improvement in four of the five
segments and even results in Engineered Materials. Operating
profit margin was 10.6%, as continued margin improvement in the
Fluid Handling, Merchandising Systems and Controls segments was
offset by slight declines in the Aerospace and Electronics and
Engineered Materials segments.
Order backlog at September 30, 2004 totaled $572.4 million, up
slightly from backlog of $565.9 million at June 30, 2004.
Financial Position
During the third quarter of 2004, the Company generated
$40.7 million in cash flow from operating activities before
asbestos-related payments as compared to $40.1 million last year.
Funds were used to reduce borrowings by $31.2 million, invest
$4.8 million in capital expenditures and pay $5.9 million in
dividends to shareholders. The Company also paid $6.7 million of
asbestos-related fees and costs. The Company did not repurchase
shares during the third quarter 2004, but year-to-date has
invested a total of $42.7 million to repurchase 1,388,100 shares
and has invested $50 million for two acquisitions. At September
30, 2004, net debt to capital was 34.5% including the third
quarter 2004 charge for asbestos and environmental, or 27.2%
before the charge, compared with 29.6% at June 30, 2004.
Segment Results
Aerospace & Electronics
The third quarter 2004 sales increase included $9.2 million of
incremental sales from P.L. Porter, acquired in late January 2004,
and $7.1 million from core businesses. Core business sales grew
6% reflecting improved OEM demand. Improved margins in the
Aerospace Group were largely offset by a decline in the
Electronics Group performance.
Aerospace Group sales of $78.8 million increased $21.5 million, or
37%, from $57.4 million in the prior year. Sales increased
$12.3 million, or 21%, from core business growth driven by
increased OEM delivery rates for both the commercial and military
markets and higher military aftermarket sales, and $9.2 million,
or 16%, from the P.L. Porter acquisition. Total Aerospace Group
operating profit increased 45%. Operating profit margin improved
over the prior year driven by the higher mix of military
aftermarket and favorable absorption on the strong OEM demand
partially offset by lower P.L. Porter margins.
Electronics Group sales of $48.5 million declined 10% with lower
shipments to both the commercial and military markets. Operating
profit was down 41% and margins declined, reflecting reduced
volume due to technical and production throughput issues in
certain of its operations, and a temporary facility shutdown at
Fort Walton Beach, Florida caused by the recent hurricanes.
The Aerospace & Electronics Segment backlog was $355.6 million at
September 30, 2004, a $2.5 million, or 1%, increase compared with
$353.1 million at June 30, 2004.
Engineered Materials
The third quarter sales increase reflects continued strong demand
for fiberglass-reinforced panels, primarily for the truck trailer
and recreational vehicle markets, although at a slower rate of
increase than in the first half of 2004, and favorable impacts
from third quarter price increases in certain markets. Operating
profit was flat, despite the higher volume, as the impact of
higher resin and styrene costs were not yet fully offset by price
increases. Additional price increases are planned in the fourth
quarter and into 2005.
Merchandising Systems
Sales increased $3.7 million, or 9% of which $1.8 million, or 4%,
reflected favorable foreign currency translation. Markets remained
weak but stable, with some encouraging signs in Europe. Operating
profit doubled compared with the prior year, as a result of the
volume increase and the benefits of prior workforce reductions and
other cost efficiencies at both Crane Merchandising Systems and
National Rejectors. Sales and operating profit improvements were
shared evenly between CMS and NRI.
Fluid Handling
The total segment third quarter sales increase of $23.6 million
includes $8.9 million, or 4%, from favorable foreign currency
translation, $5.6 million, or 3%, of incremental sales from the
Hattersley brand acquired in January 2004, and core business sales
increased $9.1 million, or 5%. This segment experienced a 39%
operating profit improvement from higher volumes on strengthening
market demand in the chemical processing industry and the benefit
of prior year facility consolidations which were partially offset
by material cost increases.
Valve Group sales of $110.6 million increased $7.1 million, or 7%,
from $103.5 million in the prior year, including $4.1 million, or
4%, from favorable foreign currency translation and the remaining
$3 million, or 3%, reflecting increased shipments to the
industrial chemical process markets. Economic recovery continued
with signs of strengthening from the core CPI market. Valve Group
operating profit declined 12% during the third quarter as a result
of supply chain disruptions, poor performance in its marine valve
business and large material cost increases.
Crane Ltd. sales of $32.9 million increased $7.7 million, or 31%,
from $25.2 million in the prior year. Sales increased $5.6 million
from the Hattersley valve brand, acquired in January 2004. Demand
continued to be weak within the core commodity valve product lines
in the domestic U.K. market. Margins remained depressed, impacted
by product availability issues and higher material costs although
they were helped by reduced benefit costs.
Crane Pumps & Systems sales of $25.5 million increased from $24.7
million in the prior year and operating profit margins were
approximately 11% in the third quarter 2004.
Crane Supply sales of $36.0 million increased $7.0 million, or
24%, from $29.0 million in the prior year driven by significant
growth in core product sales of pipe, valve and fittings.
Industrial maintenance, repair and overhaul ("MRO"), commercial
construction, petrochemical and mining industry demand across
Canada remained strong. Operating profit margin increased
strongly to over 10% from 8.4%.
Resistoflex-Industrial sales of $11.0 million increased
$1.1 million, or 12%, from the prior year as improving conditions
in the chemical process industry have strengthened MRO and small
project demand. Operating profit increased to $1.3 million from
an operating loss in the prior year as a result of higher
shipments, the absence of the 2003 cost for a plant consolidation
and improved price realization. Operating profit margin was over
10% in the third quarter 2004.
The Fluid Handling Segment backlog was $176.7 million at September
30, 2004, a $4.6 million, or 3%, improvement compared with $172.1
million at June 30, 2004.
Controls
Sales and operating profit improvements were driven by increased
demand across all of this segment's key end markets, most
particularly in fluid power, oil and gas exploration, gathering
and transmission, as higher global oil prices and increased rig
counts drove the industry's capital spending in the quarter.
Outlook for Fourth Quarter and Full Year 2004
The Company expects fourth quarter 2004 earnings share from
operations to be in the range of $0.49 to $0.54 per share. On a
pre-charge basis, management has tightened the full year 2004
earnings per share guidance for earnings from operations to $1.95
to $2.00 per share versus previous guidance of $1.90 to $2.05 per
share. Including the charge ($4.02 on a full year earnings per
share basis), earnings are expected to be a per share loss of
$2.02 to $2.07 for the full year 2004.
Improved market OEM and MRO demand is benefiting the Aerospace and
Electronics, Fluid Handling, Engineered Materials and Controls
segments. Higher raw material costs, which are mostly impacting
Engineered Materials, Fluid Handling and Merchandising Systems,
are being partially offset with price increases with varying time
lags involved. Assuming stable operating costs management
believes additional price increases will be required in the fourth
quarter and into 2005 to offset higher raw material costs.
Full year cash flow from operating activities before asbestos
payments is expected to be approximately $160 million versus $170
million in 2003. Asbestos related payments, excluding funding of
the Settlement Trust, are projected at $30 million ($18.3 million
year-to-date September 30, 2004), up substantially from $7.9
million in 2003. The Company expects to invest $20 million for
capital expenditures and to pay out $24 million in dividends for
the full year 2004. Reflecting the substantial increase in
asbestos related payments and operating working capital
requirements to support higher sales, free cash flow (after
asbestos, capital expenditures and dividends) is expected to be in
the range of $80-90 million versus previous guidance of $90-110
million.
Crane Co. is a diversified manufacturer of engineered industrial
products. Crane Co. is traded on the New York Stock Exchange
(NYSE: CR).
DESA HOLDINGS: Plan Proposal Period Stretched to Dec. 21
--------------------------------------------------------
DESA Holdings Corporation and its debtor-affiliates, sought and
obtained an extension, through Dec. 21, 2004, of its exclusive
right to propose and file a chapter 11 plan. The Honorable Peter
J. Walsh of the U.S. Bankruptcy Court for the District of Delaware
granted the Company a concomitant extension of its exclusive
period in which to solicit acceptances of that plan from creditors
through Feb. 21, 2005.
DESA reminded Judge Walsh that it sold its assets to HIG DESA
Acquisition LLC. The Company will be proposing a plan to
distribute the proceeds of that sale and preference recoveries
from:
A.O. Smith Electrical Products
Abrisa Industrial Glass, Inc.
Allwood, Inc.
American Nickeloid Company
Bodine Electrical Company
Bohn & Dawson Inc.
Cormark Inc.
Diam Pop Group
Emery Customs Brokers
Faster Form Corporation
FedEx Ground Package System, Inc. f/k/a Roadway
Flexmaster Canada Ltd. et al.
Fritz Companies, Inc.
G.A.M.A. Inc.
GAS, Inc.
Gish, Sherwood & Friends, Inc.
H.D. Hudson Manufacturing Company
Heath Company Limited
Interstate Warehousing Systems, Inc.
Marshall Gas Controls, Inc.
Maxitrol Company
Menasha Packaging Company, LLC
Norton Ignitor Products
Old Hickory Tool & Die, Inc.
Packaging Fulfillment Company, Inc.
Paula Alvarez
Plaspros, Inc.
Pollock Mechanical Services
Pro Composite Industries
Redwood International Machinery Corporation
Regal Craft Kitchens, Inc.
Semco Plastic Company, Inc.
Sengoku Works, Ltd.
Shinn Fu
The Hamilton-Ryker Company
Tracking Technology Corporation
Unicable, Inc.
United Parcel Service, Inc.
Weyerhaeuser Company
to its creditors under a chapter 11 plan of liquidiation.
DESA International, Inc. manufactured and marketed high-quality
zone heating products, hearth products, security lighting and
specialty tools for use in homes and commercial buildings. The
Company filed for chapter 11 protection (Bankr. Del. Case No.: 02-
11672) on June 8, 2002. James H.M. Sprayregen, Esq., James W.
Kapp, III, Esq., and Scott R. Zemnick, Esq., at MKirkland & Ellis,
LLP, and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl Young
Jones & Weintraub, P.C., represent the Company.
DURANGO GEORGIA: Judge Davis Denies J. Walter's Amended Claim
-------------------------------------------------------------
The Honorable Lamar W. Davis, Jr., of the U.S. Bankrutpcy Court
for the Southern District of Georgia, Savannah Division, denied
the motion of J. Walter Construction, Inc., to reclassify its
claim from unsecured to secured. The motion was filed more than a
year after the March 19, 2003, claims bar date.
Judge Davis ruled, after careful consideration and a hearing on
the objection of the Official Committee of Unsecured Creditors,
that it was not equitable to allow J. Walter to amend its proof of
claim more than a year after the Claims Bar Date had passed.
Judge Davis gives four reasons for his ruling:
a) J. Walter's filing of a formal proof of claim that listed
its claim as unsecured before the Claims Bar Date,
b) allowing the amendment would dilute the claims of the
other unsecured creditors,
c) J. Walter had all the opportunities to assert that its
claim was secured prior to the Claims Bar Date and it did
not object to the valuation of its claim as $0 in the
Amended Disclosure Statement, and
d) J. Walter did not seek an extension of the Claims Bar
Date even when the Court had a hearing on the motion for
relief from stay prior to the filing of its proof of
claim.
About the Case
On October 18, 2002, J. Walter filed suit against Durango Georgia
to recover funds for services rendered and to enforce a lien under
the Georgia mechanics and materialmans' lien statute. But before
J. Walter could file the notice, the Debtors' creditors filed an
involuntary petition on October 29, 2003.
On Nov. 20, 2002, J. Walter filed a motion requesting relief from
the automatic stay in order to file a Notice of Commencement of
Action in the Superior Court of Camden County, Georgia. On March
31, 2003, the Bankruptcy Court granted relief from stay for the
limited purpose of allowing J. Walter to file that notice.
The Bankruptcy Court's order did not declare that J. Walter's
claim was secured; it merely lifted the stay to allow the creditor
to continue its state court action asserting a lien against the
Debtors. J. Walter sent the notice of claim to the Debtors on
April 3, 2003.
J. Walter filed a formal proof of claim in the amount of
$326,124.69 on January 19, 2003. The Debtors' Schedule D
identified J. Walter as a creditor holding a secured claim, but a
note on the schedule clarifies that it "represents Notice of Lien
and/or Notice of Furnishing and may not actually represent valid
liens and encumbrances."
On Feb. 17, 2004, the Debtors and their Committee of Unsecured
Creditors filed a Joint Amended Plan of Liquidation and an Amended
Disclosure Statement. The Debtors' proposed collateral value for
J. Walter's claim was listed as $0, with the notation that the
valuation is "based on proof of claim filed as unsecured."
J. Walter did not file any objection to its unsecured treatment
under the Amended Disclosure Statement.
Committee's Objection
The Official Committee of Unsecured Creditors asserted that J.
Walters claim should not be amended because it served on the
Committee for more than a year and owes a fiduciary duty to the
general unsecured creditors.
The Debtors and the Committee may have had reason to suspect that
J. Walter might file a subsequent proof of claim, but, its failure
to act in a timely manner and continued participation in the
Committee made the parties believed in the finality of the claim
as filed.
Headquartered in St. Mary's, Georgia, Durango Georgia --
http://www.durangopaper.com/-- is a nationally recognized
bleached board and kraft paper producer in the U.S. offering
coast-to-coast and international service. On Oct. 29. 2002,
Durango's creditors filed an involuntary chapter 7 petition
against it and the Company consented to the petition. The Company
filed for chapter 11 relief on November 20, 2002 (Bankr. S.D. Ga.
Case No. 02-21669). W. Brooks Stillwell, Esq., Robert K.
Imperial, Esq., at Hunter, McClean, Exley & Dunn, PC and Michael
M. Beal, Esq., Robin C. Stanton, Esq., and Elizabeth J. Philp,
Esq., at McNair Law Firm, PA represent the Debtors in their
restructuring efforts.
ELECTRO-METRICS: Says It Can't Pay $1.5 Mil. Owed to Hayes Corp.
----------------------------------------------------------------
Morton P. Levine, Esq., that Chapter 7 Trustee overseeing the
liquidation of Access Beyond Technologies, Inc. n/k/a Hayes
Corporation (Hong Kong) Limited, holds claims against EMI Holding
Corporation on account of:
* a $1,000,000 Subordinated Term Note dated June 30, 1997;
* a $500,000 Subordinated Term Note dated June 30, 1997; and
* a Warrant to Purchase Preferred Shares of EMI Holding
Corporation;
The Trustee entered into a Tolling Agreement preserving all of
Hayes' causes of action against EMI Holding through Nov. 28, 2004.
The Trustee tells the U.S. Bankruptcy Court for the District of
Delaware that "EMI has asserted informally that it has no
unencumbered assets to satisfy any claims the Trustee may assert."
The Trustee intends to pursue the claims and has hired Robert D.
Wilcox, Esq., in Jacksonville, Florida, on a 30% contingency fee
basis to do the collection work and sue EMI if that's what's
necessary.
Mr. Wilcox relates that EMI asserts:
* it has neither the assets nor cash flow to satisfy a $1.5
million claim;
* the Trustee's claim is subordinated to an alleged $1.4
million first-priority blanket lien in favor of UPS Bank
(part of UPS Capital Business Credit f/k/a First
International Bancorp, Inc., of which First National Bank
of New England, is a subsidiary);
* UPS Bank estimates that EMI's assets are valued at less
than $500,000;
* UPS Bank has threatened to foreclose on its lien due to
non-payment of amounts owed to it; and
* the Warrant is worthless given EMI's financial condition.
Co-located with EMI Holdings Corporation at 231 Enterprise Road in
Johnstown , New York, Electro-Metrics, Inc., is a leading designer
and manufacturer of broadband RF testing and communications
instrumentation. The company's products are used for
electromagnetic interference/compatibility (EMI/EMC)
characterization, compliance testing and certification, and
wireless voice and data communications. A UCC filing, No.
404230426236, filed April 23, 2004, in New York lists Mr. Levine,
in his capacity as the Chapter 7 Trustee for Access Beyond, Inc.,
as "Successor to Electro-Metrics, Inc." Electro-Metric hosts a
Web site is at http://www.electro-metrics.com/
Access Beyond Technologies, Inc., n/k/a/ Hayes Corporation (Hong
Kong) Ltd., Hayes Corporation f/k/a Access Beyond, Inc.), Hayes
Microcomputer Products, Inc., Enterprise Technologies, Inc., Hayes
Government Services, Inc., and Cardinal Technologies, Inc., filed
for chapter 11 protection on October 9, 1998 (Bankr. D. Del. Case
Nos. 98-2276 through 98-2218). These "chapter 22" cases followed
the collapse of the 1980's modem manufacturer bearing Dennis C.
Hayes' name. Morton P. Levine, Esq., at Levine & Block in
Atlanta, Georgia, served as the Chapter 11 Trustee and filed a
motion to convert. On March 17, 2000, Judge Walrath entered an
order converting Hayes' cases to a chapter 7 liqudiation
proceeding. On March 20, 2000, the U.S. Trustee for Region 3
appointed Mr. Levine to serve as the Chapter 7 Trustee.
ENRON CORP: Wants to Dip Into $75MM Crime Loss Indemnity Policies
-----------------------------------------------------------------
Enron Corporation asks Judge Gonzalez for a declaratory judgment
against St. Paul Fire & Marine Insurance Company, Federal
Insurance Company and The Great American Insurance Company,
relating to insurance coverage of losses arising from the acts of
Michael J. Kopper and Andrew S. Fastow, among others, all
employed by Enron during the coverage period, under a "Crime Loss
Indemnity Policy" issued by St. Paul and excess policies issued
by Federal and American.
David R. Berz, Esq., at Weil, Gotshal & Manges, LLP, Washington,
D.C., tells the Court that pursuant to the Policies, St. Paul,
Federal and American have agreed to indemnify Enron for losses
related to various wrongful acts committed by Enron employees.
The Policies cover the period Jan. 1, 1997, to Jan. 1, 2003. The
indemnity limit for a single loss under the St. Paul Policy is
$25,000,000, with a deductible of $500,000. The liability limit
for a single loss under:
-- the Federal Policy is $25,000,000, excess of the Primary
Policy limits; and
-- the American Policy is $25,000,000, with a deductible of
$50,500,000.
Wrongful Acts Causing Loss to Enron
During the policy period, Mr. Fastow was employed by Enron as
Executive Vice-President and Chief Finance Officer, ECT Treasury,
Executive. Mr. Kopper was employed by Enron as Director, Finance
Funding Group/Treasury, Capital Markets, ECT-Treasury.
The transactions, of which Enron is currently aware, giving rise
to the losses claimed by Enron involved a special purpose entity
called LJM Swap Sub, LP. The general partner of Swap Sub was LJM
Cayman, which Mr. Fastow controlled, and the limited partners
were affiliates of National Westminster Bank and Credit Suisse
First Boston.
Messrs. Fastow and Kopper, and others, including other Enron and
LJM employees, participated in a fraudulent scheme intended to
steal money from Enron, and possibly others, for their benefit.
In March 2000, Mr. Fastow represented to Enron that the limited
partners of Swap Sub, National Westminster and Credit Suisse
First Boston, wanted to sell their interests in Swap Sub for
$20 million and $10 million. In fact, National Westminster had
been persuaded to sell its interest in Swap Sub for only
$1 million, not $20 million. Mr. Fastow was aware that three
National Westminster bankers induced National Westminster to sell
its interest in Swap Sub for $1 million at a time that they knew
the interest was worth significantly more.
On Mr. Fastow's representation, Enron paid a total of $30 million
for these interests. Swap Sub received at least $19 million as a
result of this transaction, which was distributed to individuals
and entities that were not entitled to receive those funds,
including employees of Enron and LJM, among others.
As a result of their participation in the scheme, the three
National Westminster bankers together received approximately
$7.3 million in proceeds. The balance of the remaining proceeds
went to individuals and entities who were selected as "investors"
in an entity called Southampton Place LP. The Southampton
"investors" were:
(1) a foundation in the name of Mr. Fastow's family, which
contributed $25,000 and received approximately $4.5
million;
(2) Mr. Kopper, who contributed $25,000, caused another entity
under Mr. Fastow's and Mr. Kopper's control to loan an
additional $750,000, and received approximately $4.5
million; and
(3) five Enron and LJM employees, selected by Messrs. Kopper
and Fastow, who contributed a total of less than $20,000
and received a total of approximately $3.3 million.
On August 21, 2002, Mr. Kopper pled guilty to federal charges of
money laundering and wire fraud.
On January 14, 2004, Mr. Fastow pled guilty to two counts of
conspiracy to commit securities and wire fraud and signed a plea
agreement admitting to, inter alia, misappropriating $19 million
intended for Enron or National Westminster.
Enron has provided St. Paul, Federal and American with notices of
loss relating to the wrongful acts of Messrs. Kopper and Fastow.
To date, St. Paul, Federal and American have not agreed to
indemnify Enron for any losses noticed or incurred.
National Westminster's Claims Against Enron
On October 15, 2002, the Royal Bank of Scotland plc and its
affiliates, including National Westminster, filed a proof of
claim against Enron to recover, inter alia, the funds wrongfully
obtained by Mr. Fastow and other Enron employees in connection
with the LJM transaction.
The National Westminster Claim does not specify the amount of the
alleged loss.
Enron has objected to the claim and no final disposition has been
reached as of August 2004. Enron has provided St. Paul, Federal
and American with notice of the National Westminster Claim.
Enron Seeks Declaratory Judgment
According to Mr. Berz, the Policies require that any legal
proceedings for the recovery of loss must be initiated within a
certain period of time. To preserve its right to enforce its
claim, Enron now seeks a declaration from the Court that St. Paul
is obligated under the subject policy to indemnify Enron in
connection with the wrongful acts of Messrs. Kopper, Fastow and
others.
Enron is also seeking a declaration that, should the loss
incurred by Enron exceed the policy limits of the St. Paul
policy, that Federal and American, as issuers of excess policies
covering the period, are obligated to provide coverage of the
excess loss.
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. 127;
Bankruptcy Creditors' Service, Inc., 15/945-7000)
FIBERMARK, INC.: Committee Members Can Trade Debtors' Securities
----------------------------------------------------------------
The Honorable Colleen A. Brown of the U.S. Bankruptcy Court for
the District of Vermont put her stamp of approval on a protocol
that will permit four members of the Official Committee of
Unsecured Creditors appointed in FiberMark, Inc.'s chapter 11
cases to trade the company's securities while serving on the
Committee and not violate their fiduciary duties to their fellow
unsecured creditors by doing so.
Judge Brown's Order, among other things, states:
IT IS HEREBY ORDERED THAT:
Committee members, acting in any capacity and engaged
in the trading of securities as a regular part of their
business, will not violate their fiduciary duties as
Committee members or per se be in violation of securities
law and, accordingly, will not subject their claims to
possible disallowance, subordination, or other adverse
treatment, by trading in the Debtors['] Securities during
the pendency of the Debtors' chapter 11 cases, provided that
any Committee member carrying out such trades establishes
and effectively implements and strictly adheres to the
information blocking procedures detailed in the Screening
Wall Declaration. For purposes of this Order, the term
"Securities" is used as such term is defined in Section
2(a)(1) of the Securities Act of 1933, including the
following, but only to the extent they constitute securities
thereunder: stock, notes, bonds, debentures, participations
in, or derivatives based upon or relating to, any of the
Debtors' debt obligations or equity interests. For the
avoidance of doubt, this definition does not apply to bank
debt.
As evidence of its implementation of the procedures
detailed in the Screening Wall Declaration, any Committee
member that wishes to trade in the Debtors' Securities
shall, as a precondition to any such trading after such
Committee member's appointment to the Committee, cause to be
filed with the bankruptcy court a declaration or affidavit
of each individual performing Committee-related activities
in [FiberMark's] bankruptcy cases on behalf of that
Committee member stating that such individual shall comply
with the terms and procedures set forth in the Screening
Wall Declaration.
This Order shall not preclude the Court from taking any
action it may deem appropriate in the event that it is
determined that a breach of fiduciary duty has occurred as a
result of a defect in, or the ineffectiveness of, the
implementation of the information blocking procedures herein
approved.
This Order shall apply only to those Committee members
that are engaged in the trading of securities as a regular
part of their business.
IT IS FURTHER ORDERED that to the extent the parties
charged with enforcing this screening wall procedure
(namely, the Debtor, the Debtor's counsel, the Office of the
U.S. Trustee, and the Committee's counsel) have reason to
believe that any member of the Committee has violated this
order or the screening wall process, they are to report such
suspicion of violation by filing "a notice of suspected
violation" with the Court promptly, and serve a copy of the
notice on the Debtor, the Committee and the Office of U.S.
Trustee; such notice shall specify the name of the subject
Committee member, the facts that give rise to the suspicion
of violation, what steps have been taken to avoid or
diminish harm to the estate, if any, and the proposed
remedy.
The four Institutions that will be allowed to trade are:
* AIG Global Investment Corp.,
* Solution Dispersions Inc.,
* Post Advisory Group LLC, and
* Wilmington Trust Co.
provided they put information blocking devices and ethical walls
in place that prohibit any non-public information in the hands of
a committee representative from falling into a trader's hands.
Fred S. Hodara, Esq., Kerry E. Berchem, Esq., and Jonathan L.
Gold, Esq., at Akin Gump Strauss Hauer & Feld LLP, represent the
Committee. Skip Victor at Chanin Capital Partners LLC serves as
the Committee's financial advisor and investment banker.
Headquartered in Brattleboro, Vermont, FiberMark, Inc.
-- http://www.fibermark.com/-- produces filter media for
transportation applications and vacuum cleaning; cover stocks and
cover materials for books, graphic design, and office supplies and
base materials for specialty tapes, wallcoverings and sandpaper.
The Company filed for chapter 11 protection on March 30, 2004
(Bankr. D. Vt. Case No. 04-10463). Adam S. Ravin, Esq., D.J.
Baker, Esq., David M. Turetsky, Esq., and Rosalie Walker Gray,
Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from its creditors, they listed $329,600,000 in
total assets and $405,700,000 in total debts.
FIRST UNION: Fitch Slices Rating on Class B Issue to B from BB-
---------------------------------------------------------------
Fitch Ratings downgraded these First Union Home Equity Loan issue:
* Series 1997-1
-- Class B is downgraded to 'B' from 'BB-'.
The negative rating action taken on $530,333 (30% of total
certificates) outstanding of class B reflects the poor performance
of the underlying collateral in the transaction.
Series 1997-1 consists of subprime residential mortgages. As of
the September 27th distribution, this transaction, with 7.78% of
the original collateral remaining, has $557,584 of
overcollateralization compared to the OC target of approximately
$1.172 million. Average monthly gross losses for the past six
months have been $73,824, and the most current monthly gross loss
is $117,262. As a result of monthly losses generally exceeding
monthly excess spread, the level of credit enhancement in the
transaction represented by OC has been steadily decreasing.
Fitch will continue to closely monitor this deal.
FLIGHTLEASE HOLDINGS: Section 304 Petition Summary
--------------------------------------------------
Petitioner: Stephen John Akers and Nick Stuart Wood,
of Grant Thornton UK LLP, as joint liquidators in the
voluntary liquidation supervised by the Royal Court of
Guernsey of
Flightlease Holdings (Guernsey) Limited
Polygon Hall, P.O. Box 29
Le Marchant Street 1
Saint Peter Port, Guernsey GY1 4AS
Bankruptcy Case No.: 04-32989
Type of Business: The Company is an affiliate of Swissair Group.
This petition is related to In re Flightlease
A.G. (Bankr. S.D.N.Y. Case No. 01-42536). The
Company is involved in various aspects of
commercial and private aircraft operation and
leasing throughout the world.
Section 304 Petition Date: October 22, 2004
Court: Northern District of California (San Francisco)
Judge: Dennis Montali
Debtor's Counsel: Kurt E. Ramlo, Esq.
Skadden, Arps, Slate, Meagher & Flom
300 South Grand Avenue #3400
Los Angeles, California 90071-3144
Tel: (213) 687-5628
Estimated Assets: More than $100 Million
Estimated Debts: More than $100 Million
FRATERNAL COMPOSITE: Dist. Ct. Won't Revive Chapter 11 Case
-----------------------------------------------------------
Chief Judge Scullin of the United States District Court for the
Northern District of New York declined to overturn Chief
Bankruptcy Judge Stephen D. Gerling's ruling dismissing the
chapter 11 case filed by Fraternal Composite Services, Inc.
Fraternal Composites specializes in the production of photograph
composite portraits, primarily for college sororities and
fraternities. James J. Karczwski is a one-third minority
shareholder in the company. Carol Gallman, his cousin, owns the
other two-thirds of the corporation.
On July 1, 1999, Mr. Karczwski filed a petition with the New York
State Supreme Court, County of Oneida, seeking the judicial
dissolution of the corporation pursuant to New York Business
Corporation Law Sec. 1104-a. On August 3, 1999, the corporation
elected to purchase his one-third interest pursuant to NYBCL Sec.
1118, rather than having the corporation dissolved. Both parties
subsequently hired experts to prepare a valuation of Mr.
Karczwski's interest in the corporation. After considering the
experts' opinions, William Chandler, the Referee, whom Justice
John J. Grow appointed, valued Mr. Karczwski's one-third interest
at $808,500 plus interest at the statutory rate of 9% per annum
beginning on the valuation date. Each party then filed objections
to the Referee's Report. The corporation also filed a motion
seeking to relitigate the issue of the payment terms under which
it would buy out Mr. Karczwski's interest and the interest rate.
Justice Grow was scheduled to hear the matter and issue a judgment
valuing the equity interest on April 30, 2003. However, one day
prior to the scheduled hearing, on April 29, 2003, the corporation
filed a voluntary chapter 11 petition. At the time that the
corporation filed its petition, Justice Grow had not ruled on
whether to adopt the findings contained in the Referee's Report
and no actual judgment had been entered in favor of Mr. Karczwski
in the state-court action.
Mr. Karczwski filed a motion to dismiss the chapter 11 proceeding
under 11 U.S.C. Sec. 1112. The bankruptcy court concluded that,
because the state court had not yet issued a judgment on the
valuation of the equity interest, the corporation's intent was to
use the bankruptcy process solely as a means to delay, frustrate
and relitigate the state-court issues. In addition, the
Bankruptcy Court found that the corporation was not experiencing
any serious financial difficulties and was current on all
obligations to pay its employees and to fulfill customer
contracts. Moreover, the Bankruptcy Court noted that the state
court had not yet determined whether the corporation would be
allowed to satisfy any state-court judgment in installments or
whether Mr. Karczwski was entitled to execute on any state-court
judgment. The Bankruptcy Court found that the state court was the
proper forum to decide whether or not to revoke the corporation's
NYBCL Sec. 1118 election to purchase the one-third equity
interest.
Fraternal Composites thinks its chapter 11 filing was entirely
appropriate and appealed the Bankruptcy Court's ruling to the
District Court. First, the corporation argues that the Bankruptcy
Court applied the wrong legal standard when it dismissed the
Chapter 11 petition. To support this position, the corporation
asserts that its filing of its Chapter 11 petition was not a
collateral attack on a state-court judgment because no state-court
judgment had been granted at the time that it filed its Chapter 11
petition. Second, the corporation contends that its filing was not
premature and that the Bankruptcy Court erred in asserting that
the absence of a state-court judgment was a determinative factor
in dismissing the Chapter 11 petition. The corporation also
argues that, when a debtor is faced with an uncertain claim
amount, the best course of action is for the bankruptcy court to
keep the case in Chapter 11 while the state court decides the
amount of the claim. The bankruptcy court can then set payment
terms if it decides that Chapter 11 reorganization is feasible.
The corporation claims that it filed a Chapter 11 plan whereby the
Bankruptcy Court would review the Referee's Report and decide on a
payment schedule that would eventually pay Mr. Karczwski in full.
Essentially, the corporation contends that its plan is a valid
attempt at reorganization rather than a collateral attack on the
pending state-court judgment. Finally, the corporation asserts
that the Bankruptcy Court might not have dismissed its Chapter 11
petition had it known that Mr. Karczwski's goal was to force the
corporation's dissolution by seeking immediate execution on any
judgment awarded.
Based upon a review of the record, the District Court concludes
that the reasons on which the corporation relies to sustain its
argument that it filed its Chapter 11 petition in good faith do
not support such a conclusion. Rather, these justifications are
based upon nothing more than mere speculation and, as the
Bankruptcy Court noted in its Letter Decision and Order, they are
based upon the "worst possible scenario should [the corporation]
be required to pay [Mr. Karczwski] over $1 million in satisfaction
of any judgment." As the Bankruptcy Court also stated, "[i]t is
the Debtor's position that it would not be financially eligible
for a supersedeas bond and, therefore, would not be in a position
to obtain a stay pending appeal in the State Court action. The
[corporation] also argues that if [Mr. Karczwski] were to execute
on any judgment obtained in State Court, the [corporation] would
be unable to pay its employees and would be unable to fulfill its
contracts. Yet, the corporation does not dispute that it is
current on those obligations and is not, otherwise, experiencing
any immediate and serious financial and/or managerial
difficulties."
On appeal, the District Court has no new information that would
support a finding that its financial position has changed since
the time that the Bankruptcy Court reached its decision. Thus,
the District Court concludes that the corporation was a completely
solvent, profit-earning company that was up-to-date on all of its
obligations to its creditors when it filed its Chapter 11
petition. Moreover, the Court notes that there is no dispute that
the corporation had full access to its assets and was not
prohibited by the state-court litigation from conducting its
normal business. In fact, as the corporation acknowledges, no
state-court judgment had been entered regarding its obligation to
pay Mr. Karczwski at the time that it filed its Chapter 11
petition.
Although the corporation's future may be uncertain, the District
Court reasons, it is not presently experiencing a difficult
financial situation that would warrant a finding that its Chapter
11 filing was in good faith. Instead, it appears that, rather
than risk an adverse judgment in state court based upon the
Referee's Report, the corporation decided to seek Chapter 11
protection in the bankruptcy court. The District Court declines
the Debtor's invitation to use the bankruptcy court as an
alternate forum for a debtor to litigate its state-court issues
"when the debtor has no other need of or use for the bankruptcy
court."
Fraternal Composite Services, Inc., filed for chapter 11
protection on April 29, 2003 (Bankr. N.D.N.Y. Case No. 03-62946).
Richard L. Weisz, Esq., at Hodgson Russ LLP, represents the
Debtor. Camille W. Hill, Esq., at Hancock & Estabrook, LLP,
represents James J. Karczwski, the company's one-third miniority
shareholder.
FREESCALE SEMICONDUCTOR: Fitch Rates Senior Unsecured Debt BB+
--------------------------------------------------------------
Fitch Ratings initiated coverage of Freescale Semiconductor, Inc.
and assigned a 'BB+' rating to the company's senior unsecured
debt. The Rating Outlook is Stable. Fitch's action affects
$1.25 billion of debt securities.
Fitch recognizes:
(1) Freescale's solid credit protection measures,
(2) strong liquidity, and
(3) conservative capital structure following the July 2004
initial public offering and concurrent debt offering.
The rating also reflects the company's diverse product portfolio
and leading positions in the relatively stable Transportation and
Standard Products Group -- TSPG. Concerns center on:
(1) historical operating losses and negative free cash flow
(although positive for the past two quarters),
(2) ongoing significant capital spending requirements,
(3) the volatile and cyclical nature of the semiconductor
industry, and
(4) continued operating losses for the wireless segment, which
represents 28% of total sales for the quarter ended
October 2, 2004, with Motorola ('BBB'/Positive Outlook)
responsible for a Fitch-estimated 75% of the segment's
sales.
Additionally, Fitch considers the challenges Freescale faces in
adding new customers and maintaining its preferred supplier status
once its purchase agreement with Motorola expires in 2006.
The Stable Outlook reflects Freescale's improved operating
profile, driven by strong end market demand, particularly
semiconductors for wireless equipment and handsets, and past
restructuring efforts, primarily to reduce manufacturing capacity,
both of which have combined to increase utilization rates to 88%
for the quarter ended October 2, 2004. As a result, gross margins
expanded for the fifth consecutive quarter reaching 39%, up from
approximately 30% for the same quarter one year earlier. These
positive trends have augmented already strong credit protection
measures, as Fitch estimates interest coverage (EBITDA-to-interest
incurred) was more than 15 times(x) and total leverage (total
debt-to-EBITDA) 1.1x for the latest twelve months -- LTM -- ended
October 2, 2004. Fitch expects credit protection measures will
remain at these levels over the intermediate term, driven by
relatively stable semiconductor demand and, potentially,
incremental gross margin expansion, which may be partially offset
by an uptick in operating expenses.
Freescale's liquidity is strong, and the company has no meaningful
debt obligations until 2009. The IPO and debt offering generated
approximately $2.8 billion of net proceeds, and following an
approximately $1.5 billion payment to Motorola related to the IPO
and repayment of intercompany debt, Freescale's cash position was
$2.2 billion as of October 2, 2004. The company does not
currently have a bank credit agreement, and Fitch expects free
cash flow, though only mildly positive for 2003, will approach
$500 million for 2004. Total debt is $1.25 billion and comprises
three tranches of senior notes:
-- $400 million of floating rate (LIBOR plus 275 bps) senior
notes due 2009, which are noncallable for two years;
-- $350 million of 6.875% senior notes due 2011, which are
noncallable for four years; and
-- $500 million of 7.125% senior notes due 2014, which are
noncallable for five years.
Freescale's TSPG represents approximately 45% of total revenues
and is the company's largest and most stable segment due to its
leading position and longer term contracts in the automotive
market. Sales increased more than 13% for the quarter ended
October 2, 2004, versus the prior year, and operating margins
improved to more than 11% from 6.6% for the same period, driven by
a more favorable demand environment, as well as higher utilization
rates and benefits from past restructurings.
Despite having achieved positive EBIT in each of the past four
quarters, the company's historical operating losses, driven
primarily by cyclical semiconductor demand and ongoing losses in
Freescale's wireless and mobile segment, have exacerbated the
company's cash usage. Fitch estimates Freescale has generated
more than $400 million of free cash flow for the LTM ended
October 2, 2004, but the company's historically significant
capital expenditures resulted in more than $2.6 billion of
negative free cash flow for the 1999-2002 period. Annual capital
expenditures were reduced from approximately $2.4 billion in 2000
to just over $400 million for the LTM ending October 2, 2004 due
to the company's ongoing strategy to increasingly outsource
manufacturing and form research and development partnerships.
While this strategy is expected to reduce future investments,
capital and R&D spending continues to represent approximately
25% of sales and Fitch believes that R&D spending and marketing
expenses will increase as the company works to develop a brand and
strong intellectual property portfolio to attract new customers.
Additionally, Freescale's next-generation 300mm manufacturing
capacity is expected to be available in the second half of 2005,
even as demand growth slows over the intermediate term, likely
resulting in some deterioration in profitability due to lower
utilization rates and ongoing pricing pressures.
GENERAL GROWTH: Strike Price for New Warrants is $32.23 Per Share
-----------------------------------------------------------------
General Growth Properties, Inc. (NYSE:GGP) said the subscription
price for its previously announced warrants offering is $32.23 per
share. The subscription price was determined by taking the
average of the high and the low trading prices for GGP common
stock on the NYSE on Tuesday, Oct. 19, Wednesday, Oct. 20, and
Thursday, Oct. 21, 2004.
Holders of the non-transferable warrants are therefore entitled to
purchase one share of common stock for each whole warrant at a
subscription price of $32.23 per share, payable in cash.
Warrants have been allocated to all holders of our shares of
common stock and to all holders of common or convertible preferred
units of limited partnership interest in GGP Limited Partnership
as of the close of business on Tuesday, Oct. 18, 2004, the record
date.
GGP expects that Warrants Offering materials, including a
prospectus and subscription certificate, will be mailed to warrant
holders on or about Oct. 25, 2004. The prospectus will contain
important information about the Warrants Offering. Warrant
holders are urged to read the prospectus when it becomes
available. Warrant holders will have until the close of business
on the expiration date of the Warrants Offering to exercise their
warrants. GGP currently expects the subscription period to end as
of the close of business on Tuesday, Nov. 9, 2004, unless extended
by GGP.
The Warrants Offering is being conducted in connection with GGP's
pending merger with The Rouse Company (NYSE:RSE), which was
announced on Aug. 20, 2004. It is currently anticipated that the
Rouse merger will close on Friday, Nov. 12, 2004. If the Rouse
merger does not close, GGP will cancel this Warrants Offering and
all exercises of warrants will be void. If GGP cancels the
Warrants Offering, any money received from subscribing Warrant
holders will be refunded promptly, without interest or deduction.
GGP may extend or cancel the Warrants Offering for any reason.
About the Company
General Growth Properties, Inc. is the country's second largest
shopping center owner, developer and manager. General Growth
currently has ownership interest in, or management responsibility
for, a portfolio of 178 regional shopping malls in 41 states.
* * *
Moody's Investors Service placed its ratings of General Growth
Properties, Inc., and its subsidiaries on review for possible
downgrade. At the same time, Moody's placed its ratings of The
Rouse Company on review for possible downgrade.
Ratings under review for possible downgrade are as follows:
Price Development Company, L.P.,
-- Senior debt rated Baa3
GGP Properties Limited Partnership
-- Senior debt shelf rated (P)Ba1
General Growth Properties, Inc.
-- Preferred stock shelf rated (P)Ba1
The Rouse Company
-- Senior debt rated Baa3;
-- senior debt shelf at (P) Baa3; and
-- Preferred stock shelf at (P)Ba1
The review was prompted by General Growth's announcement that it
has signed a definitive agreement to acquire The Rouse Company for
an estimated purchase value of $12.6 billion, including cash and
assumed debt. The transaction will be funded initially with
roughly $9.75 billion in bank loans. General Growth will retain
The Rouse Company as a wholly-owned operating subsidiary. The
closing of the transaction, expected to occur in the fourth
quarter of 2004, is contingent upon approval by the shareholders
of The Rouse Company.
Strategic benefits--scale, diversity, and increased market share--
of the transaction are mitigated by the substantial pro forma
leverage, and in particular variable-rate debt, and weaker
coverage measures for General Growth over the short term. The
merger should enhance General Growth's earnings, while extending
the REIT's competitive position with higher-end and fashion-
oriented retailers. In Moody's view, assets in Rouse's property
portfolio are highly productive, generating in excess of $400 in
sales per square foot, which is higher than General Growth's
existing mall portfolio. Notwithstanding these positives, the
credit risk profile of General Growth will increase materially
given its already leveraged capital structure and its financial
flexibility will be further constrained due to a modest level of
unencumbered assets.
Moody's review will focus on the progress and consummation of the
proposed acquisition, the ultimate capital structure, and the
resulting corporate and legal structure, including potential
structural subordination of Rouse's bonds. Moody's also will
consider in its review General Growth's long-term strategic plan
for non-core assets in Rouse's portfolio, potential cost savings
and integration risks related to the transaction.
GERDAU AMERISTEEL: Will Discuss 3rd Quarter Results on Nov. 3
-------------------------------------------------------------
Gerdau Ameristeel Corporation (TSX: GNA.TO) will host a conference
call to discuss its third quarter financial results for the
three-month period ending September 30, 2004. The Company invites
all interested parties to participate.
Date: Wednesday, November 3, 2004
Time: 2:00 p.m., Eastern Time. Call in 15 minutes
prior to start time to secure a line.
Dial-In Number: 416-405-9328 or 1-800-387-6216
Reference Number: 3108920
LIVE WEBCAST: Go to http://www.gerdauameristeel.com/
Connect to the Web site at least
15 minutes prior to the conference call to
ensure adequate time for any software
download that may be needed to hear the
webcast.
Taped Replay: 416-695-5800 or 1-800-408-3053
Available until November 10 at midnight.
Phillip Casey, president and CEO of Gerdau Ameristeel, will chair
the call. A question-and-answer session will follow, at which
time the operator will direct participants as to the correct
procedure for submitting questions.
A live audio webcast of the call will be available at
http://www.gerdauameristeel.com/ Webcast attendees are welcome to
listen to the conference in real-time or on-demand for 90 days.
About Gerdau Ameristeel
Gerdau Ameristeel is the second largest minimill steel producer in
North America with annual manufacturing capacity of over
6.8 million tons of mill finished steel products. Through its
vertically integrated network of 11 minimills (including one 50%-
owned minimill), 13 scrap recycling facilities and 32 downstream
operations, Gerdau Ameristeel primarily serves customers in the
eastern half of North America. The company's products are
generally sold to steel service centers and fabricators or
directly to original equipment manufacturers for use in a variety
of industries, including construction, automotive, mining and
equipment manufacturing. Gerdau Ameristeel's common shares are
traded on the Toronto Stock Exchange under the symbol GNA.TO
* * *
As reported in the Troubled Company Reporter on Oct. 11, 2004,
Moody's Investors Service placed the ratings of Gerdau Ameristeel
Corporation under review for possible upgrade in response to
much-improved steel market conditions and the company's
announcement of a common share offering, which, if successful,
will finance the acquisition of certain assets of North Star Steel
from Cargill, Incorporated. Moody's review will likely continue
until the conclusion of the later of the share offering and the
North Star acquisition.
The ratings were placed under review for possible upgrade:
* US$405 million of 10.375% senior unsecured notes due 2011,
currently B2,
* senior implied rating -- B1, and
* senior unsecured issuer rating -- B3.
As reported in the Troubled Company Reporter on Oct. 08, 2004,
Standard & Poor's Ratings Services raised its corporate credit
rating on Gerdau Ameristeel Corp. to 'BB-' from 'B+'.
In addition, Standard & Poor's raised its rating on Gerdau
Ameristeel's $350 million senior secured revolving credit facility
to 'BB' from 'BB-'.
The bank loan rating is rated one notch higher than the corporate
credit rating indicating a high expectation of full recovery of
principal in the event of a default. Standard & Poor's also
raised the company's senior unsecured debt rating to 'B+' from
'B'. The outlook is stable.
GITTO GLOBAL: U.S. Trustee Meeting with Creditors on Nov. 2
-----------------------------------------------------------
The U.S. Trustee for Region for Region 1 will convene a meeting of
Gitto Global Corporation's creditors at 10:00 a.m., on November 2,
2004, at the Office of the U.S. Trustee, 446 Main Street, 1st
Floor, Worcester, Massachusetts, 01608. This is the first meeting
of creditors required under U.S.C. Sec 341(a) in all bankruptcy
cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Headquartered in Lunenburg, Massachusetts, Gitto Global
Corporation -- http://www.gitto-global.com/-- manufactures
polyvinyl chloride, polyethylene, polypropylene and thermoplastic
olefinic compounds. The Company filed for chapter 11 protection
on September 24, 2004 (Bankr. D. Mass. Case No. 04-45386). Andrew
G. Lizotte, Esq., at Hanify & King P.C., represents the Debtor in
its restructuring efforts. When the Debtor filed for protection
from its creditors, it estimated more than $10 million in assets
and more than $50 million in debts.
HERITAGE AUTOMOTIVE: Chapter 11 Involuntary Case Summary
--------------------------------------------------------
Alleged Debtor: Heritage Automotive Group, LLC
5800 Montana Avenue
El Paso, Texas 79925
Involuntary Petition Date: October 14, 2004
Case Number: 04-32597
Nature of Business: The Debtor is an automobile dealer.
Chapter: 11
Court: Western District of Texas (El Paso)
Judge: Larry E. Kelly
Petitioners' Counsel: H. Christopher Mott, Esq.
Gordon & Mott PC
4695 North Mesa Street
El Paso, TX 79912
Tel: 915-545-1133
Petitioners Nature of Claim Claim Amount
----------- --------------- ------------
Falcon Financial II, LLC Loan $1,000,000
15 Commerce Rd.
Stamford, CT 06902
Kiva Oil Company Open Account $22,505
8888 Dyer Street
El Paso, TX 79904
Regent Broadcasting of Open Account $11,549
El Paso, Inc.
4180 N. Mesa St.
El Paso, TX 79902
HUFFY CORP: Gets Interim Approval of $50 Million DIP Financing
--------------------------------------------------------------
HUFFY CORPORATION (OTC: HUFC) has received interim approval for
certain of the Company's first day motions, including arrangements
for up to $50 million in debtor-in-possession financing from
Congress Financial Corporation to fund post-petition operating
expenses, supplier and employee obligations following the hearing
held by the United States Bankruptcy Court for the Southern
District of Ohio. Final approval of the motions will follow a
hearing scheduled for Nov. 18, 2004.
The Company also indicated that the Court's interim approval of
these first day motions means operations will continue as usual,
permitting current employee medical, dental, life insurance and
other employee benefits to continue, and allowing payments to be
made to vendors, suppliers and other business partners under
normal terms for post-petition goods and services.
Headquartered in Miamisburg, Ohio, Huffy Corporation --
http://www.huffy.com/-- designs and supplies wheeled and related
products, including bicycles, scooters and tricycles. The Company
and its debtor-affiliates filed for chapter 11 protection on Oct.
20, 2004 (Bankr. S.D. Ohio Case No. 04-39148). Kim Martin Lewis,
Esq., and Donald W. Mallory, Esq., at Dinsmore & Shohl LLP,
represent the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they listed
$138,700,000 in total assets and $161,200,000 in total debts.
ILLINOIS HEALTH: S&P Pares Rating on Revenue Bonds to BB from BBB
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its rating two notches
to 'BB+' from 'BBB' on Illinois Health Facilities Authority's
outstanding revenue bonds issued for Friendship Village of
Schaumburg, Illinois, a life care continuing care retirement
community. The outlook is stable.
"The lower rating reflects recurring operating and excess losses;
a sustained fund balance deficit in excess of $10 million; and a
weakened balance sheet with declining liquidity during the past
five years, although year-to-date results for the five months
ended August 31, 2004, reflect an improved days' cash on hand
liquidity level," said Standard & Poor's credit analyst Antionette
Maxwell.
Offsetting factors are Friendship Village's good occupancy levels
in a very competitive environment and improved adjusted debt
service coverage.
The rating reflects concerns regarding management's ability to
eliminate ongoing operating losses that totaled $1.8 million
(negative 6.4%) and $1.5 million (negative 5.6%) for the fiscal
year ended March 31, 2004, and 2003, respectively. The five-month
year-to-date results also reflected losses of $688,000 (negative
5.5%), compared to budgeted break-even results with an operating
profit of $74,000.
The stable outlook reflects stable occupancy levels and the
expectation that operating performance will be enhanced as FVS
works to improve its payor mix. However, Friendship Village has
plans to issue bonds of about $60 million within the next
12 months that are not fully accounted for in this bond rating
review. The proceeds of the bond issue are expected to be used to
construct 170 new one-bedroom and two-bedroom apartments with
balconies, as well as to build other common areas. If Friendship
Village's financial profile continues to falter, a lower rating
could be imminent.
IMCO RECYCLING: S&P Junks Planned $125 Million Senior Notes
-----------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'CCC+' rating to
Irving, Texas-based IMCO Recycling Escrow Inc.'s (a wholly owned
subsidiary of IMCO Recycling Inc.) proposed $125 million senior
notes due 2014 and placed the rating on CreditWatch with positive
implications.
At the same time, all existing ratings on IMCO Recycling Inc.
remain on CreditWatch with positive implications, where they were
placed June 17, 2004, following the announcement that IMCO and
Commonwealth Industries Inc. had signed a definitive merger
agreement. The transaction is structured as an all-stock deal.
Standard & Poor's also revised its outlook on Louisville,
Kentucky-based Commonwealth Industries to stable from positive and
affirmed its existing ratings on the company.
"The positive CreditWatch implications on IMCO reflect the
expected improvement in the company's business and financial
profiles following its planned merger with Commonwealth," said
Standard & Poor's credit analyst Paul Vastola. The merger is
expected to close in the fourth quarter of 2004 and is subject to
customary closing conditions.
Upon completion of the merger, Standard & Poor's will raise IMCO's
corporate credit rating to 'B+' from 'B', its $210 million senior
secured notes rating to 'B' from 'B-', and IMCO Recycling Escrow's
$125 million senior notes to 'B-' from 'CCC+'. The ratings will
then be removed from CreditWatch. These rating actions will be
contingent on IMCO successfully completing the transaction as
planned.
The outlook revision on Commonwealth reflects the meaningful risks
and challenges the new management will face in integrating these
two different businesses. Despite some improvement in diversity
and synergistic savings expected from the merger, the combined
entities' business profile will remain below average owing to
highly cyclical and competitive industries, volatile commodity
pricing and thin margins. The financial profile will also remain
aggressive.
INDYMAC ABS: Poor Performance Spurs Fitch to Junk Class BV Issue
----------------------------------------------------------------
Fitch Ratings has affirmed and taken rating action on these
IndyMac ABS, Inc. Home Equity issue:
* Series SPMD 2000-B group 2:
-- Class AV-1 affirmed at 'AAA';
-- Class MV-1 affirmed at 'AA';
-- Class MV-2 affirmed at 'A';
-- Class BV downgraded to 'CCC' from 'BB'.
The affirmations on $20,915,092 (89.13% of total certificates
outstanding) of the above classes reflect credit enhancement
consistent with future loss expectations.
The negative rating action on class BV ($2,549,844 outstanding,
10.87% of total certificates outstanding) is the result of poor
collateral performance and the deterioration of asset quality
beyond original expectations. Portfolio performance is, in part,
suffering from adverse selection. IndyMac SPMD 2000-B group 2,
with 13.85% of the original collateral remaining, contained 6.7%
manufactured housing collateral at closing (7/28/2000), and, as of
September 2004, the percentage of MH has increased to 20.21%. To
date, MH loans have exhibited very high historical loss
severities, causing Fitch to have concerns regarding the adequacy
of enhancement in this deal, especially with regard to class BV.
MH has been responsible for 42.78% of total losses to date in this
transaction.
As of the September 27 distribution, this transaction has $714,360
of overcollateralization, compared with the OC target of $967,172.
The six- and 12-month average gross losses are $203,343 and
$210,096, respectively, versus current monthly excess spread
before losses of $91,213, which has resulted in the regular
monthly depletion of OC.
The group 1 and group 2 mortgage pools within the SPMD 2000-B
transaction are not cross-collateralized, so any excess spread
generated within group 1 is not available to offset losses in
group 2. However, the deal was structured with mortgage
insurance. Currently, approximately 36% of the mortgage pool has
MI down to 80% loan to value, which will serve to somewhat
mitigate the overall loss numbers.
Fitch will continue to closely monitor this deal.
INTEGRATED ALARM: S&P Rates Planned $125M Senior Unsec. Notes B-
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' corporate
credit rating to Albany, New York-based Integrated Alarm Services
Group Inc. At the same time, Standard & Poor's assigned its 'B-'
rating to Integrated Alarm's proposed $125 million senior
unsecured notes facility, due 2011. The proceeds from this
facility will be used to acquire all of the assets and certain
liabilities of National Alarm Computer Center Inc., a subsidiary
of Tyco International Ltd., and to refinance the majority of
existing debt.
The rating is one notch below the corporate credit rating due to
the amount of priority obligations and secured debt in the capital
structure. The outlook is stable.
"The ratings reflect [Integrated Alarm's] modest size and market
position within the competitive U.S. security alarm industry and
its reliance on debt to increase its business," said Standard &
Poor's credit analyst Ben Bubeck. These partially are offset by a
largely recurring revenue base and favorable industry growth
trends.
Integrated Alarm provides services to independent security alarm
dealers, including wholesale alarm monitoring and financing
solutions. Integrated Alarm also has an owned portfolio of alarm
contracts developed through both acquisitions and organic account
generation. Pro forma for the proposed senior unsecured notes
facility, Integrated Alarm had approximately $140 million in
operating lease-adjusted debt as of September 2004.
INTEGRATED HEALTH: Asks Court to Deny Tort Claimants' Appeal
------------------------------------------------------------
IHS Liquidating, LLC, asks the Court to deny, in its entirety, the
1999 Tort Claimants' Request to compel the trust to make
distributions to them. IHS Liquidating already made an initial
distribution totaling $14,501,667 to the holders of allowed Class
8 Claims on September 27, 2004. The initial distribution, which
amounted to 70% of the aggregate allowed amount of all currently
allowed Class 8 Claims, was made pro rata so that each holder of
allowed Class 8 Claims received the same percentage recovery.
Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor, LLP, in
Wilmington, Delaware, tells Judge Walrath that, in light of the
distribution, 1999 Tort Claimants' Request is moot.
IHS Liquidating cannot predict when the final distribution, or
possible further interim distributions, might be made to Class 8
Claimants. Nor can it predict what the total recovery will be to
Class 8 Claimants. The final distribution, Mr. Brady says, will
depend on how quickly the remaining open 1999 tort claims are
resolved.
IHS Liquidating believes that it has satisfied its obligation to
the 1999 Tort Claimants, and will continue to do so, under the
IHS Plan.
Headquartered in Owings Mills, Maryland, Integrated Health
Services, Inc. -- http://www.ihs-inc.com/-- IHS operates local
and regional networks that provide post-acute care from 1,500
locations in 47 states. The Company filed for chapter 11
protection on February 2, 2000 (Bankr. Del. Case No. 00-00389).
Michael J. Crames, Esq., Arthur Steinberg, Esq., and Mark D.
Rosenberg, Esq., at Kaye, Scholer, Fierman, Hays & Handler, LLP,
represent the Debtors in their restructuring efforts. On
September 30, 1999, the Debtors listed $3,595,614,000 in
consolidated assets and $4,123,876,000 in consolidated debts.
(Integrated Health Bankruptcy News, Issue No. 83; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
INTERNATIONAL WIRE: Completes Recapitalization & Reduces Debt
-------------------------------------------------------------
International Wire Group, Inc., has completed its previously
announced recapitalization and has emerged from its bankruptcy
process. Completion of the financial recapitalization reduces
International Wire's long-term debt, excluding accrued and unpaid
interest, from approximately $391 million to approximately $181
million, and interest will be reduced by approximately $31 million
annually.
"This recapitalization is another step in International Wire's
commitment to be a strong supply chain partner," said Joseph
Fiamingo, Chief Executive Officer. "In today's business
environment, it's not enough to provide world-class products at
competitive prices. International Wire now has the financial
profile that its customers demand for long-term relationships."
Headquartered in St. Louis, Missouri, International Wire Group,
Inc., designs, manufactures and markets bare and tin-plated copper
wire and insulated copper wire products for other wire suppliers
and original equipment manufacturers. The Company manufactures
and distributes its products in 20 facilities strategically
located in the United States, Mexico, France, Italy and the
Philippines. The company filed for chapter 11 protection (Bankr.
S.D.N.Y. Case No. 04-11991) on March 24, 2004. Alan B. Miller,
Esq., at Weil, Gotshal & Manges, LLP, represents the debtor in its
restructuring efforts. When the Company filed for bankruptcy
protection, it listed total assets of $393,000,000 and total debts
of $488,000,000.
INTERSTATE BAKERIES: Moves to Reject Eight Real Property Leases
---------------------------------------------------------------
Pursuant to Sections 105(a) and 365(a) of the Bankruptcy Code,
Interstate Bakeries Corp. and its debtor-affiliates seek the
Court's authority to reject eight real property leases to reduce
postpetition administrative costs:
Non-debtor party Address of Leased Premises Lease Date
---------------- -------------------------- ----------
First Lordship Realty 590, Lordship 01/20/75
Boulevard, Stratford,
Connecticut
Michele Limited 28 Kennedy #1000 East 11/16/99
Brunswick, New Jersey
The Port Authority 1628 Bathgate Avenue, 11/01/92
of New York & Bronx, New York
New Jersey
Ahtes & Ahtes 505 Barton Boulevard 01/__/86
Rockledge, Florida
Currie & Walker, Michigan Road and 71st St., 07/29/97
LLC Indianapolis, Indiana
William H. Moore, 621D West 401 Bypass 10/22/91
Sr. Bennettsville, South
Carolina
Myrtle H. Relle 15 & 23A Fifth Street 10/3/95
Gretna, Louisiana
Muckleshoot Indian 2105 Auburn Way South 10/3/95
Tribe Auburn, Washington
Paul M. Hoffman, Esq., at Stinson Morrison Hecker, LLP, in Kansas
City, Missouri, contends that the eight Real Property Leases are:
-- financially burdensome;
-- unnecessary to the Debtors' ongoing operations; and
-- not a source of potential value for the Debtors' future
operations, creditors and interest holders.
Before the Petition Date, the Debtors were parties to over 1,200
leases and subleases of non-residential real property. As part
of their ordinary business operations before the Petition Date,
the Debtors terminated operations at certain locations, including
each of the premises covered by the eight Real Property Leases.
Accordingly, the Real Property Leases covering these locations no
longer serve any benefit to the Debtors.
Mr. Hoffman informs Judge Venters that the Debtors are performing
their review and evaluation of the unexpired leases and
subleases. As this process concludes, the Debtors may identify
additional leases and subleases to be assumed or rejected and may
seek to assume or reject additional leases and subleases in the
future.
In considering their options with respect to the Real Property
Leases, the Debtors evaluated the possibility of one or more
assignments of the eight Real Property Leases and have determined
that these leases do not have any marketable value beneficial to
the Debtors' estates. Furthermore, certain of the eight Real
Property Leases may obligate the Debtors to pay for certain real
estate taxes, utilities, insurance and other related charges
associated with the leases for which the Debtors will no longer
receive any benefit.
The Debtors have examined the costs associated with their
obligation to pay rent under the Real Property Leases and have
determined in their business judgment that these costs are
substantial and constitute an unnecessary drain on the Debtors'
cash resources. However, with respect to the Real Property
Leases, the Debtors propose to pay rent due on a pro-rated basis
for each day between the Petition Date and the Rejection Date for
each particular Real Property Lease.
"The resultant savings from the rejection of the Real Property
Leases will favorably affect the Debtors' cash flow and assist
the Debtors in managing their future operations," Mr. Hoffman
points out. "By rejecting the Real Property Leases now, the
Debtors will avoid incurring unnecessary administrative charges
for leased premises that provide no tangible benefit to the
Debtors' estates and will play no part in the Debtors' future
operations."
No person has expressed any interest in purchasing or taking an
assignment of the Real Property Leases. Mr. Hoffman further
contends that the Landlords under the Real Property Leases will
not be prejudiced by the lease rejection because they will have
ample opportunity to object to the proposed rejection, having
received unequivocal notice of the Debtors' intent to reject the
Real Property Leases.
In addition, the Landlords will not be prejudiced by the Debtors'
payment of a pro-rated amount of rent accrued postpetition and
pre-rejection. Without pro-ration, certain Landlords of Real
Property Leases with daily accruing rent would be prejudiced by
the windfall to the Landlords of Real Property Leases requiring
monthly or annual payments. Equity requires pro-ration of rent
to cover only the postpetition, pre-rejection period regardless
of the fortuity of the rejection date.
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. 4;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
INTERSTATE BAKERIES: Wants Open-Ended Lease Decision Deadline
-------------------------------------------------------------
Pursuant to Section 365(d)(4) of the Bankruptcy Code, a debtor
must assume or reject its unexpired non-residential real property
leases within 60 days after the Petition Date. The statute
provides that the Court may extend the 60-day period, at the
debtor's request, for cause.
Interstate Bakeries Corporation and its debtor-affiliates are
parties to over 1,200 real property leases. As part of their
restructuring efforts, the Debtors are in the process of
evaluating all owned and leased real estate, including the Real
Property Leases. In considering their options with respect to the
Real Property Leases, the Debtors are evaluating a variety of
factors to determine whether it is appropriate to assume, assume
and assign, or reject particular Real Property Leases.
Given the exceptionally large number of Real Property Leases in
their bankruptcy proceedings, the Debtors need more time to fully
and adequately determine whether to accept or reject particular
Real Property Leases. If the current lease decision period is
not extended, the Debtors may be compelled, prematurely, to
assume substantial, long-term liabilities under the Real Property
Leases or forfeit benefits associated with some Real Property
Leases to the detriment of the Debtors' ability to operate and
preserve the going-concern value of their business for the
benefit of all creditors and other parties-in-interest.
Accordingly, the Debtors ask the Court to extend their lease
decision period through the confirmation of a plan.
J. Eric Ivester, Esq., at Skadden Arps Slate Meagher & Flom, LLP,
in Chicago, Illinois, relates that the Debtors' decision to
assume or reject particular Real Property Leases, and the timing
of those assumptions or rejections, depends in large part on the
overall operational reorganization and whether a particular
location will play a future role in the Debtors' plan going
forward. The measure of whether a particular Real Property Lease
will be assumed or rejected will depend, for the most part, on
the outcome of the overall operational reorganization.
Mr. Ivester discloses that the Debtors are formulating their
strategic operating plan, however, many locations are still being
evaluated. Given the complexity of the Debtors' business
operation, it is not possible to determine at this early stage
whether certain of those locations will remain a part of the
Debtors' business. The Debtors also are conducting a market
analysis at many of the locations to determine whether there is
value to the Debtors in an assignment -- rather than a rejection
-- of certain Real Property Leases. These decisions cannot be
made properly and responsibly without an extension of the time
within which the Real Property Leases must either be assumed or
rejected.
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. 4;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
INTERSTATE BAKERIES: Gets Final Court Nod on $200MM DIP Financing
-----------------------------------------------------------------
Interstate Bakeries Corp. (OTC:IBCIQ) received final approval from
the Bankruptcy Court of its $200 million debtor-in-possession
financing agreement to continue purchasing goods and services, pay
employee salaries and benefits and fund ongoing operations and
other working capital needs during its voluntary restructuring
process.
"We continue to focus on the uninterrupted flow of materials to
our bakeries and in turn to our customers, and are gratified by
the level of support we have received from our vendors," said
Chief Executive Officer Tony Alvarez. "With our final DIP
financing in place, and the support of the vendor community, our
employees, and our customers, IBC is in an excellent position to
move to the next stage of the restructuring process with
confidence."
The Court also approved the Company's motion to enter into an
agreement with Alvarez and Marsal.
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.
J.P. MORGAN: S&P Places Low-B Ratings on Three Certificate Classes
------------------------------------------------------------------
Standard & Poor's Ratings Services stated that several classes of
commercial mortgage certificates from J.P. Morgan Chase Commercial
Mortgage Securities Corp.'s series 2003-FL1 shorted interest on
the October 2004 distribution date. The shortfall amount was
largely due to liquidation fees due the special servicer. No
rating actions are being taken at this time, as Standard & Poor's
anticipates that the cumulative interest shortfalls on the rated
certificates will be repaid in full.
The liquidation fee occurred when the second largest loan in the
transaction, Andalucia Townhomes, paid off. The loan had a
$28 million principal balance and was secured by a 181-unit luxury
apartment complex in the San Diego suburb of Carmel Valley,
California. The loan was transferred to the special servicer in
June 2004 when it became clear that it couldn't refinance by its
scheduled maturity date in July 2004. At that time, the borrower
submitted a request to the master servicer to exercise the first
of three available maturity extensions. The request was denied by
the master servicer, Midland Loan Services Inc., because the loan
failed a debt service coverage threshold test required to extend
the loan.
The special servicer, Lennar Partners Inc., negotiated a
forbearance agreement with the borrower, which provided the
borrower time to sell the property. The sale was completed and
the loan was repaid in full. As the loan was in special
servicing, a liquidation fee equal to one point of the proceeds
received on the loan was triggered, which was largely responsible
for the shortfall reflected on the October 14, 2004 remittance
date.
Barring an additional default or special servicing transfer,
Standard & Poor's anticipates that the investment-grade classes (C
through G) will be re-paid their outstanding shortfalls on the
next remittance date. The speculative-grade rated classes (H, J,
and K) should repay by the February 2005 remittance date. Should
this not occur, Standard & Poor's will re-examine the situation to
see if rating changes are warranted.
Classes Impacted By Interest Shortfalls On October 2004 Remittance
J.P. Morgan Chase Commercial Mortgage Securities Corp.
Commercial mortgage pass-through certs series 2003-FL1
Class Rating
----- ------
C A
D A-
E BBB+
F BBB
G BBB-
H BB
J B
K B-
KMART CORP: Wants Stay Lifted to End Footstar Master Agreements
---------------------------------------------------------------
Kmart Corporation asks the U.S. Bankruptcy Court for the Southern
District of New York to lift the automatic stay in Footstar,
Inc.'s bankruptcy cases, to allow it to terminate its Master
Agreement with Footstar.
Footstar and its debtor-affiliates filed for chapter 11 protection
on March 3, 2004.
Kmart's relationship with the Footstar Debtors is governed by:
(i) a Master Agreement effective as of July 1, 1995;
(ii) Sub-Agreements to that Master Agreement that relate to the
individual Shoemart Corporations; and
(iii) Shareholder Agreements in respect of each Shoemart
Corporation.
Each of the Agreements is interrelated, and together they govern
the overall relationship between Kmart and Footstar.
Pursuant to the Master Agreement, Footstar and Kmart have formed
nearly 1,500 corporations for currently open stores, which are
51% owned by Footstar, and 49% owned by Kmart. The Master
Agreement provides that each Shoemart Corporation and Kmart will
enter into a Sub-Agreement. Each Sub-Agreement, in turn,
incorporates the Master Agreement by reference, and provides the
applicable Shoemart Corporation with a license to operate a
footwear department in the particular Kmart store. The Master
Agreement is not assignable by either party to a non-affiliated
person and is terminable upon a change in control of either party.
Pursuant to the Agreements, Footstar has the exclusive right to
sell designated footwear in all Kmart stores. The Agreements also
grant Footstar a license to use space designated by Kmart on
Kmart's premises along with a non-transferable and non-exclusive
right to use the Kmart trademark. In practical effect, the
Agreements place Footstar inside Kmart's stores, selling footwear
to Kmart's customers, on the basis of Kmart's advertising, with
employees wearing Kmart uniforms who thank them for shopping at
Kmart. Simply put, the Agreements allow Footstar to transact
business in Kmart's stores as if it were Kmart.
The Agreements became effective in July 1995 and had an initial
term of 17 years, of which some seven and a half years remain.
Kmart has the unilateral right to refuse to extend the Agreement
beyond the initial term.
Unsurprisingly, in view of the 17-year term of the License
Agreement, as well as the unusually intimate character of the
relationship between the parties, the Master Agreement gives
Kmart substantial leeway to terminate the Master Agreement if
Footstar fails to meet its obligations.
Non-Curable Defaults Constitute
Grounds for Termination
Kmart believes that the New York Bankruptcy Court need not look
beyond the unambiguous terms of the Master Agreement and the plain
language of Section 365(e)(2) of the Bankruptcy Code to determine
that the Master Agreement may be terminated as a matter of law.
Even if the Court were to look beyond what is apparent from the
face of the contract, the Master Agreement is also terminable on
the separate and independent grounds that:
(a) the Footstar Debtors have for several years provided
inaccurate financial reports, failed to provide financial
information on time, and have denied Kmart its contractual
right to audit Footstar's books and records;
(b) the Footstar Debtors have taken improper setoffs against
dividend and contingent fee payments due to Kmart; and
(c) the Footstar Debtors have failed to pay amounts owing to
Kmart on account of the 2003 fiscal year.
These historical defaults relate to the essence of Kmart's bargain
with Footstar, and cannot be cured. As a result, Kmart will be
entitled to terminate the Master Agreement at the expiration of
the relevant notice period.
Since, by the Footstar Debtors' own account, their reorganization
is dependent on the continuation of their relationship with
Kmart, the Footstar Debtors have no prospect of an effective
reorganization, and cause exists to vacate the automatic stay.
Footstar's relationship with Kmart is virtually its sole remaining
asset. Footstar's only remaining business is the streamlined
Meldisco business and currently in excess of 90% of Meldisco's
revenues are generated by the operation of the footwear
departments at Kmart stores. Absent these revenues from the
footwear departments, Footstar cannot continue to operate.
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. 82; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
KMART CORP: Walpath Charges Non-Compliance with Chapter 11 Plan
---------------------------------------------------------------
Kmart of Michigan, Inc., and Walpath Centers Partnership were
parties to a nonresidential property lease in Southgate,
Michigan. The original tenant under the Lease was Builder's
Square, Inc., which assigned the Lease to Kmart Corporation, who
in turn assigned it to Kmart of Michigan.
Robert J. Labate, Esq., at Holland & Knight, LLP, in Chicago,
Illinois, informs Judge Sonderby that the Lease was absolutely and
unconditionally guaranteed by Kmart Corporation pursuant to a
Lease Guaranty Agreement dated April 19, 1985.
Kmart of Michigan rejected the Lease on June 18, 2002.
Subsequently, Walpath timely filed proofs of claim against Kmart
of Michigan and Kmart Corporation both for $1,768,145 each. Each
of these Debtors was independently liable for the obligation owed
to Walpath under the Lease, and Walpath was entitled to maintain
claims against both Debtors under Section 502 of the Bankruptcy
Code.
Walpath and a number of other similarly situated creditors,
objected to the Debtors' Reorganization Plan on the grounds that
it violated Section 1129(a)(1)(2) and (7) of the Bankruptcy Code.
The Plan provided for consolidation of the Debtors for purposes of
distribution, and thus, the Plan would not provide creditors like
Walpath with property of a value equal to what they would have
received or retained in a Chapter 7 liquidation. Furthermore, the
Plan discriminated against Guaranty Claimants because it provided
for a substantially higher distribution to prepetition lenders.
Like the Guaranty Claimants, the individual Debtor's obligations
to the Prepetition Lenders were guaranteed by one or more of the
other Debtors.
In response to the objections, the Debtors modified the Plan to
afford Guaranty Claimants with additional consideration.
Subsequently, Walpath settled its lease rejection claim and
received a distribution of common stock under the Plan.
Moreover, Walpath is a holder of a Rejecting Class Affected
Claim, and is otherwise qualified for additional relief under
Section 7.2 of the Plan.
Mr. Labate relates that the Reorganized Debtors have not satisfied
the requirements of Section 7.2 of the Plan with respect to any
qualifying creditors.
In this regard, Walpath asks the Court to compel the Reorganized
Debtors to comply with the terms of the Plan by fulfilling their
obligations under Section 7.2.
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. 82; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
LORAL SPACE: Files Revised Chapter 11 Plan & Disclosure Statement
-----------------------------------------------------------------
Loral Space & Communications Ltd. (OTC Bulletin Board: LRLSQ)
filed a revised plan of reorganization and a Disclosure Statement
with the Bankruptcy Court. The company expects to exit chapter 11
under current management in the first-quarter of 2005.
The Plan, which revises the terms of a Plan previously filed on
August 19, 2004, reflects a consensual agreement on financial
terms between the company and the Creditors' Committee appointed
in the chapter 11 cases of Loral and certain of its subsidiaries.
It is subject to final documentation and the resolution of certain
other issues between the company and the Creditors' Committee and
to confirmation by the bankruptcy court. It provides, among other
things, that:
* Loral's two businesses, Space Systems/Loral and Loral
Skynet, will emerge intact as separate subsidiaries of
reorganized Loral (New Loral).
The Disclosure Statement establishes the enterprise value of
New Loral at between approximately $650 million and
approximately $800 million.
* Space Systems/Loral, the satellite design and manufacturing
business, will emerge debt-free.
* The common stock of New Loral will be owned by Loral
bondholders, Loral Orion bondholders and certain other
unsecured creditors, as follows:
-- Loral bondholders and certain other unsecured creditors
will receive approximately 19.4 percent of the common
stock of New Loral.
-- Loral Orion unsecured creditors, including Loral Orion
bondholders, will receive approximately 79.0 percent of
New Loral's common stock plus $200 million in new senior
secured notes to be issued by reorganized Loral Skynet.
These creditors also will be offered the right to
subscribe to purchase their pro-rata share of an
additional $30 million in new senior secured notes to be
issued by reorganized Loral Skynet. This rights offering
will be backstopped by certain creditors who will receive
a fee payable in the notes.
-- All other general unsecured creditors will have an option
to elect to receive their pro rata share of approximately
1.6 percent of New Loral common stock or their pro rata
share of $30 million in cash, subject to adjustment for
over-subscription or under-subscription.
* Existing common and preferred stock will be cancelled and no
distribution will be made to current shareholders.
* New Loral will emerge as a public company and will seek
listing on a major stock exchange.
The Plan and Disclosure Statement will be available Monday,
October 25th, on Loral's website at http://www.loral.com/The
documents also will be available via the court's website, at
http://www.nysb.uscourts.gov/ Please note that a PACER password
is required to access documents on the Bankruptcy Court's website.
Loral's bankruptcy case number is 03-41710 (RDD).
About the Company
Loral Space & Communications is a satellite communications
company. It owns and operates a fleet of telecommunications
satellites used to broadcast video entertainment programming,
distribute broadband data, and provide access to Internet services
and other value-added communications services. Loral also is a
world-class leader in the design and manufacture of satellites and
satellite systems for commercial and government applications
including direct- to-home television, broadband communications,
wireless telephony, weather monitoring and air traffic management.
The Company and various affiliates filed for chapter 11 protection
(Bankr. S.D.N.Y. Case No. 03-41710) on July 15, 2003. Stephen
Karotkin, Esq., and Lori R. Fife, Esq., at Weil, Gotshal & Manges
LLP, represent the Debtors in their restructuring efforts. When
the company filed for bankruptcy, it listed total assets of
$2,654,000,000 and total debts of $3,061,000,000.
MARINER: Will Appeal Dismissal of Fulton County Action Against PWC
------------------------------------------------------------------
In August 2002, Mariner Health Care, Inc., filed a complaint in
the State Court of Fulton County, Georgia against
PricewaterhouseCoopers, LLP, and several former officers of
Mariner Health Group. According to Stefano M. Miele, MHC Senior
Vice President, General Counsel and Secretary, the Fulton County
action asserts claims for fraud and breach of fiduciary duty
against the Individual Defendants and claims for fraud,
professional negligence, negligent misrepresentation and aiding
and abetting breach of fiduciary duty against PwC. Many of these
claims arise from the July 1998 acquisition of MHG by Paragon
Health Network, Inc., one of MHC's predecessors. Other claims
arise from duties that MHC believes the Individual Defendants
breached as officers of MHG and MPAN. In the Fulton County
action, the Company is seeking actual damages -- including
compensatory and consequential damages -- and punitive damages, in
an amount to be determined at trial.
Chancery Court Action
In response to the action commenced by MHC in Fulton County, the
Individual Defendants filed an action in Chancery Court in
Delaware in September 2002 styled Stratton et al. v. Mariner
Health Care, Inc., Civil Action No. 19879-NC. In the Chancery
Court action, the Individual Defendants generally claim they are
not liable for the claims asserted in the Fulton County action and
that the Company is contractually and statutorily obligated to
indemnify them against the claims in the Fulton County action.
MHC removed the Chancery Court action to the Bankruptcy Court, at
which time the action was assigned Adversary Case Nos. 02-5604 and
02-5606. After removal, MHC answered the complaint and filed
counterclaims. The Individual Defendants moved to remand the
action back to the Chancery Court. The Company opposed the
motion. On December 16, 2003, the Bankruptcy Court denied the
Individual Defendants' remand motion and dismissed their claims,
holding, among other things, that the Individual Defendants'
indemnification claims had been discharged by confirmation of
MPAN's Joint Plan. The Individual Defendants have filed a "motion
to alter or amend judgment."
MHC Adversary Complaints
After the Individual Defendants filed the Chancery Court action,
MHC also filed an adversary proceeding in the Bankruptcy Court
styled Mariner Health Care, Inc. v. Stratton et al., United
States Bankruptcy Court for the District of Delaware. In this
enforcement action, MHC generally alleged that it does not have
any obligation to indemnify the Individual Defendants and the
Individual Defendants' pursuit of their indemnification claims
violated the Company's discharge in bankruptcy. The Individual
Defendants filed counterclaims generally alleging that the
Company has an obligation to indemnify them against the claims in
the Fulton County action and that it is estopped from asserting
its claims. The Company has moved to dismiss the Individual
Defendants' estoppel counterclaim. The Individual Defendants
opposed the motion, and on April 10, 2003, the Bankruptcy Court
granted MHC's motion to dismiss.
Cobb County Action
After MHC filed the Fulton County action, William R. Bassett as
Trustee for the Charlotte R. Kellett Irrevocable Trust, as
Trustee for the Samuel B. Kellett, Jr. Irrevocable Trust, as
Trustee for the Stiles A. Kellett, III Irrevocable Trust, and as
Trustee for the Barbara K. Kellett Irrevocable Trust, Kellett
Family Partners, L.P. f/k/a Kellett Partners, L.P., Samuel B.
Kellett, Stiles A. Kellett, Jr. and SSK Partners, L.P., filed an
action in the Superior Court of Cobb County, Georgia against PwC
and the Individual Defendants based on claims arising out of
MHG's acquisition of Convalescent Services, Inc., in 1995 because
of the Individual Defendants' and PwC's alleged
misrepresentations. This action is styled, William R. Bassett,
et al. v. PricewaterhouseCoopers, LLP, et al., Superior Court of
Cobb County, Georgia, Case No. 02-1-8314-35. The plaintiffs in
the Cobb County action seek damages in excess of $200 million.
The Individual Defendants added MHC as a third-party defendant in
the Cobb County action seeking to recover on indemnification
claims similar to those made by them in the Chancery Court action,
and subject to resolution before the Bankruptcy Court in the
enforcement action. In November 2003, the Individual Defendants
dismissed MHC without prejudice from the Cobb County action.
Mariner to Appeal Dismissal
On September 30, 2004, the judge presiding over the Fulton County
action granted PwC's motion for sanctions and dismissed the matter
with prejudice with respect to all defendants for alleged
discovery abuses. "Mariner believes that the judge erred in her
ruling and plans to appeal her decision. Mariner does not believe
that the dismissal of the lawsuit will have an adverse effect on
Mariner," Mr. Miele says.
Mariner Post-Acute Network, Inc., Mariner Health Group, Inc., and
scores of debtor-affiliates filed for chapter 11 protection on
January 18, 2000 (Bankr. D. Del. Case Nos. 00-113 through 00-301).
Mark D. Collins, Esq., at Richards, Layton & Finger, P.A.,
represents the Reorganized Debtors, which emerged from bankruptcy
under the terms of their Second Amended Joint Plan of
Reorganization declared effective on May 13, 2002. (Mariner
Bankruptcy News, Issue No. 62; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
MASONITE INTERNATIONAL: Announces 3rd Quarter Results
-----------------------------------------------------
Masonite International Corporation announced its results for the
third quarter ended September 30, 2004. Masonite International
Corporation reports in U.S. dollars.
Third Quarter Highlights
- Earnings per share increases 17.5%
- Net income increases 19.1%
- Sales increase 29.2% to $597.2 million
- EBITDA increases 23.2%
- EBITDA margin decreases to 13.02% from 13.66%
- EBIT increases 19.5%
- EBIT margin decreases to 10.20% from 11.02%
Nine Months Highlights
- Earnings per share increases 26.0%
- Net income increases 28.2%
- Sales increase 23.3% to $1.6 billion
- EBITDA increases 23.0%
- EBITDA margin decreases to 13.03% from 13.06%
- EBIT increases 23.0%
- EBIT margin decreases to 10.31% from 10.34%
Unaudited Financial Summary
(in millions of dollars except per share amounts)
Three Months Ended
9/30/04 9/30/03 Increase
------- ------- -------
Sales $597.2 $462.2 29.2%
EBITDA 77.8 63.1 23.2%
EBIT 60.9 50.9 19.5%
Net Income 36.7 30.8 19.1%
EPS 0.67 0.57 17.5%
Diluted EPS 0.66 0.56 17.9%
Average Shares (000's) 54,790 54,032
Unaudited Financial Summary
(in millions of dollars except per share amounts)
Nine Months Ended
9/30/04 9/30/03 Increase
------- ------- --------
Sales $1,629.7 $1,321.3 23.3%
EBITDA 212.3 172.6 23.0%
EBIT 168.0 136.6 23.0%
Net Income 100.6 78.5 28.2%
EPS 1.84 1.46 26.0%
Diluted EPS 1.80 1.42 26.8%
Average Shares (000's) 54,763 53,753
Sales for the three-month period ended September 30, 2004 were
$597.2 million, a 29.2% increase over the $462.2 million reported
in the same period in 2003. For the nine months ended September
30, 2004 sales were $1,629.7 million, a 23.3% increase over the
$1,321.3 million reported in the same period in 2003.
Net income for the three-month period ended September 30, 2004 was
$36.7 million compared to $30.8 million reported in the same
period in 2003. Earnings per share were $0.67 for the three-month
period compared to $0.57 per share in the same period in the prior
year. Net income for the nine-month period ended Sept.30, 2004
was $100.6 million compared to $78.5 million reported in the same
period in 2003. Earnings per share were $1.84 for the nine-month
period compared to $1.46 per share in the same period in the prior
year.
Philip S. Orsino, President and Chief Executive Officer, stated,
"We are very pleased with our organic sales growth of 16% in the
third quarter and 14% in the first nine months of 2004. We are
also pleased with the 18% growth in earnings per share in the
third quarter of 2004 over the third quarter of 2003, despite the
fact that margins declined. The margin decline occurred because
of material, transportation and other cost increases not being
offset by price increases. Also, during the quarter, the
Company's ten facilities in the areas most severely impacted by
four hurricanes in the U.S. Southeast lost a number of production
and shipping days. In addition, results were negatively impacted
by a 25-day labor strike during the quarter at the Company's
Ontario interior door manufacturing facility. At this time, we
expect an overall slight improvement in margins in the fourth
quarter."
During the quarter, the Company completed the previously announced
acquisition of a 50% equity interest in a wood composite molded
door facing company located in Malaysia. Also, during the quarter
the Company made several small acquisitions of door manufacturing
and door component facilities.
Masonite is a unique, integrated, global building products company
with its Corporate Headquarters in Mississauga, Ontario and its
International Administrative Offices in Tampa, Florida. It
operates over 80 facilities in seventeen countries in North
America, South America, Europe, Asia and Africa and has
approximately 14,000 employees. The Company sells its products to
customers in over 50 countries.
Masonite is a unique, integrated building products company with
its Corporate Headquarters in Mississauga, Ontario, Canada and its
International Administrative Offices in Tampa, Florida. Masonite
operates more than 70 facilities with over 12,000 employees
worldwide, spanning North America, South America, Europe, Asia,
and Africa. Masonite sells its products -- doors, components,
industrial products and entry systems -- to a wide variety of
customers in over 50 countries.
* * *
As reported in the Troubled Company Reporter on June 18, 2003,
Standard & Poor's Ratings Services raised its long-term corporate
credit rating on Masonite International Corp., to 'BB+' from 'BB'
on an improving operating profile and strengthening balance sheet.
Masonite had US$552.9 million in total debt outstanding at
March 31, 2003.
At the same time, the senior secured debt rating on the
Mississauga, Ontario-based interior and exterior door producer was
raised to 'BB+' from 'BB'. The outlook is stable.
MEDIA SERVICES: Providing Nasdaq Plan for Correcting Deficiency
---------------------------------------------------------------
Media Services Group, Inc. (Nasdaq: MSGI) (f/k/a MKTG Services,
Inc.) has received a request for review from the Nasdaq Stock
Market regarding its plan to increase stockholders equity from the
$2,200,580 reported on its Annual Report on Form 10-K and 10-K/A
for the year ended June 30, 2004.
Nasdaq Marketplace Rule 4310 (c)(2)(b) requires that the Company
have a minimum of $2,500,000 in stockholders equity or $35,000,000
in market value of listed securities or $500,000 of net income
from continuing operations.
The Company intends to provide a plan to the Nasdaq Stock Market
indicating how it expects to correct the $300,000 deficiency. It
is the Company's strong belief that the deficiency will be
corrected within the current quarter for the period ended Dec. 31,
2004.
The Company's Annual Report on Form 10-K and 10-K/A for the year
ended June 30, 2004 included a going concern qualification within
the audit opinion. While the Company ended the fiscal year with
$2,548,598 in cash on the balance sheet, the auditors noted that
the current operations of the Company represent new businesses,
the results of which could be unpredictable.
About Media Services Group, Inc.
Media Services Group, Inc. (Nasdaq: MSGI) is a proprietary
solutions provider developing a global combination of innovative
emerging businesses that leverage information and technology.
MSGI is currently comprised of two operating companies; Future
Developments America and Innalogic. The company is principally
focused on the homeland security, public safety and surveillance
industry. Their corporate headquarters is located in New York,
with regional offices in Washington, DC, and Calgary. The
corporate telephone is: 917-339-7134. Additional information is
available on the company's website: http://www.mediaservices.com/
* * *
Going Concern Doubt
In its Form 10-Q for the quarterly period ended June 30, 2004,
filed with the Securities & Exchange Commission, Media Services'
independent accountants, Amper, Politziner & Mattia P.C., raises
substantial doubt on the company's ability to continue as a going
concern due to its recurring losses from operations and negative
cash flows from operations, in addition to certain contingencies
that may require significant resources.
Effective December 29, 2003, the Company changed its legal name
from MKTG Services, Inc. to Media Services Group, Inc.
MEMEC GROUP: Moody's Downgrades Ratings After Review
----------------------------------------------------
Moody's Investors Service concluded the review for downgrade of
Memec Group Holdings and its subsidiaries based on the company's
failure to complete the IPO within the timeframe contemplated at
the time of Moody's last rating action in May 2004. Moody's notes
that Memec continues to maintain a live registration with the SEC.
A decision by Memec to issue stock in the future could have a
positive impact on ratings.
These rating actions have been taken:
* For Memec Group Holdings:
-- Senior implied rating downgraded to B2 from Ba3;
-- Senior unsecured issuer rating downgraded to Caa1 from B2;
* For Memec Group Ltd:
-- $100 million senior secured Term Loan A and $100 million
senior secured revolving credit facility, both maturing in
2009, downgraded to B1 from Ba2;
-- $100 million Term Loan B maturing 2010 downgraded to B2
from Ba3.
The ratings represent:
(1) weak consolidated debt protection measures in the absence
of an IPO as a result of the continued accrual of high-
coupon interest of shareholder loans at the holding company
level, and
(2) reduced growth expectations based on general market
conditions, indicating that coverage of cash interest and
cash generation available to reduce third party debt will
remain modest.
Since Moody's rating action in May, a number of Memec's important
vendors reduced guidance for the third calendar quarter or full
year 2004, indicating sequential revenue declines for the
manufacturers of 5% to 12% for the third quarter versus second
quarter. Moody's expects Memec's EBITDA to total interest will be
approximately 1.0 times this year, while EBITDA to cash interest
could be above 2.0 times, and EBIT to cash interest is likely to
be about 1.5 times. At the close of the recent refinancing
transaction, total debt was about $650 million, of which about
$226 million represented senior debt.
Memec's heavily levered capital structure includes a significant
amount of unrated shareholder loans at an intermediate holding
company between the two rated entities. The shareholder loans pay
only minimal amounts of interest in cash, but accrue principal at
a rate of about 10.5% annually. The shareholder loans are not
guaranteed by the issuers or guarantors of the bank debt, and are
therefore structurally subordinated to the rated debt. However,
Moody's believes that these loans will eventually be repaid by
cash generated from an equity issuance, or by a future leveraging
of Memec's operating assets. Moody's believes that the loans will
need to be repaid well ahead of their 2011 maturity, since Moody's
believes Memec would be challenged to comfortably service or
refinance the combined principal of $800 million at maturity
through organic growth alone.
The ratings are supported by:
(1) the expectation that Memec will benefit from operating
improvements stemming from changes made to the company's
cost structure during the industry downturn, and
(2) from a recovery in semiconductor volume versus past
periods.
Moody's expects Memec's profitability will continue to benefit
from improved operating leverage, and that availability under the
revolving credit facility will provide sufficient liquidity for
working capital needs.
The rating outlook is stable. Memec has the ability to meet its
debt service obligations in the near term through operating cash
flow, although cushion will vary if there are significant changes
to product demand, profitability, or working capital needs.
Memec's ability to service debt in the longer term, or to reduce
leverage, will be challenging without an equity offering or
conversion of PIK debt into equity. Ratings could rise if Memec
is able to meaningfully reduce consolidated debt as a result of an
equity sale or through very significant increases in net cash
flow. Ratings could fall, or relative notching between rated debt
could change, if overall leverage rises through the medium term.
The ratings of the secured facilities are all guaranteed by
operating subsidiaries representing not less than 85% of
consolidated sales and assets, as well as parent companies. The
loans are further secured by all assets of guarantors, even though
outstandings under the Term A and revolver are governed solely by
the level of eligible receivables and inventory. The rating
differences between the bank facilities recognizes their different
rights with regards to payment. Term B lenders may not receive
any principal repayments, except required amortization, until all
amounts under the Term A has been paid in full and the revolver
has been repaid and cancelled. The Term B loan can default if the
company violates an asset maintenance covenant. Term A loans have
mandatory amortization based on a sweep of excess cash flow.
Moody's expects the $100 million revolving credit agreement will
be largely unused and available to finance working capital needs.
Revolver availability is goverened by a borrowing base agreement,
which includes outstandings under both the revolver and Term A
loan. If Memec is unable to reduce term loan outstandings with
cash flow, the revolving credit facility may not be available to
finance operating losses at a later date. Memec also has a
receivables securitization facility, which has been recently
extended and increased to $100 million.
Memec's customers are widely diversified, with little
concentration of sales. The opposite is true for vendors. Memec
has a mutually dependent relationship with Xilinx, a leader in
programmable logic components, which Moody's believes is
beneficial to both parties.
Memec Group Holdings, together with its subsidiaries, is a global
distributor of semiconductor components with headquarters in San
Diego, California.
METROPOLITAN MORTGAGE: Fitch Junks Class M-2 Issue
--------------------------------------------------
Fitch Ratings affirmed and downgraded these Metropolitan Mortgage
and Securities issue:
* Series 2000-A
-- Class A-4 affirmed at 'AAA';
-- Class M-1 affirmed at 'AA';
-- Class M-2 is downgraded to 'CCC' from 'B-';
-- Class B-1 remains at 'D'.
The affirmations on $26,228,804 (80.71% of total certificates
outstanding) of the above classes reflect credit enhancement
consistent with future loss expectations.
The negative rating action on class M-2 is the result of poor
collateral performance and the deterioration of asset quality
beyond original expectations and affects $5,578,000, which is
17.16% of outstanding certificates. The overcollateralization
amount for series 2000-A has been completely depleted as of
October 2002. Therefore, the only credit enhancement available
for class M-2 is the $691,716 outstanding balance of class B-1.
Class B-1 had started taking principal write-downs in November
2002, with write-downs currently aggregating at $4,514,284. There
is only $11,611 of monthly gross excess spread available to cover
the current monthly gross loss of $314,904.
Series 2000-A, with 21.85% of original collateral remaining, is a
mixed asset transaction. As of the September distribution, 89% of
the collateral is residential mortgages, and 11% is commercial,
including restaurant, retail property, vacant land, and mixed-use
property. Currently, 3.17% of the mortgage pool has mortgage
insurance down to 80% loan to value, which will serve to somewhat
mitigate the overall loss numbers.
NATIONAL BENEVOLENT: Retains GaiaTech to Provide Site Assessment
----------------------------------------------------------------
The National Benevolent Association of the Christian Church
(Disciples of Christ) and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Western District of Texas, San Antonio
Division, for permission to hire GaiaTech, Inc., as their
environmental site assessors.
The Debtors need GaiaTech to assess some property about to be sold
to Fortress NBA Acquisition, LLC.
GaiaTech is expected to:
a) provide environmental site assessment -- ESAs for the
following Facilities:
(i) California Christian Home;
(ii) Ramsey Home;
(iii) Barton W. Stone; and
(iv) Kansas Christian Home;
b) update ESAs for the following Facilities:
(i) Village at Skyline;
(ii) Robin Run;
(iii) Foxwood Springs;
(iv) Lenoir;
(v) Oklahoma Christian Home;
(vi) Patriot Heights; and
(vii) Cypress Village;
c) conduct comprehensive site inspections to identify and
evaluate any current and historical sources of
significant potential environmental impacts;
d) review of site records and interviews with site
representatives to identify known or potential
environmental concerns;
e) do visual surveys of the properties in the vicinity of
the sites to identify the potential for impact from
these properties to the sites;
f) review of readily-available prior environmental reports
and historical records to identify potential impacts to
the sites from historical on-site and off-site
operations;
g) review of environmental database search reports,
supplemented by agency telephone interviews, where
appropriate;
h) conduct visual surveys for suspect friable asbestos-
containing material;
i) evaluate for potential wetlands concerns; and
j) provide preliminary opinions of cost for remediation of
quantifiable impacts or for additional assessments
required to develop remediation cost opinions.
Brain M. Devine, senior vice president of GaiaTech, tells the
Court that the Firm estimates the total cost to prepare the ESAs
at $28,400.
Mr. Devine attests to the Firm's "disinterestedness" as required
by section 327(a) of the Bankruptcy Code.
Headquartered in Saint Louis, Missouri, The National Benevolent
Association of the Christian Church (Disciples of Christ)
-- http://www.nbacares.org/-- manages more than 70 facilities
financed by the Department of Housing and Urban Development (HUD)
and owns and operates 18 other facilities, including 11 multi-
level older adult communities, four children's facilities and
three special-care facilities for people with disabilities. The
Company filed for chapter 11 protection on February 16, 2004
(Bankr. W.D. Tex. Case No. 04-50948). Alfredo R. Perez, Esq., at
Weil, Gotshal & Manges, LLP represents the Debtors in their
restructuring efforts. When the Company filed for protection from
their creditors, they listed more than $100 million in both
estimated debts and assets.
NEW SKIES: Moody's Assigns Single-B & Junk Bank & Bond Ratings
--------------------------------------------------------------
Moody's Investors Service assigns a B2 to senior implied rating to
New Skies Satellites, BV, to reflect the substantial financial
risk associated with its proposed recapitalization, significant
operating risk inherent in the satellite industry, and challenging
competitive environment.
As part of this rating action, Moody's initiates these ratings:
* B2 -- Senior Implied Rating
* B1 -- $75 million senior secured revolving credit facility
* B1 -- $460 million senior secured term loan
* B3 -- $160 million senior unsecured floating rate note
* Caa1 -- $125 million senior subordinate notes
* Caa2 -- Long-term issuer rating
* SGL-3 -- Speculative Grade Liquidity Rating
The outlook for all ratings is stable.
New Skies' B2 senior implied rating reflects high leverage and a
weak fixed charge coverage. Moody's expects New Skies' to take on
leverage of approximately 12x debt to free cash flow (Total
debt/CFFO less CAPEX less dividend) by the end of the year, and
fixed charge coverage (EBITDA-CAPEX/Cash Interest) to fall to
about 1.9x. Moody's is concerned that these high fixed debt
payments will weaken New Skies' ability to react to an increasing
competitive environment, and potential operational shortfall. The
rating also incorporates rising costs of insurance across the
industry, which may offset any margin gains resulting from
improved operational efficiency or higher utilization rates.
The ratings also reflect:
(1) New Skies' steady cash flow generation supported by a
sizable backlog,
(2) its relatively young and flexible asset base, and
(3) superior global coverage in both C- and Ku- bands, which
allows New Skies' to bid against a very narrow field for
certain contracts.
The ratings also incorporate the financial flexibility of New
Skies to control the timing of its capital expenditures. In the
near-term, Moody's expects the company's ability to manage free
cash flow through capital expenditure planning to increase as it
completes its current capital investment cycle. Moody's is also
concerned that further delays in the completion of the NSS-8
satellite, currently under construction, will continue to weaken
the company's potential revenue growth.
Moody's is concerned about New Skies' lack of scale. With only
five satellites in its operating fleet, New Skies is significantly
smaller than the other three satellite providers with global reach
in the industry. New Skies' operating flexibility is more
limited, and the relative impact of a potential in-orbit loss to
the company's overall financial strength is significantly higher.
Moody's, however, notes that the quality, age, unused capacity and
strong track record of the New Skies fleet to date partially
mitigates this risk. While insurance proceeds could offset a
portion of the loss associated with the book value of the asset,
the insurance policy for New Skies, like other providers in the
industry, does not cover business interruption costs or loss of
future revenue during the time required to replace the satellite.
Moody's believes that, even moving existing traffic to a leased
satellite, while recapturing some revenue, will significantly
reduce New Skies' operating margins.
The satellite communication industry is plagued with oversupply,
which results in increased pricing pressure and shorter average
contract lives. Although Moody's expects industry dynamics to
improve as less capacity is scheduled to come on line over the
next several years and demands for higher capacity utilization
services continue to grow, we do not expect New Skies' margins to
improve in the near term largely due to significant insurance
costs. Moody's also notes that New Skies' capacity utilization,
and thus, operating margins significantly trail those of larger
competitors.
The strength of its customer base supports New Skies' ratings. At
June 30, 2004, New Skies' backlog was $648.7 million, 94% of which
is related to non-cancelable contracts. The remaining 6% of the
contracts contain significant cancellation fees. New Skies'
customer diversity, in terms of geography, industry segment, and
product line helps to stabilize earnings and cash flow. Gains in
government services and emerging markets, for example, have offset
challenges to the growth of video services. Moody's expects New
Skies to experience above industry growth in these sectors in the
intermediate term.
Moody's notches the senior secured bank facility rating above the
senior implied rating to reflect its priority claim on the
majority of the firm's assets, and enhanced structural features
such as a 75% free cash flow sweep that improves the senior
secured lender's claims on free cash flow. The senior unsecured
floating rate notes are one notch below the senior implied rating
of a B2 to reflect the subordination to a substantial amount of
senior secured debt, which constitutes 53% of total debt. (In
total debt calculations, Moody's assumes an undrawn revolver, and
80% debt like treatment of the shareholder loans.) Moody's places
the senior subordinated notes two notches below the senior implied
rating to reflect even further subordination. Moody's notes that
in a distressed scenario, recovery rates would likely be
substantially lower for unsecured debt. Therefore, notching may
widen for unsecured notes if the senior implied falls. Moody's
considers the New Skies' sponsor's equity contribution to New
Skies in the form of a subordinated shareholders loan to add
leverage to the company, given its stated maturity and, while PIK,
the high interest rate, which creates future obligations.
New Skies' SGL-3 liquidity rating reflects Moody's belief that New
Skies has adequate liquidity to meet its near-term cash operating
and investment needs through a combination of operating cash flow
and availability under its $75 million revolving credit facility.
While Moody's does not expect New Skies to accumulate cash over
the intermediate term because of the cash sweep provision in its
term loan facility, we believe the $75 million revolving credit
facility will be sufficient for working capital needs and spikes
in satellite capital expenditures. Three financial covenants,
total leverage, interest coverage, and limitations on capital
expenditures will govern the bank credit facility. While not
finalized at the time of this release, Moody's rating assumes that
the covenants will be set at a level to allow the company adequate
cushion to weather an unexpected operational shortfall, but tight
enough to restrict meaningful incremental debt. In the event of a
liquidity crisis, Moody's does not believe that New Skies is
likely to sell assets given the strategic importance of its fleet.
New Skies' rating is likely to improve if the company can
significantly reduce leverage and increase its ability to generate
free cash flow through higher fleet utilization. The ratings are
likely to fall if New Skies experiences an unexpected in-orbit
failure that results in meaningful revenue erosion coupled with
higher capital expenditures.
New Skies, headquartered in The Hague, The Netherlands, is a
global provider of satellite services. It owns and operates five
fixed service satellites and generated approximately $215 million
in revenue in 2003.
NORTHWESTERN: S&P's Up Rating to BB- After Bankruptcy Emergence
---------------------------------------------------------------
Standard & Poor's Ratings Services raised its corporate credit
rating on electric and gas utility NorthWestern Corp. to 'BB-'
from 'D', effective after NorthWestern emerges from bankruptcy as
expected in November 2004. The outlook is positive.
The Sioux Falls, South Dakota-based utility will have $850 million
of debt outstanding after emerging from bankruptcy.
Upon emergence, NorthWestern expects to issue senior secured debt
consisting of:
-- $200 million senior secured notes due 2014,
-- $125 million senior secured term loan B due 2011, and
-- $125 million revolving credit facility due 2009.
These three debt issues will be rated 'BB', one notch higher than
the corporate credit rating because the combined net book value of
the plant pledged to secure the debt will exceed the total
corporate bondable capacity. The bank loan and revolving credit
facility will receive the '1' recovery rating, indicating a high
expectation of full principal recovery.
Upon emergence from bankruptcy, NorthWestern will largely be a
stand-alone electric and gas utility with about 80% of its utility
assets in Montana, and the remainder in South Dakota and Nebraska.
The company will also emerge with various nonutility assets,
including a 260 MW generation plant that has been under
development. NorthWestern plans to sell this plant in the near
future. Other nonregulated businesses, which were the primary
drivers of the bankruptcy filing, have been sold.
NorthWestern's rating reflects the low-risk nature of the
company's predominately transmission and distribution business,
which is strong. The rating also reflects the electric
operations' above-average reliability factors that are 30% to 40%
higher than the national average. In addition, the utility's
rates in Montana are below the regional average. However, these
strengths are offset by the company's emergence from bankruptcy
with an untested management team, operations that are located in
low-growth markets, historically unsupportive regulation in
Montana, and limited financial flexibility. In addition, there is
still some pending litigation and a U.S. SEC investigation.
NorthWestern's business risk profile score of '7' is below average
for a predominately transmission and distribution utility.
(Standard & Poor's business profiles are categorized from '1'
(strong) to '10' (weak).)
NorthWestern's management team has not yet established a reliable
track record, but over time, management has the potential to
demonstrate its capabilities.
"This management team must complete the transition from bankruptcy
and achieve projected operational and financial results before
credibility can be fully established," said Standard & Poor's
credit analyst Gerrit Jepsen.
NorthWestern will have limited financial flexibility immediately
after bankruptcy because most nonutility assets have been sold and
the company cannot cut back funding of capital expenditures below
the nondiscretionary level. Also, it is uncertain what the
capital markets' initial reception will be for NorthWestern's
common stock. Financial flexibility will also be limited by the
company's commitment to significantly reduce debt after
bankruptcy. After adding back $238 million debt equivalent for
power-purchase agreements and operating leases, debt to
capitalization will be about 60% upon bankruptcy emergence.
"This is not onerous for a regulated utility that is mostly
transmission and distribution, but it is high given the company's
limited financial flexibility," Mr. Jepsen said.
The positive outlook reflects Standard & Poor's view that
NorthWestern's credit quality will improve through 2005 and
beyond. Financial ratios should improve through 2005 as remaining
nonregulated assets are sold and debt is reduced. The company's
financial flexibility should improve once a market for its equity
develops. An operating history establishing this positive trend,
along with improved relations with regulators and proven better
corporate governance would lower the company's business risk and
could cause the rating to be raised. Alternatively, failure to
meet or exceed forecasts, unfavorable resolution of the SEC
investigation, or a worsening regulatory environment could
negatively affect the rating or outlook.
NORTHWESTERN STEEL: Bankr. Court Denies Sale of Un-Issued Shares
----------------------------------------------------------------
The Honorable Manuel Barbosa of the U.S. Bankruptcy Court for the
Northern District of Illinois declined to approve a sale of the
Debtor's authorized but unissued shares of common stock at a
hearing last week.
As reported in the Troubled Company Reporter on Oct. 4 and 20,
2004, Philip V. Martino, Esq., the Chapter 7 Trustee overseeing
Northwestern Steel's liquidation, received an unsolicited $20,000
cash offer from IMA Advisors, Inc., to purchase all of the
Debtors' authorized but unissued shares of common stock. The
United States Securities and Exchange Commission opposed
the transaction for two reasons:
(1) a corporation's authorized but unissued stock is not
property of the estate and, therefore, cannot be sold
under Section 363; and
(2) the proposed sale constitutes trafficking in a public
shell and is contrary to public policy.
The Commission's objection to the sale of unissued stock stems
from two overarching concerns:
(A) selling the stock through a Section 363 sale circumvents
state and federal securities law; and
(B) it appears that IMA is a securities law violator who is
amassing a portfolio of public shells.
The Commission blocked a previous attempt by IMA to purchase
unissued stock in a California case, In re Ultra Motorcycle Co.,
Bankruptcy Case No. RS 01-18794 (Bankr. C.D. Cal.). The
Commission has also learned about another proposed sale of a
debtor's unissued stock in In re Golf Training Systems, Inc.
(Bankr. N.D. Ga. Case No. 98-75390). The Commission believes
these types of transactions between shell corporations and thinly
capitalized private companies for which little public information
is available, are common vehicles for future "pump and dump"
scams. "When one person or group controls the flow of freely
tradable securities, this person or persons can have a much
greater ability to manipulate the stock's price than when the
securities are widely held. In a 'pump and dump' scheme, retail
interest is stimulated, and the price of the securities is
manipulated upward, at the behest or under the control of the
manipulators who control much of the stock," the Commission
explains.
Northwestern Steel and Wire Corporation was a major mini-mill
producer of structural steel components and selected wire
products. The Company filed chapter 11 protection on
December 19, 2000 (Bankr. N.D. Ill. Case No. 00-74075) and
converted to a chapter 7 liquidation proceeding on July 12, 2002.
Phillip V. Martino, Esq., at Piper Rudnick LLP, serves as the
chapter 7 trustee and is represented by himself and Colleen E.
McManus, Esq., at Piper Rudnick. Janet E. Henderson, Esq., and
Kenneth P. Kansa, Esq., at Sidley Austin Brown & Wood represented
the Debtor in its chapter 11 proceeding before operations ceased,
the case was converted and the Chapter 7 Trustee was appointed.
NVR INC: S&P Affirms BB+ Ratings with Positive Outlook
------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on NVR Inc.
to positive from stable. At the same time, the company's 'BB+'
corporate credit and senior unsecured ratings are affirmed. These
rating actions impact roughly $200 million in public senior notes.
"The rating affirmations and outlook revision acknowledge NVR's
very strong debt protection and profitability measures and a solid
market position in key mid-Atlantic markets, including the
attractive greater-Washington D.C. area," said Standard & Poor's
credit analyst Elizabeth Campbell. "Offsetting credit
considerations include somewhat higher-than-average geographic
concentration and a largely off-balance sheet model home and land
investment strategy, which results in a much less transparent
financial presentation."
The positive outlook is supported by a robust $2.9 billion
contract backlog, which provides good near-term visibility to the
company's earnings, and with very little speculative inventory,
the company is well positioned if housing demand weakens. Should
NVR be able to demonstrate a more balanced geographic contribution
while maintaining presently solid debt protection measures, a one-
notch rating upgrade would be warranted.
PARK PLACE: Fitch Rates Class M-10 Privately Offered Certs. BB+
---------------------------------------------------------------
Park Place Securities Inc. 2004-MHQ1 is rated by Fitch as follows:
-- $2.198 billion classes A-1 through A-4 certificates 'AAA';
-- $110.6 million class M-1 certificates 'AA+';
-- $99.4 million class M-2 certificates 'AA';
-- $56 million class M-3 certificates 'AA-';
-- $49 million class M-4 certificates 'A+';
-- $42 million class M-5 certificates 'A';
-- $35 million class M-6 certificates 'A-';
-- $35 million class M-7 certificates 'BBB+';
-- $28 million class M-8 certificates 'BBB';
-- $33.6 million class M-9 certificates 'BBB-';
-- $28 million privately offered class M-10 certificates 'BB+'.
Credit enhancement for the 'AAA' rated class A certificates
reflects:
* the 18.45% subordination provided by classes:
-- M-1, M-2, M-3, M-4, M-5, M-6, M-7, M-8, M-9, M-10,
* monthly excess interest, and
* initial overcollateralization of 3.05%.
Credit enhancement for the 'AA+' rated class M-1 certificates
reflects:
* the 14.50% subordination provided by classes:
-- M-2, M-3, M-4, M-5, M-6, M-7, M-8, M-9, M-10,
* monthly excess interest, and
* initial OC.
Credit enhancement for the 'AA' rated class M-2 certificates
reflects:
* the 10.95% subordination provided by classes:
-- M-3, M-4, M-5, M-6, M-7, M-8, M-9, M-10,
* monthly excess interest, and
* initial OC.
Credit enhancement for the 'AA-' rated class M-3 certificates
reflects:
* the 8.95% subordination provided by classes:
-- M-4, M-5, M-6, M-7, M-8, M-9, M-10,
* monthly excess interest, and
* initial OC.
Credit enhancement for the 'A+' rated class M-4 certificates
reflects:
* the 7.20% subordination provided by classes:
-- M-5, M-6, M-7, M-8, M-9, M-10,
* monthly excess interest, and
* initial OC.
Credit enhancement for the 'A' rated class M-5 certificates
reflects:
* the 5.70% subordination provided by classes:
-- M-6, M-7, M-8, M-9, M-10,
* monthly excess interest, and
* initial OC.
Credit enhancement for the 'A-' rated class M-6 certificates
reflects:
* the 4.45% subordination provided by classes:
-- M-7, M-8, M-9, M-10,
* monthly excess interest, and
* initial OC.
Credit enhancement for the 'BBB+' rated class M-7 certificates
reflects:
* the 3.20% subordination provided by classes:
-- M-8, M-9, M-10,
* monthly excess interest, and
* initial OC.
Credit enhancement for the 'BBB' rated class M-8 certificates
reflects:
* the 2.20% subordination provided by classes:
-- M-9, M-10,
* monthly excess interest, and
* initial OC.
Credit enhancement for the 'BBB-' rated class M-9 certificates
reflects:
* the 1.00% subordination provided by class M-10,
* monthly excess interest, and
* initial OC.
Credit enhancement for the privately offered 'BB+' rated class
M-10 certificates reflects:
* monthly excess interest, and
* initial OC.
In addition, the ratings reflect the integrity of the
transaction's legal structure, as well as the capabilities of
HomEq Servicing Corporation as master servicer. Wells Fargo Bank
N.A. will act as trustee.
On the closing date, the depositor will place approximately
$436,012,317, which will be held by the trustee in a prefunding
account relating to mortgage loans in group I and approximately
$163,987,683 relating to the mortgage loans in group II. The
amount on deposit in each account will be used to purchase
subsequent mortgage loans during the period from the closing date
up to and including the 90th day after close.
The group I mortgage pool consists of closed-end, first lien
subprime mortgage loans that conform to Freddie Mac and Fannie Mae
loan limits. As of the cut-off date (October 1, 2004), the
mortgage loans have an aggregate balance of $1,598,711,861.29.
The weighted average loan rate is approximately 7.566%. The
weighted average remaining term to maturity is 356 months. The
average cut-off date principal balance of the mortgage loans is
approximately $151,911.05. The weighted average original loan-to-
value -- OLTV -- ratio is 83.2%, and the weighted average Fair,
Isaac & Co. -- FICO -- score was 610. The properties are
primarily located in:
* California (22.27%),
* Florida (9.75%), and
* Illinois (8.44%).
The group II mortgage pool consists of closed-end, first lien
subprime mortgage loans that may or may not conform to Freddie Mac
and Fannie Mae loan limits. As of the cut-off date
(October 1, 2004), the mortgage loans have an aggregate balance of
$601,288,183.06. The weighted average loan rate is approximately
7.577%. The WAM is 355 months. The average cut-off date
principal balance of the mortgage loans is approximately
$170,578.21. The weighted average OLTV is 84.2%, and the weighted
average Fair, Isaac & Co. score was 612. The properties are
primarily located in:
* California (39.67%),
* New York (10.67%), and
* Florida (6.69%).
The loans were originated or acquired by:
* Ameriquest Mortgage Company,
* Argent Mortgage Company, LLC,
* Town & Country Credit Corporation, and
* Olympus Mortgage Company.
Argent, Town & Country, and Olympus Mortgage companies are
affiliates of Ameriquest Mortgage Company. Ameriquest Mortgage
Company is a specialty finance company engaged in the business of
originating, purchasing, and selling retail and wholesale subprime
mortgage loans.
PENN LANDFILL GAS: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Penn Landfill Gas Company, LLLP
Assignee of TDP Capital Access LLC
1099 18th Street, Suite 1725
Denver, Colorado 80202
Bankruptcy Case No.: 04-43722
Chapter 11 Petition Date: October 21, 2004
Court: District of New Jersey (Newark)
Debtor's Counsel: Brian L. Baker, Esq.
Ravin Greenberg, PC
101 Eisenhower Parkway
Roseland, New Jersey 07068
Tel: (973) 226-1500
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $500,000 to $1 Million
Debtor's 20 largest unsecured creditors:
Entity Claim Amount
------ ------------
Cooper Energy Service $111,342
NRG Thermal Services $98,492
WET $76,470
Bennett Brothers Mechanical, Inc. $19,389
Bob Watts $10,081
CES-Landtec $8,879
Safety-Kleen $8,521
Energy Recovery Associates $5,000
Energy Equipment $4,000
Reinstelder Incorporated $3,050
Bender Electric $2,562
Security Monitors $2,500
Precision $2,353
Research Triangle Park $1,006
New Jersey Department $980
Bureau of Hazardous Waste Compliance
Equipment Meter Service $397
Miller Energy $315
North Side Power Transmissions $250
McGuffy Industries $187
Transexpress $100
PIONEER NATURAL: To Webcast 3rd Qtr. 2004 Results on Oct. 28
------------------------------------------------------------
Pioneer Natural Resources Company (NYSE:PXD) announces its third
quarter conference call and webcast on Thursday, October 28, 2004
at 9:00 a.m. Central.
Pioneer Natural Resources Third Quarter Conference Call
Date: Thursday, October 28, 2004 9:00 a.m. Central
Internet: http://www.pioneernrc.com/
Select "Investor", then "Webcasts/Earnings Calls"
Telephone: To listen, dial 800-946-0741
(confirmation code: 954684) five minutes before the
call. View the accompanying presentation via
Pioneer's internet address.
A replay of the webcast will be archived on Pioneer's website. A
telephone replay will be available through November 11 by dialing
888-203-1112, confirmation code: 954684.
Pioneer is a large independent oil and gas exploration and
production company with operations in the United States,
Argentina, Canada, Gabon, South Africa and Tunisia. Pioneer's
headquarters are in Dallas.
* * *
Standard & Poor's Ratings Services raised its corporate credit and
senior unsecured debt ratings on Pioneer Natural Resources Co. to
'BBB-' from 'BB+'. The outlook is stable.
PLAINWELL, INC.: Confirmation Order Improperly Enjoined the IRS
---------------------------------------------------------------
The Honorable Jerry W. Venters confirmed the Amended Joint Chapter
11 Liquidating Plan proposed by Debtors Plainwell, Inc.
and Plainwell Holding Company on November 21, 2003, over the
objection of the United States of America. The Government
objected to a provision buried in the Plan that releases the
Debtor's third-party officers and directors from potential tax
liability for 2000, 2001, and 2002. Judge Venters' Confirmation
Order provided that, upon the filing of the proper employment tax
returns by the Third-Parties, the Internal Revenue Service is
permanently enjoined from collecting taxes for the years 2000,
2001, and 2002. The United States of America took an appeal to
the U.S. District Court for the District of Delaware.
The Government argues that the Bankruptcy Court doesn't have
subject matter jurisdiction to enter an injunction preventing the
IRS from collecting taxes from a third-party non-debtor. Section
7421 of the Internal Revenue Code states that "no suit for the
purpose of restraining the assessment or collection of any tax
shall be maintained in any court by any person, whether or not
such person is the person against whom such tax was assessed." In
re Becker's Motor Transp., 632 F.2d 242, 246 (3d Cir. 1980),
LaSalle Rolling Mills v. United States Dep't of Treasury (In re La
Salle Rolling Mills), 832 F.2d 390, 394 (7th Cir. 1987); and
Laughlin v. United States IRS, 912 F.2d 197 (8th Cir. 1990), say
bankruptcy courts can't issue injunctions against the collection
of tax and point out that Sec. 7421 doesn't contain any exception
for bankruptcy cases. The Debtor, on the other hand, argues that
the "Supreme Court has recognized certain exceptions to the Anti-
Injunction Act." The Supreme Court has held that if the
collection of the tax would cause "irreparable harm", and the
government under no circumstances could prevail, a court may enter
an injunction against the IRS. Enochs v. Williams Packing &
Navigation Co., 370 U.S. 1, 7 (1962). In that case, the Supreme
Court went on to state that "[o]nly if it is then apparent that,
under the most liberal view of the law and the facts, the United
States cannot establish its claim, may the suit for an injunction
be maintained." Id.
"In the instant case," U.S. District Court Judge Jordan says,
"[the] Debtor states that the 'IRS has never asserted . . . [a]
tax claim against the Debtors and/or their officers. . . .' As
the Bankruptcy Court did not have any information about the IRS's
claim, taking the 'most liberal view of the law and the facts' it
cannot be shown that the United States cannot establish its claim.
Consequently, the Bankruptcy Court did not have subject matter
jurisdiction to enter an injunction against the IRS."
Plainwell Inc. and its affiliate filed for Chapter 11 protection
on November 21, 2000, (Bankr. Del. Case No. 00-4350). Laura Davis
Jones, Esq., Ira D. Kharasch, Esq., Robert M. Saunders, Esq., and
Rachel Lowy Werkheiser, Esq., at Pachulski, Stang, Ziehl, Young,
Jones & Weintraub, P.C. represent the Debtors in their liquidating
efforts.
PLATINUM PRESS: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Platinum Press, Incorporated
2946 Airport Road
LaCrosse, Wisconsin 54603
Bankruptcy Case No.: 04-17431
Type of Business: The Debtor provides printing services.
See http://www.platinum-press.com/
Chapter 11 Petition Date: October 18, 2004
Court: Western District of Wisconsin (Eau Claire)
Judge: Thomas S. Utschig
Debtor's Counsel: Galen W. Pittman, Esq.
300 North 2nd Street, Suite 210
P.O. Box 668
La Crosse, WI 54602-0668
Tel: 608-784-0841
Total Assets: $500,000 to $1 Million
Total Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
RCM LLC $109,000
Alliance Commercial Capital $75,560
Royal Graphix, Inc. $64,024
Johnson, Jaekel & Associates, Inc. $13,295
Zurich North America $8,987
Unisource La Crosse $4,500
The Sabbin Robbins Paper Co. $4,419
Smyth Companies, Inc. $4,173
Packaging Supplies.com $4,053
Serigraphic Screen Print Inc. $3,695
Kish Telecom $3,445
Saint Mary's Press $3.422
Graphic Finishing Services $3,120
Health Tradition Health Plan $2,990
Con-way Transportation Services, Inc. $2,735
Aramark Uniform Services $2,532
Carlson Craft $2,132
E. Stanek Electric, Inc. $2,068
Riverfront, Inc. $2,028
Xcel Energy $1,940
QUESTERRE ENERGY: Successfully Completes Corporate Restructuring
----------------------------------------------------------------
Questerre Energy Corporation (QEC:TSX) reported that in
conjunction with its wholly owned subsidiary, Questerre Beaver
River Inc., it has emerged from protection under the Companies'
Creditors Arrangement Act.
The Plans of Arrangement approved by over 97% of the unsecured
trade creditors of QEC and QBR and sanctioned by the Court of
Queen's Bench of Alberta were implemented last month. Pursuant to
the Plans, unsecured trade creditors received a total of
$0.56 million in cash and 9,623,102 common shares of Questerre.
Questerre exits CCAA protection with daily production of 170 boe,
approximately $15 million in tax pools and two high impact natural
gas exploration projects. Liabilities have been reduced from
$10.5 million to $0.9 million. Subsequent to the issuance of the
common shares to creditors, Questerre has 54,288,904 common shares
issued and outstanding.
Of the 9,623,102 common shares issued on the implementation of the
Plans, 6,756,102 Common Shares were issued to Terrenex Acquisition
Corporation pursuant to the Court approved Liquidity Option
Agreement. One half of the common shares issued to trade
creditors and Terrenex in connection with these Plans is subject
to a contractual hold period that expires on January 9, 2005 and
the remainder is subject to a hold period that expires on May 9,
2005.
Michael Binnion, President and Chief Executive Officer, commented,
"The mistakes of the A-5 re-entry at the Beaver River Field have
cost our shareholders and suppliers greatly. We have taken
significant steps towards correcting for those mistakes over the
past few months. With our restructuring completed, we can move
towards achieving the full potential of our projects for our old
and new shareholders. I am most grateful for the support shown by
so many of our shareholders and suppliers as well as our employees
through this process."
Questerre Energy Corporation is a Calgary-based independent
resource company actively engaged in the exploration for and
development, production and acquisition of large-scale natural gas
projects in Canada.
QWEST COMMS: Agrees to Pay $250 Million in Civil Penalty with SEC
-----------------------------------------------------------------
Qwest Communications International Inc. (NYSE: Q) has entered into
a settlement with the U.S. Securities and Exchange Commission that
concludes a two-and-a-half year investigation of the company.
The Securities and Exchange Commission had charged Qwest with
securities fraud and other violations of the federal securities
laws. The Commission's complaint alleges that, between 1999 and
2002, Qwest fraudulently recognized over $3.8 billion in revenue
and excluded $231 million in expenses as part of a multi-faceted
fraudulent scheme to meet optimistic and unsupportable revenue and
earnings projections.
Without admitting or denying liability, Qwest agreed on a going-
forward basis not to violate provisions of the Federal securities
laws, as set forth in the judgment. The company agreed to pay a
$250 million cash civil penalty in two installments, $125 million
within 20 business days of the entry of the judgment and
$125 million by Dec. 31, 2005. The entire penalty amount will be
distributed to defrauded investors pursuant to the Fair Funds
provision of Sarbanes-Oxley. In assessing the penalty amount, the
Commission considered Qwest's current financial condition.
"Over the past two years, Qwest's management team, its board of
directors and our 40,000+ employees have worked tirelessly to
create a customer-focused company that incorporates best-in-class
policies and practices," said Richard C. Notebaert, Qwest chairman
and CEO. "We are pleased to conclude this matter, which will now
allow us to focus even more of our effort to provide exceptional
value and service to customers."
Additional non-monetary terms outlined in Thursday's settlement
build upon a number of corporate governance, policies and
controls, and management changes the company has established in
the last two years and include the company's agreement to continue
to cooperate with the SEC.
"Thursday's action once again sends the message that the
Commission will hold accountable not only the individuals who
commit securities fraud, but the companies that serve as vehicles
for their misconduct," said Stephen M. Cutler, Director of the
Commission's Division of Enforcement. "While our investigation of
individuals is active and ongoing, the $250 million penalty levied
against Qwest should signal to executives at other companies that
they need to worry about more than their own personal compliance
with the law; they also need to ensure that their companies have
established a culture of compliance and integrity."
About Qwest
Qwest Communications International Inc. (NYSE: Q) is a leading
provider of voice, video and data services. With more than 40,000
employees, Qwest is committed to the "Spirit of Service" and
providing world-class services that exceed customers' expectations
for quality, value and reliability. For more information, please
visit the Qwest Web site at http://www.qwest.com/
Qwest's June 30, 2004, balance sheet shows a stockholders' deficit
totaling $1,909,000,000 -- swelling 53% from the $1,251,000,000
shareholder deficit reported at March 31, 2004.
RCN CORP: Exclusivity Extension Hearing Slated for Nov. 3
---------------------------------------------------------
To recall, RCN Corporation and its debtor-affiliates, and the
Official Committee of Unsecured Creditors filed a consensual Plan
of Reorganization and Disclosure Statement on Aug. 20, 2004. A
hearing on the Disclosure Statement was scheduled for Oct. 5,
2004. The Debtors intend to pursue confirmation and consummation
of the Plan by Dec. 31, 2004. The Debtors have no reason to
believe that they will be unable to comply with this timeline.
Nevertheless, to preserve their exclusive rights in the unlikely
event that they are required, for whatever reason, to develop and
file a new reorganization plan and disclosure statement before
the year ends, the Debtors ask the Court to extend their
exclusive periods to:
-- file a plan until Dec. 31, 2004; and
-- solicit acceptances of the plan until Feb. 28, 2005.
This is without prejudice to the Debtors' right to seek further
extensions of the Exclusive Periods, or the right of any party-
in-interest to seek to reduce the Exclusive Periods for cause.
Under Section 1121(d) of the Bankruptcy Code, the Court may
extend the Plan Proposal Period or the Solicitation Period for
cause. Specifically, Section 1121(d) provides that:
"On request of a party-in-interest made within the respective
periods specified in subsections (b) and (c) of this section
and after notice and a hearing, the court may for cause reduce
or increase the 120-day period or the 180-day period referred
to in this section."
D. Jansing Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom,
LLP, in New York, assures the Court that a three-month extension
of the Exclusive Periods will not prejudice the interests of any
creditor. Mr. Baker points out that the Debtors have timely met,
and continue to timely meet, their postpetition obligations in
their Chapter 11 cases.
The hearing on the Debtors' request is continued to Nov. 3, 2004.
Judge Drain signs a bridge order extending the Debtors'
Exclusive Period until the conclusion of that hearing.
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. 13; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
RELIANCE GROUP: Liquidator Moves to Protect Subsidiaries From PBGC
------------------------------------------------------------------
Reliance Insurance Company sponsored a Pension Plan for its
employees. The Plan was terminated effective February 28, 2002.
As a result, the Pension Benefit Guaranty Corporation was
appointed trustee of the Plan. The PBGC determined that the Plan
was underfunded and that minimum funding contributions and
premium payments were overdue.
On December 10, 2003, the PBGC filed a series of claims against
RIC, including claims for:
$119,800,000 -- unfunded benefit liabilities;
$34,535,497 -- unpaid minimum funding contributions;
$1,250,428 -- statutory liabilities based on premiums;
$18,500,000 -- unfunded liabilities of the RGH Pension Plan;
and
$2,422,852 -- unpaid minimum funding contributions under
the RGH Pension Plan.
Jerome R. Richter, Esq., at Blank Rome, LLP, in Philadelphia,
Pennsylvania, tells the Commonwealth Court that the PBGC has
engaged in invasive conduct. In late March 2004, the
Commonwealth Court approved the sale of RCG-Moody for
$55,500,000. Three days before the closing of the RCG-Moody
sale, the PBGC placed liens on the assets of RCG International
and RCG-Moody and other subsidiaries that were sold to Moody
International Finance. Moody, as purchaser, may be forced to pay
RIC's pension liability as demanded by the PBGC. If this
scenario takes place, Moody has insisted that RIC assume
liability for these payments through the grant of a first
priority administrative expense.
Mr. Richter notes that the PBGC is attempting to thwart and
circumvent the distribution scheme of the Pennsylvania Insurance
Department Act and obtain an improper preference by making claims
and placing liens against RIC's subsidiaries. Under the Order of
Liquidation, RIC and its direct and indirect subsidiaries should
be protected from the PBGC's intrusions. In Pennsylvania, claims
of the federal government are granted third priority status,
after payment of all valid claims of policyholders. The PBGC's
claims, therefore, are subordinate to the claims of RIC's
policyholders.
The Liquidator cannot wind down and liquidate RIC with the PBGC
nipping at its heels. Not only are these predatory actions
disruptive, but they also alter the potential flow of funds from
the intended policyholders to the federal government. In this
process, the PBGC has lessened the value of RIC's assets,
frustrated the proof of claim process and priority scheme, and
obtained improper preference over policyholders.
M. Diane Koken, Insurance Commissioner of Pennsylvania and
Liquidator of RIC, asks the Commonwealth Court to:
1) declare that the PBGC Claims are relegated to the claim
priority and distribution process in the RIC liquidation
proceedings;
2) strike all liens filed by the PBGC against present, former,
direct or indirect subsidiaries of RIC; and
3) enjoin the PBGC from filing liens or taking any enforcement
action on account of its liens against subsidiaries of RIC.
The PBGC's Argument
In its proofs of claim, the PBGC states that it is entitled to
the amounts asserted and priority sought. The PBGC guarantees
payment of pension benefits whenever an employer pension plan is
terminated. If the terminated plan is unfunded, the PBGC becomes
the trustee of that plan and pays the unfunded benefits with its
insurance funds. The RIC Plan fits this description, John A.
Menke, Senior Counsel at PBGC, in Washington, D.C., says.
The contributing sponsor of the plan or its administrator is the
designated payor of the PBGC insurance premiums. Each member of
the contributing sponsor's controlled group is jointly and
severally liable to the PBGC for insurance premiums, interest and
penalties arising from the Plan. When an unfunded plan is
terminated, the PBGC files claims for various amounts owed.
These claims are entitled to the same status as those of any
other federal government office, for example, the Internal
Revenue Service.
Headquartered in New York, New York, Reliance Group Holdings, Inc.
-- http://www.rgh.com/-- is a holding company that owns 100% of
Reliance Financial Services Corporation. Reliance Financial, in
turn, owns 100% of Reliance Insurance Company. The holding and
intermediate finance companies filed for chapter 11 protection on
June 12, 2001 (Bankr. S.D.N.Y. Case No. 01-13403) listing
$12,598,054,000 in assets and $12,877,472,000 in debts. The
insurance unit is being liquidated by the Insurance Commissioner
of the Commonwealth of Pennsylvania. (Reliance Bankruptcy News,
Issue No. 62; Bankruptcy Creditors' Service, Inc., 215/945-7000)
SHAW COMMS: Board of Directors Declares Quarterly Dividend
----------------------------------------------------------
Shaw Communications Inc.'s Board of Directors declared a quarterly
dividend on its Class A Participating Shares and Class B Non-
Voting Participating Shares payable January 2, 2005 to all holders
of record at the close of business on December 15, 2004. The
Class A Participating Share quarterly dividend will be $0.06875
per share and the Class B Non-Voting Participating Share quarterly
dividend will be $0.07 per share.
Shaw Communications Inc. (S&P, BB+ Corporate Credit Rating,
Stable) is a diversified Canadian communications company whose
core business is providing broadband cable television, Internet
and satellite direct-to-home services to approximately 2.9 million
customers. Shaw is traded on the Toronto and New York stock
exchanges. Shaw is traded on the Toronto and New York stock
exchanges (Symbol: TSX - SJR.B, NYSE - SJR).
SHAW COMMS: Posts $28.9 Million Income for Quarter Ended Aug. 31
----------------------------------------------------------------
Shaw Communications Inc. announced net income of $28.9 million or
$0.08 per share for the quarter ended August 31, 2004 compared to
net income of $4.4 million and a loss of $0.02 per share for the
comparable period in 2003. Net income for the year, was
$90.9 million, which represents $0.22 per share, versus a net loss
of $46.9 million ($0.38 per share) last year.
Total service revenue in the fourth quarter was $531.8 million, a
5.9% increase over the fourth quarter of 2003, and on a year-to-
date basis, was $2.1 billion compared to $2.0 billion in 2003.
Customer growth occurred in both cable and DTH, with Internet
customers reaching the one million mark on June 14, 2004.
"We are pleased with our continued customer growth. The
achievement of over one million Internet customers underscores the
high quality of our product offering and is a great milestone for
our Company," said Jim Shaw, C.E.O. of Shaw Communications Inc.
Consolidated service operating income before amortization1 was
$239.2 million in the fourth quarter (2003 - $224.1 million), an
increase of 6.8%, and was $925.9 million for the year (2003 -
$817.6 million), a 13.2% increase over last year. Cash flow from
operations of $186.3 million in the fourth quarter and $694.8
million for the year represents growth of 15.8% and 27.7% over the
same periods last year.
In fiscal 2003, the Company sold its US cable systems. Excluding
the US cable systems, quarterly and annual increases in service
revenue over last year, were 7.0% and 7.1%, respectively.
Increases in operating income before amortization were 7.6% for
the quarter and 16.4% year-to-date.
On a consolidated basis, the Company achieved positive free cash
flow of $56.1 million in the fourth quarter (2003 -
$56.9 million), bringing the year-to-date amount to $278.9 million
(2003 - $98.3 million). For the second consecutive quarter, the
satellite division generated positive free cash flow of
$7.5 million compared to negative free cash flow of $16.1 million
in the same quarter last year. Cable free cash flow was
$48.6 million for the quarter compared to $73.0 million last year.
The decrease is due to a higher level of capital expenditures in
the fourth quarter this year, partly offset by improved operating
cash flows.
Customer growth continued during the fourth quarter despite the
competitive challenges from new video entrants in some of Shaw's
markets and increases in monthly subscriber rates in both cable
and DTH, which were implemented in previous quarters. In the
fourth quarter, basic cable subscribers increased by 5,830,
digital customers grew by 24,712 and Internet customers increased
by 23,488 to 1.02 million. DTH customers grew by 1,506 in the
fourth quarter bringing total DTH customers to approximately
828,000.
"We almost tripled our annual consolidated free cash flow over
last year. This achievement is the result of a number of factors,
the key one being the improvement in service operating income
before amortization. In addition, we reduced capital spending and
equipment costs by $18 million, or approximately 5%, despite
incurring Digital Phone costs during the year of approximately $14
million and while supporting year-to-date customer increases of
30,520 for basic cable, 72,904 for digital customers, 126,006 for
Internet and 19,377 for DTH," noted Jim Shaw.
In terms of divisional results, cable service revenue for the
quarter and year-to-date was $379.4 million (2003 -
$362.7 million) and $1,491.6 million (2003 - $1,460.0 million),
respectively. The increases in quarterly and annual service
revenue over 2003 results (adjusted to exclude the US cable
systems sold on June 30, 2003) were 6.2% and 6.3%, respectively.
On the same basis, quarterly and annual service operating
income before amortization of $195.8 million and $779.6 million,
increased by 6.2% and 10.5% over the same periods last year. The
main drivers of this growth were higher customer levels, rate
increases implemented over the last two years and the recent
Monarch systems acquisition.
Satellite division quarterly and annual service revenue of
$152.4 million and $588.2 million, respectively, grew by
approximately 9% over the same periods in 2003, while service
operating income before amortization was $43.4 million
(45.6% increase) and $152.8 million (67.2% increase). Both of
these improvements are primarily the result of growth in DTH
customers and rate increases.
"Both divisions have generated strong improvements," said Jim
Shaw. "Bundling, the addition of new services, and the
introduction of new technologies, such as cable's launch of the
dual tuner personal video recorder -- PVR -- and HDTV set-top
receiver, continue to add value to our service offerings and
contribute to growing our customer base. In addition, we're
looking forward to the launch of Digital Phone, our primary line
telephone offering, in 2005 as our next growth opportunity."
The continued strength in Shaw's operating results and the
generation of free cash flow has enabled the Company to improve
its financial position and reward shareholders through an increase
to the quarterly dividend rate on its Class B Non-Voting Shares.
The quarterly dividend, which was $0.03 per share on
September 30, 2003, was increased to $0.07 per share commencing
September 30, 2004. This increases the dividend from $0.16 per
share in fiscal 2004 to a projected annual rate of $0.28 per share
in fiscal 2005.
During the fourth quarter, Shaw repurchased 837,500 of its Class B
Non-Voting Shares for cancellation, pursuant to the normal course
issuer bid, for $16.8 million ($20.00 per share). On a year-to-
date basis, the Company has repurchased and cancelled 4,134,000
Class B Non-Voting Shares for $86.0 million ($20.80 per share).
In addition, Shaw repaid $210.6 million of debt during the year.
In closing, Mr. Shaw stated "The efforts of Shaw's management and
staff have enabled us to meet the free cash flow target and
strengthen our financial position. Our strong service offerings
continue to generate customer growth and will soon be further
enhanced by the addition of Digital Phone. As a result, we
believe that shareholder value will continue to improve. As stated
in the third quarter release, our preliminary view for fiscal 2005
is free cash flow of approximately $325 million. We intend to
continue to use free cash flow to reduce debt, pay dividends and,
subject to market conditions, repurchase Class B Non-Voting Shares
for cancellation".
Shaw Communications Inc. (S&P, BB+ Corporate Credit Rating,
Stable) is a diversified Canadian communications company whose
core business is providing broadband cable television, Internet
and satellite direct-to-home services to approximately 2.9 million
customers. Shaw is traded on the Toronto and New York stock
exchanges. Shaw is traded on the Toronto and New York stock
exchanges (Symbol: TSX - SJR.B, NYSE - SJR).
SILICON VALLEY: Creditor-Proposed Plan Fails Best Interests Test
----------------------------------------------------------------
Silicon Valley Telecom Exchange, LLC, filed a chapter 11 plan of
reorganization proposing to pay all of its creditors in full over
time and leaving shareholder interests intact. Corporate
Builders, Inc., one of Silicon Valley's creditors, filed a
competing chapter 11 plan offering to pay creditors 75% of their
claims and wiping-out current equity. Silicon Valley and
Corporate Builders objected to the other's plan on multiple bases.
Judge Weissbrodt held a hearing that focused on valuing the
debtor's remaining 20-year leasehold interest in a
telecommunications facility located at 250 Stockton Avenue in San
Jose, California, that's sublet to other tenants. The value of
that asset was important to determine which plan, if either,
delivered greater value to creditors and whether either plan
delivered more to creditors than they'd receive in a chapter 7
liquidation as required under 11 U.S.C. Sec. 1129(a)(7).
The Debtor brought an expert to court who testified $5,610,000 is
the value of the leasehold interest. Corporate Builders brought
an expert who said the value was between $2,240,000 and
$3,000,0000. Judge Weissbrodt found the Debtor's expert to be
credible and criticized the creditor's expert for a "fair amount
of guessing." The Debtor's bankruptcy schedules and monthly
operating reports valued the Building at $2,000,000. The Debtor's
principal testified that he no longer believes that to be the
value, but did not change the figure because the United States
Trustee told him it should remain constant.
By valuing the building at $5,610,000, that means Corporate
Builders' competing plan delivers less value to creditors than
they'd receive in a chapter 7 liquidation and can't be confirmed.
Silicon Valley Telecom Exchange, LLC, filed for chapter 11
protection in the U.S. Bankruptcy Court for the Northern District
of California (Bankr. Case No. 01-55137-ASW). Marc L. Pinckney,
Esq., at Campeau Goodsell Smith, LC, represents the Debtor. CBI
is represented by David A. Tilem, Esq. and Leslie M. Corporate
Builders, Inc., at the Law Offices of David A. Tilem, in Glendale,
California.
SK GLOBAL: Declares Chapter 11 Liquidation Plan Effective
---------------------------------------------------------
Albert Togut, Esq., at Togut, Segal & Segal LLP, in New York,
advises the U.S. Bankruptcy Court for the Southern District of New
York that SK Global America, Inc.'s Chapter 11 Plan of Liquidation
became effective on October 21, 2004.
As previously reported in the Troubled Company Reporter, Judge
Blackshear confirmed the Debtor's Liquidation Plan on September
15, 2003. The plan was the product of extensive negotiations
among the Debtor, SK Networks Co., Ltd. -- the Debtor's corporate
parent in Korea -- Cho Hung Bank and Korea Exchange Bank.
Embodied in the Plan, Moon Ho Kim, SK Global's President and
Treasurer explained, are various compromises, settlements and
concessions, which will result in creditors achieving a greater
and more expeditious recovery than would otherwise be available
under an alternative plan of reorganization or in a Chapter 7
liquidation. The Plan is intended to resolve all Claims against,
and Equity Interests in, the Debtor, and provides a mechanism for
the liquidation of all the Debtor's remaining assets and the
Distribution of the proceeds to the Debtor's Creditors. The Plan
contemplates the wind down of the Debtor's remaining operations,
the liquidation of certain assets and distribution of Cash
proceeds to certain Creditors.
The Plan resolves disputes and avoids costly litigation over the
extent and validity of the Secured Claims asserted by Cho Hung and
KEB. In addition to satisfying the Secured Claims held by Cho
Hung and compromising and settling the Junior Secured Claims held
by KEB, the Plan provides for a 100% Distribution, in Cash, to
holders of Allowed Administrative Expense Claims, Allowed Priority
Claims and Allowed General Unsecured Claims. The Plan further
contemplates the transfer of the Debtor's remaining assets to a
liquidating trust to be formed and administered for the benefit of
the Allowed Unsecured Liquidating Trust Claims and, to the extent
applicable, Allowed KEB Junior Secured Claims. Upon the
liquidation or transfer of its assets, the Debtor will dissolve in
accordance with applicable state law.
Headquartered in Fort Lee, New Jersey, SK Global America, Inc., is
a subsidiary of SK Global Co., Ltd., one of the world's leading
trading companies. The Debtors file for chapter 11 protection on
July 21, 2003 (Bankr. S.D.N.Y. Case No. 03-14625). Albert Togut,
Esq., and Scott E. Ratner, Esq., at Togut, Segal & Segal, LLP,
represent the Debtors in their restructuring efforts. When they
filed for bankruptcy, the Debtors reported $3,268,611,000 in
assets and $3,167,800,000 of liabilities. (SK Global Bankruptcy
News, Issue No. 25; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
SLI INC.: District Court Upholds Plan's Third-Party Releases
------------------------------------------------------------
SLI International Holdings, LLC, f/k/a SLI, Inc., emerged from
chapter 11 under a plan of reorganization declared effective on
June 30, 2003. Under that plan, DDJ Capital and two other
purchasers of the Debtor's prepetition secured debt received 100%
of the equity in Reorganized SLI. Unsecured creditors received a
small cash payment and an interest in recoveries by a litigation
trust.
At the plan confirmation hearing, Osram Sylvania, Inc., objected
to the scope of certain releases, injunctions, and exculpation and
limitation of liability provisions buried in SLI's Plan. The Plan
released the Debtor's officers, directors, Chapter 11
professionals and Plan funder from claims arising from
postpetition conduct, subject to exceptions for (a) claims arising
out of willful misconduct, gross negligence, fraud or self-
dealing, (b) claims for which there would exist no right to
indemnification, contribution or reimbursement fro the Debtor, and
(c) claims arising under or which may be asserted pursuant to
Bankruptcy Code sections 544, 547, 548 or 550. The Plan further
provided limited releases of potential claims by the Debtor
against M Capital and certain of its affiliates related to sales
between the two. Finally, the Plan provided that neither the
Debtors, the Reorganized Debtor, the Creditors' Committee, or the
Investors (or their affiliates). . . shall have or incur any
liability . . . for any post-Petition Date act or Omission . . .
except for actions or omissions that (w) are the result of fraud,
self-dealing, gross negligence, or willful misconduct, (x)
constitute claims or causes of action covered by applicable
insurance, but only to the extent of such instances, or (y)
constitute claims of causes of action for which such persons would
not be entitled to indemnity, contribution or reimbursement from
the Debtors.
Despite OSI's objections, the Bankruptcy Court approved the Plan
on June 19, 2003.
Soon after the approval of the Plan participants who elected to
take part invested $26 million in equity in Reorganized SLI.
Reorganized SLI entered into a term loan agreement with Bank of
America and received $20 million. The sum of $20 million was paid
to the DIP loan provider and all liens securing the DIP loan were
discharged. The stock of SLI was cancelled and delisted and the
Reorganized Debtor was incorporated. All of the interests in the
Reorganized Debtor were distributed to Plan participants. A
litigation trust was formed and funded with $1,475,000. The sum
of $2,370,451 was paid under the key employee retention plan in
exchange for releases from the Plan.
OSI filed a notice of appeal and asked the U.S. District Court for
the District of Delaware to strike or curtail the releases.
The Creditors' Committee, in turn, asked the District Court to
dismiss the appeal because the plan was substantially consummated
and OSI didn't obtain a stay of the confirmation order.
U.S. District Judge Jordan finds that modification or reversal of
the Bankruptcy Court's Confirmation Order would inequitably affect
the validity of the Plan and is impermissible under the Doctrine
of Equitable Mootness, and that the Committee's Motion to Dismiss
OSI's appeal should be granted.
SLI is a vertically integrated designer, manufacturer and seller
of lighting systems, which are comprised of lamps and fixtures.
The Company offers a complete range of lamps (incandescent,
fluorescent, compact fluorescent, high intensity discharge,
halogen, miniature incandescent, neon, LED and special lamps).
The Company also offers a comprehensive range of fixtures. The
Company serves a diverse international customer base and markets,
has 35 plants in 11 countries and operates throughout the world.
The Company believes that it is also the #1 global supplier of
miniature lighting products for automotive instrumentation.
SLI and its U.S. subsidiaries filed for chapter 11 protection on
September 9, 2002 (Bankr. D. Del. Case No. 02-12608). On May 15,
2003, Debtors filed a plan of reorganization and related
disclosure statement. On the same day, the Bankruptcy Court
approved the disclosure statement and fixed June 19, 2003 as the
date to consider confirmation of the Plan. On June 19, 2003, the
Bankruptcy Court held a confirmation hearing and approved the
Plan. Gregg M. Galardi, Esq., at Skadden, Arps, Slate, Meagher &
Flom, represents SLI. When SLI filed for chapter 11 protection,
it reported $830,684,000 in assets and debts totaling
$721,199,000.
SMTC CORPORATION: Will Hold Third Quarter Conference on Nov. 8
--------------------------------------------------------------
SMTC Corporation (Nasdaq: SMTX) (TSX: SMX) will hold its third
quarter results teleconference on November 8, 2004 at 5:00 PM EST.
Those wishing to listen to the teleconference should access the
webcast at the investor relations section of SMTC's website
http://www.smtc.com/ A rebroadcast of the webcast will be
available on SMTC's website following the teleconference.
Participants should ensure that they have a current version of
Microsoft Windows Media Player before accessing the webcast.
Members of the investment community wishing to ask questions
during the teleconference may access the teleconference by dialing
416-640-4127 or 1-800-814-4859 ten minutes prior to the scheduled
start time. A rebroadcast will be available following the
teleconference by dialing 416-640-1917 or 1-877-289-8525, pass
code 21097881 followed by the pound key.
SMTC Corporation is a global provider of advanced electronic
manufacturing services. The Company's electronics manufacturing,
technology and design centers are located in Appleton, Wisconsin;
Boston, Massachusetts; San Jose, California; Toronto, Canada; and
Chihuahua, Mexico with a third party facility in Chang An, China.
SMTC offers technology companies and electronics OEMs a full range
of value-added services. SMTC supports the needs of a growing,
diversified OEM customer base primarily within the industrial,
networking, communications and computing markets. SMTC is a
public company incorporated in Delaware with its shares traded on
the Nasdaq National Market System under the symbol SMTX and on The
Toronto Stock Exchange under the symbol SMX. Visit SMTC's web
site, http://www.smtc.com/for more information about the Company.
As reported in the Troubled Company Reporter on April 8, SMTC
Corporation filed its annual report on Form 10-K with the United
States Securities and Exchange Commission on March 30, 2004. In
response to a recent Nasdaq requirement, SMTC announced that the
Auditors' Report, included in the Company's Annual Report on Form
10-K, included an unqualified audit opinion with an explanatory
paragraph related to uncertainties about the Company's ability to
continue as a going concern, based upon the Company's historical
financial performance and the classification of its long-term debt
as a current liability at December 31, 2003, due to its maturity
on October 1, 2004.
SPEIZMAN INDUSTRIES: Exclusive Period Stretched to Nov. 1
---------------------------------------------------------
Speizman Industries, Inc., sought and obtained an extension
through Nov. 1, 2004, to file a chapter 11 plan, and a concomitant
extension of its exclusive period to solicit acceptances of that
plan from creditors through Dec. 31, 2004.
The Debtor told the Honorable W. Homer Drake in the U.S.
Bankruptcy Court for the Northern District of Georgia that it will
be filing a plan of liquidation and needs more time to discuss the
details with SouthTrust Bank, its DIP Lender. The Debtor reminded
Judge Drake that The Dobbins Company auctioned off most of the
company's assets in August 2004.
Headquartered in Charlotte, North Carolina, Speizman Industries,
Inc. -- http://www.speizman.com/-- is a distributor of
specialized Commercial industrial machinery parts and equipment
operating primarily in textile and laundry. The Company, along
with its affiliates, filed for chapter 11 protection (Bankr. N.D.
Ga. Case No. 04-11540) on May 20, 2004. Michael D. Langford,
Esq., at Kilpatrick Stockton LLP, represents the debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors, they listed $23,938,000 in assets and $23,073,000
in liabilities.
STELCO INC.: Court Approves Capital Raising & Asset Sale Process
----------------------------------------------------------------
Stelco Inc. (TSX:STE) received Court approval of a process
designed to raise capital and to pursue the sale of non-core
assets. The Company also announced that it has reached an
agreement with General Motors regarding the sourcing of supply in
2005.
As indicated previously, the capital raising and asset sale
process will allow Stelco to raise the capital needed to ensure
that it becomes a long term viable company coming out of the CCAA
process. Stelco was given approval to begin the process of
soliciting bids for its non-core businesses. Stelco was also
given permission to begin the process of raising capital for its
core business. As a first step, bondholders will be given the
opportunity to present a financing proposal, which will provide at
least $200 million to Stelco by November 8, 2004. The Court made
it clear that Stelco is not prohibited from receiving other
unsolicited offers from any party during this initial period.
After November 8, 2004 Stelco is free to solicit other proposals
for raising capital. This process will be conducted in two
stages. The first will solicit preliminary expressions of
interest from potential investors while the second will entail the
completion of due diligence followed by the submission of binding
offers. It is anticipated that the due diligence period will be
completed on or about January 31, 2005.
The Court also approved the engagement by Stelco of UBS Securities
Canada Inc and UBS Securities LLC to assist it with the capital
raising and sale process.
Under the agreement reached this morning with General Motors, GM
will proceed to source supply from a supplier other than Stelco to
meet its requirements for the first quarter of 2005. GM will
defer any further sourcing activities for the balance of 2005 for
a thirty-day deferral period beginning October 19. If, during
that period, GM receives from Stelco adequate assurances for
supply for the balance of the year, GM will enter into an
agreement with the Company regarding the purchase of steel for the
remaining three quarters of 2005.
The assurances being sought by GM are twofold. First, Stelco must
have in place a collective agreement or other arrangements
satisfactory to GM with the Lake Erie and Hamilton unions to be
effective throughout 2005. Second, Stelco must demonstrate to
GM's satisfaction that it can obtain the equity contribution and
financing necessary to fund the Company's emergence from its
Court-supervised restructuring as a long-term viable supplier.
Courtney Pratt, Stelco President and Chief Executive Officer,
said, "These are welcome and positive developments. The capital
raising and asset sale process enables us to explore alternative
approaches to raising the capital we need. It will help to
determine if there are prospective buyers willing to pay an
appropriate price for a number of non-core subsidiaries.
"The agreement with General Motors provides us with the
opportunity to preserve the business of our biggest customer. We
appreciate the flexibility GM is demonstrating in this matter. We
will do everything we can to provide the assurances outlined in
today's agreement."
About Stelco
Stelco, Inc. -- http://www.stelco.ca/-- which is currently
undergoing CCAA restructuring proceedings, is a large, diversified
steel producer. Stelco is involved in all major segments of the
steel industry through its integrated steel business, mini-mills,
and manufactured products businesses. Consolidated net sales in
2003 were $2.7 billion.
TACTICA INTERNATIONAL: Case Summary & Largest Unsecured Creditors
-----------------------------------------------------------------
Debtor: Tactica International, Inc.
11 West 42nd Street, 7th Floor
New York, New York 10036
Bankruptcy Case No.: 04-16805
Type of Business: The Company designs, develops and markets
personal and home care items under the IGIA and
Singer brands. Product categories include hair
care, dental care, skin care, sports and
exercise, household and kitchen. See
http://www.igia.com/ Tactica holds an
exclusive license to market a line of floor
care products under the Singer name.
and http://www.singervac.com/ Tactica also
owns rights to the "As Seen On TV" trademark.
Chapter 11 Petition Date: October 21, 2004
Court: Southern District of New York (Manhattan)
Debtor's Counsel: Timothy W. Walsh, Esq.
Piper Rudnick, LLP
1251 Avenue of the Americas
New York, New York 10020-1104
Tel: (212) 835-6216
Fax: (212) 835-6001
Financial Condition as of Sept. 30, 2004:
Total Assets: $10,568,890
Total Debts: $14,311,824
List of the Debtors' 20-Largest Unsecured Creditors:
Creditor Nature of Claim Claim Amount
-------- --------------- ------------
Walgreens Disputed $2,000,000
1901 East Vorhees Street
Danville, IL 61834
Telephone: (217) 544-8803
Empire State Building Co., LLC Disputed $1,900,000
c/o Duane Morris LLP
280 Lexington Ave.
New York, NY 10168
4 Bucks Media Disputed $1,144,536
19 Colt Lane
Bell Canyon
West Hills, CA 91307
Lifetime Television $829,492
309 West 49th St.
New York, NY 10019
Sherwood Media $682,794
299 West Hillcrest Dr., Suite 113
Thousand Oaks, CA 91360
Creative Displays & Packacing $322,928
3710 Abbott Road
Orchard Park, NY 14127
World Enterprise Ltd. Disputed $267,903
Room 603A, 5/F Tower 1
Admiralty Road
Hong Kong
Nordea Bank Finland plc $241,613
437 Madison Ave.
New York, NY 10022
Attn: Kren Holm Jorgensen
Senior V.P.
Chief Media LLC $233,557
116 West 23rd St., 5th Floor
New York, NY 10011
Innovative Chemical $233,237
55 Woodridge Dr.
Amherst, NY 14228
Telephone: (716) 883-4000
Duvar Laboratories $230,000
1640 Rue Graham Bell
Boucherville, J4B 6H5
Canada
Steinberg & Raskin $201,079
1140 Avenue of the Americas
New York, NY 10036
Telephone: (212) 768-3800
Jenkins & Gilchrist Parker $173,401
Chrysler Building
405 Lexington Avenue
New York, NY 01136
Attn: Henry I. Rothman, Esq.
Inland Corporation Inc. $135,803
P.O. Box 951178
Dallas, TX 75395
Visionaire Concepts Disputed $132,990
15/F Cameron Centre
Chatham Road South
Tsim Sha Tsui, Kowloon
Hong Kong
Allstar Marketing Group LLP $109,170
4 Skyline Drive
Hawthorne, NY 10532
Reicorp Co. Ltd. $89,869
Room 1004, 10/F Join-In Hang
71-75 Container Port Road
New Territories
Hong Kong
FedEx Freight West $88,418
Dept. CH
P.O. Box 10306
Palatine, IL 60055
Shorewood Packaging $76,000
P.O. Box 281431
Atlanta, GA 30384
Federal Express $71,135
P.O. Box 371461
Pittsburgh, PA 15250
TIMKEN CO: North American Subsidiary Increases Tool Steel Prices
----------------------------------------------------------------
Timken Latrobe Steel, a subsidiary of The Timken Company, reported
it would increase prices by 6 to 8 percent on rounds, plate and
flats tool steel and alloy products. The price change is
effective with shipments beginning on November 1, 2004. Raw
material surcharges will remain in effect.
"High energy, scrap and production costs are reasons for this
price increase," said David A. Murray, vice president - sales and
marketing - Timken Latrobe Steel.
The Timken Company (NYSE: TKR) (Moody's, Ba1 Senior Unsecured
Debt, Senior Implied and Senior Unsecured Issuer Ratings) --
http://www.timken.com/-- is a leading global manufacturer of
highly engineered bearings and alloy steels and a provider of
related products and services with operations in 27 countries. A
Fortune 500 company, Timken recorded 2003 sales of $3.8 billion
and employed approximately 26,000 at year-end.
TORPEDO SPORTS: Inks Definitive Acquisition Pact with Interactive
-----------------------------------------------------------------
Interactive Games, Inc., signed a definitive agreement to complete
the acquisition of the Company by Torpedo Sports USA, Inc. (OTC
BB: TPDO). Completion of the transaction is subject to customary
closing conditions and is anticipated to occur in approximately 30
days. At that time, the Company intends to apply for a symbol
change of its common stock.
Interactive Games has entered into license and distribution
agreements with Ed McMahon for the Interactive Games "Million
Dollar Madness Class III Slot Machine(TM)," BestBet Media, Spin
Inc. and other third-party manufacturers and distributors, in
which the company has the right to market, sublicense and
distribute gaming products under the Interactive Games brand.
"This transaction is the culmination of our quest to seek
alternative business strategies for the Company's future," stated
Torpedo Chief Executive Officer, Henry Fong. "After attending the
Global Gaming Expo trade show in Las Vegas last week and seeing
the interest for Interactive Games' products there, I am convinced
now more than ever this transaction will provide a solid business
plan for growth and future shareholder value."
"We are excited to be moving forward with this transaction and as
I stated before, believe access to the public markets allowing for
additional operating capital needs and worldwide exposure of our
proprietary gaming products will provide us with the roadmap to
success and allow us the opportunity to compete within this
exciting sector," stated Adam Wasserman, Chief Financial Officer
of Interactive Games.
About Interactive Games
Interactive Games, Inc. -- http://www.interactivegamesinc.com/--
is a developer and licensor of interactive casino technologies and
slot machine games to the rapidly growing Native American Class
II, Class III and charitable gaming markets. Interactive Games'
mission is to deliver to its customers gaming technology that
produces a high return on investment by providing both software
and gaming hardware that extend the earnings life of its
innovative gaming platforms beyond the standard. Situated in the
Foreign Trade Zone in heart of Fort Lauderdale, Florida,
Interactive Games occupies a 20,000-square-foot corporate office
and showroom ideally situated for shipment and storage of its
products both domestically and internationally.
About Torpedo Sports
Torpedo Sports USA, Inc. formerly operated through its wholly
owned subsidiary, Torpedo Sports, Inc. of Quebec, Canada, as a
manufacturer and distributor of outdoor recreational products for
children. The Company recently announced its intention to
liquidate its recreational products business and explore other
business opportunities.
Torpedo Sports Inc.'s April 30, 2004, balance sheet shows a
$3,512,598 stockholders' deficit.
TRAVELCENTERS: S&P Rates Planned $575M Senior Secured Facility BB
-----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB' bank loan
rating to TravelCenters of America Inc.'s proposed $575 million
senior secured credit facility. A recovery rating of '1' was also
assigned to the facility, indicating a high expectation for a full
recovery of principal in the event of a default.
The existing ratings for TravelCenters, including the 'BB-'
corporate credit rating, were affirmed and removed from
CreditWatch, where they were placed with negative implications
October 8, 2004. The outlook is negative.
TravelCenters expects to use proceeds from the proposed credit
facility to pay for the Rip Griffin acquisition, acquire one
property from a franchisee in Kenly, North Carolina, refinance its
current term loan B and synthetic leases, and cover other fees and
expenses. Pro forma for the refinancing and acquisitions, the
company would have total lease-adjusted debt outstanding of
$761 million at the end of August 30, 2004, or debt to EBITDA of
4.9x. Excluding this transaction, credit measures would have
improved in 2004, with total debt to EBITDA in the low 4x range.
However, pro forma for the transaction, credit measures
essentially remained flat with 2003 levels.
"The ratings on TravelCenters of America Inc. reflect the
company's participation in the competitive truck stop industry,
the volatility of diesel fuel prices, marginal growth prospects
for the industry, and the company's high debt levels," said
Standard & Poor's credit analyst Stella Kapur. "These risks are
somewhat offset by TravelCenters' leading position in the industry
and its strong relationships with trucking fleets."
Westlake, Ohio-based TravelCenters owns, operates, and franchises
160 full-service truck stops in 41 states and the province of
Ontario Canada (pro forma for the Rip Griffin acquisition). These
locations offer a broad range of fuel and non-fuel products, and
primarily serve truck fleets and professional truck drivers. The
truck stop industry is highly fragmented: Of the 3,000 total sites
in the U.S., only eight chains have 25 or more sites. Despite
relative stability in truck mileage, the truck stop industry
typically faces declines in more discretionary sales when the
economy slows. This factor can negatively affect a company's
higher-margin non-fuel sales. Increasing fuel prices also places
pressure on fuel margins. While credit measures for the company
deteriorated due to increased debt levels following its
acquisition by Oak Hill Capital Partners L.P. in 2000, they have
slowly improved since then, despite a weak economy.
TRM CORP: Moody's Rates Planned $150M Senior Secured Facility B2
----------------------------------------------------------------
Moody's Investors Service assigned a B2 rating to the proposed
$150 million senior secured bank credit facilities of TRM
Corporation. The ratings outlook is stable.
The bank facilities consist of a $120 million term loan which will
fund (along with approximately $30 million proceeds from a recent
equity offering) TRM's $150 million acquisition of eFunds Inc.'s
ATM servicing business, expected to close in the fourth quarter of
2004. The bank facilities also consist of $30 million undrawn
U.S. and U.K. revolving credit facilities to serve as alternate
additional liquidity. These ratings are assigned:
* B2 Senior Secured Bank Credit Facility Rating
* B2 Senior Implied Rating
* Caa1 Issuer Rating
* SGL-2 speculative grade liquidity rating
The ratings reflect TRM's moderate debt leverage relative to its
small business scale (approximating $140 million in revenues pro
forma for the eFunds acquisition) and manageable costs expected to
integrate the relatively sizable eFunds acquisition. The rating
also reflects the gradual decline of TRM's photocopy business, due
in part to the advent of affordable at home printing and the
potential substitution risk of pin based debit card use to replace
ATM transactions.
In support of the ratings, Moody's notes TRM's leading position in
the growing ATM independent service operator market, the stability
of ATM revenues driven by recurring revenues from long term
service contracts, business stability from large grocery and
convenience store clients, including the Pantry and Albertsons,
and favorable contract performance as measured by system
availability in excess of 95%, which supports high client
retention. The increased diversity of TRM's revenue base as a
result of the acquisition of eFunds, which alleviates the
company's dependence on the mature photocopier servicing business,
is also a supporting factor for the ratings; currently, the
photocopier business generates 51% of TRM's net revenues. Pro
forma for the acquisition of eFunds, the photocopier business will
represent about 31% of net revenues.
The stable outlook anticipates continued growth for TRM's ATM
business, driven by small acquisitions and new contract wins. The
eFunds acquisition will enable TRM to gain the 2nd largest ISO
market share in the US and the 3rd largest ISO market share in
Canada, with pro forma 21,750 ATM machines, representing a unit
market share of slightly less than 10% of the off bank premise ATM
market. Although the eFunds acquisition triples TRM's base of ATM
units and eFunds ATM business has generated a lower operating
margin than TRM, Moody's believes there is modest integration risk
because TRM currently services 67% of eFunds' ATMs. While U.S.
off premise ATM unit growth slowed to the low single digits in the
past year due in part to saturation within the market place,
Moody's believes TRM's U.S. ATM business will continue to grow as
TRM replaces smaller competitors.
Evidence of a successful integration of the eFunds acquisition,
sustained organic ATM business revenue growth, contained capital
spending, including the estimated $6.5 million to upgrade ATM
security encryption, and photocopy business pricing and installed
unit stability such that debt leverage as measured by debt to
EBITDA falls below 2.5x could result in upward ratings pressure.
Conversely, poor integration of the eFunds acquisition,
significant substitution of the company's ATMs by pin based debit
card use and substitution of the company's photocopiers by at home
printing could put downward pressure on the ratings.
Given technology advances in the photocopier industry, Moody's
believes that revenues from the photocopy business will continue
to decline gradually. Net revenues for the photocopier business
were flat year over year in the company's fiscal second quarter
ended June 30, 2004, with price increases implemented over the
course of the past twelve months offsetting a gradual
deterioration of the installed unit base.
Moody's notes that under the terms of the credit facilities, as
long as leverage is greater than 2.5x, 75% of excess free cash
flow is applied as a mandatory prepayment of the term loan in
addition to the quarterly $2.5 million prepayment schedule. Pro
forma for the transaction, the company's projected fiscal 2004
debt leverage is moderate at 2.8x. Free cash flow to total debt
is moderate at about 16%. Moody's notes that TRM's senior implied
rating and senior secured rating are equal because the
preponderance of secured debt.
The assignment of an SGL-2 liquidity score incorporates available
liquidity of the company's undrawn $30 million revolver and cash
of $7.9 million and less covenant flexibility of the credit
facilities of a $105 million minimum net worth requirement
compared to a slightly higher anticipated level of net worth TRM
should achieve just subsequent to the closing of the eFunds
acquisition.
Headquartered in Portland, Oregon, TRM Corporation is a leading
ATM and photocopier servicing company.
TRW AUTOMOTIVE: S&P Assigns BB+ Rating to $300M Sr. Secured Loan
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB+' rating to
the $300 six-year senior secured term loan E of TRW Automotive
Inc.'s and affirmed its 'BB+' corporate credit rating and all
other ratings on the company. A recovery rating of '3' was also
assigned to the term loan, indicating meaningful recovery of
principal (50%-80%) in a post default scenario.
The outlook on Livonia, Michigan-based TRW is stable. At
June 25, 2004, TRW's outstanding debt totaled about $3.2 billion.
Proceeds from the newly issued term loan E under TRW's existing
senior credit agreement, along with cash on hand and existing
liquidity arrangements, will be used to repurchase a
$493.5 million net amount of a seller note, held at parent company
TRW Automotive Intermediate Holdings Corp. (unrated) and issued to
an affiliate of Northrop Grumman Corp. (BBB/Stable/--) in
connection with the 2003 sale of TRW to Blackstone Group LP.
The repurchase of the 8% pay-in-kind seller notes reduces TRW's
overall cost of capital and simplifies the capital structure.
However, it increases TRW's debt level, as Standard & Poor's had
viewed the seller notes as having some equity-like
characteristics.
"Over the next year, we expect TRW to largely earmark free cash
flow for debt reduction, allowing the firm to reduce leverage in
line with our expectation for the ratings," said Standard & Poor's
credit analyst Daniel DiSenso.
The company's product lines include active safety systems and
components in the areas of braking, steering, and suspension;
passive safety systems and components, such as inflatable
restraints (airbags), seat belts, and steering wheels; and other
automotive components, such as engine valves, engineered
fasteners, and body control systems.
Following completion of the seller note repurchase, TRW's debt
leverage will be temporarily elevated, but debt usage is expected
to diminish over the next year, allowing the firm to strengthen
credit measures.
TXU GAS: Fitch Affirms BB+ Rating on Preferred Stock
----------------------------------------------------
Fitch Ratings removes the Rating Watch Evolving status and affirms
the TXU Gas Co.'s preferred stock at 'BB+' and rates all
outstanding senior notes 'AAA'. The Rating Outlook is Stable.
TXU Corp. (senior unsecured debt rated 'BBB-'; preferred stock
rated 'BB+'; Stable Outlook by Fitch) sold essentially all of the
assets of TXU Gas to Atmos Energy for $1.925 billion, which is
approximately book value. Atmos Energy acquired TXU Gas'
operations through an entirely cash transaction in which it
assumes none of the debt. TXU Corp. is using the proceeds to
defease TXU Gas' debt and to call the preferred stock. Repayment
is from cash acquired by the parent from the sale, therefore the
preferred stock rating is deemed to be equivalent to those of TXU
Corp. Fitch anticipates that the preferred stockholder will be
paid in full as the company has deposited with the trustee all
funds sufficient to cover the interest payment due
October 15, 2004 and the redemption prices due payable on the call
date of November 4, 2004.
The outstanding senior notes of TXU Gas are rated 'AAA' upon the
receipt of funds by the trustees for the defeasance of the 7-1/8%
notes due June 15, 2004 ($150 million), the floating-rate capital
securities ($150 million), and the remarketed reset notes due
January 1, 2008 ($125 million). The funds will be invested in
'AAA' government securities, and the proceeds from these
securities are sufficient to repay all interest and principal due
on the notes.
TXU Corp. is a holding company that is engaged in the generation,
delivery, and sale of electricity to both the wholesale and retail
customers in the U.S., primarily in Texas.
UAL CORP: Bridge Assoc. Will Independently Analyze Business Plan
----------------------------------------------------------------
The Association of Flight Attendants-CWA achieved its core
objective in filing its motion to appoint a trustee through an
agreement under which United Airlines will hire Bridge Associates
LLC, an independent restructuring firm selected in consultation
with AFA, to analyze United's business plan.
In early September, AFA filed a motion in the bankruptcy court to
appoint a trustee to oversee United Airlines' development of a
viable business plan that would allow the company to successfully
exit bankruptcy. The International Association of Machinists and
Aerospace Workers had also filed a motion to appoint a trustee.
AFA has continually worked to ensure that the core issue raised in
its trustee motion -- the direction and future of United -- would
be addressed. The union is encouraged that an agreement has been
reached that directly deals with our primary concern. Within the
next few days the court will be asked to approve the retention of
Bridge Associates LLC to conduct an independent evaluation of
United's business plan. As part of this agreement, upon the court
approving the retention of the restructuring firm, AFA will
withdraw the trustee motion.
Over a 30-day period, Bridge Associates will examine the business
plan and provide a confidential written report to United with
copies to AFA and the IAM.
"United Airlines flight attendants have been a powerful advocate
for a successful reorganization and we will continue to work
toward that goal," stated AFA United Master Executive Council
President Greg Davidowitch. "The magnitude of contributions and
sacrifices made by our members to the success of United Airlines
is immeasurable. AFA will utilize this agreement and any other
available tools to see that flight attendant sacrifices are
prudently, fairly and meaningfully applied to a plan that returns
United Airlines to premier status in the aviation industry."
More than 46,000 flight attendants, including the 21,000 flight
attendants at United, join together to form AFA, the world's
largest flight attendant union. AFA is part of the 700,000 member
strong Communications Workers of America, AFL-CIO. Visit us at
http://www.unitedafa.org/
Bridge Associates LLC -- http://www.bridgellc.com/-- is a
restructuring and turnaround management firm headquartered in New
York City and with offices in Cleveland, Tampa, Houston, and
Chicago. Wickes, Inc., and Redback Networks, Inc., hired Bridge
earlier this year to serve as their Crisis Manager.
Headquartered in Chicago, Illinois, UAL Corporation --
http://www.united.com/-- through United Air Lines, Inc., is the
holding company for United Airlines -- the world's second largest
air carrier. The Company filed for chapter 11 protection on
December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M.
Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq.,
and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $24,190,000,000
in assets and $22,787,000,000 in debts.
UAL CORP: New Convertible Notes Will Pay Postpetition Interest
--------------------------------------------------------------
U.S. Bank, SunTrust Bank, BNY Midwest Trust Company and HSBC Bank
USA are Trustees for various Bonds. Since they filed for chapter
11 protection, UAL Corporation and its debtor-affiliates have not
paid any of the semi-annual payments on the Bonds and are in
default. Also since the Petition Date, the Debtors and the City
of Chicago, as operator of O'Hare International Airport, have been
litigating over whether the Debtors may operate at O'Hare,
regardless of the Debtors' default on various O'Hare-related
Bonds. In an adversary proceeding over the terms of Section 27.08
of the Airport Use Agreement, the Debtors argued that the tie
between rights of operation at O'Hare and existence of default
should be severed in bankruptcy. The Trustees insisted that this
tie was fully enforceable. At issue is $600,000,000 of bond
obligations.
James H.M. Sprayregen, Esq., at Kirkland & Ellis, informs the
Court that the parties have intensely debated this issue, in and
out of court, for over a year. Settlement discussions have been
arduous as well. The settlement process has been challenging, as
it involved multiple bond issuances, some with construction funds
some without, multiple indenture trustees, and a variety of
bondholders, including hedge funds, distressed buyers,
institutional par buyers and retail holders. Notwithstanding the
difficulties, the parties have fashioned a settlement that will
provide all holders with better economic return.
Terms of the Settlement
Pursuant to the Settlement, the Trustees and the Holders are
entitled to a general unsecured claim equal to the principal
balance outstanding on the Bonds, including postpetition
interest. The Debtors acknowledge that allowance of postpetition
interest on a prepetition unsecured claim is not normally
authorized, but this concession is an integral component of the
overall deal. Therefore, any plan of reorganization will contain
specific formulae for satisfaction of the claims related to the
Bonds.
The Debtors will issue Convertible Bonds in Reorganized UAL
Corporation with a par value of $150,000,000 on terms developed
by the Debtors, Stark Investments, LP, and Sheperd Investments
International, Ltd. The terms must be sufficient for the
Convertible Bonds to trade at a minimum of par upon issuance.
The Trustees, on behalf of Stark, will receive $144,453,000 of
the Convertible Bonds in the form of distributions under any
Plan. On the Effective Date, Stark will purchase the remaining
portion of the Convertible Bonds with a par value of $5,547,000
for cash. The Note Purchase will fund amounts due to the Holders
of the Series 2001A-1 Bonds and the Series 2001A-2 Bonds.
Treatment of Specific Bonds
(1) Series 2001A-1 Bonds and Series 2001A-2 Bonds
Holders of the Series 2001A-1 Bonds and the Series 2001A-2
Bonds, other than Stark, will receive $0.58 in cash for every
$1.00 in principal. These amounts will be paid in order of
priority from:
(a) the Series 2001A Construction Fund;
(b) the Series 2001A Capitalized Interest Fund;
(c) the $5,547,000 Note Purchase; and
(d) a distribution of Pooling Agreement Assets.
Stark will receive $0.60 for every $1.00 of principal amount
of Series 2001A-1 Unsecured Claim and Series 2001A-2
Unsecured Claim.
(2) Series 2000A Bonds
Holders of the Series 2000A Bonds, other than Stark, will
receive:
(a) a pro rata distribution of the Series 2000A
Construction Fund;
(b) a pro rata distribution of the Series 2000A
Redemption and Bond Fund;
(c) a pro rata portion of any distributions paid by the
Debtors through a Plan on account of the Series
2000A Unsecured Claim; and
(d) a pro rata portion of the Pooling Agreement Assets.
Stark will receive $0.60 for every $1.00 of principal amount
of Series 2000A Unsecured Claim and Series 2001A-2 Unsecured
Claim.
(3) Series 2001B Bonds, Series 2001C Bonds, Series 1999A Bonds
and Series 1999B Bonds
The Trustees of the Series 2001B Bonds, Series 2001C Bonds,
Series 1999A Bonds and Series 1999B Bonds, on behalf of their
Holders, will receive:
(a) a pro rata portion of any distributions paid by the
Debtors pursuant to a Plan on account of an
Unsecured Claim; and
(b) a pro rata portion of the proceeds of the Pooling
Agreement Assets.
Stark will receive $0.60 for every $1.00 of principal amount
of Series 2000A Unsecured Claim and Series 2001A-2 Unsecured
Claim.
In return, the Trustees and the Holders will not take any action
to declare an event of default or terminate the Airport Use
Agreement or any Bond Agreements. The Trustees and the Holders
will not take action against any provision of the Plan associated
with the assumption of the Airport Use Agreement. The Trustees
and the Holders will not take action to compel payment by the
Debtors for payments due or payable under the Bonds.
The Pooling Agreement
Mr. Sprayregen relates that the Parties only have a rough outline
of the Pooling Agreement at this point, as final terms have not
been reached yet. When the terms are finalized, they will be
subject to Court approval.
All distributions paid by the Debtors pursuant to any Plan on
account of the Series 2001A Deficiency Claim, the Series 2000A
Deficiency Claim and the Stark Remaining Bonds Deficiency Claim,
will be deposited into a trust account pursuant to a liquidating
stock Pooling Agreement. Stark will act as the liquidating
agent. The Pooling Agreement Assets will be liquidated and
distributed in order of priority:
(a) to the Trustees of the Series 2001A-1 Bonds and
Series 2001A-2 Bonds, after taking into account the
Construction Fund Monies, the Capitalized Interest
Fund Monies and proceeds of the Note Purchase; and
(b) to the Trustees of the Series 2000A Bonds and the
Remaining Bonds on a pro rata basis.
If the proceeds from the Pooling Agreement Assets are not
sufficient to pay the Trustees of the Series 2001A-1 Bonds and
the Series 2001A-2 Bonds, Stark will be responsible for the
shortfall.
The Debtors and the Trustees will take all action to dismiss with
prejudice all claims asserted against one another in the
Adversary Proceeding. The Parties reserve the right to revive
claims if the Settlement is terminated. Termination may occur if
the Debtors fail to confirm a Plan consistent with the Settlement
by December 31, 2005.
Settlement Benefits the Debtors
Good cause exists to approve the Settlement. The Settlement
eliminates $450,000,000 in long-term indebtedness, representing a
step forward in the formulation of the Debtors' exit capital
structure. In the absence of the Settlement, the Debtors would
either have to bring their obligations current and maintain
service to remain in good standing with the Airport, or discharge
the Bonds as unsecured debt through a Plan. The Settlement
avoids that difficult choice.
The Debtors will provide two forms of consideration to the
Trustees and Holders. The Debtors will issue $150,000,000 in
Convertible Bonds and forego their right to pursue about
$60,000,000 in the Construction Fund that was earmarked to defray
the costs of projects at O'Hare.
Stark drove a hard bargain. Stark is the largest holder of the
Chicago municipal bonds and has been active in this dispute,
engaging separate counsel and retaining an investment banker.
Without Stark's agreement, no settlement would be feasible. The
heart of the Settlement is Stark's agreement to accept
$150,000,000 in Convertible Bonds. The Convertible Bonds will be
illiquid and not suitable for other investors. This election by
Stark allows other Holders to receive more desirable currency for
their holdings.
The Debtors wanted a global resolution that included the City of
Chicago, but this objective was not achievable. Thus, Mr.
Sprayregen notes that a portion of the Adversary Proceeding will
technically remain outstanding. However, if the Settlement is
approved, it will render the dispute with Chicago and Section
27.08 of the Airport Use Agreement irrelevant.
The Debtors must maintain their position at O'Hare. Operations
at O'Hare are a central component of the Debtors' business plan
and they will almost certainly assume the Airport Use Agreement.
If the Court disagrees and determines that the Airport Use
Agreement is enforceable, the Debtors will have to continue to
make principal and interest payments and cure prior defaults to
assume the Airport Use Agreement.
Headquartered in Chicago, Illinois, UAL Corporation --
http://www.united.com/-- through United Air Lines, Inc., is the
holding company for United Airlines -- the world's second largest
air carrier. The Company filed for chapter 11 protection on
December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M.
Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq.,
and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $24,190,000,000
in assets and $22,787,000,000 in debts. (United Airlines
Bankruptcy News, Issue No. 63; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
US AIRWAYS: ALPA Pilots Ratify Transformation Plan Agreement
------------------------------------------------------------
The US Airways pilot group, represented by the Air Line Pilots
Association, International (ALPA), ratified the US Airways/ALPA
Transformation Plan Tentative Agreement by a 58% margin. This
agreement supersedes the Oct. 15, 2004 Bankruptcy Court decision
that ruled in favor of the Company's motion to impose immediate
interim contractual relief on certain US Airways labor unions.
Under an agreement with US Airways, this consensual agreement will
become effective retroactive to October 15, 2004, subject to
approval by ALPA's President and approval of the bankruptcy court.
A motion seeking bankruptcy court approval of this agreement is
scheduled for October 26, 2004.
The agreement, which is in effect until December 31, 2009,
contains an 18% pay cut, a decrease in the Company's contributions
to the pilots' defined contribution plan, and a modification of
work rules that will significantly increase pilot productivity. It
also offers returns for the pilots, including a profit sharing
plan and equity participation shares.
"These provisions will provide the airline with the necessary
elements required to successfully implement US Airways'
Transformation Plan, provided that other employee groups and
stakeholders participate," said US Airways MEC Chairman Bill
Pollock. "However, this agreement did not come without tremendous
sacrifices by our membership. While the burden that the US Airways
pilots have agreed to shoulder is immense, this vote signifies
that our pilots acknowledge the pain and sacrifice that is
required to address the reality of our situation.
"Clearly, this ratification shows that the pilots of US Airways
understand why it was necessary to come to a consensual agreement
with the Company. This agreement provides us with the means to
survive, emerge from bankruptcy as a formidable competitor, and
ultimately prosper in even the most challenging of economic
environments," said Captain Pollock.
"With the $1.8 billion that this agreement provides, US Airways
pilots, through previous restructuring efforts, including the
termination of their defined benefit pension plan, have now
provided nearly $7 billion in cost savings to US Airways through
2009," said Captain Jack Stephan, spokesman for the US Airways
ALPA pilots.
"Once again, we have delivered on our commitment to participate in
a plan to restore US Airways to profitability, but we can not and
will not do it alone. Management and salaried employees, along
with other labor groups, must also participate in the
Transformation Plan. We look forward to management reaching
consensual agreements with all employee groups," said Captain
Stephan.
ALPA is the world's oldest and largest pilot union, representing
64,000 airline pilots at 42 airlines in the U.S. and Canada.
ALPA's website is http://www.alpa.org/
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 a $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 their 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.
USA REIT: Declares CAD$9.45 Per Share Liquidating Distribution
--------------------------------------------------------------
USA REIT Fund LLC (TSX: URF) reported that a distribution of
CAD$9.45 per common share will be paid on November 1, 2004 to
shareholders of record on October 29, 2004. On Sept. 27, 2004,
shareholders voted in favour of a special resolution to approve a
plan for the liquidation, dissolution and winding up of the Fund
and this distribution represents substantially all of the net
assets following the liquidation of the REIT portfolio of the
Fund. A very small additional distribution is possible in 2 or 3
months time once the final accounting for all of the Fund's
liabilities is completed.
Since inception in December 2003, the Fund has paid distributions
of US$0.425 or an equivalent of CAD$0.563 per common share which
when combined with the current CAD$9.45 liquidating distribution,
amounts to CAD$10.013 per common share.
Common shares of the Fund will be de-listed from the TSX at the
close of business on October 26, 2004.
As reported in the Troubled Company Reporter on Aug 17, 2004, the
Board of Directors of USA REIT Fund LLC has authorized presenting
to shareholders for their approval a plan for the liquidation,
dissolution and winding up of the Fund. A special shareholder
meeting has been called and will be held on September 27, 2004,
where shareholders will be asked to vote upon a special resolution
to approve the liquidation, dissolution and winding up of the
Fund. Details of the plan will be outlined in a management
information circular and proxy statement to be prepared and
delivered to shareholders at the end of August 2004.
The reasons for the wind-up are:
(i) the shares of the Fund are thinly traded;
(ii) as a closed-end fund registered under the United States
Investment Company Act of 1940, the Fund's shares are not
redeemable at the option of shareholders; and
(iii) the shares have generally traded below their net asset
value.
In addition, recent regulatory initiatives in the United States
will result in substantially increased costs to the Fund effective
in October 2004. If the special resolution is approved by
shareholders, the assets of the Fund will be liquidated and a
liquidating distribution, equal to the net asset value at that
time, will be paid to shareholders shortly thereafter. If
shareholders do not approve the special resolution, the
VALLEY MEDIA: Sony Music Pays $1.75 Mil. to Resolve Preference
--------------------------------------------------------------
Valley Media Inc. asks the U.S. Bankruptcy Court for the District
of Delaware to approve a settlement agreement resolving Sony Music
Entertainment, Inc.'s claims.
In March 2003, Valley Media sued Sony to recover an alleged
$11,095,893 preferential transfer. Sony disputed the Debtor's
allegations. Negotiations culminated In Sony's agreement to pay
$1,750,000 to resolve the lawsuit. The Debtor tells the Court the
settlement fair, reasonable, and in the best interest of the
Debtor's estate.
Headquartered in Woodland, California, Valley Media, Inc. --
http://www.valleymedia.com/-- is a full-line distributor of music
and video entertainment products. The Company filed for chapter
11 protectionon November 20, 2001 (Bankr. D. Del. Case No. 01-
11353). Bernard George Conaway, Esq., at Fox Rothschild LLP,
Christopher A. Ward, Esq., at The Bayard Firm, Christopher Martin
Winter, Esq., at Duane Morris LLP, et. al. represent the Debtor in
its restructuring efforts. When the Debtor filed for protection
from its creditors, it listed $241,547,000 in total assets and
$259,206,000 in total debts.
VISTEON CORP.: Debt-to-Equity Ratio Soars to Nearly 20:1
--------------------------------------------------------
Visteon Corporation (NYSE:VC) reported a $1.36 billion net loss
for the quarter ending Sept. 30, 2004. Shareholder equity on the
company's balance plunged to $487 million -- nearly 20-times the
auto parts maker's $9.6 billion of balance sheet liabilities.
Last month, Standard & Poor's Ratings Services placed Visteon's BB
rating on CreditWatch with negative implications, Moody's
Investors Service placed the company's low-B long-term debt
ratings under review for possible downgrade, and Fitch Ratings
downgraded Visteon's senior unsecured debt to 'BB+'. Fitch said
it wanted further disclosure of company plans on how management
intends to address existing issues such as capacity, cost
structure, and business concentration with Ford.
Third Quarter Results
Visteon's reported third quarter 2004 revenues of $4.15 billion,
up 7 percent compared with the same period in 2003, driven by a 37
percent increase in non-Ford revenue. Non-Ford sales for the
quarter totaled 33 percent of total revenue, up seven points
compared with the same period last year.
"The diversification of our customer base has been a driving focus
throughout Visteon and reaching a new record in the third quarter
for non-Ford sales reflects this effort," said Mike Johnston,
president and chief executive officer. "While Ford sales were down
in the quarter due to their lower production volumes in the U.S.,
we look forward to the launch of several exciting Ford vehicles in
the North American marketplace. We expect our revenues to increase
in the fourth quarter, however, our current cost structure
combined with escalating material surcharges will challenge our
operating performance for the rest of the year."
For the third quarter, Visteon reported Ford revenue of $2.77
billion, a decrease of $101 million compared to third quarter
2003. Visteon's sales to Ford reflect the automaker's lower
production volume in North America and represent the lowest sales
to Ford for any quarter in Visteon's history.
For third quarter 2004, Visteon reported a net loss of $1.36
billion or $10.86 per share, which includes $1.2 billion or $9.64
per share of special charges. This compares with a net loss of
$168 million or $1.34 per share for the third quarter 2003, which
included expenses for the 2003 UAW labor contract ratification
bonus and nominal special charges.
During the third quarter, Visteon had several special charges that
adversely impacted results by $1.2 billion or $9.64 per share. As
previously announced, Visteon recorded a non-cash charge of $872
million as it increased valuation allowances against its deferred
tax assets. In addition, as of July 1, 2004, Visteon is no longer
recording a tax benefit on losses in several jurisdictions,
including the U.S., the United Kingdom and Germany. This resulted
in additional tax expense for the company in the quarter, and will
lead to variability in the company's tax expense going forward.
In addition, Visteon recorded a non-cash asset impairment write-
down of $314 million to reduce the net book value of fixed assets
related to the steering systems product group. Under accounting
rules, an asset group is considered impaired if the book value is
greater than the undiscounted cash flows from the use of the asset
group.
The company also recognized $25 million of charges during the
third quarter 2004 related to early retirement and relocation
programs to reduce its Master Agreement UAW workforce that it
leases from Ford. These programs resulted in reductions in the
leased UAW workforce of more than 700 people. At the end of the
third quarter, Visteon's leased UAW headcount was approximately
18,000, a 9 percent decrease from year-end 2003.
2004 Year-to-Date Results
Revenue for the first nine months totaled $14 billion, increasing
$795 million or 6 percent year-over-year. Non-Ford sales of $4.1
billion represent a $1.1 billion or 36 percent increase year-over-
year and represent 29 percent of total sales. Ford revenue for the
first nine months decreased 3 percent to $9.9 billion reflecting
lower North American production, the exit of seating operations,
and price downs, offset partially by favorable currency, new
business, and higher volumes in Europe.
For the first nine months, Visteon reported a loss of $1.3
billion, or $10.37 per share. Included in these results are
special charges of $9.35 per share. This compares with a loss of
$350 million or $2.78 per share for the first nine months of 2003.
Included in last year's results were $191 million of after-tax
special charges and the 2003 UAW ratification bonus.
Cash flow from operating activities for the first nine months was
$227 million, an improvement of nearly $200 million from the same
period in 2003. Cash payments related to capital expenditures were
$573 million for the first nine months of the year, compared to
$641 million for the same period in 2003.
As previously announced, Visteon is exploring strategic and
structural changes to its business in the U.S. and these changes
will involve Ford and Visteon's legacy businesses. Because of the
uncertainty surrounding future market and economic conditions,
combined with Visteon's on-going discussions with Ford, Visteon is
not providing specific guidance at this time.
Quarterly Conference Call
Visteon held a conference call last week to discuss third quarter
results in further detail, as well as other related matters. A
replay of the conference call is available until Thursday. Inside
the U.S., dial 800-642-1687; outside the U.S., callers should dial
706-645-9291. The pass code to access the replay is 1413774.
Credit Agreements Okay
Visteon has financing arrangements with a syndicate of third-party
lenders that provide contractually committed, unsecured revolving
credit facilities. During the second quarter of 2004, the 364-day
revolving credit facility in the amount of $565 million was
renewed, which now expires in June 2005. In addition to the 364-
day revolving facility, Visteon continues to have a five-year
revolving credit facility in the amount of $775 million that
expires in June 2007. The Credit Facilities also provide for a
delayed-draw term loan in the amount of $250 million, expiring in
2007, which is used primarily to finance new construction for
facilities consolidation in Southeast Michigan. Borrowings under
the Credit Facilities bear interest based on a variable rate
interest option selected at the time of borrowing. The Credit
Facilities contain certain affirmative and negative covenants
including a covenant not to exceed a certain leverage ratio of
consolidated total debt to consolidated EBITDA (as defined in the
agreement) of 3.5 to 1. Visteon has been in compliance with all
covenants since the inception of the Credit Facilities. As of
September 30, 2004, there were no outstanding borrowings under
either the 364-day or the five-year facility; however, there were
$98 million of obligations under standby letters of credit under
the five-year facility.
About Visteon Corp.
Visteon Corporation is a leading, global supplier of automotive
systems, modules and components -- the No. 2 auto parts maker in
the United States. Visteon sells products primarily to global
vehicle manufacturers, and also sells to the worldwide aftermarket
for replacement and vehicle appearance enhancement parts. Visteon
became an independent company when Ford Motor Company established
Visteon as a wholly-owned subsidiary in January 2000 and
subsequently transferred to Visteon the assets and liabilities
comprising Ford's automotive components and systems business. Ford
completed its spin-off of Visteon on June 28, 2000. Prior to
incorporation, Visteon operated as Ford's automotive components
and systems business. Ford Motor Company is Visteon's major
customer. Visteon has approximately 72,000 employees and a global
delivery system of more than 200 technical, manufacturing, sales
and service facilities located in 25 countries.
VIVENTIA BIOTECH: Eyes $14M Financing from New Secured Debentures
-----------------------------------------------------------------
Viventia Biotech Inc. (TSX: VBI) reported that the disinterested
shareholders of the Company approved a special resolution
authorizing the private placement of secured convertible
debentures with Mr. Leslie Dan, a member of his family and their
respective nominees. Pursuant to the requirements of the Toronto
Stock Exchange, the Dan Group and the affiliates, associates and
insiders of the Dan Group were not permitted to vote on the
Private Placement.
In accordance with the terms of the Private Placement, which is
expected to close on or about October 27, 2004, the Dan Group will
invest $14 million in secured convertible debentures and will
convert $8.9 million plus accrued interest of currently
outstanding unsecured demand bridge financing loans into secured
convertible debentures. The resulting convertible debentures will
be secured by a first charge over all of the assets of the Company
and will bear interest at the rate of 4.5% per annum, compounded
annually. The debentures will mature two years from the date of
issuance, when both interest and principal will be payable. The
principal amount of the debentures will be convertible at the
option of the holder at any time into units at a price of
$1.50 per unit. Each unit will be comprised of one common share
of the Company and one half of a common share purchase warrant.
Each whole common share purchase warrant will enable the holder to
purchase an additional common share at an exercise price of $2.00
per common share at any time for a period of four years from the
date of issuance. The conversion price of any accrued interest on
the debentures will be equal to the ten-day weighted average
trading price of the Company's common shares for the ten
consecutive trading days prior to conversion. The Private
Placement is still subject to regulatory approval.
The Company will use the proceeds of the Private Placement to
repay the following indebtedness together with accrued interest
thereon:
(a) existing convertible secured debentures issued to members
of the Dan Group on June 20, 2002 with an aggregate
principal amount of $4,000,000 and
(b) other unsecured demand bridge financing loans made by
members of the Dan Group with an aggregate principal amount
of $4,500,000.
The Company will use balance of the proceeds, after payment of the
amounts listed above, associated accrued interest, and payment of
issue costs related to the Private Placement, to advance its
business plan.
In addition, the Company recently received the amount of
$1,000,000 in the form of an unsecured demand loan from Mr. Leslie
Dan. The demand loan bears interest at the market rate of
4.5% per annum, and has been provided as an interim funding
measure pending the closing of the Private Placement.
Viventia Biotech Inc. is a biopharmaceutical company advancing a
new generation of monoclonal antibody therapeutics designed to
offer safer, more beneficial therapies for cancer patients.
Viventia's fully integrated technology platform is based upon the
isolation of human monoclonal antibodies from cancer patients, and
the development of those antibodies to deliver cancer-killing
payloads directly to cancer cells. Viventia's lead product
candidate Proxinium (TM) is in clinical development for the
treatment of head and neck cancer and bladder cancer, and several
other product candidates are in pre-clinical development.
At June 30, 2004, Viventia's shareholders' deficit widened to
$13,283,000, compared to a $4,484,000 deficit at Dec. 31, 2003.
WCI STEEL: D.E. Shaw Wants to Put $140M Plan in Creditors' Hands
----------------------------------------------------------------
"Since there has been a stalemate between WCI Steel, Inc., and
Noteholders, on Tuesday, October 12, 2004, MIC Capital Inc., in
collaboration with D. E. Shaw Laminar Portfolios, L.L.C., filed a
motion to expedite its Plan of Reorganization for WCI Steel, Inc.,
in the United States Bankruptcy Court for the Northern District of
Ohio," the investment fund said in a statement released yesterday
afternoon.
On April 20, 2004, WCI filed its Plan of Reorganization.
Sponsored by The Renco Group, Inc., WCI's ultimate parent, the
plan calls for Renco to make a $35 million investment, assume
responsibility for the pension plan, and includes a new labor
agreement with the United Steelworkers of America. WCI's
Noteholders proposed a second Plan of Reorganization for WCI
Steel. The Noteholders Plan says the Noteholders will invest $40
million in the company and walk away from the pension liability.
D.E. Shaw doesn't like doesn't either plan. D.E. Shaw proposes to
sell the company to a new entity formed by D.E. Shaw and MIC
Capital. NewCo would invest $50 million and leave the pension
liability behind.
Alan Kestenbaum, the CEO of MIC Capital, an affiliate of Marco
International Corp., stated, "The filing of this motion
demonstrates our continued interest in providing a more favorable
alternative for the employees and creditors of WCI than the
separate plans proposed by the Debtors and the Noteholders. Since
time is running out for the company in terms of securing adequate
coke supplies and there has been a stalemate between the Debtors
and Noteholders in developing a consensual plan, we believe the
filing of this motion is critical in assisting the company on the
path toward emergence from Chapter 11 and the restoration of a
stable working environment for its employees. As we have
previously indicated, our plan provides for better creditor
recoveries than the Debtors' plan, and is predicated on a business
plan that will increase that plant's output, thereby providing
additional hiring opportunities.
"Unlike both the Debtors' Plan and the Noteholder Plan, the MIC
Plan will be accompanied by a firm contract for coke, a critical
raw material for the production of steel. Neither the Debtors'
Plan nor the Noteholders' Plan suggests that they have secured a
coke source to meet supply needs starting in December 2004.
Although the price of coke has recently gone down, it remains a
highly volatile commodity with the potential for supply
disruptions, and therefore we believe a supply contract remains
critical for WCI."
In addition to a secure flow of raw materials, the MIC Plan
benefits employees through a strategic vision that includes an
increase in production. The MIC Plan proponents intend to work
with company management, employees, and the local community to
effectuate a timely emergence from bankruptcy. Details
of the MIC Plan can be found in the documents filed with the
Bankruptcy Court.
Not So Fast
WCI Steel Inc. has asked the Honorable William T. Bodoh to delay
considering approval of the Disclosure Statement explaining D.E.
Shaw's Plan. WCI says the exercise will waste everybody's time,
effort, energy and money. Judge Bodoh is scheduled to consider
the Company's Plan and the Noteholders' Plan at a hearing today,
Oct. 25, 2004, in Youngstown. The value of the company is a
central issue in WCI Steel's case.
"Confirmation by the court of either of the pending plans as a
matter of law will moot the proposed plan of reorganization filed
by D.E. Shaw," WCI said in pleadings filed in the Bankruptcy Court
late last week. D.E. Shaw has a simple response: let creditors
decide which of the three plans they like. "Permitting the
proponents to pursue approval of its disclosure statement and
corresponding plan solicitation procedures will promote
competition, maximization of the value to the debtors' estates
and, perhaps, elicit a consensual resolution of the current
impasse," D.E. Shaw said in its court filings.
The Players
MIC Capital located in New York is an affiliate of Marco
International Corp., a company specializing in manufacturing,
finance, and trading of metal on a worldwide basis.
D. E. Shaw Laminar Portfolios, L.L.C.'s activities include the
deployment of capital in connection with the restructuring of
companies that may currently be experiencing financial distress.
D. E. Shaw Laminar Portfolios, L.L.C. is a member of the D. E.
Shaw group, a New York-based investment and technology development
firm.
WCI is an integrated steelmaker producing more than 185 grades of
custom and commodity flat-rolled steel at its Warren, Ohio
facility. WCI products are used by steel service centers,
convertors and the automotive and construction markets. WCI Steel
filed for chapter 11 protection on Sept. 16, 2003 (Bankr. N.D.
Ohio Case No. 03-44662). Christine M Pierpont, Esq., and G.
Christopher Meyer, Esq., at Squire, Sanders & Dempsey, L.L.P.,
represent the Company. When WCI Steel filed for chapter 11
protection it reported $356,286,000 in total assets and
liabilities totaling $620,610,000.
WORLDCOM INC: Leucadia Sells MCI Stock for $20 Million Profit
-------------------------------------------------------------
Joseph A. Orlando, Leucadia National Corp.'s Vice President and
Chief Financial Officer, discloses to the Securities and Exchange
Commission that Leucadia sold its interest in MCI stock for an
aggregate pre-tax gain of $20 million, inclusive of dividends
received.
"The Company's sale of MCI stock should not be interpreted to mean
that the Company is no longer interested in acquiring control of
MCI, but no assurance can be given that the Company will acquire
control of MCI," Mr. Orlando relates. The transaction will be
reflected in Leucadia's third quarter 2004 results of operations.
Leucadia owned 15,738,100 shares of MCI common stock for an
aggregate investment of approximately $245.9 million -- 4.96%
equity stake -- before the transaction.
Headquartered in Clinton, Mississippi, WorldCom, Inc., now known
as MCI -- http://www.worldcom.com/-- is a pre-eminent global
communications provider, operating in more than 65 countries and
maintaining one of the most expansive IP networks in the world.
The Company filed for chapter 11 protection on July 21, 2002
(Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the
Debtors listed $103,803,000,000 in assets and $45,897,000,000 in
debts. The Bankruptcy Court confirmed WorldCom's Plan on October
31, 2003, and on April 20, 2004, the company formally emerged from
U.S. Chapter 11 protection as MCI, Inc. (Worldcom Bankruptcy News,
Issue No. 62; Bankruptcy Creditors' Service, Inc., 215/945-7000)
WORLDCOM INC: Dist. Ct. Approves 401(K) Suit Against Merrill Lynch
------------------------------------------------------------------
U.S. District Court Judge Denise Cote in New York rules that
WorldCom, Inc. employees who lost their 401(k) accounts by
investing in WorldCom stock may sue Merrill Lynch & Co. as a class
for their $100 million claim, David E. Rovella at Bloomberg News
reports. Merrill Lynch, the former plan trustee for WorldCom's
401(k) retirement plans, objected to class action certification
because of the number of employees from predecessor pension plans
who wanted to sue it. According to Judge Cote, "the fact that
Merrill Lynch may not have fiduciary obligations to all class
members for the entire period of the class shouldn't stop
certification."
Merrill Lynch is the only active defendant in the case after
WorldCom CEO Bernard Ebbers and other former officers agreed to a
$51 million settlement with the employees.
Headquartered in Clinton, Mississippi, WorldCom, Inc., now known
as MCI -- http://www.worldcom.com/-- is a pre-eminent global
communications provider, operating in more than 65 countries and
maintaining one of the most expansive IP networks in the world.
The Company filed for chapter 11 protection on July 21, 2002
(Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the
Debtors listed $103,803,000,000 in assets and $45,897,000,000 in
debts. The Bankruptcy Court confirmed WorldCom's Plan on October
31, 2003, and on April 20, 2004, the company formally emerged from
U.S. Chapter 11 protection as MCI, Inc. (Worldcom Bankruptcy News,
Issue No. 62; Bankruptcy Creditors' Service, Inc., 215/945-7000)
* BOND PRICING: For the week of October 25 - October 29, 2004
-------------------------------------------------------------
Issuer Coupon Maturity Price
------ ------ -------- -----
AAIPharma Inc. 11.000% 04/01/10 72
Adelphia Comm. 6.000% 02/15/06 25
American & Foreign Power 5.000% 03/01/30 72
American Airline 4.250% 09/23/23 62
AMR Corp. 4.500% 02/15/24 58
AMR Corp. 9.000% 08/01/12 56
AMR Corp. 9.000% 09/15/16 54
AMR Corp. 10.200% 03/15/20 49
Applied Extrusion 10.750% 07/01/11 61
Armstrong World 6.350% 08/15/03 64
Bank New England 8.750% 04/01/99 12
Burlington Northern 3.200% 01/01/45 57
Calpine Corp. 7.750% 04/15/09 56
Calpine Corp. 7.785% 04/01/08 64
Calpine Corp. 8.500% 02/15/11 57
Calpine Corp. 8.625% 08/15/10 59
Comcast Corp. 2.000% 10/15/29 43
Continental Airlines 4.500% 02/01/07 70
Continental Airlines 5.000% 06/15/23 66
Delta Air Lines 7.700% 12/15/05 47
Delta Air Lines 7.711% 09/18/11 56
Delta Air Lines 7.779% 11/18/05 45
Delta Air Lines 7.900% 12/15/09 30
Delta Air Lines 8.000% 06/03/23 28
Delta Air Lines 8.300% 12/15/29 25
Delta Air Lines 8.375% 12/10/04 52
Delta Air Lines 9.000% 05/15/16 24
Delta Air Lines 9.250% 03/15/22 22
Delta Air Lines 9.750% 05/15/21 25
Delta Air Lines 10.000% 08/15/08 34
Delta Air Lines 10.125% 05/15/10 30
Delta Air Lines 10.375% 02/01/11 25
Dobson Comm. Corp. 8.875% 10/01/13 63
Dobson Comm. Corp. 10.875% 07/01/10 73
Evergreen Int'l Avi. 12.000% 05/15/10 61
Falcon Products 11.375% 06/15/09 64
Federal-Mogul Co. 7.500% 01/15/09 30
Finova Group 7.500% 11/15/09 44
Foamex L.P. 9.875% 06/15/07 70
Greyhound Lines 8.500% 03/31/07 75
Iridium LLC/CAP 14.000% 07/15/05 13
Inland Fiber 9.625% 11/15/07 44
Kaiser Aluminum & Chem. 12.750% 02/01/03 17
Kulicke & Soffa 0.500% 11/30/08 74
Level 3 Comm. Inc. 6.000% 09/15/09 58
Level 3 Comm. Inc. 6.000% 03/15/10 56
Liberty Media 3.750% 02/15/30 67
Liberty Media 4.000% 11/15/29 71
Mirant Corp. 2.500% 06/15/21 65
Mirant Corp. 5.750% 07/15/07 64
Mississippi Chem. 7.250% 11/15/07 57
National Vision 12.000% 03/30/09 62
Northern Pacific Railway 3.000% 01/01/47 57
Northwest Airlines 7.875% 03/15/08 64
Northwest Airlines 8.700% 03/15/07 69
Northwest Airlines 9.875% 03/15/07 73
Northwest Airlines 10.000% 02/01/09 70
Northwest Airlines 10.500% 04/01/09 75
Nutritional Src. 10.125% 08/01/09 65
Oglebay Norton 10.000% 02/01/09 38
O'Sullivan Ind. 13.375% 10/15/09 48
Owens Corning 7.000% 03/15/09 50
Owens Corning 7.500% 05/01/05 49
Owens Corning 7.500% 08/01/18 46
Pegasus Satellite 12.375% 08/01/06 66
Pegasus Satellite 13.500% 03/01/07 2
Pen Holdings Inc. 9.875% 06/15/08 53
Primus Telecom 8.000% 01/15/14 72
RCN Corp. 10.000% 10/15/07 49
RCN Corp. 10.125% 01/15/10 53
Reliance Group Holdings 9.000% 11/15/00 21
RJ Tower Corp. 12.000% 06/01/13 67
Syratech Corp. 11.000% 04/15/07 45
Trico Marine Service 8.875% 05/15/12 44
Triton Pcs. Inc. 8.750% 11/15/11 71
Triton Pcs. Inc. 9.375% 02/01/11 74
Tower Automotive 5.750% 05/15/24 44
United Air Lines 9.125% 01/15/12 4
United Air Lines 10.670% 05/01/04 4
Univ. Health Services 0.426% 06/23/20 56
US West Capital 6.500% 11/15/18 73
US West Capital Fdg. 6.875% 07/15/28 73
Zurich Reinsurance 7.125% 10/15/23 66
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania,
USA, and Beard Group, Inc., Frederick, Maryland USA. Yvonne L.
Metzler, Emi Rose S.R. Parcon, Rizande B. Delos Santos, Jazel P.
Laureno, Cherry Soriano-Baaclo, Marjorie Sabijon, Terence Patrick
F. Casquejo and Peter A. Chapman, Editors.
Copyright 2004. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers. Information contained
herein is obtained from sources believed to be reliable, but is
not guaranteed.
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*** End of Transmission ***