/raid1/www/Hosts/bankrupt/TCR_Public/041123.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Tuesday, November 23, 2004, Vol. 8, No. 257
Headlines
AAMES MORTGAGE: Moody's Pares Ratings on Two Classes to Low-B
ABN AMRO: Fitch Assigns Low-B Ratings to 16 Certificate Classes
ACTUANT CORP: Inks Pact to Acquire Key Components for $315 Million
AMERICAN AIRLINES: Defers Delivery of 54 Boeing Aircrafts
AMERICAN MEDICAL: Moody's Rates Planned Sr. Secured Facility B2
AMERITEK PLANT: Case Summary & 20 Largest Unsecured Creditors
ATA AIRLINES: Bank Wants to Lift Stay to Enforce Credit Agreement
ATA AIRLINES: Wants to Employ Ordinary Course Professionals
BREUNERS HOME: Employs IP Recovery & ICMB Ocean to Sell IP Assets
CALPINE GENERATING: Extends Exchange Offer to Dec. 1
CARROLS CORP: Moody's Places Low-B Ratings on Bank Loan & Notes
COMMUNITY SERVICE: Declares $2 Per Share Annual Distribution
CSFB MORTGAGE: Moody's Reviewing Low-B Ratings on Three Classes
DELTA FUNDING: Moody's Reviewing Ratings on Eight Cert. Classes
DODGE-ISUZU-SUZUKI: Case Summary & Largest Unsecured Creditors
DYKESWILL: U.S. Trustee Asks Court to Appoint Chapter 11 Trustee
ECUITY INC: Defaults on Secured Promissory Note, Divine Says
ENRON: Judge Baer Dismisses Appaloosa & Yosemite Appeals As Moot
EPOCH 2001-2: Fitch Affirms Junk Rating on $8 Mil. Class V Notes
EPOCH 2002-1: Fitch Affirms BB Rating on $12 Million Class V Notes
ESCHELON OPERATING: Moody's Junks $165 Mil. Senior Secured Notes
FRANKLIN CAPITAL: Receives $3.5 Million from Private Placement
FT WILLIAMS: Creditors Must File Proofs of Claim Today
GC POWER: Moody's Rates Proposed $1.375B Sr. Secured Loans at Ba2
GC POWER: S&P Assigns Low-B Ratings to Loans & Says Outlook Stable
GENTEK INC: NASDAQ National Market Approves Common Stock Listing
GREEN TREE: Weak Performance Prompts Moody's to Review Ratings
HCA INC: Declares $0.13 Per Share Quarterly Dividend
HEALTH & NUTRITION: Files Plan of Reorganization in Florida
HOLLINGER CANADIAN: Receives Proceeds from Canwest Transaction
INDYMAC ARM: S&P Downgrades Class B-3's Rating to BB from BBB
INFOWAVE SOFTWARE: Inks Pact with Investor for Recapitalization
INTEGRATED HEALTH: Wants to Settle Citicorp & Danka Claims
INTERSTATE BAKERIES: Gets More Time to Decide on APC Capital Lease
JONES FAMILY RECREATION: Voluntary Chapter 11 Case Summary
KAISER ALUMINUM: Australia & Finance Units' Liquidation Analysis
KRONOS INTL: S&P Places BB- Rating to Planned EUR90 Mil. Sr. Debt
LEVEL 3: S&P Junks $730 Million Senior Secured Bank Loan
LNR PROPERTY: S&P Places BB Rating on CreditWatch Developing
M & M KATZ INC: Case Summary & 20 Largest Unsecured Creditors
MAGELLAN MIDSTREAM: Moody's Revises Outlook on Ratings to Positive
MANUFACTURERS & TRADERS: Fitch Affirms BB Rating on Class B4 Cert.
MERRILL LYNCH: Fitch Places Class G's B Rating on Watch Negative
MORGAN STANLEY: Fitch Affirms BB+ Ratings on Classes MM-A & MM-B
MORTGAGE ASSET: Fitch Places Low-B Ratings on Nine Cert. Classes
NEENAH PAPER: Prices $225 Million Ten-Year Notes Due 2014
NEXTWAVE TELECOM: Verizon Sale Hearing Scheduled for Nov. 30
NORTEL NETWORKS: Gets New Waiver from Export Development Canada
PRESIDION CORP: Subsidiary Inks New Lending Arrangements
PROTECTION ONE: Moody's Alters Outlook on Junk Ratings to Positive
PSA QUALITY: DBS-Hearn Sale Hearing Going Forward on Nov. 24
PSA QUALITY: Traub Bonacquist Approved as Debtors' Counsel
QWEST CORP: Prices Reopening for $250 Million More Notes
RCN CORP: Tejas Submits Competing Commitment for 2nd Lien Notes
REGENCY GAS: S&P Assigns Single-B Ratings to $290 Million Debts
RIGGS CAPITAL: Dividend Non-Payment Cues Fitch to Junk Preferreds
RIGGS NATIONAL: Dividend Non-Payment Spurs Moody's to Cut Ratings
ROGERS CABLE: Prices Private Placement of US$427 Million Notes
ROGERS WIRELESS: Prices $2.36 Billion Notes via Private Placement
SAFETY-KLEEN: Wants Court to Approve PwC Settlement Agreement
SCHLOTZSKY'S INC: Creditors Must File Proofs of Claim by Nov. 28
SOUTHERN PERU: Fitch Ups Long-Term Foreign Currency Rating to BB
SPIEGEL INC: Gets to Walk Away from Fleet Capital Equipment Lease
STAR GAS: Inks Pact to Sell Propane Business for $475 Million
STAR GAS: Divestiture Plan Prompts Moody's to Review Junk Ratings
STELCO INC: Steelworkers Oppose Deutsche Bank Proposal
STELCO INC: Management Declines 3% Equity in Deutsche Bank Pact
STELCO: Monitor's Eleventh Report Details Deutsche Bank Proposal
TARRANT COUNTY: Moody's Places B2 Ratings on Watchlist
TENET HEALTHCARE: Transfers 3 Los Angeles Hospitals to Centinela
TORCH ENERGY: Declares Per Unit Cash Distribution of 15.6 Cents
TRENWICK AMERICA: Court Dismisses Affiliates' Chapter 11 Case
TRUMP HOTELS: Files for Chapter 11 Protection in New Jersey
TRUMP HOTELS: Case Summary & 52 Largest Unsecured Creditors
TRUMP CASINO: S&P Ratings Tumbles to D After Bankruptcy Filing
UAL CORP: Asks Court to Toll Limitations Period to Dec. 9, 2005
UAL CORP: October Revenue Passenger Miles Up 7.2% From Last Year
UNIVERSAL ACCESS: Court Okays Key Employee Retention Plan
VOICEIQ INC: Inks Pact to Undergo CCAA Restructuring
WASHINGTON MUTUAL: Fitch Puts Low-B Ratings on Six Cert. Classes
WHX CORP: S&P Downgrades Corporate Credit Rating to CCC-
WINROCK GRASS: Gets Interim Okay to Use Cash Collateral
WORLDCOM INC: Touch America Trustee Wants to Compel Cure Payment
WYNN LAS VEGAS: Moody's Places B2 Rating on $2.2 Billion Debts
XM SATELLITE: S&P Junks Planned $300M Sr. Unsec. Convertible Notes
* Gibson Dunn Elects Eight New Lawyers to Partnership
* Large Companies with Insolvent Balance Sheets
*********
AAMES MORTGAGE: Moody's Pares Ratings on Two Classes to Low-B
-------------------------------------------------------------
Moody's Investors Service downgraded four classes of certificates
and has confirmed three classes of certificates issued in four
transactions by Aames Mortgage Trust in 2001. The transactions
are backed mostly by first-lien, fixed rate, sub-prime mortgage
loans originated by Aames Financial Corporation and are serviced
by Countywide Home Loans, Inc.
The Class B certificates issued in Aames Mortgage Trust 2001-1,
Aames Mortgage Trust 2001-2 and Aames Mortgage Trust 2001-3
transactions and the Class M certificates issued in the 2001-2
transaction have been downgraded. The securitizations have
experienced significant losses causing gradual erosion of credit
enhancement provided in the form of overcollateralization. As of
October 25, 2004, the realized cumulative losses were 5.34% for
the 2001-1 transaction, 5.21% for the 2001-2 transaction and 3.21%
for the 2001-3 transaction. The existing credit enhancement
levels in the transactions did not provide adequate protection to
support the ratings on the most subordinate certificate classes.
The Class B certificates issued in the 2001-2 transaction will
remain on watch for potential downgrade. High loss severities on
the properties held for resale could have further negative impact
on the credit quality of the Class B certificates of the 2001-2
deal.
The ratings for the Class Aa2, A2 and Baa2 certificates issued in
Aames Mortgage Trust 2001-4 transaction have been confirmed. The
performance of this deal is in line with original expectation and
the current credit enhancement levels provide sufficient
protection for the certificates. As of October 25, 2004, the pool
factor for the deal was 26.2%, cumulative losses realized to-date
were 1.61% and the 60+ delinquencies were 18.8%.
Moody's complete rating actions are:
Issuer: Aames Mortgage Trust
Downgrades:
* Series 2001-1; Class B, downgraded to Ba2 from Baa2
* Series 2001-2; Class M-2, downgraded to Baa1 from A2
* Series 2001-2; Class B, downgraded to B2 from Baa2 and
remains under review for downgrade
* Series 2001-3; Class B, downgraded to Ba1 from Baa2
Confirmed:
* Series 2001-4; Class M-1, Aa2 rating confirmed
* Series 2001-4; Class M-2, A2 rating confirmed
* Series 2001-4; Class B, Baa2 rating confirmed
ABN AMRO: Fitch Assigns Low-B Ratings to 16 Certificate Classes
---------------------------------------------------------------
Fitch Ratings upgrades nine and affirms 44 classes of ABN AMRO
Mortgage Corp., residential mortgage-backed certificates, as
follows:
* ABN AMRO Mortgage Corp., mortgage pass-through certificates,
series 2002-2
-- Class A affirmed at 'AAA'.
* ABN AMRO Mortgage Corp., mortgage pass-through certificates,
series 2003-1
-- Class A affirmed at 'AAA';
-- Class M upgraded to 'AA+' from 'AA';
-- Class B-1 upgraded to 'A+' from 'A-';
-- Class B-4 affirmed at 'B'.
* ABN AMRO Mortgage Corp., mortgage pass-through certificates,
series 2003-2
-- Class A affirmed at 'AAA'.
* ABN AMRO Mortgage Corp., mortgage pass-through certificates,
series 2003-3
-- Classes A affirmed at 'AAA';
-- Class M upgraded to 'AAA' from 'AA';
-- Class B-1 upgraded to 'A+' from 'A';
-- Class B-2 upgraded to 'BBB+' from 'BBB';
-- Class B-3 upgraded to 'BB+' from 'BB';
-- Class B-4 affirmed at 'B'.
* ABN AMRO Mortgage Corp., mortgage pass-through certificates,
series 2003-4
-- Class A affirmed at 'AAA';
-- Class M upgraded to 'AA+' from 'AA';
-- Class B-1 upgraded to 'A' from 'A-';
-- Class B-2 upgraded to 'BBB+' from 'BBB';
-- Class B-3 affirmed at 'BB';
-- Class B-4 affirmed at 'B'.
* ABN AMRO Mortgage Corp., mortgage pass-through certificates,
series 2003-5
-- Class A affirmed at 'AAA';
-- Class M affirmed at 'AA';
-- Class B-1 affirmed at 'A';
-- Class B-2 affirmed at 'BBB-';
-- Class B-3 affirmed at 'BB';
-- Class B-4 affirmed at 'B'.
* ABN AMRO Mortgage Corp., mortgage pass-through certificates,
series 2003-6
-- Class A affirmed at 'AAA';
-- Class M affirmed at 'AA';
-- Class B-1 affirmed at 'A';
-- Class B-2 affirmed at 'BBB-';
-- Class B-3 affirmed at 'BB';
-- Class B-4 affirmed at 'B'.
* ABN AMRO Mortgage Corp., mortgage pass-through certificates,
series 2003-8
-- Class A affirmed at 'AAA';
-- Class M affirmed at 'AA';
-- Class B-1 affirmed at 'A-';
-- Class B-2 affirmed at 'BBB-';
-- Class B-3 affirmed at 'BB';
-- Class B-4 affirmed at 'B'.
* ABN AMRO Mortgage Corp., mortgage pass-through certificates,
series 2003-9
-- Class A affirmed at 'AAA'.
* ABN AMRO Mortgage Corp., mortgage pass-through certificates,
series 2003-10
-- Class A affirmed at 'AAA';
-- Class M affirmed at 'AA';
-- Class B-1 affirmed at 'A';
-- Class B-2 affirmed at 'BBB';
-- Class B-3 affirmed at 'BB';
-- Class B-4 affirmed at 'B'.
* ABN AMRO Mortgage Corp., mortgage pass-through certificates,
series 2003-11
-- Class A affirmed at 'AAA';
-- Class B-1 affirmed at 'A-';
-- Class B-3 affirmed at 'BB';
-- Class B-4 affirmed at 'B'.
* ABN AMRO Mortgage Corp., mortgage pass-through certificates,
series 2003-13
-- Class A affirmed at 'AAA';
-- Class M affirmed at 'AA';
-- Class B-1 affirmed at 'A';
-- Class B-2 affirmed at 'BBB';
-- Class B-3 affirmed at 'BB';
-- Class B-4 affirmed at 'B'.
The upgrades, affecting $27,315,336 of outstanding certificates,
are being taken as a result of low delinquencies and losses, as
well as significantly increased credit support levels. The
affirmations, affecting over $2.8 billion of certificates, are due
to stable collateral performance and small to moderate growth in
credit enhancement -- CE. With the exception of one (series
2002-2), all of the ABN AMRO transactions included in this rating
action are of the 2003 vintage.
As of the last distribution date (Oct. 25, 2004), the most
seasoned of these deals (series 2002-2) has a pool factor
(mortgage principal outstanding as a percentage of original
mortgage principal as of closing) of 11% and currently benefits
from CE levels nearly eight times the original. The least
seasoned transaction maintains a pool factor of 90% and has only
experienced a slight increase in CE coverage. All transactions
have experienced some increase in CE and most are at or around
1.5 times (x) original.
ACTUANT CORP: Inks Pact to Acquire Key Components for $315 Million
------------------------------------------------------------------
Actuant Corporation (NYSE:ATU) signed a definitive agreement to
acquire the stock of Key Components Inc. for cash from an investor
group lead by Kelso & Company. The purchase is subject to
customary regulatory approvals and conditions, and is expected to
close within the next 60 days. Total consideration for the
transaction is approximately $315 million, including the
assumption of approximately $80 million of KCI's debt.
KCI, with headquarters in Tarrytown, New York, is a leading
manufacturer of custom engineered products for a diverse array of
end-user markets. Through its existing two business segments,
Mechanical Engineered Components and Electrical Components, KCI
targets its products to original equipment manufacturers and
certain distribution channels. Its Electrical Components segment,
whose product offering includes specialty electrical components,
power conversion products and high-voltage utility switches, are
offered by its Marinco, Acme Electric and Turner divisions,
respectively. Its Mechanical Engineered Components segment, whose
product offering consists primarily of flexible shafts and
turbocharger components, are manufactured by its BW Elliot and
Gits Manufacturing divisions, respectively. KCI employs
approximately 1,300 employees, primarily in the United States,
with smaller operations in Mexico, Thailand and China.
Commenting on the transaction, Robert C. Arzbaecher, Actuant
President and CEO, said, "We believe this transaction represents a
defining event in Actuant's history. KCI is comprised of six
operating businesses, each of which fit well in one of Actuant's
business segments, Tools & Supplies and Engineered Solutions. We
believe KCI fits Actuant's strategy; businesses with leading
positions in niche end-user markets serving diverse customer
bases, and generating above average financial returns. KCI has
strong business unit management teams, which we believe fit with
the Actuant culture."
Actuant also announced a financing initiative to fund this
transaction and further enhance its balance sheet. Actuant will
be modifying its existing senior credit agreement and plans to
issue approximately $250 million of additional senior debt to
finance the acquisition. In addition, Actuant plans to offer
approximately $125 million of its Class A Common Stock through a
public offering, the proceeds of which would be used to fully
retire KCI's $80.0 million of 10.5% senior notes and reduce other
senior borrowings. The size and timing of both the debt and equity
financings are subject to prevailing market conditions.
Commenting on the financing initiatives, Andrew G. Lampereur,
Actuant's Chief Financial Officer, stated, "As we have
communicated in the past, Actuant's desired leverage level is
between two and three times debt to EBITDA (EBITDA is earnings
before interest, income taxes, depreciation, amortization and
minority interest). After the proposed equity offering, our
leverage is expected to be near the top end of the targeted range,
but we expect to use future operating cash flow to reduce this
further."
On a pro forma basis, taking into account a full year's impact of
the acquisitions and divestitures it has completed during calendar
2004, KCI expects its 2004 sales and EBITDA to be approximately
$220 million and $45 million, respectively. Based on this
information, and taking into account planned synergies and the
impact of the contemplated common stock offering, Actuant
estimates the acquisition will add approximately $0.40 to diluted
earnings per share on a full twelve-month basis (prior to the
adoption of proposed new accounting rules for contingent
convertible bonds).
Wachovia Securities is serving as the financial advisor to Actuant
on the acquisition, while J.P. Morgan Securities Inc. and Wachovia
Securities are arranging the acquisition bank financing. McDermott
Will & Emery LLP and Quarles & Brady LLP are Actuant's legal
advisors on the transaction.
About the Company
Actuant Corporation, headquartered in Milwaukee, Wisconsin, is a
diversified global provider of highly engineered position and
motion control systems and branded tools end-users in a variety of
industries.
* * *
As reported in the Troubled Company Reporter on Nov. 12, 2004,
Standard & Poor's Ratings Services revised its outlook on Actuant
Corp. to positive from stable. At the same time, S&P affirmed its
rating on the Milwaukee, Wisconsin-based company.
As reported in the Troubled Company Reporter on May 5, 2004,
Standard & Poor's Ratings Services assigned its 'BB' rating to the
$250 million senior revolving credit facility of Actuant Corp.
(BB).
"The outlook revision reflects our view that the company's
strategy of focused, niche acquisitions that increases scale, in
conjunction with a further track record of balancing this growth
with an improving financial profile, could lead to a modest
upgrade over the next two years," said Standard & Poor's credit
analyst Nancy Messer.
AMERICAN AIRLINES: Defers Delivery of 54 Boeing Aircrafts
---------------------------------------------------------
American Airlines and The Boeing Company reported that American
will defer 54 of 56 aircraft originally scheduled for delivery
between 2006 and 2010. The delivery of 47 Boeing 737-800 aircraft
and seven Boeing 777 aircraft will be deferred by seven years and
six years, respectively, beyond their originally scheduled
delivery dates. The arrangement allows American to postpone
$1.4 billion of capital spending previously planned for 2005
through 2007 and a total of $2.7 billion in capital spending
through 2010.
American will take delivery of two Boeing 777 aircraft in 2006,
including one aircraft originally scheduled for delivery in 2007,
to support its previously announced international growth.
"Deferring the delivery of 54 aircraft and the related capital
spending for up to seven years is a very important milestone in
American's Turnaround Plan. It will substantially enhance our
ability to restructure our finances," said James Beer, American's
Senior Vice President-Finance and Chief Financial Officer. "We
very much appreciate the support shown to us by our partners at
Boeing and look forward to a continuing robust relationship
between our two companies," Mr.Beer said.
Boeing already has factored these changes into Boeing's financial
guidance.
American Airlines' active fleet consists of over 730 aircraft,
including 700 Boeing and McDonnell Douglas aircraft.
American Airlines is the world's largest carrier. American,
American Eagle and the AmericanConnection regional carriers serve
more than 250 cities in over 40 countries with more than 4,200
daily flights. The combined network fleet numbers more than 1,000
aircraft. American's award-winning Web site, http://AA.com/
provides users with easy access to check and book fares, plus
personalized news, information and travel offers. American
Airlines is a founding member of the oneworld(sm) Alliance.
AMR Corp.'s September 30, 2004, Balance Sheet shows liabilities
exceeding assets by $314 million.
AMERICAN MEDICAL: Moody's Rates Planned Sr. Secured Facility B2
---------------------------------------------------------------
Moody's Investors Service assigned a B2 rating to American Medical
Holdings' proposed senior secured credit facility. Moody's also
assigned a senior implied rating of B2 and a senior unsecured
issuer rating of B3 to AMI.
The rating assignment reflects:
(1) the company's short operating history under its current
corporate structure,
(2) small research and development budget and reliance on
licensing products from outside vendors,
(3) potential for additional pricing pressure in its wound
closure division,
(4) limited resources and scale relative to larger competitors,
and
(5) the absence of patents and long-term contracts.
Factors mitigating these concerns include:
(1) solid geographic and product diversification,
(2) a balanced distribution strategy between a direct sales
force and original equipment customers,
(3) strong manufacturing plant and technical expertise and,
(4) an experienced management team.
Additional factors supporting the rating include:
(1) the company's strong market position and proprietary
physicians' preference items in the interventional
diagnostic markets,
(2) favorable industry growth trends,
(3) willingness to reduce leverage, and
(4) improving operating trends.
Following is a list of the new ratings assigned:
* $25 million senior secured revolving credit facility due
2009, rated B2
* $32.5 million senior secured term loan A, due 2009, rated B2
* $100.0 million senior secured term loan B, due 2010, rated B2
* B2 Senior Implied Rating
* B3 Senior Unsecured Issuer Rating
The outlook is stable.
In spite of the listed credit strengths, Moody's is concerned
about the limited operating history of the company. Somewhat
offsetting this risk is the fact that management has been able to
increase sales, expand margins, reduce debt and expand free cash
flow since taking over the company in early 2003.
A stable outlook anticipates that the company will experience
continued strong revenue growth and expansion of operating margins
through manufacturing efficiencies and leveraging the existing
sales infrastructure by broadening the product portfolio. With
limited incremental capital required to support future growth,
increased profitability should translate into higher free cash
flow generation and debt reduction over time, improving debt
coverage statistics. There is a risk, however, that additional
pricing pressure and increased competitive threats may lead to the
deterioration in the company's performance and credit metrics.
American Medical Instruments Holdings Inc. is expected to issue
$157.5 million in senior secured financing. Moody's expects AMI
to use the proceeds from the facility to refinance existing debt,
pay a dividend to existing shareholders and to provide funds for
working capital and other corporate purposes. The overall
financing facility would comprise a $25 million Senior Secured
Revolving Credit Facility, a $32.5 million Term Loan A Facility
and a $100 million Term Loan B Facility. The Revolving Credit
Facility and the Term Loan A facility will have a five year term,
while the Term Loan B facility will have a six year term.
Following the issuance of the Term Loan facility and the payment
of a dividend to existing shareholders, the degree of leverage
will increase slightly. However, leverage metrics will be good
for the rating category. As the company increases free cash flow
and reduces debt, the ratio of adjusted free cash flow to adjusted
debt should expand to a range of 25% to 30% in 18 months.
American Medical Instrument Holdings Inc. is a medical device
company that manufacturers and distributes needles, sutures,
blades, biopsy instruments and other incision and wound care
products used in the ophthalmology, orthopedics, plastic and
reconstructive surgery, dental and cardiovascular surgery markets.
AMI was formed in 2003 with the purchase of the company by
Roundtable Healthcare Partners from the Marmon Group; currently,
Roundtable owns 65% of the company and Marmon Medical Companies,
LLC owns the remaining 35%. The company has a dedicated sales
force for physician preference devices and strong original
equipment manufacturer relationships.
AMERITEK PLANT: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: AmeriTek Plant Services, LLC
420 South 16th
La Porte, Texas 77571
Bankruptcy Case No.: 04-46547
Chapter 11 Petition Date: November 19, 2004
Court: Southern District of Texas (Houston)
Judge: Marvin Isgur
Debtor's Counsel: Richard L. Fuqua, II, Esq.
Fuqua & Keim
2777 Allen Parkway, Suite 480
Houston, TX 77019
Tel: 713-960-0277
Estimated Assets: $0 to $50,000
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Shaw Heat, Inc. $53,004
P.O. Box 956044
St. Louis, MO 63195
Hytorc $24,449
Division Unex Corporation
333 Route 17 North
Mahwah, NJ 07430
HVAC Portable Systems $18,752
P.O. Box 730562
Dallas, TX 75373-0562
Aggreko $18,140
Preheat, Inc. $16,014
MSR, LLP $12,525
Refractories, Inc. $8,000
EHP $7,550
Electric Heating Systems $7,165
Ajax Environmental & Safety Supply $6,600
Best Western LaPorte Inn $6,532
Bic Alliance $6,070
EH Wachs $5,770
Hydratight Sweeney $5,704
La Quinta Inn $4,910
Branton Industries $4,477
Apache Oil $4,393
Business Technology Innovators $4,058
G & K Services $3,901
Zurich $3,475
ATA AIRLINES: Bank Wants to Lift Stay to Enforce Credit Agreement
-----------------------------------------------------------------
On December 19, 2002, ATA Airlines, Inc., and National City Bank
of Indiana entered into a credit agreement to induce NCBI to issue
letters of credit for ATA Airlines' account. Under the Credit
Agreement, NCBI issued letters of credit in favor of 40 of ATA
Airline's vendors and lessors.
Thomas C. Scherer, Esq., at Bingham McHale, LLP, in Indianapolis,
Indiana, relates that, to evidence ATA Airline's reimbursement
obligations to NCBI, ATA Airlines executed and delivered to NCBI
a reimbursement note for $40,000,000 principal amount dated
December 19, 2002.
To secure ATA Airline's obligations to NCBI under the Credit
Agreement, including but not limited to, the obligation to
reimburse NCBI in the event of a draw under the Letters of
Credit, costs and charges associated with the issuance and payment
of the Letters of Credit, and attorneys' fees incurred by
NCBI or its participant, ATA Airlines executed and delivered to
NCBI a security agreement with respect to two depository accounts:
Depository Bank Account Number
--------------- --------------
National City Bank of Indiana 758138866
U.S. Bank National Association 152302005961
To further evidence and secure NCBI's security interest in the
U.S. Bank National Depository Account, ATA Airlines and U.S. Bank
executed and delivered to NCBI a deposit account control
agreement.
ATA Airlines' obligations under the Credit Agreement are
guaranteed by ATA Holdings, Inc.
Mr. Scherer informs the United States Bankruptcy Court for the
Southern District of Indiana that as of the Petition Date, the
aggregate face amount of NCBI's obligations as issuer under the
Letter of Credit is not less than $30,830,504. The aggregate
balances of the Depository Accounts are not less than
$30,910,135. Interest is earned on the amounts in the Depository
Accounts.
NCBI holds a valid, perfected, first priority security interest in
and to the Depository Accounts.
According to Mr. Scherer, the Credit Agreement, Reimbursement
Note, Security Agreement, and Deposit Control Agreement represent
a set of interrelated documents that allow ATA Airlines to provide
credit enhancements to selected vendors and lessors while at the
same time assuring NCBI of immediate payment of ATA Airlines'
reimbursement obligation. Under the Credit Agreement, if a draw
is made under any Letter of Credit, NCBI is authorized to
immediately debit the Depository Accounts to reimburse NCBI.
Furthermore, the aggregate amount of the Letters of Credit
outstanding at any time will never exceed the amount of the
aggregate balances of the Depository Accounts.
By virtue of the "independence" principle, which governs the
issuance of LOCs, Mr. Scherer reminds Judge Lorch that an
irrevocable Letter of Credit issued by a bank in favor of a third
party does not constitute property of the estate and a draw on
that Letter of Credit is not prohibited by the automatic stay of
Section 362 of the Bankruptcy Code.
Mr. Scherer notes that the Letter of Credit beneficiaries have
made or are expected to make demands and draws under the Letter of
Credit during the pendency of the Debtors' Chapter 11 cases.
One of the Beneficiaries is LaSalle Bank National Association, as
bond trustee under a trust indenture dated December 1, 1995, in
connection with the issuance by the City of Chicago, Illinois, of
the Chicago Midway Airport Variable Rate Demand Special Facility
Revenue Bonds -- American Trans Air, Inc., Project -- Series
1995. The $6,076,667 Letter of Credit for the American Trans Air
Project was originally issued at ATA Airlines' request as a credit
enhancement to facilitate issuance of the Bonds.
With the consent of ATA Airlines, NCBI has or will give notice to
LaSalle Bank that an event of default has occurred under the
Credit Agreement and directing LaSalle Bank to accelerate the
Bonds. Under the Trust Indenture, LaSalle Bank is authorized upon
receipt of that Notice to declare the principal of the Bonds and
interest accrued immediately due and payable, and to draw under
the applicable Letter of Credit to pay the principal and interest.
However, Mr. Scherer continues, although the automatic stay does
not restrict or restrain beneficiaries of the Letters of Credit
from making demands or draws on NCBI, it does restrain NCBI from
its ability to debit the Depository Accounts to reimburse draws
made under the Letters of Credit. Accordingly, unless the stay is
lifted, NCBI will be irreparably harmed since it will be obliged
to honor draws under the Letters of Credit but denied its
bargained for right of immediate reimbursement from the
Depository Accounts. In addition, interest and costs will accrue
or be incurred under the Credit Agreement to the detriment of ATA
Airlines until its reimbursement obligation to NCBI is honored.
It is in ATA Airline's interest that the Bonds be accelerated and
paid with proceeds of a draw under the applicable Letter of
Credit with immediate reimbursement to NCBI from the Depository
Account.
NCBI, therefore, asks the Court to lift the automatic stay:
(a) as it relates to funds held in the Depository Accounts,
including interest earned from and after the Petition
Date, to permit NCBI to deal with those funds as
contemplated by the Credit Agreement and the Letters of
Credit;
(b) to permit NCBI to enforce the Credit Agreement terms, the
Security Agreement, and Deposit Account Control Agreement
with respect to the Depository Accounts, including but not
limited to reimbursement of draws under the Letters of
Credit; and
(c) with respect to NCBI and LaSalle Bank so they may
implement and enforce the terms of the Trust Indenture
and all documents related to the American Trans Air
Project so that (i) the Bonds are accelerated and (ii)
LaSalle Bank's draw on the applicable Letter of Credit is
honored and immediately reimbursed from the Depository
Accounts.
Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA
Holdings Corp. -- http://www.ata.com/-- is the nation's 10th
largest passenger carrier (based on revenue passenger miles) and
one of the nation's largest low-fare carriers. ATA has one of the
youngest, most fuel- efficient fleets among the major carriers,
featuring the new Boeing 737-800 and 757-300 aircraft. The
airline operates significant scheduled service from Chicago-
Midway, Hawaii, Indianapolis, New York and San Francisco to over
40 business and vacation destinations. Stock of parent company,
ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The
Company and its debtor-affiliates filed for chapter 11 protection
on Oct. 26, 2004 (Bankr. S.D. Ind. Case No. 04-19866, 04-19868
through 04-19874). Terry E. Hall, Esq., at Baker & Daniels,
represents the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they listed
$745,159,000 in total assets and $940,521,000 in total debts.
(ATA Airlines Bankruptcy News, Issue No. 4; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
ATA AIRLINES: Wants to Employ Ordinary Course Professionals
-----------------------------------------------------------
ATA Airlines and its debtor-affiliates want to retain the services
of various accountants, independent financial consultants,
attorneys and law firms, and other professionals -- including
persons not "professional persons" as contemplated by Section 327
of the Bankruptcy Code -- to represent them in matters arising in
the ordinary course of their business.
The Debtors intend to compensate Ordinary Course Professionals for
postpetition services rendered, subject to certain limits without
the necessity of additional Court approval.
Each Ordinary Course Professional will be paid 100% of its fees
and disbursements incurred upon submission of an invoice detailing
the nature of the services rendered after the Petition Date,
provided that the interim fees and disbursements do not exceed 10%
over the estimated monthly average expenditure as set for per
Ordinary Course Professional, and in no event more than $50,000
per month per Ordinary Course Professional.
The Ordinary Course Professionals and their corresponding
Estimated Average Expenditure per month are:
Estimated Average
OCPs Expenditure
----------------- -----------------
Cravath Swaine & Moore, LLP $50,000
Blue & Company, LLC 3,000
Laner, Muchin Dombrow, Becker, Levin & Tominberg 3,000
Bingham McHale, LLP 2,000
Squire, Sanders & Dempsey 25,000
Paul, Hastings Janofsky & Walker, LLP 15,000
Unisys/Phil Roberts 15,000
Buehler & Associates 4,500
Troutman Sanders 50,000
Capstar Partners 10,000
Castro Barros Sobraz Vidigal 200
Akerman Senterfit 1,000
Zerboni & Bowdry 1,000
Martinez-Alvarez, Menedez Cortada 2,000
Alston, Hunt and Floyd 25,000
Payne & Fears 2,000
Thomas Hunt, Esq. 1,000
McCarter & English, LLP 1,000
Acosta, Kruse, Raines & Zemenides 5,000
Greenberg Traurig 2,000
Samual A. Ramizer & Co., Inc. 4,000
The Debtors will file an accounting report with the Court and
serve the Report on, among others, the United States Trustee and
attorneys for the Airline Transportation Stabilization Board
beginning January 15, 2005. The Report will continue to be served
subsequently, in three-month intervals so long as the Chapter 11
cases are pending.
The Report will provide information regarding:
(a) the name of each Ordinary Course Professionals that the
Debtors have paid for services rendered during the
relevant period; and
(b) the monthly amounts paid as compensation for services
rendered and reimbursement of expenses incurred for each
Ordinary Course Professionals during the Fee Period and,
as applicable, before the Fee Period, but not disclosed in
previous quarterly statements.
Rule 2014 Affidavits
Although certain of the Ordinary Course Professionals may hold
unsecured prepetition claims against the Debtors, the Debtors do
not believe that any of the Ordinary Course Professionals have an
interest materially adverse to the Debtors, their estates, or
creditors.
Each Ordinary Course Professional located in the United States
will be required to file an affidavit of proposed professional and
disclosure statement, within 45 days after the Court approves the
Debtors' request or within 45 days of commencement of any work by
the Ordinary Course Professionals for the Debtors.
Upon receipt of each Affidavit, the U.S. Trustee, the attorneys
for the creditors committee, and the ATSB will have 30 days to
object to the retention of any Ordinary Course Professionals.
Additional Professionals
The Debtors propose to employ additional Ordinary Course
Professionals without the need to file individual retention
applications for each Additional Professional by filing a
supplement and serving the Supplement on the U.S. Trustee, the
creditors committee's attorneys, and the ATSB.
Melissa M. Hinds, Esq., at Baker & Daniels, in Indianapolis,
Indiana, asserts that the Debtors business operations will be
seriously disrupted if they are unable to retain and pay for the
services of Ordinary Course Professionals. Additionally, the
Debtors' operations will be hindered if the Debtors are required
to submit the Court individual Applications. A number of the
Ordinary Course Professionals are unfamiliar with the fee
application procedures employed in Chapter 11 cases and, as a
result, might be unwilling to work with the Debtors if the
requirements are imposed. The uninterrupted services of the
Ordinary Course Professionals are vital to the Debtors' continuing
operations and their ultimate ability to reorganize. More
important, the cost that would be borne by the estates in
connection with preparing and prosecuting the retention
applications and fee applications would be significant and
unnecessary.
Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA
Holdings Corp. -- http://www.ata.com/-- is the nation's 10th
largest passenger carrier (based on revenue passenger miles) and
one of the nation's largest low-fare carriers. ATA has one of the
youngest, most fuel- efficient fleets among the major carriers,
featuring the new Boeing 737-800 and 757-300 aircraft. The
airline operates significant scheduled service from Chicago-
Midway, Hawaii, Indianapolis, New York and San Francisco to over
40 business and vacation destinations. Stock of parent company,
ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The
Company and its debtor-affiliates filed for chapter 11 protection
on Oct. 26, 2004 (Bankr. S.D. Ind. Case No. 04-19866, 04-19868
through 04-19874). Terry E. Hall, Esq., at Baker & Daniels,
represents the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they listed
$745,159,000 in total assets and $940,521,000 in total debts.
(ATA Airlines Bankruptcy News, Issue No. 4; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
BREUNERS HOME: Employs IP Recovery & ICMB Ocean to Sell IP Assets
-----------------------------------------------------------------
Breuners Home Furnishings Corporation retained IP Recovery, Inc.,
and ICMB Ocean Tomo with the approval of the U.S. Bankruptcy Court
for the District of Delaware, to sell Breuners Home's intellectual
property and intangible assets.
Among the assets for sale are the company's registered trademarks,
internet domain names, third party software licenses, and
historical sales, purchasing and customer data. A detailed list
of all intellectual property assets for sale can be found at
http://www.iprecovery.com/
About IP Recovery, Inc.
IP Recovery, Inc. -- http://www.iprecovery.com/-- is a
full-service intellectual property asset advisory and disposition
services company. IP Recovery helps healthy and distressed firms
monetize intangible assets and specializes in trademarks, business
intelligence, software licenses and proprietary technologies. IP
Recovery works with buyers to negotiate the acquisition of new
technologies and other IP assets. Headquartered in Aspen,
Colorado, the company also has offices in New York, New York and
San Francisco, California.
About OceanTomo, LLC
ICMB Ocean Tomo -- http://www.oceantomo.com/-- is an integrated
intellectual capital merchant bank providing corporate finance,
asset and risk management, valuation, research, analytics, and
expert services. Ocean Tomo's goal is to assist its clients --
corporations, law firms, governments and institutional investors
-- in maximizing value from their Intellectual Capital Equity(TM).
Headquartered in Chicago, Illinois, Ocean Tomo also has offices in
San Francisco, California; Louisville, Kentucky; and Greenwich,
Connecticut.
Headquartered in Lancaster, Pennsylvania, Breuners Home
Furnishings Corp. -- http://www.bhfc.com/-- is one of the largest
national furniture retailers focused on the middle the upper-end
segment of the market. The Company, along with its debtor-
affiliates, filed for chapter 11 protection on July 14, 2004
(Bankr. Del. Case No. 04-12030). Great American Group, Gordon
Brothers, Hilco Merchant Resources, and Zimmer-Hester were brought
on board within the first 30 days of the bankruptcy filing to
conduct Going-Out-of- Business sales at the furniture retailer's
47 stores. Bruce Grohsgal, Esq., and Laura Davis Jones, Esq., at
Pachulski, Stang, Ziehl, Young, Jones & Weintraub, represent the
Debtors in their restructuring efforts. The Company reported more
than $100 million in estimated assets and debts when it sought
protection from its creditors.
CALPINE GENERATING: Extends Exchange Offer to Dec. 1
----------------------------------------------------
Calpine Generating Company, LLC, a wholly owned subsidiary of
Calpine Corporation (NYSE: CPN), has extended the exchange offer
for certain of its outstanding notes. The exchange offer, which
commenced on October 19, 2004, was originally set to expire on
November 17, 2004, will now expire at 5:00 p.m., New York City
time, on December 1, 2004.
Calpine Generating Company, LLC is offering to exchange
$1,705,000,000 in aggregate principal amount of new notes for
$1,705,000,000 in aggregate principal amount of the outstanding
unregistered notes. The terms of the exchange notes will be
identical to the respective terms of the original notes
of the corresponding series except that the exchange notes will be
registered under the Securities Act of 1933.
The exchange offer relates to the following notes issued by
Calpine Generating Company, LLC and CalGen Finance Corp.:
-- $235,000,000 of First Priority Secured Floating Rate Notes
due 2009 (CUSIP 13135BAA4 and U1305QAA7);
-- $640,000,000 of Second Priority Secured Floating Rate Notes
due 2010 (CUSIP 13135BAB2 and U1305QAB5);
-- $680,000,000 of Third Priority Secured Floating Rate Notes
due 2011 (CUSIP 13135BAC0 and U1305QAB5); and
-- $150,000,000 of 11-1/2% Third Priority Secured Notes due
2011 (CUSIP 13135BAD8 and U1305QAD1).
The Exchange Agent for the exchange offer is Wilmington Trust
Company, which can be contacted at 302-636-6470.
* * *
As reported in the Troubled Company Reporter on March 24, 2004,
Standard & Poor's Ratings Services assigned its 'B' corporate
credit rating to Calpine Generating Co. LLC (CALGEN). The outlook
is negative.
CARROLS CORP: Moody's Places Low-B Ratings on Bank Loan & Notes
---------------------------------------------------------------
Moody's Investors Service assigned ratings of B1 and B3,
respectively, to the proposed new bank loan and senior
subordinated notes of Carrols Corporation. Net proceeds from the
new debt will pay a $141 million dividend to the equity owners and
refinance existing long-term debts. Negatively impacting the
company's ratings are the company's high financial leverage and
the challenges in permanently stabilizing operations at Burger
King. However, in spite of increasing debt to pay the sizable
dividend, the good performance and development potential of the
Pollo Tropical and Taco Cabana concepts benefit Moody's opinion of
the company. The rating outlook is stable.
Ratings assigned are:
-- $250 million secured bank loan at B1, and the
-- $200 million eight-year senior subordinated notes at B3.
These ratings are affirmed:
-- Senior Implied Rating at B1, and the
-- Issuer Rating at B2.
Moody's will withdraw the ratings on the existing $124 million
bank loan and $170 million 9.5% senior subordinated note (2008)
issue once this transaction is complete.
The ratings consider:
(1) the challenges in improving performance at the Burger King
segment because of the intense competition within the
hamburger quick-service restaurant industry,
(2) the company's high financial leverage and low fixed charge
coverage following the transaction, and
(3) the intention to use most discretionary cash flow for
growing the Pollo Tropical and Taco Cabana concepts.
The lack of obvious operational synergies between the three
concepts also adversely impacts our view of the risks facing the
company.
However, the ratings recognize that:
(1) the company's position as the largest Burger King
franchisee allows potential operating and overhead
economies of scale,
(2) the good performance at Pollo Tropical and Taco Cabana that
have offset the mediocre performance at Burger King, and
(3) the growth potential of the Taco Cabana and Pollo Tropical
concepts.
Initial indications that several years of poor performance at
Burger King have started to reverse and the good performance of
the company's Burger King restaurants relative to the system
average also positively impact the ratings.
The stable outlook reflects Moody's expectation that the company's
financial profile will steadily improve as it:
(1) continues developing the Pollo Tropical and Taco Cabana
segments,
(2) stabilizes the Burger King segment, and
(3) uses a portion of discretionary cash flow to improve the
balance sheet.
Ratings could be negatively impacted if the recent improvements at
Burger King do not prove permanent, operating performance at the
new and existing Taco Cabana and Pollo Tropical stores falters, or
the company overspends its liquidity while developing new stores.
Ratings could eventually go up as higher average unit volume
across all three concepts leads to greater financial flexibility
(such as lease adjusted leverage falling toward 4 1/2 times and
fixed charge coverage approaching 2 times) and the company
achieves worthwhile returns on investment with the planned
development program.
The B1 rating on the Bank Loan to be arranged for Carrols Corp
(comprised of a $50 million Revolving Credit Facility and a
$200 million Term Loan B) considers that this debt enjoys the
guarantees of the company's operating subsidiaries and is secured
by a first-lien on substantially all assets, including assignments
on the sale or transfer of all Burger King franchise contracts.
The bank loan is not notched above the senior implied rating
because of:
(1) the significant proportion of this bank loan in the
company's total debt structure, and
(2) the large size of the loan commitment relative to the
orderly liquidation value of collateral.
Over the life of the bank loan, Moody's expects that the company
will only utilize the Revolving Credit Facility for temporary cash
flow timing differences except Letters of Credit (currently about
$13 million) that cover self-insurance commitments.
The B3 rating on the senior subordinated notes to be issued by
Carrols Corp recognizes, in spite of the guarantees on a senior
subordinated basis from all of the Carrols operating subsidiaries,
that the notes are contractually subordinated to substantial
amounts of more senior debt. As of Sept. 30, 2004, more senior
debt includes the secured bank loan, $84 million of lease
obligations, and $20 million of trade accounts payable. The
issuing entity (Carrols Corp as operator of the Burger King
segment) directly owns the majority of assets and carries out more
than half of operations, while the guarantors (principally Pollo
Tropical and Taco Cabana) have the balance. In a hypothetical
distressed scenario with the revolving credit facility fully
utilized, Moody's believes that recovery would rely on enterprise
value given likely liquidation proceeds relative to book value for
tangible assets such as restaurant equipment and leasehold
improvements.
Pro-forma for the transaction as of the twelve months ending Sept.
30, 2004, lease adjusted leverage equaled 6 times and fixed charge
coverage was 1 times, compared to 5 times and 1 ½ times,
respectively, prior to the balance sheet events. Operating margin
has stayed relatively constant around 6% over the previous several
years as development of the Pollo Tropical and Taco Cabana
concepts has offset the substantial average unit volume decline at
Burger King. Moody's expects that the Burger King segment, which
has now reported positive comparable store sales for two
consecutive quarters, will permanently stabilize within the next
year. Moody's believes that free cash flow will remain small as
the company uses most operating cash to maintain the existing
store base and to develop new Pollo Tropical and Taco Cabana
stores.
Carrols Corporation, with headquarters in Syracuse, New York,
operates 351 Burger King quick service hamburger restaurants.
Carrols also operates or franchises 85 Pollo Tropical restaurants
and 133 Taco Cabana restaurants. Revenue for the four quarters
ending Sept 2004 was about $674 million.
COMMUNITY SERVICE: Declares $2 Per Share Annual Distribution
------------------------------------------------------------
Community Service Communications, Inc. (OTC: CMYS) reported that
the Board of Directors of the Company declared a $2.00 per share
distribution payable on December 13, 2004 for its shareholders of
record on December 6, 2004.
This distribution is in accordance with the shareholder approved
Plan of Complete Liquidation and Dissolution on June 15, 2004. The
Plan requires the management to wind-up its business affairs and
distribute from time to time the available liquid proceeds to its
shareholders.
Community has approximately 632,452 shares of Common Stock, held
by approximately 301 shareholders of record.
About Community
Community is a Maine-based telecommunications company that had
been serving local telephone customers for more than 100 years.
Formed in 1898, today Community has a few remaining investments
including a 50% interest in a Maine-based paging company.
* * *
As reported in the Troubled Company Reporter on June 17, 2004,
Community Service Communications, Inc. (OTC: CMYS) announced that
its shareholders approved and have adopted the Plan of Complete
Liquidation and Dissolution at its Annual Meeting held on June 15.
Following the Annual Meeting and consistent with the Plan, the
board of directors set a final record date for its shareholders of
June 30, 2004, at which time it will fix the shareholders of
record for future voting and distributions and will not make any
further transfers of Community stock on its records.
The Plan requires the management to wind-up its business affairs
and distribute from time to time the available liquid proceeds to
its shareholders.
Community has approximately 632,452 shares of Common Stock, held
by approximately 311 shareholders of record.
CSFB MORTGAGE: Moody's Reviewing Low-B Ratings on Three Classes
---------------------------------------------------------------
Moody's Investors Service placed three classes of Credit Suisse
First Boston Mortgage Securities Corp., Commercial Mortgage Pass-
Through Certificates, Series 2002-TFL1 on review for possible
downgrade as follows:
-- Class F-WBC, $6,500,000, Floating, currently rated Baa3
-- Class G-WBC, $3,500,000, Floating, currently rated Ba2
-- Class H-WBC, $3,250,000, Floating, downgraded to Ba3
The watchlisted Certificates pertain to the Williamsburg & The
Commons Loan ($42.2 million), which is secured by two cross-
collateralized and cross-defaulted garden-style apartment
properties containing a total of 1,264 units. Both properties are
located in the Cincinnati, Ohio area. The properties have a
combined occupancy of approximately 69.7% as of November 2004.
An event of default was declared on this loan on August 16, 2004
due to waste, as well as the Borrower's failure to comply with
several covenants and conditions of the loan documents. The Whole
Loan matured on November 11, 2004 and the Borrower has expressed
its inability to make the balloon payment. The Borrower has
ceased funding of this monthly deficit. The special servicer has
commenced foreclosure and filing a motion for receivership.
Moody's review will incorporate current operating performance, the
market outlook and potential recovery on the Loan.
DELTA FUNDING: Moody's Reviewing Ratings on Eight Cert. Classes
---------------------------------------------------------------
Moody's Investors Service placed under review for possible
downgrade two certificates from two Delta Funding Home Equity Loan
Trust transactions and has placed under review for possible
upgrade six certificates from three transactions, issued by Delta
Funding Corporation. The transactions are backed by primarily
first lien adjustable and fixed rate subprime mortgage loans.
These transactions, with the exception of the 2000-3 deal, have
been serviced by Delta Funding Corporation. Countrywide Home
Loans, Inc., is the servicer for the 2000-3 transaction.
The six subordinate certificates from the 1997-3, 1997-4, and
1998-2 transactions are placed under review for possible upgrade
based on the substantial build up in credit support. The
projected pipeline losses are not expected to significantly affect
the credit support for these certificates. The seasoning of the
loans and low pool factors reduce loss volatility.
The two subordinate certificates are placed under review for
possible downgrade due to the reduced credit enhancement levels
relative to the current projected losses on the underlying pools.
The transactions have taken significant losses causing gradual
erosion of the overcollateralization. As of the October 25th
reporting date, the realized loss in the 1998-2 adjustable rate is
5.39% and in the 2000-3 deal is 5.17%.
Moody's complete rating actions are:
Issuer: Delta Funding Corporation
Review for Upgrade:
* Series 1997-3; Class M-1F, current rating Aa2, under review
for possible upgrade
* Series 1997-3; Class M-2F, current rating A2, under review
for possible upgrade
* Series 1997-3; Class B-1A, current rating Ba3, under review
for possible upgrade
* Series 1997-4; Class M-1F, current rating Aa2, under review
for possible upgrade
* Series 1997-4; Class M-2F, current rating A2, under review
for possible upgrade
* Series 1998-2; Class M-2A, current rating A2, under review
for possible upgrade
Review for Downgrade:
* Series 1998-2; Class B-1A, current rating Baa3, under review
for possible downgrade
* Series 2000-3; Class B, current rating Baa3, under review for
possible downgrade
DODGE-ISUZU-SUZUKI: Case Summary & Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Dodge-Isuzu-Suzuki
dba Suburban Dodge-Isuzu-Suzuki
7050 West Ogden Avenue
Berwyn, Illinois 60402
Bankruptcy Case No.: 04-42931
Type of Business: The Company new and used car dealer.
See http://www.suburbandodge.com/
Chapter 11 Petition Date: November 18, 2004
Court: Northern District of Illinois (Chicago)
Judge: Eugene R. Wedoff
Debtor's Counsel: Michael L Gesas, Esq.
Gesas, Pilati, Gesas and Golin, Ltd.
53 West Jackson Boulevard, Suite 528
Chicago, Illinois 60604
Tel: (312) 726-3100
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
------ --------------- ------------
Man Marketing, Inc. $227,564
765 Kimberly Drive
Carol Stream, Illinois 60188
James J. Roche & Associates $50,000
Attorneys at Law
642 North Dearborn
Chicago, Illinois 60610
Sosin, Lawler & Arnold, LLC $36,048
11800 South 75th Avenue
Suite 300
Palos Heights, Illinois 60463
Liberty Mutual Insurance Group $32,095
75 Remittance Drive, Suite 1837
Chicago, Illinois 60675-1837
National Credit Center, Inc. $26,894
Gabriel Environmental $26,037
McHenry Insurance Services $23,913
Traid Financial $21,197
GMAC $20,920
Weis & Dubrock $19,000
GMAC Lien Payoff $15,120
Harris Bank $13,466
Lyndon Properties & The Extended Warranties $11,817
Plan & Prizm
Areadia Financial Lien Payoff $7,892
Suburban Auto $7,106
Baltimore Life Credit Life $5,909
MC2 Customs Alloy, Inc. $5,785
ADP Dealer Services $5,657
Harris Bank Barrington NA $5,592
United Auto Lien Payoff $5,180
DYKESWILL: U.S. Trustee Asks Court to Appoint Chapter 11 Trustee
----------------------------------------------------------------
Richard W. Simmons, the United States Trustee for Region 7, says
Dykeswill Ltd.'s principal, Everett C. Williams, has failed to
comply with the provisions of the Bankruptcy Code in the
performance of his duties pursuant to Section 1106 of the
Bankruptcy Code and should be displaced by a chapter 11 trustee.
The U.S. Trustee charges that Mr. Williams, on the Debtor's
behalf, has failed to file monthly operating reports for the
months of July, August and September and October 2004.
Furthermore, Mr. Williams, on the Debtor's behalf, has failed to
respond through his attorney, Dick Fuqua, Esq., to two e-mail
requests for documents and compliance with the Bankruptcy Code.
Specifically, the U.S. Trustee is waiting for the Debtor:
-- to file an application to employ an accountant as promised
at the creditors' meeting;
-- to file a partnership resolution permitting the Debtor to
file bankruptcy;
-- to provide proof of closing prepetition bank accounts;
-- to open postpetition debtor-in-possession bank accounts;
-- to provide the Trustee with financial statements submitted
to Laredo National Bank and First National Bank; and
-- to provide settlement statements for property acquisitions
and sales made by Dykeswill from January 1, 2000 to the date
of filing bankruptcy.
The U.S. Trustee tells the Court that he contacted ten of the
debtor's creditors and those creditors or their attorneys express
a general mistrust of the Debtor's principal.
The U.S. Trustee interviewed one creditor, Mrs. Saminah
Aziz-Hodge, who told him that $400,000 of her money was lent for a
specific purchase of real estate to an entity owned by the
Debtor's principal who then transferred those funds to the Debtor
for general operating expenses. The Debtor's principal has failed
to cooperate in complying with a discovery request by Ms. Hodge,
the U.S. Trustee relates.
The U.S. Trustee argues that the Debtor holds valuable real estate
assets. The disposition of those assets should be used to benefit
Debtor's creditors. However, the Debtor's principal has not
exhibited conduct consistent with the duties of a debtor-in-
possession. The Debtor was unable to timely file its Schedules of
Assets and Liabilities, the original creditor meeting had to be
rescheduled, a disclosure statement and plan of reorganization
have not been filed to date.
Mr. William's failures to act on behalf of Dykeswill constitute
cause for him to be removed and replaced by a chapter 11 trustee,
the Trustee contends. Accordingly, the U.S. Trustee asks the U.S.
Bankruptcy Court for the Southern District of Texas to appoint a
Chapter 11 Trustee.
As contemplated in Sections 521, 704 and 1106 of the Bankruptcy
Code, the Chapter 11 Trustee, once appointed, will take over the
Debtor's responsibilities.
Headquartered in Corpus Christi, Texas, Dykeswill Ltd., filed for
Chapter 11 protection on July 26, 2004 (Bankr. S.D. Tex. Case No.
04-20974). Harlin C. Womble, Jr., Esq., at Jordan, Hyden Womble
and Culbreth, P.C., represents the Debtor in its restructuring
efforts. When the company filed for protection from its
creditors, it listed over $10 million in assets and debts of more
than $1 million.
ECUITY INC: Defaults on Secured Promissory Note, Divine Says
------------------------------------------------------------
On Nov. 19, 2004, Divine Capital Markets LLC, a registered broker
dealer located in New York, New York, reported that on Nov. 11,
2004, the holder of a secured promissory note issued by Ecuity,
Inc. (OTC Bulletin Board: ECUI) (f/k/a Y3K Secure Enterprise
Software Inc.) on September 13, 2004, and amended on Oct. 14,
2004, in the principal amount of $113,000, due Oct. 21, 2004,
provided to Ecuity a notice of default for non-payment and breach
of other obligations Ecuity owed to the holder under the secured
promissory note. Divine Capital Markets LLC acted as Ecuity's
placement agent in connection with the issuance of the promissory
note, and made this announcement to ensure that Ecuity's default
was publicly disclosed. Divine Capital Markets LLC suggests that
any inquiries regarding Ecuity's default be made directly to
Ecuity.
About the Company
Ecuity Inc. provides secure end-to-end communication technology.
The Company uses next-generation voice services, instant
messaging, data transfer, Internet conference calling, and
enterprise software to create solutions that meet the
communication needs. Ecuity sells and markets to small to medium
businesses.
ENRON: Judge Baer Dismisses Appaloosa & Yosemite Appeals As Moot
----------------------------------------------------------------
On April 13, 2004, the appeals of the Ad Hoc Committee of
Yosemite/CLN Noteholders, and of Appaloosa Management LP and
Angelo Gordon & Co., LP, from the Bankruptcy Court order
approving Enron's Disclosure Statement were consolidated before
Judge Harold Baer, Jr. of the U.S. District Court for the
Southern District of New York.
To recall, the Appellants alleged that the Bankruptcy Court erred
in its decision that the Disclosure Statement contained adequate
information as required under Section 1125 of the Bankruptcy
Code. The Appellants argued that the Disclosure Statement did
not include a liquidation analysis that outlined anticipated
recoveries for creditors if each Debtor entity were separately
liquidated under Chapter 7 and not pursuant to a global
compromise.
The Debtors sought dismissal of the consolidated appeals, arguing
that:
(a) the Disclosure Statement Order was an interlocutory order;
(b) the Appellants did not meet the criteria for the District
Court to grant discretionary leave to appeal because the
Disclosure Statement's adequacy did not involve a
controlling question of law about which there was
substantial grounds for a difference of opinion that would
materially advance the termination of the litigation; and
(c) dismissal of the Appeals would not moot the issue because
the Appellants would have the opportunity to raise these
arguments during the proceedings to confirm the Plan.
The Debtors also asked for an award of fees.
In June 2004, Judge Gonzalez held a hearing to consider
confirmation of the Debtors' Plan, during which time the
Appellants had opportunity to revisit their arguments to the
adequacy of the Disclosure Statement and the Liquidation
Analysis. After reviewing and considering the Plan, the
Bankruptcy Court confirmed the Plan on July 15, 2004.
District Court's Analysis
Judge Baer holds that when, during the pendency of an appeal,
events occur that would prevent the appellate court from
fashioning effective relief, the appeal must be dismissed as
moot. Judge Baer explains that the Appellants never sought a
stay of the Disclosure Statement Order or the confirmation
proceedings pending their appeal. Nor did they ask for an
expedited review of their appeals in the District Court. Since
the Disclosure Statement has been issued and the Plan confirmed,
the question on the adequacy of the Disclosure Statement is
equitably moot.
Even if the Appeals presented a live, justiciable controversy,
Judge Baer points out that an order concerning the adequacy of a
disclosure statement:
-- is interlocutory in nature and therefore not appealable as
a matter or right; and
-- does not meet the criteria for a discretionary appeal under
Section 1292(b) of the Judiciary and Judicial Procedure.
Accordingly, Judge Baer dismisses the Appeals as moot.
The Debtors' application for fees is denied.
Headquartered in Houston, Texas, Enron Corporation filed for
chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case
No. 01-16033) following controversy over accounting procedures,
which caused Enron's stock price and credit rating to drop
sharply. Judge Gonzalez confirmed the Company's Modified Fifth
Amended Plan on July 15, 2004, and numerous appeals followed. The
Debtors' confirmed chapter 11 Plan took effect on Nov. 17, 2004.
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. 130;
Bankruptcy Creditors' Service, Inc., 15/945-7000)
EPOCH 2001-2: Fitch Affirms Junk Rating on $8 Mil. Class V Notes
----------------------------------------------------------------
Fitch Ratings affirms six tranches of EPOCH 2001-2, Ltd.:
-- $48,000,000 class I notes affirmed at 'AA';
-- $28,000,000 class II notes affirmed at 'A';
-- $12,000,000 class III notes affirmed at 'BBB';
-- $33,500,000 class IV-A notes affirmed at 'B-';
-- JPY1,000,000,000 class IV-B notes affirmed at 'B-';
-- $8,000,000 class V notes affirmed at 'CCC-'.
EPOCH 2001-2, Limited, incorporated under the laws of the Cayman
Islands, was created to enter into a credit default swap with
Morgan Stanley Credit Products, Ltd. -- MSCPL -- and to issue the
above-referenced securities. The notes are supported by the cash
flows of the collateral, as well as the credit default swap
premium paid by MSCPL. The credit default swap references a
static portfolio of securities, consisting of predominantly senior
unsecured credits. The ratings assigned to the notes address the
timely payment of interest and the ultimate payment of principal.
Fitch Ratings has reviewed the credit quality of the individual
assets comprising the portfolio. Since Fitch's last rating action
in July 2003, the portfolio has not experienced any additional
credit events. Additionally, the performance of the reference
portfolio has remained stable, along with minimal credit
migration. Accordingly, Fitch has determined that the ratings
assigned to all rated securities, as indicated above, reflect the
current risk to noteholders.
Fitch will continue to monitor and review this transaction for
future rating adjustments as needed.
EPOCH 2002-1: Fitch Affirms BB Rating on $12 Million Class V Notes
------------------------------------------------------------------
Fitch Ratings affirms five tranches of EPOCH 2002-1, Ltd.:
-- $40,000,000 class I notes affirmed at 'AAA';
-- $22,000,000 class II notes affirmed at 'AA';
-- $10,000,000 class III notes affirmed at 'A';
-- $35,000,000 class IV-A notes affirmed at 'BBB';
-- $12,000,000 class V notes affirmed at 'BB'.
EPOCH 2002-1, Limited, incorporated under the laws of the Cayman
Islands, was created to enter into a credit default swap with
Morgan Stanley Credit Products, Ltd. -- MSCPL -- and to issue the
above-referenced securities. The notes are supported by the cash
flows of the collateral, as well as the credit default swap
premium paid by MSCPL. The credit default swap references a
static portfolio of securities, consisting of predominantly senior
unsecured credits. The ratings assigned to the notes address the
timely payment of interest and the ultimate payment of principal.
Fitch Ratings has reviewed the credit quality of the individual
assets comprising the portfolio. Since Fitch's last rating action
in July 2003, the performance of the reference portfolio has
remained stable, along with minimal credit migration.
Additionally, EPOCH has not incurred any credit events to date.
Accordingly, Fitch has determined that the ratings assigned to all
rated securities, as indicated, reflect the current risk to
noteholders.
Fitch will continue to monitor and review this transaction for
future rating adjustments as needed.
ESCHELON OPERATING: Moody's Junks $165 Mil. Senior Secured Notes
----------------------------------------------------------------
Moody's Investors Service affirmed its Caa1 rating for Eschelon
Operating Co.'s $165 million (estimated face amount, as adjusted
to reflect pending $65 million add-on issuance) of senior secured
notes due 2010. The add-on notes will be priced at a discount
with expected proceeds of around $52 million, which will be used
along with proceeds from the issuance of $15 million of Series B
preferred stock to fund the $46 million acquisition of the stock
of Advanced Telecom, Inc. -- ATI, a competitive local exchange
carrier -- CLEC -- in the western U.S., with the rest of the net
proceeds being placed on the balance sheet to boost cash balances,
which is the main impetus for the higher liquidity rating.
Moody's affirmed these ratings:
Eschelon Operating Co.
* $165 million (estimated face amount, as adjusted to reflect
the pending $65 million add-on) of Senior 2nd Priority Lien
Notes maturing in 2010 -- Caa1
* Senior Implied Rating -- Caa1
* Issuer Rating -- Caa2
Moody's upgraded these rating:
* Liquidity Rating -- to SGL-2 from SGL-3
The rating outlook is stable.
Moody's has reassigned the senior implied rating, issuer rating,
speculative grade liquided to Eschelon Operating Company from
Eschelon Telecom Inc. in order to regularize Moody's rating.
The ratings reflect high leverage and low interest coverage pro
forma the acquisition of ATI, though Moody's believes the ATI
transaction slightly improves the company's strategic position and
free cash flow generating capacity. The ratings also incorporate
integration risk, which Moody's believes exists as a result of the
relatively large size of the acquisition. While Moody's
recognizes that ATI represents a complementary acquisition for
Eschelon, concerns remain about potential near term integration
challenges and Eschelon's need to maintain a significant growth
rate in order to generate meaningful free cash flow in the next
two years. To support this high growth rate, Eschelon will have
to continue to make substantial capital expenditures with only a
relatively modest (albeit improved proforma for successful
completion of the pending transaction) cash cushion to fund
performance shortfalls. Moody's believes the ATI transaction
makes strategic long-term sense, although asset coverage remains
thin, even on a proforma basis.
The ratings benefit, however, from the company's continued growth
in access lines, customers on net, revenue, gross margin, and
EBITDA. Moody's also believes that the ATI acquisition will
ultimately provide the company with benefits of scale that may
include more sustainable revenue growth and higher margins. Scale
may also provide savings in capital expenditures, implying higher
returns and better coverage metrics over the intermediate term.
Eschelon's senior implied rating reflects moderately high
financial leverage and modest liquidity combined with a high
degree of business risk. Proforma for the proposed transaction,
Eschelon will have approximately $140 million of debt and
$32 million in cash balances. For the latest twelve months ended
9/30/04, Moody's believes that Eschelon generated about
$30 million of EBITDA (proforma for the inclusion of ATI) and used
approximately $15 million in cash. In order for Eschelon to avoid
running out of cash, the company must continue to grow operating
cash flow at a continued high rate. Operating cash flow growth
remains a function of the company's ability to take market share
from Qwest, and now SBC. Eschelon has historically grown its
revenue base in a poor macroeconomic environment by taking
small- and medium-sized business customers, mostly from Qwest.
Moody's believes the organic market for telecommunications
services will grow only at modest rates over the long term,
essentially requiring CLECs, like Eschelon, to compete for
customers with the incumbents in order to achieve the high growth
necessary to support their debt levels and fixed cost structures.
As the incumbents generally have superior operating and economic
resources, this represents a significant ongoing challenge.
Failure to significantly increase operating cash flow could result
in a cash shortfall, as Moody's anticipates investment levels and
cash interest expense represent a significant fixed burden, which
could begin to weigh more heavily on the liquidity rating (as cash
balances erode again) over the next couple of quarters.
The ratings also incorporate Moody's view of the underlying value
of Eschelon's assets in the event of a default. While the company
will have a substantial customer base served by more than 300,000
access lines on a proforma basis, 17% percent of these are UNE-P
lines leased wholesale from the ILEC at regulated rates and the
remainder rely on UNE-L (loops) and dedicated T-1 connections to
complete access to the customer premise. This means that
Eschelon's tangible telecom assets consist mostly of voice and
data switches whose value does not cover Eschelon's liabilities.
Therefore, full recovery is uncertain since it would likely
require multiple bidders who viewed Eschelon's entire business as
complementary to their own or in some other way strategic on an
asset-resale basis.
Eschelon's proposed $65 million of add-on senior second-priority
notes, in conjunction with its $100 million of existing notes of
the same rank and security package, will comprise nearly all of
the company's outstanding debt, and are therefore not notched off
of the company's Caa1 senior implied rating. This is
notwithstanding the fact that, for analytical purposes, Moody's
considers the parent's proforma $61 of million preferred stock as
substantially debt-like, albeit noting that the cash servicing
requirement is fully restricted for some time in Moody's
estimation by the terms of the restricted payments basket in the
notes indenture. The notes would be structurally senior to any
debt that would be issued at the parent, Eschelon Telecom Inc.,
and also benefit from senior unsecured guarantees from both the
parent and all restricted subsidiaries. Importantly, additional
debt is limited by a debt incurrence test of 4.5x annualized
trailing two-quarter EBITDA (as specified in the bond indenture),
while secured debt is limited to an amount no greater than 2.7x
cash flow (as defined in the bond indenture); only $5 million of
aggregate indebtedness is permitted at the company's subsidiaries.
Total debt incurred would remain capped at 4.5x EBITDA. Since the
company's debt to EBITDA ratio will potentially exceed 4.5x upon
closing of this transaction, additional debt can only effectively
be incurred as EBITDA increases, either through operational
improvements or acquisitions.
The upgrade of Eschelon's speculative grade liquidity rating to
SGL-2 reflects the company's improved cash balances proforma for
the assumed successful completion of the proposed transaction.
Eschelon's SGL-2 rating reflects the company's "good" liquidity
profile as projected for the next twelve months. Moody's believes
that Eschelon's projected $32 million proforma cash balance is
sufficient to fund a reasonable shortfall in operating cash flow,
and recognizes the company's flexibility to modestly pare expenses
and investment levels if business conditions warrant during this
period. Eschelon presently has no alternate liquidity in the form
of a backup credit facility, which relegates the liquidity profile
to a somewhat weaker position within the rating category, although
the resulting absence of any maintenance financial covenants
serves as a somewhat offsetting factor. Moody's also believes
that the company has few "backdoor" sources of liquidity, other
than additional sponsor equity or the potential to monetize a
fairly modest amount of receivables, whose prospective financing
would be less than assured. Due to the potential use of cash to
fund any ongoing operating shortfall, the liquidity profile is
expected to worsen in the near-term.
The stable rating outlook reflects Moody's understanding of the
risks and challenges facing Eschelon. Ratings could be lifted if
Eschelon generates free cash flow as a result of successfully
scaling its business while maintaining sufficient liquidity in the
form of cash balances or implements an undrawn credit facility.
Conversely, ratings could fall if the company's cash burn shows
signs of materially accelerating.
Eschelon is a competitive local exchange carrier servicing
354,000 access lines in 19 markets on a proforma basis. The
company maintains its headquarters in Minneapolis, Missesota.
FRANKLIN CAPITAL: Receives $3.5 Million from Private Placement
--------------------------------------------------------------
Franklin Capital Corporation (AMEX: FKL) reported that, as a
result of the Company's receipt of additional proceeds in
connection with a second closing of the Company's previously
announced private placement of shares of its common stock and
warrants to purchase additional shares of its common stock, the
Company has received to date aggregate proceeds of approximately
$3.5 million from the private placement. These proceeds will be
used in connection with the Company's previously announced
restructuring and recapitalization plan, including to expedite the
Company's entry into the medical products/health care solutions
industry and financial services industry.
The shares of common stock and warrants to purchase additional
shares of common stock issued in connection with the private
placement have not been registered under the Securities Act of
1933, as amended, and may not be offered or sold unless they are
so registered or are exempt from the registration requirements.
Franklin Capital Corporation originates and services direct and
indirect loans for itself and its sister company Franklin
Templeton Bank and Trust, F.S.B. Eight different loan programs are
offered, allowing Franklin Capital Corporation to serve the needs
of prime, non-prime and sub-prime customers throughout the United
States.
* * *
As reported in the Troubled Company Reporter on August 24, 2004,
Franklin Capital Corporation's former independent accountants,
Ernst & Young LLP, indicated in its reports dated March 5, 2004
and March 7, 2003 on Franklin's financial statements, substantial
doubt about the company's ability to continue as a going concern.
FT WILLIAMS: Creditors Must File Proofs of Claim Today
------------------------------------------------------
The United States Bankruptcy Court for the Western District of
North Carolina set Nov. 23, 2004, as the deadline for all
creditors owed money by F.T. Williams Company Incorporated, on
account of claims arising prior to July 15, 2004, to file their
proofs of claim.
Creditors must file their written proofs of claim on or before the
November 22 Claims Bar Date, and those forms must be delivered to:
Clerk of the Bankruptcy Court
Charlotte Division
P.O. Box 34189
Charlotte, North Carolina 28234-4189
Headquartered in Charlotte, North Carolina, FT Williams Company
Inc., filed for Chapter 11 protection on July 27, 2004 (Bankr.
W.D. N.C. Case No. 04-32623). Kevin Michael Profit, Esq., and
Travis W. Moon, Esq., at Hamilton Gaskins Fay and Moon represent
the Debtor in its restructuring efforts. When the Debtor filed for
protection from its creditors, it listed $10,000,001 in total
assets and $12,703,065 in total debts.
GC POWER: Moody's Rates Proposed $1.375B Sr. Secured Loans at Ba2
-----------------------------------------------------------------
Moody's Investors Service assigned a Ba2 rating to GC Power
Acquisition LLC's proposed $1.375 billion of first priority senior
secured credit facilities, which include a $900 million term loan
and a $475 million delayed draw facility (the term loans), both
maturing in 2011. Moody's also assigned a Ba2 senior secured
rating to GC Power's $325 million revolving credit facility, $200
million letter of credit facility and $300 million Special LC
facility, all of which mature in 2009 and will rank pari passu
with the other first lien credit facilities. In addition, Moody's
assigned a Ba3 senior secured rating to GC Power's planned
$1.375 billion second priority senior secured notes, maturing in
2014. Moody's also assigned a Senior Implied rating of Ba3, an
Issuer Rating of B1, and a speculative grade liquidity rating of
SGL-2. The rating outlook is stable.
The Ba3 Senior Implied rating reflects:
(1) GC Power's cost competitive base load coal and nuclear
generation capacity within the Electric Reliability Council
of Texas -- ERCOT -- market,
(2) the substantially contracted forward power sales of
available baseload capacity, and
(3) the current commodity price outlook for natural gas and
power in the ERCOT market.
The rating incorporates the investment grade ratings of Goldman
Sachs and Constellation Energy, the power off-take counterparties,
both of whom have signed multi-year power purchase agreements.
The contracts expire in 2008. The rating also incorporates
provisions under the term loan and delayed draw facilities that
capture excess cash flow and increase liquidity. These provisions
include:
(1) a cash sweep of a portion of excess cash flow, with amounts
being used for debt reduction;
(2) significant available liquidity in the form of a
$325 million revolver; and
(3) a $200 million LC facility to support additional forward
sales.
The $200 million LC facility is in addition to a $300 million
special LC facility, which will be posted with J. Aron, a member
of the Goldman Sachs group, as collateral for the currently
contracted forward sales.
GC Power's initial balance sheet will have a debt to total
capitalization of approximately 75%. Moody's expects that GC
Power will generate cash flow from operations equal to
approximately 15% of total debt over the near-term. Moody's
expects GC Power to generate positive free cash flows over the
next few years, a portion of which will be contractually obligated
to reduce the First Priority Senior Secured Term Loans. The
majority of GC Power's cash flows are expected to be generated
through its baseload forward sales agreements, which Moody's views
positively due to the expected stability of the contractual
revenues.
The ratings also incorporate the operating and outage risks
associated with managing approximately 14,000 MW's of generating
capacity in a single market. Included in these risks is nuclear
event risk, which we consider to be an extended, unplanned outage.
We also note the presence of business execution risks associated
with a new management team assuming operating control of these
assets while planning to make significant reductions in non-fuel
fixed operating costs without deteriorating capacity factors and
availability levels.
The Ba2 rating of the first lien debt incorporates the strong
collateral position for this debt, which is secured by
substantially all properties and assets of GC Power and its
subsidiary guarantors (including the pledge of interest in the
South Texas Project nuclear facility). Most of the estimated
collateral value resides in the 5,200 MW of base load coal-fired
plants and the nuclear plant, while the approximately 9,000 MW of
natural gas fired plants are viewed as providing modest additional
value under current market conditions. The Ba3 rating of the
second lien debt reflects Moody's view that the residual
collateral would be expected to provide substantial potential
recovery but that the second lien debt might have less than full
coverage under some default scenarios.
The B1 Issuer Rating reflects Moody's opinion of GC Power's
unsupported ability to meet senior unsecured financial
obligations.
The SGL-2 rating reflects the company's liquidity profile over the
next 12 months. This rating considers the volatility associated
with natural gas and electric commodities. However, the rating
considers the expected availability of most of the $325 million
revolving credit facility, and the provision for an additional
$200 million letter of credit facility in addition to the
$300 million facility that is needed to collateralize GC Power's
forward agreements with J. Aron. The terms of the J. Aron
agreement do not require GC Power to post additional collateral
beyond the initial $300 million LC facility despite possible
fluctuations in the mark to market position of the forward
contracted position.
GC Power Acquisition LLC, is a newly formed entity owned in equal
parts by affiliates of The Blackstone Group, Hellman & Friedman
LLC, Kohlberg Kravis Roberts & Co. L.P. and Texas Pacific Group.
It will acquire Texas Genco Holdings, Inc. from CenterPoint
Energy, Inc. (Ba2 senior unsecured, negative outlook) for
approximately $3.65 billion in cash. The transaction will be
accomplished in two steps. In the first step, expected to be
completed in December 2004, TGN will purchase the approximately
19% of its shares owned by the public in a cash-out merger at a
price of $47 per share. Following the cash-out merger of the
publicly owned shares, a subsidiary of TGN that owns the coal,
lignite and gas-fired generation plants will merge with a
subsidiary of GC Power. The closing of the first step of the
transaction is subject to several conditions. On Sept. 17, 2004,
the Federal Trade Commission granted early termination of the
waiting period applicable to the consummation of the transactions
contemplated by the transaction agreement under the Hart-Scott-
Rodino Act. On September 24, 2004, the FERC granted exempt
wholesale generator status to Texas Genco II, LP. There are no
other material regulatory approvals to be obtained prior to
completion of the public company merger.
In the second step of the transaction, expected to take place in
April 2005 following receipt of approval by the Nuclear Regulatory
Commission, TGN, which at that time, will only own an interest in
the STP nuclear facility, will merge with another subsidiary of GC
Power.
In connection with the transaction, a subsidiary of TGN, Texas
Genco, LP, entered into a master power purchase and sale agreement
with J. Aron, a member of the Goldman Sachs group. Under that
agreement, TGN has sold forward a substantial quantity of its
available baseload capacity through 2008.
Upon completion of the transactions, GC Power will be an exempt
wholesale generator headquartered in Houston, Texas. GC Power
expects to change its name to Texas Genco LLC in the near future.
GC POWER: S&P Assigns Low-B Ratings to Loans & Says Outlook Stable
------------------------------------------------------------------
Standard & Poor's Ratings Services assigned its preliminary 'BB-'
corporate credit rating to GC Power Acquisition LLC.
Standard & Poor's also assigned its:
* preliminary 'BB' rating to:
-- GC Power's $1.375 billion first lien term loan B due 2011
and
-- $325 million revolving credit facility due 2009, and
* its preliminary 'B+' rating to GC Power's $1.375 billion
second lien notes.
The ratings are preliminary subject to final documentation. The
outlook is stable.
Furthermore, Standard & Poor's assigned its '1' recovery rating to
GC Power's first lien debt, indicating the high expectation for
the full recovery of principal in the event of default, and its
'3' recovery rating to the company's second lien debt, indicating
the expectation for meaningful recovery (50%-80%) of principal in
the event of default.
"Ratings stability for GC Power reflects our view that the
company's credit quality should not significantly deteriorate in
the short term due to the hedging agreements that are in place,"
said Standard & Poor's credit analyst Scott Taylor. "However, the
hedges do not mitigate operating risk, and the company will still
be exposed to commodity price risk on the portion that is
unhedged."
"Any upgrades would depend on the company's debt reduction, and
the dynamics of the Electric Reliability Council of Texas (ERCOT)
market going forward," continued Mr. Taylor.
GC Power was formed by a consortium of four private equity firms
to acquire Texas Genco Holdings Inc. from CenterPoint Energy Inc.
The four firms are The Blackstone Group, Hellman & Friedman,
Kohlberg Kravis Roberts & Co., and Texas Pacific Group, and
minority investors.
Texas Genco owns 14,386 MW of generating capacity, all located in
ERCOT. Of the total generating capacity, 9,164 MW is fired by gas
or oil, and contributes very little operating margin to the
business. The remaining capacity is baseload capacity, including
the 2,501 MW W.A. Parish coal units, the 1,621 MW Limestone
lignite facility, and 1,100 MW (including 330 MW to be purchased
in April 2005) of the South Texas Project nuclear facility.
GENTEK INC: NASDAQ National Market Approves Common Stock Listing
----------------------------------------------------------------
GenTek Inc.'s (OTC Bulletin Board: GETI) application to list its
common stock on the NASDAQ National Market has been approved.
GenTek's common stock will begin trading on the NASDAQ National
Market today, Nov. 23, 2004 under the ticker symbol "GETI."
"We believe that listing our shares on the NASDAQ National Market
will provide GenTek's shareholders with a more liquid and
efficient market in which to trade our shares as well as expand
our base of potential investors," said Richard R. Russell,
GenTek's president and CEO.
GenTek continues to work with Goldman, Sachs & Co. to explore
strategic alternatives, including the possible sale of the company
in its entirety.
Headquartered in Hampton, New Hampshire, GenTek Inc. --
http://www.gentek-global.com/-- is a technology-driven
manufacturer of communications products, automotive and industrial
components, and performance chemicals. The Company filed for
Chapter 11 protection on October 11, 2002 (Bankr. D. Del. Case No.
02-12986) and emerged on November 10, 2003 under the terms of a
confirmed plan that eliminated $670 million of debt and delivered
94% of the equity in Reorganized GenTek to the Company's secured
lenders. Old subordinated bondholders took a 4% slice of the
equity pie and prepetition unsecured creditors shared a 2% stake
in the Reorganized Company. Old Equity Interests were wiped out.
Mark S. Chehi, Esq., and D.J. Baker, Esq., at Skadden, Arps,
Slate, Meagher & Flom LLP, represented the Debtors in their
restructuring. When the Debtors filed for protection from its
creditors, they listed $1,219,554,000 in assets and $1,456,000,000
in liabilities.
GREEN TREE: Weak Performance Prompts Moody's to Review Ratings
--------------------------------------------------------------
Moody's Investors Service placed on review for possible downgrade
the ratings on certain senior, mezzanine and subordinate
certificates of 20 Green Tree Financial Corp. (subsequently
Conseco Finance Corp.) manufactured housing securitizations. The
transactions are currently being serviced by Green Tree Investment
Holdings II LLC, which bought the MH servicing platform of Conseco
Finance in 2003.
Moody's previously downgraded the senior, mezzanine and
subordinate certificates of 44 Green Tree's 1992-1998
securitizations in December 2003 and 13 Conseco's 1999-2002
securitizations in December 2003 and August 2004. The rating
actions were prompted by the continued performance deterioration
of Green Tree pools and the resulting erosion of credit support.
The current review is prompted by the continued weaker than
expected performance of Green Tree's pools. Although
repossessions and loss severities have decreased, the improvement
has been slower than expected. As a result, losses remain high
and credit support continues to erode. The B-2 classes of many of
the pools have been completely written down.
Green Tree Investment Holdings II LLC is a joint venture among
Fortress Investment Group LLC, Cerberus Capital Management.
The complete ratings actions are:
Issuer: Green Tree Financial Corporation
Series 1993-2:
* 8.00% Class B Certificates, rated B3, on review for possible
downgrade
Series 1996-3:
* 7.70% Class M-1 Certificates, rated B1, on review for
possible downgrade
Series 1996-4:
* 7.40% Class A-6 Certificates, rated Aa3, on review for
possible downgrade
* 7.90% Class A-7 Certificates, rated Aa3, on review for
possible downgrade
* 7.75% Class M-1 Certificates, rated B2, on review for
possible downgrade
Series 1996-5:
* 8.05% Class M-1 Certificates, rated B2, on review for
possible downgrade
Series 1996-6:
* 7.95% Class M-1 Certificates, rated Ba3, on review for
possible downgrade
Series 1996-7:
* 7.70% Class M-1 Certificates, rated Ba1, on review for
possible downgrade
* 7.70% Class B-1 Certificates, rated Ca, on review for
possible downgrade
Series 1996-8:
* 7.85% Class M-1 Certificates, rated B1, on review for
possible downgrade
Series 1996-9:
* 7.63% Class M-1 Certificates, rated B1, on review for
possible downgrade
* 7.65% Class B-1 Certificates, rated Ca, on review for
possible downgrade
Series 1997-1:
* 6.86% Class A-5 Certificates, rated A1, on review for
possible downgrade
* 7.29% Class A-6 Certificates, rated A1, on review for
possible downgrade
* 7.22% Class M-1 Certificates, rated B1, on review for
possible downgrade
* 7.23% Class B-1 Certificates, rated Ca, on review for
possible downgrade
Series 1997-2:
* 7.24% Class A-6 Certificates, rated A3, on review for
possible downgrade
* 7.62% Class A-7 Certificates, rated A3, on review for
possible downgrade
* 7.54% Class M-1 Certificates, rated B2, on review for
possible downgrade
Series 1997-3:
* 7.14% Class A-5 Certificates, rated A3, on review for
possible downgrade
* 7.32% Class A-6 Certificates, rated A3, on review for
possible downgrade
* 7.64% Class A-7 Certificates, rated A3, on review for
possible downgrade
* 7.53% Class M-1 Certificates, rated B2, on review for
possible downgrade
Series 1997-4:
* 6.88% Class A-5 Certificates, rated A2, on review for
possible downgrade
* 7.03% Class A-6 Certificates, rated A2, on review for
possible downgrade
* 7.36% Class A-7 Certificates, rated A2, on review for
possible downgrade
* 7.22% Class M-1 Certificates, rated B1, on review for
possible downgrade
Series 1997-5:
* 6.62% Class A-5 Certificates, rated Aa3, on review for
possible downgrade
* 6.82% Class A-6 Certificates, rated Aa3, on review for
possible downgrade
* 7.13% Class A-7 Certificates, rated Aa3, on review for
possible downgrade
* 6.95% Class M-1 Certificates, rated Ba3, on review for
possible downgrade
* 6.97% Class B-1 Certificates, rated Ca, on review for
possible downgrade
Series 1997-7:
* 7.03% Class M-1 Certificates, rated B1, on review for
possible downgrade
Series 1998-1:
* 6.04% Class A-4 Certificates, rated A3, on review for
possible downgrade
* 6.68% Class A-5 Certificates, rated A3, on review for
possible downgrade
* 6.33% Class A-6 Certificates, rated A3, on review for
possible downgrade
* 6.77% Class M-1 Certificates, rated B1, on review for
possible downgrade
Series 1998-2:
* 6.24% Class A-5 Certificates, rated Baa1, on review for
possible downgrade
* 6.81% Class A-6 Certificates, rated Baa1, on review for
possible downgrade
* 6.94% Class M-1 Certificates, rated B2, on review for
possible downgrade
Series 1998-4:
* 6.18% Class A-5 Certificates, rated Baa2, on review for
possible downgrade
* 6.53% Class A-6 Certificates, rated Baa2, on review for
possible downgrade
* 6.87% Class A-7 Certificates, rated Baa2, on review for
possible downgrade
* 6.83% Class M-1 Certificates, rated Caa1, on review for
possible downgrade
Series 1998-5:
* 6.54% Class A-1 Certificates, rated Baa1 on review for
possible downgrade
* 6.71% Class M-1 Certificates, rated B2, on review for
possible downgrade
Series 1998-7:
* 6.32% Class A-1 Certificates, rated Baa1, on review for
possible downgrade
* 6.40% Class M-1 Certificates, rated Ba3, on review for
possible downgrade
* 6.84% Class M-2 Certificates, rated B3, on review for
possible downgrade
Series 1998-8:
* 6.28% Class A-1 Certificates, rated Baa1, on review for
possible downgrade
* 6.98% Class M-1 Certificates, rated Ba3, on review for
possible downgrade
* 7.08% Class M-2 Certificates, rated Caa2, on review for
possible downgrade
HCA INC: Declares $0.13 Per Share Quarterly Dividend
----------------------------------------------------
HCA Inc.'s (NYSE: HCA) Board of Directors has declared a regular
quarterly dividend of $0.13 per share, payable March 1, 2005, to
shareholders of record as of February 1, 2005.
HCA Inc., headquartered in Nashville, Tennessee is the nation's
largest acute care hospital company with 190 hospitals.
* * *
As reported in the Troubled Company Reporter on Nov 19, 2004,
Standard & Poor's Ratings Services assigned its 'BB+' rating to
hospital operator HCA Inc.'s $500 million senior unsecured notes
due December 1, 2009, and $750 million senior notes due
January 15, 2015. These notes are being issued as a Rule 415
shelf drawdown.
At the same time, Standard & Poor's affirmed its 'BB+' corporate
credit rating and its other outstanding ratings on the company.
The outlook is stable.
The proceeds of the senior unsecured notes will be used to repay
outstanding borrowings under a $1.25 billion short-term loan
facility. This facility was used only to help fund the company's
$2.5 billion common stock share repurchase program that is under
way as a modified "Dutch" auction. The rest of the share
repurchase program will be funded from borrowings under HCA's new,
unrated $2.5 billion bank credit facility. With the completion of
this financing, total outstanding debt is about $11 billion.
HCA is the largest owner and operator of acute-care hospitals,
with a portfolio of 190 hospitals and 91 ambulatory surgery
centers (of which seven hospitals and 10 ambulatory surgery
centers are owned through equity joint ventures) in 23 states, the
U.K., and Switzerland.
Despite its aggressive financial policy, the company has:
-- a reasonably diversified hospital portfolio,
-- strong positions in several of its markets, and
-- relatively favorable reimbursement.
"Profitability will continue to be tied to changes in
reimbursement rates by the government and other third-party payors
that are under increasing pressure to contain their health care
costs," said Standard & Poor's credit analyst David Peknay.
"Payment rates from private insurers are still favorable.
However, hospitals are experiencing declining levels of rate
increases," he continued.
HEALTH & NUTRITION: Files Plan of Reorganization in Florida
-----------------------------------------------------------
Health & Nutrition Systems International Inc. (OTC Bulletin Board:
HNNSQ) filed its plan of reorganization under Chapter 11 of the
federal bankruptcy law on Nov. 19, 2004, subject to approval by
the U.S. Bankruptcy Court for the Southern District of Florida and
certain classes of the Company's creditors.
The plan of reorganization, if approved, will include the sale of
HNS' operating assets to TeeZee Inc., or to another bidder that
submits a higher and better bid. TeeZee Inc. is a Florida-based
company owned by Christopher Tisi, who formerly served as CEO and
a Director of HNS, and who currently is an employee. TeeZee
Inc.'s offer is to pay HNS $350,000 in cash (subject to
adjustment), and assume $1,935,000 of the debt of HNS. The plan
filed by the Company details the methods by which the claims of
the Company's creditors will be satisfied.
As part of the Company's plan of reorganization, HNS entered into
an employment contract with its Chief Executive Officer, James A.
Brown, which contract is subject to the confirmation of the plan.
If the plan, including the contract, is confirmed and approved by
the relevant creditors and the Court, Mr. Brown will serve as CEO
of HNS for a period of one year and receive annual compensation of
$86,200. He will also receive 300,000 shares of the common stock
of HNS upon consummation of the plan. The Company will have the
right to repurchase those shares if Mr. Brown leaves the Company
prior to the expiration of the agreement, or is terminated for
cause.
Headquartered in West Palm Beach, Florida, Health & Nutrition
Systems International, Inc. -- http://www.hnsglobal.com/--
develops and markets weight management products in over 25,000
health, food and drug store locations. The Company's products can
be found in CVS, GNC, Rite Aid, Vitamin Shoppe, Vitamin World,
Walgreens, Eckerd and Wal-Mart. The Company's HNS Direct division
distributes to independent health food stores, gyms and
pharmacies. The Company filed for chapter 11 protection on
Oct. 15, 2004 (Bankr. S.D. Fla. Case No. 04-34761). Arthur J.
Spector, Esq., at Berger Singerman, represents the Debtor in its
restructuring efforts. When the Company filed for protection from
its creditors, it listed $1,182,382 in total assets and $2,196,129
in total Debts as of June 30, 2004.
HOLLINGER CANADIAN: Receives Proceeds from Canwest Transaction
--------------------------------------------------------------
Hollinger Canadian Newspapers, Limited Partnership said 3815668
Canada Inc., a subsidiary of CanWest Global Communications Corp.,
has completed the issuance of a new series of 8% Senior
Subordinated Notes due 2012 in exchange for most of the
outstanding 12-1/8% Senior Notes due 2010 issued by Hollinger
Participation Trust. The Participation Trust sold debentures
previously issued by the Issuer in connection with the
transaction. Each of the Partnership and Hollinger International
Inc. also sold CanWest Debentures held by them to the Issuer for
cash. With the successful completion of the transaction, the
Participation Trust was liquidated and each of the Partnership and
Hollinger International received payments in respect of their
residual interests in the Participation Trust.
In connection with the transaction, the Partnership received cash
proceeds of approximately US$84.5 million (Cdn$101.8 million) and
Hollinger International received cash proceeds of approximately
US$49.1 million (Cdn$59.2 million), for a total of US$133.6
million (Cdn$161.0 million). Of the cash proceeds received by the
Partnership, US$72.0 million (Cdn$86.7 million) was received in
respect of the CanWest Debentures beneficially owned by the
Partnership and US$12.5 million (Cdn$15.1 million) was received in
respect of the Partnership's residual interest in the
Participation Trust and was attributable to foreign currency
exchange. Canadian dollar proceeds are reflected at a conversion
rate of Cdn$1.00 to US$0.8299.
About the Company
Hollinger Canadian Newspapers, Limited Partnership owns and
operates of 13 daily and non-daily community newspapers, 55 trade
magazines and directories, 7 newsletters, the Northern Miner
weekly industry newspaper, and four business publications in
electronic formats (TSX: HCN.UN)
* * *
As reported in the Troubled Company Reporter on Aug. 23, 2004, the
Toronto Stock Exchange formally suspended Hollinger Canadian's
Units from trading on the TSX as of 5:00 p.m. Toronto time on
August 6, 2004. The Units were suspended from trading on the TSX
due to the failure of Hollinger Canadian Newspapers G.P., Inc.,
the general partner of the Partnership to have at least two
independent directors on its board of directors, as required by
the TSX continued listing requirements. The Limited Partnership
Agreement governing the Partnership requires the General Partner
to have at least three independent directors. The General Partner
currently has one independent director.
INDYMAC ARM: S&P Downgrades Class B-3's Rating to BB from BBB
-------------------------------------------------------------
Standard & Poor's Ratings Services lowered its rating on class B-3
from IndyMac ARM Trust IndyMac ARM Grantor Trust 2001-H1.
Concurrently, ratings are affirmed on all other listed classes
from IndyMac ARM Trusts 2001-H1 and 2001-H2 (see list).
The lowered rating on class B-3 from IndyMac ARM Trust 2001-H1
reflects Standard & Poor's determination that the previous rating
is no longer consistent with the credit support available due to
deteriorating collateral pool performance. Credit support for
both transactions is provided by subordination.
To date, IndyMac ARM Trust 2001-H1 has realized approximately
$2.042 million in losses over the life of the pool. However, pool
losses are expected to accelerate in coming months based on
current pool data. As of October 2004, one-fifth (20.67%) of the
pool was 30-plus days delinquent, with the majority (12.19%) of
those loans experiencing severe delinquency.
Applying the loss severity and foreclosure information provided by
the issuer to the present delinquency pipeline, cumulative losses
will likely spike by a third to approximately $2.783 million.
Because the losses would further jeopardize the likelihood of
timely payment in an investment-grade scenario, the lowered rating
on class B-3 from IndyMac ARM Trust 2001-H1 is warranted at this
time.
The affirmed ratings reflect actual and projected credit support
percentages that adequately support the current ratings despite
relatively high delinquencies.
Notwithstanding the collateral performance and similar performance
trends in IndyMac ARM Trust 2001-H2 (i.e., total delinquencies of
15.77% and severe delinquencies of 8.43%), loss protection remains
sufficient for the classes with affirmed ratings, due to each
deal's rapid prepayment and shifting interest structure. However,
Standard & Poor's will continue to closely monitor the deal in the
event that credit erosion exceeds current expectation.
The collateral consists primarily of 30-year, adjustable-rate
mortgage loans secured by first liens on one- to four-family
residential properties.
Rating Lowered
IndyMac ARM Trust IndyMac ARM Grantor Trust 2001-H1
Mortgage pass-thru certs series 2001-H1
Rating
Class To From
----- -- ----
B-3 BB BBB
Ratings Affirmed
IndyMac ARM Trust
Mortgage pass-through certs
Series Class Rating
------ ----- ------
2001-H1 I-A, II-A, III-A-2 AAA
2001-H1 R-I, R-II, X-1, X-2 AAA
2001-H1 B-1 AA
2001-H1 B-2 A
2001-H2 A-1, A-2, A-3, R-I, R-II, X AAA
2001-H2 B-1 AA
2001-H2 B-2 A
2001-H2 B-3 BBB
INFOWAVE SOFTWARE: Inks Pact with Investor for Recapitalization
---------------------------------------------------------------
Infowave Software, Inc. (TSX:IW), has entered into an agreement
with 0698500 B.C. Ltd. to recapitalize and reorganize Infowave's
business. Infowave will transfer all of its technology assets to
a new company all of the shares of which will owned by the
existing shareholders of Infowave who will exchange their existing
shares of Infowave for shares of Newco on a one for one basis
under a plan of arrangement. The Investor will then acquire a
majority equity interest in Infowave by paying approximately
Cdn$5.45 million to Newco, and shares of Infowave, representing a
minority equity interest, will be distributed to the existing
shareholders of Infowave. As part of the arrangement, Newco will
apply to retain Infowave's current listing on the TSX, and it is
expected that Infowave will apply for a new listing on the TSX
Venture Exchange.
The restructuring will be completed by way of a two separate plans
of arrangement, to be approved by the British Columbia Supreme
Court and the Infowave security holders. The transaction is also
subject to regulatory approval and the receipt by the Board of
Directors of Infowave of a favorable fairness opinion from an
independent third party financial advisor. Subject to these
conditions, the board of Infowave has unanimously approved the
agreement.
Following the transaction Newco -- which will then be named
"Infowave Software, Inc." -- will continue to carry on the
business carried on by Infowave, but will have the benefit of the
non-dilutive capital consisting of the Cdn$5.45 million paid to
Newco by Investor. This will provide Newco with the financing
necessary to carry on the business currently carried on by
Infowave. The current board and management of Infowave will carry
on in the same capacity with Newco.
Terence Hui, the President and Chief Executive Officer of Concord
Pacific Group Inc. is the Chairman of the Investor. After the
completion of the transaction, it is expected that Infowave would
participate in the development of three buildings to be
constructed at Concord Pacific Place in Vancouver, B.C.
By virtue of the transaction Infowave shareholders will not only
retain their current ownership in Infowave's current business, but
will also own a minority equity interest in a real estate
development company.
Upon closing, Newco will maintain a share capital substantially
the same as Infowave's current share capital, being approximately
240 million outstanding common shares. Infowave's share capital
will be reorganized such that the outstanding shares will be
consolidated on a ten-for one basis and additional voting and non-
voting shares of Infowave will be acquired by the Investor from
Newco resulting in the Investor holding, following this
acquisition, a 32% voting and a 97.5% equity interest in Infowave.
Jerry Meerkatz, Infowave President and CEO said: "This transaction
represents a real win for Infowave and its shareholders. Infowave
will receive a substantial increase of capital to carry on its
business in a new company, without dilution to its existing
shareholders. At the same time shareholders will maintain their
current interest in Infowave, and receive a minority equity
interest in a second venture as well. I would also like to take
this opportunity to reassure our customers and business partners
that this transaction will have no impact on Infowave's day-to-day
operations and it should be 'business as usual' throughout."
Further details of the transaction will be provided to
shareholders in an information circular describing the
transaction, which is expected to be mailed in early December.
Closing is currently expected to occur in early 2005.
About the Company
Infowave (TSX:IW) provides enterprises with scalable and robust
mobile solutions for improving operational efficiency and
increasing the productivity of mobile workers. Infowave's
configurable enterprise mobile application (EMA) suite, Telispark
Mobile Enterprise, is designed to streamline and integrate
business operations required by mobile workers. Infowave mobile
solutions are sold directly and indirectly through
telecommunications carriers, independent software vendors and
systems integrator partners. Some of the world's most innovative
organizations, including Hydro One, Shell Oil, Unilever and the
U.S. Navy use Infowave solutions to increase the efficiency of
their large mobile workforces. For more information, please email
info@infowave.com or visit http://www.infowave.com/
* * *
Going Concern Doubt
In its Form 10-K for the fiscal year ended December 31, 2003,
filed with the Securities and Exchange Commission, the Auditor's
report on the Company's 2003 consolidated financial statements
includes additional comments for U.S. readers that states that
conditions and events exist that cast substantial doubt about the
Company's liability to continue as a going concern. The Company
said it is not currently profitable and has incurred operating
losses from continuing operations (calculated in accordance with
Canadian Generally Accepted Accounting Principles) of $5,797,515,
$9,763,740 and $19,413,246 for the years ended December 31, 2003,
2002 and 2001 respectively.
These losses have continued in 2004. For the nine-month period
ending Sept. 30, 2004, Infowave reported a $8,390,753 net loss.
Equity investments have funded these losses.
INTEGRATED HEALTH: Wants to Settle Citicorp & Danka Claims
----------------------------------------------------------
On July 13, 2000, Citicorp Vendor Finance, Inc., asked the United
States Bankruptcy Court for the District of Delaware to compel the
IHS Debtors to pay rents allegedly owed on leased equipment.
Citicorp, formerly known as Copelco Capital, Inc., asserted an
administrative expense claim in excess of $280,000 in respect of
the alleged postpetition "lease" obligations.
The IHS Debtors opposed Citicorp's request on the grounds that the
leases were not "true leases" subject to the requirements of
Section 365 of the Bankruptcy Code.
By agreement of the parties, Citicorp's request has been adjourned
from time to time and is still pending as of November 10, 2004.
Alfred Villoch, III, Esq., at Young Conaway Stargatt & Taylor,
LLP, in Wilmington, Delaware, tells the Court that Citicorp now
asserts an administrative expense claim against the IHS Debtors in
excess of $3,000,000 arising from the IHS Debtors' alleged
continued use of its Equipment postpetition. The IHS Debtors,
IHS Liquidating and IHS Long Term Care, Inc., dispute this claim.
Mr. Villoch contends that pursuant to the Stock Purchase
Agreement and the IHS Plan, any liability of the IHS Debtors for
the Administrative Expense Claim is a liability of LTC, a
subsidiary of Abe Briarwood Corp., and not IHS Liquidating.
Briarwood, however, disputes IHS Liquidating's contentions and
denies liability for the Administrative Expense Claim.
On various dates including June 1, 2000, August 29, 2000, and
December 1, 2000, Citicorp had filed nine general unsecured
claims:
Claim No. On Behalf of Amount
--------- ------------ ------
10924 Dan Danka Fund Corp./DBS Funding $657,618
10925 Konica Business Technologies 44,234
10926 TCM Business Systems 40,011
927 Freedom Capital Holdings 40,397
893 Copelco Capital, Inc. 22,375
10923 Copelco Capital, Inc. 98,718
10928 Copelco Capital, Inc. 269,233
12761 Citicorp Vendor Finance, Inc. 2,324
7758 Citicorp USA 71,970,551
The Adversary Proceeding
On January 31, 2002, Debtor Symphony Health Services, Inc., filed
a complaint against Danka Financial Services and Danka
Industries, Inc., pursuant to Rule 7001 of the Federal Rules of
Bankruptcy Procedure. Symphony sought to recover at least
$224,273 in preferential or fraudulent conveyances made to Danka,
plus accruing interest on and after the date of the Transfers.
Citicorp, as assignee of Danka Financial Services, filed an answer
to the Complaint, asserting, among other things, the subsequent
advance of new value and ordinary course of business affirmative
defenses. Citicorp asserted various counterclaims against
Symphony.
Danka also replied. Danka asserted, among other things, the
subsequent advance of new value and ordinary course of business
affirmative defenses. Danka further raised a cross-claim against
Citicorp.
Citicorp responded, asserting a cross-claim against Danka.
The Stipulation
To resolve the Adversary Proceeding, Citicorp's demand for
payment, and the administrative expense and general unsecured
claims held by or on behalf of Citicorp and Danka -- except Claim
No. 7758 -- IHS Liquidating, LTC, Briarwood, Danka, and Citicorp,
agree that:
(1) Danka will pay $20,000 to IHS Liquidating within 20
business days after the Court approves the Stipulation;
(2) in the event of Danka's untimely payment, Danka will be
obligated to pay 10% interest per annum accruing daily
from the date the Danka Settlement Amount became due until
the payment is actually received by IHS Liquidating;
(3) after payment of the Danka Settlement Amount, all claims
filed by or on behalf of Danka in the IHS Debtors' Chapter
11 cases will be deemed disallowed in their entirety;
(4) Citicorp will be allowed a $62,500 Administrative Claim;
(5) IHS Liquidating and Briarwood will each pay Citicorp
$31,250 within 10 business days after the Court approves
the Stipulation;
(6) if IHS Liquidating or Briarwood fails to timely pay their
shares of the Citicorp Settlement Amount, IHS Liquidating
or Briarwood will be obligated to pay 10% interest per
annum accruing daily from the date their share of the
Citicorp Settlement Amount became due until the payment is
actually received by Citicorp;
(7) Citicorp will waive its General Unsecured Claims, except
Claim No. 7758, and the balance of the asserted
Administrative Expense Claim in excess of the Allowed
Administrative Claim;
(8) After full payment of the Citicorp Settlement Amount, all
claims filed by or on behalf of Citicorp, or which have
been scheduled for or on behalf of Citicorp, in the IHS
Debtors' bankruptcy cases in respect to the equipment
lease obligations -- including Citicorp's General
Unsecured Claims but excluding Claim No. 7758 -- will be
deemed disallowed in their entirety;
(9) Citicorp will withdraw its Request with prejudice and
without costs to any party, without further delay after
receipt of the full Citicorp Settlement Amount; and
(10) the parties will execute mutual releases, provided,
however, that Claim No. 7758 is excluded.
IHS Liquidating asks the Court to approve the Stipulation.
Integrated Health Services, Inc. -- http://www.ihs-inc.com/--
operated local and regional networks that provide post-acute care
from 1,500 locations in 47 states. The Company and its 437
debtor-affiliates filed for chapter 11 protection on February 2,
2000 (Bankr. Del. Case No. 00-00389). Rotech Medical Corporation
and its direct and indirect debtor-subsidiaries broke away from
IHS and emerged under their own plan of reorganization on March
26, 2002. Abe Briarwood Corp. bought substantially all of IHS'
assets in 2003. The Court confirmed IHS' Chapter 11 Plan on May
12, 2003, and that plan took effect September 9, 2003. Michael J.
Crames, Esq., Arthur Steinberg, Esq., and Mark D. Rosenberg, Esq.,
at Kaye, Scholer, Fierman, Hays & Handler, LLP, represent the IHS
Debtors. 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. 85; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
INTERSTATE BAKERIES: Gets More Time to Decide on APC Capital Lease
------------------------------------------------------------------
Interstate Bakeries Corporation and its debtor-affiliates and APC
Capital Partners, LLC, are parties to a commercial lease, dated
November 1, 2000, for premises located at 157 Bracken Road, in
Montgomery, New York.
The parties dispute whether APC Capital effectively terminated
the Commercial Lease before the Petition Date.
To settle their dispute:
(1) APC Capital agrees that the deadline for the Debtors to
assume or reject the Commercial Lease is extended through
and including the effective date of a plan of
reorganization, but no later than March 21, 2006, without
prejudice to APC Capital's substantive argument that the
Lease had been terminated prepetition;
(2) the Debtors will timely perform all of their obligations
under the Lease as required by Section 365(d)(3) of the
Bankruptcy Code, pending assumption or rejection of the
Lease or any determination by the Court that the Lease had
been terminated prepetition;
(3) the Debtors agree that acceptance of postpetition rent by
APC Capital will not constitute an admission by APC
Capital that the Lease remains in full force and effect.
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. 6; Bankruptcy Creditors' Service, Inc., 215/945-7000)
JONES FAMILY RECREATION: Voluntary Chapter 11 Case Summary
----------------------------------------------------------
Debtor: Jones Family Recreation Properties, LLC
155 Greendale US 191
Dutch John, Utah 84023
Bankruptcy Case No.: 04-38799
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
Colletts Recreation Service Inc. 04-38802
Chapter 11 Petition Date: November 18, 2004
Court: District of Utah (Salt Lake City)
Judge: Judith A. Boulden
Debtors' Counsel: L. Mark Ferre, Esq.
1366 East Murray Holladay Road
Salt Lake City, UT 84117
Tel: 801-274-9909
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
The Debtors did not file a list of its 20-Largest Creditors.
KAISER ALUMINUM: Australia & Finance Units' Liquidation Analysis
----------------------------------------------------------------
Because the liquidation value of Kaiser Alumina Australia
Corporation and Kaiser Finance Corporation are limited to the
amount of cash held or to be held in each Kaiser Aluminum
Corporation's Trust Accounts, the Debtors' liquidation analysis
focuses on the additional costs and the diminution in value to the
Debtors' Estates that would occur if their Chapter 11 cases were
converted to cases under Chapter 7 of the Bankruptcy Code.
In the event of a conversion of the Chapter 11 cases to cases
under Chapter 7, the liquidation value available to holders of
Unsecured Claims and Interests would be reduced by:
(a) the costs, fees, and expenses of the liquidation, as well
as other administrative expenses of the Liquidating
Debtors' Chapter 7 cases;
(b) unpaid Administrative Claims of the Chapter 11 cases; and
(c) Priority Claims and Priority Tax Claims.
Kaiser Australia's and Kaiser Finance's costs of liquidation in
Chapter 7 cases would include, among other things, the
compensation of a trustee or trustees, as well as counsel and
other professionals retained by the trustees. The trustees and
any newly retained professionals would have to expend considerable
time and effort to review and understand the issues raised by the
liquidation, thereby duplicating the efforts of the Liquidating
Debtors and their professionals and resulting in the incurrence of
fees and expenses anticipated to exceed materially the fees and
expenses that would be incurred by the Distribution Trustee and
its professionals under the Plan.
The trustee's fees in any Chapter 7 case, which could be as much
as 3% of the assets in the Liquidating Debtors' Estates under
Section 326 of the Bankruptcy Code -- or $12,000,000 in the
aggregate -- also are anticipated to exceed the fees to be paid to
the Distribution Trustee.
Moreover, since any newly retained professionals would lack the
institutional knowledge of the facts and circumstances underlying
Claims and Recovery Actions, it is likely that Disputed Claims
would be settled at higher amounts and Recovery Actions at lower
amounts, thereby resulting in lower recoveries to holders of
Unsecured Claims. Due to the lack of familiarity with the
Liquidating Debtors of any trustees appointed in the Chapter
7 cases, distributions in the Chapter 7 cases likely would be made
substantially later than the Effective Date assumed in connection
with the Plan and this delay would reduce the present value of
distributions to creditors, including holders of Unsecured Claims.
In this regard, the Liquidating Debtors believe that creditors
will receive greater and more expeditious distributions under the
Plan than they would receive through a Chapter 7 liquidation.
The Plan is, therefore, in the best interests of each Claim
holder.
The Plan has been negotiated by the Liquidating Debtors and the
representatives of certain of the Liquidating Debtors' most
significant creditors, including the Creditors Committee and,
therefore, the Liquidating Debtors believe that negotiating an
alternative liquidation plan under Chapter 11 is unlikely to alter
significantly the relative treatment of Claims.
Headquartered in Houston, Texas, Kaiser Aluminum Corporation --
http://www.kaiseral.com/-- operates in all principal aspects of
the aluminum industry, including mining bauxite; refining bauxite
into alumina; production of primary aluminum from alumina; and
manufacturing fabricated and semi-fabricated aluminum products.
The Company filed for chapter 11 protection on February 12, 2002
(Bankr. Del. Case No. 02-10429). Corinne Ball, Esq., at Jones
Day, represent the Debtors in their restructuring efforts. On
June 30, 2004, the Debtors listed $1.619 billion in assets and
$3.396 billion in debts. (Kaiser Bankruptcy News, Issue No. 54;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
KRONOS INTL: S&P Places BB- Rating to Planned EUR90 Mil. Sr. Debt
-----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB-' rating to
Kronos International Inc.'s proposed E90 million senior secured
notes issue, an add-on to the company's existing E285 million
8.875% senior secured notes due June 2009.
At the same time, Standard & Poor's affirmed its 'BB' corporate
credit ratings for Valhi Inc. and KII, and revised the outlooks to
negative from stable. KII is a majority owned indirect subsidiary
of Dallas, Texas-based Valhi.
Proceeds from the transaction will be distributed to Kronos
Worldwide Inc. (NYSE: KRO), the direct parent of KII, to pay off
intercompany notes due to affiliates NL Industries Inc. and Valhi.
Pro forma for the transaction, Valhi will have approximately $742
million in total debt outstanding.
"The outlook revision reflects concerns about the proposed
increase to external debt and an acquisitive policy that could
increase leverage, despite the improvement in operating results,"
said Standard & Poor's credit analyst George Williams.
Although proceeds from the transaction will be used to settle an
intercompany loan, the increase in Valhi's external debt load
raises the company's risk profile and leverage. Standard & Poor's
expects that the proceeds will eventually be used for targeted
acquisitions in titanium dioxide (TiO2) or within Valhi's other
businesses. While not anticipated, the cash proceeds could also
be used to finance a dividend to Contran Corp., a privately owned
company that owns approximately 90% of Valhi's outstanding common
stock.
The rating on KII's proposed senior secured notes, which are
secured by 65% of the shares of its first-tier subsidiaries, is
one notch below KII's corporate credit rating to reflect the
disadvantaged position of these creditors in the event of
bankruptcy. Standard & Poor's expects that the security will
provide only limited protection to the noteholders, who are
structurally subordinated to the claims of creditors at key
operating subsidiaries. Ratings on KII also reflect its strategic
importance to, and the credit quality of its ultimate parent,
Valhi Inc.
The ratings on Valhi reflect a below-average business profile,
derived from its solid market position among the leading global
TiO2 producers and a niche component products business (ergonomic
computer support systems, precision ball-bearing slides for
furniture, and security products), and an aggressive financial
profile. The company also maintains equity positions in Titanium
Metals Corp. and Waste Control Specialists, a small waste
management company.
LEVEL 3: S&P Junks $730 Million Senior Secured Bank Loan
--------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'CCC' bank loan
rating to Level 3 Financing Inc.'s $730 million senior secured
bank loan package. A recovery rating of '3' was also assigned to
the loan, indicating the expectation for meaningful recovery of
principal (50%-80%) in a default scenario. In addition, a 'CC'
rating was assigned to Level 3 Communications Inc.'s (parent of
Level 3 Financing Inc.) $320 million 5.25% convertible senior
notes due 2011, to be issued under Rule 144A with registration
rights. Proceeds of the loan and convertible notes will be used
to finance a $1.105 billion cash tender offer for a portion of
four Level 3 debt issues maturing in 2008 at less than full
maturity of principal.
At the same time, the rating on Level 3 Financing's existing
10.75% senior notes due 2011 was lowered to 'CC' from 'CCC-'
because the new bank facility reduces the potential recovery of
these notes in the event of a bankruptcy.
On Nov. 3, 2004, Standard & Poor's lowered Level 3's corporate
credit rating to 'CC' and lowered the rating on the four issues
targeted by the tender offer to 'C'. These ratings were also
placed on CreditWatch with negative implications. Standard &
Poor's views completion of the proposed tender offer as tantamount
to a default on the original debt issue terms.
Following a successful tender offer, the corporate credit rating
on Level 3 will be lowered to 'SD', designating a selective
default. The ratings on the affected issues will be lowered to
'D'. Subsequently, the corporate credit rating is expected to be
reassigned at 'CCC', with a developing outlook, and the rating on
the targeted debt issues that remain outstanding after the tender
will be reassigned at 'CC'.
Completion of the proposed tender offer and refinancing will not
materially reduce the company's onerous $5.1 billion debt balance
or the debt-to-EBITDA ratio of in excess of 10x. On Nov. 17,
2004, the company increased the maximum aggregate amount it will
accept for tender to $1.105 billion from $450 million. The
transaction will reduce Level 3's 2008 maturities by about 46%,
somewhat improving the maturity profile. Without meaningful
improvement in the wholesale long-haul telecommunications industry
and stronger revenue performance, the company could be challenged
to further reduce the roughly $1.3 billion in 2008 maturities that
will remain following completion of the current transactions.
"The ratings on Level 3 reflect very high credit risk from
elevated debt and negative discretionary cash flow, exacerbated by
soft telecommunications industry conditions, especially in the
long-haul transport sector," said Standard & Poor's credit analyst
Eric Geil. "The company continues to experience weak demand and
declining prices from industry overcapacity and intense
competition. Potential acquisition activity could also limit
financial improvement. Tempering factors include a sizable cash
balance and an absence of meaningful debt maturities until 2008."
LNR PROPERTY: S&P Places BB Rating on CreditWatch Developing
------------------------------------------------------------
Standard & Poor's Ratings Services revised its CreditWatch listing
on its ratings on Miami Beach, Florida-based LNR Property Corp.,
including LNR's 'BB' long-term counterparty credit rating, to
CreditWatch Negative from CreditWatch Developing.
"The CreditWatch action reflects the anticipated increase in
leverage, reduction in equity, and encumbered nature of the LNR's
balance sheet, which will result from the recapitalization of LNR
following the anticipated acquisition transaction," said Standard
& Poor's credit analyst Steven Picarillo.
On Aug. 30, 2004, LNR announced that it has agreed to be acquired
by a newly formed company, which will be majority owned by funds
managed by Cerberus Capital Management L.P. and other investors
selected by Cerberus.
"Standard & Poor's will update LNR's CreditWatch status on an as-
needed basis. Resolution of the CreditWatch status will follow
the acquisition, which is expected to be completed by the end of
2004 or early in 2005," Mr. Picarillo said.
LNR, with $3.1 billion in assets, is a real estate investment,
finance, and management company. The company operates primarily
within real estate investment activities including acquiring,
developing, managing, and repositioning commercial and multifamily
residential properties; investing in unrated and noninvestment
grade-rated CMBS; and acquiring and managing portfolios of
mortgage loans.
M & M KATZ INC: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: M & M Katz, Inc.
618 West 6th Street
Austin, Texas 78701
Bankruptcy Case No.: 04-15916
Type of Business: The Debtor operates a restaurant called Katz's
Deli & Bar, located at 618 West 6th Street in
Austin, Texas.
Chapter 11 Petition Date: November 16, 2004
Court: Western District of Texas (Austin)
Judge: Frank R. Monroe
Debtor's Counsel: Joseph D. Martinec, Esq.
Martinec, Winn, Vickers & McElroy, P.C.
919 Congress Avenue, Suite 1500
Austin, TX 78701
Tel: 512-476-0750
Fax: 512-476-0753
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Band I LLC $73,498
618 W. 6th St.
Austin, TX 78701
Sysco Food Services of Austin $72,286
101 S. Chisholm Trail
Round Rock, TX 78681
American Express Business Gold Card $59,870
P.O. Box 650448
Dallas, TX 75265
Chase Small Business Financial $50,244
Services
MQandC Advertising and Marketing $38,848
Kelly, James P. $31,999
Reagan Transit Advertising $9,558
Labatt Foodservice $7,569
ACMS $6,713
Contract Cleaning Services $5,970
City of Austin-Utilities $5,634
Aetna $5,410
Texas Linen Company $4,817
Fox Service Co. $4,774
Five Star Produce $4,579
Amy's Ice Creams $4,464
Simmons Media Group $4,360
Miramar Pickles $4,060
Bells, International $4,053
Easterly and Co. $3,944
MAGELLAN MIDSTREAM: Moody's Revises Outlook on Ratings to Positive
------------------------------------------------------------------
Moody's Investors Service changed the rating outlook for Magellan
Midstream Partners, L.P. (Ba1 senior unsecured) to positive from
stable. Moody's affirmed the ratings for Magellan Midstream
Holdings, LP (Ba3 senior secured bank loan rating) with a stable
outlook.
Moody's also assigned a Ba3 senior secured rating to MMH's
proposed $250 million secured term loan B due 12/2011 that will
refinance and replace its existing term loan B due 6/08.
The positive outlook for MMP reflects the strong, consistent track
record it has accrued over the past few years since its inception
with sound financial policies and strategic focus remaining on
low-risk product logistics operations. Moody's could upgrade
MMP's ratings in the coming 12 months' timeframe if it realizes
the incremental cash flows that it expects from its recent
acquisition of Shell Oil's products transportation system. MMP's
credit metrics are solid and compares favorably against some of
its investment-grade MLP peers. The rating affirmations for MMH
reflect the expectation that the re-leveraging that will result
from its proposed refinancing will be decreased over the next
12-24 months. MMH's credit is linked to MMP's, as MMH's equity
holdings in MMP are its only assets and its control of MMP as its
GP sponsor. Moody's notes that adjusting to consolidate MMP with
MMH, the Magellan system is highly leveraged with $1 billion of
debt (pro forma to include MMP's Shell acquisition-related debt
and $250 million of MMH's new bank loan) burdening MMP's roughly
$230 million of EBITDA (pro forma for the Shell assets). The
de-leveraging of the Magellan system over the next few years will
be at MMH rather than at MMP, whose MLP business model inhibits
organic debt reduction. In turn, MMH's ability to de-leverage
will depend on MMP's ability to sustain its strong cash flows and
unit prices.
MMH's Refinancing and Bank Loan
MMH will apply the proceeds from the new $250 million term loan B
to repaying the approximately $95 million remaining balance on its
existing term loan and to make a special dividend of about
$150 million to the two private equity funds that own it. As with
the existing loan, the new term loan will be secured by MMH's GP
and LP interests in MMP that comprise all of MMH's assets. As
with the existing loan, the new loan has cash sweep provisions
that require MMH to pay down the loan with excess cash flow and
proceeds from sales of its MMP LP units. The cash sweep
provisions promote debt reduction with thresholds calibrated to
MMH's debt and cash flow levels. The higher the debt levels, the
higher the proportion of excess cash flow and proceeds from MMP LP
unit sales that must be applied toward debt reduction. These
provisions are also designed to maintain adequate asset coverage
of debt by requiring debt reduction as collateral is liquidated
(50% of proceeds from sale of MMP LP units must be used to prepay
the loan, with certain exceptions). This proposed loan is
$50 million larger than the original $200 million amount of the
existing loan that was placed in 6/03. However, Moody's notes
that roughly half the existing 5-year loan has already been repaid
in the year and a half that it has been outstanding because of
higher than expected levels of distributions from MMP and higher
than expected MMP LP unit prices than were envisioned in the terms
of the existing loan.
The new loan has been upsized to account for strong cash flow
expected from MMP (particularly after MMP's 10/04 acquisition of
Shell's Midwest product logistics system) and designed to de-lever
MMH over time to a steady-state level of 4.5x MMH debt/pre-
interest free cash flow. Under the draft terms as currently
proposed, 75% of excess cash flow is swept if MMH's leverage ratio
is above 5.25x, 50% of cash flow when leverage is between
4.5x to 5.25x and 0% when leverage is below 4.5x. 50% of the net
proceeds from MMP unit sales are swept toward debt reduction.
Once leverage is reduced below 4.5x, MMH can retain all the
proceeds, except for the 1% annual amortization. MMH can also
retain $100 million of unit sales proceeds until 12/31/05. The
other financial covenant will be an interest coverage ratio
(pre-interest free cash flow/interest expense) of at least 2x.
MMH Financial Analysis, Rating Outlook and Catalysts
The incremental debt that MMH will incur in this refinancing will
raise its leverage ratio from about 2.8x currently to 7.3x
initially. Assuming the distribution stream from MMP remains
fairly flat (its GP incentive distributions increasing as its LP
distributions decrease with the sales of its LP units), the pace
of de-leveraging will be driven by how quickly, how many, and at
what price MMH sells its remaining MMP LP units (it currently
holds about 7 million, or about a fifth, of total LP units
outstanding). Interest coverage will be more than halved over the
near term from 6x currently because of the roughly doubling of
interest expense, though the company forecasts exceed its 2x
covenant. While MMH's ratings are based on MMP's ratings, there
may be some widening with MMP's ratings if MMP's credit profile
continues to show strength over the next 12-18 months. MMH's
rating outlook is unlikely to improve over the next 12-18 months
until MMH makes progress in de-leveraging closer to its 4.5x
target. For MMH's rating to be upgraded, there needs to be not
only improvement in MMP's ratings, but also de-leveraging at MMH
as well as a demonstrated commitment to not re-leverage MMH.
Update on MMP and Its Rating Catalysts
MMP closed on its $490 million acquisition of Shell's Midwest
products logistics system in October 2004. The acquisition was
fully valued, with all-in acquisition costs of $515 million
(including $25 million of related expansion projects due on-line
2006) at 9.7x estimated average 2005-2007 EBITDA of $53 million.
The acquisition was in keeping with its stated business strategies
(expansion of its low-risk product transportation business,
expansion of its Midwest geographic footprint with the acquired
assets physically connected to its existing systems) and was
financed in a credit-neutral manner -- 44% with debt, the rest
with equity.
Over the coming 12 months, we may upgrade MMP if it realizes its
estimated EBITDA for the Shell assets by achieving throughput at
rates forecast for those assets. Among the key credit metrics
that we will monitor are adjusted debt/gross cash flow maintained
at about 4x and distribution coverage ratio (gross cash flow minus
non-acquisition capex plus interest / interest plus distributions)
of about 100%.
In summary, Moody's has taken these rating actions:
* For MMP:
1) Rating outlook changed to positive from stable;
* For MMH:
1) Existing Ba3 senior secured term loan B and B1 senior
unsecured issuer rating affirmed;
2) Stable rating outlook affirmed;
3) Ba3 senior secured bank loan rating assigned to the
proposed term loan B.
Headquartered in Tulsa, Oklahoma, Magellan Midstream Partners L.P.
is an MLP that is engaged in the transportation, storage, and
distribution of refined petroleum products, crude oil, and
ammonia. Magellan Midstream Holdings, L.P. is a limited
partnership formed by Madison Dearborn Capital Partners IV, L.P.
and Carlyle/Riverstone MLP Holdings, L.P. that own general partner
and limited partner interests together representing 23% of the
MLP.
MANUFACTURERS & TRADERS: Fitch Affirms BB Rating on Class B4 Cert.
------------------------------------------------------------------
Fitch Ratings has taken rating actions on these Manufacturers and
Traders Trust Company residential mortgage-backed certificates:
* Manufacturers and Traders Trust Company mortgage pass-through
certificates, series 2002-1
-- Class A affirmed at 'AAA';
-- Class B1 upgraded to 'AAA' from 'AA';
-- Class B2 upgraded to 'AAA' from 'A';
-- Class B3 upgraded to 'AA' from 'BBB';
-- Class B4 upgraded to 'BBB' from 'BB'.
* Manufacturers and Traders Trust Company mortgage pass-through
certificates, series 2003-1
-- Class A affirmed at 'AAA';
-- Class B1 affirmed at 'AA';
-- Class B2 affirmed at 'A';
-- Class B3 affirmed at 'BBB';
-- Class B4 affirmed at 'BB.'
The upgrades, affecting approximately $38,585,071, are being taken
as a result of low delinquencies and losses, as well as increased
credit support levels. The affirmations, affecting approximately
$1,078,798,962, are due to credit enhancement consistent with
future loss expectations. The current credit enhancement for the
upgraded classes in M&T 2002-1 increased on average 2.2 times (x)
the original percentages.
The collateral of the above M&T deals primarily consists of 15 to
30 year fixed- and adjustable-rate mortgages secured by first
liens on one- to four-family residential properties. M&T 2003-1
was issued just a year ago in November 2003 with an original
collateral balance of $838,413,987, original weighted average
coupon -- WAC -- of 5.68%, and weighted average loan to value --
LTV -- ratio of 71.30%. M&T 2002-1, issued in November 2002, had
an original collateral balance of $1,114,550,514 with original WAC
of 7.07% and weighted average LTV ratio of 76.11%.
The pool factors (i.e., percentage of remaining pool balance out
of the original balance as of the cut-off date) are 35% and 88%
each for deals 2002-1 and 2003-1 respectively.
MERRILL LYNCH: Fitch Places Class G's B Rating on Watch Negative
----------------------------------------------------------------
Fitch Ratings places Merrill Lynch Mortgage Investors commercial
mortgage pass-through certificates, series 1996-C2, $39.8 million
class G on Rating Watch Negative, which is currently rated 'B-' by
Fitch.
The Rating Watch Negative placement is due to the uncertainty
surrounding the resolution of the loans secured by the Shilo Inn
loans, along with expected losses on several other loans currently
with the special servicer. These expected losses may severely
affect the credit enhancement to class G. In addition, the
evolving situation of the Shilo Inn loans presents uncertainty if
and when losses occur on these loans.
Currently, 16 loans (12.3%) are currently being special serviced
by CRIIMI MAE. Four of the loans (5.9%) are collateralized by
Shilo Inn properties, with three located in Oregon and one in the
state of Washington. A modification to the loans was completed in
2004 that bifurcated the loans into A and B notes, with the A
notes representing the current balance of the loans and the B
notes representing the advanced interest balances. The interest
rate on the loans was also reduced and a period of interest-only
payments was granted per the modification. The modification has
brought the Shilo Inns current. The loan remains with the special
servicer as the borrower is having difficulty in meeting the terms
of the loan modification as performance of the collateral has
declined. The borrower has also requested a discounted payoff.
In addition to the Shilo Inn loans, the pool suffers from a high
percentage of loans that are delinquent, with losses expected on
several of these loans. The pool consists of four loans that are
30 days delinquent (0.5%), five loans 90 plus days delinquent
(1.2%), and five REO properties (4.0%). Fitch will continue to
monitor the status of these loans and will revisit the ratings
once updated information becomes available.
MORGAN STANLEY: Fitch Affirms BB+ Ratings on Classes MM-A & MM-B
----------------------------------------------------------------
Fitch Ratings affirms Morgan Stanley Capital I Trust 2003-IQ-4 MM,
as follows:
-- $10 million class MM-A at 'BB+';
-- $5 million class MM-B at 'BB+'.
The affirmations are the result of the strong market position of
stabilizing collateral, which has long-term leases, strong in-line
sales, and experienced ownership and management.
The certificates are collateralized by a $15 million B-note. The
B-note is subordinate to a senior mortgage, which totals
$195 million, bringing the total debt to $210 million. The senior
portion has been divided into four pari passu notes:
* Notes A-1 and A-2, totaling $70 million, have been
contributed to the Morgan Stanley 2003-IQ4 trust.
* Note A-3 is part of the GMAC 2003-C3 transaction and has a
current balance of $67.5 million.
* Note A-4 is part of the Morgan Stanley Capital I Trust
2004-HQ4 transaction and has a current balance of
$57.5 million.
The loan is secured by the fee-simple interest in the 518,682 sf
of in-line space at the Mall at Millenia in Orlando, Florida. The
two-level, enclosed mall is anchored by Macy's, Bloomingdale's,
and Neiman Marcus, each of which owns its land and improvements.
As part of its review of the transaction, Fitch analyzed the
performance of the whole loan and its underlying collateral. The
weighted average debt service coverage ratio -- DSCR -- is
calculated using borrower reported net operating income -- NOI --
adjusted for reserves and capital expenditures. The Fitch-
adjusted DSCR for the whole loan was 1.18 times (x), compared with
1.26x at issuance. As of August 2004, mall occupancy was 97%,
compared with 98% at issuance, while in-line occupancy was 93%,
compared with 95% at issuance.
The super luxury mall opened in October of 2002. As of August
2004, over 96% of the leases in place had terms extending beyond
the year 2012. The subject is the dominant luxury mall in the
market with very strong in-line sales and upscale tenants, such as
Cartier, Gucci, Tiffany & Co., Burberry, Coach, Chanel, Lacoste,
Louis Vuitton, St. John, Furla, and Betsey Johnson. While
performance was down slightly in 2003, this is attributed to the
stabilization of the mall, and performance is expected to improve
in the future.
MORTGAGE ASSET: Fitch Places Low-B Ratings on Nine Cert. Classes
----------------------------------------------------------------
Fitch Ratings upgraded eight classes and affirmed 255 classes for
the following Mortgage Asset Securitization Transactions, Inc.
mortgage-pass through certificates:
* MASTR, mortgage pass-through certificates, series 2003-1
Pools 1 & 3:
-- Classes 1-A-1, 3-A-1 to 3-A-7, 15-A-X, PO affirmed at
'AAA';
-- Class 15-B-1 upgraded to 'AA' from 'AA-';
-- Class 15-B-2 affirmed at 'A';
-- Class 15-B-5 affirmed at 'B'.
* MASTR, mortgage pass-through certificates, series 2003-1
Pool 2
-- Classes 2-A-1-2-A-22,30AX, A-R affirmed at 'AAA';
-- Class 30-B-1 upgraded to 'AAA' from 'AA';
-- Class 30-B-2 upgraded to 'A+' from 'A';
-- Class 30-B-4 affirmed at 'BB'.
* MASTR, mortgage pass-through certificates, series 2003-2
Pools 1 & 2
-- Classes 1A1, 2A1-2A13, A-R, 15AX, PO affirmed at 'AAA';
-- Class 15-B-5 affirmed at 'B'.
* MASTR, mortgage pass-through certificates, series 2003-2
Pool 3
-- Classes 3A1-3A14, 30AX affirmed at 'AAA';
-- Class 30-B-1 upgraded to 'AAA' from 'AA';
-- Class 30-B-2 upgraded to 'AA' from 'A';
-- Class 30-B-3 upgraded to 'A' from 'BBB';
-- Class 30-B-4 upgraded to 'BBB' from 'BB';
-- Class 30-B-5 upgraded to 'BB' from 'B'.
* MASTR, mortgage pass-through certificates, series 2003-3
-- Classes 1A through 5A, AR, PO, AX affirmed at 'AAA';
-- Class B-2 affirmed at 'A';
-- Class B-3 affirmed at 'BBB';
-- Class B-5 affirmed at 'B'.
* MASTR, mortgage pass-through certificates, series 2003-5
-- Classes 1-A through 5-A, A-R, PO, AX affirmed at 'AAA'.
* MASTR, mortgage pass-through certificates, series 2003-6
Pools 1, 2, 5, 6, 7, 8 & 9
-- Classes 1A, 2A, 5A, 6A, 7A, 8A 9A, PO, PP-A-X, 30-A-X, A-R
affirmed at 'AAA';
-- Class 30-B-2 affirmed at 'A';
-- Class 30-B-4 affirmed at 'BB';
-- Class 30-B-5 affirmed at 'B'.
* MASTR, mortgage pass-through certificates, series 2003-6
Pools 3 & 4
-- Classes 3-A, 4-A, 15-A-X affirmed at 'AAA';
-- Class 15-B-2 affirmed at 'A';
-- Class 15-B-5 affirmed at 'B'.
* MASTR, mortgage pass-through certificates, series 2003-7
-- Classes 1A, 2A, 3A, 4A, 5A, PO, A-X, AR affirmed at 'AAA'.
* MASTR, mortgage pass-through certificates, series 2003-8
-- Classes 1-A through 8-A, PO, A-X, A-R affirmed at 'AAA';
-- Class B-5 affirmed at 'B'.
* MASTR, mortgage pass-through certificates, series 2003-9
-- Classes 1-A through 5-A, PO, A-X, A-R affirmed at 'AAA';
-- Class B-3 affirmed at 'BBB-'.
The upgrades, affecting $28,028,184 of outstanding certificates,
are being taken as a result of low delinquencies and losses, as
well as significantly increased credit support levels. The
affirmations, affecting over $5.4 billion of certificates, are due
to stable collateral performance and small to moderate growth in
credit enhancement -- CE.
All of the MASTR transactions included in this rating action are
of the 2003 vintage and are secured by 15 and 30 year fixed-rate
mortgages extended to prime quality borrowers that on average have
90% one- to four-family residences.
As of the last distribution date (Oct. 25, 2004), the most
seasoned of these deals (series 2003-1, Pools 1 & 3) has a pool
factor (mortgage principal outstanding as a percentage of original
mortgage principal as of closing) of just over 30% and currently
benefits from CE levels three times original. The least seasoned
transaction maintains a pool factor of just over 80% and has only
experienced a slight increase in CE coverage. Most transactions
have at least 1.5 times (x) original CE levels and pool factors in
the 30% to 40% range.
NEENAH PAPER: Prices $225 Million Ten-Year Notes Due 2014
---------------------------------------------------------
Neenah Paper, Inc. (NYSE: NP) has priced a private offering of
$225 million of 7-3/8% Senior Unsecured Notes due 2014 in
connection with its spin-off from Kimberly-Clark Corporation. The
sale of the Notes is expected to close on Nov. 30, 2004, which is
the distribution date for the spin-off. Neenah Paper anticipates
using the net proceeds of the Notes offering to make a payment to
Kimberly-Clark as part of the spin-off and for related spin- off
expenses.
The Notes have not been registered under the Securities Act of
1933 and may not be offered or sold in the United States absent
registration or an applicable exemption from registration
requirements of the Securities Act and applicable state laws.
About the Company
Neenah Paper manufactures and distributes a wide range of premium
and specialty paper grades, with leading positions in many of its
markets and well-known brands such as CLASSIC(R), ENVIRONMENT(R),
KIMDURA(R) and MUNISING LP(R) Papers. The Company also produces
and sells bleached pulp, primarily for use in the manufacture of
tissue and writing papers. Neenah Paper is based in Alpharetta,
Georgia, and has operations in Wisconsin, Michigan and in the
Canadian provinces of Ontario and Nova Scotia. Additional
information about Neenah Paper can be found in the Form 10
statement filed with the U.S. Securities and Exchange Commission
and, following the distribution, at the Company's web site at
http://www.neenah.com/
* * *
As reported in the Troubled Company Reporter on Nov. 10, 2004,
Moody's Investors Service assigned a B1 rating to Neenah Paper,
Inc.'s proposed $200 million guaranteed senior unsecured notes due
2014, and a Ba3 rating to the company's proposed $150 million
senior secured revolving credit facility. In addition, Moody's
assigned a B1 senior implied rating, B3 senior unsecured issuer
rating, and SGL-2 speculative grade liquidity rating to the
company. The outlook for the ratings is stable. This is the
first time Moody's has rated the debt of Neenah.
Kimberly Clark is spinning off its fine paper, technical paper,
and Canadian pulp operations into a single independent publicly
traded company, Neenah, through a tax-free distribution to its
existing shareholders. Neenah will use proceeds from the note
offering and approximately $30 to $35 million of borrowings under
the revolving credit facility to pay a dividend of approximately
$215 million to a subsidiary of KC, $10 million in debt issuance
costs, and to fund working capital of approximately $5 to
$10 million. After the distribution, KC will not own any of the
common equity of Neenah, although the two companies will have
various contractual agreements including a pulp supply agreement
and a corporate services agreement. Neenah's three operating
segments will have a focus in:
* premium writing, text/cover, and other specialty paper (the
fine paper segment);
* durable, saturated and coated papers (the technical paper
segment); and
* softwood and hardwood market pulp.
The B1 senior implied rating reflects the modest scale of Neenah's
operations, the high level of customer concentration and
considerable volume declines within its fine paper segment over
the past several years, and significant exposure to market pulp,
where its operating costs are quite high. The ratings also
recognize the considerable challenge of improving the cost
structure at the Terrace Bay pulp facility, the eventual task of
building a core customer base for its pulp operation external to
KC, and high capital investment requirements.
NEXTWAVE TELECOM: Verizon Sale Hearing Scheduled for Nov. 30
------------------------------------------------------------
NextWave Telecom, Inc., and its debtor-affiliates ask the United
States Bankruptcy Court for the Southern District of New York, for
permission to enter into an Acquisition Agreement with VZW Corp.,
a wholly owned subsidiary of Cellco Partnership d/b/a Verizon
Wireless, wherein VZW will acquire all of the Debtor's outstanding
stock following the satisfaction of all liabilities and transfer
of certain assets pursuant to a plan of reorganization.
The Acquisition Agreement provides for:
a) Payment of cash amounts by VZW Corp. for the purchase of
new NextWave Telecom common stock to be issued pursuant to
the Proposed Plan;
b) Payment of break-up fee to VZW Corp. in the event NextWave
Telecom accepts an alternative proposal, as set forth in
the Acquisition Agreement;
c) The indemnification of the debtor-affiliates and VZW Corp.
by the newly formed operating entity under the Proposed
Plan, NextWave Opco, for certain losses arising prior to
closing;
d) An escrow of a portion of cash amounts to satisfy any tax
amounts due to VZW Corp. under the Acquisition Agreement
and the losses, if any; and
e) Payment of all amounts due and owing to the Federal
Communications Commission pursuant to the terms of the
Global Resolution Agreement among the Federal and the
Debtors, approved by an order of the Bankruptcy Court.
A full text copy of the Acquisition Agreement is available for
review at the Bankruptcy Court's Website at http://www.nysb.uscourts.com/
or from the Debtors' counsel at:
Deborah L. Schrier-Rape, Esq.
Schrier-Rape P.C.
5929 Westgrove Drive
Dallas, Texas 75248
Tel. No. (972) 818-6761
Fax No. (972) 248-3229
- or -
Jason S. Brookner, Esq.
Andrews Kurth LLP
1717 Main Street, Suite 3700
Dallas, Texas 75201
Tel. No. (214) 659-4400
Fax No. (214) 659-4401
A hearing will take place before the Honorable Adlai S. Hardin,
Jr., on Nov. 30, 2004 at 11:00 a.m. in Room 520 at 300 Quarropas
Street in White Plains, N.Y.
NextWave Telecom, Inc., headquartered in Hawthorne, New York, was
organized in 1995 to provide high-speed wireless Internet access
and voice communications services to consumer and business markets
on a nationwide basis. NextWave is currently constructing a
third-generation CDMA2000 1X network in all of its 95 PCS markets
whose geographic scope covers more than 168 million POPs coast to
coast, including all top 10 U.S. markets, 28 of the top 30
markets, and 40 of the top 50 markets. NextWave's "carriers'
carrier" strategy allows existing carriers and new service
providers to market NextWave's network services through innovative
airtime arrangements. The company filed for chapter 11 protection
(Bankr. S.D.N.Y. Case No. 98-23303) on December 23, 1998. Deborah
Lynn Schrier-Rape, Esq. of Andrews & Kurth, LLP represents the
Debtor.
NORTEL NETWORKS: Gets New Waiver from Export Development Canada
---------------------------------------------------------------
Nortel Networks Corporation's (NYSE:NT)(TSX:NT) principal
operating subsidiary, Nortel Networks Limited, has obtained a new
waiver from Export Development Canada under the EDC performance-
related support facility of certain defaults related to the delay
by the Company and NNL in filing their respective 2003 Annual
Reports on Form 10-K, Q1 2004 Quarterly Reports on Form 10-Q and
Q2 2004 Quarterly Reports on Form 10-Q and the expected delay in
filing their respective Q3 2004 Quarterly Reports on Form 10-Q
beyond Nov. 24, 2004, in each case with the U.S. Securities and
Exchange Commission, the trustees under the Company's and NNL's
public debt indentures and EDC. The waiver also applies to
certain additional breaches under the EDC Support Facility
relating to the delayed filings and the planned restatements and
revisions to the Company's and NNL's prior financial results.
The new waiver from EDC will remain in effect until the earlier of
certain events including:
-- the date on which the Delayed Reports and the Third Quarter
Reports have been filed with the SEC; or
-- December 10, 2004.
NNL's prior waiver from EDC, previously announced on Oct. 29,
2004, was set to expire on Nov. 19, 2004.
The Company and NNL are targeting a filing date for the Delayed
Reports within 30 to 60 days of Nov. 11, 2004. The Company expects
that it and NNL will file the Third Quarter Reports as soon as
practicable thereafter. There can be no assurance that the Company
will be able to file the Delayed Reports and Third Quarter Reports
by Dec. 10, 2004. If the Company and NNL fail to file the Delayed
Reports and the Third Quarter Reports by Dec. 10, 2004, EDC will
have the right, on such date, unless EDC has granted a further
waiver in relation to the delayed filings and the Related
Breaches, to terminate the EDC Support Facility, exercise certain
rights against collateral or require NNL to cash collaterize all
existing support. If the Company and NNL fail to file the Delayed
Reports and the Third Quarter Reports by Dec. 10, 2004, there can
be no assurance that NNL would receive any further waivers or any
extensions of the waiver beyond its scheduled expiry date.
Also, the Related Breaches will continue beyond the filing of the
Delayed Reports and the Third Quarter Reports. Accordingly, EDC
will have the right (absent a further waiver of the Related
Breaches) beginning on the earlier of the date upon which the
Delayed Reports and Third Quarter Reports are filed and December
10, 2004 to terminate or suspend the EDC Support Facility
notwithstanding the filing of the Delayed Reports and the Third
Quarter Reports. While NNL expects to seek a permanent waiver
from EDC in connection with the Related Breaches, there can be no
assurance that NNL will receive a permanent waiver, or any waiver
or as to the terms of any such waiver.
The EDC Support Facility provides up to US$750 million in support,
all presently on an uncommitted basis. The US$300 million
revolving small bond sub-facility of the EDC Support Facility will
not become committed support until the Delayed Reports and the
Third Quarter Reports are filed with the SEC and NNL obtains a
permanent waiver of the Related Breaches. As of November 18,
2004, there was approximately US$286 million of outstanding
support utilized under the EDC Support Facility, approximately
US$202 million of which was outstanding under the small bond sub-
facility.
About the Company
As a global innovation leader, Nortel Networks enriches consumer
and business communications worldwide by offering converged
multimedia networks that eliminate the boundaries among voice,
data and video. These networks use innovative packet, wireless,
voice and optical technologies and are underpinned by high
standards of security and reliability. For both carriers and
enterprises, these networks help to drive increased profitability
and productivity by reducing costs and enabling new business and
consumer services opportunities. Nortel Networks does business in
more than 150 countries. For more information, visit Nortel
Networks on the Web at http://www.nortelnetworks.com/or
http://www.nortelnetworks.com/media_center/
* * *
As reported in the Troubled Company Reporter on June 25, 2004,
Standard & Poor's Ratings Services said that its long-term
corporate credit rating and other long-term ratings on Nortel
Networks Corp. and Nortel Networks Ltd. remain on CreditWatch with
developing implications, where they were placed Apr. 28, 2004.
As previously reported, Standard & Poor's lowered its 'B' long-
term corporate credit rating and other long-term ratings on Nortel
Networks Corp. and Nortel Networks Ltd. to 'B-'.
PRESIDION CORP: Subsidiary Inks New Lending Arrangements
--------------------------------------------------------
Presidion Solutions (OTC Bulletin Board: PSDI), a subsidiary of
Presidion Corporation, said Mirabilis Ventures has retired the
amount outstanding on Presidion's revolving secured line of credit
with a financial institution. Mirabilis Ventures, which has
signed a letter of intent to provide new financing for Presidion,
is now the company's commercial senior credit provider.
Craig A. Vanderburg, Presidion's President and Chief Executive
Officer, said that the acquisition of Presidion's senior debt
facility is an integral step in the Company's partnership with
Mirabilis Ventures. "We are very pleased to execute the first
phase of the restructuring plan," Mr. Vanderburg said. "With
Mirabilis as our primary financial partner, we are in a better
position to execute on our strategic plan to strengthen our
balance sheet. These steps to improve our financial position also
contribute to our ability to keep our efforts focused on serving
our clients and growing our business."
About Presidion Corporation
Presidion Corporation is one of the largest Professional Employer
Organizations (PEO) in the United States. With more than 1,900
client companies, Presidion provides human resources, regulatory
compliance and employee benefits management services to
approximately 29,000 worksite employees. The Company's operations
are headquartered in Jupiter, FL and supported by sales and
services offices throughout its market area of Florida, Georgia,
South Carolina and Michigan. For more information, visit
http://www.presidion.com/
At June 30, 2004, Presidion Corporation's balance sheet showed a
$2,550,029 stockholders' deficit, compared to $514,035 deficit at
Dec. 31, 2003.
PROTECTION ONE: Moody's Alters Outlook on Junk Ratings to Positive
------------------------------------------------------------------
Moody's affirmed all the credit ratings of Protection One Alarm
Monitoring, Inc., and changed the outlook from negative to
positive (senior implied at Caa2). The change in outlook reflects
the potential reduction in leverage as a result of a proposed
restructuring of the company's revolving credit facility.
On November 15, 2004, Protection One announced that it had entered
into an exchange agreement with affiliates of the Quadrangle Group
to reduce a significant portion of its revolving credit facility
in exchange for additional common stock of the company.
Protection One also announced a tax sharing settlement agreement
with Westar Energy, Inc., the company's former majority owner.
The restructuring of the revolving credit facility, which the
company expects to complete within 120 days, is contingent upon
numerous conditions including the filing and clearance of an
information statement with the Securities and Exchange Commission.
Moody's expects that if the restructuring of the revolving credit
facility is consummated, Protection One's debt levels will decline
to about $350 million from about $547 million at Sept. 30, 2004
and expected recovery rates for the company's rated debt will
improve.
Pursuant to the tax sharing settlement agreement, Westar paid
Protection One approximately $46 million in cash and transferred
to it approximately $27 million principal amount of 7.375% senior
notes of Protection One. The company used a portion of the
proceeds from the Westar tax sharing settlement to make a
$14.5 million principal payment on its revolving credit facility
with Quadrangle. Protection One had a receivable balance of $34
million as of September 30, 2004 related to its tax sharing
agreement with Westar.
The exchange agreement includes the following provisions:
(1) Quadrangle will reduce the aggregate principal amount
outstanding under the revolving credit facility by
$120 million in exchange for additional common stock of
Protection One;
(2) the maturity date of the revolving credit facility will be
extended until August 15, 2005, subject to earlier
termination if the debt restructuring is not consummated;
(3) Quadrangle will waive and release all defaults and events
of default under the revolving credit facility existing
immediately prior to the consummation of the debt
restructuring; and
(4) upon completion of the debt restructuring, Protection One
will use the proceeds from the tax sharing settlement to
offer to purchase the outstanding principal and accrued
interest on the company's 13.625% senior subordinated
discount notes (13.625% Notes), pursuant to the notes'
change in control provisions, and, after such tender offer
and subject to certain allowances, to further pay down the
outstanding principal and accrued interest on the revolving
credit facility.
In connection with its sale to Quadrangle in February 2004,
Protection One was required under the terms of its 13.625% Notes
indenture to offer to purchase such notes. Since Protection One
did not commence an offer to purchase the 13.625% Notes, its
inaction constituted a covenant breach. The breach constitutes an
event of default under the indenture unless it is cured within 30
days after receipt of appropriate notice.
The positive ratings outlook reflects Moody's expectation that
Protection One will be able to significantly reduce leverage as a
result of the restructuring of the revolving credit facility and
the application of the proceeds from the tax sharing settlement.
The outlook would likely revert to negative if the restructuring
of the revolving credit facility is not consummated.
Moody's has affirmed these ratings:
* $164 million 7.375% Senior Unsecured Notes, due 8/15/2005,
rated Caa2;
* $30 million 13.625% Senior Subordinated Notes, due 6/30/05,
rated Ca;
* $110 million 8.125% Senior Subordinated Notes, due 1/15/09,
rated Ca;
* Senior Implied, rated Caa2;
* Senior Unsecured Issuer Rating, rated Caa3.
Protection One Alarm Monitoring, Inc., headquartered in Topeka,
Kansas, is a publicly traded alarm monitoring company. Revenue
for the twelve months ended September 30, 2004 is about
$270 million.
PSA QUALITY: DBS-Hearn Sale Hearing Going Forward on Nov. 24
------------------------------------------------------------
PSA Quality Systems (Ohio), Inc. asks the U.S. Bankruptcy Court
for the District of Delaware to review and approve the bidder who
submitted the highest bid in connection with the Debtor's sale of
substantially all of its assets that are free and clear of all
liens, claims and other interests.
The Court approved the motion of PSA Quality to sell substantially
all of its assets on Nov. 5, 2004, to DBS-Hearn, Inc., or any
higher bidder that emerged at a Court-approved auction held on
Nov. 16, 2004. Bankruptcy Court records don't show that any
higher or better offer emerged from that auction.
The Court will convene a hearing at 12:00 p.m., on Nov. 24, 2004,
to consider the Debtor's motion to approve the sale to the high
bidder.
The Court authorized the Debtor to pay a Break-Up Fee of $100,000
to DBS-Hearn, Inc., in connection with the Subject Assets that
were part of the pre-petition Asset Purchase Agreement between the
Debtor and DBS-Hearn and included in the November 16 auction.
The Debtor will pay the Break-Up Fee to DBS-Hearn in the event
that the Court approves any higher or better bid.
The Court will also consider, at the Nov. 24 hearing, the Debtor's
motion to assume and assign unexpired nonresidential leases and
executory contracts in connection with the assets auctioned on
November 16.
Headquartered in Troy, Michigan, PSA Quality Systems (Ohio), Inc.
is a subsidiary and debtor-affiliate of PSA Holdings International
Corp., a major provider of containment, sorting, rework, repack,
inventory management, material handling, warehousing,
distribution, customer representation, sequencing and subassembly
services for automotive manufacturers, Tier One suppliers, and
other industries. The Company filed for chapter 11 protection on
October 20, 2004 (Bankr. D. Del. Case No. 04-13030). Michael S.
Fox, Esq., at Traub, Bonacquist, & Fox LLP, and John H. Knight,
Esq., at Richards Layton & Finger represent the Debtors in their
restructuring. When the Debtor filed for protection from its
creditors, it listed estimated assets of $1 million to $10 million
and estimated debts of $10 million to $50 million.
PSA QUALITY: Traub Bonacquist Approved as Debtors' Counsel
----------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware gave PSA
Quality Systems (Ohio), Inc. and its debtor-affiliates permission
to employ Traub, Bonacquist & Fox LLP as their general bankruptcy
counsel.
Traub Bonacquist will:
a) advise the Debtors with respect to their powers and duties
as debtors-in-possession and the continued management and
operation of their business properties;
b) assist the Debtor in the preparation of their financial
statements, schedule of assets and liabilities, statements
of financial affairs and other reports and documentation
pursuant to the Bankruptcy Code;
c) appear and represent the Debtors at all hearings on matters
pertaining to their affairs as debtors-in-possession,
negotiate with representatives of creditors an other
parties in interest, respond to creditor inquiries, and
advise and consult on the conduct of the Debtor's cases;
d) prosecute and defend litigated matters that may arise
during the Debtors' chapter 11 cases and any other action
necessary to protect and preserve the Debtors' estates;
e) advise and represent the Debtors in connection with the
assumption or rejection of executory contracts and leases,
administration of claims and other bankruptcy-related
matters arising from the Debtors' chapter 11 cases;
f) advise the Debtors with respect to various general and
litigation matters relating to their chapter 11 cases;
g) negotiate and prepare in obtaining confirmation of a plan
of reorganization, approval of a disclosure statement and
all other matters related to the plan and disclosure
statement;
h) advise and represent the Debtors in connection with the
assumption, assumption and assignment or rejection of
unexpired leases and executory contracts and the sale of
assets outside of the ordinary course of business; and
i) prepare, file and prosecute motions, applications, answers,
orders, reports, and papers necessary and desirable for the
efficient and economic administration of the Debtors'
chapter 11 cases.
Michael S. Fox, Esq., a Partner at Traub Bonacquist is the lead
attorney for the Debtors. Mr. Fox discloses that the Firm
received a 181,317.79 retainer. For his professional services,
Mr. Fox will bill the Debtors $535 per hour.
Mr. Fox reports Traub Bonacquist's lead professionals bill:
Professional Designation Hourly Rate
------------ ----------- -----------
Susan Balaschak Partner $485
Adam H. Friedman Partner 410
Peter G. Lavery Associate 260
Mr. Fox reports Traub Bonacquist's other professionals bill:
Designation Hourly Rate
----------- -----------
Partners $385 - 595
Counsel 385
Associates 225 - 325
Support Staff 75 - 150
Paraprofessionals 50 - 140
Traub Bonacquist does not represent any interest adverse to the
Debtors or their estate.
Headquartered in Troy, Michigan, PSA Quality Systems (Ohio), Inc.
is a subsidiary and debtor-affiliate of PSA Holdings International
Corp., a major provider of containment, sorting, rework, repack,
inventory management, material handling, warehousing,
distribution,customer representation, sequencing and subassembly
services for automotive manufacturers, Tier One suppliers, and
other industries. The Company filed for chapter 11 protection on
October 20, 2004 (Bankr. D. Del. Case No. 04-13030). Michael S.
Fox, Esq., at Traub, Bonacquist, & Fox LLP, and John H. Knight,
Esq., at Richards Layton & Finger represent the Debtors in their
restructuring. When the Debtor filed for protection from its
creditors, it listed estimated assets of $1 million to $10 million
and estimated debts of $10 million to $50 million.
QWEST CORP: Prices Reopening for $250 Million More Notes
--------------------------------------------------------
Qwest Communications International Inc.'s (NYSE: Q) Qwest
Corporation subsidiary has priced a reopening of the 7.875% notes
due Sept. 1, 2011. The reopening is for an additional
$250 million.
The seven-year notes were priced at $107.50 per $1,000 principal
amount yielding 6.5%. The net proceeds of the offering will be
used for general corporate purposes, including funding or
refinancing the company's investments in telecommunication assets.
"This offering provides the company even greater financial
flexibility for funding our capital program while furthering our
goal to reduce overall debt," said Oren G. Shaffer, Qwest vice
chairman and CFO. "As we continue to benefit from operational
improvements that began to take hold in 2004, our scheduled and
callable maturities in 2005 present the opportunity to use free
cash flow and proceeds as an efficient debt reduction option."
The sale of the notes is expected to close today, Nov. 23, 2004.
The offering was made in a private placement transaction pursuant
to Rule 144A under the Securities Act of 1933, as amended. The
notes have not been registered under the Securities Act of 1933,
as amended, or the securities laws of any other jurisdiction and
may not be offered or sold in the United States absent
registration or an applicable exemption from registration
requirements.
About the Company
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 www.qwest.com
* * *
As reported in the Troubled Company Reporter on Aug. 13, 2004,
Standard & Poor's Ratings Services assigned its 'BB-' rating to
Denver, Colorado-based local telephone carrier Qwest Corporation's
$500 million notes due 2011. These notes represent senior
unsecured debt obligations of the company. Proceeds are expected
to be used to repay maturing debt, given the company's
announcement that it is tendering for $750 million of Qwest
Corporation debt due in November 2004.
At the same time, Standard & Poor's affirmed its 'BB-' rating of
Qwest Corporation's existing senior unsecured debt, as well as the
'BB-' corporate credit rating on the company and its Denver,
Colorado-based integrated telecommunications carrier parent, Qwest
Communications International Inc. The outlook is developing.
"The ratings reflect the relatively good overall business risk
profile of Qwest's increasingly challenged but still well-
positioned local exchange business," said Standard & Poor's credit
analyst Catherine Cosentino. "However, this is tempered by the
company's lack of a national wireless presence in contrast to the
other regional Bell operating companies (RBOCs) and by a fairly
leveraged financial profile--largely a legacy of cash drain from
the classic Qwest long-distance business."
RCN CORP: Tejas Submits Competing Commitment for 2nd Lien Notes
---------------------------------------------------------------
As reported in the Troubled Company Reporter on Oct. 18, 2004, RCN
Corporation and certain of its subsidiaries filed an Amended
Plan and Disclosure Statement on Oct. 12, 2004. At the
Oct. 13, 2004 hearing, Judge Drain finds that the Debtors'
Amended Disclosure Statement contains adequate information within
the meaning of Section 1125 of the Bankruptcy Code. Accordingly,
the Court approves the Debtors' Amended Disclosure Statement.
Deutsche Bank Securities, Inc., on May 24, 2004, committed to
provide the Debtors a new senior exit financing facility.
Pursuant to a commitment letter, Deutsche Bank would provide an
exit facility comprised of two components:
(a) a senior first lien secured credit facility in the
principal amount of $285 million plus a $25 million letter
of credit facility; and
(b) second lien floating rate notes in the principal amount of
$150 million.
Shortly after the Petition Date, the Court approved the Deutsche
Bank Commitment Letter and the Debtors' payment of related fees
and expenses.
Debtors File Supplements
Consistent with the Debtors' request and the commitment letters,
D. Jansing Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom,
LLP, in New York, tells Judge Drain that certain definitive terms
relating to the purchase and registration of, and rights of the
holders of, the anticipated Convertible Second Lien Notes will be
contained in a Note Purchase Agreement, a Registration Rights
Agreement, and an Indenture, that the Debtors will enter into
with the purchaser.
A copy of the Note Purchase Agreement draft is available for free
at:
http://bankrupt.com/misc/Note_Purchase_Agreement.pdf
A copy of the Registration Rights Agreement draft is available
for free at:
http://bankrupt.com/misc/Registration_Rights_Agreement.pdf
A copy of the Indenture draft is available for free at:
http://bankrupt.com/misc/Indenture.pdf
Tejas and Noteholder Investors Object
Tejas Securities Group, Inc., and the holders of $170 million in
aggregate face amount of RCN Corporation Senior Notes, have
submitted a competing commitment for the purchase of Convertible
Second Lien Notes. The Noteholder Investors ask the Court to
deny the Debtors' request, in its entirety.
Michael S. Stamer, Esq., at Akin Gump Strauss Hauer & Feld, LLP,
in New York, informs the Court that the Noteholder Investors have
submitted to the Debtors a commitment letter for the purchase of
Convertible Second Lien Notes on terms more favorable than those
proposed by D.E. Shaw Laminar Lending 2, Inc. Mr. Stamer points
out that the Noteholder Investors are prepared to accept a 0.25%
reduction in the interest rate on the Convertible Second Lien
Notes and will commit to purchase up to an aggregate of
$150,000,000 of 7.25% Convertible Second Lien notes from
Reorganized RCN. In addition, Tejas will act as placement agent
for the Investor Notes for a fee of 1.0% of the aggregate amount
of Investor Notes sold. This is 0.5% less than the placement fee
imposed by Deutsche Bank Securities, Inc., and Deutsche Bank AG
Cayman Islands Branch.
The Debtors, as fiduciaries for the creditors of these estates,
in the face of competing alternative exit financing proposals,
must accept the proposal that maximizes the benefits for all
creditors. Mr. Stamer asserts that the Noteholder Investors'
Proposal is clearly superior because of its reduced interest rate
and lower proposed transactions costs. Because the Noteholder
Investors are offering the Debtors exit financing which is
virtually identical to the financing proposed by Laminar -- but
which contains certain terms which are obviously better for the
Debtors' estates -- the Court should direct the Debtors to
consummate the alternative exit financing contemplated by the
Noteholder Investors' Proposal.
To the extent that the Court finds that the Noteholder Investors'
Proposal does not offer the Debtors exit financing on more
favorable terms, or to the extent that Laminar is able to provide
the Debtors with even more attractive exit financing terms, the
Noteholder Investors object, on the limited grounds that there is
no legitimate basis to provide Deutsche Bank with a windfall of
up to $2.25 million for acting as placement agent when it appears
they will have no substantive roll in the placement of the notes.
The Debtors should be able to place the Convertible Second Lien
Notes themselves or, alternatively, the Debtors can engage Tejas
to serve as placement agent for a 1.0% fee, a savings of up to
$750,000 for the creditors of the Debtors' estates, Mr. Stamer
says.
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. 15; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
REGENCY GAS: S&P Assigns Single-B Ratings to $290 Million Debts
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B+' corporate
credit rating to midstream and pipeline company Regency Gas
Services LLC. The outlook is stable.
At the same time, Standard & Poor's assigned ratings to its
proposed $290 million credit program. These ratings, and
corresponding recovery scores, which are preliminary and subject
to a review of final documentation, are as follows:
-- Standard & Poor's assigned its 'B+' bank loan rating to
Regency's proposed $240 million senior secured credit
facilities, consisting of a $40 million, five-year revolving
credit facility and a $200 million, 5.5-year term loan
facility. Both facilities rank pari passu and are secured
by a first-priority perfected lien on essentially all stock
and assets of Regency and its subsidiaries. Standard &
Poor's assigned a recovery score of '2' to the first-lien
debt, representing our expectation of substantial (80% to
100%) recovery of principal in the event of a default.
-- Standard & Poor's assigned its 'B-' bank loan rating to
Regency's proposed $50 million, six-year senior secured term
loan. The facility is secured by a second-priority
perfected lien on essentially all stock and assets of
Regency and its subsidiaries. Standard & Poor's assigned a
recovery of '5' to the second-lien debt, representing our
expectation of negligible recovery of principal in the event
of a default.
Dallas, Texas-based Regency, formed in April 2003, will have about
$250 million in debt pro forma for the proposed transaction.
"The stable outlook relies on continued efforts to manage the
volatility of cash flows through successful contract renegotiation
and the implementation of a comprehensive hedging program," said
Standard & Poor's credit analyst Kimberly Stokes. "Standard &
Poor's expects acquisitions to be managed and financed in a
prudent manner, and any increase in the size or scope of Regency's
gas marketing operations may have a negative effect on the
rating," she added.
RIGGS CAPITAL: Dividend Non-Payment Cues Fitch to Junk Preferreds
-----------------------------------------------------------------
Fitch Ratings has lowered the preferred ratings for Riggs Capital
and Riggs Capital II, the two subsidiaries of Riggs National
Corporation, to 'C' from 'B-'. The ratings for Riggs and its
other subsidiaries remain unchanged. All of Riggs' ratings remain
on Rating Watch Evolving.
Fitch's rating action takes into consideration the fact that Riggs
will not pay the December semi-annual dividend as it did not gain
written approval from the Federal Reserve Bank of Richmond (the
Fed) and the director of the Division of Banking Supervision and
Regulation of the Board of Governors to make the payment. This is
a requirement of the cease and desist order signed by its officers
on May 13, 2004.
The lack of regulatory approval highlights the uncertainty of
Riggs' prospects and, in Fitch's view, a desire by the regulators
to preserve capital until Riggs' financial condition improves.
The new ratings address the continuing uncertainties relating to
the company's ability to make future payments on these
instruments. Non-payment of the trust preferreds is not
considered a default, as interest payments for both issues can be
deferred at any time or from time to time for a period not
exceeding 10 consecutive semi-annual periods. Additionally,
although this recent issue adds additional weight to the company's
strained financial profile, Fitch still believes that Riggs
currently maintains the financial resources to fully service its
financial obligations in a timely manner. That said, Fitch still
believes that there is the potential for sharp deterioration in
its financial flexibility.
The Rating Watch Evolving status indicates reasonable probability
that Riggs' ratings could be upgraded, downgraded, or maintained
by Fitch within the next six months. As mentioned in a past press
release, although no indication has been given by executive
management at both Riggs and PNC, the increased legal risk, along
with uncertainty as to how or when such risks will be fully
addressed, raises the reasonable possibility that the pending
acquisition by PNC may be delayed or terminated. If PNC were to
terminate the transaction, the potential for a rating upgrade
would likely be eliminated, absent the emergence of another buyer.
The potential for a downgrade will mostly be determined by how
effectively Riggs is able to address its legal and regulatory
issues.
These ratings have been downgraded:
* Riggs Capital
-- Preferred stock to 'C' from 'B-'.
* Riggs Capital II
-- Preferred stock to 'C' from 'B-'.
RIGGS NATIONAL: Dividend Non-Payment Spurs Moody's to Cut Ratings
-----------------------------------------------------------------
Moody's Investors Service downgraded the ratings of Riggs National
Corporation (subordinate to B1 from Ba2) and its lead bank
subsidiary, Riggs Bank N.A. (long-term deposits to Baa3 from Baa2
and short-term deposits to P-3 from P-2). Moody's also downgraded
Riggs Capital and Riggs Capital II (preferred stock to Caa1 from
Ba2). The ratings continue to remain on review, direction
uncertain.
Moody's said the downgrade on the trust preferred securities was
in response to the regulators' statement they were not inclined to
allow Riggs National Corporation to pay preferred dividends.
Moody's said the action on the other ratings reflected its
expectation that the increased level of legal and other expenses
Riggs incurred in the third quarter of 2004 will continue for some
time. These expenses are in connection with the ongoing
investigations by the US Department of Justice and regulatory
authorities. The high level of expenses calls into question the
company's ability to generate net income in the short-term. In
addition, there continues to be uncertainty that the acquisition
of Riggs by PNC Financial Services Group -- PNC -- will be
completed as originally envisioned. Moody's added that the
company announced that its acquisition by PNC would now be pushed
back to mid-April, 2005 instead of during the first quarter of
2005, due to systems conversions issues. Moody's said that its
ratings on the bank assume asset quality and liquidity remain
satisfactory.
These ratings were downgraded:
* Riggs National Corporation:
-- Subordinate to B1 from Ba2
* Riggs Bank N.A.:
-- Long-term deposits to Baa3 from Baa2
-- Short-term deposits to P-3 from P-2
-- Issuer to Ba2 from Baa3
-- Bank financial strength to D from D+
* Riggs Capital and Riggs Capital II:
-- Trust Preferred to Caa1 from Baa2
Riggs National Corporation is a bank holding company headquartered
in Washington, D.C. with assets of $5.9 billion as of
September 2004.
ROGERS CABLE: Prices Private Placement of US$427 Million Notes
--------------------------------------------------------------
Rogers Communications Inc. and its wholly-owned subsidiary Rogers
Cable Inc. said Rogers Cable has priced a private placement of
notes in an aggregate principal amount of approximately US$427
million (approximately Cdn$509 million based on Friday's noon rate
of exchange as reported by the Bank of Canada). The private
placement consists of:
-- Cdn$175 million 7.25% Senior (Secured) Second Priority Notes
due 2011 and
-- US$280 million 6.75% Senior (Secured) Second Priority Notes
due 2015.
The offering is being made pursuant to Rule 144A and Regulation S
under the Securities Act of 1933, as amended in the United States
and pursuant to private placement exemptions in certain provinces
of Canada and is expected to close on or about November 30, 2004.
Rogers Cable intends to use all of the net proceeds from the
private placement to partially repay outstanding advances under
its bank credit facility. On November 9, 2004, Rogers Cable
borrowed $650.0 million under its bank credit facility which,
together with $10.0 million cash on hand, was distributed to RCI
as a return of capital.
The Notes have not been registered under the Securities Act and
may not be offered or sold in the United States absent
registration or an applicable exemption from registration
requirements. This news release is not an offer of the Notes for
sale or a solicitation of an offer to purchase the Notes in the
United States or Canada. The Notes have not been and will not be
qualified for distribution under the securities laws of any
province or territory of Canada except pursuant to prospectus
exemptions.
About the Company
Rogers Cable Inc. (S&P BB/Stable/--) is a wholly-owned subsidiary
of Rogers Communications Inc. (TSX: RCI; NYSE: RG). Rogers Cable
passes 3.3 million homes in Ontario, New Brunswick and
Newfoundland, with 69% basic penetration of its homes passed.
Rogers Cable pioneered high-speed Internet access with the first
commercial launch in North America in 1995 and now approximately
27% of homes passed are Internet customers. With 99% of its
network digital ready, Rogers Cable offers an extensive array of
High Definition TV, a suite of Rogers On Demand services
(including Video on Demand (VOD), Subscription VOD, Personal Video
Recorders and Timeshifting channels) as well as a large line-up of
digital, multicultural, and sports programming. Approximately 28%
of Rogers basic subscribers are also digital customers and
approximately 39% are Rogers Hi-Speed residential and business
customers. Rogers Cable also owns and operates 288 Rogers Video
Stores.
Rogers Communications Inc. (TSX: RCI; NYSE: RG) is a diversified
Canadian communications and media company. It is engaged in cable
television, high-speed Internet access and video retailing through
Canada's largest cable television provider, Rogers Cable Inc.; in
wireless voice and data communications services through Canada's
leading national GSM/GPRS cellular provider, Rogers Wireless
Communications Inc.; and in radio, television broadcasting,
televised shopping and publishing businesses through Rogers Media
Inc.
ROGERS WIRELESS: Prices $2.36 Billion Notes via Private Placement
-----------------------------------------------------------------
Rogers Wireless Communications Inc.'s wholly-owned subsidiary
Rogers Wireless Inc. has priced a private placement of notes in an
aggregate principal amount of approximately US$2,356 million
(approximately Cdn$2,807 million based on Friday's noon rate of
exchange as reported by the Bank of Canada). The private
placement consists of:
-- Cdn$460 million 7.625% Senior (Secured) Notes due 2011;
-- US$550 million Floating Rate Senior (Secured) Notes due
2010;
-- US$470 million 7.25% Senior (Secured) Notes due 2012;
-- US$550 million 7.50% Senior (Secured) Notes due 2015 and
-- US$400 million 8.00% Senior Subordinated Notes due 2012.
The offering is being made pursuant to Rule 144A and Regulation S
under the Securities Act of 1933, as amended, in the United States
and pursuant to private placement exemptions in certain provinces
of Canada and is expected to close on or about Nov. 30, 2004.
RWI expects:
-- to use the proceeds from the private placement to make a
$1,750.0 million distribution as a return of capital to
RWCI;
-- to repay $850.0 million of intercompany subordinated debt
owing to RCI in connection with RWI's acquisition of
Microcell; and
-- the remaining net proceeds to partially repay advances
outstanding under RWI's amended bank credit facility.
RWCI is reviewing the various methods of transferring the $1,750.0
million distribution to its shareholders, so RCI will have
adequate funds to repay its $1,750.0 million bridge credit
facility incurred in connection with its acquisition of RWCI
shares from AT&T Wireless Services, Inc. A determination
of the method of such a distribution, including the timing
thereof, will not take place until following completion of RCI's
announced exchange offer for all of the outstanding shares of RWCI
and the distribution will be subject to compliance with applicable
legal requirements.
The Notes have not been registered under the Securities Act and
may not be offered or sold in the United States absent
registration or an applicable exemption from registration
requirements. This press release is not an offer of the Notes for
sale or a solicitation of an offer to purchase the Notes in the
United States or Canada. The Notes have not been and will not be
qualified for distribution under the securities laws of any
province or territory of Canada except pursuant to prospectus
exemptions.
About the Company
Rogers Wireless Communications Inc. (TSX: RCM; NYSE: RCN) operates
Canada's largest integrated wireless voice and data network,
providing advanced voice and wireless data solutions to customers
from coast to coast on its GSM/GPRS/EDGE network, the world
standard for wireless communications technology. The company has
over 5.5 million customers, and has offices in Canadian cities
across the country. Rogers Wireless Communications Inc. is
approximately 89% owned by Rogers Communications Inc.
* * *
Moody's Investors Service:
(1) confirmed:
(a) the Ba3 Senior Implied rating of Rogers Communications,
Inc.,
(b) the existing ratings of Rogers Wireless, Inc.,
(2) lowered the debt ratings of:
(a) Rogers Cable, Inc., and,
(b) Rogers Communications,
(3) assigned:
(a) a Ba3 Senior Secured rating to Wireless' proposed debt
issue,
(b) a B2 Senior Subordinated rating to Wireless' proposed
debt issue,
(c) a Ba3 Senior Secured Second Priority rating to Cable's
proposed C$500 million debt issue,
(d) a Speculative Grade Liquidity rating of SGL-2, and
(4) withdrew Wireless':
(a) Senior Implied, and
(b) Issuer ratings.
The outlook is stable.
As reported in the Troubled Company Reporter on Nov. 10, 2004,
Standard & Poor's Ratings Services lowered its long-term corporate
credit ratings on Rogers Communications, Inc. -- RCI, Rogers Cable
Inc., and Rogers Wireless Inc. -- RWI -- to 'BB' from 'BB+'
following RWI's successful tender for various equity securities of
Microcell Telecommunications, Inc. Given the success of the
offer, and lack of any other material conditions RWI is expected
to complete the acquisition of Microcell in the near term. The
outlook is currently stable.
SAFETY-KLEEN: Wants Court to Approve PwC Settlement Agreement
-------------------------------------------------------------
Oolenoy Valley Consulting, the Trustee of Safety-Kleen Creditor
Trust, seeks the Court's authority to enter into a settlement
agreement with PricewaterhouseCoopers, LLP.
The Agreement resolves an avoidance action the Trustee initiated
against PwC to recover $644,076 transferred by the Debtors to PwC
90 days prior to the Petition Date.
PwC agrees to pay the Trustee $133,000 in exchange for the
dismissal of the Avoidance Action.
Headquartered in Delaware, Safety-Kleen Corporation --
http://www.safety-kleen.com/-- provides specialty services such
as parts cleaning, site remediation, soil decontamination, and
wastewater services. The Company, along with its affiliates,
filed for chapter 11 protection (Bankr. D. Del. Case No. 00-02303)
on June 9, 2000. Gregg M. Galardi, Esq., at Skadden, Arps, Slate,
Meagher, represents the Debtors in their restructuring efforts.
When the Debtors filed for protection from their creditors, they
listed $3,031,304,000 in assets and $3,333,745,000 in liabilities.
(Safety-Kleen Bankruptcy News, Issue No. 83; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
SCHLOTZSKY'S INC: Creditors Must File Proofs of Claim by Nov. 28
----------------------------------------------------------------
The United States Bankruptcy Court for the District of Western
District of Texas set Nov. 28, 2004, as the deadline for all
creditors owed money by Schlotzsky's, Inc., on account of claims
arising prior to Aug. 3, 2004, to file their proofs of claim.
Creditors must file their written proofs of claim on or before the
November 28 Claims Bar Date and those forms must be delivered to:
Lawrence T. Bick
Clerk of the Bankruptcy Court
P.O. Box 1439
San Antonio, Texas 78295
Headquartered in Austin, Texas, Schlotzsky's, Inc. --
http://www.schlotzskys.com/-- is a franchisor and operator of
restaurants. The Debtors filed for chapter 11 protection on
August 3, 2004 (Bankr. W.D. Tex. Case No. 04-54504). Amy Michelle
Walters, Esq., and Eric Terry, Esq., at Haynes & Boone, LLP,
represent the Debtors in their restructuring efforts. When the
Debtors filed for protection from its creditors, they listed
$111,692,000 in total assets and $71,312,000 in total debts.
SOUTHERN PERU: Fitch Ups Long-Term Foreign Currency Rating to BB
----------------------------------------------------------------
Fitch Ratings upgraded the long-term foreign currency rating of
Southern Peru Copper Corporation and Telefonica del Peru, S.A.A.
to 'BB' from 'BB-'. The Rating Outlook for both companies is
Stable.
These rating actions follow the upgrade of Fitch's sovereign
rating of Peru and country ceiling to 'BB' from 'BB-', with a
Stable Rating Outlook, which reflects the recent passage of
pension reform and sustained robust macroeconomic and fiscal
performance. Peru's GDP growth is forecast to remain solid at
4.5% in 2004, following growth above 4% in the prior two years.
Both SPCC and TDP remain constrained by Peru's country ceiling at
'BB'.
SPCC's 'BB' foreign currency rating is supported by the company's
competitive cost structure and favorable market position as a
leading copper producer and exporter. As a relatively low-cost
producer, SPCC is able to remain competitive during the troughs in
the price cycle. SPCC is planning to fund an upcoming $300
million modernization project for its Ilo copper smelter primarily
with available cash balances of over US$400 million as of
Sept. 30, 2004. The three-year project aims to bring the
company's Ilo smelter operations into compliance with the
established environmental standards by capturing no less the
92% of sulfur dioxide emissions.
Fitch understands that the pending acquisition of affiliate
company Minera Mexico S.A. de C.V. (Minera Mexico) by SPCC will
likely involve a cashless stock-for-stock transaction. In the
event the proposed transaction was not cashless and Minera
Mexico's debt is rebalanced between it and SPCC, Fitch would not
expect the underlying credit quality (local currency rating) of
SPCC to deteriorate to a level below the foreign currency rating
of Peru.
SPCC is one of the world's largest private sector copper producers
and exporters; approximately 95% of the company's production
primarily goes to the U.S. and Europe. SPCC's operations are
located in southern Peru and consist of two large-scale, open-pit,
copper-mining units, Toquepala and Cuajone, along with integrated
smelting and refining facilities in the port town of Ilo. SPCC
produced 375,000 tons of copper in 2003 and generated revenues of
nearly US$800 million. The company is owned by Grupo Mexico
(54%), Phelps Dodge (14%), Cerro Trading Co. (14%), and public
stockholders (18%).
TDP's 'BB' foreign currency rating is based on the company's solid
business position as the largest Peruvian telecommunications,
diversified revenue stream from its various business segments,
healthy cash flow generation, relatively low capital expenditure
needs, and a strong financial profile. TDP's existing local
currency rating of 'BBB+' remains unchanged.
TDP's local-service business, which accounts for more than 40% of
consolidated revenues, provides the company with a relatively
stable source of cash flow. TDP currently has a 98% market share
in the local service business. TDP's financial profile is
expected to remain consistent with the rating category despite
heightened competition and lower long distance and local service
tariffs due to recent debt reductions and solid free cash flow
generation of over $200 million annually that provides the company
with a degree of financial flexibility. Following debt reduction
of over 50% over the past three years, EBITDA/interest expense is
strong at 14.1 times (x), while debt/EBITDA is currently under 1.0
times (x).
TDP generated $1.0 billion of revenues and $478 million of EBITDA
during 2003. The company participates in several segments,
including fixed local service (43% of revenues during the first
nine months of 2004), public telephony (20%), domestic and
international long distance (9%), cable TV (10%), and business
communications (8%), among other segments (10%). The company is
97% owned by Telefonica S.A of Spain -- TEF.
SPIEGEL INC: Gets to Walk Away from Fleet Capital Equipment Lease
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
gave Spiegel Inc. and its debtor-affiliates permission to walk
away from an equipment lease with Fleet Capital Leasing-Technology
Finance.
Pursuant to the Lease, the Debtors obtained from Fleet Capital:
-- 16 Hitachi copiers;
-- one Hitachi printer each for a term of 60 months
commencing on January 20, 2001 at a monthly rate for all of
the equipment totaling $12,481; and
-- an additional Hitachi printer for a term of 55 months
commencing on June 25, 2001 at a monthly rate of $1,115.00.
The Fleet Lease provides that, on the expiration of the initial
term, the Lease will renew for successive one-month terms unless
and until the Debtors send Fleet Capital a written termination
notice of at least 60 days prior to the end of any term. If the
Debtors elect to terminate, at the expiration of the final term,
they are required under the Fleet Lease to return the Equipment
in good working condition.
In light of the recent contraction in the overall size of their
business enterprises over the past year, the Debtors no longer
require the use of the Equipment. The Debtors also do not wish
to waste their resources by keeping and maintaining the
Equipment.
Marc B. Hankin, Esq., at Shearman & Sterling, LLP, in New York,
relates that Fleet Capital filed Claim No. 2527 amounting
$438,353 for payments allegedly due and owing under the Lease.
The Debtors have examined their books and records and determined
that:
(i) they owe Fleet $7,618 in prepetition amounts;
(ii) they are current on all postpetition payments under the
Fleet Lease; and
(iii) the total payments due and owing for the remainder of
the term of the Fleet Lease total $334,325.
Headquartered in Downers Grove, Illinois, Spiegel, Inc. --
http://www.spiegel.com/-- is a leading international general
merchandise and specialty retailer that offers apparel, home
furnishings and other merchandise through catalogs, e-commerce
sites and approximately 560 retail stores. The Company filed for
Chapter 11 protection on March 17, 2003 (Bankr. S.D.N.Y. Case No.
03-11540). James L. Garrity, Jr., Esq., and Marc B. Hankin, Esq.,
at Shearman & Sterling, represent the Debtors in their
restructuring efforts. When the Company filed for protection from
its creditors, it listed $1,737,474,862 in assets and
$1,706,761,176 in debts. (Spiegel Bankruptcy News, Issue No. 34;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
STAR GAS: Inks Pact to Sell Propane Business for $475 Million
-------------------------------------------------------------
Star Gas Partners, L.P. (NYSE: SGU, SGH), a diversified home
energy distributor and services provider specializing in heating
oil and propane, said the board of directors of its general
partner, Star Gas LLC, has approved a strategic transaction and
restructuring plan designed to de-leverage the Partnership's
balance sheet in an effort to significantly improve its financial
condition. The plan will result in the Partnership focusing on
its home heating oil business.
The Partnership has signed an agreement to sell its propane
distribution and services segment, held largely through Star Gas
Propane, L.P., to Inergy Propane LLC, the operating subsidiary of
Inergy, L.P., (NASDAQ: NRGY), for $475 million. In addition, the
Partnership announced that it has given notice to holders of the
secured notes of Petro Holdings, Inc. and of Petroleum Heat and
Power Co., Inc., of its election to optionally prepay the secured
notes, representing an aggregate payment, including principal,
interest and estimated premium, of approximately $182 million.
The Partnership also intends to give notice of optional prepayment
of the secured notes of its propane segment involving an aggregate
payment including principal, interest and estimated premium, of
approximately $114 million. The aggregate amount payable with
regard to both sets of secured notes is approximately $296
million.
Following the Partnership's press release of October 18, 2004, the
Partnership was approached by Inergy regarding its interest in
acquiring the Partnership's propane segment. In connection with
addressing this possibility, the board of directors of the
Partnership's general partner formed a special committee comprised
of two independent directors to determine whether a transaction
would be fair to the non-affiliated unitholders of the Partnership
as a whole. The special committee, in turn, engaged separate
financial and legal advisors to assist it. The board monitored
the negotiation with Inergy and considered other possible
alternatives, including a sale of less than all the propane
segment, a sale of the heating oil segment, a sale of the entire
Partnership and delaying any discussion regarding a sale and
simply restructuring the debt of the Partnership. The special
committee and full board spent considerable time considering the
tax impact of the announced transaction and particularly why the
sale of the propane segment would generate adverse tax
consequences to a number of unitholders, particularly those that
had held their units the longest. The special committee and full
board considered the likelihood of consummation of the transaction
and the specific terms of the purchase agreement. They noted that
the agreement included a provision permitting the Partnership to
terminate the agreement should a superior proposal be made for the
propane segment or the Partnership as a whole upon a payment of a
breakup fee.
The analyses presented to the special committee and the board
indicated that the sale of the propane segment would, by de-
leveraging the balance sheet of the Partnership, likely advance
the time when it would be possible for the Partnership to resume
regular distributions on the Partnership's common units, at some
level, although the special committee and full board understood
that there could be no assurance that the Partnership would make
distributions on the common units, at any level, in the future.
The analyses also indicated that, irrespective of the sale of the
propane segment, it is unlikely that the Partnership will resume
regular distributions to the senior subordinated and junior
subordinated units for the foreseeable future.
After considering the advice of its advisors, the special
committee unanimously determined that the sale of the propane
segment to Inergy on the terms described above was fair to the
non-affiliated unitholders of the Partnership as a whole. After
considering the advice of their advisors and an analysis of the
issues, the Audit Committee unanimously determined that the
transaction was fair to the Partnership, and the Audit Committee
and the full board unanimously approved the execution of the
agreement to sell the Partnership's propane segment to Inergy.
The sale should improve Star's financial condition which should
have the effect of increasing the heating oil segment's
opportunities.
The Sale of the Propane Business
General Description
The agreement with Inergy contemplates that Inergy will purchase
the Partnership's propane segment for $475 million in cash,
without assumption of the propane segment's indebtedness for
borrowed money at the time of sale. The purchase price is subject
to a working capital adjustment. The transaction is expected to
close in late December, 2004, but will be treated for financial
purposes as if it closed on November 30, 2004.
No financing condition
The purchaser's obligation to close is not conditioned on receipt
of financing.
General conditions
The sale is conditioned on a number of customary closing
conditions, including the passage of the applicable waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
The agreement provides that the Partnership will enter into a five
year noncompetition agreement with respect to the propane business
in certain regions. The agreement also provides for a breakup fee
to Inergy in the event that the Partnership terminates the
agreement because of a superior offer for the propane business or
the Partnership enters into an agreement providing for the sale of
the Partnership as an entirety. The Partnership can terminate the
agreement if the transaction does not close by December 17, 2004,
and Inergy can terminate the agreement if the transaction does not
close by December 31, 2004. There can be no assurance that all of
the conditions to closing will be met.
Partnership status
Star will continue to be classified as a partnership for federal
income tax purposes after the sale of the propane business.
Nonetheless, because the heating oil business is held through a
corporate subsidiary, following the sale nearly all of Star's
earnings will be subject to corporate-level income taxes, whereas
prior to the sale most of the earnings from the propane business
are not subject to entity-level taxation. By virtue of net
operating loss carryforwards, the Partnership does not anticipate
that the corporate subsidiary will pay substantial federal income
taxes for several years.
Use of Proceeds from the Sale of the Propane Business
Proceeds from the sale of the propane segment will be used to
repay $296 million that will be owing with respect to the secured
notes at the Partnership's subsidiaries, to repay outstanding
borrowings under the propane segment's credit facilities, and to
pay expenses related to the sale of the propane segment.
Thereafter, pursuant to the terms of the indenture relating to the
Partnership's 10-1/4% Senior Notes, the Partnership will be
obligated, within 360 days of the sale, to apply the net proceeds
of the sale of the propane business either to reduce indebtedness
(and reduce any related commitment) of the Partnership or of a
restricted subsidiary, or to make an investment in assets or
capital expenditures useful to the Partnership's or any
subsidiary's business. To the extent any net proceeds that are not
so applied exceed $10 million, the indenture requires the
Partnership to make an offer to all holders of MLP Notes to
purchase for cash that number of MLP Notes that may be purchased
with excess proceeds at a purchase price equal to 100% of the
principal amount of the MLP Notes plus accrued and unpaid interest
to the date of purchase. The Partnership has not determined the
amount of excess proceeds that will result from the sale of the
propane segment. Accordingly, the Partnership cannot predict the
size of any offer to purchase the MLP Notes and whether or to what
extent holders of MLP Notes will accept the offer to purchase when
made.
The Partnership is taking steps to put in place, at the closing of
the sale of the propane business, a new asset based loan facility
to refinance the working capital indebtedness of Petro.
Tax Consequences to Unitholders Upon
Sale of the Propane Business
Star's unitholders will recognize gain or loss associated with the
sale of the propane business based on a number of factors,
including each individual holder's basis in the units held, and
the tax consequences of such sale will accrue to the record
holders as of the date of the sale. Based on its preliminary
calculations, in general the Partnership estimates that, depending
on the profile of the unitholder, the gain can be as high as
approximately $11 per common unit and loss as high as $4.27. In
general, the Partnership anticipates that holders who have held
units for a substantial period of time, particularly those who
purchased units prior to 2002, and those who purchased units at a
low purchase price, will recognize the most gain. A holder's tax
basis in units will be increased by the amount of gain recognized.
If a holder sells units prior to the consummation of the sale of
the propane business, such holder may recognize substantially less
gain than would a holder who continues to hold through the date of
consummation of the sale.
Unitholders are encouraged to consult with their own tax advisors
with respect to the application of tax laws to their particular
situations.
Prepayment of the Partnership's Subsidiaries' Secured Notes
The Partnership has given the holders of Petro's secured notes
notice of prepayment of all of the notes on December 17, 2004. As
contemplated by the note purchase agreements relating to the
notes, the prepayment amount will be 100% of the principal amount
outstanding ($157 million), together with interest accrued thereon
to the date of prepayment ($3.6 million), and an estimated make-
whole amount ($21 million). At least 10 days before the December
17, 2004 expected closing of the sale of the propane segment, the
Partnership expects to give notice of the prepayment of the
propane segment's secured notes. The prepayment amount for the
propane segment's secured notes will be 100% of the outstanding
principal amount ($96.3 million), together with accrued interest
thereon to the date of prepayment ($1.9 million) and an estimated
make-whole amount ($16 million). The aggregate amount payable for
the Petro notes and the propane segment notes is approximately
$296 million.
JP Morgan Chase Commitment
The Partnership has negotiated a revised commitment letter for a
bridge facility and an asset based revolving credit facility from
JP Morgan Chase to extend its expiration date and to allow the
Partnership to defer the public or private offering of debt
securities.
If the sale of the propane business to Inergy is not consummated
for any reason by December 17, 2004, the Partnership's commitment
from JP Morgan Chase will remain unaffected. On that date, the
Partnership would expect to draw down JP Morgan Chase's bridge
facility if the propane segment sale has not been consummated. The
proceeds from the bridge facility would be used to repay the
Partnership's subsidiaries' secured notes which will become due on
that date because of the Partnership's notice of prepayment. The
Partnership also would expect to close on that date the asset
based revolving credit agreement underwritten by JP Morgan Chase
to replace the existing revolving credit agreements of the
Partnership's subsidiaries. Therefore, the Partnership will be
able to restructure its indebtedness as disclosed in our previous
release dated November 5, 2004, provided that it is able to
satisfy the conditions in the JP Morgan Chase commitment.
The JP Morgan Chase commitment for the bridge facility and the
asset based revolving credit facility is subject to a number of
conditions and there can be no assurance that the Partnership will
meet those conditions.
Wachovia Waiver Letter
As previously disclosed, Petro entered into a Letter Amendment and
Waiver, with respect to that certain Credit Agreement, dated as of
December 22, 2003, as amended among Petro and the various
financial institutions as are or may become parties thereto,
Wachovia Bank, National Association, as Agent for the Lenders and
as issuer of certain letters of credit, LaSalle Bank National
Association, as issuer of certain letters of credit, Fleet
National Bank, as Syndication Agent, and J.P. Morgan Chase Bank
and LaSalle Bank, National Association, as Co-Documentation
Agents.
As a result of the Amendment, Petro expects to be able to continue
to borrow funds under the Credit Agreement to support its working
capital requirements for the near term. The Amendment provides for
the waiver, through December 17, 2004, of various terms under the
Credit Agreement. The Amendment also amends for the waiver period
the financial covenant regarding the Partnership's consolidated
funded debt to cash flow ratio and the financial covenant
regarding Petro's cash flow to interest expense ratio.
About the Company
Star Gas Partners, L.P., is a leading distributor of home heating
oil and propane. The Partnership is the nation's largest retail
distributor of home heating oil and the nation's seventh largest
retail propane distributor. Additional information is available at
http://www.star-gas.com/
* * *
As reported in the Troubled Company Reporter on Nov. 22, 2004,
Fitch Ratings revised the Rating Watch status for Star Gas
Partners, L.P.'s outstanding 'B-' rated $265 million principal
amount of 10.25% senior notes due 2013, co-issued with its special
purpose financing subsidiary Star Gas Finance Company, to Positive
from Negative.
In addition, the Rating Watch status of the private placement
senior secured debt of its operating subsidiaries, Petroleum Heat
and Power Co. 'B' and Star Gas Propane, L.P. 'B+', is revised to
Positive from Negative.
All ratings had been downgraded to their current levels and placed
on Rating Watch Negative on October 18, 2004, following the
announcement of a substantial decline in earnings at Petroleum
Heat.
The rating action follows the announcement that Star Gas has
agreed to sell Star Propane to Inergy, L.P., for $475 million in
cash, with the transaction expected to close in late Dec. 2004.
Proceeds will be used to fully repay all $254 million of secured
debt at Petroleum Heat and Star Propane on December 17, 2004, at
which time ratings for both companies will be withdrawn.
If the sale to Inergy has not been closed by December 17, 2004,
the company would expect to draw down its existing bridge facility
to fund repayment of the operating company debt. Star Gas is
obligated under the indenture for its senior notes to apply the
remaining net proceeds from the sale, estimated at nearly $180
million, to reduce Star Gas indebtedness or make investments in
assets or capital expenditures useful to Star Gas or its
subsidiaries.
Management expects to use an amended bank credit agreement at
Petroleum Heat to manage near-term liquidity needs. Prospectively,
Star Gas' rating and Rating Watch status will be dependent on the
redeployment of the cash proceeds and stabilization of Petroleum
Heat's operations.
STAR GAS: Divestiture Plan Prompts Moody's to Review Junk Ratings
-----------------------------------------------------------------
Moody's Investor Service placed the ratings for Star Gas Partners,
L.P. under review with the direction uncertain in light of the
company's announcement that it has agreed to sell its propane
business to Inergy, L.P. an independent propane distributor. The
review will enable Moody's to complete its analysis of this
transaction and its impact on the unsecured notes at the Master
Limited Partnership -- MLP -- given that the only business that
will remain at Star Gas to support the MLP notes will be the
heating oil business. This transaction, which is valued at
$475 million and does not include assumption of any of the propane
debt by Inergy, should generate enough cash to enable Star Gas to
redeem of all the secured private placement debt at both the
propane and heating oil businesses, leaving only a secured
revolver (which we expect would be restructured to accommodate the
remaining heating oil business), and the MLP notes.
Moody's ratings for Star Gas Partners, L.P. are:
* Caa1 -- Star Gas, L,P.'s senior implied rating
* Caa3 -- Star Gas, L.P.'s 10.25% senior unsecured notes due
2013
Moody's notes that under the MLP notes' indenture, the company
must offer to repurchase MLP notes at par, up to the amount of
excess proceeds from the sale. Given the existing amount of
private placement notes at both propane and heating oil
(approximately $260 million), there may be about $160 to
$175 million of excess proceeds (after all fees and expenses
related to the sale) that could be used to redeem a portion of the
MLP notes. While this would not be sufficient to redeem all
$265 million of the notes, it could potentially result in
redemption of approximately half of the notes. The amount and
timing of this possible redemption will be a significant part of
this ratings review that will also re-consider whether the current
notching (two notches below the senior implied rating) would still
be appropriate given the altered capital structure under this
scenario.
The review will encompass analyzing the company's heating oil
business and its ability to support the MLP notes post closing of
the propane sale. This business has been reporting a declining
EBITDA figure for the past two years and that may face further
reduction into 2005 due to a combination of business fundamentals,
which includes its extremely competitive nature and commodity
price sensitivity, as well as customer attrition due to service
issues at Petro, the company's heating oil business.
The review will also have to consider the effects on the company
and the MLP notes if this transaction does not close. Previously,
the company announced that JP Morgan has committed to provide up
to $600 million of financing in the form of a $300 million
revolving credit facility that would be secured by all of the
assets of both the propane and heating oil businesses and a
$300 million bridge loan that would have a second lien on all of
the same assets. The bridge facility would help finance the
complete repayment of the company's secured private placement
notes pending a new secured high yield (with a second lien on the
assets) notes offering that would pay off the bridge facility and
complete the recapitalization plan. The company has indicated
that if the sale of the propane business falls through, it would
then proceed with this previously announced refinancing plan that
would in our view, potentially put the MLP notes in a more
subordinate position than they currently are in.
Star Gas Partners, L.P. is headquartered in Stamford, Connecticut.
STELCO INC: Steelworkers Oppose Deutsche Bank Proposal
------------------------------------------------------
The United Steelworkers has filed with the Ontario superior court
its objection to Stelco Inc.'s motion to seek approval for the
financing commitment offered by Deutsche Bank.
In an affidavit by National Director Ken Neumann, the union says
the Deutsche Bank commitment puts unsecured creditors ahead of
pension obligations and does not satisfy the requirement of the
Oct. 19 Capital Process Order for a financing proposal that
generates no less than $200-million worth of proceeds to Stelco.
"The DB Commitment . . . in fact leads to a reduction of $100-
million in liquidity . . . ," the affidavit states. "The DB
Commitment is in effect a swap of unsecured debt for secured debt,
which jeopardizes or compromises employee future benefits and the
unfunded pension liability."
The affidavit goes on to point out that Stelco has repeatedly
claimed that $900 million in Employee Future Benefits and
$1-billion in unrecorded unfunded pension liabilities were reasons
for filing for protection under the Companies Creditors
Arrangement Act (CCAA). These amounts are now compromised since
secured debt, which will be significantly increased under the DB
Commitment once Stelco emerges from CCAA protection, come first
ahead of employees' claims against Stelco.
"[T]he commitment mandates the payment of $400-million, plus
shares to be issued, to other unsecured creditors, which includes
senior noteholders and convertible debenture holders, a group that
may include DB and its affiliates.
"The DB Commitment is simply DB paying itself and converting its
debt from an unsecured to a senior secured position."
The union also seeks to have the Oct. 19 Capital Raising and Asset
Sale Process amended for a more open and transparent process, to:
-- Permit parties interested in making proposals for Stelco to
have immediate and unfettered communication with the union
and other key stakeholders;
-- Remove the requirement for other parties' permission or
attendance at such meetings between interested parties and
the Steelworkers and other stakeholders;
-- Mitigate the problems associated with the conflict of
interest of existing entrenched management in the process;
-- Properly test the market for the value of Stelco and to
encourage the participation of parties who are interested in
the potential acquisition of Stelco, including its
subsidiaries, on a going-concern and long-term basis.
The union wants full and frank discussions with potential bidders
to elaborate on labor relations at Stelco and identify solutions
to the benefit of the future owners of the company and the
interests of workers.
The affidavit reiterates the union's position that Stelco should
be restructured as a single entity and not sold off in parts.
"The Stelco Motion seeks to amend the process to permit the
marketing and selling off 'non-core assets', including some of the
subsidiary companies. It is evident that management is directing
the process to a particular outcome, while eliminating or reducing
the potential for interested parties to acquire the entire Stelco
operation, including its subsidiaries, on a going-concern basis.
By favoring this one particular outcome, management is reducing
the potential value of Stelco by failing to test the market for
the operation as a whole, which is contrary to the intent of the
court's decision on October 19, 2004."
For a full-text copy of the affidavit, go to http://www.uswa.ca/
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.
STELCO INC: Management Declines 3% Equity in Deutsche Bank Pact
---------------------------------------------------------------
Stelco Inc. (TSX:STE) has had discussions with Deutsche Bank for
the purpose of deleting reference to the management share plan in
the Deutsche Bank Commitment Letter.
The change reflects the desire on the part of management of the
corporation and Stelco to put forward a proposal for stakeholder
consideration which can result in broad consensus.
Mr. Richard Drouin, Stelco's Chairman of the Board said, "The
management team contacted me and recommended the change to ensure
a proposed management share plan would not in any way hinder a
full review of the Deutsche Bank Commitment Letter by
stakeholders."
The Deutsche Bank Commitment had contemplated that 3% of the
equity would be reserved for management related to compensation
arrangements, to be used at the discretion of the future Board of
Directors. Deutsche Bank has agreed to withdraw that provision of
the plan.
Courtney Pratt, Stelco's President and Chief Executive Officer
said, "While we understand and appreciate Deutsche Bank's
consideration of management in its allocation of equity, we do not
want management compensation to be a part of this or any other
potential transaction."
The Company continues to be involved in active negotiations with
USWA Local 8782 in an effort to develop an agreement that will
meet General Motors' needs with respect to assurances of steel
supply throughout the term of the new General Motors contract.
This would ensure that one of General Motors' conditions for
continuing its relationship with Stelco is met. The other
condition is Court approval of the Deutsche Bank's Commitment
Letter, as a benchmark, on November 22, 2004.
The Deutsche Bank Commitment Letter will be amended to reflect the
changes with respect to the allocation of shares to management,
and will be reissued to the Court for their consideration.
About the Company
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.
STELCO: Monitor's Eleventh Report Details Deutsche Bank Proposal
----------------------------------------------------------------
Stelco Inc. (TSX:STE) filed the Eleventh Report of the Monitor in
the matter of the Company's Court-supervised restructuring.
The Report provides an update on a number of matters, many of
which have been announced by the Company or otherwise made public
in recent weeks. The full text of the Report can be accessed
through a link available on Stelco's Web site.
The Report devotes considerable attention to the Deutsche Bank
proposal, and outlines the key points included in the Deutsche
Bank Commitment Letter. These include:
-- the generation of a minimum of $200 million of proceeds to
Stelco for its critical capital expenditure program,
-- no required concessions from Stelco's current hourly or
salaried employees or its retirees, and
-- the requirement that Stelco enter into a collective
bargaining agreement at the Lake Erie facility to regain the
General Motors' business.
It also comments on Stelco management's decision to decline the 3%
of equity reserved for management. The Company noted that, in its
Report, the Court-appointed Monitor concurs with Stelco and
recommends that the Court approve the Deutsche Bank commitment
Letter, the General Motors Supply Contract that was announced
last week, and the amended Capital Process schedule.
About the Company
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.
TARRANT COUNTY: Moody's Places B2 Ratings on Watchlist
------------------------------------------------------
Moody's Investors Service placed the ratings of Tarrant County
Housing Finance Corporation, Texas, Multifamily Housing Revenue
Bonds (Westridge Apartments Project) 2001 Senior Series A and B
rated B2, on Watchlist for possible downgrade. The rating outlook
on the bonds is negative.
The bonds have been placed on Watchlist as a result of a continued
decline in net operating income, resulting from:
* decreased rental revenues,
* increased concessions, and
* an overall increase in expenses.
Increased competition from luxury rentals and increased
homeownership has significantly impacted the property.
Unemployment from a prolonged downturn in the airline and
technology sectors of the Dallas/Fort Worth economy continue to
dampen demand. Deep concessions and move in specials have been
required to maintain occupancy levels. Higher than expected
expenses have further exacerbated the deficiencies, as large
capital repairs were required throughout the property.
As per unaudited financial statements dated 10/31/2004, the senior
debt service reserve fund only has $273,033 and has not been
replenished since the June 2004 draw. Subordinate and junior
subordinate have already defaulted and debt service reserve funds
remain unreplenished and underfunded.
Preliminary review of rolling 12 month unaudited operating results
indicate debt service coverage continuing to trend below
underwritten levels, falling below 1 times debt service coverage
on the senior tranche. These coverage levels are expected to
result in ongoing deficiencies. Moody's will continue to assess
Westridge's situation, which will include additional discussions
with property management and assessment of the transaction's
projected performance based on current rent levels, concessions
and expenses.
TENET HEALTHCARE: Transfers 3 Los Angeles Hospitals to Centinela
----------------------------------------------------------------
Tenet Healthcare Corporation (NYSE:THC) said several of its
subsidiaries have completed the previously announced transfer of
assets of three acute care hospitals in West Los Angeles to
Centinela Freeman HealthSystem. The hospitals are 370-bed
Centinela Hospital Medical Center and 358-bed Daniel Freeman
Memorial Hospital in Inglewood, and 166-bed Daniel Freeman Marina
Hospital in Marina del Rey.
Net after-tax proceeds are estimated to be approximately $47
million, including the liquidation of working capital and tax
benefits. The company expects to use the proceeds for general
corporate purposes.
The three West Los Angeles hospitals are among 27 hospitals Tenet
announced it was divesting on Jan. 28, 2004. With this
announcement, Tenet has completed the divestiture of 10 of the 27
facilities and has entered into definitive agreements to divest an
additional 11 hospitals. Discussions and negotiations with
potential buyers for the remaining six hospitals slated for
divestiture are ongoing.
About the Company
Tenet Healthcare Corporation, through its subsidiaries, owns and
operates acute care hospitals and related health care services.
Tenet's hospitals aim to provide the best possible care to every
patient who comes through their doors, with a clear focus on
quality and service. Tenet can be found on the World Wide Web at
http://www.tenethealth.com/
* * *
As reported in the Troubled Company Reporter on June 21, 2004,
Standard & Poor's Ratings Services said that the ratings and
outlook on Tenet Healthcare Corp. (B/Negative/--) will not be
affected by an increase in the size of the company's new senior
unsecured note issue due in 2014, to $1 billion from $500 million.
Tenet used $450 million of the proceeds to repay debt due in 2006
and 2007, and the balance will be retained in cash reserves.
Despite the additional debt and interest costs, Standard & Poor's
considers the additional liquidity provided by the cash, as well
as the effective extension of maturities, to be offsetting
factors. The ratings already consider expectations of weak
operating performance and cash flow over the next year while the
negative outlook incorporates the risk of ongoing litigation and
investigations related to the hospital chain's operations.
TORCH ENERGY: Declares Per Unit Cash Distribution of 15.6 Cents
---------------------------------------------------------------
Torch Energy Royalty Trust (NYSE: TRU) reported a cash
distribution of 15.6 cents per unit, payable on Dec. 10, 2004, to
unitholders of record on Nov. 30, 2004. This cash distribution is
attributable to third quarter 2004 production from the underlying
properties of the Trust.
Production attributable to the Trust's net profits interests,
excluding the Robinson's Bend field and infill wells, was 586,173
Mcf of gas and 6,716 Bbls of oil for the third quarter. The
average price attributable to production during the quarter ended
September 30, 2004 was $3.87 per Mcf of gas after deducting
gathering fees and $35.93 per Bbl of oil. Because the Trust's
index price for gas exceeded $2.13 per MMBtu during the third
quarter, Torch Energy Marketing, Inc., was entitled to deduct 50%
of such excess in calculating the purchase price for production.
The aggregate Sharing Price Adjustment for production during the
quarter ended September 30, 2004 was $1.8 million. Additionally,
TEMI accrues price credits as a result of its obligation to
purchase gas for the minimum price of $1.73 per MMBtu. TEMI is
entitled to recoup such credits in future periods when the Trust's
index price exceeds the minimum price. As of September 30, 2004,
TEMI has no accrued price credits.
The Trust received no payments with respect to the Robinson's Bend
field during the quarter ended December 31, 2004. In calculating
Robinson's Bend field net proceeds pertaining to the quarter ended
September 30, 2004 production, costs and expenses exceeded
revenues, net to the Trust, by approximately $77,000. Neither the
Trust nor unitholders are liable to pay such deficit directly.
However, the Trust will receive no payments with respect to the
Robinson's Bend field until future proceeds exceed the sum of
future costs and expenses and the cumulative excess of such costs
and expenses including interest. As of September 30, 2004, the
Robinson's Bend Cumulative Deficit was approximately $446,000.
Torch Energy Advisors Incorporated does not currently anticipate
that the net proceeds attributable to the Robinson's Bend field,
if any, will be significant in the future.
The Trust will terminate on March 1 of any year if it is
determined that the pre-tax future net cash flows, discounted at
10%, attributable to the estimated net proved reserves of the net
profits interests on the preceding December 31 are less than $25.0
million. The pre-tax future net cash flows, discounted at 10%,
attributable to the estimated net proved reserves of the Net
Profits Interests as of December 31, 2003, was approximately $37.2
million. Such reserve report was prepared pursuant to Securities
and Exchange Commission guidelines and utilized an unescalated
Henry Hub spot price for natural gas on December 31, 2003 of $5.97
per MMBtu. The December 31, 2003 reserve value was greater than
$25.0 million. Therefore, the Trust did not terminate on March 1,
2004. Based on oil and gas reserve estimates at December 31, 2003
prepared by independent reserve engineers, Torch projects that
unless the Henry Hub spot price for natural gas on December 31,
2004 exceeds approximately $4.50 per MMBtu, the Trust will
terminate on March 1, 2005. Upon termination of the Trust, the
Trustee is required to sell the net profits interests. No
assurances can be given that the Trustee will be able to sell the
net profits interests, the price that will be received for such
net profits interests or the amount that will be distributed to
unitholders following such a sale. Such distributions could be
below the market price of the Trust units.
The Trust's underlying properties are depleting assets consisting
of net profits interests in proved developed oil and gas
properties located in Texas, Alabama and Louisiana. Approximately
98% of the estimated reserves are gas.
Torch Energy Royalty Trust -- http://www.torchroyalty.com/-- is a
privately held, Houston-based company incorporated in 1981. It is
the parent company of Torch Energy TM, Inc., Torch Energy Services
Inc., Torch Rig Services, Inc., Torch Energy Marketing Inc. and
Torch E&P Company. Torch has a long history of owning, operating
and maximizing value from large oil and gas projects. During its
history, Torch was directly responsible for the investment and
management of over $3 billion in the energy industry.
* * *
Going Concern Doubt
In its Form 10-K for the fiscal year ended Dec. 31, 2003, filed
with the Securities and Exchange Commmission, Torch Energy Royalty
reported that it has relied on its ability to incur debt and
obtain cash through the proceeds from the sale of assets. The
inability to reach a reasonable settlement with Torchmark or to
raise capital through the incurrence of new debt or the sale of
assets will have a material adverse effect on Torch's financial
condition, ability to meet its obligations and operating needs,
and results of operations. Torch's financial statements have been
presented on the basis that it is a going concern, which
contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. Torch's capital
requirements raise a substantial doubt about its ability to
continue as a going concern. Torch's financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
TRENWICK AMERICA: Court Dismisses Affiliates' Chapter 11 Case
-------------------------------------------------------------
The Honorable Mary F. Walrath of the United States Bankruptcy
Court for the District of Delaware entered an order dismissing
Trenwick Group Ltd. and LaSalle Re Holdings' chapter 11 case,
jointly administered under Trenwick America Corporation.
The Order will not take effect until the joint provisional
liquidators assume full control of the Debtors' business.
As reported in the Troubled Company Reporter on Oct. 29, 2004, the
Court confirmed the Amended Plan of Reorganization for Trenwick
America Corporation and its debtor-affiliates on Oct. 27. The
Plan's Effective Date is expected to occur in January 2005.
The Plan was proposed by:
* J.C. Waterfall;
* Phoenix Partners, LP;
* Phoenix Partners II, LP;
* Phacton International Ltd.; and
* John J. Gorman of Tejax Securities Group, Inc. 401(k) Plan
and Trust FBO.
The Debtors filed their own Plan of Reorganization in March but,
the Plan failed to provide for the treatment of claims and
interests of Trenwick's affiliates in Bermuda. The Debtor withdrew
that Plan in June.
The confirmed Plan will allow for the liquidation of Trenwick
Group Ltd. and LaSalle Re Holdings Limited's assets in Bermuda.
The proceeds of property to be sold will be distributed to the
Debtors' creditors in accordance with their statutory priorities.
The Plan reflects a settlement between the Debtor and its major
creditors. After a series of restructuring transactions, the
Reorganized Debtor will become a holding company and will have as
its principal assets 100% of the outstanding shares of the stock
of Trenwick America Reinsurance Corporation and Insurance
Corporation of New York.
The terms of the Plan include:
* 100% recovery for administrative claims, secured claims,
convenience claims and priority claims;
* the LoC Bank Group claim is expected to receive 27.4% of
their claim in the form of New Series B Junior Subordinated
Notes to be issued in the face amount of $19,505,000;
* senior note claims get a 60.4% pro rata share of the New
Senior Subordinated Notes and Senior Litigation Trust
Certificates in the aggregate amount of $35 million;
* Insurance Corporation of New York claim recovers 81.2% of
its claim through a New Senior Subordinated Notes and
Senior Litigation Trust Certificates amounting to more than
$16 million;
* CI Notes claim and general unsecured creditors will recover
60.4% of their claims through New Senior Subordinated Notes
and Senior Litigation Trust Certificates;
* trust preferred claims shall receive pro rata share in the
Reorganized Debtor's interests and residual trust
certificates; and
* old common stock will be cancelled and extinguished.
Upon emergence, New Trenwick will be run by nine managers
designated by the Plan proponents. Funding for the Reorganized
Trenwick is provided by a revolving credit facility in the maximum
amount of $2 million.
Headquartered in Stamford, Connecticut, is a holding company for
operating insurance companies in the United States. The Company
filed for chapter 11 protection on August 20, 2003 (Bankr. Del.
Case No. 03-12635). Christopher S. Sontchi, Esq., and William
Pierce Bowden, Esq., at Ashby & Geddes, and Benjamin Hoch, Esq.,
Irena Goldstein, Esq., Carey D. Schreiber, Esq., at Dewey
Ballantine LLP represent the Debtors in their restructuring
efforts. As of June 30, 2003, the Debtor listed approximate
assets of $400,000,000 and debts of $293,000,000.
On August 20, 2003, Trenwick Group, Ltd., and LaSalle Re Holdings
Limited also filed insolvency proceedings in the Supreme Court of
Bermuda. On August 22, 2003, the Bermuda Court granted an order
appointing Michael Morrison and John Wardrop, partners of KPMG in
Bermuda and KPMG LLP in the United Kingdom, respectfully, as Joint
Provisional Liquidators in respect of TGL and LaSalle.
The Bermuda Court granted the JPLs the power to oversee the
continuation and reorganization of these companies' businesses
under the control of their boards of directors and under the
supervision of the U.S. Bankruptcy Court and the Bermuda Court.
TRUMP HOTELS: Files for Chapter 11 Protection in New Jersey
-----------------------------------------------------------
Trump Hotels, Casinos & Resorts Inc., together with its debtor-
affiliates, filed for protection under chapter 11 of the federal
bankruptcy law with the United States Bankruptcy Court for the
District of New Jersey to help implement its previously announced
recapitalization plan.
As reported in the Troubled Company Reporter on Nov. 2, 2004, the
Company has selected Beal Bank as the sole lead arranger for a
$100 million interim financing. Proceeds from the Financing,
which will be secured by a lien on substantially all of the
Company's assets, are expected to be used to fund certain business
costs, including capital expenditures, wages, trade and vendor
contracts and leases.
Before Beal will lend a dime, an executive officer of each
Borrower must deliver a certificate stating that the trailing 12-
month EBITDA is not less than $150,000,000 in the aggregate for
TCH and TAC on a consolidated basis or $125,000,000 for TAC on a
standalone basis, measured as of the most recent quarterly test.
Donald J. Trump, the Company's Chairman and Chief Executive
Officer, commented on the commencement of the proceedings, "It has
been a great honor and privilege to deal with and get to know the
bondholders and their representatives. The process has been a
very constructive one and should reap great benefits for everyone
in the years to come. This is a Company with one of the best
brands in the world and with great potential." Scott C. Butera,
the Company's President and Chief Operating Officer, added, "We
are pleased to file for court approval with such overwhelming
support for our Plan. We anticipate that the court approval
process will be efficient, and we are excited about the financial
benefits which the Company should realize from this process."
The Company has established a website -- http://www.THCRrecap.com/
-- to provide the public and interested parties with information
and updates regarding the Plan.
Headquartered in Atlantic City, New Jersey, Trump Hotels & Casino
Resorts, Inc., through its subsidiaries, owns and operates four
properties and manages one property under the Trump brand name.
The Company and its debtor-affiliates filed for chapter 11
protection on Nov. 21, 2004 (Bankr. D. N.J. Case No. 04-46898
through 04-46925). Robert A. Klymman, Esq., Mark A. Broude, Esq.,
John W. Weiss, Esq., at Latham & Watkins, LLP, and Charles
Stanziale, Jr., Esq., Jeffrey T. Testa, Esq., William N. Stahl,
Esq., at Schwartz, Tobia, Stanziale, Sedita & Campisano, represent
the Debtors in their restructuring efforts. When the Debtors
filed for protection from their creditors, they listed more than
$500 million in total assets and more than $1 billion in total
debts.
TRUMP HOTELS: Case Summary & 52 Largest Unsecured Creditors
-----------------------------------------------------------
Lead Debtor: THCR/LP Corporation
aka Trump Hotels, Casinos & Resorts LP Corporation
1000 Boardwalk at Virginia Avenue
Atlantic City, NJ 08401
Bankruptcy Case No.: 04-46898
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
Trump Taj Mahal Associates 04-46899
Trump Plaza Associates 04-46900
Trump Marina Associates, L.P. 04-46901
Trump Indiana Realty, LLC 04-46902
Trump Indiana Casino Management, LLC 04-46903
THCR Management Holdings, LLC 04-46904
THCR Management Services, LLC 04-46905
THCR Enterprises, LLC 04-46906
THCR Enterprises, Inc. 04-46907
Trump Internet Casino, LLC 04-46908
Trump Hotels & Casino Resorts Development
Company, LLC 04-46909
Trump Atlantic City Associates 04-46910
Trump Casino Holdings, LLC 04-46911
Trump Casino Funding, Inc. 04-46912
Trump Atlantic City Funding, Inc. 04-46913
Trump Marina, Inc. 04-46914
Trump Hotels & Casino Resorts
Holdings L.P. 04-46915
Trump Atlantic City Holding, Inc. 04-46916
Trump Hotels & Casino Resorts, Inc. 04-46917
THCR Holding Corporation 04-46918
Trump Hotels & Casino Resorts Funding, Inc. 04-46919
Trump Plaza Funding, Inc. 04-46920
Trump Atlantic City Funding II, Inc. 04-46921
Trump Atlantic City Funding III, Inc. 04-46922
Trump Atlantic City Corporation 04-46923
Trump Indiana, Inc. 04-46924
THCR Ventures, Inc. 04-46925
Type of Business: The Company and its affiliates own and
operate hotels and casino resorts.
See http://www.trump.com/
Chapter 11 Petition Date: November 21, 2004
Court: District of New Jersey (Camden)
Judge: Judith H. Wizmur
Legal Counsel: Robert A. Klymman, Esq.
Mark A. Broude, Esq.
John W. Weiss, Esq.
Latham & Watkins, LLP
885 Third Avenue
New York, New York 10022
Tel: (212) 906-1200
Fax: (212) 751-4864
-- and --
Charles Stanziale, Jr., Esq.
Jeffrey T. Testa, Esq.
William N. Stahl, Esq.
Schwartz, Tobia, Stanziale, Sedita & Campisano
22 Crestmont Road
Montclair, New Jersey 07042
Tel: (973) 746-6000
Auditing Firm: Ernst & Young
Financial Condition as of October 31, 2004:
Total Assets Total Debts
------------ -----------
THCR/LP Corporation $2 $0
Trump Taj Mahal Associates $3,824,005 $0
Trump Plaza Associates $452,690,633 $1,361,569,518
Trump Marina Associates, L.P. $368,872,349 $523,423,379
Trump Indiana Realty, LLC $0 $495,922,307
Trump Indiana Casino Management, LLC $0 $0
THCR Management Holdings, LLC Unknown $493,800,000
THCR Management Services, LLC $570,000 $493,800,000
THCR Enterprises, LLC $3,419 $0
THCR Enterprises, Inc. $0 $0
Trump Internet Casino, LLC $0 $0
Trump Hotels & Casino Resorts
Development Company, LLC $0 $0
Trump Atlantic City Associates $1,465,124 $1,300,000,000
Trump Casino Holdings, LLC $3,200,872 $495,922,307
Trump Casino Funding, Inc. $822 $495,922,307
Trump Atlantic City Funding, Inc. $1,971 $1,200,000,000
Trump Marina, Inc. $0 $495,922,307
Trump Hotels & Casino Resorts
Holdings L.P. $878,014 $446,918
Trump Atlantic City Holding, Inc. $1,194 $0
Trump Hotels & Casino Resorts, Inc. $3,914 $0
THCR Holding Corporation $100 $0
Trump Hotels & Casino Resorts
Funding, Inc. $704 $0
Trump Plaza Funding, Inc. $3,824,005 $0
Trump Atlantic City Funding II, Inc. $177 $75,000,000
Trump Atlantic City Funding III, Inc. $49 $25,000,000
Trump Atlantic City Corporation $27,023 $1,300,000,000
Trump Indiana, Inc. $114,272,812 $549,092,071
THCR Ventures, Inc. $0 $0
Consolidated list of 25 Largest Unsecured Creditors of the
following Debtors:
-- Trump Atlantic City Associates
-- Trump Atlantic City Funding, Inc.
-- Trump Atlantic City Funding II, Inc.
-- Trump Atlantic City Funding III, Inc.
-- Trump Atlantic City Corporation
-- Trump Plaza Associates
-- Trump Taj Mahal Associates
Entity Nature Of Claim Claim Amount
------ --------------- ------------
U.S. Bank National Association $1.2 Billion $1,200,000,000
As Collateral Agent 11-1/4% First
Corporate Trust Department Mortgage Priority
180 East Fifth Street Notes due 2006
Saint Paul, Minnesota 55101
Attn: Richard Prokash
Tel: (651) 466-8330
Bear Sterns $1.2 Billion $234,868,000
245 Park Avenue 11-1/4% First
New York, New York 11201 Mortgage Priority
Attn: Vincent Marzella Notes due 2006
Tel: (212) 272-2000
Bank of New York $1.2 Billion $143,509,000
One Wall Street 11-1/4% First
New York, New York 10286 Mortgage Priority
Attn: Cecile Lamarco Notes due 2006
Tel: (201) 319-3066
JP Morgan Chase $1.2 Billion $134,040,000
14201 Dallas Parkway 11-1/4% First
Dallas, Texas 75254 Mortgage Priority
Attn: Paula J. Dabner Notes due 2006
Tel: (469) 477-0081
Goldman Sachs $1.2 Billion $127,889,000
180 Maiden Lane 11-1/4% First
New York, New York 10038 Mortgage Priority
Attn: Patricia Baldwin Notes due 2006
Tel: (212) 902-1000
Investors Bank $1.2 Billion $90,530,000
200 Clarendon Street 11-1/4% First
Boston, Massachusetts 02116 Mortgage Priority
Tel: (617) 330-6700 Notes due 2006
Morgan Stanley $1.2 Billion $76,091,000
1 Pierrpont Plaza, Suite 7 11-1/4% First
Brooklyn, New York 11201 Mortgage Priority
Tel: (718) 923-5500 Notes due 2006
U.S. Bank National Association $75 Million $75,000,000
As Collateral Agent 11-1/4% First
Corporate Trust Department Mortgage Priority
180 East Fifth Street Notes due 2006
Saint Paul, Minnesota 55101
Attn: Richard Prokash
Tel: (651) 466-8330
GS International $1.2 Billion $46,804,000
(Address Unknown) 11-1/4% First
Tel: (212) 902-1000 Mortgage Priority
Notes due 2006
SSB&T CO $1.2 Billion $46,574,000
1776 Heritage Drive 11-1/4% First
Quincy, Massachusetts 02171 Mortgage Priority
Attn: Joseph J. Callahan Notes due 2006
Tel: (617) 786-3000
CitiBank $1.2 Billion $34,499,000
3851 Queen Palm Drive 11-1/4% First
Tampa, Florida 33610 Mortgage Priority
Tel: (813) 604-2484 Notes due 2006
Morgan Stanley $1.2 Billion $33,800,000
1 Pierrpont Plaza, Suite 7 11-1/4% First
Brooklyn, New York 11201 Mortgage Priority
Tel: (718) 923-5500 Notes due 2006
Bank of New York $75 Million $33,800,000
One Wall Street 11-1/4% First
New York, New York 10286 Mortgage Priority
Tel: (212) 742-7039 Notes due 2006
U.S. Bank National Association $1.2 Billion $29,030,000
Corporate Trust Department 11-1/4% First
180 East Fifth Street Mortgage Priority
Saint Paul, Minnesota 55101 Notes due 2006
Tel: (651) 466-8330
U.S. Bank National Association $1.2 Billion $25,000,000
As Collateral Agent 11-1/4% First
Corporate Trust Department Mortgage Priority
180 East Fifth Street Notes due 2006
Attn: Richard Prokash
Tel: (651) 466-8330
First Clearing Corporation $1.2 Billion $21,361,000
10700 Wheat First Drive 11-1/4% First
Glen Allen, Virginia 23060 Mortgage Priority
Attn: Charita Thompson Notes due 2006
Tel: (804) 965-2348
Pershing $1.2 Billion $15,458,000
1 Pershing Plaza 11-1/4% First
Jersey City, New Jersey 07399 Mortgage Priority
Tel: (201) 413-2000 Notes due 2006
Raymond $1.2 Billion $15,189,000
(Address Unknown) 11-1/4% First
Tel: (212) 856-4390 Mortgage Priority
Notes due 2006
UBS Secllc $1.2 Billion $14,850,000
677 Washington Blvd., 6th Floor 11-1/4% First
Stamford, Connecticut 06901 Mortgage Priority
Attn: Linda A. Fritsche Notes due 2006
Tel: (203) 719-1850
Chs Schwab $1.2 Billion $13,638,333
(Address Unknown) 11-1/4% First
Tel: (888) 403-9000 Mortgage Priority
Notes due 2006
Thermal Energy Limited 1 Vendor $1,528,204
1825 Atlantic Avenue
Atlantic City, New Jersey 08401
Casino Revenue Fund Vendor $792,027
New Jersey Division of
Taxation Revenue
Processing Center
PO Box 254
Trenton, New Jersey 08646-0254
IGT, Inc. Vendor $763,954
Department 7866, PO Box 10580
Los Angeles, California 90088
Buckhead Beef Company Vendor $715,240
T/A Buckhead Beef
PO Box 932686
Atlanta, Georgia 31193-2686
Cananwill, Inc. Vendor $545,568
PO Box 19639
Newark, New Jersey 07195-0639
Consolidated list of 25 Largest Unsecured Creditors of the
following Debtors:
-- Trump Casino Holdings, LLC
-- Trump Casino Funding, Inc.
-- Trump Marina, Inc.
-- Trump Indiana, Inc.
-- Trump Indiana Realty, LLC
-- THCR Management Holdings, LLC
-- Trump Marina Associates, LP
-- THCR Management Service, LLC
Entity Nature Of Claim Claim Amount
------ --------------- ------------
U.S. Bank National Association 11-5/8% First $490,000,000
As Collateral Agent Priority Notes
Corporate Trust Department due 2010
180 East Fifth Street 17-5/8% Second
Saint Paul, Minnesota 55101 Priority Mortgage
Attn: Richard Prokash Notes due 2010
Tel: (651) 466-8330
Bear Stern 11-5/8% First $100,857,000
245 Park Avenue Priority Notes
New York, New York 11201 due 2010
Goldman Sachs 11-5/8% First $71,565,000
180 Maiden Lane Priority Notes
New York, New York 10038 due 2010
Bank of New York 11-5/8% First $41,089,000
One Wall Street Priority Notes
New York, New York 10286 due 2010
SSB&T Company 11-5/8% First $39,893,000
One New York Plaza, 45th Floor Priority Notes
New York, New York 10004 due 2010
Investors Bank 11-5/8% First $28,868,000
200 Clarenton Street, 9th St. Priority Notes
Boston, Massachusetts 02116 due 2010
Morgan Stanley 11-5/8% First $28,241,000
One Pierrepont Plaza, 7th Floor Priority Notes
Brooklyn, New York 11201 due 2010
JPM Chase 11-5/8% First $19,745,200
14201 Dallas Parkway Priority Notes
Dallas, Texas 75254 due 2010
UBS Secllc 11-5/8% First $19,120,000
677 Washington Blvd., 9 Floor Priority Notes
Stamford, Connecticut 06901 due 2010
CS First Boston 17-5/8% Second $15,887,750
Issuer Services Priority Mortgage
c/o ADP Proxy Services Notes due 2010
51 Mercedes Way
Edgewood, New York 11717
Bank of New York 17-5/8% Second $13,601,017
One Wall Street Priority Mortgage
New York, New York 10286 Notes due 2010
Raymond 11-5/8% First $11,234,000
(Address Unknown) Priority Notes
due 2010
Mellon TR 17-5/8% Second $11,119,000
525 William Penn Place, #3418 Priority Mortgage
Pittsburgh, Pennsylvania 15259 Notes due 2010
Goldman Sachs 11-5/8% First $10,698,017
180 Maiden Lane Priority Notes
New York, New York 10038 due 2010
Citigroup 11-5/8% First $10,110,000
333 West 34th Street Priority Notes
New York, New York 10001 due 2010
Bear Stern 17-5/8% Second $7,062,179
245 Park Avenue Priority Mortgage
New York, New York 11201 Notes due 2010
Brown Brothers 11-5/8% First $6,625,000
525 Washington Boulevard Priority Notes
New Port Towers due 2010
Jersey City, New Jersey 07302
First Clear 11-5/8% First $6,178,000
901 East Byrd Street Priority Notes
Richmond, Virginia 23219 due 2010
Bank of America 11-5/8% First $5,500,000
300 Harmon Meadows Boulevard Priority Notes
Secaucus, New Jersey 07094 due 2010
Deutsche 11-5/5% First $4,366,800
1251 Avenue of the Americas Priority Notes
New York, New York 10020 due 2010
IGT, Inc. Vendor $1,219,337
Department 7866, PO Box 10580
Los Angeles, California 90088
Thermal Energy Limited I Vendor $498,259
1825 Atlantic Avenue
Atlantic City, New Jersey 08401
Cananwill, Inc. Vendor $425,502
PO Box 19639
Newark, New Jersey 07195
U.S. Foodservice Vendor $350,534
PO Box 820050
Philadelphia, Pennsylvania 19182
Casino Lobster Vendor $280,762
120 West Merion Avenue
Pleasantville, New Jersey 08232
Trump Hotels & Casino Resorts, Inc.'s list of 2 Largest Unsecured
Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Rosselli, James Litigation Unknown
c/o Craig A. Altman, Esq.
1173 East Landis Avenue
Vineland, New Jersey 08360
Tel: (856) 327-8899
Zentero, Manuela Carreon & Litigation Unknown
Pablo Molino Cortes
c/o Eugene D. McGurk, Jr., Esq.
116 White House Pike
Haddon Heights, New Jersey 08035
TRUMP CASINO: S&P Ratings Tumbles to D After Bankruptcy Filing
--------------------------------------------------------------
NEW YORK (Standard & Poor's) Nov. 22, 2004
Standard & Poor's Ratings Services lowered its corporate credit
and first mortgage note debt ratings on Trump Casino Holdings LLC
to 'D' from 'CCC+', and its second mortgage note rating to 'D'
from 'CCC-'. At the same time, Standard & Poor's lowered its
corporate credit and senior secured debt ratings on Trump Atlantic
City Associates to 'D' from 'CCC+'. All ratings were removed from
CreditWatch where they were placed on February 12, 2004.
The ratings actions follow the announcement by Atlantic City, New
Jersey-based Trump Hotels & Casino Resorts Inc., the holding
company parent of TAC and TCH, that it has filed for voluntary
Chapter 11 reorganization in the U.S. Bankruptcy Court for the
District of New Jersey.
The company reported approximately $1.8 billion in consolidated
debt outstanding as of September 30, 2004.
UAL CORP: Asks Court to Toll Limitations Period to Dec. 9, 2005
---------------------------------------------------------------
UAL Corporation and its debtor-affiliates' deadline under Section
546(a)(1)(A) of the Bankruptcy Code to commence actions to recover
transfers under Section 550 is rapidly approaching. In the next
few weeks, the Debtors will begin avoidance actions against
several unaffiliated third parties. However, it will not be an
efficient use of any party's time to commence avoidance actions
against other Debtors or their affiliates, especially since these
actions may be rendered moot due to restructuring transactions
implemented by a plan of reorganization.
In this regard, the Debtors ask the Court to enter an order
tolling the limitations period set forth in Section 546(a)(1)(A)
through December 9, 2005, with respect to any claims, defenses,
causes of action, rights to payment, equitable remedies or legal
remedies between the Debtors and any non-debtor affiliates.
James H.M. Sprayregen, Esq., at Kirkland & Ellis, anticipates
that the reconstituted corporate and capital structure of the
reorganized Debtors could render unnecessary the need to avoid
certain prepetition intercompany transfers. A confirmed plan of
reorganization may provide for mergers between Debtors,
extinguishment of a Debtors' stock or a liquidation of other
Debtors. As a result, certain currently viable intercompany
actions may be rendered moot. Tolling the two-year limitations
period under Section 546(a)(1)(A) to allow confirmation of a plan
before pursuing any intercompany actions will ensure that the
Debtors do not engage in unnecessary litigation.
If the Commencement Deadline is not tolled, Mr. Sprayregen notes
that the Debtors will be forced to bear various transaction costs
including completing investigations of each potential
intercompany action, drafting legal documents to commence each
intercompany action, and retaining separate legal counsel for
each Debtor or non-debtor affiliate that is party to an
intercompany action. These costs would not be an efficient use
of estate resources.
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. 66; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
UAL CORP: October Revenue Passenger Miles Up 7.2% From Last Year
----------------------------------------------------------------
With its flights averaging 77.8% full in October, United Airlines
has broken its load-factor record for the month, as it has for
each month this year. United's total scheduled revenue passenger
miles (RPMs) increased in October 2004 by 7.2% on a capacity
increase of 5.5% available seat miles (ASMs) vs. the same period
in 2003.
2004 2003 Percent
October October Change
-------- -------- -------
Scheduled Service Only:
Revenue Plane Miles 66,983,000 64,466,000 3.9%
Number Of Departures 52,070 51,007 2.1%
Revenue Passengers 5,978,000 5,560,000 7.5%
Revenue Passenger Miles (000):
North America 6,084,334 5,494,496 10.7%
Pacific 1,919,602 1,873,515 2.5%
Atlantic 1,297,596 1,254,695 3.4%
Latin America 252,798 288,979 -12.5%
System 9,554,330 8,911,685 7.2%
Available Seat Miles (000):
North America 7,914,843 7,410,584 6.8%
Pacific 2,414,474 2,241,607 7.7%
Atlantic 1,637,627 1,578,768 3.7%
Latin America 319,217 409,648 -22.1%
System 12,286,161 11,640,607 5.5%
Passenger Load Factor (Percent):
North America 76.9 74.1 2.8%
Pacific 79.5 83.6 -4.1%
Atlantic 79.2 79.5 -0.3%
Latin America 79.2 70.5 8.7%
System 77.8 76.6 1.2%
Cargo Ton Miles (000):
Freight 163,003 121,102 34.6%
Mail 32,360 36,229 -10.7%
System 195,363 157,331 24.2%
Total System Inc Charter (000):
Revenue Passenger Miles 9,559,080 8,932,246 7.5%
Available Seat Miles 12,341,903 11,676,116 5.7%
Revenue Psgr. Km. 15,447,799 14,374,663 7.5%
Available Seat Km. 19,861,824 18,790,373 5.7%
Total Revenue Ton Miles 1,155,433 1,050,555 10.0%
Total Avail. Ton Miles 1,947,057 1,834,493 6.1%
Total Rev. Ton Km. 1,675,768 1,523,422 10.0%
Total Avail. Ton Km. 2,842,703 2,678,360 6.1%
Year To Date
----------------------- Percent
2004 2003 Change
-------- -------- -------
Scheduled Service Only:
Revenue Plane Miles 664,830,000 626,632,000 6.1%
Number Of Departures 516,461 501,022 3.1%
Revenue Passengers 59,659,000 55,156,000 8.2%
Revenue Passenger Miles (000):
North America 61,437,265 56,110,228 9.5%
Pacific 19,218,507 15,224,941 26.2%
Atlantic 12,905,634 11,788,334 9.5%
Latin America 2,824,357 3,097,625 -8.8%
System 96,385,763 86,221,128 11.8%
Available Seat Miles (000):
North America 78,816,275 74,017,095 6.5%
Pacific 22,925,044 19,873,151 15.4%
Atlantic 15,609,687 14,845,061 5.2%
Latin America 3,610,497 4,251,896 -15.1%
System 120,961,503 112,987,203 7.1%
Passenger Load Factor (Percent):
North America 77.9 75.8 2.1%
Pacific 83.8 76.6 7.2%
Atlantic 82.7 79.4 3.3%
Latin America 78.2 72.9 5.3%
System 79.7 76.3 3.4%
Cargo Ton Miles (000):
Freight 1,320,706 1,255,641 5.2%
Mail 300,398 322,094 -6.7%
System 1,621,104 1,577,735 2.7%
Total System Inc Charter (000):
Revenue Passenger Miles 96,944,339 86,786,073 11.7%
Available Seat Miles 121,642,178 113,689,264 7.0%
Revenue Psgr. Km. 156,012,525 139,664,827 11.7%
Available Seat Km. 195,758,757 182,960,133 7.0%
Total Revenue Ton Miles 11,315,719 10,256,618 10.3%
Total Avail. Ton Miles 19,170,972 17,896,469 7.1%
Total Rev. Ton Km. 16,408,175 14,873,327 10.3%
Total Avail. Ton Km. 27,989,619 26,128,845 7.1%
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. 66; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
UNIVERSAL ACCESS: Court Okays Key Employee Retention Plan
---------------------------------------------------------
The United States Bankruptcy Court for the Northern District of
Illinois entered an order authorizing Universal Access Global
Holdings Inc. (UAXSQ.PK) and its U.S. subsidiaries to implement
and adopt a Key Employee Retention Plan applicable to all
employees of United Access. The primary purpose of the KERP is to
assist the Company in retaining qualified employees while it seeks
a liquidating Chapter 11 plan or sale of its business pursuant to
Section 363 of the U.S. Bankruptcy Code and to compensate the
Company employees for the additional responsibilities and burdens
occasioned by UA's financial difficulties and status as a debtor-
in-possession.
All employees of UA are eligible to participate in the KERP
provided that the employee is employed by UA on the earlier of:
(i) the closing date of a sale of all or substantially all of
UA's assets; or
(ii) December 31, 2005.
The KERP divides UA employees into three groups:
-- the Chief Executive Officer;
-- Key Management Employees, a group of 10 persons; and
-- Other Key Employees, a group of 71 persons.
The KERP provides for the payment of incentive bonus compensation
to these employees based upon UA's achievement of certain total
revenue and earnings before interest, taxes, depreciation and
amortization targets, as well as exceeding a target sales price
for the Sale. Specifically, the KERP provides for the following
base bonus compensation:
-- The CEO is eligible to receive $100,000 upon the achievement
of 100% of the TR and EBITDA targets through the Sale
Closing Date or December 31, 2005, whichever occurs sooner,
and an additional $200,000 if a Sale Closing Date occurs on
or before March 31, 2005 under which the UA bankruptcy
estate realizes cash of $30 million.
-- The KME group is eligible to receive $100,000 upon the
achievement of 100% of the TR and EBITDA targets through the
Sale Closing Date or December 31, 2005, whichever occurs
sooner, and an additional $200,000 if a Sale Closing Date
occurs on or before March 31, 2005 under which the
bankruptcy estate realizes the Sale Amount.
-- The OKE group is eligible to receive $100,000 upon the
achievement of 100% of TR and EBITDA targets through the
Sale Closing Date or December 31, 2005, whichever occurs
sooner, and an additional $100,000 if a Sale Closing Date
occurs on or before March 31, 2005 under which the
bankruptcy estate realizes the Sale Amount.
The allocation of the bonus compensation amounts to be paid to
employees of the KME and OKE groups will be made at the discretion
of UA's CEO subject to approval of UA's compensation committee of
its Board of Directors.
That portion of the bonus compensation based on the TR and EBITDA
targets is divided equally between the two targets and each will
adjusted downward in the event such TR or EBITDA target, as the
case may be, is only partially achieved; provided, however, that
if less than 88% of the TR target is achieved, no bonus
compensation based on TR will be paid, and if the EBITDA target is
underachieved by more than $200,000, no bonus compensation based
on EBITDA will be paid. Additionally, if the Sale Amount is
underachieved, the bonus compensation relating to the Sale Amount
will be reduced based on the percentage of the Sale Amount
achieved provided that the bankruptcy estate receives at least 25%
of the Sale Amount. Also, if all or any portion of the
consideration received by UA in connection with a Sale is received
after March 31, 2005, the bonus compensation relating to the Late
Consideration will be reduced by an amount equal to 10% for each
month or portion thereof after March 31, 2005 in which the Late
Consideration is received. The bonus compensation payable
relating to Late Consideration, however, will not be reduced if:
(a) the definitive contract relating to the Sale is executed
prior to February 28, 2005;
(b) the Sale Closing Date occurs after March 31, 2005 solely
because of a delay in obtaining Court or necessary
regulatory approval of the Sale; and
(c) all of the consideration for the Sale is received prior
to May 15, 2005.
The KERP also provides severance benefits if the CEO or a member
of the KME or OKE group is terminated by UA without "cause." The
amount of the severance benefit is equal to:
(a) in the case of the CEO, four months salary;
(b) in the case of a KME, two months salary and
(c) in the case of an OKE, one month salary.
For purposes of the plan, "cause" means misconduct including,
without limitation, failure to comply with UA's employment
policies and rules. Pursuant to the KERP, severance is payable on
the date of the employee's termination.
Under the terms of the KERP, the maximum cost amounts payable
under the KERP is $800,000 in bonus compensation and $716,407 in
severance compensation.
Headquartered in Chicago, Illinois, Universal Access Global
Holdings, Inc. -- http://www.universalaccess.com/-- provides
network infrastructure services and facilitates the buying and
selling of capacity on communications networks. The company, and
its debtor-affiliates, filed for a chapter 11 protection on
August 4, 2004 (Bankr. N.D. Ill. Case No. 04-28747). John Collen,
Esq., and Rosanne Ciambrone, Esq., at Duane Morris LLC, represent
the Company. David W. Wirt, Esq., and David Neier, Esq., at
Winston & Strawn, represent an Official Committee of Unsecured
Creditors. When the Debtor filed for protection from its
creditors, it listed $22,047,000 in total assets and $24,054,000
in total debts.
VOICEIQ INC: Inks Pact to Undergo CCAA Restructuring
----------------------------------------------------
VoiceIQ Inc. entered into an agreement providing for a proposed
plan of arrangement to recapitalize and reorganize its business.
The Arrangement involves the Company, its shareholders, Yoho
Resources Investment Partnership and the Company's creditors.
The Arrangement consists of two parts, the "Creditors'
Arrangement", and the "Shareholders' Arrangement". The
Shareholders' Arrangement provides for a reorganization of VoiceIQ
and its business such that shareholders will maintain their
interest in the Company's existing voice capture, digitization and
compression business and for VoiceIQ to acquire producing oil and
natural gas assets and focus on the oil and gas exploration and
production business.
Specifically, all of VoiceIQ's voice capture, digitization and
compression assets and business are to be transferred to a newly
formed company, VIQ Solutions Inc. Shareholders will then
exchange each common share of VoiceIQ held by them for one share
of VIQ Solutions and a portion of a "new" common share of VoiceIQ.
The Creditors' Arrangement provides for a settlement by VoiceIQ
with its creditors pursuant to the Companies Creditors Arrangement
Act (Canada). Creditors who are owed up to $2,000 by VoiceIQ are
to receive 100% of their claim value in cash, while creditors owed
more than $2,000 will receive the first $2,000 of their claim in
cash, plus a pro rata share of a basket of cash and shares of
VoiceIQ and VIQ Solutions. The estimated recovery for Creditors
with claims exceeding $2,000 is $0.25 to $0.28 on the dollar. The
Creditors' Arrangement and the Shareholders' Arrangement are each
conditional on the other being approved.
As a result of the Arrangement:
-- VoiceIQ's shareholders will own all of the shares of a new
entity (VIQ Solutions) that will own all of VoiceIQ's
existing assets related to its voice capture, digitization
and compression business and whose only debts will be
certain normal course government obligations and the balance
of a vendor take back loan incurred in the acquisition of
the Spark and Cannon companies in April of 2004.
-- VoiceIQ's existing shareholders will maintain an ownership
interest in the ongoing Company, which will, through the
Arrangement, have changed its name to Yoho Resources Inc.,
acquired oil and natural gas properties producing
approximately 750 barrels of oil equivalent per day,
received $7 million in new capital investment (comprised of
$4 million of common shares at $2.00 per share and
$3 million of "flow-through" shares at $2.40 per share) and
have no debt. The balance of Yoho Resources' outstanding
shares will be held by creditors, the investors providing
the new capital investment and the vendors of the oil and
gas assets. Yoho Resources will then be poised to recruit a
permanent management team and focus on its development as a
successful oil and gas exploration, production and marketing
company.
-- Upon the closing of the Arrangement, VoiceIQ's shares will
be suspended from trading on the TSX Venture Exchange
pending Yoho Resources recruiting a permanent management
team and meeting the other conditions of the TSXV. There
can be no assurance that Yoho Resources will be successful
in meeting the conditions to be imposed by the TSXV related
to the lifting of the trading suspension. In addition, VIQ
Solutions has applied to have its shares listed on the TSXV,
including applying for certain discretionary exemptions from
the normal listing requirements of the TSXV, including from
the sponsorship requirement. Conditional listing approval
has not been received from the TSXV for this application and
there can be no assurance that the approval or
discretionary exemptions will be secured.
Shortly after the closing of the Arrangement, VIQ Solutions
intends on completing certain private placement financings to
raise an estimated $2.2 million, which financings are expected to
consist of an equity private placement for approximately
$1 million (at a subscription price of $0.20 per share) and the
entering into of an equity line of credit for approximately
$1.2 million. Shares of VIQ Solutions to be acquired pursuant to
this equity line of credit, from time to time, shall be subscribed
for at the market price of VIQ Solutions shares, at the applicable
time, provided that the subscription price cannot be lower than
$0.10 per share. Following the restructuring and these private
placement financings, VIQ Solutions will therefore enjoy a fresh
start, owning all of VoiceIQ's existing voice capture,
digitization and compression assets and business, having no debt
(other than certain normal course government obligations and the
balance of a vendor take back loan incurred in the acquisition of
the Spark and Cannon companies in April of 2004) and being funded
with an estimated $2.2 million of cash to implement its business
plan.
For the Arrangement to proceed, it must be approved by at least
66-2/3% of the aggregate votes cast by shareholders as well as by
at least 66-2/3% of the aggregate votes cast by, and a majority in
number of, the creditors. The transaction is also subject to the
receipt by the board of directors of VoiceIQ of a favourable
fairness opinion to be provided by an independent third party
financial advisor and the receipt of the report of the Monitor
appointed pursuant to the CCAA process. If shareholder, creditor
and regulatory approvals are obtained, orders of the Ontario
Superior Court of Justice and the Alberta Court of Queen's Bench
will be sought pursuant to the Business Corporations Act (Ontario)
and the CCAA, respectively, approving the Arrangement. Subject to
these conditions, the board of directors of VoiceIQ has
unanimously approved the transaction and recommended the
transaction as being in the best interests of the Company, its
shareholders and creditors.
David Outhwaite, President and CEO of VoiceIQ, commented: "This is
a tremendous opportunity for VoiceIQ shareholders. Maintaining
our current share structure in a new publicly listed entity, with
virtually no debt and sufficient working capital, as well as
gaining an interest in the newly formed oil and gas company,
creates immediate shareholder value and at the same time allows
the company to accelerate the commercialization of its promising
technology".
An annual and special meeting of the shareholders of VoiceIQ and a
creditors' meeting have been convened to approve the Plan of
Arrangement. The Information Circular and proxy materials for
this meeting are expected to be mailed to shareholders and
creditors during the week of November 23, 2004, with the
shareholder and creditors meetings to approve the Plan being
scheduled for the week of December 20, 2004.
Trading of VoiceIQ's shares on the TSXV has been halted pending
the mailing of the Information Circular and proxy materials and
the filing of same on SEDAR.
WASHINGTON MUTUAL: Fitch Puts Low-B Ratings on Six Cert. Classes
----------------------------------------------------------------
Fitch Ratings has taken rating actions on these Washington Mutual
-- WaMu -- residential mortgage-backed certificates:
* WaMu, mortgage pass-through certificates -- WAMMS, series
2003-MS1
-- Class A affirmed at 'AAA';
-- Class CB1 upgraded to 'AAA' from 'AA-';
-- Class CB2 upgraded to 'AA+' from 'A-';
-- Class CB3 upgraded to 'AA-' from 'BBB-';
-- Class CB4 upgraded to 'BBB' from 'BB';
-- Class CB5 affirmed at 'B';
* WaMu, mortgage pass-through certificates (WAMMS), series
2003-MS2
-- Class A affirmed at 'AAA';
-- Class CB1 upgraded to 'AAA' from 'AA';
-- Class CB2 upgraded to 'AA' from 'A';
-- Class CB3 upgraded to 'A+' from 'BBB';
-- Class CB4 upgraded to 'BBB-' from 'BB';
-- Class CB5 affirmed at 'B';
* WaMu, mortgage pass-through certificates (WAMMS), series
2003-MS3
-- Class A affirmed at 'AAA';
-- Class CB1 upgraded to 'AAA' from 'AA-';
-- Class CB2 upgraded to 'AA+' from 'A-';
-- Class CB4 upgraded to 'BBB-' from 'BB-';
-- Class CB5 affirmed at 'B';
* WaMu, mortgage pass-through certificates (WAMMS), series
2003-MS5
-- Class A affirmed at 'AAA';
-- Class CB5 affirmed at 'B';
* WaMu, mortgage pass-through certificates (WAMMS), series
2003-MS7
-- Class A affirmed at 'AAA';
-- Class B1 upgraded to 'AAA' from 'AA';
-- Class B2 upgraded to 'AA' from 'A';
-- Class B3 upgraded to 'A-' from 'BBB';
-- Class B4 affirmed at 'BB';
-- Class B5 affirmed at 'B.'
The upgrades, affecting approximately $41,793,566, are being taken
as a result of low delinquencies and losses, as well as increased
credit support levels. The affirmations, affecting approximately
$1,231,416,958, are due to credit enhancement consistent with
future loss expectations. The credit enhancement for the reviewed
classes as of Oct. 25, 2004 distribution increased as much as
3.5 times (x) the original credit enhancement percentage, which is
a significant jump for 2003 vintage deals. None of these deals
have suffered losses to date.
The collateral of the above WAMMS deals primarily consists of 15
to 30 year fixed-rate mortgages secured by first liens on one- to
four-family residential properties.
The pool factors (i.e. percentage of remaining pool balance out of
the original balance as of the cut-off date) for these deals range
from 27% to 44% as of Oct. 25, 2004 distribution.
WHX CORP: S&P Downgrades Corporate Credit Rating to CCC-
--------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on WHX Corp. to 'CCC-' from 'CCC+', and its senior
unsecured debt rating to 'C' from 'CCC-'. The outlook is
negative.
The New York, New York-based company had about $239 million in
total debt outstanding as of Sept 30, 2004.
"The downgrades reflect the strong likelihood of a default, given
the meaningful challenges WHX faces in accessing capital markets
to refinance its $92.8 million of outstanding 10-1/2% senior notes
maturing on April 15, 2005," said Standard & Poor's credit analyst
Paul Vastola. With limited refinancing options available, the
company may be forced to seek bankruptcy protection or a coercive
exchange offer of its bonds, which would be considered by
Standard & Poor's tantamount to a default.
Ratings on WHX reflect its meaningful refinancing challenges, its
weak financial and operating performance and deteriorating
liquidity. WHX's operations are limited to its wholly owned
operating subsidiary -- Handy & Harman. Handy & Harman has
several different business segments, including precious and base
metals, wire, cable, and tubing, specialty roofing and
construction fasteners, and electrogalvanized products. Although
the company sells to several different niche markets, most are
cyclical and highly competitive.
The company's performance has been quite poor over the past few
years due to very difficult market conditions as a result of the
recent recession. Despite improvements in the economy and most of
its markets in the past year, the company continues to generate
net losses, mainly due to margin pressures from its inability to
fully pass through rising energy and customers and persistent
weakness in its wire business.
WINROCK GRASS: Gets Interim Okay to Use Cash Collateral
-------------------------------------------------------
The Honorable James G. Mixon of the U.S. Bankruptcy Court for the
Eastern District of Arkansas gave Winrock Grass Farm Inc. and its
debtor-affiliates permission, on an interim basis, to use cash
collateral securing repayment of prepetition loan obligations to
Metropolitan National Bank and Bank of Little Rock.
The Debtor explains to the Court that the majority of its income
is generated thorough the sale of sod grass it grows in its farm,
for use in residential, commercial and golf course applications.
The Debtor needs access to the cash collateral generated by
selling the sod and needs to use those sale proceeds to pay its
ongoing operating expenses including payroll, contract labor
expenses, payment of quarterly fees due to the U.S. Trustee, and
other administrative and operating expenses.
The Debtors owe Metropolitan National $4,483,840.52 under a
foreclosure judgment in Pulaski County Circuit Court Case No.
CV 2003-10730 as of Sept. 22, 2004, when the Company filed for
chapter 11 protection.
The Debtors relate that their assets consist of approximately 900
hundred acres of real property located in Western Pulaski County,
Arkansas, irrigation equipment, vehicles and other equipment.
Metropolitan National holds perfected first mortgage liens and a
security interest on the Debtors' assets pursuant to pre-petition
mortgages and security agreements filed in the office of the
Circuit Clerk of Pulaski County, Arkansas.
The Debtors relate that their debt obligations to Metropolitan
National are fully secured because it expects to generate sales
from its sod production of approximately $1.5 million by the end
of June 2005, and the value of its assets exceeds the amount of
its debt obligations to Metropolitan.
The Debtor adds that Metropolitan has consented to the use of the
cash collateral on the condition that any excess sod sale proceeds
after deduction of operating and administrative expenses would be
applied toward Metropolitan's secured claim.
The Court's interim order does not include any finding as to the
validity or perfection of Bank of Little Rock's lien claims on
certain of the Debtor's assets.
The Court held a hearing on Nov. 5, 2004 to consider the Debtor's
motion to use the cash collateral on a permanent basis but it has
yet to issue a final order.
To adequately protect its interest, Metropolitan Bank is granted
the best available lien on the Debtor's assets as compensation for
any loss its may incur from the Debtor's use of the cash
collateral.
Headquartered in Little Rock, Arkansas, Winrock Grass Farm Inc.,
-- http://www.winrockgrass.com/-- produces and markets Meyer
Z-52 Zoysiagrass in the United States. The Company and its debtor-
affiliates filed for protection on September 22, 2004 (Bankr. E.D.
Ark. Case No. 04-21283). Charles Darwin Davidson, Sr., Esq., and
Stephen L. Gershner, Esq., at Davidson Law Firm represent the
Debtors in their restructuring efforts. When the Debtor filed for
protection from its creditors, it estimated more than $10 million
in assets and debts.
WORLDCOM INC: Touch America Trustee Wants to Compel Cure Payment
----------------------------------------------------------------
According to Robert S. Brady, Esq., at Young Conaway Stargatt &
Taylor, in Wilmington, Delaware, Touch America Holdings, Inc., and
WorldCom, Inc. and its debtor-affiliates were parties to several
agreements, including a System and Capacity Agreement, dated May
21, 1996. The Agreement was assumed by Touch America during its
bankruptcy proceedings and assigned to 360Networks (USA), Inc.,
the purchaser of substantially all of Touch America's assets.
Touch America and its affiliates filed Chapter 11 petitions in
June 2003 before the U.S. Bankruptcy Court for the District of
Delaware.
Touch America asserts claims against the Debtors for payment of
the Debtors' prepetition obligations under the Agreement,
amounting to $954,203. In addition, the Debtors owe Touch America
$895,964 for services it rendered under the Agreement during the
period subsequent to the Debtors' Petition Date and prior to the
Touch America Petition Date.
Mr. Brady point out that the Debtors' Plan provides that all the
Debtors' executory contracts that were not otherwise rejected are
assumed as the Effective Date. Touch America has not received
notice that the Agreement would be rejected, and upon information
and belief, the Plan sought to assume the Agreement.
Furthermore, although the Debtors' Confirmed Plan provides for the
assumption of the Agreement, the Debtors have not notified
Touch America or the Touch America Plan Trust of their cure
obligations to Touch America. The Debtors have not made any
payment on account of their cure obligations to Touch America.
On the other hand, the Debtors sought permission from the
Delaware Bankruptcy Court to set off their cure obligations to
Touch America against their alleged $3,133,237 prepetition claim
against Touch America.
Mr. Brady notes that recent examination and reconciliation of the
Touch America's books and records by Chanin Capital Partners, the
Touch America Plan Trustee, reflect that:
-- the Debtors may not have any valid claim against Touch
America; or
-- if the Debtors have a valid claim against Touch America,
the total amount of the claim will be less than $1 million.
Further review of Touch America's books and records indicate that
the Touch America Plan Trust has potential preference claims
against the Debtors totaling $2.1 million.
By this motion, the Touch America Plan Trustee asks the Court to:
(a) allow Touch America's Cure Claim for $1,850,166; and
(b) require the Debtors to pay the Cure.
Mr. Brady asserts that, as the Debtors have not established with
any certainty any claims against or debt owed by Touch America,
any set-off claim against Touch America is premature. Only when
the amount, if any, of the Debtors' claim has been established
will consideration of the legal issue of the Debtors' asserted
set-off right be warranted.
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. 66; Bankruptcy Creditors' Service, Inc., 215/945-7000)
WYNN LAS VEGAS: Moody's Places B2 Rating on $2.2 Billion Debts
--------------------------------------------------------------
Moody's Investors Service assigned a B2 rating to Wynn Las Vegas,
LLC's $1.1 billion proposed senior secured bank credit facility
and $1.1 billion first mortgage notes due 2014. The proposed bank
facility is comprised of a $1.0 billion 5-year revolver and a $100
million 7-year term loan. Wynn's existing B2 senior implied
rating, B2 secured bank facility rating, B3 second mortgage note
rating, and Caa1 long-term senior unsecured issuer rating were
affirmed.
Proceeds from the first mortgage notes, along with a $400 million
equity contribution from Wynn Resorts, Limited, the parent company
of Wynn Las Vegas, LLC, will be used to:
(1) refinance Wynn's:
(a) $472 million outstanding bank debt,
(b) $248 million second mortgage notes,
(c) $198.5 million furniture, fixture & equipment loan, and
(2) contribute about $500 million of cash to Wynn's balance
sheet.
This new, larger capital structure will also provide availability
for the company to begin construction of its recently announced
Phase II expansion. The revolving and term portion of the new
bank facility will remain un-drawn at closing. Wynn's parent
company recently completed the sale of 7.5 million of common
stock. Net proceeds from the sale were approximately
$453 million.
Wynn's B2 senior implied rating continues to reflect the ramp-up
risk associated with the company's large scale casino project, as
well as its single asset profile, significant reliance on
destination travel and high-end gaming, and ability to achieve
projected returns. Positive rating consideration is given to the
significant equity component of the project and Steve Wynn's
reputation as a developer of high quality must-see casino resort
properties. The ratings also recognize Las Vegas' favorable
visitation trends and leading position as a primary destination
resort.
The stable rating outlook anticipates that the Phase I portion of
Wynn's development project will be up and running by the expected
completion date, and will generate a sufficient return to meet
debt service requirements. The Wynn Las Vegas $2.7 billion Phase
I development is estimated to be about 70% complete and is on
track to open in April 2005. The stable outlook also considers
that Wynn recently announced plans for a $900 million expansion of
its Wynn Las Vegas project, on land adjacent to its Phase I
development. The name of this new, Phase II development will be
Encore at Wynn Las Vegas. The new property will include a
1,500-suite hotel tower, additional casino space and restaurants,
swimming pools, retail, convention space and a spa. It is
currently scheduled to open in 2007.
Wynn's significant underlying real estate value currently provides
downside protection to its rating. The approximate market value
of Wynn's owned 235 acres of Las Vegas strip land is significant,
at about $2 billion, and more than 1.0x Wynn's pro forma debt
level. Ratings could be lowered if the project unexpectedly runs
into material construction delays, cost overruns and/or
significant ramp-up or liquidity problems. Better than expected
cash flow performance and returns on the Phase I development
combined with lower leverage and a continuation of current growth
and popularity trends in the Las Vegas market, could have a
positive impact on ratings.
These new ratings were assigned:
* $1.0 billion senior secured revolver due 2009 -- B2;
* $100 million senior secured term loan due 2011 -- B2; and
* $1.1 billion first mortgage notes due 2014 -- B2.
These ratings were affirmed:
* Senior implied rating, at B2;
* $800 million senior secured revolver due 2008, at B2;
* $250 million senior secured delayed draw term loan due 2009,
at B2;
* $248 million 12% second mortgage notes due 2010, at B3; and
* Long-term issuer rating, at Caa1.
The ratings on Wynn's existing senior secured bank credit
facility, senior secured delayed draw term loan, and second
mortgage notes will be withdrawn following the completion of the
planned refinancing. The company recently commenced a cash tender
offer for any and all of its outstanding second mortgage notes.
The proposed $1.1 billion first mortgage notes and $1.1 billion
bank facility will each have a first priority lien on the same
collateral pool, as well as a senior secured guaranty from all
existing and future restricted subsidiaries. The collateral pool
includes a first priority pledge of stock and all real property of
Wynn Las Vegas.
Wynn Las Vegas, LLC is constructing, and will own and operate, the
Wynn Las Vegas hotel and casino resort on the Las Vegas Strip.
Wynn Las Vegas is expected to open to the public in April 2005.
Wynn Las Vegas, LLC is a wholly owned subsidiary of Wynn Resorts,
Limited (Nasdaq: WYNN). In addition to Wynn Las Vegas, Wynn
Resorts, Limited has also begun building a $704 million resort on
the Chinese enclave of Macau.
XM SATELLITE: S&P Junks Planned $300M Sr. Unsec. Convertible Notes
------------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'CCC-' rating to
XM Satellite Radio Holdings Inc.'s proposed Rule 144A $300 million
1.75% senior unsecured convertible notes due November 2009. At
the same time, Standard & Poor's affirmed its 'CCC+' corporate
credit rating on the company and its subsidiary, XM Satellite
Radio Inc., which are analyzed on a consolidated basis. The
outlook is stable.
Proceeds from the note issue will be used for general corporate
purposes, including investments to expand distribution and the
potential repayment of higher coupon debt. The Washington, D.C.-
based satellite radio broadcaster will have about $1.13 billion in
debt (before discounts) as of Sept. 30, 2004, pro forma for the
financing.
The financial impact of the transaction is mixed, as it will
provide a needed boost to XM's liquidity but also add to its
sizable debt burden. The new notes are rated two notches below
the corporate credit rating because they are not supported by
subsidiary guarantees and because of the substantial amount of
secured debt in the capital structure.
"The very low, speculative-grade corporate credit rating reflects
concern about XM's substantial debt load, its insufficient equity,
the likelihood of continued large EBITDA and cash flow losses for
the near to intermediate term, and increasing competition in the
emerging subscription-based satellite radio niche," said Standard
& Poor's credit analyst Steve Wilkinson. "These risks overshadow
the company's near-term liquidity and consistent growth and
operational execution."
Since its launch in late 2001, XM has generally met its business
targets, steadily grown its subscriber base, and enjoyed a
substantial lead over Sirius Satellite Radio Inc., its only direct
competitor. In the third quarter, XM added 415,000 net
subscribers, for a total of about 2.5 million users at
Sept. 30, 2004. XM's support from General Motors Corp., its
exclusive automobile partner, has been critical to its growth, as
this relationship has produced about 30%-35% of its total
subscribers. GM offers XM's service as a factory-installed option
on most vehicles and provides minimum installation guarantees and
other support. GM and American Honda Motor Corp., a minority
investor, have expanded XM's service availability on 2005 model
cars. Competition for retail aftermarket sales, which produce
about 50% of XM's subscribers, is intensifying, although this
channel is growing quickly. Both companies have added exclusive
programming to help attract subscribers, with Sirius signing
shock-radio personality Howard Stern to a five-year contract and
XM reaching an 11-year deal with Major League Baseball. These
deals have significantly increased fixed operating costs and the
minimum subscriber levels needed to break even.
* Gibson Dunn Elects Eight New Lawyers to Partnership
-----------------------------------------------------
Gibson, Dunn & Crutcher LLP elected eight new partners in the
firm's Los Angeles, Munich, New York, Orange County and
Washington, D.C. offices, effective January 1, 2005.
The new partners are:
-- Robert C. Blume, a member of the Business Crimes and
Investigations, Securities Litigation and Litigation
Practice Groups, resident in Washington, D.C.
-- Amy Goodman, a member of the Corporate Transactions and
Securities Practice and Executive Compensation Practice
Groups, resident in Washington, D.C.
-- Michelle Hodges, a member of the Corporate Transactions and
Securities Practice Group, resident in Orange County,
California
-- M. Natasha Labovitz, a member of the Business Restructuring
and Reorganization Practice Group, resident in New York
-- Mark Lahive, a member of the Corporate Transactions and
Securities Practice Group, resident in Los Angeles
-- Philip Martinius, a member of the Corporate Transactions and
Securities Practice Group, resident in Munich, Germany
-- James J. Moloney, a member of the Corporate Transactions and
Securities Practice Group, resident in Orange County,
California
-- Andrew Tulumello, a member of the Litigation and Appellate
and Constitutional Law Practice Groups, resident in
Washington, D.C.
"We are delighted to welcome this exceptionally talented group of
lawyers to the partnership," said Ken Doran, Managing Partner of
Gibson Dunn. "They will add depth, focus and energy in a number
of our core practice areas and will help us remain at the top of
the market in terms of our ability to consistently deliver that
highest quality of legal services to our clients."
About the Firm
Gibson, Dunn & Crutcher LLP is a leading international law firm.
Consistently ranking among the world's top law firms in industry
surveys and major publications, Gibson Dunn is distinctively
positioned in today's global marketplace with more than 800
lawyers and 13 offices, including Los Angeles, New York,
Washington, D.C., San Francisco, Palo Alto, London, Paris, Munich,
Brussels, Orange County, Century City, Dallas and Denver.
* Large Companies with Insolvent Balance Sheets
-----------------------------------------------
Total
Shareholders Total Working
Equity Assets Capital
Company Ticker ($MM) ($MM) ($MM)
------- ------ ------------ ------- --------
Airgate PCS Inc. CSA (89) 270 9
Akamai Tech. AKAM (144) 189 63
Alaska Comm. Syst. ALSK (12) 650 85
Alliance Imaging AIQ (50) 641 27
Amazon.com AMZN (721) 2,109 642
AMR Corp. AMR (314) 29,261 (1,824)
Amylin Pharm. Inc. AMLN (42) 402 325
Atherogenics Inc. AGIX (19) 93 77
Blount International BLT (283) 421 103
CableVision System CVC (1,669) 11,795 223
CCC Information CCCG (131) 80 8
Cell Therapeutic CTIC (65) 162 72
Centennial Comm CYCL (538) 1,532 152
Choice Hotels CHH (175) 271 (16)
Cincinnati Bell CBB (615) 2,022 (17)
Clean Harbors CLHB (3) 471 31
Compass Minerals CMP (109) 642 99
Conjuchem Inc. CJC (16) 24 19
Cubist Pharmacy CBST (75) 155 (7)
Delta Air Lines DAL (3,297) 23,526 (2,614)
Deluxe Corp. DLX (214) 1,561 (344)
Denny's Corporation DNYY (246) 730 (80)
Domino Pizza DPZ (575) 421 (16)
Eagle Hospitality EHP (26) 177 N.A.
Echostar Comm DISH (1,711) 6,170 (503)
Graftech International GTI (44) 1,036 284
Hawaii Holding HA (160) 236 (60)
Hercules Inc. HPC (40) 2,658 362
IMAX Corp. IMAX (49) 222 9
Indevus Pharm. IDEV (34) 205 164
Inex Pharm. IEX (9) 59 34
Kinetic Concepts KCI (29) 638 214
Level 3 Comm Inc. LVLT (159) 7,395 157
Lodgenet Entertainment LNET (68) 301 20
Lucent Tech. Inc. LU (2,240) 15,924 2,784
Maxxam Inc. MXM (629) 1,040 96
McDermott Int'l MDR (338) 1,245 33
McMoran Exploration MMR (78) 163 49
Memberworks Inc. MBRS (46) 453 (11)
Northwest Airline NWAC (2,166) 14,450 (431)
Northwestern Corp. NWEC (603) 2,445 (692)
ON Semiconductor ONNN (298) 1,221 270
Per-se Tech. Inc. PSTI (34) 157 43
Pinnacle Airline PNCL (18) 147 26
Phosphate Res. PLP (439) 316 5
Quality Distribution QLTY (26) 377 9
Qwest Communication Q (2,477) 24,926 (509)
SBA Comm. Corp. SBAC (19) 934 5
Sepracor Inc. SEPR (380) 974 600
St. John Knits Int'l SJKI (57) 206 77
US Unwired Inc. UNWR (234) 709 (280)
Valence Tech. VLNC (57) 16 3
Vector Group Ltd. VGR (41) 552 105
Western Wireless WWCA (142) 2,665 1
WR Grace & Co. GRA (118) 3,087 774
Young Broadcasting YBTVA (1) 799 89
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania,
USA, and Beard Group, Inc., Frederick, Maryland USA. Yvonne L.
Metzler, Emi Rose S.R. Parcon, Rizande B. Delos Santos, Jazel P.
Laureno, Cherry Soriano-Baaclo, Marjorie Sabijon, Terence Patrick
F. Casquejo and Peter A. Chapman, Editors.
Copyright 2004. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers. Information contained
herein is obtained from sources believed to be reliable, but is
not guaranteed.
The TCR subscription rate is $675 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same firm
for the term of the initial subscription or balance thereof are
$25 each. For subscription information, contact Christopher Beard
at 240/629-3300.
*** End of Transmission ***