/raid1/www/Hosts/bankrupt/TCR_Public/041214.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, December 14, 2004, Vol. 8, No. 275
Headlines
AADCO AUTOMOTIVE: Sept. 30 Balance Sheet Upside Down by $2.8 Mil.
AIR CARGO: Wants to Hire Tydings & Rosenberg as Bankruptcy Counsel
AIR CARGO: Wants to Use Silicon Valley's Cash Collateral
ALLIANCE IMAGING: S&P Puts 'B-' Rating on $150 Million Sr. Notes
AMERICAN EQUITY: Fitch Rates $250 Million Senior Debt at 'BB-'
AMERISOURCEBERGEN: Moody's Reviewing Low-B Ratings & May Downgrade
ASSET BACKED: Fitch Puts 'BB+' on $3.5 Million Private Offering
ATA AIRLINES: Wants to Reject John Hancock Aircraft Lease
ATLANTIC EXPRESS: Liquidity Pressures Prompt S&P to Junk Ratings
AVAYA INC: Completes Acquisition of Tenovis GmbH & Co.
AVAYA INC: Redeeming Liquid Yield Option(TM) Notes Until Dec. 20
AVOTUS CORP: Sept. 30 Stockholders' Deficit Narrows to $536,144
BERWALD PARTNERSHIP: Hall Law Firm Approved as Committee Counsel
BOCA RESORTS: Completes Merger with Blackstone Affiliate
BOCA RESORTS: S&P Withdraws B+ Rating After Blackstone Acquisition
BORGER ENERGY: Moody's Pares Senior Secured Debt Rating to Ba1
CATHOLIC CHURCH: Spokane Creditors Must File Claims by Apr. 5
CELESTICA INC: Moody's Reviewing Low-B Ratings & May Downgrade
CENVEO INC: Low Profit Expectations Trigger S&P to Slice Ratings
CITATION CAMDEN: Files Schedules of Assets and Liabilities
COPAMEX: Fitch Rates Sr. Unsecured Foreign & Local Debt at 'BB-'
CORRECTIONS CORP: Moody's Revises Outlook on Ratings to Positive
DANA CORP: Completes Private Placement of $450 Million Sr. Notes
DIVERSIFIED ASSET: Moody's Pares Rating on Class B-1L Notes to B3
E*TRADE: S&P Assigns 'BB' Rating to $6.952 Million Class E Notes
EL-BETHEL MISSIONARY: Voluntary Chapter 11 Case Summary
ENRON CORP: Nahem Fine Art Agrees to Settle Claim for $628,000
EPCO INC: Case Summary & 10 Largest Unsecured Creditors
EXIDE TECH: William Martin Wants Debtors to Comply with Plan
FOUNDATION COAL: Prices Initial Public Offering of Common Stock
FRIEDMAN'S INC: Allan Edwards Leaves Post as Executive Chairman
GENERAL NUTRITION: S&P Junks Sub. Debt & Preferred Stock Ratings
GITTO GLOBAL: Has Until Jan. 23 to Make Lease-Related Decisions
GLOBAL CROSSING: Files Registration Statement for 4.9 Mil. Shares
GLOBAL CROSSING: GCUK to Sell $350M Sr. Debt via Private Placement
GLOBAL CROSSING: Adopts Leadership Program to Keep Key Executives
GLOBAL DIGITAL: Reduces Workforce Following Default Notice
GOODMAN GLOBAL: S&P Rates Proposed $500M Sr. Sec. Facility at 'B+'
HAYES LEMMERZ: Creditor Trust Wants to Clarify Modified Plan
HAYES LEMMERZ: Posts $9.5 Million Net Loss in Third Quarter
HEI INC: Waives & Amends Term Loan Pacts with Commerce Bank
IESI CORP: Gets Requisite Consents to Amend Indenture
IESI CORP: Moody's Puts B1 Rating on $375M Senior Secured Facility
INTEGRATED HEALTH: Will File Removal Notices Until Feb. 7
INTELLIVEX INC: Case Summary & 20 Largest Unsecured Creditors
INTERMEDICAL HOSPITAL: Case Summary & Largest Unsecured Creditors
INTERSTATE BAKERIES: Discloses Pension Accounting Problems
J.P. MORGAN: Fitch Affirms Class B-5 Mortgage Trust Rating at 'B'
JOBS.COM: Fifth Circuit Says Warrant Rights are Equity Interests
KAISER ALUMINUM: Asks Court to Establish Solicitation Procedures
KING SERVICE: Wants Exclusive Period Extended Through June 11
KMART CORP: Settles Noritsu Dispute with $4,750,000 Cash Payment
LITFUNDING CORP: Inks $5 Million Multi-Stage Financing Pact
MAGELLAN HEALTH: Aetna to Purchase Health Care Operations
MERRILL LYNCH: Completes Exchange Offer for Convertible Securities
MEZZ CAP: Fitch Puts Low-B Ratings on Three Series 2004-C2 Certs.
MILPITAS MOTORCYCLES: Case Summary & Largest Unsecured Creditors
MIRANT CORP: District Court Rules in Favor of Pepco Contracts
NAVISITE INC: First Qtr. EBITDA Up $1.2 Mil. Over Previous Quarter
NEXIA HOLDINGS: Working Capital Deficit Spurs Going Concern Doubt
NORTEL NETWORKS: Export Development Canada Waives Filing Default
NRG ENERGY: Moody's Rates Proposed $950M Secured Facility at Ba3
OMEGA HEALTHCARE: Prices 3.5 Million Shares in Public Offering
PILLOWTEX CORP: Declares Castle & Cooke's $4.25-Mil. Bid Highest
PREMIER CONCEPTS: Emerges From Chapter 11 Protection
PURE MORTGAGES: Moody's Places Ba2 Rating on $23.5M Class F Notes
RAINIER CBO: Fitch Assigns Low-B Ratings on Classes B-1L & B-2
REAL MEX: S&P Places Single-B Ratings on CreditWatch Negative
REGAL ROW: Bankr. Ct. Will Hear Lawsuit Against Washington Mutual
RELIANCE GROUP: High River Objects to Disclosure Statement
ROLLIE R. FRENCH: Case Summary & 20 Largest Unsecured Creditors
SEQUILS-MINCS: Fitch Puts 'BB-' Rating on $58 Mil. MINCS Notes
SEQUOIA MORTGAGE: Fitch Puts Low-B Ratings on 4 Cert. Classes
SIMMONS BEDDING: S&P Rates Planned $165M Sr. Discount Notes at B-
SIMMONS COMPANY: Moody's Junks $165 Million Senior Discount Notes
SINGH BROTHERS LLC: Case Summary & 4 Largest Unsecured Creditors
STANDARD PARKING: Moody's Withdraws Junk Ratings After Redemption
STELCO INC: Utilizes $257.6 Million of Credit Facility
STRUCTURED ASSET: Fitch Assigns Low-B Ratings on Four Certificates
TENET HEALTHCARE: Subsidiary to Sell St. Charles General Hospital
TENGTU INTL: Working Capital Deficiency Spurs Going Concern Doubt
TOWER PARK: Unsatisfactory Cash Flows Trigger Going Concern Doubt
TRAPEZA CDO: Fitch Affirms $6.9 Mil. Class E Debt Rating at 'BB'
TRUSSWAY LTD.: Involuntary Chapter 11 Case Summary
UAL CORP: Permanent Salary Reductions to Save $112 Mil. Annually
UAL CORP: IFS Wants Pension Payments Under Administrative Claim
US AIRWAYS: Flight Attendants Authorize Strike
US AIRWAYS: Passenger Load Hits Record 73.1% in November 2004
USGEN: HSBC Bank Issues Notice to Bear Swamp Certificateholders
WEIRTON STEEL: Court Approves HSBC Bank Settlement Agreement
WILLIAMS CO: Fitch Upgrades Senior Secured Debt Rating to 'BB'
WINN-DIXIE: Grants Restricted Stock Award to New President & CEO
* Jonathan Halpern Joins Winston & Strawn as Partner in NY Office
* Davis Polk Elects Five New Counsel
* Large Companies with Insolvent Balance Sheets
*********
AADCO AUTOMOTIVE: Sept. 30 Balance Sheet Upside Down by $2.8 Mil.
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AADCO Automotive, Inc., reported its financial results for first
quarter fiscal year 2004-2005, ending September 30, 2004.
Sales for the first quarter ended September 30, 2004, increased by
$578,310 or 56% to $1,605,342 compared to $1,027,032 in the same
period in 2003. The sales increase was due to the following main
factors. Firstly, the acquisition of Coreline on April 1st, 2004
added $393,344 to sales revenue for the first quarter. Secondly,
the addition of major preferred supplier arrangements with large
corporate body shops and AADCO's continued focus on sales
reorganization provided the balance of the improvement.
Throughout the fall of 2003, sales were increasing due to initial
implementation of the Company's new sales strategies. These new
sales strategies include increasing sales and sales operations
staff by 30%, upgrading phone and order processing systems,
installing the latest version of inventory management systems,
introducing a unique and proprietary reporting system for its
major clients, and refining sales methodologies to better target
and service its growing client base. Aadco does anticipate a
decrease in sales of LKQ parts in the second quarter due to the
two-month move of its premises from 220 Walker Drive to its new
facility on 38 Hansen Road. With the finalizing of the physical
move by December 1, 2004, and the setup of the new facility being
fully operational by December 31, 2004, the negative effect of the
move on sales revenues should dissipate by the end of the second
quarter.
Gross Margin decreases to 40% from 54% during the quarter. Margin
is greatly affected by the source of product. Traditionally,
product is either procured through a regulated auction system
utilized by insurance companies as a means of disposing of their
salvage vehicles. Aadco purchases over 90% of its vehicles
through the auction system. Conversely, Aadco may choose to
purchase product from one of its exchange partners. Currently
Aadco has over 45 partners, most of whom are located throughout
Ontario. Parts are readily available from these partners but
margins are substantially less than if the part being sold
originates from Aadco's inventory. Typical margins on parts
purchased from other yards are in the range of 20-25%, where
margins from Aadco inventory have margins in the 60% range.
Gross margin for the first quarter of fiscal 2005 was $642,766 or
40% compared to $556,834 or 54% for the same period last year.
The reasons for this are twofold. Firstly, the Coreline revenues
carry a slightly lower margin than the sale of LKQ parts.
Secondly, the company has seen an increase in the parts it has to
source from outside suppliers as compared to having those parts in
its own inventory. During the later part of the quarter the
company became more reliant on outside sources of parts due to
capital constraints and as a result of preparing for the move to
its new premises. These capital constraints caused a reduction in
the number of auctions the company attended thereby limiting the
amount of new inventory coming into the company. This disruption
is seen as temporary in nature and will be rectified once the
company finalizes its current negotiations for additional capital
and commences dismantling during December of 2004.
Balance Sheet
As at September 30, 2004, current assets were $4,489,614 and
current liabilities were $3,028,992 compared to $4,543,143 and
$3,267,277 at June 30, 2004, resulting in an increase in working
capital at September 30, 2004 to $1,460,622 from $1,275,866 at
June 30, 2004. The increase in working capital is due to the
release of the $750,000 promissory note to the company's old
landlord offset by an increase in accounts payable.
The company is in the midst of finalizing a $2,620,000 financing
with Quorum Managed Funds. These funds will be brought into the
company by way of a 6% convertible debenture. The proceeds of
this debenture issue will be used for working capital, inventory
replenishment and acquisitions. The net effect on the balance
sheet will be reduction of long-term debt of approximately
$2,100,000.
At September 30, 2004, stockholders' deficit narrowed to
$2,820,275 compared to a $2,928,010 deficit at September 20, 2003.
Financial Position
The Corporation closed its Series 4 convertible dentures on
February 10, 2004. A total of $1,875,000 was paid on a short-term
basis to the Corporation in the first, second and third quarters
of fiscal 2004 and these loans have now been converted to the
Series 4 Convertible debentures. The advance of these funds has
allowed the Corporation to expand its operations, fund its
operating losses during fiscal 2004 and acquire certain assets of
Coreline Auto Parts, Inc.
During fiscal 2004, the Corporation entered into a financial
agreement with a third party to facilitate improved turnover/cash
flow from its trade accounts receivables. Under the terms of this
agreement, the Corporation may draw up to $300,000 based on a
certain ratio of its trade receivables. This financial agreement
is secured by a first charge on trade accounts receivables covered
by the agreement. During fiscal 2004, an additional $837,500 in
cash was received from the exercise of 6,979,167 warrants at $0.12
per Common Share and 6,979,167 Common Shares were issued.
The Corporation is raising additional capital through Quorum
Managed Funds in order to support the business and carry out its
planned activities. The initial tranche of $1,060,000 of the
funding is expected to close before the end of the second quarter
of fiscal 2005. In the absence of the completion of new financing
arrangements, the Corporation may default in its debt obligations,
which could cause the debt obligations to become immediately
payable.
About AADCO Automotive, Inc.
AADCO Automotive, Inc., is a rapidly growing, Canadian public
company committed to complete vehicle dismantling and providing
quality used parts and core from insurance salvage. AADCO serves
mechanical and body shop clients across Ontario through its LKQ
parts division. AADCO maintains the largest unbolted inventory of
quality used OEM parts in Canada at its 118,000 sq. ft. facility
in Brampton, Ontario and is the only auto recycler to have been
awarded the Ecologo for environmental stewardship.
AIR CARGO: Wants to Hire Tydings & Rosenberg as Bankruptcy Counsel
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Air Cargo, Inc., asks the U.S. Bankruptcy Court for the District
of Maryland for permission to employ Tydings & Rosenberg LLP as
its general bankruptcy counsel.
Tydings & Rosenberg is expected to:
a) provide the Debtor with legal advice with respect to its
powers and duties as a Debtor-in-Possession and in the
operation of its business and management of its property;
b) represent the Debtor in defense of any proceedings
instituted to reclaim property or to obtain relief from the
automatic stay under Section 362(a) of the Bankruptcy Code;
c) prepare any necessary applications, answers, orders, reports
and other legal papers, and appear on the Debtor's behalf in
proceedings instituted by or against the Debtor;
d) assist the Debtor in the preparation of schedules,
statements of financial affairs, and any amendments to those
documents that the Debtor may be required to file in its
chapter 11 case;
e) assist the Debtor in the preparation of a plan of
reorganization and a disclosure statement;
f) assist the Debtor with all bankruptcy legal work;
g) provide the Debtor with general corporate legal advice; and
h) perform all of the legal services for the Debtor that may be
necessary or desirable in its chapter 11 case.
Alan M. Grochal, Esq., a Partner at Tydings & Rosenberg, is the
lead attorney for the Debtor's restructuring. Mr. Grochal
discloses that the Firm received a $35,000 retainer.
Tydings & Resenberg has not yet submitted its professionals'
compensation rates to Air Cargo at the time that Air Cargo
submitted its motion to the Court to employ the Firm as its
bankruptcy counsel.
Tidings & Rosenberg assures the Court that it does not represent
any interest adverse to the Debtor or its estate.
Headquartered in Annapolis, Maryland, Air Cargo, Inc., provides
contract management, freight bill auditing and consolidated
freight invoicing and payment services for wholesale cargo
customers. The Company filed for chapter 11 protection on Dec. 7,
2004 (Bankr. D. Md. Case No. 04-37512). When the Debtor filed for
protection from its creditors, it listed total assets of
$16,300,000 and total debts of $17,900,000.
AIR CARGO: Wants to Use Silicon Valley's Cash Collateral
--------------------------------------------------------
Air Cargo, Inc. asks the U.S. Bankruptcy Court for the District of
Maryland for permission, on an interim basis, to use cash
collateral securing repayment of prepetition obligations to its
primary lender, Silicon Valley Bank.
The Debtor needs access to the cash collateral to avoid immediate
and irreparable harm to its estate and to pay the necessary costs
and expenses required for its ongoing business operations.
The Debtor owes Silicon Valley $2,973,119.63, plus accrued
interest, fees and costs, under a prepetition Loan and Security
Agreement dated February 28, 2004.
Under the terms of the Loan and Security Agreement, the loan from
Silicon Valley is secured by all the proceeds from the Debtor's
assets, including accounts receivable, deposit accounts,
instruments, general intangibles, chattel paper, inventory,
equipment, fixtures, goods and accounts.
The Debtor's use of the cash collateral on an interim basis is in
accordance with a budget for a five-week period commencing from
December 10, 2004, up to January 7, 2005.
(in thousands of dollars)
For the Week Ending
Dec. 10 Dec. 17 Dec. 24 Dec. 31 Jan. 7
------- ------- ------- ------- -------
Total Wages and
Temporary Help (1,350) (61,905) (1,350) (52,351) (62,352)
Total Non-Payroll
Operating Cash
Expenditures (57,150) (145,134) (24,859) (14,500) (42,167)
Total Cash
Disbursement
Operations (58,500) (207,039) (26,209) (66,851) (104,519)
To adequately protect Silicon Valley's interest, the Debtor has
agreed to grant Silicon a continuing security interest having the
same priority and extent as the prepetition interest of Silicon in
the cash collateral. The Debtor has also agreed to grant a
superpriority claim to Silicon for any diminution of the value of
the cash collateral.
Headquartered in Annapolis, Maryland, Air Cargo, Inc., provides
contract management, freight bill auditing and consolidated
freight invoicing and payment services for wholesale cargo
customers. The Company filed for chapter 11 protection on Dec. 7,
2004 (Bankr. D. Md. Case No. 04-37512). Alan M. Grochal, Esq., at
Tydings & Rosenberg, LLP, represents the Debtor in its
restructuring efforts. When the Debtor filed for protection from
its creditors, it listed total assets of $16,300,000 and total
debts of $17,900,000.
ALLIANCE IMAGING: S&P Puts 'B-' Rating on $150 Million Sr. Notes
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Standard & Poor's Ratings Services assigned a 'B-' rating to
medical diagnostic imaging provider Alliance Imaging Inc.'s
$150 million senior subordinated notes due December 2012.
The proceeds, along with proceeds from the company's amended term
loan C, will be used to retire $260 million of outstanding 10 3/8%
senior subordinated notes due 2011, which were tendered on
November 30. The 'B+' corporate credit rating is affirmed. The
outlook is stable.
"Alliance Imaging Inc.'s ratings reflect the highly fragmented and
competitive nature of the medical imaging industry, the company's
concentration in mobile MRI facilities, and the risk of changes to
reimbursement," said Standard & Poor's credit analyst Cheryl
Richer.
"These concerns overshadow favorable industry demographics, the
company's national presence, and its industry reputation for
quality. The rating is also supported by the company's positive
free cash flow generation and strong financial metrics," Ms.
Richer added.
With 481 diagnostic imaging systems (including 362 MRI systems and
53 PET or PET/CT systems) and more than 1,000 customers in 43
states, Anaheim, California-based Alliance is the largest U.S.
mobile scan provider, offering MRI scan services to hospitals
based on the number of scans or the length of use.
It also offers PET services to large hospitals with oncology
practices. The company's competitors include:
-- InSight Health Service Corporation,
-- MedQuest Inc., and
-- Radiologix Inc.
While mobile operations provide higher margins, they add risk to
the portfolio; about one-third of contracts renew annually, and
competition centers largely on price. Over the past couple of
years, contract renewals have been even more uncertain as
attractive vendor-finance arrangements have increased the
likelihood that higher volume customers will acquire their own
imaging equipment.
Alliance has grown through small acquisitions and contract-linked
equipment purchases. The company is rationalizing its mobile
fleet in an attempt to reduce its revenue gap, which it defines as
(annualized) contractual revenues lost net of (annualized)
contractual revenues gained.
In addition, the company has begun to diversify into fixed-site
centers, and plans to add between 12-15 new sites per year. Its
strategy is to partner with hospitals that offer a known and
relatively secure level of patient throughput. The fixed-site
initiative also effectively replaces riskier contract-based
relationships with ones in which both parties are invested in the
success of the venture.
In addition, Alliance is adding PET/CT facilities to capitalize on
the expanding number of indications reimbursed by third parties;
the average number of PET systems in its fleet grew to 50 in the
third quarter of 2004 from 41 in the third quarter of 2003.
Alliance receives about 88% of revenues from wholesale (hospital
and health care) providers. Although its sales profile minimizes
its direct exposure to Medicare and provides a measure of revenue
visibility, future reductions in pricing are possible given
ongoing pressures on health care costs. In November 2004, the
Center for Medicare and Medicaid Studies announced a 21% reduction
in PET hospital reimbursement rates effective Jan. 1, 2005.
AMERICAN EQUITY: Fitch Rates $250 Million Senior Debt at 'BB-'
--------------------------------------------------------------
Fitch Ratings has assigned a 'BB-' senior debt rating to American
Equity Investment Life Holding Co.'s -- AEL -- $250 million
contingent, convertible, senior debt due 2024 recently issued
under SEC Rule 144a.
At the same time, Fitch has assigned a 'BBB' insurer financial
strength -- IFS -- rating to AEL's subsidiary life insurers,
American Equity Investment Life Insurance Company and American
Equity Investment Life Insurance Company of New York. The Rating
Outlook is Stable.
Rationale for AEL's senior debt rating includes elevated levels of
financial leverage at approximately 55% debt and preferred stock
at the holding company level after the issuance of the $250
million of senior debt. Fitch's equity adjusted financial
leverage that gives equity credit for trust preferred securities
is approximately 48% and does not include notes payable to a
related party service company. As a result of rapid growth in
recent years, the company has a large DAC asset on its balance
sheet, exceeding 210% of shareholders equity at Sept. 30, 2004,
reducing the quality of GAAP equity.
Statutory cash dividend, fixed-charge coverage for 2005 is
expected to be approximately 2 times while GAAP-based EBIT
coverage is expected to be greater at approximately 4x. Fitch
believes that the positive GAAP based earnings trend could improve
coverage levels.
The notes are unsecured obligations of AEL and pay interest of
5.25% with a contingent interest feature beginning in 2012. The
notes mature Dec. 6, 2024, and may be not be redeemed by the
company before Dec. 15, 2011. Holders of the notes may require
AEL to repurchase all or a portion of their notes on Dec. 15,
2011, 2014 and 2019. Fitch views the put feature as potentially
limiting the permanency of the capital to AEL. The notes are
convertible under certain circumstances into cash and shares of
AEL's common stock at an initial conversion price of $14.47 per
share.
Rationale for the 'BBB' IFS rating for AEL's main operating
subsidiary, American Equity Investment Life, include the company's
position as a leading producer in the U.S. equity index annuities
marketplace, strong service to its national marketing organization
based distribution, improving GAAP earnings profile, and low
credit risk in its asset portfolio. Substantially, all the
proceeds from the offering are expected to be contributed over
time to American Equity Life to increase the capital and surplus
position and support future growth.
Fitch's concerns include AEL's business line concentration and
rapid growth with over 95% of its earnings tied to fixed and
equity index annuities. Fitch views AEL Life as currently
adequately capitalized, but believes that statutory capitalization
could be pressured in the future due to strong projected sales
growth. American Equity Life of New York's 'BBB' IFS rating is
based upon Fitch's consideration that the company is a core
operation of American Equity Life Investment.
Fitch also believes that AEL Life has elevated levels of
operational risk due to its asset liability profile. Fitch
observes that many of AEL products are designed with features to
reduce lapses in its annuity book of business and that its equity
index annuity products have adequate hedge management. However,
Fitch believes that the current bond portfolio has above average
interest rate risk, especially in rising interest rate scenarios
due to its large investment in zero coupon, long duration federal
agency securities. In addition, in declining interest rate
scenarios earnings and surplus could be pressured due to
reinvestment risk present in the significant investment in
callable, federal agency securities.
Fitch views favorably AEL's progress in enhancing its asset
liability management techniques and in taking investment strategy
initiatives to diversify its investment portfolio in conjunction
with asset growth.
AMERISOURCEBERGEN: Moody's Reviewing Low-B Ratings & May Downgrade
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Moody's Investors Service placed the ratings of AmerisourceBergen
Corporation (Ba2 senior implied) under review for possible upgrade
due to continued debt reduction, reduced reliance on external
liquidity sources and expectations of good free cash flow
generation relative to debt. Moody's believes that improved
financial flexibility -- achieved through sustained debt reduction
-- would help to offset the transition to a new business model and
the loss of two key contracts. Further, the establishment of a
new unsecured bank facility will be considered in this review.
Moody's affirmed ABC's SGL-2 speculative grade liquidity rating.
In addition to withdrawing the rating on Bergen Brunswig's TOPrS,
which were redeemed earlier this year, Moody's is withdrawing the
rating on the company's old credit facility. Moody's has not
rated the company's new credit facilities.
Ratings placed under review for possible upgrade:
* AmerisourceBergen Corporation:
-- Ba3 senior unsecured notes;
-- Ba3 issuer rating;
-- Ba2 senior implied rating.
* Amerisource Health Corporation:
-- B1, 5% convertible subordinated notes, due 2007.
Ratings withdrawn:
* AmerisourceBergen Corporation:
-- Ba1 secured bank facility rating.
* Bergen Brunswig Corporation:
-- B1, 7.8% Trust Originated Preferred Securities (TOPrS),
due 2039.
Rating affirmed:
* AmerisourceBergen Corporation:
-- SGL-2 speculative grade liquidity rating.
The rating review is supported by ABC's recent announcement that
it has repaid its $180 million secured bank term loan and is
redeeming its 5% convertible debt, which follows $300 million of
debt reduction earlier this year.
Under ABC's previous secured bank credit facility, the secured
bank lenders benefited from their security in a significant amount
of assets of the company -- primarily in the form of inventory.
This resulted in secured bank debt being notched upward from the
senior implied rating and the unsecured note holders being notched
below the senior implied rating.
Moody's review will consider:
(1) the sustainability of lower debt levels given the potential
for more share buybacks and acquisitions as the company
achieves greater flexibility with new bank facility;
(2) the likelihood that convertible debt will be redeemed with
equity;
(3) the effects of a changing business model;
(4) the effects of the recent loss of several large contracts;
and
(5) the notching implications associated with the removal of
secured debt from the company's capital structure.
The affirmation of the SGL-2 rating reflects Moody's updated
assessment of ABC's near-term liquidity position, recognizing the
company's significantly reduced reliance on external sources of
liquidity, good operating cash flow generation, anticipated future
debt reduction and a solid near-term covenant compliance cushion.
Although these factors are offset to some extent by lower free
cash flow due to temporarily higher capital spending, the recent
loss of two key contracts, a share buyback program and uncertainty
associated with a new business model, the company is expected to
have a good level of liquidity over the next 12 months.
AmerisourceBergen Corporation, headquartered in Valley Forge,
Pennsylvania, is one of the nation's leading wholesale
distributors of pharmaceutical products and related services.
ASSET BACKED: Fitch Puts 'BB+' on $3.5 Million Private Offering
---------------------------------------------------------------
Asset Backed Securities Corporation home equity loan trust, series
2004-HE10, certificates are rated:
-- $186,030,000 class A-1 through A-3 'AAA';
-- $11,670,000 class M-1 'AA+';
-- $11,420,000 class M-2 'AA';
-- $12,640,000 class M-3 'A';
-- Privately offered $6,080,000 class M-4 'BBB+';
-- Privately offered $2,310,000 class M-5 'BBB';
-- Privately offered $2,790,000 class M-6 'BBB-';
-- Privately offered $3,532,000 class M-7 'BB+' by Fitch.
The 'AAA' rating on the senior certificates reflects the 23.45%
total credit enhancement provided by:
* the 4.80% class M-1,
* the 4.70% class M-2,
* the 5.20% class M-3,
* the 2.50% class M-4,
* the 0.95% class M-5,
* the 1.15% class M-6,
* the 1.45% class M-7, and
* the 2.70% initial overcollateralization -- OC.
All certificates have the benefit of monthly excess cash flow to
cover losses. In addition, the ratings reflect the quality of the
loans and the integrity of the transaction's legal structure, as
well as the primary servicing capabilities of Litton Loan
Servicing rated 'RPS1' by Fitch, and U.S. Bank National
Association as Trustee.
As of the cut-off date, Dec. 1, 2004, the mortgage pool consists
of 1,331 closed-end, first lien, fixed-rate, and adjustable-rate
mortgage loans with an aggregate principal balance of
$243,033,897. The weighted average mortgage loan rate is
approximately 7.092%, and the weighted average remaining term to
maturity is 353 months. The average principal balance of the
mortgage loans as of the cut-off date is approximately $182,595.
The weighted average original loan-to-value ratio -- OLTV -- is
79.91%, and the weighted average Fair, Isaac & Co. score is 607.
The properties are primarily located in:
* California (33.67%),
* Florida (9.04%), and
* Illinois (5.48%).
ATA AIRLINES: Wants to Reject John Hancock Aircraft Lease
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As part of their ongoing efforts to reduce costs and maximize
fleet flexibility, ATA Airlines and its debtor-affiliates have
identified that the Boeing 727-290 aircraft leased from John
Hancock Leasing Corporation no longer fits into their business
plan and, accordingly, will no longer be utilized by them. The
Debtors determined that the Aircraft does not have any marketable
value in that the lease rates are substantially above market lease
rates for comparable aircraft. Thus, the Aircraft is burdensome
to the Debtors and no longer beneficial to them or their estates.
Pursuant to Section 365 of the Bankruptcy Code, the Debtors seek
the United States Bankruptcy Court for the Southern District of
Indiana's authority to reject the lease of the Boeing 727-290 and
its engines identifiable through these details:
Tail No. Engine Model Engine Serial Number
-------- --------------------- ------------------------
N775AYT Pratt & Whitney JT8-7 654698, 708341, & 709553
Jeffrey C. Nelson, Esq., at Baker & Daniels, in Indianapolis,
Indiana, relates that on or before November 30, 2004, the
Aircraft and its corresponding engines were taken out of service.
John Hancock was notified of their location and informed of the
Debtors' intent to reject the Lease effective November 30.
Mr. Nelson assures the Court that the Debtors will continue the
existing insurance coverage for the Aircraft and its engines and
the existing FAA-approved maintenance program for 30 days after
the Rejection Date.
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. 8; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
ATLANTIC EXPRESS: Liquidity Pressures Prompt S&P to Junk Ratings
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
and senior secured debt ratings on Atlantic Express Transportation
Corp. to 'CCC+' from 'B' and removed the ratings from CreditWatch,
where they were placed July 6, 2004. The outlook is developing.
The rating actions reflect the company's greater-than-expected
liquidity pressures in recent months and Standard & Poor's belief
that challenging market conditions will continue to put pressure
on earnings and cash flow over the next few years, despite recent
financing activities that have provided some breathing room for
the company over the near term. The Staten Island, New York-based
school bus transportation company, which emerged from Chapter 11
bankruptcy protection in December 2003, has about $150 million of
lease-adjusted debt.
"Earlier this year, the company disclosed that it expects cash
flow over the coming year to be adversely affected by a number of
factors, including higher-than-expected fuel costs and other
expenses," said Standard & Poor's credit analyst Lisa Jenkins.
"Although the company subsequently tapped some additional sources
of funding, liquidity remains tight and leaves the company
extremely vulnerable to cost and revenue pressures."
Adding to financial uncertainty is the fact that Atlantic Express
derives a substantial portion of revenues, 42.7% in fiscal 2004
(fiscal year end is June 30), from the New York City Department of
Education -- DOE. This contract is up for renewal in mid-2005.
The loss of all or a portion of this contract or a failure to
renew or rebid the contract on favorable terms would have a
material negative impact on the company. The loss of certain
other contracts would also have negative consequences for the
company, given its modest size and limited liquidity. Financial
risk is heightened by the fixed price nature of the company's
contracts, which leaves it vulnerable to unexpected increases in
costs. Despite its emergence from Chapter 11, Atlantic Express
remains highly leveraged. For fiscal 2004, the company generated
a loss from operations of $6.6 million.
Debt to capital is currently about 70.4%.
Atlantic Express is the fourth-largest (albeit in a very
fragmented industry) provider of school bus transportation in the
U.S. and the leading provider in New York City. School bus
services account for about 88% of revenues. The company also
provides paratransit services for physically and mentally disabled
passengers and other services, including express commuter lines
and tour buses. The company operates a fleet of approximately
6,000 vehicles.
If the company renews or rebids contracts, including the important
New York City contract, on favorable terms and is able to control
costs such that the outlook for earnings, cash flow generation,
and liquidity improves, ratings could be raised. Should the
company lose a significant portion of its revenue base or
experience increased costs such that earnings, cash generation,
and liquidity come under renewed pressure, ratings could be
lowered.
AVAYA INC: Completes Acquisition of Tenovis GmbH & Co.
------------------------------------------------------
Avaya, Inc., (NYSE: AV) completed the acquisition of Tenovis
GmbH & Co. KG, a major European provider of enterprise
communications systems and services, from affiliates of Kohlberg
Kravis Roberts & Co.
Tenovis provides communications solutions, including telephony,
call and contact centers, customer relationship management,
messaging, networking and services to companies and public
authorities across Europe. With the acquisition, Avaya adds more
than 5,400 employees to its operations across Austria, Belgium,
France, Germany, Italy, Spain, Switzerland and The Netherlands.
The acquisition significantly increases the company's European
customer base, market share and presence.
Avaya, Inc. -- http://www.avaya.com/-- designs, builds and
manages communications networks for more than one million
businesses worldwide, including more than 90 percent of the
FORTUNE 500(R). Focused on businesses large to small, Avaya is a
world leader in secure and reliable Internet Protocol telephony
systems and communications software applications and services.
Driving the convergence of voice and data communications with
business applications -- and distinguished by comprehensive
worldwide services -- Avaya helps customers leverage existing and
new networks to achieve superior business results.
* * *
As reported in the Troubled Company Reporter on Nov. 18, 2004,
Standard & Poor's Ratings Services raised its rating on Basking
Ridge, New Jersey-based Avaya Inc.'s senior unsecured debt to 'B+'
from 'B' to reflect lower amounts of priority secured debt in
Avaya's capital structure. On November 16, 2004, Avaya announced
it had successfully tendered for $271 million of its outstanding
$284 million of senior secured notes. Avaya maintains access to
an undrawn $250 million senior secured credit facility, although
the senior unsecured debt holders would not be materially
disadvantaged. The corporate credit rating is affirmed, with a
positive outlook.
AVAYA INC: Redeeming Liquid Yield Option(TM) Notes Until Dec. 20
----------------------------------------------------------------
Avaya, Inc., (NYSE: AV) will redeem for cash all of its
outstanding Liquid Yield Option(TM) Notes due 2021 on
Dec. 20, 2004. As provided pursuant to the indenture governing
the LYONs, the redemption price is $545.67 per $1,000 principal
amount at maturity of LYONs.
Holders retain the right to convert their LYONs at any time before
5:00 p.m. Eastern time on December 20, 2004 into Avaya common
stock. The LYONS are convertible into 37.4437 shares of Avaya
common stock per $1,000 principal amount at maturity of LYONs.
Any LYONs not converted on or before 5:00 p.m. Eastern time on
December 20, 2004, will be automatically redeemed.
A notice of redemption is being mailed by The Bank of New York,
the trustee for the LYONs, to all registered holders of LYONs.
Copies of the notice of redemption and additional information
relating to the procedure for redemption may be obtained from The
Bank of New York by calling 1-800-254-2826.
Avaya, Inc. -- http://www.avaya.com/-- designs, builds and
manages communications networks for more than one million
businesses worldwide, including more than 90 percent of the
FORTUNE 500(R). Focused on businesses large to small, Avaya is a
world leader in secure and reliable Internet Protocol telephony
systems and communications software applications and services.
Driving the convergence of voice and data communications with
business applications -- and distinguished by comprehensive
worldwide services Avaya helps customers leverage existing and new
networks to achieve superior business results.
* * *
As reported in the Troubled Company Reporter on Nov. 18, 2004,
Standard & Poor's Ratings Services raised its rating on Basking
Ridge, New Jersey-based Avaya Inc.'s senior unsecured debt to 'B+'
from 'B' to reflect lower amounts of priority secured debt in
Avaya's capital structure. On November 16, 2004, Avaya announced
it had successfully tendered for $271 million of its outstanding
$284 million of senior secured notes. Avaya maintains access to
an undrawn $250 million senior secured credit facility, although
the senior unsecured debt holders would not be materially
disadvantaged. The corporate credit rating is affirmed, with a
positive outlook.
AVOTUS CORP: Sept. 30 Stockholders' Deficit Narrows to $536,144
---------------------------------------------------------------
Avotus Corporation (TSX Venture: AVS) reported its financial
results for the third quarter of fiscal 2004.
For the third quarter of 2004 revenue was $7.3 million compared to
$8.1 million for the same period last year. EBITDA was a loss of
($105,000) vs. positive EBITDA of $307,000 for the same period in
2003, and the net loss was ($568,000) or ($0.04) per share vs.
($357,000) or ($0.02) per share in the same period in 2003. In
accordance with Canadian GAAP, because the company was in a loss
position, the loss per share does not take into account the effect
of conversion of preferred shares, options and warrants into
common shares.
The 10% decline in revenue for the third quarter of 2004 compared
to the corresponding prior year period was in part the result of
the Company's planned shift in revenue mix, away from software
licenses, where revenue is recognized upon shipping and billing,
and toward Avotus hosted and managed solutions, where the customer
pays on a monthly basis. The Company expects this shift in
revenue mix to continue as it focuses on building its backlog of
subscription-type business moving forward.
In addition, approximately $160,000 of the decrease in revenue in
the third quarter of 2004 over the same quarter in 2003 was due to
the strong Canadian dollar as more than 50% of the Company's
revenues are U.S. dollar denominated and the Canadian dollar
appreciated from the third quarter of 2003 to the third quarter of
2004.
Included in the net loss and EBITDA for the third quarter of 2004
is $243,000 of expense related to the adoption on January 1, 2004,
of the new accounting standard requiring expensing of all
stock-based compensation to employees. There was no stock-based
compensation expense recorded in 2003. Also included in the net
loss and EBITDA for the third quarter of 2004 was a gain of
$418,000 from the sale of an investment.
Expressed in U.S. dollars, the third quarter of 2004 revenue was
US$5.8 million as compared to US$6.0 million in the prior year.
EBITDA was a loss of (US$83,000) vs. positive EBITDA of US$228,000
in 2003, and the net loss was (US$451,000) or (US$0.03) per share
compared with a net loss of (US$265,000) or (US$0.01) per share in
2003.
Key accomplishments in the third quarter for Avotus included:
-- acquired 49% of Applied Research Technologies (ART) of Salt
Lake City, with an exclusive option to purchase the
remaining 51%, exercisable at any time prior to June 4,
2005. Through the acquisition of ART with its innovative e-
procurement technologies, including its online auction
capabilities and best practices methodologies, Avotus
further extends the leadership position of its Intelligent
Communications Management(TM) (ICM) solution set;
-- established US$4 million line of credit with Silicon Valley
Bank for operating cash flow;
-- sold first combined Avotus Expense Management and Avotus
Usage solution;
-- enrolled over 300 potential customers via the Company's
Avotus Webinar program; and
-- entered into new distribution agreements in Singapore, Great
Britain, and a teaming agreement in North America.
"We are confident that our focus on communications spend
management is exactly what the market is looking for," stated Fred
Lizza, president and CEO of Avotus. "As always, these business
shifts take time. We are growing our managed services backlog to
the scale where it can more than compensate for the shift in focus
from the legacy operations. Once the e-procurement operations of
ART contribute to Avotus' financial results, the positive impact
will be even greater."
About Avotus
Avotus Corporation -- http://www.avotus.com/-- provides solutions
that dramatically reduce the cost and complexity of enterprise
communications. Intelligent Communications Management is Avotus'
unique model for a single, actionable environment that enables any
company to bring together decision-critical information about
communications expense management, procurement and systems usage
for wired, wireless and VoIP systems. Deployed as an onsite or
hosted application, or as a completely outsourced value-added
managed solution, Avotus enables dramatic savings while improving
productivity and efficiency. Avotus is empowering Fortune 500
companies as well as thousands of other organizations worldwide to
gain insight into and control over their communications
environment. Its solutions are strongly supported and endorsed by
industry-leading partners such as Avaya, Cisco, and Nortel.
At September 30, 2004, Avotus Corporation's balance sheet deficit
narrowed to $536,144 compared to a $16,881,103 deficit at
December 31, 2003.
BERWALD PARTNERSHIP: Hall Law Firm Approved as Committee Counsel
----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of South Dakota gave
the Official Committee of Unsecured Creditors of Berwald
Partnership permission to employ Hall Law Firm as its counsel.
Hall Law Firm will:
a) advise the Committee with respect to its statutory powers
and duties in the Debtor's chapter 11 case;
b) advise the Committee and consult with the Debtor concerning
the administration of its chapter 11 case;
c) advise the Committee with regards to the formulation of a
plan of reorganization for the Debtor;
d) prepare on the Committee's behalf and necessary and
appropriate legal papers;
e) represent the Committee in legal matters before the Court;
and
f) perform other legal services as necessary and appropriate to
protect and advance the position of the Committee and its
constituents.
Ronald J. Hall, Esq., a Member at Hall Law Firm, is the lead
attorney for the Committee, while Yvonne Lange is the Paralegal
performing services for the Committee. Mr. Hall will charge at
$150 per hour, and Ms. Lange will charge at $45 per hour.
Hall Law Firm assures the Court that it does not represent any
interest adverse to the Committee, the Debtor or its estate.
Headquartered in Toronto, South Dakota, Berwald Partnership filed
for chapter 11 protection on August 23, 2004 (Bankr. D.S.D. Case
No. 04-10273). Clair R. Gerry, Esq., at Stuart, Gerry &
Schlimgen, LLP, represents the Company in its restructuring
efforts. When the Debtor filed for protection from its creditors,
it listed estimated assets and debts of $10 million to
$50 million.
BOCA RESORTS: Completes Merger with Blackstone Affiliate
--------------------------------------------------------
Boca Resorts, Inc. (NYSE: RST) has completed its merger with an
affiliate of The Blackstone Group. Under the terms of the merger
agreement, the Company's stockholders will be entitled to receive
$24.00 per share in cash, without interest.
About The Blackstone Group
The Blackstone Group, a private investment firm with offices in
New York, Boston, Atlanta, London and Hamburg, was founded in
1985. Blackstone's Real Estate Group has raised five funds,
representing over $6 billion in total equity, and has a long track
record of investing in hotels and other commercial properties. In
addition to Real Estate, The Blackstone Group's core businesses
include Private Equity, Corporate Debt Investing, Marketable
Alternative Asset Management, Mergers and Acquisitions Advisory
and Restructuring and Reorganization Advisory. The Blackstone
Group can be accessed on the Internet at
http://www.Blackstone.com/
About Boca Resorts
Boca Resorts, Inc. is the owner and operator of five distinctive
destination resorts located in Florida with hotels, conference
facilities, golf courses, spas, marinas and private clubs. The
Company's resorts include the Boca Raton Resort & Club (Boca
Raton), the Registry Resort at Pelican Bay (Naples), the Edgewater
Beach Hotel (Naples), the Hyatt Regency Pier 66 Hotel and Marina
(Fort Lauderdale) and the Radisson Bahia Mar Resort and Yachting
Center (Fort Lauderdale). The Company also owns and operates two
golf clubs located in Florida (Grande Oaks Golf Club in Fort
Lauderdale and Naples Grande Golf Club in Naples) that serve as
additional amenities to its resorts, as well as components of its
exclusive social club, known as the Premier Club. In addition,
the Company owns and operates two golf courses in Boca Raton that
are part of the Boca Raton Resort & Club. Boca Resorts, Inc. can
be accessed on the Internet at http://www.bocaresortsinc.com/
* * *
As reported in the Troubled Company Reporter on Oct. 25, 2004,
Standard & Poor's Ratings Services placed its 'B+' corporate
credit rating on Boca Resorts Inc. on CreditWatch with developing
implications, following the announcement that it has been acquired
by The Blackstone Group for $24 per share. The total value of the
transaction, including debt, is about $1.25 billion. The
transaction is subject to shareholder approval and other customary
conditions, and is expected to be completed in late 2004 or early
2005.
Boca's Chairman and Chief Executive Officer, H. Wayne Huizenga,
who controls about 98% of the company's voting shares, agreed to
vote in favor of the transaction. Standard & Poor's expects to
withdraw its ratings on the Fort Lauderdale, Florida-based luxury
resorts owner and operator upon consummation of this transaction.
BOCA RESORTS: S&P Withdraws B+ Rating After Blackstone Acquisition
------------------------------------------------------------------
Standard & Poor's Ratings Services withdrew its 'B+' corporate
credit rating on Boca Resorts, Inc. The rating had been placed on
CreditWatch with developing implications on Oct. 21, 2004.
The rating withdrawal reflects the acquisition of Boca Resorts by
the Blackstone Group for $24 per share or $1.25 billion.
Stockholders of Boca Resorts approved the acquisition on December
6. Based in Fort Lauderdale, Florida, Boca Resorts owns and
operates five luxury resorts and four golf clubs in Florida.
BORGER ENERGY: Moody's Pares Senior Secured Debt Rating to Ba1
--------------------------------------------------------------
Moody's Investors Service downgraded the senior secured debt
rating of Borger Energy Associates, L.P., to Ba1 from Baa3,
concluding the review for downgrade that was initiated on
November 1, 2004. The rating outlook is negative.
The downgrade reflects the expectation that Borger's debt service
coverage ratios will remain below the level that is consistent
with the Baa3 rating through 2006, and the fact that Borger is not
expected to be able to fully fund its major maintenance reserve in
2004. At year-end 2004, the project's major maintenance reserve
is expected to be under funded by approximately $400,000.
Debt service coverage for 2004 is projected to be between 0.91x
and 0.95x. However, management expects that there will be no need
to draw on the project's $5.3 million six-month debt service
reserve. Debt service coverage ratios for 2005 are projected to
be approximately 1.30x. Debt service coverage ratios are projected
to stay in the range of 1.30x to 1.45x through at least 2006,
assuming that the project returns to normal operating performance.
The negative outlook reflects the potential for additional
negative developments in conjunction with Borger's scheduled
January 2005 major turbine overhaul of Unit #2. A portion of the
overhaul costs will need to be funded out of 2005 cash flow. The
outlook also reflects the uncertainty surrounding the project's
longer term plans regarding its generators, which will require
either additional maintenance or replacement.
Borger's debt service coverage ratios in 2005 and 2006 are
expected to be depressed due to the projected curtailment of
ConocoPhillips steam usage, which will reduce revenues for the
next two years. ConocoPhillips reduction in usage actually began
in the fourth quarter and contributed to the project's lower than
anticipated 2004 revenues. Borger's planned turbine overhaul of
Unit #2 was moved from October 2005 to January 2005 so that the
project would benefit from its improved performance earlier in the
year. The decline in Unit #2's performance also contributed to
the project's lower fourth quarter 2004 cash position.
Uncertainty remains regarding Borger's long term generator related
maintenance plans, including the magnitude of the costs, the
manner in which these costs will be funded, and the risk of
operational complications that could negatively impact cash flow.
The current weakness in Borger's financial profile is due
primarily to prolonged outages that occurred in 2004. The project
was left with little financial flexibility to handle additional
unforeseen events such as the reduction in steam revenues,
additional expenses or other potential operating disruptions.
Borger Energy Associates, L.P. is a 230 MW gas-fired cogeneration
facility located near Borger Texas. Power generated by the
project is sold to Southwestern Public Service Corporation (Baa1
senior unsecured), and steam is sold to ConocoPhillips (A3 senior
unsecured).
CATHOLIC CHURCH: Spokane Creditors Must File Claims by Apr. 5
-------------------------------------------------------------
The United States Bankruptcy Court for the Eastern District of
Washington set April 5, 2005, as the deadline for all creditors
owed money by the Diocese of Spokane on account of claims arising
prior to the Petition Date, to file their proofs of claim.
The Archdiocese of Portland in Oregon filed for chapter 11
protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004.
Thomas W. Stilley, Esq., and William N. Stiles, Esq., at Sussman
Shank LLP, represent the Portland Archdiocese in its restructuring
efforts. In its Schedules of Assets and Liabilities filed with
the Court on July 30, 2004, the Portland Archdiocese reports
$19,251,558 in assets and $373,015,566 in liabilities.
The Roman Catholic Church of the Diocese of Tucson filed for
chapter 11 protection (Bankr. D. Ariz. Case No. 04-04721) on
September 20, 2004, and delivered a plan of reorganization to the
Court on the same day. Susan G. Boswell, Esq., and Kasey C. Nye,
Esq., at Quarles & Brady Streich Lang LLP, represent the Tucson
Diocese.
The Roman Catholic Church of the Diocese of Spokane filed for
chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on
Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen,
Coffin, Brooke & Miller, LLP, represents the Spokane Archdiocese
in its restructuring efforts. When the Debtor filed for
protection from its creditors, it listed $11,162,938 in total
assets and $81,364,055 in total debts. (Catholic Church Bankruptcy
News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 215/945-
7000)
CELESTICA INC: Moody's Reviewing Low-B Ratings & May Downgrade
--------------------------------------------------------------
Moody's Investors Service placed the debt ratings of Celestica,
Inc., on review for possible downgrade. This review is
precipitated by a combination of:
(1) the expectation that current, subdued demand levels and
inventory streamlining efforts involving the core high-end
technology and telecommunications end markets (contribute
80% total company revenue) will continue to present a
challenge for much of 2005;
(2) associated concerns that the company's current, materially
underutilized global infrastructure (55-60% utilization
rates for the September quarter) will require further
streamlining; and
(3) the belief that the company's below peer margin levels and
recent cash burn (five of past six quarters) will continue
to hinder its operational results and fundamental business
risk for the foreseeable future.
These ratings have been placed under review:
* $500 million 7.875% senior subordinate notes, due 2011, rated
Ba3;
* $335 million (accreted value) subordinate, zero coupon liquid
yield option notes (LYONS) yielding 3 3/4% and due 2020,
rated Ba3;
* Universal shelf registration for unsecured senior or
subordinated debt, and/or preferred stock rated (P)Ba3/(P)B1,
respectively;
* Senior implied rating of Ba2; and
* Senior unsecured issuer rating of Ba3.
This ratings review will consider the company's Q4 2004 operating
results and future expectations, particularly for the high-end
technology and telecommunication end markets. Moody's will also
assess the company's prospects for securing more meaningful margin
expansion, increasing its overall asset management efficiencies
(i.e., utilization levels, related capital return metrics) and its
ability to sustainably fund internal operating needs.
While Celestica continues to be challenged in its efforts to
right-size the operations and generate positive free cash flow, at
the present time the company possesses very good liquidity. As of
the September quarter end, the company reported on-hand liquidity
of approximately $975 million and access to an unutilized
$600 million revolver (subject to pro forma covenant compliance).
Headquartered in Toronto, Canada, Celestica, Inc., is a world
leader in providing electronics manufacturing services to original
equipment manufacturers in the information technology and
communications industries. For the latest twelve months ending
September 2004, the company generated adjusted EBITDA (excludes
non-recurring charges) of approximately $255 million from total
net sales of approximately $8.4 billion.
CENVEO INC: Low Profit Expectations Trigger S&P to Slice Ratings
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on Cenveo,
Inc., and operating subsidiary Cenveo Corp., including its
corporate credit rating to 'B+' from 'BB-' following the company's
announcement that EBITDA profitability in the December 2004
quarter would be lower than previous expectations.
The outlook is stable. Lease adjusted total debt was $863 million
as of September 2004. Cenveo is an Englewood, Colorado-based
commercial printer.
"The downgrade reflects our belief that over the intermediate
term, Cenveo will generate lower profitability and free cash flow
levels, as well as report higher debt balance than previously
expected," said Standard & Poor's credit analyst Emile Courtney.
The lowered profitability guidance in the December 2004 quarter
involves lower-than-expected volumes at large new customer
accounts in the company's Resale segment, the cancellation and
postponement of several large orders in its Commercial Print
segment, as well as the inability to pass through paper price
increases under certain customer contracts. While pricing power
has improved in some high volume envelope lines, overall pricing
is expected to remain under pressure in both of the company's
industry segments, further challenging the pace of profitability
and leverage improvements over the near term.
The ratings on Cenveo reflect the company's narrow business focus
on envelope and commercial print segments; competitive market
conditions in the overall print sector; and high debt levels.
These factors somewhat are tempered by the company's good market
positions in its segments served and adequate liquidity.
CITATION CAMDEN: Files Schedules of Assets and Liabilities
----------------------------------------------------------
Citation Camden Castings Center, Inc., filed its Schedules of
Assets and Liabilities with the U.S. Bankruptcy Court for the
Northern District of Alabama, Southern Division, disclosing:
Name of Schedule Assets Liabilities
---------------- ------ -----------
A. Real Property $ 1
B. Personal Property $ 655,574
C. Property Claimed as Exempt
D. Creditors Holding $324,234,598
Secured Claims
E. Creditors Holding
Unsecured Priority Claim
F. Creditors Holding Unsecured
Non-Priority Claim $100,000
A full-text copy of this financial disclosure document is
available for a fee at:
http://www.researcharchives.com/bin/download?id=040812020022
Headquartered in Camden, Tennessee, Citation Camden Castings
Center, Inc. -- http://www.citation.net/-- an affiliate of
Citation Corporation, manufactures ductile iron parts for disc
brakes. The Company filed for chapter 11 protection on Dec. 7,
2004 (Bankr. N.D. Ala. Case No. 04-10781). Cathleen C. Moore,
Esq., and Michael Leo Hall, Esq., at Burr & Forman represent the
Debtor in its restructuring efforts. When the Debtor filed for
protection from its creditors, it listed $655,575 in total assets
and $324,334,598 in total debts.
COPAMEX: Fitch Rates Sr. Unsecured Foreign & Local Debt at 'BB-'
----------------------------------------------------------------
Fitch Ratings views the divestiture by Copamex, S.A. de C.V. of
its consumer products division as neutral to the company's credit
quality and ratings. Fitch rates Copamex's senior unsecured
foreign and local currency debt at 'BB-'.
Fitch also rates Copamex's MXP700 million of medium-term notes
with a 15% partial guarantee by Nederlandse Financierings-
Maatschappij voor Ontwikkelingslanden N.V. -- FMO -- at 'A(mex)'
and MXP600 million of short term notes at 'F2(mex)'. The Outlook
for all ratings is Stable.
On Dec. 8, 2004, Copamex announced that it intends to sell its 50%
stake in the consumer products division, Copamex Productos al
Consumidor S.A. de C.V. (CPG) to its joint venture partner Svenska
Cellulosa Aktiebolaget SCA (SCA) for US$122 million. CPG produces
tissue, feminine hygiene, and diaper products. This division
earned US$348 million in revenues and US$54 million of EBITDA
during 2003, accounting for approximately 46% and 56% of Copamex's
consolidated sales and EBITDA, respectively.
Copamex has indicated that it expects net proceeds of US$88
million from the transaction to be used to repay debt at the
holding company level, which at Sept. 30, 2004, reached US$180
million. For the 12 month ended Sept. 30, 2004, Copamex had a
ratio of consolidated total debt to EBITDA of 4.8 times and an
EBITDA-to-interest expense ratio of 1.4x.
Pro forma total debt to EBITDA at Copamex post-divestiture should
reach 2.3x and the ratio of EBITDA-to-interest expense should
exceed 3.0x. Following the divestiture, Copamex will be a
producer of paper-based industrial products with operations in
packaging (kraft paper, corrugated boxes, and specialty paper) and
printing and writing paper (bond and copy paper).
Pro forma 2004 annual revenues and EBITDA are approximately US$400
million and US$40 million, respectively. While the aforementioned
transaction lowers Copamex's leverage, it is expected to increase
the company's business risk, as the businesses that remain are
more exposed to operating volatility than paper-based consumer
products.
CORRECTIONS CORP: Moody's Revises Outlook on Ratings to Positive
----------------------------------------------------------------
Moody's Investors Service has affirmed its B1 senior unsecured and
Ba3 senior secured ratings of Corrections Corporation of America.
The rating outlook was changed to positive, from stable.
According to Moody's, this positive credit outlook is based on the
significant improvement that Corrections Corporation has made in
reducing overall leverage as well as secured debt. The company's
total debt to gross assets has improved from 62% at year-end 2002
to 44% at the end of the third quarter 2004. Furthermore,
Corrections Corporation has reduced secured debt as a percentage
of gross assets from 33% to 12% in the same timeframe. In 2004
the company also redeemed all of its preferred stock.
Moody's noted the strides made by Corrections Corporation in its
credit metrics have been achieved while increasing its asset base,
revenues and cash flow. Of particular note, the firm has achieved
higher revenues in each segment-federal, state, and local-in
recent years. This is in no small part due to the firm's sound
operating track record, particularly its high contract renewal
rate of 95% for the past four years. Occupancy has been high and
increasing, averaging 95.5% in the first nine months of 2004
versus 92.1% for the same period in 2003. In addition, the
company has had few escapes, with only one in 2004 and none in the
previous two years.
Moody's believes Corrections Corporation has well positioned
itself as the leading entity in an industry with good growth
prospects; the US prison population is expected to expand. With
federal and state budgets strained, there will be little public
money available for new facility construction. As the largest
private owner of correctional facilities, the firm has the ability
to capture increasing demand with vacant beds at existing
facilities as there are few variable costs associated with filling
this inventory. The increased flexibility resulting from lower
leverage and unencumbering of assets will help Corrections
Corporation to strengthen its position in the private corrections
business.
Moody's said that a rating upgrade would result from improvements
in gross operating margins to the mid-to-upper 20% range. Should
Corrections Corporation lower the ratio of debt to EBITDA below
4X, it would be viewed as a credit positive.
Conversely, Moody's believes that a downgrade would be warranted
should Corrections Corporation suffered a significant loss of
contracts or occupancy falling below 90%. Negative rating
pressure would also result from any development approaching 10% of
assets. Moody's also would consider negative any reversal in the
company's efforts to deleverage.
These ratings were affirmed, with a positive outlook:
* senior secured bank credit facility at Ba3;
* senior secured shelf at (P)Ba3; senior unsecured debt at B1;
* senior unsecured shelf at (P)B1;
* senior subordinate shelf at (P)B2;
* preferred shelf at (P)B3.
Headquartered in Nashville, Tennessee, USA, Corrections
Corporation of America [NYSE: CXW] is the USA's largest owner and
operator of privatized correctional and detention facilities and
one of the largest prison operators in the United States, behind
only the federal government and three states. Corrections
Corporation operates 63 facilities, including 38 company-owned
facilities, with a total design capacity of approximately 67,000
beds in 19 states and the District of Columbia.
DANA CORP: Completes Private Placement of $450 Million Sr. Notes
----------------------------------------------------------------
Dana Corporation (NYSE: DCN) completed its private placement of
$450 million in unsecured senior notes maturing on Jan. 15, 2015.
The notes bear a coupon of 5.85 percent and were priced at 99.953
to yield 5.855 percent.
In conjunction with some of the cash on hand from the company's
recently completed sale of its automotive aftermarket businesses,
Dana will use the proceeds from the offering to pay for the notes
that had been received under its recent tender offer. As
previously announced:
-- $169.5 million of the company's 10-1/8 percent notes due
2010;
-- EUR163.7 million of its 9 percent Euro notes due 2011; and
-- $445.4 million of its 9 percent notes due 2011
were tendered under the offer.
"We are extremely pleased with the success of both our notes
offering and the results, to date, of the tender," said Dana Chief
Financial Officer Bob Richter. "These transactions, in
combination with the recent divestiture of our aftermarket
business, position Dana well for the future by enhancing our
strategic focus and strengthening our balance sheet."
The securities offered 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.
This press release is neither an offer to sell nor the
solicitation of an offer to buy the notes or any other securities,
and shall not constitute an offer, solicitation, or sale in any
jurisdiction in which such an offer, solicitation, or sale is
unlawful.
About the Company
Dana Corporation is a global leader in the design, engineering,
and manufacture of value-added products and systems for
automotive, commercial, and off-highway vehicles. Delivering on a
century of innovation, Dana employs approximately 45,000 people
worldwide dedicated to advancing the science of mobility. Founded
in 1904 and based in Toledo, Ohio, Dana operates technology,
manufacturing, and customer-service facilities in 30 countries.
Sales from continuing operations totaled $7.9 billion in 2003.
Dana's Internet address is: http://www.dana.com/
* * *
As reported in the Troubled Company Reporter on Dec. 09, 2004,
Fitch Ratings has upgraded Dana Corporation's senior unsecured
debt rating to 'BBB-' from 'BB+' and assigns a rating of 'BBB-' to
new $450 million 10-year senior unsecured notes.
The Positive Rating Watch put in place on Aug. 2, 2004 has now
been resolved as the proceeds from a new issuance of senior
unsecured notes and the sale of the Automotive Aftermarket Group -
- AAG -- will be used to make a voluntary pension fund
contribution and to retire outstanding indebtedness in a tender
offer currently in progress. Including the completion of the
tender offer, approximately $2 billion of Dana's debt is affected
by this rating action.
Fitch's rating action reflects Dana's enhanced liquidity, sharply
improved credit metrics, and improved business profile, as well as
Dana's improved operational performance.
DIVERSIFIED ASSET: Moody's Pares Rating on Class B-1L Notes to B3
-----------------------------------------------------------------
Moody's Investors Service lowered the ratings of four classes of
notes issued by Diversified Asset Securitization Holdings III,
L.P.:
(1) to Aa2 (from Aaa on Watch for possible downgrade), the U.S.
$215,000,000 Class A-1L Floating Rate Notes Due July 2036;
(2) to Aa2 (from Aaa on Watch for possible downgrade), the U.S.
$70,000,000 Class A-2 7.4202% Notes Due July 2036;
(3) to Baa1 (from Aa2 on Watch for possible downgrade), the
U.S. $30,000,000 Class A-3L Floating Rate Notes Due July
2036; and
(4) to B3 (from Baa2 on Watch for possible downgrade), the U.S.
$18,500,000 Class B-1L Floating Rate Notes due July 2036.
This transaction closed on June 28, 2001. Moody's noted that all
four classes of notes would remain on Watch for further possible
downgrade.
According to Moody's, its rating action results primarily from
credit deterioration of the collateral pool and significant
decline in the par coverage of the rated notes. According to the
latest deal surveillance report dated November 29th, the deal is
currently in violation of its Moody's Weighted Average Rating Test
(currently reported at 602 versus a trigger level of 425) and all
of its par overcollateralization tests.
Rating Action: Downgrade and Review for Downgrade
Issuer: Diversified Asset Securitization Holdings III, L.P.
Class Description: U.S. $215,000,000 Class A-1L Floating Rate
Notes Due July 2036
Prior Rating: Aaa (on Watch for possible downgrade)
Current Rating: Aa2 (on Watch for possible downgrade)
Class Description: U.S. $70,000,000 Class A-2 7.4202% Notes Due
July 2036
Prior Rating: Aaa (on Watch for possible downgrade)
Current Rating: Aa2 (on Watch for possible downgrade)
Class Description: U.S. $30,000,000 Class A-3L Floating Rate Notes
Due July 2036
Prior Rating: Aa2 (on Watch for possible downgrade)
Current Rating: Baa1 (on Watch for possible downgrade)
Class Description: U.S. $18,500,000 Class B-1L Floating Rate Notes
due July 2036
Prior Rating: Baa2 (on Watch for possible downgrade)
Current Rating: B3 (on Watch for possible downgrade)
E*TRADE: S&P Assigns 'BB' Rating to $6.952 Million Class E Notes
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its preliminary
ratings to E*TRADE RV and Marine Trust 2004-1's $307.5 million
asset-backed notes series 2004-1.
The preliminary ratings are based on information as of
Dec. 10, 2004. Subsequent information may result in the
assignment of final ratings that differ from the preliminary
ratings.
The preliminary ratings reflect the initial credit enhancement in
the form of a nonamortizing reserve account (1.50%),
overcollateralization (0.50%), subordination (2.25%-12.00%), and
excess spread. The credit enhancement percentages are expressed
as a percentage of the initial receivables pool balance, which, as
of Nov. 30, 2004, was $308,996,120.
The preliminary ratings also reflect the credit quality of the
underlying pool of recreational vehicle and marine loans, the
structural features that preserve the available credit
enhancement, and the sound legal structure.
A copy of Standard & Poor's complete presale report for this
transaction can be found on RatingsDirect, Standard & Poor's Web-
based credit analysis system, at http://www.ratingsdirect.com/
The presale can also be found on the Standard & Poor's Web site at
http://www.standardandpoors.com/ Select Credit Ratings, and then
find the article under Presale Credit Reports.
Preliminary Ratings Assigned
E*TRADE RV and Marine Trust 2004-1
Class Rating Amount (mil. $)
----- ------ ---------------
A-1 AAA 60.900
A-2 AAA 65.600
A-3 AAA 76.400
A-4 AAA 32.700
A-5 AAA 34.772
B AA 10.042
C A 9.270
D BBB 10.815
E (not offered) BB 6.952
EL-BETHEL MISSIONARY: Voluntary Chapter 11 Case Summary
-------------------------------------------------------
Debtor: El-Bethel Missionary Baptist Church
715 Bellevue Avenue
Trenton, New Jersey 08618
Bankruptcy Case No.: 04-48775
Type of Business: The Company operates a church.
Chapter 11 Petition Date: December 10, 2004
Court: District of New Jersey (Trenton)
Debtor's Counsel: John E Maziarz, Esq.
Wolk and Maziarz, Esqs.
311 Whitehorse Avenue, Suite A
Trenton, New Jersey 08610
Tel: (609) 581-0063
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
The Debtor did not file a list of its 20 Largest Unsecured
Creditors.
ENRON CORP: Nahem Fine Art Agrees to Settle Claim for $628,000
--------------------------------------------------------------
For the purchase of various works of art, Enron Corp. wired on
June 5, 2001, $1,375,000 to Edward Tyler Nahem Fine Art, LLC's
bank account, representing payment for two invoices:
Invoice No. Amount
----------- ------
10385 $595,000
10386 $785,000
On June 21, 2001, Enron remitted an additional $785,000 to Nahem
Fine Art by check, also for Invoice No. 10386.
In May 2002, Enron notified Nahem Fine Art that the June 21
payment by check was a duplicate payment for Invoice No. [10386],
and that the payment had been made in error. Enron asked Nahem
Fine Art to return the $785,000.
On October 15, 2002, Nahem Fine Art filed Claim No. 14361 in
Enron's Chapter 11 case. Nahem asserted that its claim against
Enron represents lost commissions and unpaid fees for framing for
no less than $204,614 plus interest. Nahem further asserted a
right of set-off for any claims Enron may have against it.
After engaging in negotiations, the parties entered into a
settlement, which provides that:
(a) Nahem Fine Art will pay the estate $628,000;
(b) Nahem's Claim No. 14361 will be disallowed and expunged;
and
(b) The parties will exchange releases for all claims
relating to:
-- Enron's claim for the duplicate payment; and
-- Claim No. 14361.
Since it is compromising a claim and granting a release, Enron
asks the Court to approve the Settlement.
The Settlement is achieved without any litigation costs. It is a
beneficial resolution and makes good business sense.
Headquartered in Houston, Texas, Enron Corporation is in the midst
of restructuring various businesses for distribution as ongoing
companies to its creditors and liquidating its remaining
operations. Before the company agreed to be acquired, controversy
over accounting procedures had caused Enron's stock price and
credit rating to drop sharply.
Enron filed for chapter 11 protection on December 2, 2001 (Bankr.
S.D.N.Y. Case No. 01-16033). Judge Gonzalez confirmed the
Company's Modified Fifth Amended Plan on July 15, 2004, and
numerous appeals followed. Martin J. Bienenstock, Esq., and Brian
S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the
Debtors in their restructuring efforts.
EPCO INC: Case Summary & 10 Largest Unsecured Creditors
-------------------------------------------------------
Debtor: EPCO Inc.
fdba Man Can Construction
PO Box 3222
Estes Park, Colorado 80517
Bankruptcy Case No.: 04-36685
Type of Business: The Company is a building contractor.
Chapter 11 Petition Date: December 9, 2004
Court: District of Colorado (Denver)
Judge: Howard R. Tallman
Debtor's Counsel: Ken McCartney, Esq.
PO Box 1364
Cheyenne, Wyoming 82003-1364
Tel: (307) 635-0555
Total Assets: $ 2,028,264
Total Debts: $ 1,271,497
Debtor's 10 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Mccoud & Nichols $76,654
205 West Kansas Street
Liberty Mo 64068
Estes Park Lumper $16,280
P O Box 3160
Estes Park Company 80517
Westover Construction, Inc. $7,120
1191 Woodstock #2
Estes Park Company 80517
Man Can $6,583
Bacon & Vinton $5,281
Flash Electric $5,279
First National Bank $3,805
David Trout Surveying $2,600
Park Supply Company $1,194
Allied Insulation $1,000
EXIDE TECH: William Martin Wants Debtors to Comply with Plan
------------------------------------------------------------
On July 13, 1998, William T. Martin, doing business as Martin's
Auto Electric, filed a complaint before a state court in South
Carolina seeking to represent a class of battery resellers who
had purchased batteries from Exide Corporation. The Complaint
alleged that batteries manufactured at Exide's Greer, South
Carolina plant were defective or otherwise substandard. The
Complaint alleged cause of action for:
-- breach of contract,
-- breach of express and implied warranties,
-- fraud,
-- breach of contract accompanied by fraudulent act,
-- negligent misrepresentation, and
-- the Racketeer Influenced Organizations Act.
According to Francis A. Monaco, Jr., Esq., at Monzack and Monaco,
PA, in Wilmington, Delaware, the Plaintiffs include battery
resellers who purchased batteries from Exide and reside in
Alabama, Georgia, Florida, Tennessee, Mississippi, North
Carolina, South Carolina, Louisiana and Kentucky -- States into
which Greer batteries were primarily sold.
On June 19, 2000, the parties appeared before the State Court to
present the terms of a proposed settlement class that would avoid
the need for a decision on the issue of class certification. The
State Court indicated that the settlement on its face appeared to
be reasonable and fair, and the Court invited the parties to
submit a Motion for Certification of the Proposed Settlement
Case. There were no challenges to the class counsel.
On November 21, 2000, the State Court preliminarily approved and
granted class certification for purposes of settlement. The
Court also approved the proposed settlement agreement and allowed
dissemination of an approved class notice. On March 1, 2001, the
Court held a final hearing giving final approval to the
settlement and dismissing the lawsuit consistent with the
settlement agreement which was incorporated into the Court's
final order.
Mr. Monaco relates that pursuant to the Agreement, Exide would
provide to the class members credits totaling $12,100,000, if
used for the purchase of Exide batteries. Alternatively, the
credits could be exchanged for a discounted cash payment.
The credits will be distributed pro rata among the class members
based on the volume of each class member's purchases of certain
categories of batteries manufactured at the Greer plant. The
date necessary for making the pro rata distribution was provided
by Exide.
Under the Agreement, the creditors could be used to obtain 25%
discounts on the purchase of wholesale batteries from Exide
branch locations. A class member using the credits could use up
to 1/3 of his credits the first year, 2/3 the second year, and
any remaining credits the third year.
Individual class members had the option to elect to exchange
their credits for cash payments. If they exchanged their credits
for cash in years one or two, they would receive a cash payment
equal to 25% of the value of their remaining credits. If they
wait until three, the exchange value percentage went up to 35%.
If a class member elected to cash out, all remaining credits held
by the class member had to be cashed out at that time.
Until Exide filed for bankruptcy, the Agreement was implemented
according to its terms. Some class members cashed out while
other chose to utilize the settlement credits to purchase Exide
batteries. The balance of the obligation due by Exide as of the
Petition Date was $6,219,671 for the remaining credits.
On August 19, 2003, Mr. Martin objected to the Debtors'
disclosure statement because it failed to adequately address the
class action settlement and clarify the proposed treatment of the
class. According to Mr. Monaco, the Settlement Agreement may be
considered an executory contract as performance is due from both
parties. As such, there are outstanding defaults which the
Disclosure Statement fails to address its cure.
In response, the Debtors clarified in their disclosure statement
that:
"The Debtors are still analyzing whether to assume or reject
various executory contracts, including but not limited to a
settlement agreement with William T. Martin and others
similarly situated. Those contracts not rejected pursuant
to the procedures described in preceding paragraphs will be
assumed under the Joint Plan."
Mr. Monaco says that the clarification resolved the Objection as
it answered what treatment the Agreement was receiving -- it was
an executory contract which would either be assumed or rejected.
The Plan provided that executory contracts not rejected by
separate motion or on a plan supplement would be assumed. The
Agreement was never rejected or included on a plan supplement.
On May 10, 2004, Mr. Martin's counsel sent a letter to the
Debtors' counsel stating that since the Plan was confirmed and
the Agreement assumed, the amount necessary to cure the default
was $6,219,671. The Debtors eventually affirmatively responded
to the letter in late July 2004. Mr. Martin was informed that
the Debtors were taking the untenable position that they did not
reject the Agreement because it was not an executory contract.
Mr. Martin immediately asserted that the Debtors were bound by
their disclosure statement and Plan. However, the Debtors assert
that the inclusion of the Agreement as an executory contract was
of no effect and not binding on them.
Despite its best efforts to resolve the issue outside of the
Bankruptcy Court, Mr. Martin has been unsuccessful. Thus, Mr.
Martin asks Judge Carey to compel the Debtors to comply with the
terms of the confirmed Plan.
Headquartered in Princeton, New Jersey, Exide Technologies is the
worldwide leading manufacturer and distributor of lead acid
batteries and other related electrical energy storage products.
The Company filed for chapter 11 protection on April 14, 2002
(Bankr. Del. Case No. 02-11125). Matthew N. Kleiman, Esq., and
Kirk A. Kennedy, Esq., at Kirkland & Ellis, represent the Debtors
in their restructuring efforts. Exide's confirmed chapter 11 Plan
took effect on May 5, 2004. On April 14, 2002, the Debtors listed
$2,073,238,000 in assets and $2,524,448,000 in debts. (Exide
Bankruptcy News, Issue No. 58; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
FOUNDATION COAL: Prices Initial Public Offering of Common Stock
---------------------------------------------------------------
Foundation Coal Holdings, Inc., has priced its initial public
offering of 23,610,000 shares of common stock at $22.00 per share.
The common stock begins trading Dec. 9 on the New York Stock
Exchange under the symbol "FCL".
Morgan Stanley & Co. Incorporated and Citigroup Global Markets
Inc. are serving as joint book-running managers of the offering.
UBS Securities LLC, Bear, Stearns & Co. Inc., Credit Suisse First
Boston LLC, Lehman Brothers Inc., ABN AMRO Rothschild LLC and
Natexis Bleichroeder Inc. are co-managers of the offering.
Foundation Coal Holdings, Inc. has granted the underwriters an
option to purchase up to an additional 3,541,500 shares at the
public offering price.
The public offering is being made by means of a prospectus, copies
of which may be obtained from:
Morgan Stanley & Co. Incorporated
Prospectus Department
1585 Broadway
New York, N.Y. 10036
Tel. No. 212-761-4000
-- or --
Citigroup Global Markets Inc.
Brooklyn Army Terminal
8th Floor, 140 58th Street
Brooklyn, New York 11220
Tel No. 718-765-6732
This press release shall not constitute an offer to sell or a
solicitation of an offer to buy, nor shall there be any sale of
these securities in any state or jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such state or
jurisdiction.
About the Company
Foundation Coal Holdings, Inc. is the fourth largest coal producer
in the United States, with operations in the four major coal
producing regions in the United States: the Powder River Basin,
Northern Appalachia, Central Appalachia and the Illinois Basin.
Its primary business is to produce, process and sell steam coal,
which it sells to producers of electric power, the majority of
whom are large U.S.-based utilities with an investment grade
credit rating. Foundation Coal Holdings, Inc. also produces and
processes metallurgical coal for use in the manufacture of steel.
* * *
As reported in the Troubled Company Reporter on July 12, 2004,
Standard & Poor's Rating Services assigned its 'BB-' corporate
credit rating to Linthicum Heights, Maryland-based Foundation Coal
Corp. The outlook is stable.
In addition, Standard & Poor's assigned its 'BB-' bank loan rating
and recovery rating of '4' to Foundation PA Coal Co.'s proposed
$785 million secured credit facility, consisting of a $350 million
revolving credit facility maturing in 2009 and a $435 million term
loan B facility maturing in 2011. The 'BB-' rating is the same as
the corporate credit rating; this and the '4' recovery rating
indicate a marginal expectation of full recovery of principal in
the event of a default. Standard & Poor's also assigned its 'B'
rating to Foundation PA Coal's proposed $335 million senior
unsecured notes, maturing in 2014.
"The ratings on Foundation Coal reflect its aggressive financial
leverage, limited operating diversity, inherent operating risks,
and exposure to expiring western coal supply contracts that are
currently above spot prices," said Standard & Poor's credit
analyst Dominick D'Ascoli. Partially offsetting these risks are
its competitive cost position and favorable coal industry
conditions.
FRIEDMAN'S INC: Allan Edwards Leaves Post as Executive Chairman
---------------------------------------------------------------
Friedman's Inc. (OTC: FRDM.PK), reported that Allan Edwards will
step down from his position as an officer, Executive Chairman, at
the end of his term in January 2005. Friedman's Board of
Directors has selected Peter Thorner to serve in the newly created
position of Vice Chairman of the Board. Mr. Thorner has been a
member of the Board since October 2004.
Mr. Edwards came to Friedman's in May 2004 in the midst of
government investigations and numerous business challenges.
During the seven months Mr. Edwards has served as Chairman, the
Company has undergone significant changes, including hiring new
management, refinancing the Company's credit facility, and the
development of a trade creditor support program. Also, Mr.
Edwards has led a restructuring of Friedman's Board in recent
months. Including Mr. Edwards and a Class A director, six out of
seven directors have been newly appointed to Friedman's Board, a
majority of which is independent.
Mr. Edwards said, "Important progress has been made in assembling
new management at Friedman's. I feel that the Company has made
significant strides and that I can now step back from the
Executive Chairman position with the knowledge that we have senior
management in place to move the Company forward."
"Allan has absolutely devoted himself to Friedman's over the past
several months," said Sheldon Whitehouse of Friedman's Board of
Directors. "He has assembled a high-quality board and management
and has jump-started the process of rebuilding Friedman's
credibility. I think Allan deserves a great deal of credit for
leading Friedman's in the right direction," added Mr. Whitehouse.
The Company said that it plans to actively seek a new Chairman.
Separately, Friedman's also disclosed key changes to its senior
management team:
-- Effective Dec. 10, 2004, Richard Hettlinger will no longer
be serving as Chief Financial Officer of Friedman's.
-- Ken Maher has been named interim CFO of Friedman's effective
Dec. 13, 2004. Mr. Maher brings over twenty years of retail
and financial experience to Friedman's. He most recently
served as Vice President and Controller of Wickes Furniture,
a furniture distribution and retailing company.
-- Steve Zeringue has joined Friedman's as Vice President of
Credit. Mr. Zeringue is a credit specialist with over 15
years of retail credit and financial experience. He joins
Friedman's from Certegy Payment Recovery Services, where he
was Vice President of Collections. Prior to Certegy, Mr.
Zeringue served as Director of Credit Risk for Heilig Meyers
Furniture and Assistant Vice President of Credit for Service
Merchandise.
About the Company
Founded in 1920, Friedman's Inc. is a leading specialty retailer
based in Savannah, Georgia. The Company is the leading operator of
fine jewelry stores located in power strip centers and regional
malls. For more information, go to: http://www.friedmans.com/
* * *
As reported in the Troubled Company Reporter on Nov. 04, 2004,
Friedman's Inc. said it anticipates a default under certain of the
financial covenants contained in its amended and restated credit
facility which it had entered into earlier this year. In
particular, Friedman's expects that it will fail to meet
cumulative EBITDA requirements for the period ending Oct. 30,
2004, constituting a default under its term loan, and will fail to
meet a minimum ratio of Accounts Payable to Inventory as of Oct.
30, 2004, constituting a default under both its term loan and its
revolving loan.
Loan Renegotiated in September
Friedman's completed the restructuring of its senior secured
credit facility in September 2004. The new facility consists of a
senior revolving loan of up to $67.5 million (maturing in 2006)
and a $67.5 million junior term loan (maturing in 2007).
Friedman's issued some warrants to Farallon Capital Management,
L.L.C., in connection with that transaction.
Friedman's also entered into a secured trade credit program
providing security to vendors. Part of the deal allows Friedman's
to stretch payment of invoices past due in July 2004 through 2005.
The company's most recently published balance sheet -- dated
June 28, 2003 -- shows $496 million in assets and $190 million in
liabilities. The Company explains that its year-end closing
process was delayed because of an investigation by the Department
of Justice, a related informal inquiry by the Securities and
Exchange Commission, and its Audit Committee's investigation into
allegations asserted in a August 13, 2003, lawsuit filed by
Capital Factors Inc., a former factor of Cosmopolitan Gem
Corporation, a former vendor of Friedman's, as well as other
matters. Ernst & Young has been working on a restatement of the
company's financials. The company's signaled that a 17% or
greater increase to allowances for accounts receivable can be
expected.
GENERAL NUTRITION: S&P Junks Sub. Debt & Preferred Stock Ratings
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
and senior secured bank loan ratings on General Nutrition Centers,
Inc., to 'B' from 'B+'. At the same time, Standard & Poor's
lowered the subordinated debt rating to 'CCC+' from 'B-' and the
preferred stock rating to 'CCC' from 'CCC+'. The outlook is
stable.
"The downgrade is based on concerns over weaker-than-expected
sales and operating trends," explained Standard & Poor's credit
analyst Kristi Broderick. "We believe that credit protection
measures may deteriorate given that it is unlikely that GNC will
be able to reverse its recent negative same-store sales results in
the near term. Ratings on this leading specialty retailer of
nutritional supplements reflect its recent weak operating
performance, expectations of continued operational challenges, its
product liability risk, and its high debt leverage."
GNC's recent weak operating performance is due to softness in the
diet category, a drop-off in sales of low-carb products, and poor
execution of its operations, which has resulted in a loss of
market share. The company's merchandise assortment has not been
managed well. A healthy first quarter of 2004 was more than
offset by a soft second quarter and an even weaker third quarter.
This deteriorating trend is revealed in GNC's comparable-store
sales figures for its company-owned domestic stores, which
increased 6.7% in the first quarter, but fell 3.2% in the second
quarter and then 10.7% in the third quarter. While other players
in the nutritional supplements industry are feeling the softness
in the diet category, they have not experienced the magnitude of
GNC's recent weakness in comparable-store sales.
GNC is implementing several initiatives to improve its competitive
position and boost sales. This includes focusing on the
merchandise assortment, leveraging its brand, and launching a new
marketing program. Success from these initiatives will be key to
the company's future. Because of the mature store base, store
growth is expected to be limited and will come primarily from
international franchising, which requires minimal capital
investment.
GITTO GLOBAL: Has Until Jan. 23 to Make Lease-Related Decisions
---------------------------------------------------------------
The Honorable Joel B. Rosenthal of the U.S. Bankruptcy Court for
the District of Massachusetts extended, until January 23, 2005,
the period within which Gitto Global Corporation can elect to
assume, assume and assign, or reject its unexpired nonresidential
real property leases.
The Debtor reminds the Court that it filed a motion to authorize
the private sale of substantially all of its assets free and clear
of liens, claims, encumbrances and interests to GGC Acquisition,
LLC on November 5, 2004 under an Asset Purchase Agreement.
The Debtor and GGC Acquisition are contemplating that the sale
will closed on December 31, 2004 pending the Court's entry of a
final order approving the sale of the Debtor's assets to GGC
Acquisition.
The Debtor explains to the Court that is a party to two unexpired
leases:
a) a Lease Agreement with Tradex Corporation dated
September 18, 1998, located 140 Leominster-Shirley Road,
Lunenburg, Massachusetts; and
b) a Lease Agreement with FLIP Realty Trust located at 232
Airport Road, Fitchburg, Massachusetts.
The Debtor adds it is also a party to other unexpired leases where
it operates off-site warehouse space. The Asset Purchase
Agreement contemplates the Debtor's assumption and assignment of
certain of the unexpired real property leases
The Debtor tells the Court that the extension will give it more
time and opportunity to consummate any assumption and assignment
of the unexpired leases resulting from the private sale of its
assets to GGC Acquisition.
The Debtor assures Judge Rosenthal that the extension will not
prejudice the lessors under the leases and it is current on all
post-petition rent payments under the terms of the leases.
Headquartered in Lunenburg, Massachusetts, Gitto Global
Corporation -- http://www.gitto-global.com/-- manufactures
polyvinyl chloride, polyethylene, polypropylene and thermoplastic
olefinic compounds. The Company filed for chapter 11 protection
on September 24, 2004 (Bankr. D. Mass. Case No. 04-45386). Andrew
G. Lizotte, Esq., at Hanify & King P.C., represents the Debtor in
its restructuring efforts. When the Debtor filed for protection
from its creditors, it listed estimated assets of $10 million to
$50 million and estimated debts of $50 million to $100 million.
GLOBAL CROSSING: Files Registration Statement for 4.9 Mil. Shares
-----------------------------------------------------------------
On December 8, 2004, Global Crossing Limited filed a registration
statement on Form S-8 with the Securities and Exchange Commission
under the Securities Act of 1933, as amended, in relation to
4,878,261 common shares of the Company of par value $0.01 each
which may be issued in accordance with the 2003 Global Crossing
Limited Stock Incentive Plan.
Title of Proposed Proposed
securities Amount maximum maximum
to be to be offering price aggregate
registered registered per share offering price
---------- ---------- -------------- --------------
Common Stock,
par value
$ .01 per
share (1) 2,139,000 $10.16 $21,732,240
Common Stock,
par value
$ .01 per
share (2) 2,739,261 $15.45 $42,321,582
----------
TOTAL 4,878,261
(1) Consists of shares of Common Stock subject to outstanding
options under the 2003 Global Crossing Limited Stock
Incentive Plan.
(2) Consists of shares of Common Stock available for future
issuance under the Incentive Plan. That indeterminate
number of additional shares as may be issuable pursuant to
the recapitalization provisions under the Incentive Plan
is also registered.
A full-text copy of Global Crossing's Registration Statement is
available at no charge at:
http://sec.gov/Archives/edgar/data/1061322/000119312504209469/ds8.htm
Appleby Spurling Hunter acted as legal counsel in Bermuda to the
Company. The firm is of the opinion that when issued and when
fully paid for pursuant to and in accordance with the terms of
the Incentive Plan and the Resolutions and as contemplated by the
Registration Statement, the Common Stock will be validly issued,
fully paid, non-assessable shares of the Company.
A full-text copy of Appleby Spurling Hunter's opinion letter is
available at no charge at:
http://sec.gov/Archives/edgar/data/1061322/000119312504209469/dex5.htm
Headquartered in Florham Park, New Jersey, Global Crossing Ltd. --
http://www.globalcrossing.com/-- provides telecommunications
solutions over the world's first integrated global IP-based
network, which reaches 27 countries and more than 200 major cities
around the globe. Global Crossing serves many of the world's
largest corporations, providing a full range of managed data and
voice products and services. The Company filed for chapter 11
protection on January 28, 2002 (Bankr. S.D.N.Y. Case No.
02-40188). When the Debtors filed for protection from their
creditors, they listed $25,511,000,000 in total assets and
$15,467,000,000 in total debts. Global Crossing emerged from
chapter 11 on December 9, 2003. (Global Crossing Bankruptcy News,
Issue No. 71; Bankruptcy Creditors' Service, Inc., 215/945-7000)
GLOBAL CROSSING: GCUK to Sell $350M Sr. Debt via Private Placement
------------------------------------------------------------------
Global Crossing Limited's (Nasdaq: GLBC) indirectly wholly-owned
subsidiary, Global Crossing (UK) Finance Plc, is planning to sell
$350 million (currency equivalent) in senior secured notes due in
2014, denominated in U.S. dollars and British pounds sterling,
through a private placement to institutional investors. The notes
will be guaranteed by GCUK Finance's immediate parent company,
Global Crossing (UK) Telecommunications Limited, and will be
secured by certain of GCUK's assets. The private placement is
expected to be completed within the next two weeks.
The private placement is part of the previously announced
recapitalization plan being implemented by Global Crossing
Limited. Pursuant to the recapitalization plan, the proceeds of
the private placement will be used to repay $75 million of
existing indebtedness of a U.S. subsidiary of GCL and to fund the
long-term liquidity requirements of GCL and its subsidiaries
worldwide.
The senior notes to be issued by GCUK Finance have not been
registered under the U.S. Securities Act of 1933, as amended, and
may not be offered or sold in the United States absent
registration or an applicable exemption from the registration
requirements of the Securities Act.
This press release does not constitute an offer to sell or the
solicitation of an offer to buy these securities in the United
States or elsewhere, nor will there be any sale of these
securities in any jurisdiction where such offer, solicitation or
sale would be unlawful prior to registration or qualification
under the securities laws of such jurisdiction. The statements in
this press release regarding the timing of the proposed offering
and any other future aspects relating to the proposed offering and
other statements which are not historical facts are forward-
looking statements as that term is defined in the Private
Securities Litigation Reform Act of 1995. Such forward-looking
statements involve risks and uncertainties, including, but not
limited to, market conditions and the price and market for the
securities proposed to be offered.
Headquartered in Florham Park, New Jersey, Global Crossing Ltd. --
http://www.globalcrossing.com/-- provides telecommunications
solutions over the world's first integrated global IP-based
network, which reaches 27 countries and more than 200 major cities
around the globe. Global Crossing serves many of the world's
largest corporations, providing a full range of managed data and
voice products and services. The Company filed for chapter 11
protection on January 28, 2002 (Bankr. S.D.N.Y. Case No.
02-40188). When the Debtors filed for protection from their
creditors, they listed $25,511,000,000 in total assets and
$15,467,000,000 in total debts. Global Crossing emerged from
chapter 11 on December 9, 2003.
GLOBAL CROSSING: Adopts Leadership Program to Keep Key Executives
-----------------------------------------------------------------
On Nov. 19, 2004, Global Crossing Limited's Board of Directors
adopted a Senior Leadership Performance Program at the
Compensation Committee's recommendation. The Leadership Program
is a special long-term incentive program intended to retain key
executives and to motivate them to help Global Crossing achieve
its financial goals. The participants in the Leadership Program
include all executive officers and a limited group of additional
key executives.
Daniel O'Brien, Global Crossing's Executive Vice President and
Chief Financial Officer, discloses to the Securities and Exchange
Commission that each Leadership Participant's aggregate potential
award under the Leadership Program is an amount equivalent to the
Leadership Participant's regular annual cash bonus target
opportunity as of November 19, 2004, the date on which the
Leadership Program was approved. For executive officers, this
amount ranges from 55% to 100% of their base salary. Actual
awards under the Leadership Program will be paid only if Global
Crossing achieves specified performance goals relating to
earnings and cash flow.
Specifically, each Leadership Participant will be entitled to
receive:
-- a bonus equal to 50% of the Leadership Participant's
Maximum Award if the EBITDA Goal is achieved by
December 31, 2006; and
-- a bonus equal to 50% of the Leadership Participant's
Maximum Award if the Cash Flow Goal is achieved by
December 31, 2006.
Any bonus will be payable 50% in cash and, subject to approval of
the proposal to increase the shares available under the 2003
Global Crossing Limited Stock Incentive Plan at the 2004 annual
general meeting of shareholders scheduled for December 15, 2004,
50% in shares of Global Crossing common stock issued under the
Share Plan. Shares awarded under the Leadership Program will be
valued based on the closing price of the common stock on the
Nasdaq National Market on November 19, 2004, the date on which
the Leadership Program was approved.
To earn a bonus award under the Leadership Program, a Leadership
Participant must be employed by Global Crossing when performance
goals are achieved and on the date of payment. If both the
EBITDA Goal and the Cash Flow Goal are achieved, the aggregate
bonus amount to be paid out under the Leadership Program would be
approximately $5.5 million. Awards under the Leadership Program
are in addition to any award payable under the annual cash bonus
program or any other compensatory plan or arrangement.
In addition, on November 19, 2004, the Board also modified the
2004 annual cash bonus program at the Compensation Committee's
recommendation in light of changes to Global Crossing's business
plan relating to its recently announced restructuring. The Bonus
Program is an annual cash incentive program intended to retain
employees and to motivate them to help Global Crossing achieve
its financial goals. The participants in the Bonus Program
include all Global Crossing executive officers and substantially
all other employees other than sales employees and employees
covered by collective bargaining agreements.
When the Bonus Program was originally established in early 2004,
Bonus Participants were given threshold, target and maximum bonus
award opportunities based on their level of employment. Target
opportunities for executive officers ranged from 55% to 100% of
their base salary, with threshold opportunities equal to 60% of
the target opportunity, and maximum opportunities equal to 130%
of the target opportunity. Actual awards were to be made out of
a Company-wide pool to be funded based on corporate performance
against designated financial performance metrics relating to
revenue, earnings and cash use. For performance at target, the
pool was to be funded with an amount equal to the aggregate
target bonus opportunities of all Bonus Participants, which would
be approximately $36 million based on projected year-end
headcount. For performance above or below target, the pool was
to be funded with a greater or lesser amount determined using
straight-line interpolation based on the threshold and maximum
bonus opportunities and financial performance metrics, provided
that no bonus was to be paid for performance below threshold, and
the bonus for performance above maximum was to be capped at the
maximum bonus opportunity.
After giving effect to the modifications made to the Bonus
Program on November 19, 2004, each Bonus Participant is deemed to
have earned 12.5% of his or her target annual bonus opportunity
for performance for the first three quarters of 2004. For the
fourth quarter of 2004, each Bonus Participant has been given a
new bonus opportunity equal to 25% of his or her target annual
bonus opportunity. The fourth quarter opportunity is based on
new corporate financial performance metrics relating to earnings
and cash use established in light of the recently announced
restructuring plan. The fourth quarter bonus opportunity is
capped at the new target opportunity amount. For performance
below the new corporate performance metric target, the award will
be a lesser amount determined using straight-line interpolation
based on the threshold and target bonus opportunities and
financial performance metrics, provided that no fourth quarter
bonus will be paid for performance below threshold. To earn a
bonus award under the amended Bonus Program, a Bonus Participant
must be employed by the Company when performance goals are
achieved and on the date of payment. If the fourth quarter
financial targets are achieved, the aggregate bonus amount to be
paid out under the modified Bonus Program would be approximately
$14 million based on projected year-end headcount.
Headquartered in Florham Park, New Jersey, Global Crossing Ltd. --
http://www.globalcrossing.com/-- provides telecommunications
solutions over the world's first integrated global IP-based
network, which reaches 27 countries and more than 200 major cities
around the globe. Global Crossing serves many of the world's
largest corporations, providing a full range of managed data and
voice products and services. The Company filed for chapter 11
protection on January 28, 2002 (Bankr. S.D.N.Y. Case No.
02-40188). When the Debtors filed for protection from their
creditors, they listed $25,511,000,000 in total assets and
$15,467,000,000 in total debts. Global Crossing emerged from
chapter 11 on December 9, 2003. (Global Crossing Bankruptcy News,
Issue No. 71; Bankruptcy Creditors' Service, Inc., 215/945-7000)
GLOBAL DIGITAL: Reduces Workforce Following Default Notice
----------------------------------------------------------
Global Digital Solutions, Inc., is significantly reducing its work
force at its operation in California to minimal crews. This
action is necessary because, until recently, Global Digital has
been unsuccessful in raising sufficient equity capital required to
execute its strategic business plan. The lack of capital combined
with ongoing litigation on a large bonded contract, has caused
Global Digital to be in a tight working capital position unable to
meet its financial obligations. Also, on Sept. 13, 2004, Global
Digital received notice from Laurus Capital Management, LLC, that
Global Digital is in default for non-payment of interest due under
its borrowing agreement.
Global Digital has recently received commitments for bridge
financing of $404,000. Upon receipt of this financing and
long-term equity financing for Global Digital of at least
$2,000,000 USD, Messrs. Sullivan and Artigliere have agreed to
return approximately 14,100,000 common shares back to Global
Digital. Global Digital is currently in negotiations for the
long-term equity financing.
The Compay is a company engaged in a highly competitive industry.
It has experienced annual operating losses and negative operating
cash flow. As of June 30, 2004, its current liabilities exceeded
its assets by $3,974,069. Global will need to raise additional
capital to continue as a going concern.
The ability to become profitable will depend on a variety of
factors, including the following:
-- price, volume and timing of product sales;
-- variations in gross margins on products, which may be
affected by the sales mix and competitive pricing;
-- changes in its levels of research and development, including
the timing of any demonstration projects for regulatory
approval; and
-- acquisitions of products, technology or companies; and
-- the ability to obtain performance bonding when required.
Global's long-term success also will be affected by expenses,
difficulties and delays encountered in developing and selling its
products and services and competition.
The Company has focused its efforts on developing its business in
the Communications sector. Global will need to raise additional
capital to implement fully its business plan and continue to
establish adequate marketing, sales, and customer support
operations. There can be no assurance that additional public or
private financing, including debt or equity financing, will be
available as needed, or, if available, on terms favorable to the
Company. Any additional equity financing may be dilutive to the
Company's stockholders and such additional equity securities may
have rights, preferences or privileges that are senior to those of
its existing common or preferred stock. Furthermore, debt
financing, if available, will require payment of interest and may
involve restrictive covenants that could impose limitations on
Global's operating flexibility. The failure to successfully
obtain additional future funding may jeopardize the Company's
ability to continue its business and operations.
As of June 30, 2004, Global had a working capital deficit of
$3,974,069. As a result of its operating losses incurred during
the year ended June 30, 2004, the Company generated a cash flow
surplus of $ 345,611 from operating activities.
The Company will need additional capital to continue its
operations and will endeavor to raise funds through the sale of
equity shares and revenues from operations.
There can be no assurance that the Company will generate revenues
from operations or obtain sufficient capital on acceptable terms,
if at all. Failure to obtain such capital or generate such
operating revenues would have an adverse impact on the Company's
financial position and results of operations and ability to
continue as a going concern.
Global Digital Solutions, Inc., formerly Creative Beauty Supply,
Inc., is a holding company designed to target the United States
government contract marketplace for audio and video services. The
U.S. government and commercial marketplaces have budgeted over the
long term to upgrade existing telephony, computer, and outsourcing
systems across the spectrum of communications, security, and
services marketplace segments. The three identified segments that
will be pursued to expand Global through controlled internal
growth and niche as well as strategic acquisitions are
Communications, Security, and Service.
GOODMAN GLOBAL: S&P Rates Proposed $500M Sr. Sec. Facility at 'B+'
------------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B+' corporate
credit rating to heating, ventilation, and air conditioning (HVAC)
producer Goodman Global Holdings, Inc., in connection with the
Houston, Texas-based company's proposed leveraged buyout
transaction.
At the same time, Standard & Poor's assigned its 'B+' bank loan
rating and its recovery rating of '2' to Goodman's proposed
$500 million senior secured credit facilities. The bank loan
rating is the same as the corporate credit rating; this and the
'2' recovery rating indicate that bank lenders can expect a
substantial recovery of principal (80%-100%) in the event of a
default.
In addition, Standard & Poor's assigned its 'B-' senior unsecured
debt rating to the company's proposed $200 million senior
unsecured floating rate notes due 2012, and its 'B-' subordinated
debt rating to Goodman's proposed $450 million senior subordinated
notes due 2012, both to be issued under Rule 144A with
registration rights. The allocation of amounts between the senior
unsecured and senior subordinated notes is to be determined.
Although the senior unsecured notes will rank ahead of the
subordinated debt, they are rated two notches below the corporate
credit rating, based on Standard & Poor's expectations that the
level of Goodman's priority liabilities relative to its assets
will place senior unsecured lenders at a material disadvantage to
the secured lenders in a bankruptcy. All of these newly assigned
ratings are based on preliminary terms and conditions. The
outlook is negative.
"The ratings on Goodman reflect its mature and cyclical markets;
established competition that includes larger and better
capitalized companies; the relatively narrow focus of its product
offerings; earnings vulnerability to weather and rising raw-
material and transportation costs; a very aggressive financial
profile; and exposure to rising interest rates," said Standard &
Poor's credit analyst Cynthia Werneth. These negatives
overshadow:
(1) the company's good market position as the second-largest
U.S. manufacturer of residential and light commercial air
conditioning and heating equipment;
(2) low-cost manufacturing; and
(3) benefits associated with its captive distribution network.
Transaction proceeds, along with approximately $478 million of
equity, will be used to fund the $1.4 billion purchase of Goodman
by an Apollo Management LP affiliate and to pay related fees. Pro
forma total debt outstanding will be about $1 billion.
HAYES LEMMERZ: Creditor Trust Wants to Clarify Modified Plan
------------------------------------------------------------
Norman L. Pernick, Esq., at Saul Ewing, in Wilmington, Delaware,
relates that HSBC Bank USA is successor indenture trustee for
Hayes Lemmerz International, Inc. and its debtor-affiliates'
11-7/8% Senior Notes due 2005. Pursuant to the Modified
Plan, all claims relating to the Senior Notes were placed in
Class 5. As confirmed, Section 4.7 of the Modified Plan provides
that, on the Effective Date, the Senior Note Claims will be deemed
Allowed Claims, aggregating $316,130,000.
Pursuant to Section 4.3 of the Modified Plan, all secured claims
relating to the BMO Synthetic Leases were placed in Class 3a.
Section 4.3(c) of the Modified Plan states that:
"[t]he BMO Synthetic Lessors shall be deemed to have an
Allowed General Unsecured Claim in the amount of $8.1 million,
provided that the BMO Synthetic Lessors shall assign $5.0
million of such Claim to the holders of Class 5 Senior Note
Claims in exchange for treatment as the holder of an Allowed
Claim in the amount of $5.0 million in Class 5."
Neither section 4.3(c) nor 4.7 addresses the effect on the amount
of the Class 5 Claims of the assignment by the BMO Synthetic
Lessors, Mr. Pernick remarks.
Subsequent to the Effective Date, the BMO Synthetic Lessors
assigned $5 million of their $8.1 million Allowed General
Unsecured Claim to holders of Class 5 Senior Note Claims.
The HLI Creditor Trust believes that the best reading of section
4.7 of the Modified Plan is that, upon the assignment of the
Claims by the BMO Synthetic Lessors, the aggregate amount of
Allowed Class 5 Claims was increased by $5 million, for a total of
$321,130,000, comprised of the $316,130,000 Allowed Senior Claims,
plus the $5,000,000 Allowed BMO Claim.
In an abundance of caution, the Trust asks the United States
Bankruptcy Court for the District of Delaware to clarify
Section 4.7 of the Modified Plan to provide that, upon the
assignment of the BMO Synthetic Lessors' Claims, in accordance
with Sections 4.3 and 4.7 of the Modified Plan, the aggregate
amount of the Allowed Class 5 Claims is increased to
$321,130,000.
Hayes Lemmerz International, Inc., is a world leading global
supplier of automotive and commercial highway wheels, brakes,
powertrain, suspension, structural and other lightweight
components. The Company filed for chapter 11 protection on
December 5, 2001 (Bankr. D. Dela. Case No. 01-11490). Eric
Ivester, Esq. at Skadden, Arps, Slate, Meager & Flom and Mark S.
Chehi, Esq. at Skadden, Arps, Slate, Meager & Flom represent the
Debtors' in their restructuring efforts. (Hayes Lemmerz
Bankruptcy News, Issue No. 57; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
HAYES LEMMERZ: Posts $9.5 Million Net Loss in Third Quarter
-----------------------------------------------------------
Hayes Lemmerz International, Inc. (Nasdaq: HAYZ) reported that
sales for the fiscal third quarter ended October 31, 2004, rose
4.8% to $556.2 million, compared with $530.9 million in the fiscal
third quarter of 2003. Sales for the nine months ended October
31, 2004 were $1,674.0 million compared with $1,549.0 million for
the nine months ended October 31, 2003, an increase of 8.1%.
The Company reported a net loss of $9.5 million for the fiscal
third quarter ended October 31, 2004, compared with a loss of
$10.0 million in the fiscal third quarter of 2003. For the nine
months ended October 31, 2004, the Company reported a net loss of
$22.2 million. Results for the prior year's period are not
comparable because the Company emerged from financial
reorganization on June 3, 2003.
The Company reported a cash balance of $27.8 million as of
Oct. 31, 2004 and $81.3 million of available liquidity under its
$100 million revolving credit facility (net of outstanding letters
of credit of $18.7 million). To further enhance liquidity, the
Company announced on December 10, 2004 it completed the
establishment of a $75.0 million receivables securitization
program, which was instituted to replace liquidity lost by
termination of domestic automakers' early payment programs. The
Company expects to begin selling receivables pursuant to the
securitization program during the fiscal fourth quarter.
"We are continuing to pursue our strategy of aggressive cost
reductions, investment in the right geographic markets, and
investment in the right products," said Curtis Clawson, Chairman,
President, and CEO. "We are taking action for long-term value
creation."
Mr. Clawson cited acquisition of an aluminum wheel production
facility in Mexico and establishment of a new joint venture
aluminum wheel production facility in Turkey, as well as
acquisition of a majority position in a truck wheel plant in
Turkey, as important strategic expansions during 2004. "We expect
to continue to expand aluminum wheel production in low-cost
countries, including Mexico, Brazil, Thailand, and the Czech
Republic, with a goal of having nearly two thirds of our aluminum
wheel production in low-cost countries within five years," he
said.
"During 2004, Hayes Lemmerz launched over $325 million of follow-
on and conquest business globally and continues to build a strong
book of business," Mr. Clawson said.
Hayes Lemmerz International, Inc., is a world leading global
supplier of automotive and commercial highway wheels, brakes,
powertrain, suspension, structural and other lightweight
components. The Company filed for chapter 11 protection on
December 5, 2001 (Bankr. D. Dela. Case No. 01-11490). The
Debtors' confirmed chapter 11 Plan took effect on June 3, 2003.
Eric Ivester, Esq., and Mark S. Chehi, Esq., at Skadden, Arps,
Slate, Meager & Flom, represented the Debtors in their
restructuring efforts.
HEI INC: Waives & Amends Term Loan Pacts with Commerce Bank
-----------------------------------------------------------
HEI, Inc. (Nasdaq: HEII) disclosed that on Dec. 3, 2004, it
entered into waiver and amendment agreements to its term loan
agreements and related promissory notes with Commerce Bank and
Commerce Financial Group, Inc. Such waiver and amendment
agreements are retroactively effective to Nov. 30, 2004. Among
other things, such waiver and amendment agreements:
(i) waive covenant violations included in each term loan
agreement relating to accounting records and the delivery
of annual financial statements;
(ii) increase the time period for delivery of a copy of its
annual financial statements from 90 days to 120 days
after each fiscal year-end;
(iii) extend the date for compliance with the stated debt
service ratio from HEI's fiscal quarter ended Feb. 28,
2005, to its fiscal quarter ended February 28, 2006;
(iv) increase the interest rate to be paid under HEI's
promissory note with Commerce Bank beginning on March 1,
2005, to and including Oct. 31, 2006, from 6.5% to 7.5%;
and
(v) increase the interest rate to be paid under HEI's
promissory note with Commerce Financial Group, Inc.
beginning on March 1, 2005, to and including September
28, 2007, from 8.975% to 9.975%.
HEI also reported that on Dec. 7, 2004, it entered into an
amendment to its accounts receivable agreement with Beacon Bank to
extend the term of such agreement to Jan. 1, 2006.
"The changes to our loan agreements with Commerce Bank and
Commerce Financial Group and the extension of our credit agreement
with Beacon Bank are both positive outcomes of our year-end audit
process," said Mack V. Traynor, Chief Executive Officer and
President of HEI. "These events strengthen our cash position,
which we anticipate will enable us to aggressively pursue our key
corporate strategies."
About the Company
HEI, Inc. -- http://www.heii.com/-- designs, develops and
manufactures microelectronics, subsystems, systems, connectivity
and software solutions for OEMs engaged in the medical equipment
and medical device, hearing, communications and RFID industries.
HEI provides its customers with a single point of contact that can
take an idea from inception to a fully functional, cost effective
and manufacturability product utilizing innovative design
solutions and by the application of state-of-the-art materials,
processes and manufacturing capabilities.
IESI CORP: Gets Requisite Consents to Amend Indenture
-----------------------------------------------------
IESI Corporation reported that, as of 5:00 p.m., New York City
time on Dec. 10, it had received tenders and consents from holders
of $147,336,000 aggregate principal amount of its 10-1/4% Senior
Subordinated Notes due 2012 (CUSIP No. 44950GAB8), which amount
represents 98.224% of the outstanding principal amount of the
Notes, in connection with the Company's previously announced cash
tender offer and consent solicitation for the Notes. The
percentage of consents received exceeds the requisite consents
required to amend the indenture governing the Notes.
The consents were delivered and the Notes were tendered pursuant
to an Offer to Purchase and Consent Solicitation Statement dated
Nov. 29, 2004, which more fully sets forth the terms and
conditions of the tender offer and consent solicitation. Notes
tendered at or prior to the Consent Time may no longer be
withdrawn and the related consents may not be revoked. IESI and
the trustee under the indenture intend to promptly execute and
deliver a supplemental indenture containing the proposed
amendments described in the Offer to Purchase, which eliminate
substantially all of the restrictive and reporting covenants,
certain events of default and certain other provisions contained
in the indenture. The amendments will not become operative,
however, unless and until IESI accepts the Notes for payment in
accordance with the terms and subject to the conditions set forth
in the Offer to Purchase. If the amendments become operative, any
Notes that remain outstanding will be subject to the terms of the
indenture as modified by the supplemental indenture.
A consent payment of $20 per $1,000 principal amount of the Notes
will be paid to holders of Notes who validly tendered and did not
withdraw such Notes prior to the Consent Time, if and only if IESI
accepts for payment Notes tendered in the tender offer. IESI will
also pay the Consent Payment to holders whose valid tenders are
received after the Consent Time, but prior to the expiration of
the tender offer, if and only if IESI accepts for payment Notes
tendered in the tender offer. The tender offer will expire at
5:00 p.m., New York City time, on Jan. 7, 2005, unless extended by
IESI.
The consummation of the tender offer is conditioned on, among
other things, the closing of the Company's previously announced
merger, as described in more detail in the Offer to Purchase.
Credit Suisse First Boston LLC is the dealer manager and
solicitation agent for the tender offer and the consent
solicitation. Requests for documents may be directed to Morrow &
Co., Inc., the Information Agent, at (800) 607-0088 (U.S. toll-
free) or by email at iesi.info@morrowco.com Questions regarding
the tender offer and consent solicitation may be directed to
Credit Suisse First Boston LLC at (800) 820-1653 (U.S. toll-free)
or (212) 538-0652.
About the Company
IESI is one of the leading regional, non-hazardous solid waste
management companies in the United States and has grown rapidly
through a combination of strategic acquisitions and internal
growth. IESI provides collection, transfer, disposal and recycling
services to 272 communities, including more than 560,000
residential customers and 56,000 commercial and industrial
customers, in nine states.
* * *
As reported in the Troubled Company Reporter on Dec. 02, 2004,
Standard & Poor's Ratings Services placed its ratings, including
the 'B+' corporate credit rating, on IESI Corp. on CreditWatch
with developing implications.
Forth Worth, Texas-based IESI had about $375 million of total debt
outstanding at Sept. 30, 2004.
"The CreditWatch placement follows the public announcement that
BFI Canada Income Fund will acquire IESI in a transaction valued
at approximately C$1.1 billion," said Standard & Poor's credit
analyst Franco DiMartino.
IESI CORP: Moody's Puts B1 Rating on $375M Senior Secured Facility
------------------------------------------------------------------
Moody's Investors Service affirmed the senior implied rating of
IESI Corporation. The action was prompted by the announcement of
the purchase of IESI by BFI Canada Income Fund, "BFI Fund" for
approximately $900 million dollars.
The purchase of IESI will be funded in part by the proceeds of an
equity offering at BFI Fund, which is expected to generate
$220 million. Approximately $160 million will be downstreamed to
IESI in the form of an intercompany subordinated note due 2016 and
$36 million of common equity. The intercompany note will be
guaranteed by the IESI and its operating subsidiaries and will
bear interest at 12%. The proceeds from the intercompany note
will be used to tender the company's $150 million issue of 12.5%
senior subordinated notes due 2012. In addition, the proceeds
from a proposed 7-year, $375 million guaranteed senior secured
credit facility will refinance outstandings under the existing
bank facility and pay related fees and expenses. IESI will retain
its US corporate structure and management team.
These ratings are affected:
* Senior Implied affirmed at B1;
* Senior Unsecured Issuer Rating affirmed at B2;
* $400 million guaranteed senior secured credit facility due
2010 rated B1 will be withdrawn upon the closing of new
credit facility;
* $150 million issue of 10.25% guaranteed senior subordinated
notes due 2012 rated B3 will be withdrawn upon completion of
the tender.
This rating was assigned:
* $375 million guaranteed senior secured credit facility due
2012 rated B1.
The outlook is stable.
The ratings reflect the recent improvement in margins, leverage
and cash generation of IESI for the twelve months ended
Sept. 30, 2004 related to the integration of the Seneca Meadows
landfill in New York and the capacity expansion at one of its
Pennsylvania landfills. The rating also incorporates the weak
cash generation to pro forma debt and the expectation that
leverage may fluctuate to higher levels due to the acquisitive
nature of the company and Moody's expectation that the company
will use its revolver to fund dividends to BFI Trust. Cash
generation to total debt, measured as twelve months ended
September 30 2004 EBITDA to pro forma debt is low for the rating
category at 3.3%. Moody's anticipates that the dividend policy
will generate negative retained earnings for the foreseeable
future.
Moody's believes the purchase of IESI by a Canadian income fund
ownership increases the risk profile of the company. Of concern
is the significant drain of cash through dividends, the permitted
size of intercompany debt under the subordinated note indenture,
and the reliance on the proceeds of future equity issuances by BFI
Fund to substantially reduce debt.
The risks inherent in the Canadian income fund structure are
somewhat mitigated by covenants within the bank agreement. The
financial covenant tests include minimum net worth and maximum
debt incurrence tests. Senior debt leverage is further restricted
by the inclusion of triggers in the bank agreement, which provide
for the deferral of dividends and of interest payments on the
intercompany subordinated note, and therefore, cash conservation
at more restrictive levels of senior debt to EBITDA. The tightest
trigger point (the dividend stopper) is set at an EBITDA margin
that is 310 basis points higher than that achieved by the company
for fiscal year 2003.
The lack of significant cash reserves and refinancing risk at IESI
is somewhat mitigated by the common interest of the banks and the
intermediate holding company, BFI Canada Newco "Holdings", which
guarantees the bank debt. In the event of a liquidity crisis from
poor operating performance or a short-term inability to tap the
Canadian capital markets, Holdings could convert all or a portion
of the intercompany loan into common equity at IESI. In addition,
IESI might also cover a liquidity crisis from the downstream of
cash or equity from the ultimate parent BFI Canada Income Fund.
While much of the consolidated cash generated is paid out to unit
holders, the fund retains roughly 14% of the distributable cash.
At September 2004, BFI Canada Income Fund had cash on hand of
Canadian dollars 22.9 million (US$ 17.95 million).
The outlook on the ratings remains stable. In the event cash
generation does not keep pace with debt creation, or capital
expenditure levels are insufficient to maintain average fleet age
or liquidity decreases (net of environmental liability assurance),
the ratings could face negative pressure. Significant
improvements in free cash generation to total debt, the creation
of cash reserves and improved liquidity would be required for the
ratings to improve.
The B1 reflects the benefits of the collateral as well as the
guarantee of the Canadian parent, Holdings. IESI and its current
direct and indirect subsidiaries are joint and several borrowers
under the credit facility agreement. The collateral package
includes a first priority perfected lien on substantially all
assets of the company, including a pledge of stock of the
operating subsidiaries. Real estate, vehicles and landfills may
be perfected at a later date. At closing approximately,
$106 million will be available under the revolver after letters of
credit.
The B2 issuer rating reflects the lack of retained earnings in the
structure and effective subordination to the guaranteed senior
secured creditors.
IESI Corporation, based in Fort Worth, Texas, provides
non-hazardous collection, transfer, disposal, and recycling
services in two geographic regions: its South Region, which
includes 11 operating districts in Texas, Louisiana, Oklahoma,
Arkansas, and Missouri; and its Northeast Region which includes 3
operating districts in New York, New Jersey, Pennsylvania, and
Maryland. Revenues for fiscal 2003 were $256 million.
BFI Canada Income Fund, based in Toronto, Ontario, Canada,
indirectly owns BFI Canada Holdings, Inc., which provides
non-hazardous solid waste collection, transfer, disposal and
recycling services in the provinces of British Columbia, Alberta,
Manitoba, Ontario and Quebec. The company had revenues of
C$167 million for fiscal year 2003 (US$ 128 million).
INTEGRATED HEALTH: Will File Removal Notices Until Feb. 7
---------------------------------------------------------
IHS Liquidating, LLC, is responsible for, inter alia, litigating,
settling or otherwise resolving disputed claims against the IHS
Debtors, some of which are the subject of actions currently
pending in the courts of various states and federal districts.
IHS Liquidating is also in the process of investigating the
Prepetition Actions to determine which, if any, of these matters
will be litigated, and if so, whether they should be removed
pursuant to Rule 9027(a) of the Federal Rules of Bankruptcy
Procedure.
According to Alfred Villoch, III, Esq., at Young Conaway Stargatt
& Taylor, LLP, in Wilmington, Delaware, IHS Liquidating has
already resolved many of the Prepetition Actions through the
claims reconciliation process. However, IHS Liquidating
anticipates that removal may be appropriate with respect to
certain of the unresolved Prepetition Actions. IHS Liquidating
believes that it is prudent to preserve the estates' right to seek
removal of civil actions pending on the Petition Date until it has
completed analysis of the Prepetition Actions.
At IHS Liquidating's request, the United States Bankruptcy Court
for the District of Delaware extends the time within which IHS
Liquidating may file notices of removal through and including
February 7, 2005.
"The extension sought will afford [IHS Liquidating] an opportunity
to make more fully informed decisions concerning the removal of
each [Prepetition] Action and will assure that [IHS Liquidating]
does not forfeit the valuable rights afforded to it under 28
U.S.C. Section 1452," Mr. Villoch says.
The Court also finds that the rights of IHS Liquidating's
adversaries will not be prejudiced by the extension, as any party
to a Prepetition Action that is removed may seek to have it
remanded to the state court pursuant to Section 1452(b) of the
Bankruptcy Code.
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. 86; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
INTELLIVEX INC: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Intellivex, Inc.
fdba Computer Power Technology, Inc.
3649 South 200 East #A1
Salt Lake City, UT 84107
Bankruptcy Case No.: 04-39663
Type of Business: The Debtor designs, builds, and manages
infrastructure for e-business.
See http://www.intellivex.com/
Chapter 11 Petition Date: December 8, 2004
Court: District of Utah (Salt Lake City)
Judge: William T. Thurman
Debtor's Counsel: R. Mont McDowell, Esq.
McDowell & Gillman
12th Floor, 50 West Broadway
Salt Lake City, UT 84101
Tel: 801-359-3500
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
ASM Modular $254,153
2880 Argentina Road, Unit 3
Mississauga, ON L5N 7X8
Canada
American Express $100,453
P.O. Box 0001
Los Angeles, CA 90096
America Cable Systems $72,515
260 Duchaine Blvd.
New Bedford, MA 02745
Stulz Air Technology Systems $41,289
Alarm Control Company $26,445
Premier Services Group $25,272
RLE Technologies, Inc. $20,388
Utah State Tax Commission $20,328
Greg Boyce, CPA PC $28,135
Sterling Batteries (IPS) $16,959
Robinson & Sheen $15,201
Westfire, Inc. $13,000
GS Metals $12,552
FAA $12,000
AFC ACS/UNI-FAB $9,907
Premier Air Logistics $9,359
Mountain Power $8,982
On-Line Power $7,293
Power Distribution, Inc. $5,161
Delta Fire Systems, Inc. $4,950
INTERMEDICAL HOSPITAL: Case Summary & Largest Unsecured Creditors
-----------------------------------------------------------------
Debtor: InterMedical Hospital of South Carolina, Inc.
Taylor at Marion Streets
Columbia, South Carolina 29220
Bankruptcy Case No.: 04-14722
Type of Business: The Debtor operates a hospital.
See http://www.intermedicalhospital.com/
Chapter 11 Petition Date: December 10, 2004
Court: District of South Carolina (Columbia)
Judge: Thurmond Bishop
Debtor's Counsel: Julio E. Mendoza, Jr., Esq.
Nexsen Pruet Adams Kleemeier, LLC
1441 Main Street, Suite 1500
Columbia, SC 29201
Total Assets: $3,641,273
Total Debts: $8,876,236
Debtor's 2 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Palmetto Health Alliance Money Loaned $8,777,799
Attn: Paul Duane, Sr. VP/CFO
P.O. Box 2266
Columbia, SC 29202
Centers for Medicaid and Medicare Patient Unknown
Medicare Services Interim Payments
US Dept of Health and Human
Services
Atlanta Federal Center
61 Forsyth Street, SW
Suite 4T20
Atlanta, GA 30303
INTERSTATE BAKERIES: Discloses Pension Accounting Problems
----------------------------------------------------------
Interstate Bakeries Corporation (OTC: IBCIQ), filed a Form 8-K
with the Securities and Exchange Commission containing business
and preliminary unaudited financial information for the year ended
May 29, 2004. IBC is currently unable to file a fully compliant
Annual Report on Form 10-K due to a review being undertaken in
light of newly identified information with respect to the proper
accounting treatment for a defined benefit pension plan to which
the Company contributes on behalf of approximately 900 of its
approximately 32,000 employees. The Company remains uncertain if
and when it will file its delayed Annual Report on Form 10-K.
Also, IBC announced certain preliminary unaudited financial
information for the fiscal 2005 first quarter ended August 21,
2004. This preliminary unaudited information does not reflect
significant asset impairment charges the Company expects to
recognize when the financial results for the quarter are finalized
or any impact of a potential change to the accounting treatment
for the defined benefit pension plan discussed above.
Preliminary Unaudited
Fiscal 2004 Financial Information
While IBC believes that the fiscal 2004 report furnished today
with the SEC has been prepared in accordance with accounting
principles generally accepted in the United States (GAAP), except
for the uncertainties related to the defined benefit pension plan
discussed above, it can give no assurances that all other
adjustments are final and that all other adjustments necessary to
present its financial information in accordance with GAAP have
been identified. No independent auditors have expressed any
opinion or any other form of assurance on such information or its
accuracy. For these reasons, the financial information contained
in the report furnished today may not be indicative of the
Company's financial condition or operating results.
Consistent with preliminary unaudited information released in the
Company's August 9, 2004 press release, for the full fiscal year
ended May 29, 2004, the Company disclosed the following unaudited
financial information before the potential adjustments described
herein:
-- Net sales of $3,467,562,000, a 1.7 percent decrease in
comparison to the prior year's $3,525,780,000.
-- An operating loss of $(6,679,000) compared to the previous
year's operating income of $83,268,000. Included in fiscal
2004 and 2003 results were restructuring and other charges
of $12,066,000 and $13,501,000, respectively.
-- A net loss of $(25,678,000) compared to the previous year's
net income of $27,450,000.
-- Adjusted EBITDA of $101,427,000 compared to the previous
year's $191,946,000.
Consistent with preliminary information released in the Company's
August 9, 2004 press release, for the twelve weeks ended May 29,
2004, the Company announced the following unaudited financial
information before the potential adjustments described herein:
-- Net sales of $803,038,000, a 1.8 percent decrease in
comparison to the prior year's $818,019,000.
-- An operating loss of $(10,245,000) compared to the previous
year's operating income of $2,433,000. Included in fourth
quarter fiscal 2004 and 2003 results were restructuring
charges of $7,911,000 and $3,460,000, respectively.
-- A net loss of $(12,388,000) compared to the previous year's
net loss of $(4,568,000).
-- Adjusted EBITDA (as defined below) of $18,555,000 compared
to the previous year's $28,249,000.
Preliminary Fiscal 2005 First Quarter Financial Information
IBC has delayed filing its Quarterly Report on Form 10-Q for the
fiscal quarter ended August 21, 2004 due to, among other causes,
the need to complete the analysis necessary to determine
appropriate significant asset impairment charges related to its
bankruptcy filing and in response to its fiscal 2005 financial
performance. The Company's review of the accounting treatment for
one of its defined benefit pension plans, more fully described
above, has also contributed to the Company's inability to file
this Quarterly Report on Form 10-Q. The Company remains uncertain
if and when it will file this delayed report.
IBC also announced preliminary financial information for the first
quarter ended August 21, 2004 based on a review of information
available under its financial reporting system. The Company
anticipates that actual first quarter results, once finalized,
will include asset impairment charges related to the Company's
evaluation of the carrying value of its assets because of its
bankruptcy filing and in response to its fiscal 2005 financial
performance. Final first quarter results also may include the
impact of a change in the accounting treatment for the defined
pension benefit plan discussed above if the manner in which the
Company has historically accounted for the plan is changed. The
Company cannot predict with certainty the amount of the impairment
charges or the impact of any potential change in accounting
treatment with respect to the defined benefit plan, but expects
that the combined effect on operating loss and net loss as
announced today will be significant. While the Company believes
that the preliminary financial information announced today has
been prepared in accordance with accounting principles generally
accepted in the United States (GAAP) except for the absence of the
asset impairment charges discussed above and the uncertainties
related to the above-noted defined benefit pension plan, it can
give no assurances that all other adjustments are final and that
all other adjustments necessary to present its financial
information in accordance with GAAP have been identified. In
addition, no independent auditors have examined, compiled or
performed any procedures with respect to the Company's preliminary
financial information, nor have they expressed any opinion or any
other form of assurance on such information or its accuracy. For
the reasons discussed above, the financial information for the
first quarter of fiscal 2005 announced today is merely
preliminary.
For the twelve weeks ended August 21, 2004, the Company announced
the following preliminary unaudited financial information before
potential adjustments described herein:
-- Net sales of $812,002,000, a 2.3 percent decrease in
comparison to the prior year's $831,015,000.
-- Operating loss of $(18,211,000), compared to the previous
year's operating income of $26,507,000.
-- Net loss of $(16,877,000), compared to the previous year's
net income of $11,190,000.
-- Adjusted EBITDA (as defined below) of $11,408,000, compared
to the previous year's $48,381,000.
Net sales decreased in the first quarter due primarily to a 4.5%
decline in unit volume. Most notable were unit declines in both
branded and private label white bread and individual snack cake
items. While the Company also experienced some unit price decline
related to its branded white bread, price increases for its
private label bread and sweet goods, along with sales of its new
super premium Baker's Inn products, favorably impacted net sales
compared to the prior year.
The Company's preliminary operating loss of $(18,211,000) as
reported today does not reflect anticipated significant asset
impairment charges related to the Company's evaluation of the
carrying value of its assets because of its bankruptcy filing and
in response to its fiscal 2005 financial performance or any impact
of a change in the accounting treatment for the defined benefit
pension plan discussed above. Preliminary operating loss for the
first quarter includes restructuring charges of $8,162,000
principally related to bakery, bakery outlet and depot closings,
including non-cash impairment charges of approximately $3,600,000.
Preliminary operating loss also reflects the impact of the high
fixed cost structure and normal inflationary cost increases
associated with production and delivery against a lower net sales
base, higher workers' compensation costs and increased advertising
charges related to the promotion of the new Baker's Inn bread
line.
The Company's preliminary net loss of $(16,877,000) as reported
today also does not reflect the significant asset impairment
charges the Company expects to recognize or any impact of a change
in the accounting treatment for the defined benefit pension plan
discussed above.
Non-GAAP Financial Measures
EBITDA is the measure of the Company's earnings before interest,
taxes, depreciation and amortization; the Company uses the term
"Adjusted EBITDA" to reflect that its financial measure also
excludes other income, restructuring charges and other charges.
Adjusted EBITDA is not a GAAP measurement, but is commonly used as
a measure of a company's performance. The Company has provided
preliminary Adjusted EBITDA for the fiscal year ended May 29,
2004, for the twelve weeks ended May 29, 2004, and for the first
quarter of fiscal 2005 as supplemental disclosure to provide
information with respect to its ability to meet capital
expenditures and working capital requirements, to monitor its
compliance with certain financial covenants and to assess its
performance relative to its competitors and its own performance in
prior periods. IBC's debtor-in-possession credit facility
contains covenants that, among other things, will require the
Company to satisfy certain Adjusted EBITDA targets as a measure of
its operating performance.
The Company's preliminary Adjusted EBITDA should not be considered
as an alternative to any measures of performance as promulgated
under GAAP, such as income from operations as an indicator of
operating performance or as an alternative to cash flows from
operating activities as a measure of liquidity as determined in
accordance with GAAP. The Company's calculation of preliminary
Adjusted EBITDA may be different from calculations used by other
companies and therefore may not be comparable to Adjusted EBITDA
as reported by other companies.
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 53 bakeries, more than 1,000 distribution centers and
1,100 bakery outlets throughout the U.S.
The Company and seven of its debtor-affiliates filed for chapter
11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No.
04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at
Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in
their restructuring efforts. When the Debtors filed for
protection from their creditors, they listed $1,626,425,000 in
total assets and $1,321,713,000 (excluding the $100,000,000 issue
of 6.0% senior subordinated convertible notes due August 15, 2014,
on August 12, 2004) in total debts.
J.P. MORGAN: Fitch Affirms Class B-5 Mortgage Trust Rating at 'B'
-----------------------------------------------------------------
Fitch Ratings has affirmed 12 classes of J.P. Morgan Residential
Mortgage Acceptance Corp. mortgage pass-through trusts:
J.P. Morgan Residential Mortgage Acceptance Corp., series 2003-A1:
-- Class A affirmed at 'AAA';
-- Class B-1 affirmed at 'AA';
-- Class B-2 affirmed at 'A';
-- Class B-3 affirmed at 'BBB';
-- Class B-4 affirmed at 'BB';
-- Class B-5 affirmed at 'B';
J.P. Morgan Residential Mortgage Acceptance Corp., series 2003-A2:
-- Class A affirmed at 'AAA';
-- Class B-1 affirmed at 'AA';
-- Class B-2 affirmed at 'A';
-- Class B-3 affirmed at 'BBB';
-- Class B-4 affirmed at 'BB';
-- Class B-5 affirmed at 'B'.
These affirmations reflect credit enhancement consistent with
future loss expectations and affect approximately $392.1 million
of outstanding certificates detailed above. As of the November
2004 distribution date, the series 2003-A1 transaction is 13
months seasoned, with a pool factor (current mortgage loans
outstanding as a percentage of the initial pool) of approximately
90%. The series 2003-A2 transaction is 12 months seasoned, with a
pool factor of approximately 86%.
JOBS.COM: Fifth Circuit Says Warrant Rights are Equity Interests
----------------------------------------------------------------
The United States Court of Appeals for the Fifth Circuit received
an appeal from six individuals holding preferred shares and
warrants to purchase stock in Jobs.com, Inc. The five
shareholders -- John Carrieri, Anthony Carrieri, Steven M. Elliot,
Dave Sergeant, Michael Slentz, and Sean Slentz -- filed a proof of
claim in Jobs.com's chapter 11 case arguing that certain stock
warrant redemption provisions gave rise to a claim, or "right to
payment" as described in 11 U.S.C. Sec. 101(5). The Debtor argued
that all rights under a stock warrant constitute an "equity
security" as defined in 11 U.S.C. Sec. 101(16). Jobs.com objected
to the shareholders' proof of claim. Judge Houser ruled against
the shareholders, 283 B.R. 209, and Judge McBryde affirmed that
decision at the District Court level, 301 B.R. 187.
The Fifth Circuit reviewed the matter, says Judge Houser's
analysis was correct, and holds:
(1) a shareholders' right to require a debtor to repurchase
their shares of preferred stock is in the nature of an
"equity security";
(2) the rights of holders of preferred stock warrants issued
by a Chapter 11 debtor to demand that the debtor
repurchase warrants at a particular price also fall
within the Bankruptcy Code's definition of "equity
security";
(3) any rights of the shareholders to require the debtor to
repurchase their shares of preferred stock, or to
repurchase their stock warrants, if the debtor has
"legally available funds," are not the in nature of
independent rights to payment, and do not to come within
the Bankruptcy Code's definition of "claim"; and
(4) any claims that the shareholders' possessed are
disallowed.
A full-text copy of the Slip Opinion released by the Fifth Circuit
on Dec. 7, 2004, is available at no charge at:
http://www.ca5.uscourts.gov/opinions/pub/03/03-11268-CV0.wpd.pdf
JOBS.COM, Inc., filed for chapter 11 protection on March 15, 2001
(Bankr. N.D. Ill. Case No. 01-41861-BJH-11) and subsequently sold
its Jobs.com URL and trademark to TMP Worldwide Inc., the company
that operates the Monster.com online recruiting Web site, for
$800,000. Scott D. McDonald, Esq., and Deirdre B. Ruckman, Esq.,
at Gardere, Wynne & Sewell, represent the debtor.
KAISER ALUMINUM: Asks Court to Establish Solicitation Procedures
----------------------------------------------------------------
Debtors Alpart Jamaica, Inc., and Kaiser Jamaica Corporation,
Kaiser Alumina Australia Corporation and Kaiser Finance
Corporation ask the United States Bankruptcy Court for the
District of Delaware and its debtor-affiliates to establish
procedures for the solicitation and tabulation of votes to accept
or reject their plans of liquidation.
The Liquidating Debtors also seek approval of notices and
solicitation materials to be sent to creditors.
Vote Tabulation Procedures
A. Approval of Form of Ballots
Rule 3017(d) of the Federal Rules of Bankruptcy Procedure requires
the Liquidating Debtors to mail a form of ballot that
substantially conforms to Official Form No. 14 only to "creditors
and equity security holders entitled to vote on the plan." The
Liquidating Debtors propose to distribute to creditors entitled to
vote on the Plans one or more ballots. The Ballots are based on
Official Form No. 14, but have been modified to address the
particular terms of the Plans.
Appropriate form of Ballot will be distributed to holders of
claims in classes entitled to vote to accept or reject the Plan:
Ballot No. lA Individual ballot to be returned directly to
Logan & Company, Inc., the Solicitation and
Tabulation Agent, for Subclass 3A Senior
Note Claims or Subclass 3B Senior
Subordinated Note Claims.
Ballot No. 1B Individual ballot to be returned directly to
a certain master ballot agent for Subclass
3A Senior Note Claims or Subclass 3B Senior
Subordinated Note Claims.
Ballot No. 2 Master Ballot for Subclass 3A Senior Note
Claims or Subclass 3B Senior Subordinated
Note Claims.
Ballot No. 3 Ballot for Subclass 3C PBGC Claims.
Ballot No. 4 Ballot for Subclass 3D Other Unsecured
Claims.
Classes l and 2 under each Plan are unimpaired and, therefore, are
conclusively presumed to accept the applicable Plan in accordance
with Section 1126(f) of the Bankruptcy Code. Furthermore, holders
of claims in Class 4 and Kaiser Aluminum & Chemical Corporation as
the holder of interests in Class 5 under each Plan are deemed to
have accepted the applicable Plan. Solicitation of Classes 1, 2,
4 and 5 under each Plan is not required and no Ballots have been
proposed for creditors and interest holders in these classes.
Certain beneficial owners hold 9-7/8% Senior Notes, 10-7/8%
Senior Notes or Senior Subordinated Notes through brokers, banks,
dealers or other agents or nominees. Each Master Ballot Agent
will receive both:
(a) a Public Notes Master Ballot to be completed by the
Master Ballot Agent; and
(b) Form B Public Notes Individual Ballot to be completed by
the beneficial owners of 9-7/8% Senior Notes, 10-7/8%
Senior Notes or Senior Subordinated Notes for whom the
Master Ballot Agent provides services.
The Master Ballot Agent will make arrangements to distribute the
Form B Public Notes Individual Ballots to the applicable
Beneficial Owners, who will complete and return the Form B Public
Notes Individual Ballots to the Master Ballot Agent. The Master
Ballot Agent then will:
(a) tally on the Public Notes Master Ballot the votes of the
applicable Beneficial Owners that return the Form B Public
Notes Individual Ballots; and
(b) return the completed Public Notes Master Ballot to Logan
& Company.
B. Voting Deadline
Bankruptcy Rule 3017(c) provides that, on or before approval of a
disclosure statement, the Court may fix a time within which the
holders of claims or equity interests may accept or reject a plan.
The Liquidating Debtors anticipate commencing the Plan
solicitation period by mailing Ballots and other approved
solicitation materials no later than five business days after the
Disclosure Statement is approved. Based on this schedule, the
Debtors propose that, with respect to Form B Public Notes
Individual Ballots, to be counted as votes to accept or reject the
applicable Plan, all Ballots must be properly executed, completed
and delivered to Logan & Company either by:
(a) mail in the return envelope provided with each Ballot;
(b) overnight courier; or
(c) personal delivery,
so that, in each case, the Ballots are received by Logan &
Company no later than 4:00 p.m., Eastern Time, on January 24,
2005, or another date established by the Liquidating Debtors that
is at least 25 days after the commencement of the solicitation
period.
In addition, to accommodate the additional tabulation activities
that must be performed by Master Ballot Agents, the Liquidating
Debtors further propose that Public Notes Master Ballots, if
necessary, may be submitted by facsimile so that they are received
by Logan & Company before the Voting Deadline.
The Debtors believe that a 25-day solicitation period provides
sufficient time for:
(a) creditors to make informed decisions to accept or reject
the Plans and submit timely Ballots; and
(b) Master Ballot Agents to distribute Form B Public Notes
Individual Ballots and complete and submit timely Public
Notes Master Ballots.
C. Tabulation Procedures
Solely for purposes of voting to accept or reject each Plan -- and
not for the purpose of the allowance of, or distribution on
account of, a claim and without prejudice to the rights of the
Liquidating Debtors in any other context -- the Liquidating
Debtors propose that each claim within a class of claims entitled
to vote to accept or reject each Plan be temporarily allowed in
accordance with these tabulation rules:
(a) Unless otherwise provided in the Tabulation Rules, a claim
will be deemed temporarily allowed for voting purposes in
an amount equal to the lesser of the claim amount as set
forth in:
-- the Schedules; and
-- in a timely filed proof of claim;
(b) If a claim is deemed allowed in accordance with the
applicable Plan, that claim will be temporarily allowed
for voting purposes in the deemed allowed amount set forth
in that Plan;
(c) If a claim for which a proof of claim has been timely
filed is marked as contingent or unliquidated, that claim
will be temporarily allowed for voting purposes at $1.00;
(d) If a claim has been estimated or otherwise allowed for
voting purposes by Court order, that claim will be
temporarily allowed for voting purposes in the amount so
estimated or allowed by the Court;
(e) If a claim is listed in the Schedules as contingent,
unliquidated or disputed and a proof of claim was not
timely filed, that claim will be disallowed for voting
purposes;
(f) If the Liquidating Debtors have filed and served an
objection to a claim at least 15 days before the Voting
Deadline, that claim will be temporarily allowed or
disallowed for voting purposes in accordance with the
relief sought in the objection;
(g) If a claim holder identifies a claim amount on its Ballot
that is less than the amount otherwise calculated in
accordance with the Tabulation Rules, the claim will be
temporarily allowed for voting purposes in the lesser
amount identified on the Ballot; and
(h) With respect to Senior Note Claims and Senior Subordinated
Note Claims asserted by holders of 9-7/8% Senior Notes,
10-7/8% Senior Notes or Senior Subordinated Notes, the
amounts of those claims for voting purposes will be the
lesser of the amounts:
-- provided to the Liquidating Debtors by the
corresponding Indenture Trustee on the Record Holder
Register or the Master Ballot Agent register, as
Applicable; or
-- identified by an Individual Record Holder in a Form A
Public Notes Individual Ballot or by a Master Ballot
Agent on a Public Notes Master Ballot.
The Liquidating Debtors will utilize these additional procedures
in tabulating the Ballots:
(a) Any Ballot that is properly completed, executed and timely
returned to Logan & Company but does not indicate an
acceptance or rejection of the applicable Plan will not be
counted as either a vote to accept or a vote to reject
that Plan;
(b) If a creditor casts more than one Ballot voting the same
claim before the Voting Deadline, the last dated Ballot
received before the Voting Deadline will be deemed to
reflect the voter's intent, and thus, will supersede any
prior Ballots; and
(c) Creditors will be required to vote all of their claims
within a particular class under the applicable Plan either
to accept or reject the Plan, and may not split their
votes.
Thus, a Ballot -- or a group of Ballots within a Plan class
received from a single creditor -- that partially rejects and
partially accepts a Plan will not be counted. For purposes of
determining whether the numerosity and claim amount requirements
of Sections 1126(c) and 1126(d) have been satisfied, the
Liquidating Debtors will tabulate only those Ballots cast by the
Voting Deadline.
Confirmation Hearing and Notice, Record Date and
Distribution of Solicitation Packages Procedures
A. Confirmation Hearing
In accordance with Bankruptcy Rule 3017(c) and consistent with the
Liquidating Debtors' proposed solicitation schedule, the
Liquidating Debtors ask the Court to schedule the Confirmation
Hearing for January 31, 2005, to be continued on February 1 and 2,
2005, as necessary. The Confirmation Hearing may be continued
from time to time by the Court without further notice. The
Liquidating Debtors further propose that objections, if any, to
the confirmation of each Plan must:
(a) be in writing;
(b) state the name and address of the objecting party and the
nature of the claim or interest of the party;
(c) state with particularity the basis and nature of any
objection to the confirmation of the Plan; and
(d) be filed with the Court and served on:
-- the Clerk,
-- the counsel to the Debtors,
-- counsel to the official committees,
-- counsel to the representatives,
-- counsel to the Debtors' postpetition lenders, and
-- the U.S. Trustee
so as to be received no later than 4:00 p.m., Eastern
Time, on January 24, 2005, or such other date established
by the Liquidating Debtors that is at least 25 days after
the commencement of the solicitation period.
In accordance with Bankruptcy Rules 2002 and 3017(d), the
Liquidating Debtors propose to serve on all creditors, as part of
the Solicitation Packages and not less than 25 days before the
Confirmation Objection Deadline, a copy of a notice setting forth:
(a) the Voting Deadline for the submission of Ballots to
accept or reject the applicable Plan;
(b) the Confirmation Objection Deadline; and
(c) the time, date and place of the Confirmation Hearing.
In addition to mailing the Confirmation Hearing Notice as part of
the Solicitation Packages, the Liquidating Debtors propose to
publish a notice in an abbreviated form of the Confirmation
Hearing Notice not less than 25 days before the Confirmation
Hearing in the national edition of The Wall Street Journal.
B. Record Date
The Liquidating Debtors propose to set December 13, 2004, as the
record date to determine which creditors are entitled to receive
Solicitation Packages and, where applicable, vote on the Plans.
With respect to a transferred claim, the Liquidating Debtors
further propose that the transferee will be entitled to receive a
Solicitation Package and cast a Ballot on account of the
transferred claim only if by the Record Date:
(a) all actions necessary to effect the transfer of the claim
pursuant to Rule 3001(e) have been completed; or
(b) the transferee files:
-- the documentation required by Rule 3001(e) to evidence
the transfer; and
-- a sworn statement of the transferor supporting the
validity of the transfer.
Each transferee will be treated as a single creditor for purposes
of the numerosity requirements in Section 1126(c) and the other
voting and solicitation procedures.
C. Solicitation Package
Consistent with Bankruptcy Rule 3017(d), the Liquidating Debtors
will mail Solicitation Packages containing copies of:
(a) the Confirmation Hearing Notice;
(b) the applicable Disclosure Statement, including the
applicable Plan that have been filed with the Court before
the mailing date;
(c) letters recommending acceptance of the applicable Plan;
and
(d) for Solicitation Packages sent to holders of claims in
classes entitled to vote to accept or reject the Plans, an
appropriate form of Ballot, a Ballot return envelope, and
other materials as the Court may direct.
The Solicitation Packages for holders of claims against any
Liquidating Debtor in a class under the applicable Plan that is
deemed to accept or reject the Plan under Section 1126(f) or
1126(g) will not include a Ballot.
The Solicitation Packages will be mailed not less than 25 days
before the Confirmation Objection Deadline to:
(a) all persons or entities that have filed proofs of claim on
or before the Record Date or their transferees in
accordance with the procedures;
(b) all persons or, entities listed in the Schedules as
holding liquidated, non-contingent, undisputed claims as
of the Record Date, or their transferees;
(c) all other known holders of claims against the Liquidating
Debtors, if any, as of the Record Date;
(d) all parties-in-interest that have filed notices in
accordance with Rule 2002 in the Debtors' Chapter 11 cases
on or before the Record Date;
(e) counsel to the Debtors' postpetition lenders;
(f) the Indenture Trustees;
(g) the SEC; and
(h) the U.S. Trustee
The Debtors have mailed notices of the December 20, 2004
Disclosure Statement Hearing. To the extent notices of the
Disclosure Statement Hearing are returned by the United States
Postal Service as undeliverable as a result of incomplete or
inaccurate addresses, the Liquidating Debtors believe that it
would be costly and wasteful to mail Solicitation Packages to the
Undeliverable Addresses. Therefore, the Liquidating Debtors
request that they be excused from mailing Solicitation Packages to
those entities for which the Liquidating Debtors have only
Undeliverable Addresses unless the Liquidating Debtors are
provided with accurate addresses for those entities, in writing,
on or before the date of the Disclosure Statement Hearing. If a
Solicitation Package is returned as undeliverable, Logan &
Company will resend the Solicitation Package only once, provided
that the Post Office has included a forwarding address at least
five business days before the Voting Deadline.
Special Solicitation Procedures
for Public Noteholders
The Liquidating Debtors currently lack the information necessary
to solicit the votes of Public Noteholders. In particular, the
Liquidating Debtors do not have information regarding the
identities of the Public Noteholders or their holdings.
Moreover, each of the Indenture Trustees filed a single proof of
claim on behalf of all the Public Noteholders with respect to the
Senior Note Claims or the Senior Subordinated Note Claims under
the corresponding indenture. The proof of claim process,
therefore, has not provided the Liquidating Debtors with the
information necessary to solicit Plan votes from the individual
Public Noteholders. In addition, because the Indenture Trustees'
records identify only registered holders, the Liquidating Debtors
do not have direct access to information regarding the Beneficial
Owners that hold their 9-7/8% Senior Notes, 10-7/8% Senior Notes
or Senior Subordinated Notes in "street name" through brokers,
banks or other agents.
As a result of the circumstances, the Liquidating Debtors ask the
Court to approve special procedures for the distribution of
Solicitation Packages and tabulation of votes with respect to the
Public Noteholders' Senior Note Claims and Senior Subordinated
Note Claims.
The Liquidating Debtors outline the Special Procedures:
(a) The Liquidating Debtors will cause a Solicitation Package
or Packages to be mailed by first class mail, postage
prepaid, to:
-- each holder of record of 9-7/8% Senior Notes, 10-7/8%
Senior Notes or Senior Subordinated Notes as of the
Record Date that hold such instruments in their own
Name, rather than in street name as a Master Ballot
Agent for Beneficial Owners; and
-- each Master Ballot Agent for distribution to Beneficial
Owners as of the Record Date;
(b) Pursuant to Rules 1007(i) and 3017(e), to permit mailing
and facilitate the transmittal of Solicitation Packages to
Individual Record Holders and Beneficial Owners of 9-7/8%
Senior Notes, 10-7/8% Senior Notes or Senior Subordinated
Notes, the Indenture Trustee will be required to provide
these documents to the Liquidating Debtors within three
business days after the Record Date:
-- A list in appropriate electronic or other format agreed
to by the Liquidating Debtors containing the names,
addresses and holdings of the respective Individual
Record Holders as of the Record Date;
-- A list containing the names and addresses of the Master
Ballot Agents and, for each Master Ballot Agent, the
aggregate holdings of the Beneficial Owners for whom
such Master Ballot Agent provides services; and
-- Accompanying mailing labels;
(c) The Liquidating Debtors or their agent will send each
Individual Record Holder a Solicitation Package containing
the applicable Form A Public Notes Individual Ballot. The
Form A Public Notes Individual Ballot must be completed
and returned to Logan & Company so that it is received
before the Voting Deadline;
(d) Upon receipt of the Master Ballot Agent Register, Logan &
Company will:
-- contact each Master Ballot Agent to determine the
number of Solicitation Packages needed by the Master
Ballot Agent for distribution to the applicable
Beneficial Owners for whom the Master Ballot Agent
performs services; and
-- deliver to each Master Ballot Agent a Public Notes
Master Ballot and the requisite number of Solicitation
Packages with Form B Public Notes Individual Ballots;
(e) The Master Ballot Agents will be required to distribute
the Solicitation Packages they receive as promptly as
possible to the Beneficial Owners for whom they provide
services. In particular, to obtain the votes of the
Beneficial Owners, the Master Ballot Agents will include
as part of each Solicitation Package sent to a Beneficial
Owner a Form B Public Notes Individual Ballot and a return
envelope provided by and addressed to the Master Ballot
Agent. The Beneficial Owners then must return the Form B
Public Notes Individual Ballots to the Master Ballot Agent
in the manner and by the deadline in the instructions
accompanying the Form B Public Notes Individual Ballots.
Upon receipt of the completed Form B Public Notes
Individual Ballots from the Beneficial Owners, the Master
Ballot Agent will summarize the votes of its Beneficial
Owners on a Public Notes Master Ballot in accordance to
the instructions attached to the Public Notes Master
Ballot. The Master Ballot Agent must return the Public
Notes Master Ballot to Logan & Company so that it is
received before the Voting Deadline;
(f) The Liquidating Debtors will serve a copy of the Court
order approving the solicitation procedures on:
-- the Indenture Trustees;
-- each known entity that is serving as a Master Ballot
Agent; and
-- ADP Proxy Services, which is an intermediary that
processes voting materials for many brokerage firms and
banks.
Upon written request, the Liquidating Debtors will
reimburse the entities -- or their agents -- in accordance
with customary procedures for their reasonable, actual and
necessary out-of-pocket expenses incurred in performing
their tasks. No other fees, commissions or other
remuneration will be payable to any Master Ballot Agent --
or their agents or intermediaries -- in connection with
the distribution of Solicitation Packages to Beneficial
Owners or the completion of Public Notes Master Ballots;
(g) With respect to the tabulation of Ballots cast by
Individual Record Holders and Beneficial Owners of 9-7/8%
Senior Notes, 10-7/8% Senior Notes or Senior Subordinated
Notes, these procedures will apply:
-- All Master Ballot Agents will be required to retain the
Form B Public Notes Individual Ballots cast by their
Beneficial Owners for inspection for a period of one
year after the Voting Deadline;
-- Logan & Company will compare the votes cast by
Individual Record Holders and Beneficial Owners to the
Record Holder Register and the Master Ballot Agent
Register. Votes submitted by an Individual Record
Holder on a Form A Public Notes Individual Ballot will
not be counted in excess of the record position in, as
applicable, the 9-7/8% Senior Notes, 10-7/8% Senior
Notes or Senior Subordinated Notes for that particular
Individual Record Holder, as identified on the Record
Holder Register. Votes submitted by a Master Ballot
Agent on a Public Notes Master Ballot will not be
counted in excess of the aggregate position in, as
applicable, 9-7/8% Senior Notes, 10-7/8% Senior Notes
or Senior Subordinated Notes of the Beneficial Owners
for whom the Master Ballot Agent provides services, as
identified in the Master Ballot Agent Register;
-- To the extent that a Form A Public Notes Individual
Ballot submitted by an Individual Record Holder
contains an overvote or otherwise conflicts with the
Record Holder Register, Logan & Company will tabulate
the Individual Record Holder's vote to accept or reject
the applicable Plan based upon the information
contained in the Record Holder Register;
-- To the extent that a Public Notes Master Ballot
contains an overvote or votes that otherwise conflict
with the Master Ballot Agent Register, Logan & Company
will attempt to resolve the overvote or conflicting
vote prior to the Voting Deadline;
-- To the extent that an overvote or a conflicting vote on
a Public Notes Master Ballot is not reconciled before
the Voting Deadline, Logan & Company will:
(i) calculate the percentage of the total stated
amount of the Public Notes Master Ballot voted by
each Beneficial Owner;
(ii) multiply the percentage for each Beneficial Owner
by the amount of aggregate holdings for the
applicable Master Ballot Agent identified on the
Master Ballot Agent Register; and
(iii) tabulate votes to accept or reject the Plan based
on the result of this calculation.
The Liquidating Debtors reserve the right to challenge
the appropriateness of the calculation in any given
case by seeking a determination of the Court within
three business days after the final voting results are
certified by the Logan & Company;
-- A single Master Ballot Agent may complete and deliver
to Logan & Company multiple Public Notes Master Ballots
summarizing the votes of Beneficial Owners of 9-7/8%
Senior Notes, 10-7/8% Senior Notes or Senior
Subordinated Note. Votes reflected on multiple Public
Notes Master Ballots will be counted, except to the
extent that they are duplicative of other Public Notes
Master Ballots. If two or more Public Notes Master
Ballots are inconsistent, the latest dated Public Notes
Master Ballot received before the Voting Deadline will,
to the extent of such inconsistency, supersede and
revoke any prior Public Notes Master Ballot; and
-- The tabulation of votes by Individual Record Holders
and Beneficial Holders will be subject to the
additional provisions.
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. 55;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
KING SERVICE: Wants Exclusive Period Extended Through June 11
-------------------------------------------------------------
The King Service, Inc., asks the U.S. Bankruptcy Court for the
Northern District of New York for an extension, through and
including June 11, 2005, of the time within which it alone can
file a chapter 11 plan. The Debtor also asks the Court for more
time to solicit acceptances of that plan from their creditors,
through August 22, 2005.
This is the Debtor's first request for an extension of its
exclusive periods.
The Debtor gives the Court six reasons militating in favor of its
request for more time to propose and file a chapter 11 plan
without interference from other parties-in-interest:
a) the Debtor has addressed and resolved a number of issues
critical to its continued business operations;
b) the Debtor has reduce payroll through reduction in staffing
and voluntary salary reductions by family members;
c) the Debtor believes it has made a turnaround necessary in
establishing a profitable business operation by:
(i) reducing expenses and continuing to service existing
customers and maintain customer satisfaction,
(ii) obtaining debtor-in-possession financing, and
(iii) revamping it prepaid and budget programs for the 2005-
2006 heating season;
d) the Debtor will be able to redirect its resources to
formulating a proposed plan of reorganization once the 2004-
2005 winter heating season concludes because it will be in a
better position to accurately project its future operations
and cash flow projections;
e) substantially all of the Debtor's post-petition expenses,
including taxes, have been paid; and
f) none of the Debtor's creditors will be prejudiced by the
requested extension of its exclusive periods.
The Court will convene a hearing 10:30 a.m., on December 16, 2004,
to consider the Debtor's motion.
Headquartered in Troy, New York, The King Service, operates
gasoline service stations, convenience stores and a fuel oil
business. The Company filed for chapter 11 protection on
July 14, 2004 (Bankr. N.D.N.Y. Case No. 04-14661). Howard M.
Daffner, Esq., at Segel, Goldman, Mazzota & Siegel, PC. represents
the Debtor in its restructuring efforts. When the Debtor filed
for protection, it listed $12,090,890 in total assets and
$13,498,949 in total debts.
KMART CORP: Settles Noritsu Dispute with $4,750,000 Cash Payment
----------------------------------------------------------------
In response to Noritsu America Corporation's complaint, Kmart
denies certain of Noritsu's allegations and asserts a counterclaim
against Noritsu for breach of a rebate program.
Subsequently, Kmart and Noritsu each filed motions for summary
judgment with respect to the Complaint. However, the Bankruptcy
Court denied both parties' requests.
Dispute Resolved
The parties have agreed to consensually resolve their disputes
with respect to the claims and cross-claims asserted in the
Adversary Proceeding and certain related matters.
In a Court-approved stipulation, the parties agreed that:
(a) In full and complete settlement and satisfaction of all
claims held by Noritsu against Kmart or its former
bankruptcy estate, other than claims for ongoing servicing
obligations with respect to the Mini-Labs, Kmart will pay
$4,750,000 to Noritsu in immediately available funds.
The Settlement Amount will be paid on December 15,
2004, by wire transfer to Noritsu's account;
(b) Noritsu will be entitled to allocate and apply the
Settlement Amount, in Noritsu's sole and absolute
discretion, to any or all of its claims against Kmart or
Kmart's former bankruptcy estate. Unless the
Settlement Amount is paid to and received by Noritsu on or
before December 15, 2004, the Stipulation will be null
and void after the close of business on that date;
(d) All rights, title, and interest of Noritsu in and to the
Mini-Labs will transfer to and become vested in Kmart,
free and clear of all liens, claims, and encumbrances.
The Mini-Labs are deemed to include all of the equipment
previously delivered by Noritsu to Kmart under the various
documents, which formed the basis of Noritsu's claims in
the Adversary Proceeding and its Claim No. 53191 in
Kmart's bankruptcy case;
(e) The parties will exchange mutual releases. All claims
asserted by either of the parties in the Adversary
Proceeding will be dismissed with prejudice, provided,
however, that nothing contained in the mutual release
provision will release:
-- either party's obligations with respect to ongoing
service arrangements for the Mini-Labs;
-- rights, duties, or obligations arising under the
Stipulation; or
-- claims by one party against the other for breach of
the Stipulation;
(f) Claim No. 53191 will be reclassified as a Class 5 Claim
and allowed for $8,795,509. The Allowed Claim, without
reduction on account of the Settlement Amount, will be
deemed transferred and assigned to Kmart without recourse,
representation or warranty, and without need for further
documentation by the parties. All other proofs of claim
filed by Noritsu against Kmart or the former bankruptcy
estates will be deemed expunged and disallowed without
further Court order, and Noritsu will not file any other
proofs of claim against Kmart or the former Kmart
bankruptcy estates; and
(g) Kmart agrees to pay and discharge any sales, use,
exercise, or other transfer taxes arising out of the
settlement transaction embodied in the Stipulation, and to
indemnify and hold Noritsu harmless from and against any
tax liability, if any, including Noritsu's attorney's fees
and defense costs.
Headquartered in Troy, Michigan, Kmart Corporation (n/k/a KMART
Holding Corporation) -- http://www.bluelight.com/-- is the
nation's second largest discount retailer and the third largest
merchandise retailer. Kmart Corporation currently operates
approximately 2,114 stores, primarily under the Big Kmart or Kmart
Supercenter format, in all 50 United States, Puerto Rico, the U.S.
Virgin Islands and Guam. The Company filed for chapter 11
protection on January 22, 2002 (Bankr. N.D. Ill. Case No.
02-02474). Kmart emerged from chapter 11 protection on May 6,
2003. John Wm. "Jack" Butler, Jr., Esq., at Skadden, Arps, Slate,
Meagher & Flom, LLP, represented the retailer in its restructuring
efforts. The Company's balance sheet showed $16,287,000,000 in
assets and $10,348,000,000 in debts when it sought chapter 11
protection. (Kmart Bankruptcy News, Issue No. 85; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
LITFUNDING CORP: Inks $5 Million Multi-Stage Financing Pact
-----------------------------------------------------------
LitFunding Corp. (LFC) (NASDAQ: LFDG) has signed a non-binding
Letter of Intent with International Monetary Group Inc. (IMG) in
Florida for a multi-stage $5 million round of funding. As
proposed, IMG will either make a capital investment or make a loan
to a limited liability company formed together with LitFunding
USA, the new wholly owned operating subsidiary of LFC. Under the
terms of the agreement, the limited liability company will receive
fees for originating, servicing and managing investments made with
these funds. After the return of capital invested to IMG, both
the limited liability company and IMG will participate equally in
the fees generated from the investments made.
Morton Reed, Ph.D., chairman and president, announced that this
third Letter of Intent for $5 million means that LFC has attracted
$10 million in the five-month period following its emergence from
bankruptcy. LFC is resuming its pre-eminence as a source of
capital to the plaintiff's attorney's market and, as a result,
LFC's growing appeal is clearly reflected by strong investing
interest.
LFC through its wholly owned subsidiary LitFunding USA (the
company) remains one of the nation's largest public companies
specializing in the funding of litigation primarily through
plaintiff's attorneys. The company is in the litigation funding
business making advances to plaintiff's attorneys primarily in the
areas of personal injury. A fee is earned when the lawsuits so
funded are settled or otherwise concluded by a court ruling. At
that time both the funds advanced and the fee contractually agreed
to are repaid to the company.
* * *
As reported in the Troubled Company Reporter on Aug. 23, 2004,
LitFunding Corp. and its subsidiary, California LitFunding, both
Nevada corporations reported that their Second Amended Joint Plan
of Reorganization (Plan) under Chapter 11 of the Bankruptcy Code
was confirmed by the United States Bankruptcy Court, Central
District of California, Los Angeles Division, on May 26, 2004.
The order confirming that ruling was entered into the court record
on June 17, 2004 and became effective on June 21, 2004.
MAGELLAN HEALTH: Aetna to Purchase Health Care Operations
---------------------------------------------------------
Magellan Health Services, Inc. (Nasdaq:MGLN) has been informed
that Aetna plans to exercise its option to purchase the Magellan
operations that manage behavioral health care for its members.
The sale of the Company's Aetna-dedicated operations will be
consummated on Dec. 31, 2005, pursuant to an Asset Purchase
Agreement executed by the parties as part of the Company's
bankruptcy case earlier this year, at which time the Company's
contract with Aetna will terminate.
Net revenue from the Aetna contract was $170.4 million for the
nine months ended Sept. 30, 2004. The purchase price of the
Aetna-dedicated assets is based in part on the number of Magellan
providers that agree to provide services to Aetna as well, and is
estimated to be approximately $50 million to $55 million. Also,
as part of the terms of the Company's bankruptcy case, the Company
will repay its $49 million note to Aetna on Dec. 31, 2005.
"We are very proud of our track record in managing behavioral
health care for many of the nation's largest and most respected
health plans and particularly proud of our work in creating
clinically innovative programs and service-oriented and efficient
operations," said Steven J. Shulman, chairman and CEO of Magellan.
"We have demonstrated tremendous value to customers by the
delivery of excellent quality services and the mitigation of care
costs through focused management initiatives that we believe have
held our cost of care trends below industry levels. This strong
performance has further strengthened our long-term partnerships
with our core customer base of leading Blue Cross Blue Shield
plans, employers and government entities. Furthermore, the
development of innovative new products enhances and expands our
continued role as a strategic partner in helping our customers to
achieve their goals."
"While we had hoped to continue our productive association with
Aetna, we also have known that Aetna has been faced with its own
unique strategic imperatives that could lead to this decision. The
agreements they obtained in our bankruptcy case reflected that
potential and we have considered this in our strategies and
planning," Mr. Shulman said.
"We have achieved a comprehensive operational and financial
turnaround at Magellan, and as a result we are very confident in
our current position as the leading player in our market segment.
Because of our strong cash position, we have a great deal of
flexibility to address the change in our revenue and earnings that
will result from this development. I am confident in Magellan's
prospects, particularly given our recent progress in product
development and initiatives to leverage our behavioral health
expertise to positively impact physical health with our current
long-standing customer base as well as new prospects," Shulman
concluded.
Magellan's Aetna-dedicated care management operations are located
in El Segundo, Calif., Sandy, Utah, and King of Prussia, Pa., and
employ approximately 550 staff.
Magellan Health Services is headquartered in Columbia, Maryland,
and is the leading behavioral managed healthcare organization in
the United States. Its customers include health plans,
corporations and government agencies. The Company filed for
chapter 11 protection on March 11, 2003, and confirmed its Third
Amended Plan on October 8, 2003. Under the Third Amended Plan,
nearly $600 million of debt dropped from the Company's balance
sheet and Onex Corporation invested more than $100 million in
new equity.
MERRILL LYNCH: Completes Exchange Offer for Convertible Securities
------------------------------------------------------------------
Merrill Lynch & Co., Inc. (NYSE: MER) has completed its offer to
exchange Liquid Yield Option(TM) Notes due 2032 for a new issuance
of Exchange Liquid Yield Option Notes due 2032. The exchange
offer expired at 5:00 p.m., Eastern Standard Time, on Dec. 9,
2004. As of the expiration of the exchange offer, approximately
$2,232,108,000 aggregate principal amount of Old LYONs,
representing approximately 97 percent of the total original
principal amount of Old LYONs outstanding, had been tendered in
exchange for an equal principal amount of New LYONs. All Old
LYONs that were properly tendered have been accepted for exchange.
The exchange of New LYONs for Old LYONs is expected to take place
today, Dec. 14, 2004. Following the consummation of the exchange
offer, approximately $67,892,000 aggregate original principal
amount of Old LYONs will remain outstanding.
Merrill Lynch has repurchased $2,874,876,000 aggregate principal
amount at maturity of its Liquid Yield Option(TM) Notes due 2031.
Information concerning the exchange offer and copies of the
Exchange Circular and related documents may be obtained from the
information agent:
Global Bondholder Services Corporation
65 Broadway - Suite 704
New York, New York 10006
Attn: Corporate Actions
Banks and Brokers call: (212) 430-3774
(866) 470-3800 (toll-free)
The financial advisor is:
Merrill Lynch, Pierce, Fenner & Smith Incorporated
4 World Financial Center
New York, New York 10080
Attn: Liability Management Group
Toll-Free: (888) 654-8637
(212) 449-4914
Merrill Lynch is one of the world's leading financial management
and advisory companies, with offices in 36 countries and total
client assets of approximately $1.5 trillion. As an investment
bank, it is a leading global underwriter of debt and equity
securities and strategic advisor to corporations, governments,
institutions and individuals worldwide. Through Merrill Lynch
Investment Managers, the company is one of the world's largest
managers of financial assets. Firmwide assets under management
total $478 billion. For more information on Merrill Lynch, please
visit http://www.ml.com/
* * *
As reported in the Troubled Company Reporter on Nov. 08, 2004,
Fitch Ratings has taken rating actions on these Merrill Lynch
Mortgage Loans, Inc. mortgage pass-through certificates:
* Merrill Lynch Mortgage Loans, Inc., mortgage pass-through
certificates, series 2000-3
-- Class A is affirmed at 'AAA';
-- Class M-1 affirmed at 'AAA';
-- Class M-2 affirmed at 'AAA';
-- Class B-1 affirmed at 'AAA';
-- Class B-2 affirmed at 'AAA';
-- Class B-3 upgraded to 'AAA' from 'AA+'.
* Merrill Lynch Mortgage Loans, Inc., mortgage pass-through
certificates, series 2003-A
-- Classes 1-A and 2-A are affirmed at 'AAA';
-- Class B-1 is affirmed at 'AA+';
-- Class B-2 is affirmed at 'A+';
-- Class B-3A is affirmed at 'A';
-- Class B-3B is affirmed at 'BBB+';
-- Class B-4 is affirmed at 'BBB-';
-- Class B-5 is affirmed at 'B+'.
* Merrill Lynch Mortgage Loans, Inc., mortgage pass-through
certificates, series 2003-A1
-- Classes 1-A, 2-A and 3-A are affirmed at 'AAA';
-- Class M-1 upgraded to 'AAA' from 'AA';
-- Class M-2 upgraded to 'AA' from 'A';
-- Class M-3 upgraded to 'A' from 'BBB';
-- Class B-1 upgraded to 'BBB' from 'BB';
-- Class B-2 affirmed at 'B'.
* Merrill Lynch Mortgage Loans, Inc., mortgage pass-through
certificates, series 2003-A3
-- Class I-A is affirmed at 'AAA'
-- Class M-1 affirmed at 'AA';
-- Class M-2 affirmed at 'A';
-- Class M-3 affirmed at 'BBB';
-- Class B-1 affirmed at 'BB';
-- Class B-2 affirmed at 'B'.
* Merrill Lynch Mortgage Loans, Inc., mortgage pass-through
certificates, series 2003-B
-- Classes A-1 and A-2 are affirmed at 'AAA';
-- Class B-1 is affirmed at 'AA+';
-- Class B-2 is affirmed at 'A+';
-- Class B-3 is affirmed at 'BBB+';
-- Class B-4 is affirmed at 'BBB-';
-- Class B-5 is affirmed at 'B+'.
* Merrill Lynch Mortgage Loans, Inc., mortgage pass-through
certificates, series 2003-C
-- Classes A-1 and A-2 are affirmed at 'AAA';
-- Class B-1 is affirmed at 'AA+';
-- Class B-2 is affirmed at 'A+';
-- Class B-3 is affirmed at 'BBB+';
-- Class B-4 is affirmed at 'BB+';
-- Class B-5 is affirmed at 'B+'.
* Merrill Lynch Mortgage Loans, Inc., mortgage pass-through
certificates, series 2003-D
-- Class A-1 is affirmed at 'AAA';
-- Class B-1 is affirmed at 'AA+';
-- Class B-2 is affirmed at 'A+';
-- Class B-3 is affirmed at 'BBB+';
-- Class B-4 is affirmed at 'BB+';
-- Class B-5 is affirmed at 'B+'.
* Merrill Lynch Mortgage Loans, Inc., mortgage pass-through
certificates, series 2003-E
-- Classes A-1 and A-2 are affirmed at 'AAA';
-- Class B-1 is affirmed at 'AA+';
-- Class B-2 is affirmed at 'A+';
-- Class B-3 is affirmed at 'BBB+';
-- Class B-4 is affirmed at 'BB+';
-- Class B-5 is affirmed at 'B+'.
* Merrill Lynch Mortgage Loans, Inc., mortgage pass-through
certificates, series 2003-F
-- Classes A-1, A-2 and A-3 are affirmed at 'AAA';
-- Class B-1 is affirmed at 'AA+';
-- Class B-2 is affirmed at 'A+';
-- Class B-3 is affirmed at 'BBB';
-- Class B-4 is affirmed at 'BB';
-- Class B-5 is affirmed at 'B+'.
* Merrill Lynch Mortgage Loans, Inc., mortgage pass-through
certificates, series 2003-G
-- Classes A-1, A-2, A-3 and A-4 are affirmed at 'AAA';
-- Class B-1 is affirmed at 'AA+';
-- Class B-2 is affirmed at 'A+';
-- Class B-3 is affirmed at 'BBB+';
-- Class B-4 is affirmed at 'BB+';
-- Class B-5 is affirmed at 'B+'.
* Merrill Lynch Mortgage Loans, Inc., mortgage pass-through
certificates, series 2003-H
-- Classes A-1, A-2 and A-3 are affirmed at 'AAA';
-- Class B-1 is affirmed at 'AA+';
-- Class B-2 is affirmed at 'A+';
-- Class B-3 is affirmed at 'BBB+';
-- Class B-4 is affirmed at 'BB+';
-- Class B-5 is affirmed at 'B+'.
The upgrades reflect an increase in credit enhancement relative to
future loss expectations and represent approximately $10.9 million
of outstanding principal.
As of October 25, 2004, class B-3 of MLMI series 2000-3 has seen
an increase to 13.33% (from 0.60% at closing) in credit
enhancement provided by subordination from the nonrated class B-4.
In addition, the collateral pool has experienced no loan level
losses to date and current nonperforming loans are limited to the
30-day delinquency bucket. Only 1% of the original mortgage pool
remains outstanding.
The current credit enhancement of MLMI series 2003-A1 classes M-1,
M-2, M-3, and B-1 is 4.34%, 2.61%, 1.59%, and 1.01% respectively.
Currently, 66% of the collateral has paid down. Only 0.71% of the
current pool is delinquent. There have been no losses to the
pool. The collateral consists of conventional, first lien,
one- to four-family, 30-year adjustable-rate residential mortgage
loans.
The affirmations, representing approximately $7.6 billion of
outstanding principal, reflect credit enhancement consistent with
future loss expectations. The pools are seasoned from a range of
10 to 21 months. The pool factors (current principal balance as a
percentage of original) also range from approximately 58% to 91%
outstanding.
MEZZ CAP: Fitch Puts Low-B Ratings on Three Series 2004-C2 Certs.
-----------------------------------------------------------------
Fitch Ratings assigns these ratings to the Mezz Cap Commercial
Mortgage Trust, series 2004-C2, commercial mortgage pass-through
certificates:
-- $34,583,000 class A 'AAA';
-- $52,399,318 class X* 'AAA';
-- $2,096,000 class B 'AA';
-- $1,638,000 class C 'A';
-- $2,554,000 class D 'BBB';
-- $1,048,000 class E 'BBB-';
-- $1,834,000 class F 'BBB-';
-- $1,179,000 class G 'BB';
-- $3,930,000 class H 'B';
-- $524,000 class J 'B-';
-- $3,013,818 class K not rated (NR);
*Notional amount and interest only.
All classes are privately placed pursuant to rule 144A of the
Securities Act of 1933. The certificates represent beneficial
ownership interest in the trust, primary assets of which are 81
fixed-rate loans having an aggregate principal balance of
approximately $52,399,818, as of the cut-off date.
For a detailed description of Fitch's rating analysis, see the
report 'Mezz Cap 2004-C2,' dated Nov. 17, 2004, available on the
Fitch Ratings web site at http://www.fitchratings.com/
MILPITAS MOTORCYCLES: Case Summary & Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Milpitas Motorcycles, Inc.
dba Honda Kawasaki of Oakland
dba San Jose Powersports, LLC
10550 A International Boulevard
Oakland, California 94603
Bankruptcy Case No.: 04-46542
Type of Business: The Company is a motorcycle dealer.
Chapter 11 Petition Date: December 9, 2004
Court: Northern District of California (Oakland)
Judge: Leslie J. Tchaikovsky
Debtor's Counsel: Michael W. Malter, Esq.
Binder and Malter, LLP
2775 Park Avenue
Santa Clara, California 95050
Tel: (408) 295-1700
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
------ --------------- ------------
American Honda Finance Line of Credit - $634,671
Corporation Credit Line Milpitas
21041 South Western
Avenue, Suite 200
Torrance, California 90501
Attn: Gary Tokumori, Esq.
Tel: (213) 624-0222
Kawasaki Motors Finance Corp. Trade Debt $256,248
c/o Steven T. Gubner, Esq.
Ezra, Brutzkus & Gubner, LLP
16830 Ventura Boulevard, Suite 310
Encino, California 91436
Wells Fargo Bank Line of Credit $95,564
Line of Credit Account #:
PO Box 54349 5474-6431-7158-9148
Los Angeles, California 90054
Bank of the West Trade Debt $65,105
c/o Rodney L. Levin, Esq.
McArthur & Levin, LLP
14375 Saratoga Avenue. Suite 206
Saratoga, California 95070
American Honda Finance Line of Credit - $51,886
21041 South Western Oakland
Avenue, Suite 200
Torrance, California 90501
Attn: Gary Tokumori, Esq.
Tel: (213) 624-0222
Sears Point Raceway Trade Debt $47,000
Parts Unlimited Trade Debt $30,038
Wave Media Trade Debt $26,800
Fox Trade Debt $25,370
Tax Collector Trade Debt $18,432
County Government Center
SBC (Pacific Bell Yellow Pages) Trade Debt $12,354
Tucker Rocky Trade Debt $6,421
Gilroy Honda Trade Debt $6,208
Dugan Publications/ISM PMB 161 Trade Debt $5,956
Helmet House Trade Debt $5,914
Race Promotion Management Trade Debt $5,700
GMD Computrack Australia Trade Debt $4,000
Universal Underwriters Trade Debt $3,854
Insurance
Shields Trucking Trade Debt $3,505
Tucker Rocky Distributing Trade Debt $2,738
MIRANT CORP: District Court Rules in Favor of Pepco Contracts
-------------------------------------------------------------
The United States District Court for the Northern District of
Texas denied Mirant Corp.'s request to reject its obligations to
pay Pepco as required by contract. These payments are required as
part of the Back-to-Back Agreement in the Asset Purchase and Sale
Agreement (APSA) under which Mirant purchased Pepco's generating
assets in December 2000. The Court found that the Back-to- Back
Agreement is part of a larger contract that cannot be rejected in
part, as Mirant sought to do. Under the Back-to-Back Agreement,
Mirant is required to purchase from Pepco, at the price Pepco is
obligated to pay, the capacity and energy that Pepco must buy
under power purchase agreements with FirstEnergy Corp. and Panda-
Brandywine L.P. Pepco is a subsidiary of Pepco Holdings, Inc.
(NYSE: POM).
"Now that their legal obligation has been clarified by the Court,
we presume Mirant will follow the law and continue to meet their
obligations to pay Pepco," said Dennis Wraase, Chairman of the
Board, President and Chief Executive Officer, Pepco Holdings. "If
not, we will take appropriate legal action."
Since declaring bankruptcy in July 2003, Mirant has repeatedly and
unsuccessfully attempted to obtain legal approval to terminate its
contractual obligations to pay Pepco for the cost of electricity
which Pepco provides to Mirant. Contrary to prior representations
made before the courts, Mirant issued a Notice that it would
suspend payments to Pepco. Friday's Order reaffirms that Mirant
is legally required to make the payments.
About PHI
Pepco Holdings, Inc. is a diversified energy company with
headquarters in Washington, D.C. Its principal operations consist
of Pepco and Conectiv Power Delivery, which deliver 50,000
gigawatt-hours of power to more than 1.8 million customers in
Washington, Delaware, Maryland, New Jersey and Virginia. PHI
engages in regulated utility operations by delivering electricity
and natural gas, and provides competitive energy and energy
products and services to residential and commercial customers.
Headquartered in Atlanta, Georgia, Mirant Corporation --
http://www.mirant.com/-- together with its direct and indirect
subsidiaries, generate, sell and deliver electricity in North
America, the Philippines and the Caribbean. Mirant Corporation
filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex.
03-46590). Thomas E. Lauria, Esq., at White & Case LLP,
represents the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they listed
$20,574,000,000 in assets and $11,401,000,000 in debts.
NAVISITE INC: First Qtr. EBITDA Up $1.2 Mil. Over Previous Quarter
------------------------------------------------------------------
NaviSite, Inc. (Nasdaq SC: NAVI), a leading provider of managed
application services and a broad range of outsourced hosting
services, reported financial results for its first quarter of
fiscal year 2005, which ended Oct. 31, 2004.
In the first quarter of fiscal year 2005, NaviSite posted, for the
fifth consecutive quarter, positive EBITDA, improving $1.2 million
over the prior quarter, while increasing revenue and decreasing
its net loss. NaviSite's operating loss was $4.8 million for the
first fiscal quarter of fiscal year 2005, as compared to an
operating loss of $10.7 million in the prior quarter and $2.8
million in the first quarter of fiscal year 2004. Specifically,
during the first quarter of fiscal year 2005 the Company:
-- Increased revenue by 15% sequentially to $28.9 million, up
from $25.2 million in the prior quarter;
-- Increased revenue by 23% year over year, up from
$23.5 million in the same period in the prior year;
-- Posted positive EBITDA (Earnings Before Interest, Taxes,
Depreciation and Amortization), excluding impairment and
other one-time charges, for the fifth consecutive quarter in
the amount of $1.3 million, up from $23,000 in the prior
quarter; and
-- Decreased net loss to $6.6 million for the first quarter of
fiscal year 2005, as compared with a net loss of $11.5
million for the prior quarter. Net loss for the first
quarter of fiscal year 2004 was $3.4 million.
Key Highlights and Subsequent Events
The first quarter of fiscal year 2005 marked the first full
quarter that NaviSite included operating results from its recent
acquisition of the Surebridge business. As a result, revenue
increased 15% to $28.9 million from $25.2 million in the prior
quarter. Operating expenses, excluding impairment, restructuring
and other costs, were reduced by nearly 21% to $9.8 million in the
first quarter of fiscal year 2005, as compared to $12.4 million in
the prior quarter.
NaviSite continues to execute on its strategic initiatives for
growth. Since the start of the first quarter of fiscal year 2005,
more than 50 NaviSite customers have proactively signed renewal
and contract change orders, including a 4,000 seat managed
messaging contract for a major media company and a current hosted
customer, and a $480,000 contract addition of an existing managed
messaging agreement with a Fortune 50 manufacturer. We have also
extended existing global Electronic Software Distribution
contracts with two of the largest software vendors for combined
annual minimum revenue of $2.8 million.
"We are pleased with our ability to gain new sales from both new
customers and our existing installed base which is a key piece of
our Company's growth strategy. Our customers are responding
positively to our customer-centric business model and new service
offerings," said Arthur Becker, CEO of NaviSite. "This growth
also underscores that companies are adopting the hosted model and
are turning to NaviSite to run their business applications while
they focus on their core initiatives."
Customer churn, defined as the loss of a customer or a reduction
in a customer's monthly revenue run rate, excluding our major
accounts, continued to improve in the first quarter of fiscal year
2005, averaging 1.4% per month as compared to a rate of slightly
lower than 2% per month during the fourth quarter of fiscal year
2004.
Continuing the strategy to emerge as a leader in the Software as a
Service (SaaS) enablement business, during the first quarter,
NaviSite announced a partnership with industry leader and On
Demand delivery platform provider, JamCracker. This partnership
creates a turn-key SaaS enablement package that allows Independent
Software Vendors (ISVs) to create On Demand application services
which will allow them to offer their Software as a Service without
the requirement to make changes in their software. In this
context, the Company also announced deals during the quarter to
provide infrastructure and SaaS enablement services to ISVs,
Mitratech, a process automation solutions provider, and DMSI, the
leading provider of software for the building materials and
inventory industry. NaviSite currently provides these services
for more than 75 ISV customers.
In support of its Peoplesoft practice which was a part of the
Surebridge acquisition, NaviSite announced the launch of its
SureStart(TM) service. This template driven approach delivers
cost-effective Peoplesoft functionality to mid-market companies in
a 12 week time frame. SureStart ensures a rapid return on
investment by combining the cost-effectiveness of a packaged
software solution with the flexibility to accommodate customer's
specific needs. The Company earlier announced that it has signed
a reseller agreement with PeopleSoft, Inc. to sell its
PeopleSoft(R) EnterpriseOne and PeopleSoft(R) World software
packages directly to companies with revenues of $100 million and
below. With this agreement, NaviSite is enabled to extend to its
clients the benefits of its end-to-end solutions for business
application strategy, implementation, integration, and
optimization services to smaller and mid-market enterprises.
NaviSite has successfully completed a SAS 70 (Statement on
Auditing Standards No. 70) Type II Audit on its data center
processes, procedures and general controls by a nationally
recognized public accounting firm. Successful completion of the
SAS 70 Type II Audit is a critical element in Sarbanes-Oxley
compliance for NaviSite's public company customers and will help
to assure them that NaviSite has instituted best practices and the
appropriate systems and processes to safeguard the applications
they outsource to NaviSite.
First Quarter Financial Results
Total revenue for the first quarter of fiscal year 2005 increased
15% to $28.9 million from $25.2 million in the prior quarter and
increased 23% from $23.5 million in the first quarter of fiscal
year 2004. NaviSite posted a gross profit of $6.1 million for the
first quarter fiscal year 2005, an increase of 12% from $5.4
million in the prior quarter, and 24% over a gross profit of $4.9
million reported for first quarter fiscal year 2004.
Net loss decreased to $6.6 million for the first quarter of fiscal
year 2005, as compared with a net loss of $11.5 million for the
prior quarter. Net loss for the first quarter of fiscal year 2004
was $3.4 million. Net loss per share decreased to $0.24 per share
for first quarter of fiscal year 2005, from a loss of $0.43 per
share for the prior quarter. Net loss per share for the first
quarter of fiscal year 2004 was $0.14. NaviSite posted positive
EBITDA, excluding impairment and other one-time charges, of $1.3
million for the first quarter or fiscal year 2005, as compared to
$23,000 of EBITDA for the prior quarter and $2.0 million of
EBITDA, excluding impairment and other one-time charges, for the
first quarter of fiscal year 2004.
"The results from the first quarter of fiscal 2005 highlight the
continuation of our integration of Surebridge. We increased
revenue, lowered expenses, improved gross profit and continued to
move toward our goal of being a profitable leader in outsourced
managed application services for the mid-market," said Arthur
Becker, CEO and President of NaviSite. "We anticipate revenue for
the second quarter of fiscal year 2005, ending January 31, 2005,
will be in the range of $28.7 million to $29.3 million and
forecast EBITDA, excluding impairment and other one-time charges,
to be between $1.6 million and $2.2 million as we begin to see the
realization of the first full quarter of synergies from the
acquisition of Surebridge."
EBITDA
EBITDA is not a recognized measure for financial statement
presentation under United States generally accepted accounting
principles (U.S. GAAP). The Company believes that the non-GAAP
measure of EBITDA provides investors with a useful supplemental
measure of the Company's actual and expected operating and
financial performance by excluding the impact of interest, taxes,
depreciation, amortization and non-cash compensation. The Company
also excludes impairment and other one-time charges from its non-
GAAP measure, as such items may be considered to be of a non-
operational nature. EBITDA does not have any standardized
definition and therefore may not be comparable to similar measures
presented by other reporting companies. Management uses EBITDA to
assist in evaluating the Company's actual and expected operating
and financial performance. These non-GAAP results should not be
evaluated in isolation of, or as a substitute for, the Company's
financial results prepared in accordance with U.S. GAAP. A table
reconciling the Company's net loss, as reported, to EBITDA is
included in the consolidated financial statements in this release.
The Company believes that using expected EBITDA as a performance
measure, together with expected net loss, will help investors
better understand the Company's underlying financial performance.
A table reconciling expected net loss to expected EBITDA for the
second quarter of fiscal year 2005 is also included in this
release.
About NaviSite
NaviSite, Inc. (NASDAQ SC: NAVI) deploys, manages and enables
software applications and infrastructure for middle-market
organizations, which include mid-sized companies, divisions of
large multi-national companies and government agencies.
The Company offers a full range of services including design,
implementation, optimization, upgrade, application development,
fully hosted and remote application management, managed services,
content delivery, colocation, and Software as a Service
enablement.
NaviSite is a Microsoft Gold Certified Partner, PeopleSoft
Distributor and Silver Services Partner, and a Siebel Reseller
Partner. The Company offers vertical expertise in the
manufacturing/distribution, financial services,
healthcare/pharmaceutical, services, publishing/media &
communications, and public sector industries.
NaviSite was founded in 1997 and is headquartered in Andover,
Massachusetts, with offices and data centers across the United
States and in the UK. The Company has approximately 500 employees
servicing approximately 1,100 customers worldwide. For more
information, please visit http://www.navisite.com/or call
978.682.8300.
* * *
As reported in the Troubled Company Reporter on Nov. 09, 2004,
NaviSite, Inc., disclosed last week that it received an audit
report on its fiscal year 2004 consolidated financial statements
from KPMG LLP, and the report contains an explanatory paragraph
stating that the Company's recurring losses since inception and
accumulated deficit, as well as other factors, raise substantial
doubt about NaviSite's ability to continue as a going concern.
NaviSite anticipates it will continue to incur net losses in the
future, and notes that it has significant fixed commitments for
real estate, bandwidth commitments, machinery and equipment
leases.
NaviSite says that it needs to obtain additional financing.
NaviSite filed a registration statement with the SEC in early 2004
to register shares of common stock to issue and sell in a public
offering to raise additional funds.
NEXIA HOLDINGS: Working Capital Deficit Spurs Going Concern Doubt
-----------------------------------------------------------------
Nexia Holdings, Inc., incurred cumulative operating losses through
June 30, 2004 of $11,373,703 and its balance sheet showed a
working capital deficit of $1,384,742 at June 30, 2004, all of
which raises substantial doubt about the Company's ability to
continue as a going concern.
Revenues have not been sufficient to cover the Company's operating
costs. Management's plans to enable the Company to continue as a
going concern include:
* Increasing revenues from rental properties by implementing
new marketing programs.
* Making certain improvements to certain rental properties in
order to make them more marketable.
* Reducing negative cash flows by selling rental properties
that do not at least break even.
* Refinancing high interest rate loans.
* Increasing consulting revenues by focusing on procuring
clients that pay for services rendered in cash or highly
liquid securities.
* Reducing expenses through consolidating or disposing of
certain subsidiary companies.
* Raising additional capital through private placements of the
Company's common stock.
Nexia operates in two primary areas of business: Nexia acquires,
leases and sells real estate; and, Nexia provides financial
consulting services.
Gross revenues for the three and six month periods ended
June 30, 2004, were $153,683 and $303,444 respectively as compared
to $174,936 and $350,057 for the same periods in 2003. The
decrease in six-month revenues of $46,613 is due to a decrease in
consulting revenues due to restructuring efforts.
Losses
Nexia recorded operating losses of $502,253 and $1,408,653 for the
three and six-month periods ended June 30, 2004, respectively,
compared to losses of $29,122 and $105,188 for the comparable
periods in the year 2003.
Nexia recorded net losses of $397,671 and $1,149,236 for the three
and six months ended June 30, 2004, respectively, as compared to
net income of $209,914 and $118,851 for the same periods in 2003.
The increase in losses is attributable primarily to the issuance
of shares of common stock to pay for services rendered which
increased expenses accompanied by a decrease in consulting
revenues.
Nexia does not expect to operate at a profit through fiscal 2004.
Since Nexia's activities are closely tied to the securities
markets and the ability to operate its real estate properties at a
profit, future profitability or its revenue growth tends to follow
changes in the securities and real estate market place. There can
be no guarantee that profitability or revenue growth can be
realized in the future.
Expenses
General and administrative expenses for the three and six months
ended June 30, 2004, were $290,674 and $859,419, respectively,
compared to $20,436 and $24,360 for the same periods in 2003. The
increase in expenses is due primarily to directors fees of
$480,000 and $107,153 in legal and accounting fees. The Company
issued 10,000,000 shares of restricted stock to each director as
fees during the first quarter of the year.
Capital Resources and Liquidity
On June 30, 2004, Nexia had current assets of $312,219 and
$3,460,986 in total assets. Nexia had a net working capital
deficit of $1,384,742 at June 30, 2004. The working capital
deficit is due primarily to mortgages, which will, or may, come
due in the next twelve months and are thus considered as current
liabilities.
Net cash used in operating activities was $131,346 for the six
months ended June 30, 2004, compared to net cash used in operating
activities of $403,764 for the six Nexia operates in two primary
areas of business: Nexia acquires, leases and sells real estate;
and, Nexia provides financial consulting services.
Cash used in investing activities was $117,030 for the six months
ended June 30, 2004, compared to cash used by investing activities
of $2,761 for the same period in 2003.
Cash provided by financing activities was $229,292 for the six
months ended June 30, 2004, compared to cash provided of $129,177
for the same period in 2003.
Nexia Holdings, Inc., provides a variety of financial consulting
services to a range of clients through its subsidiary, Hudson
Consulting Group, Inc.
NORTEL NETWORKS: Export Development Canada Waives Filing Default
----------------------------------------------------------------
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 and Q1, Q2 and Q3 2004 Quarterly Reports on
Form 10-Q, 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 Reports have been filed with the SEC;
or
-- January 15, 2005.
NNL's prior waiver from EDC, previously announced on November 19,
2004, was set to expire on December 10, 2004.
NNL and EDC have also agreed to amend the EDC Support Facility to
extend its termination date from December 31, 2005 to December 31,
2006.
As previously announced, the Company expects that it and NNL will
commence filing their respective 2003 Annual Reports on Form 10-K
and Q1 and Q2 2004 Quarterly Reports on Form 10-Q on January 10,
2005 and follow thereafter, as soon as practicable, with the
filing of their respective Q3 2004 Quarterly Reports on Form 10-Q.
If the Company and NNL fail to file the Reports by January 15,
2005, EDC will have the right, on such date (absent 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 collateralize all
existing support. If the Company and NNL fail to file the Reports
by January 15, 2005, there can be no assurance that NNL would
receive any further waivers or any extensions of the waiver beyond
its scheduled expiry date.
In addition, the Related Breaches will continue beyond the filing
of the 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 Reports are filed and January 15, 2005
to terminate or suspend the EDC Support Facility notwithstanding
the filing of the 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 all of the Reports are filed
with the SEC and NNL obtains a permanent waiver of the Related
Breaches. As of December 9, 2004, there was approximately US$290
million of outstanding support utilized under the EDC Support
Facility, approximately US$206 million of which was outstanding
under the small bond sub-facility.
About Nortel
Nortel is a recognized leader in delivering communications
capabilities that enhance the human experience, ignite and power
global commerce, and secure and protect the world's most critical
information. Serving both service provider and enterprise
customers, Nortel delivers innovative technology solutions
encompassing end-to-end broadband, Voice over IP, multimedia
services and applications, and wireless broadband designed to help
people solve the world's greatest challenges. Nortel does business
in more than 150 countries. For more information, visit Nortel on
the Web at http://www.nortel.com/
* * *
As reported in the Troubled Company Reporter on Dec. 10, 2004,
Standard & Poor's Ratings Services placed its B-/Watch Developing
credit rating on Nortel Networks Lease Pass-Through Trust
certificates series 2001-1 on CreditWatch with negative
implications.
The rating on the pass-through trust certificates is dependent
upon the ratings assigned to Nortel Networks Ltd. and ZC Specialty
Insurance Co. This CreditWatch revision follows the Dec. 3, 2004,
withdrawal of the ratings assigned to ZC Specialty Insurance Co.
Previously, the rating had a CreditWatch developing status due to
the CreditWatch developing status on the rating assigned to
Nortel.
The pass-through trust certificates are collateralized by two
notes that are secured by five single-tenant, office/R&D buildings
that are leased to Nortel ('B-'). Nortel guarantees the payment
and performance of all obligations of the tenant under the leases.
The lease payments do not fully amortize the notes. A surety bond
from ZC Specialty Insurance Co. insures the balloon amount.
The notes mature in August 2016, at which time a final principal
payment of $74.7 million is due. If this amount is not repaid,
the indenture trustee can obtain payment from the surety, provided
certain conditions are met.
The notes will remain on CreditWatch while Standard & Poor's
examines the impact of the withdrawal of the ratings on ZC
Specialty Insurance Co.
NRG ENERGY: Moody's Rates Proposed $950M Secured Facility at Ba3
----------------------------------------------------------------
Moody's Investors Service upgraded all of the debt ratings of NRG
Energy, Inc. (NRG: Senior Implied to B1 from B2). Moody's also
assigned a Ba3 senior secured rating to the company's proposed
$950 million secured revolving credit and term loan facility, a
B2 Issuer Rating, and a Speculative Grade Liquidity Rating of
SGL-1. This rating action concludes the review for possible
upgrade that was initiated on November 15, 2004. The rating
outlook is stable.
The rating action reflects NRG's substantially stronger than
anticipated cash flow and earnings since the company's December
2003 emergence from bankruptcy. These results reflect higher than
expected energy margins from its merchant coal fleet of power
plants as well as a substantial improvement in the financial
performance of its NEPOOL generating assets following the
settlement agreement with Connecticut Light & Power. NRG reported
earnings of $167 million for the first nine months of 2004, and
the company's operating cash flow for 2004 is expected to be about
30% higher than the level anticipated at the time the company
emerged from bankruptcy.
The rating action also reflects the largely completed execution of
the company's divesture plans which when completed by year-end
2004 will reduce consolidated debt by nearly $1 billion and
provide cash proceeds of about $150 million. To that end, NRG
recently completed the sale of its Kendall Generating Station,
which deconsolidated a substantial amount of project level debt
from NRG's balance sheet. The combination of higher than expected
operating cash flow and asset sales proceeds have resulted in
lower consolidated debt levels for 2004 and an approximate
$600 million increase in NRG's balance sheet cash to $1.2 billion
at September 30, 2004.
The rating also considers the company's longer-term growth
strategies, which could include future plant and asset
acquisitions, and acknowledges the company's plans to
conservatively manage its balance sheet leverage. As of
September 30, 2004, Moody's calculates the company's current total
debt to total capitalization ratio to be around 58%.
Moody's expects NRG's funds from operations for 2004 and for the
next several years to remain at or above 10% of total consolidated
debt under most reasonable scenarios. Moody's also notes that
while the company's cash flow can be impacted by volatility in
energy prices, the majority of its merchant energy cash flows are
sourced from the company's coal fired assets located in the New
York Power Pool and in the Pennsylvania New Jersey Maryland
Interconnect. These assets largely burn lower cost Western coal
and the margins from these coal assets are expected to be more
than 80% hedged for 2005 and 2006. Moreover, NRG's higher heat
rate, less efficient natural gas and oil plants tend to be
somewhat protected from the more efficient natural gas entrants in
the near-term, as a number of these plants serve transmission
constrained load pockets and are expected to continue to receive
capacity payments for availability and regional reliability for
the next several years.
The $950 million in senior secured credit facilities, rated Ba3,
will consist of a $150 million revolver/letter of credit facility
and an $800 million seven year Term Loan B facility. A
$350 million portion of the Term Loan B facility will be used to
secure a cash collateralized letter of credit, which will be used
to support NRG's working capital needs. The Ba3 rating
incorporates the strong collateral package provided to these
facilities. Both facilities are secured by a first-priority lien
on all unencumbered NRG domestic subsidiary assets and on the
stock of all encumbered international and domestic subsidiaries.
The majority of the collateral value consists of the power plant
assets of Northeast and South Central regions. These two regional
subsidiaries, along with NRG Power Marketing, will provide joint
and several upstream guarantees of both facilities. Together, the
assets of Northeast, and South Central comfortably provide full
collateral coverage of senior debt under a distress scenario.
Based upon a recent study conducted by a independent third party,
the value of these particular generating assets cover senior debt
by nearly 3.0x. While the terms of the senior credit facilities
will be relaxed from the existing facilities, the senior credit
facilities will continue to have financial covenants requiring
minimum coverage of both parent interest and consolidated interest
expense, and limiting the incurrence of parent only and
consolidated debt. Additionally, the credit facilities will have
a cash sweep that requires excess cash to be used to retire debt.
The amount of mandatory debt retirement will be on a sliding scale
based upon the company's senior implied rating from Moody's and
the corporate credit rating from Standard and Poor's.
Moody's assignment of an SGL-1 rating for NRG's liquidity reflects
our belief that NRG's liquidity is very good given the sizeable
amount of cash liquidity on the balance and our belief that the
company will continue to generate free cash flow. Moody's
estimates NRG will have about $1.1 billion of unrestricted cash at
year-end 2004 and total liquidity of around $1.4 billion. The
company's cash flow is expected to cover all funding requirements,
including required capital expenditures, for the foreseeable
future. Aside from the 1% annual principal amortization on the
Term Loan ($8 million), there is no large principal maturity due
until 2014. In addition to the sizeable amount of cash on hand,
working capital needs are expected to be satisfied by availability
under the $150 million revolving credit facility and by the
$350 million letter of credit facility. Working capital needs
largely include the posting of collateral required to secure fuel
for its power generation business as well as satisfying collateral
requirements of various counterparties, which are either
purchasing electric energy from NRG or selling electric energy to
NRG.
The B2 Issuer rating assigned to NRG reflects the unsecured nature
of these claims relative to the company's first lien and second
debt. All of NRG's debt has been issued on a secured basis, so
creditors at this level are subordinate to approximately
$2.7 billion of NRG debt and about $800 million of project level
debt.
The stable rating outlook reflects Moody's expectation that NRG
will generate cash flow of around 10% of total consolidated debt
for the foreseeable future and that leverage will modestly decline
over that timeframe. The rating could be upgraded if NRG
continues to execute on its business plan over a sustainable
timeframe including financing any growth opportunities in a
reasonably conservative fashion. The rating could be downgraded
should sustainable cash flow to total debt decline to around 7 to
8% caused by NRG incurring higher debt or sustainable cash flow
declining due to higher than anticipated operating expenses or
lower than anticipated spark spreads.
Ratings upgraded and removed from review for possible upgrade
include:
-- $1.725 billion 8.0% second lien secured notes due 2013,
upgraded to B1 from B2;
-- Senior implied rating, upgraded to B1 from B2.
Ratings assigned include:
-- Proposed $800 million secured Term Loan due 2011 and
$150 million secured Revolving Credit due 2007 rated Ba3;
-- Issuer Rating at B2
-- Speculative Grade Liquidity (SGL) Rating of SGL-1
The B1 rating for the existing $250 million Revolving Credit
Facility due 2006 and the B1 rating for the existing $700 million
secured Term Loan due 2010 have been withdrawn as both facilities
will be replaced by the new above referenced bank credit
facilities.
Headquartered in Princeton, New Jersey, NRG Energy, Inc., owns and
operates a diverse portfolio of power-generating facilities,
primarily in the United States. Its operations include baseload,
intermediate, peaking, and cogeneration facilities, thermal energy
production and energy resource recovery facilities. The company,
along with its affiliates, filed for chapter 11 protection (Bankr.
S.D.N.Y. Case No. 03-13024) on May 14, 2003. The Company emerged
from chapter 11 on December 5, 2003, under the terms of its
confirmed Second Amended Plan. James H.M. Sprayregen, Esq.,
Matthew A. Cantor, Esq., and Robbin L. Itkin, Esq., at Kirkland &
Ellis, represented NRG Energy in its $10 billion restructuring.
OMEGA HEALTHCARE: Prices 3.5 Million Shares in Public Offering
--------------------------------------------------------------
Omega Healthcare Investors, Inc. (NYSE:OHI) declared the pricing
of the public offering of 3.5 million shares of its common stock
at a price of $11.96 per share for gross proceeds of $41.86
million. The offering is being made from its shelf registration
statement that became effective on August 27, 2004. Also, the
Company intends to grant the underwriters a 30-day option to
purchase up to an additional 525,000 shares of common stock to
cover over-allotments, if any. The common stock is being offered
by the Company and represents a new financing.
UBS Investment Bank is acting as sole book-running manager for the
offering. Banc of America Securities LLC, Deutsche Bank
Securities and Legg Mason Wood Walker, Incorporated are acting as
co-managers for the offering.
This press release shall not constitute an offer to sell nor a
solicitation of an offer to buy, nor shall there be any sale of
these securities in any state or jurisdiction in which such offer,
solicitation, or sale would be unlawful prior to registration or
qualification under the securities laws of any such state or
jurisdiction.
About the Company
Omega is a Real Estate Investment Trust investing in and providing
financing to the long-term care industry. At September 30, 2004,
the Company owned or held mortgages on 205 skilled nursing and
assisted living facilities with approximately 21,900 beds located
in 29 states and operated by 39 third-party healthcare operating
companies.
* * *
As reported in the Troubled Company Reporter on Nov. 02, 2004,
Fitch Ratings has published a credit analysis report on Omega
Healthcare Investors, Inc. providing insight into Fitch's
rationale for its ratings of:
-- $300 million of outstanding senior unsecured notes 'BB';
-- $168 million of preferred stock 'B'.
The Rating Outlook is Stable.
PILLOWTEX CORP: Declares Castle & Cooke's $4.25-Mil. Bid Highest
----------------------------------------------------------------
Castle & Cooke, Inc.'s Kannapolis-based subsidiary, Castle & Cooke
North American Commercial, LLC, was declared the highest bidder at
the conclusion of the auction held earlier Friday for Pillowtex
Corporation's Plant 1 complex and waste water treatment facility
located in Kannapolis. Plant 1, which consists of over five
million square feet and approximately 135 acres, lies in the
center of downtown Kannapolis. The final bid was for
consideration of $4.25 million in cash plus a convertible
promissory note in the principal amount of $2.125 million.
Under the terms of the bid, a joint venture formed by Castle &
Cooke North American Commercial, LLC or an affiliate will own
Plant 1 and the treatment plant. The promissory note to Pillowtex
Corporation will be converted for no cost into a one-third
interest in the joint venture. Castle & Cooke's bid is subject to
Bankruptcy Court approval. The hearing before the Court to
consider such approval is scheduled for Tuesday, Dec. 14, 2004.
David H. Murdock, Chairman and Chief Executive Officer of Castle &
Cooke, Inc., stated, "We, in joint venture with Pillowtex
Corporation, are very excited to be embarking upon the
redevelopment of the Plant 1 complex and the creation of new
employment opportunities for the citizens of Kannapolis and the
surrounding communities. We believe the property offers a great
diversity of development potential and we will be exploring these
possibilities aggressively over the next several months. It is
our goal to determine the best use for the property that would
most benefit the City of Kannapolis and its residents."
North Carolina Governor Mike Easley stated, "We look forward to
working with David Murdock and Castle & Cooke to create jobs and
investment in Cabarrus County and surrounding areas." In
referring to David Murdock and Castle's final bid, Mayor Ray Moss,
City of Kannapolis, stated, "We are dealing with someone who is
known and has been involved in our City since 1982. I can't say
anything about this that doesn't make the future for Kannapolis
brighter than it is." Kannapolis City Manger Mike Legg added,
"This is the best news. This is the best possible scenario for
Kannapolis."
Senator Fletcher Hartsell commented, "Over the years, David H.
Murdock has shown a continued interest in North Carolina and we
are very pleased to see that commitment extend to the
redevelopment of Plant 1. With Castle & Cooke's reputation for
quality development, the coming months will be exciting times for
the entire community. We look forward to working with Mr. Murdock
on these redevelopment plans."
"[Friday's] announcement certainly reinforces David Murdock's
continued commitment to downtown Kannapolis. I am certain the
City of Kannapolis is happy to know that plans for the
redevelopment and reenergizing of this important area of the City
can now begin. Senator Dole's office looks forward to working
with Mr. Murdock and the City of Kannapolis in any way
appropriate," commented Margaret Kluttz, State Director of Senator
Elizabeth Dole's office.
Castle & Cooke North American Commercial, LLC and its affiliate
company, also based in Kannapolis, Atlantic American Properties,
own over 700,000 square feet of commercial and retail space in and
around the Kannapolis area, including Cannon Village, the downtown
Kannapolis shopping district, and over 800 acres of undeveloped
land in Cabarrus and Rowan Counties in North Carolina. Atlantic
American Properties, Inc. also owns and operates the Kannapolis
Country Club and it recently purchased the sixteen-acre former
Pillowtex Plant 4 facility in Kannapolis.
Castle & Cooke, Inc. and its affiliated companies operate in over
twenty-five states, with diversified businesses that include the
ownership and development of real estate, manufacture of brick,
and ownership of public warehouses, in addition to its chassis and
generator set leasing services.
Headquartered in Dallas, Texas, Pillowtex Corporation --
http://www.pillowtex.com/-- sold top-of-the-bed products to
virtually every major retailer in the U.S. and Canada. The
Company filed for Chapter 11 protection on November 14, 2000
(Bankr. Del. Case No. 00-4211), emerged from bankruptcy under a
chapter 11 plan, and filed a second time on July 30, 2003 (Bankr.
Del. Case No. 03-12339). The second chapter 11 filing triggered
sales of substantially all of the Company's assets. David G.
Heiman, Esq., at Jones Day, and William H. Sudell, Jr., Esq., at
Morris Nichols Arsht & Tunnel, represent the Debtors. On
July 30, 2003, the Company listed $548,003,000 in assets and
$475,859,000 in debts.
PREMIER CONCEPTS: Emerges From Chapter 11 Protection
----------------------------------------------------
The U.S. Bankruptcy Court for the Central District of California
approved Premier Concepts, Inc.'s (OTC Bulletin Board: FAUX)
Chapter 11 Plan of Reorganization. Under the terms of the Plan,
Premier's common stock will be subject to a 1 for 11 reverse stock
split, and Premier's name will be changed to USN Corporation.
Also, the Company's symbol has been changed to USNR.
In accordance with the Bankruptcy Court's order, the effective
date of the Plan of Reorganization, as well as the name change and
reverse stock split, took effect yesterday, Dec. 13, 2004.
Headquartered in Century City, California, Premier Concepts, Inc.,
sells costume fashion jewelry in retail outlets. The Company
filed for chapter 11 protection on Oct. 10, 2003 (Bankr. C.D. Cal.
Case No. 03-36445). Lawrence A. Diamant, Esq., at Robinson,
Diamant, & Wolkowitz represents the Debtor in its restructuring
efforts. When the Debtor filed for protection from its creditors,
it listed $2,378,629 in total assets and $2,148,897 in total
debts.
PURE MORTGAGES: Moody's Places Ba2 Rating on $23.5M Class F Notes
-----------------------------------------------------------------
Moody's Investors Service assigned these definitive ratings to the
debt issued by PURE Mortgages 2004 plc, the first synthetic
securitization of US commercial mortgages:
-- Aaa to the $250,000 Class A+ Floating Rate Credit Linked
Notes due 2034,
-- Aaa to the $52,100,000 Class A Floating Rate Credit Linked
Notes due 2034,
-- Aa2 to the Euro 26,050,000 Class B Floating Rate Credit
Linked Notes due 2034,
-- A2 to the $28,650,000 Class C Floating Rate Credit Linked
Notes due 2034,
-- A3 to the $13,050,000 Class D Floating Rate Credit Linked
Notes due 2034,
-- Baa2 to the $29,950,000 Class E Floating Rate Credit Linked
Notes due 2034, and
-- Ba2 to the $23,500,000 Class F Floating Rate Credit Linked
Notes due 2034.
Moody's issued prospective ratings on the Notes on Nov. 5, 2004.
The ratings on the Notes are based on:
(1) the credit risk associated with the underlying collateral
in conjunction with that of a reference pool of commercial
mortgages originated by HSH Nordbank AG;
(2) Moody's assessment of the characteristics of the reference
pool of loans and the underlying real estate;
(3) the subordinated position of the Class A Notes to the Class
A+ Notes;
(4) the level of subordination provided by the more junior
ranking classes of notes; and
(5) the legal and structural integrity of the issue.
The ratings address the timely payment of interest and ultimate
repayment of principal on or before the final maturity date.
Moody's ratings address only the credit risks associated with the
transaction. Other non-credit risks, such as those associated
with the timing of principal prepayments and other market risks
have not been addressed and may have a significant effect on yield
to investors.
The Notes are credit-linked to a pool of US commercial mortgages.
The reference pool totals approximately $1.041 billion and
contains 41 mortgages secured by 51 commercial real estate
properties located throughout the United States. The states with
the highest concentration of properties are:
* California (32.6 per cent),
* New York (27.5 per cent),
* Massachusetts (7.4 per cent),
* Florida (6.5 per cent), and
* Texas (6.1 per cent).
The quality of the security is good with approximately 98 per cent
of all properties achieving an above average quality score. The
net proceeds from the issuance of the Credit-Linked Notes will be
used to fund either a cash collateral account with HSH Luxembourg
(guaranteed by HSH), or certain eligible investments, which will
have the benefit of a Put Option agreement with HSH.
RAINIER CBO: Fitch Assigns Low-B Ratings on Classes B-1L & B-2
--------------------------------------------------------------
Fitch Ratings has affirmed Rainier CBO I, Ltd. and Rainier CBO I
(Delaware) Corp.:
-- $88,549,059.25 class A-1L notes at 'AAA';
-- $137,000,000 class A-2L notes at 'AAA';
-- $62,000,000 class A-3L notes at 'A+';
-- $35,000,000 class A-4C notes at 'BB+';
-- $12,440,000 class B-1L notes at 'B+';
-- $6,960,000.02 class B-2 notes at 'B-'.
Rainier CBO, a collateralized bond obligation -- CBO, is managed
by Centre Pacific, LLC. The CBO was established in July of 2000
to issue debt and equity securities, and the issuance proceeds
were used to purchase high yield bond collateral.
Since the last rating action in January 2004, the collateral pool
has seen improvement in its credit quality. According to the Oct.
17, 2004, trustee report, Rainier CBO's collateral currently
includes a par amount of $13.444 million (3.71%) in defaulted
assets as opposed to $14.367 million (4.04%) in January 2004. The
percentage of 'CCC+' or below assets has gone down to 17.7% from
21.17% since January 2004.
The senior class A overcollateralization -- OC -- test, with a
trigger of 117%, has gone up to 128% from 124.7% since January
2004. The class A OC test, with a trigger of 106%, has gone up to
113.5% from 110.6% since January 2004. The class B OC test is
currently passing at 105.5%, with the trigger set at 103%. This
class B OC test was failing at 102.4% in January 2004. The
revolving period of this transaction ended on July 17, 2004, and
the notes are currently amortizing.
Fitch conducted cash flow modeling utilizing various default
timing and interest rate scenarios to measure the breakeven
default rates relative to the minimum cumulative default rates
required for the rated liabilities.
Fitch will continue to monitor and review this transaction for
future rating adjustments. Additional deal information and
historical data are available on the Fitch Ratings web site at
http://www.fitchratings.com/ For more information on the Fitch
VECTOR Model, see 'Global Rating Criteria for Collateralised Debt
Obligations,' dated Sept. 13, 2004, available on Fitch's web site.
REAL MEX: S&P Places Single-B Ratings on CreditWatch Negative
-------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings for casual
restaurant operator Real Mex Restaurant, Inc., on CreditWatch with
negative implications. The CreditWatch placement follows the
company's agreement to purchase Chevys, Inc., which operates 74
restaurants, the majority of which are located in California, for
$77.9 million. Real Mex plans to fund the acquisition through one
or a combination of debt, equity, cash on hand, or asset sales.
As reported in the Troubled Company Reporter on Mar. 16, 2004,
Standard & Poor's Ratings Services assigned its 'B-' rating to
Real Mex Restaurant Inc.'s proposed $105 million senior secured
note offering due 2010. The notes will be issued under Rule 144A
with registration rights. The proceeds will be used to repay
existing debt. Standard & Poor's also assigned its 'B' corporate
credit rating to the company.
The CreditWatch listing reflects the possibility that ratings
could be lowered based on a potential deterioration of the
company's financial profile. Upon completion of the transaction,
Standard & Poor's will evaluate the merits of the acquisition and
the impact on Real Mex's credit profile.
REGAL ROW: Bankr. Ct. Will Hear Lawsuit Against Washington Mutual
-----------------------------------------------------------------
Chief Judge Fish of the U.S. District Court for the Northern
District of Texas denied a motion by Regal Row Fina, Inc., Shiraz
Poonawala and Yasmin Poonawala, to remand their lawsuit against
Washington Mutual Bank F.A. to Texas state court. Judge Fish
finds that the U.S. Bankruptcy Court is the best place to litigate
the dispute.
Regal Row Fina, Inc., borrowed money from Washington Mutual Bank
before filing for chapter 11 protection. The loan is secured and
Shiraz Poonawala and Yasmin Poonawala, Regal Row's owners,
guarantee repayment of that bank debt.
In 1999, the Debtor and its owners entered into negotiations with
Atlantic Oil & Gas, Inc., p/k/a North Atlantic Oil & Gas, Ltd., to
purchase real property, construct improvements, and to operate a
Fina-branded gas station and convenience store and a Grandy's fast
food restaurant. In July 1999, Yasmin Poonawala purchased the
real property which is the subject of this dispute; Washington
Mutual served as the lender for this purchase. Following this
initial transaction, Washington Mutual provided $1.5 million of
additional financing to Regal Row in October 1999, which was
guaranteed by the Poonawalas. Pursuant to a Deed of Trust, the
Security Agreement, and the Financing Statements, Washington
Mutual holds a first priority security interest in and against
substantially all of Regal Row's real property and personal
property -- including, but not limited to, all of Regal Row's
furniture, fixtures, equipment, and inventory. Washington Mutual
has allowed the Debtor to use cash collateral to fund post-
petition operations.
On April 2, 2004, the Debtor and the Poonawalas sued the Bank
(162d Judicial District Court in and for Dallas County, Texas,
Cause No. 04-02755). The plaintiffs allege counts of fraud,
constructive fraud, fraud in a real estate transaction, breach of
contract, negligent misrepresentation, and breach of fiduciary
duty. The plaintiffs seek money damages and an award of costs and
attorney's fees against Washington Mutual. Specifically, the
plaintiffs claim that prior to the July 1999 purchase and the
October 1999 financing, there were several meetings and
conversations between the parties during which time Washington
Mutual made certain representations. As a result of these
representations, the plaintiffs claimed that they believed they
had acquired real estate, improvements, and personal property to
operate the business at a cost they understood to be the cost of
construction. However, the plaintiffs stated that the value of
their acquisition was less than the amount the plaintiffs paid to
Washington Mutual, thereby allowing Washington Mutual to receive a
financial benefit by reason of the excess charges.
After Regal Row tumbled into chatper 11, Washington Mutual removed
the lawsuit from state court to the Bankruptcy Court. The Debtor
and the Poonawalas want the lawsuit sent back to state court.
Judge Fish says the Bankruptcy Court is the appropriate forum.
Regal Row Fina, Inc., sought chapter 11 protection (Bankr. N.D.
Tex. Case No. 04-33857-SAF-11), on April 5, 2004. Robert M.
Nicoud, Jr., Esq., at Olson, Nicoud & Gueck, LLP, represents Regal
Row. When the debtor filed for chapter 11 protection, it reported
$596,000 in assets and $1,596,484 in liabilities. On May 5, 2004,
Shiraz and Yasmin Poonawala, Regal Row's owners, commenced an
individual chapter 11 proceeding (Bankr. N.D. Tex. Case 04-35147-
BJH-11).
RELIANCE GROUP: High River Objects to Disclosure Statement
----------------------------------------------------------
High River Limited Partnership notes that the Official Committee
of Unsecured Creditors' Disclosure Statement fails to provide
adequate information on the Litigation Claims and Proceeds and
the ERISA Breach of Duty Claims.
According to Edward S. Weisfelner, Esq., at Brown Rudnick Berlack
Israels, LLP, in New York City, the Disclosure Statement is
"replete with glaring deficiencies that make it impossible for
creditors to analyze the merits of the Creditors' Committee
Plan." There is not enough information to evaluate:
(a) the Litigation Claims;
(b) how those Litigation Claims will be pursued by Reliance
Group Holdings; and
(c) the ERISA-based claims that are effectively abandoned by
the Creditors' Committee Plan.
"These deficiencies leave creditors with no guidance on possible
recoveries, possible distributions, and the possible outcome of
the Creditors' Committee Plan," Mr. Weisfelner says.
A. Litigation Claims and Proceeds
Mr. Weisfelner points out that the Disclosure Statement does
not provide enough information on the nature and extent of
Litigation Claims and Litigation Proceeds. Like the Bank
Committee Plan, the Creditors' Committee Plan provides
that Holders of Claims in Classes 2 and 4a, unless they "opt
out," will assign their rights to Litigation Claims to RGH.
RGH will then prosecute the Litigation Claims and distribute
the Proceeds in accordance with the distribution scheme of the
Creditors' Committee Plan. Mr. Weisfelner complains that
the Disclosure Statement does not address the potential for
the Litigation Claims. There is no description of the
underlying factual basis of the Litigation Claims or of the
likely outcome.
High River wants to know how the Litigation Claims will be
prosecuted. The Disclosure Statement does not explain what
legal strategies will employed, the means in which the
Litigation will be guided or what entity will be responsible
for legal decisions. The Disclosure Statement only makes a
bald reference that RGH will be responsible for the
prosecution of the Litigation Claims. For example, Mr.
Weisfelner says, there is no information as to how
determinations whether to settle Litigation Claims will be
made, or how "RGH" will determine which Litigation Claims to
pursue. In short, there is no information with respect to the
entities responsible for litigation strategy and the means for
devising that strategy.
B. ERISA Breach of Fiduciary Duty Claims
The Disclosure Statement does not adequately describe the
nature and extent of ERISA-based Breach of Fiduciary Duty
Claims. These Claims are to be carved out of the Litigation
Claims assigned to RGH for prosecution for the benefit of
certain RFSC creditors. For example, if RFSC is deemed to be
a fiduciary of the pension plans at issue, RFSC may have
valuable claims for the benefit of its creditors -- claims
that are not assigned to RGH for prosecution. Service
providers may have committed fiduciary duty breaches,
producing increased liabilities that were imposed on RFSC. If
so, valuable claims against those service providers may exist.
The Disclosure Statement fails to discuss these potential
Claims, or any other potential estate claims that are being
abandoned by the Creditors' Committee Plan.
In light of the deficiencies, the Disclosure Statement does not
have enough information to enable creditors to decide whether to
accept the proposed treatment under the Creditors' Committee
Plan. Without understanding the Litigation Claims, the ERISA-
based Breach of Fiduciary Duty Claims or how they will be
pursued, a creditor cannot determine whether the distribution
scheme for the Litigation Proceeds is satisfactory. Given the
information gaps, High River asserts, the Court should not
approve the Disclosure Statement.
Headquartered in New York, New York, Reliance Group Holdings, Inc.
-- http://www.rgh.com/-- is a holding company that owns 100% of
Reliance Financial Services Corporation. Reliance Financial, in
turn, owns 100% of Reliance Insurance Company. The holding and
intermediate finance companies filed for chapter 11 protection on
June 12, 2001 (Bankr. S.D.N.Y. Case No. 01-13403) listing
$12,598,054,000 in assets and $12,877,472,000 in debts. The
insurance unit is being liquidated by the Insurance Commissioner
of the Commonwealth of Pennsylvania. (Reliance Bankruptcy News,
Issue No. 65; Bankruptcy Creditors' Service, Inc., 215/945-7000)
ROLLIE R. FRENCH: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Rollie R. French, Inc.
1813 South 10th Street
San Jose, California 95112
Tel: (408) 286-5300
Bankruptcy Case No.: 04-57424
Type of Business: The Company is a member of the South Bay
Plastering Contractors Association.
See http://www.plasterconnect.com/
Chapter 11 Petition Date: December 7, 2004
Court: Northern District of California (San Jose)
Judge: Arthur S. Weissbrodt
Debtor's Counsel: Robert G. Harris, Esq.
Heinz Binder, Esq.
Binder & Malter, LLP
2775 Park Avenue
Santa Clara, California 95050
Tel: (408) 295-1700
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
------ --------------- ------------
Scafco Steel Trade Debt $261,186
PO Box 11215
Spokane, Washington 99211-1215
Carpenter Funds of North Union $231,850
California
Department 01611
PO Box 39000
San Francisco, California 94139
Acoustical Material Services Trade Debt $163,176
1137 Olinder Court
PO Box 20492
Phoenix, Arizona 95036
Brand Scaffold Rent & Erect Trade Debt $113,562
PO Box 91298
Chicago, Illinois 60693
ADR Consulting, Inc. Consulting Services $78,873
Calply, Inc. Trade Debt $59,022
Tomarco Trade Debt $54,958
Plasterers Local #66 Union $50,593
Isolatek International Trade Debt $46,003
Bay Scaffolding, Inc. Trade Debt $40,895
State Compensation Insurance Workers Compensation $25,839
Bay Area Painters & Tapers Union $24,634
San Francisco Gravel Company Trade Debt $19,836
Plasterers Local #224 Union $18,556
Ahern Rentals Trade Debt $18,537
HOD Carriers #36 Trust Funds Union $17,696
Denmar Steel Incorporated Trade Debt $11,833
Railway Distributors Trade Debt $9,370
Aqua Proof, Inc. Trade Debt $7,318
North California Ind. Union $7,130
Pension Plan
SEQUILS-MINCS: Fitch Puts 'BB-' Rating on $58 Mil. MINCS Notes
--------------------------------------------------------------
Fitch Ratings affirms the ratings assigned to SEQUILS ING and
MINCS ING effective immediately:
-- $355,000,000 SEQUILS notes 'AA';
-- $58,653,000 MINCS notes 'BB-'.
SEQUILS ING and MINCS ING are cash flow and synthetic CLOs,
respectively, jointly obtaining exposures to a portfolio of high
yield U.S. senior bank loans. SEQUILS obtains access to the
economics of the loan portfolio via the purchase or the assignment
of the loans using funds obtained from the SEQUILS note issuance.
MINCS obtains access to the economics of the portfolio by
synthetically referencing the portfolio via credit default swaps
between SEQUILS, JPMorgan Chase Bank, and MINCS. The MINCS
program is essentially a first-loss, credit enhancement to the
SEQUILS program. ING Capital Advisors, Inc., is the asset
manager.
Positive performance since Fitch last rating action on the
transactions confirms Fitch's opinion that the risk inherent in
the various classes of securities are commensurate with the
ratings assigned. Specifically, defaulted assets and assets rated
'CCC' or lower represent approximately 2.3% of the portfolio and
the credit quality of the overall portfolio remains unchanged at
'BB-/B+'. The SEQUILS reserve account balance increased by $2
million to $6.6 million, the SEQUILS threshold utilization test
has decreased nearly 20% to 0.0%, and the MINCS deficit ratio has
also improved by nearly 5% to 49.3%.
Fitch assigned a rating for the SEQUILS notes to the timely return
of interest and ultimate return of principal. The MINCS notes are
rated to the ultimate payment of basic interest and principal.
Additionally, the ratings assigned to the SEQUILS and MINCS notes
do not address the payment of any additional interest or
distributions.
SEQUOIA MORTGAGE: Fitch Puts Low-B Ratings on 4 Cert. Classes
-------------------------------------------------------------
Fitch Ratings has taken rating actions on Sequoia Mortgage Trust
Home Equity Issues:
Sequoia Mortgage Trust 11 (2002-11):
-- Class A affirmed at 'AAA';
-- Class B-1 affirmed at 'AA';
-- Class B-2 affirmed at 'A';
-- Class B-3 affirmed at 'BBB';
-- Class B-4 affirmed at 'BB';
-- Class B-5 affirmed at 'B'.
Sequoia Mortgage Trust 12 (2002-12):
-- Class A affirmed at 'AAA';
-- Class B-1 affirmed at 'AA';
-- Class B-2 affirmed at 'A';
-- Class B-3 affirmed at 'BBB';
-- Class B-4 affirmed at 'BB';
-- Class B-5 affirmed at 'B'.
The affirmations reflect credit enhancement consistent with future
loss expectations and affect $1,373,733,464 of outstanding
certificates.
As of the November 2004 distribution, the pool factor (current
mortgage loans outstanding as a percentage of the initial pool)
for Trust 11 is 92%. In the 25 months since this transaction
closed, credit enhancement (in the form of subordination) has
increased by at least 40% for each class.
As of the November 2004 distribution, the pool factor for Trust 12
is 76%. In the 23 months since this transaction closed, credit
enhancement has increased by at least 30% for each class.
SIMMONS BEDDING: S&P Rates Planned $165M Sr. Discount Notes at B-
-----------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its ratings on
Atlanta, Georgia-based mattress manufacturer Simmons Bedding Co.,
including its 'B+' corporate credit rating.
At the same time, Standard & Poor's assigned its 'B+' corporate
credit rating to Simmons Co., the holding company of the entity.
Standard & Poor's also assigned its 'B-' rating to Simmons Co.'s
proposed $165 million senior discount notes due 2014. For
analytical purposes Standard & Poor's views the companies on a
consolidated basis.
At the same time, Standard & Poor's revised its outlook to
negative from stable, reflecting the consolidated firm's increased
debt leverage.
The notes are rated two notches below the corporate credit rating,
indicating its subordinated position in the consolidated capital
structure. Proceeds from the proposed notes will be used to fund
a dividend to the company's shareholders.
"The ratings on Simmons are based on its highly leveraged
financial profile, a result of its debt-financed acquisition by an
affiliate of Thomas H. Lee Partners L.P. in late 2003, and the
proposed holding company notes," said Standard & Poor's credit
analyst Martin S. Kounitz. At these debt levels, the ratings
would be lower if not for firm's history of stable cash flows,
successful new product innovations and its entrenched number-two
position in the stable mattress industry, which is characterized
by predictable demand characteristics.
Following the company's recapitalization in December 2003, and pro
forma for the proposed issuance of $165 million senior discount
notes, Simmons is very highly leveraged.
SIMMONS COMPANY: Moody's Junks $165 Million Senior Discount Notes
-----------------------------------------------------------------
Moody's Investors Service has assigned a Caa2 rating to Simmons
Company's proposed $165 million senior discount notes due 2014.
At the same time, the existing senior unsecured issuer rating of
B3 assigned to Simmons Bedding Company has been withdrawn and a
new senior unsecured issuer rating of Caa2 has been assigned to
Simmons Company. All other ratings have been affirmed. Outlook
remains stable.
These ratings have been assigned:
* $165 million secured discount notes due 2014 of Caa2;
* Long-term senior unsecured issuer rating of Caa2;
These ratings have been affirmed:
* Senior implied rating of B2;
* $75 million senior secured term loan B due 2011 of B2;
* $405 million senior term loan B due 2011 of B2;
* $140 million senior unsecured floating rate loan due 2012 of
B3;
* $200 million senior subordinated notes due 2013 of Caa1;
This rating has been withdrawn:
* Long-term senior unsecured issuer rating of B3
The discount notes will be issued by Simmons Company, the ultimate
holding company of Simmons Bedding Company, without upstream
support from any of the operating subsidiaries. Proceeds from the
senior discount notes are expected to be dividended to all
shareholders, including, Thomas H. Lee Partners, the financial
sponsor of Simmons Company, and to pay transaction costs.
The new ratings and affirmation reflect Simmons increased leverage
as a result of the transaction mitigated by improved operating
performance. Moody's expects December 2004 leverage, proforma for
the sale of Mattress Gallery, acquisition of Juvenile Products and
the proposed note offering, to be approximately 6.7x, an increase
from 5.5x at September 25, 2004. The higher debt burden will
place additional pressure on Simmons Bedding Company to generate
adequate profits for dividends to be upstreamed to Simmons Company
and could limit the company's overall financial flexibility.
Mitigating this increased leverage is the company's success in
enhancing its operations.
Over the past few years, Simmons has registered improvements in
its operating margins, which is reflective of its strong product
innovation and cost control discipline. Management's focus on
product innovation and cost control (eg. shift to one-sided
mattress and zero-waste programs) has enabled the company to
achieve this growth while increasing its EBITDA margins and free
cash flow after capital expenditures. Moreover, Simmons has been
disciplined in its application of cash flow to debt reduction over
the past couple of years.
The Caa2 rating on Simmons Company senior discount notes reflects
their structural subordination to a material amount of
indebtedness at Simmons Bedding Company. These notes will not be
guaranteed by any operating subsidiary and will not pay cash
interest for the first five years. Provisions in the indenture
are expected to restrict additional indebtedness, dividends,
investments, liens, asset sales, affiliate transactions, and
mergers and acquisitions. Further, restricted payments will be
limited to 50% of consolidated net income.
Simmons' credit profile remains supported by its leading brand and
competitive position (second largest market share behind Sealy) in
the relatively stable and brand sensitive mattress industry, by
its product innovation (HealthSmart removable mattress tops
introduced in October 2004), and by the proven operating abilities
of Simmons senior management who are expected to continue in their
current roles. While consumers can defer mattress purchases in
the short term, replacement bedding accounts for about 70% of
industry sales and the average replacement cycle has been
relatively steady at 8 to 10 years. The mattress industry's
stability also stems from favorable demographics including growth
in home sales, number of rooms per home, disposable income, and
population (approximately 2/3 of Simmons sales come from
replacement sales). The industry has experienced only one
year-over-year dollar sales decline over the past twenty years
(2001), and average selling prices have steadily risen. Finally,
Moody's believes that it is unlikely that Simmons will move any of
its business overseas given quick turnarounds (3 days from order
to delivery).
The stable ratings outlook reflects Moody's expectation that
Simmons will maintain its credit protection measures, which should
allow for moderate deleveraging over time. Moody's expects
management to sustain its strategic direction, which is centered
on premium pricing (price points of $799 or higher), new products
and distribution channels, cost and asset efficiency measures, and
debt reduction.
Moody's will consider positive rating actions if Simmons sustains
its currently strong operating momentum with well-received new
product launches and smooth operational transitions, and applies
its cash generation to debt reductions. Negative ratings actions
could be considered through a sustained reversal in profitability
measures or a change in strategic direction, which materially
impedes debt reduction, compromises the company's liquidity
position, or upsets recent market share gains.
Headquartered in Atlanta, Georgia, Simmons Company is one of the
largest manufacturers of premium mattresses, foundations and
related accessories. The company has the second largest market
share, behind Sealy, in the U.S. mattress industry. Net sales for
the twelve months ended September 2004 approximated $876 million.
SINGH BROTHERS LLC: Case Summary & 4 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Singh Brothers LLC
c/o Sukhdev Hothi
27902 36th Avenue South
Auburn, Washington 98001
Bankruptcy Case No.: 04-25645
Chapter 11 Petition Date: December 9, 2004
Court: Western District of Washington (Seattle)
Judge: Thomas T. Glover
Debtor's Counsel: Richard G. Birinyi, Esq.
Bullivant Houser Bailey PC
1601 5th Avenue #2300
Seattle, WA 98101
Tel: 206-292-8930
Total Assets: $2,327,500
Total Debts: $1,008,740
Debtor's 4 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Sukhdev Hothi $7,500
27902 36th Ave. S.
Auburn, WA 98001
Gurmail Kang $7,500
5612 185 St.
Surrey, BC V3S 8J3
Farmers Insurance Services $1,340
P.O. Box 25368
Santa Ana, CA 92799
Puget Sound Energy Services $400
STANDARD PARKING: Moody's Withdraws Junk Ratings After Redemption
-----------------------------------------------------------------
Moody's Investors Service has withdrawn the ratings of Standard
Parking Corporation following the redemption of the company's
rated debt securities.
These ratings have been withdrawn:
* Senior Implied, rated Caa1;
* Issuer Rating, rated Caa1.
The withdrawal reflects the company's redemption of its rated debt
with the proceeds of an equity issuance and a new senior credit
facility, which is not rated by Moody's.
Standard Parking Corporation and its subsidiaries and affiliates
manage, operate and develop parking properties throughout the
United States and Canada. Revenues for the year ended
December 31, 2003 were about $546 million.
STELCO INC: Utilizes $257.6 Million of Credit Facility
------------------------------------------------------
Stelco Inc.'s (TSX:STE) credit facility utilization pursuant to an
existing Stelco financing agreement was $257.6 million as of
November 12, 2004. Stelco forecasts that the total facility
utilization of the Existing Stelco Financing Agreement will
decrease by $25.7 million to $231.9 million as at Feb. 11, 2005.
There has been interest shown in the sale process of the non-core
subsidiaries. A total of 53 parties have signed confidentiality
agreements with respect to the six non-core subsidiaries:
* AltaSteel,
* Norambar,
* Stelcam,
* Stelwire,
* Stelfil, and
* Stelpipe.
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.
STRUCTURED ASSET: Fitch Assigns Low-B Ratings on Four Certificates
------------------------------------------------------------------
Fitch Ratings has affirmed 29 classes of Structured Asset
Securities Corp. residential mortgage-backed certificates:
Series 1996-2:
-- Class A affirmed at 'AAA'.
Series 1996-A:
-- Class A affirmed at 'AAA'.
Series 2001-11:
-- Class A affirmed at 'AAA'.
Series 2001-15A:
-- Class A affirmed at 'AAA'.
Series 2001-17:
-- Class A affirmed at 'AAA'.
Series 2002-15:
-- Class A affirmed at 'AAA'.
Series 2002-19:
-- Class A affirmed at 'AAA'.
Series 2002-27A:
-- Class A affirmed at 'AAA'.
Series 2003-4:
-- Class A affirmed at 'AAA'.
Series 2003-16:
-- Class A affirmed at 'AAA'.
Series 2003-21:
-- Class A affirmed at 'AAA'.
Series 2003-23H:
-- Class A affirmed at 'AAA';
-- Classes 1B1, 2B1 affirmed at 'AA';
-- Classes 1B2, 2B2 affirmed at 'A';
-- Class B3 affirmed at 'BBB';
-- Class B4 affirmed at 'BB';
-- Class B5 affirmed at 'B'.
Series 2003-29:
-- Class A affirmed at 'AAA'.
Series 2003-30:
-- Class A affirmed at 'AAA'.
Series 2003-33H:
-- Class A affirmed at 'AAA';
-- Classes 1B1, 2B1 affirmed at 'AA';
-- Classes 1B2, 2B2 affirmed at 'A';
-- Class B3 affirmed at 'BBB';
-- Class B4 affirmed at 'BB';
-- Class B5 affirmed at 'B'.
These affirmations reflect credit enhancement consistent with
future loss expectations, and affect $2,777,652,377 of outstanding
certificates. The pools are seasoned from a range of 103 to only
13 months. The pool factors (current principal balance as a
percentage of original) range from approximately 4% to 87%
outstanding.
TENET HEALTHCARE: Subsidiary to Sell St. Charles General Hospital
-----------------------------------------------------------------
Tenet Healthcare Corporation (NYSE:THC) reported that a company
subsidiary has entered into a definitive agreement to sell St.
Charles General Hospital, a 168-bed hospital in New Orleans, to
Preferred Continuum Care.
Net after-tax proceeds, including a note from Preferred Continuum
Care for a portion of the sales proceeds and the liquidation of
working capital, are estimated to be approximately $11 million.
The company expects to use the proceeds of the sale for general
corporate purposes.
Preferred Continuum Care, based in Birmingham, Ala., was formed in
January 2004 to create centers of excellence for treating long-
term acute care patients. The company, which is developing
facilities in four states, was founded by two health care
executives -- Thomas D. Scott and Eugene E. Smith -- with combined
industry experience totaling more than 50 years. Smith is an
original founder of HEALTHSOUTH Corporation. The transaction is
expected to be complete by Dec. 31, subject to customary
approvals.
"We are pleased to be transferring ownership of St. Charles
General Hospital to a well-qualified buyer with significant
experience in hospital operations, who will continue to provide
health care services to the community," said W. Randolph Smith,
president of Tenet's former Western Division, who is overseeing
the company's previously announced divestiture program. "New
Orleans remains an important market for Tenet and we are committed
to continue serving the community through the network of acute
care hospitals and health care facilities that we are retaining in
the area."
St. Charles General Hospital is one of 27 facilities Tenet
reported it was divesting on Jan. 28, 2004. Tenet has completed
the divestiture of 11 of the 27 facilities and, with this
announcement, has entered into definitive agreements to divest
another 11. Discussions and negotiations with potential buyers
for the remaining five hospitals slated for divestiture are
ongoing.
Previously reported completed divestitures are:
-- In November, a Tenet subsidiary completed the sale of Midway
Hospital Medical Center in Los Angeles to Physicians of
Midway, Inc. Net after-tax proceeds, including the
liquidation of working capital, are estimated to be
approximately $12 million.
-- Also in November, several Tenet subsidiaries completed the
transfer of assets of three acute care hospitals in West Los
Angeles to Centinela Freeman HealthSystem. Net after-tax
proceeds are estimated to be approximately $47 million,
including the liquidation of working capital and tax
benefits.
-- In October, several Tenet subsidiaries completed the sale of
four hospitals in the Los Angeles area to AHMC, Inc. Net
after-tax proceeds, including the liquidation of working
capital, are estimated to be approximately $95 million.
Under the sales agreement, the company received $50 million
of cash proceeds upon closing and entered into a $50 million
senior secured loan agreement with the buyer. The $50
million loan due from the buyer matures on Dec. 16, 2004,
and is collateralized by all the properties of the sold
hospitals.
-- In August, a Tenet subsidiary completed the sale of Doctors
Hospital of Jefferson in Metairie, La., to East Jefferson
General Hospital. Net after-tax proceeds, including the
liquidation of working capital, are estimated to be
approximately $33 million.
-- In July, a Tenet subsidiary returned Doctors Medical Center
- San Pablo in San Pablo, Calif., to the West Contra Costa
Health Care District, the entity from which the company had
been leasing the facility.
-- In June, a Tenet subsidiary completed the sale of
Brownsville Medical Center in Brownsville, Texas, to Valley
Baptist Health System. Net after-tax proceeds, including the
liquidation of working capital, are estimated to be
approximately $68 million.
Previously announced definitive agreements are:
-- In November, a Tenet subsidiary entered into a definitive
agreement to sell Hollywood Presbyterian Medical Center in
Los Angeles, Calif., to the CHA Medical Group. Net after-tax
proceeds, including the liquidation of working capital, are
estimated to be approximately $69 million. The transaction
is expected to be complete by Dec. 31, subject to regulatory
approvals.
-- In October, several Tenet subsidiaries entered into a
definitive agreement to sell two acute care hospitals in St.
Louis to Argilla Healthcare, Inc. Net after-tax proceeds,
including the liquidation of working capital, are estimated
to be approximately $42 million. The sale is expected to be
complete by Dec. 15, subject to regulatory approvals.
-- Also in October, several Tenet subsidiaries entered into a
definitive agreement to sell three acute care hospitals in
Massachusetts to a subsidiary of Vanguard Health Systems,
Inc. Net after-tax proceeds, including the liquidation of
working capital, are estimated to be approximately $167
million. The sale is expected to be completed by Dec. 31,
subject to regulatory approvals and certain other closing
conditions.
-- In September, several Tenet subsidiaries entered into a
definitive agreement to sell four acute care hospitals in
Orange County, Calif., to Costa Mesa-based Integrated
Healthcare Holdings, Inc. Net after-tax proceeds, including
the liquidation of working capital, are estimated to be
approximately $72 million. The transaction is expected to be
complete in December, subject to customary regulatory
approvals.
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 Dec. 09, 2004,
Moody's Investors Service assigned an SGL-4 speculative grade
liquidity rating to Tenet Healthcare Corporation. At the same
time, Moody's affirmed Tenet's existing long-term debt ratings
(senior implied at B2) and assigned a B3 rating to Tenet
Healthcare's $1 billion 9.875% senior unsecured note offering,
which was issued in June of this year. The rating outlook is
negative.
Ratings assigned:
* Tenet Healthcare Corporation:
-- SGL-4 speculative grade liquidity rating;
-- B3, 9.875% senior unsecured notes.
Ratings affirmed:
* Tenet Healthcare Corporation:
-- B2 senior implied;
-- B3 issuer rating;
-- B3 senior unsecured note ratings.
TENGTU INTL: Working Capital Deficiency Spurs Going Concern Doubt
-----------------------------------------------------------------
Tengtu International Corp., reported that for the fiscal year
ended June 30, 2004, it made a one time adjustment of $18,700,000
due from a related party. Tengtu believed that its approximately
$19.5 million receivable due from Tengtu China was materially
impaired and that Tengtu was continuing an assessment of the
impairment. Upon further assessment, Tengtu believes that
approximately $800,000 of this amount will be collected from
schools resulting in a write-down $18,700,000 due from Tengtu
China in the quarter ended June 30, 2004. However, the Company is
continuing aggressive efforts to collect all receivables.
In addition to, the Tengtu China Group companies have incurred
approximately $8.37 million in bank debts and loans.
The Company's net loss for the year ended June 30, 2004, was
$73,015,718. Other cash changes from operating activities include
non-cash changes for depreciation of $108,288, $47,209,330 of
Goodwill write off after re-evaluation of issuing 30 million
shares for a 43% of interest in Tengtu United and consolidation of
other Tengtu Group companies from the restructuring, loss on eqity
investments of $1,183,804 primarily due to the high start-up
expenses in CBERC, bad debt expenses of $18,700,000 for the one-
time write off of amounts due from related party, minority
interest of $13,101, net advances to related party of $680,185,
and non-cash interest expense of $272,013 related to the Top Eagle
Holdings, Ltd. convertible debenture.
Tengtu's cash on hand is not sufficient to meet its capital
investment plans and operating requirements for the next 12
months. The Company is planning to raise additional funds to meet
the cash requirements for its operations, including NEP and CBERC.
There can be no assurance that the financing will be available, or
if available, that it will be on acceptable terms.
Going Concern Doubt
Moore Stephens, P.C., Certified Public Accountants of New York,
New York, has stated, in part, in their September 26, 2004,
Auditors Report to the Board of Tengtu International Corporation:
"The accompanying statements have been prepared assuming that the
Company will continue as a going concern. . . . [T]he Company
incurred a net loss of $73,015,718 for the year ended June 30,
2004, used cash in operations of $3,690,102 and, as of that date,
had a working capital deficiency of $3,822,607. These conditions
raise substantial doubt about the Company's ability to continue as
a going concern."
Tengtu International Corp., through its wholly owned subsidiary,
Beijing Tengtu United Electronics Development Co., Ltd., is
engaged in the sale of software and educational materials to
schools in the People's Republic of China.
TOWER PARK: Unsatisfactory Cash Flows Trigger Going Concern Doubt
-----------------------------------------------------------------
Tower Park Marina Investors LP's marina is not generating
satisfactory levels of cash flows and cash flow projections do not
indicate significant improvement in the near term. These matters
raise substantial doubt about the Partnership's ability to recover
the carrying value of its assets, (not withstanding the write-down
of the marina facility to its net realizable value) and to
continue as a going concern. The Partnership's ability to
continue to operate through 2004 and beyond is contingent on,
among other factors, the improvement in Tower Park Marina
operations and continued advances from the General Partners.
Management's plans include the expenditure of approximately
$125,000 (unaudited) in additional repairs and capital
improvements during 2004, which management believes will continue
to improve the operations of the property.
For the nine months ended September 30, 2004, revenues for Tower
Park declined by $141,000 to $2,107,000. The decrease was the net
result of declines in RV parking ($86,000) retail sales ($68,000)
and other ($63,000), offset by increases in slip rentals of
$51,000, and fuel service of $20,000.
For the three months ended September 30, 2004, the Partnership's
net loss of $35,000 was $34,000 better than the $69,000 net loss
incurred for the same period last year. However, last year's net
loss included an $81,000 prepayment penalty assessed by the prior
lender and $24,000 related to the write-off of unamortized loan
costs. Adjusting for these two items, the Partnership's
performance was $71,000 worse than that of the prior year. This
decline was primarily the result of an $80,000 decline in RV
parking revenues, as a result of transient workers occupying a
large portion of the RV park in 2003.
The Partnership's net loss of $261,000 for the nine months ended
September 30, 2004, is $6,000 more than the loss incurred in the
same period a year ago. The increased loss reflects a decline in
activity at the property from the previous year, when occupancies,
primarily in RV parking, were elevated by transient workers who
resided at the property during road construction for most of 2003.
In addition, lease income declined due to a decrease in percentage
rent payments from the restaurant tenant, and a reduction in
square footage leased to another tenant. The 2004 loss was
partially offset by a significant decline in interest expense, due
primarily to the 2003 interest amounts including an $81,000
prepayment penalty assessed by the prior lender.
Included in the Partnership's net loss of $261,000 is $199,000 of
depreciation and amortization. Excluding these non-cash items,
the Partnership incurred a cash flow deficit of $62,000. This
deficit was covered by additional advances from the General
Partner and by the deferral of interest and management fee
payments due to the General Partner and its affiliates.
Tower Park Marina Investors, L.P. (f/k/a PS Marina Investors I),
is a publicly held limited partnership organized on Jan. 6, 1988
under the California Revised Limited Partnership Act.
The Company was formed to acquire and improve existing marinas and
related facilities and, to a lesser extent, to develop marina
facilities. Marina facilities typically contain wet and dry boat
storage facilities, gasoline sales facilities and may contain one
or more related facilities such as a recreational vehicle or
campground facilities, boat trailer storage facilities, boat
rental and sales facilities, restaurants or similar facilities,
and boat supply and sundries stores. Substantially all of the
Company's income is derived from the rental of wet and dry boat
storage facilities and related facilities such as R.V. facilities
and boat trailer storage facilities, and from the receipt of
rental payments under leases or subleases.
TRAPEZA CDO: Fitch Affirms $6.9 Mil. Class E Debt Rating at 'BB'
----------------------------------------------------------------
Fitch Ratings affirms seven classes of notes issued by Trapeza CDO
III, LLC. These affirmations are the result of Fitch's review
process. These rating actions are effective immediately:
-- $108,497,331 class A1A notes at 'AAA';
-- $71,500,000 class A1B notes at 'AAA';
-- $25,000,000 class B notes at 'AA+';
-- $31,250,000 class C-1 notes at 'A';
-- $31,250,000 class C-2 notes at 'A';
-- $13,715,288 class D notes at 'BBB';
-- $6,857,142 class E notes at 'BB'.
Trapeza III is a collateralized debt obligation -- CDO -- managed
by Trapeza Capital Management, LLC which closed June 25, 2003.
Trapeza III is composed of bank and thrift trust preferred
securities. Included in this review, Fitch discussed the current
state of the portfolio with the asset manager and their portfolio
management strategy going forward.
Since closing the collateral has continued to perform, with slight
improvement in the weighted average bank score of the portfolio as
determined by the Fitch Bank Scoring Model. The class A/B and
class C/D overcollateralization -- OC -- ratios remain relatively
unchanged, and continue to pass their performance test triggers of
141.25% and 103.5% with ratios of 146.3% and 106.7%, respectively.
There are currently no deferring or defaulted securities in the
portfolio. Three institutions with securities totaling 5.1% of
the initial portfolio have been acquired by separate institutions
not previously included in the portfolio, allowing obligor
concentration to remain unchanged.
The ratings on the class A1A, A1B, and B notes address the
likelihood that investors will receive timely payment of interest
and ultimate payment of principal by the stated maturity date.
The ratings on the class C-1, C-2, D, and E notes address the
likelihood that investors will receive ultimate payment of
interest and ultimate payment of principal by the stated maturity
date.
TRUSSWAY LTD.: Involuntary Chapter 11 Case Summary
--------------------------------------------------
Alleged Debtors: Trussway, Ltd.
Trussway Holdings, Inc.
Trussway Partners, Inc.
Trussway, Inc. Central
Trussway, Inc. East
Trussway, Inc. West
T-Way L.P., Inc.
c/o 9411 Alcord
Houston, Texas 77093
Involuntary Petition Date: December 9, 2004
Case Numbers: 04-21687 to 04-21689 and 04-21691 to 04-21694
Chapter: 11
Court: Southern District of Texas (Corpus Christi)
Judge: Richard S. Schmidt
Petitioners' Counsel: Trey A. Monsour, Esq.
Haynes & Boone LLP
901 Main Street, Suite 3100
Dallas, TX 75202
Tel: 214-651-5137
Fax: 214-200-0532
Petitioner Claim Amount
---------- ------------
Pam Capital Funding LP $11,111,252
13455 Noel Road Suite 1300
Dallas, TX 75240
Pamco Cayman Ltd. $10,740,877
13455 Noel Road Suite 1300
Dallas, TX 75240
Highland Legacy Limited $7,407,502
c/o Highland Capital Management, L.P.
Two Galleria Tower
13455 Noel Road, Ste 1300
Dallas, TX 75240
California Public Employees' Retirement System $5,555,626
c/o Highland Capital Management, L.P.
Two Galleria Tower
13455 Noel Road, Ste. 1300
Dallas, TX 75240
UAL CORP: Permanent Salary Reductions to Save $112 Mil. Annually
----------------------------------------------------------------
UAL Corporation (OTC Bulletin Board: UALAQ), the holding company
whose primary subsidiary is United Airlines, disclosed changes to
salaried and management (SAM) employees' compensation and benefits
that will achieve annual average savings of $112 million through
permanent salary reductions, benefit changes, and productivity
enhancements.
The permanent SAM salary reductions will increase with an
employee's responsibilities:
-- Salaried employees will take a 4% reduction.
-- Management employees will take a 6% reduction.
-- Officers will take an 8% reduction.
-- Members of the Executive Council (Glenn Tilton and his
seven direct reports) have already said they will take an
11% reduction.
In addition to the permanent salary reductions, and consistent
with United's proposals to its unions, there will be a 4%
temporary reduction in salaries. As a result, total reductions in
salaries for the SAM group will range from 8% to 15%. These
salary reductions take effect January 1; the temporary reductions
will be restored upon United's exit from bankruptcy.
"This is very difficult for all our employees," said Sara Fields,
senior vice president-People. "But it is absolutely essential if
we are to build a strong and healthy company providing good,
secure jobs, competitive compensation and benefits, and the
opportunity to participate in the company's success in the
future."
The company also will adopt a revised benefit plan for salaried
and management employees and is assessing the impact of changes to
medical and dental programs, vacation and holiday schedules, and
sick leave. These plans have not been finalized. The final
component of the salaried and management savings is expected to be
achieved through productivity enhancements. The company has
already identified $30 million in annual productivity savings.
These changes affect U.S.-based salaried and management employees
and expatriates only.
Headquartered in Chicago, Illinois, UAL Corporation --
http://www.united.com/-- through United Air Lines, Inc., is the
holding company for United Airlines -- the world's second largest
air carrier. The Company filed for chapter 11 protection on
December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M.
Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq.,
and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $24,190,000,000
in assets and $22,787,000,000 in debts.
UAL CORP: IFS Wants Pension Payments Under Administrative Claim
---------------------------------------------------------------
Independent Fiduciary Services, Inc., is the independent
fiduciary appointed to protect the interests of the participants
and beneficiaries of the defined benefit pension plans of the
Debtors. Filiberto Agusti, Esq., at Steptoe & Johnson, in
Washington, D.C., says that UAL Corporation and its debtor-
affiliates have failed to make contributions required by the
Internal Revenue Code. The Debtors have also failed to make
contributions directly attributable to the postpetition service of
employees.
IFS asks the Court to allow the claims for unpaid contributions as
administrative priority expenses under Section 503(b) of the
Bankruptcy Code.
For 2003 and 2004, the Debtors are obligated to make $949,223,621
in minimum funding contributions to the Plans. Approximately
$406,424,919 of this shortfall represents benefits earned by
employees through labor provided to the Debtors' estate. Yet the
Debtors have contributed only $145,782,418 to the Plans
postpetition and assert that there will be no more contributions
for the duration of their reorganization. Therefore, the Debtors
are leaving $803,441,203 in contributions unpaid, of which
$260,642,501 is meant to cover the benefits earned by employees
through postpetition work.
Mr. Agusti tells the Court that these figures are conservative.
They are based on the Debtors' calculations, which use optimistic
assumptions like a 9.25% annual return on pension assets. If a
more realistic 7.25% total return rate assumption were used
instead, Mr. Agusti says, the Debtors would owe $1,137,000,000 in
postpetition minimum funding contributions, of which $432,030,000
would be attributable to postpetition labor. By deducting the
postpetition contributions, the more realistic calculations
indicate that the Debtors owe $993,970,000 for unpaid
contributions.
Mr. Agusti asserts that administrative priority should to
$803,440,000 to $993,970,000 of unpaid contributions. IRC
Section 412 requires a company with a defined benefit plan to
make minimum funding contributions. Therefore, federal law
imposes a statutory obligation on the Debtors to make these
payments. As with any postpetition government license, fee or
tax, the portion representing the cost of benefits earned for
postpetition work is entitled to administrative priority.
The Debtors may intend to reject their collective bargaining
agreements, but the estates have benefited from nearly two years
worth of employee labor. Even if the Debtors reject the CBAs
now, they are still responsible for honoring the collectively
bargained-for commitments through the rejection date. The
$260,640,000 to $288,920,000 in unpaid accrued benefits qualify
for administrative expense priority as actual, necessary costs of
preserving the estate.
Mr. Agusti emphasizes that IFS is not seeking immediate payment
of these contributions. This separate issue can be addressed in
the future.
U.S. Labor Secretary Responds
Elaine L. Chao, Secretary of the United States Department of
Labor, submits an Amicus Brief in support of IFS. The Secretary
of Labor is responsible for the interpretation and enforcement of
Title I of the Employee Retirement Income Security Act of 1974.
This embodies the Secretary with a strong interest in ensuring
that courts correctly interpret ERISA.
Ms. Chao asserts that the minimum funding contributions are
administrative expenses of the Debtor's estate and entitled to
administrative priority. The Bankruptcy Code promulgates that a
debtor must manage its business in compliance with state and
federal law. The minimum funding contributions constitute
statutory obligations for employers that maintain ERISA-covered
pension plans. To permit otherwise would give the Debtors an
unfair advantage over other employers.
The Bankruptcy Code addresses CBAs and the means for assumption,
rejection or modification. The Debtors agreed to make minimum
funding contributions to the Flight Attendants Plan and agreed
not to maintain their retirement benefits. Therefore, the
Debtors must make the minimum contributions to the Plans. If the
Debtors want to avoid these payments, they must reject the CBAs.
Since this has not happened, the contributions must be treated as
administrative expenses and given administrative priority.
The minimum funding obligation constitutes a postpetition debt,
which arose out of a transaction that benefited the estate. Upon
filing the Petition, the Debtors did not immediately move to
reject the CBAs. Instead, they obtained a first-day order
authorizing maintenance of the Plans. The Debtors' employees
continued to work with confidence that their pensions were
preserved intact. In April 2003, the unions agreed to modify the
CBAs, through wage concessions that were designed to protect
their retirement benefits. The entire time, the Debtors
continued to operate, benefiting from the labor of its Plan
participants.
After more than $800,000,000 has accrued in delinquent
contributions to the Plans, the Debtors decided to file a Section
1113 Motion to reject the CBAs in disregard of provisions
requiring maintenance of the Plans. Ms. Chao says the Debtors
may seek to modify or reject the CBAs prospectively; they may not
do so retroactively. Permitting the Debtors to treat the minimum
funding contributions as general unsecured claims would be a
retroactive rejection of the CBAs.
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. 69; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
US AIRWAYS: Flight Attendants Authorize Strike
----------------------------------------------
Flight attendants at US Airways overwhelmingly authorized their
union to engage in CHAOS(TM) strike-related activities should a
federal bankruptcy court permit management to abrogate its
collective bargaining agreement with its employees.
"Our sisters and brothers have given voice to a clear and
unmistakable message: 'Enough is enough,'" said Pat Friend,
international president of the Association of Flight Attendants-
CWA. "We will not stand by while our employers destroy our
careers in a desperate attempt to cover for their own mistakes."
Ms. Friend noted that by seeking to scrap its legally binding
contract, terminate its pension plan, cut retiree health benefits
and impose intolerable wage cuts and work rule changes, US Airways
is forcing its employees to mobilize for CHAOS (Create Havoc
Around Our System), AFA's trademarked tactic of surprise,
intermittent strikes on flights, dates and locations chosen solely
at the union's discretion.
Today, flight attendants will join with hundreds of fellow workers
and supporters from throughout the labor movement for an AFA-
sponsored rally in Washington's Lafayette Park, in front of the
White House, to protest corporate America's assault on their
livelihoods, and to promote an economic agenda to save America's
middle class. Similar rallies will be held at locations across
the country.
More than 46,000 flight attendants, including 5,200 at US Airways,
join together to form AFA, the world's largest flight attendant
union. AFA is part of the 700,000 member strong Communications
Workers of America, AFL-CIO. Visit us at http://www.afanet.org/
Headquartered in Arlington, Virginia, US Airways' primary business
activity is the ownership of the common stock of:
* US Airways, Inc.,
* Allegheny Airlines, Inc.,
* Piedmont Airlines, Inc.,
* PSA Airlines, Inc.,
* MidAtlantic Airways, Inc.,
* US Airways Leasing and Sales, Inc.,
* Material Services Company, Inc., and
* Airways Assurance Limited, LLC.
Under a chapter 11 plan declared effective on March 31, 2003,
USAir emerged from bankruptcy with the Retirement Systems of
Alabama taking a 40% equity stake in the deleveraged carrier in
exchange for $240 million infusion of new capital.
US Airways and its subsidiaries filed another chapter 11 petition
on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian
P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning,
Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and
Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors
in their restructuring efforts. In the Company's second
bankruptcy filing, it lists $8,805,972,000 in total assets and
$8,702,437,000 in total debts.
US AIRWAYS: Passenger Load Hits Record 73.1% in November 2004
-------------------------------------------------------------
US Airways reported its November 2004 passenger traffic. Mainline
revenue passenger miles for November 2004 increased 2.0 percent on
a 1.3 percent increase in available seat miles compared to
November 2003. The passenger load factor was 73.1 percent (a
record for any November in the company's history), which is a 0.5
percentage point increase compared to November 2003.
Revenue passenger miles for US Airways mainline during the first
11 months of 2004 increased 6.7 percent on a 3.6 percent increase
in available seat miles compared to the same period in 2003. The
passenger load factor for January through November 2004 was 75.5
percent, a 2.1 percentage point increase compared to the same
period in 2003.
The two wholly owned subsidiaries of US Airways Group, Inc.,
Piedmont Airlines, Inc. and PSA, Inc., -- and MidAtlantic Airways,
reported a 117.0 percent increase in revenue passenger miles for
November 2004, on 98.4 percent more capacity, compared to November
2003. The passenger load factor was 62.5 percent, a 5.4 percentage
point increase compared to November 2003. The triple digit
increase in revenue passenger miles is attributed to the company's
rapid expansion of regional jet flying over the past 12 months.
Revenue passenger miles for the two wholly owned subsidiaries of
US Airways Group, Inc., and MidAtlantic Airways for the first 11
months of 2004 increased 56.7 percent on a 35.7 percent increase
in available seat miles compared to January through November 2003.
The passenger load factor for the first 11 months of 2004 was 61.4
percent, an 8.2 percentage point increase compared to the same
period in 2003.
Mainline system passenger unit revenue for November 2004 is
expected to decrease between 6.5 percent and 7.5 percent compared
to November 2003.
The mainline load factor in November markets where US Airways
offers GoFares was 76.6 percent, compared to a 71.4 percent load
factor in non- GoFares markets. GoFares now are offered on 29
percent of US Airways' flights.
US Airways ended the month of November by completing 99.3 percent
of its scheduled departures.
Headquartered in Arlington, Virginia, US Airways' primary business
activity is the ownership of the common stock of:
* US Airways, Inc.,
* Allegheny Airlines, Inc.,
* Piedmont Airlines, Inc.,
* PSA Airlines, Inc.,
* MidAtlantic Airways, Inc.,
* US Airways Leasing and Sales, Inc.,
* Material Services Company, Inc., and
* Airways Assurance Limited, LLC.
Under a chapter 11 plan declared effective on March 31, 2003,
USAir emerged from bankruptcy with the Retirement Systems of
Alabama taking a 40% equity stake in the deleveraged carrier in
exchange for $240 million infusion of new capital.
US Airways and its subsidiaries filed another chapter 11 petition
on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian
P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning,
Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and
Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors
in their restructuring efforts. In the Company's second
bankruptcy filing, it lists $8,805,972,000 in total assets and
$8,702,437,000 in total debts.
USGEN: HSBC Bank Issues Notice to Bear Swamp Certificateholders
---------------------------------------------------------------
HSBC Bank USA, in its capacity as the Successor Pass Though
Trustee in connection with those Pass Through Trust Agreements A
and B dated as of November 23, 1998, between USGen New England,
Inc., and JPMorgan Chase Bank, issued a notice to holders of:
* 7.459% Pass Through Certificates, Series 1998-A; and
* 8.270% Pass Through Certificates, Series 1998-B,
and as the Successor Lease Indenture Trustee under those
Indentures of Trust, Mortgage and Security Agreement dated as of
November 23, 1998, between Bear Swamp Generating Trust No. 1 and
No. 2, and JPMorgan, regarding:
a) the status of certain litigation affecting the
certificateholders;
b) the status of USGen New England, Inc.'s bankruptcy
proceeding; and
c) the proposed refinancing of the credit facility between
HSBC and certain certificateholders.
A full-text copy of the Trustee Notice is available for free at:
http://bankrupt.com/misc/Trustee_Notice_to_Bear_Swamp_Certificateholders.pdf
For further information concerning the Trustee Notice,
Certificateholders may contact:
* Stephanie Wickouski, Esq.
Gardner, Carton & Douglas, LLP
Counsel to the Trustee
Phone: (202) 230-5161
- or -
* Robert J. Gibbons, Esq.
Debevoise & Plimpton, LLP
Counsel to the Certificateholders Committee
and co-counsel to the Trustee
Phone: (212) 909-6303
Headquartered in Bethesda, Maryland, USGen New England, Inc., an
affiliate of PG&E Generating Energy Group, LLC, owns and operates
several electric generating facilities in New England and
purchases and sells electricity and other energy-related products
at wholesale. The Debtor filed for Chapter 11 protection on July
8, 2003 (Bankr. D. Md. Case No. 03-30465). John E. Lucian, Esq.,
Marc E. Richards, Esq., Edward J. LoBello, Esq., and Craig A.
Damast, Esq., at Blank Rome, LLP, represent the Debtor in their
restructuring efforts. When it sought chapter 11 protection, the
Debtor reported assets amounting to $2,337,446,332 and debts
amounting to $1,249,960,731.
WEIRTON STEEL: Court Approves HSBC Bank Settlement Agreement
------------------------------------------------------------
As reported in the Troubled Company Reporter on Nov. 11, 2004,
after Weirton Steel Corporation and its debtor-affiliates filed
for chapter 11 protection, HSBC Bank USA was appointed as
successor indenture trustee to J.P. Morgan Trust Company, N.A., to
the 8-5/8% 1989 City of Weirton, West Virginia Pollution Control
Revenue Funding Bonds. HSBC provided a variety of services
relating to the Bonds throughout the course of Weirton's
bankruptcy case.
Subsequently, HSBC filed Claim No. 20439, asserting administrative
priority status, for $229,507 plus additional fees and expenses it
incurred through the Effective Date of Weirton's Confirmed Plan.
Weirton Steel Corporation's First Amended Plan of Liquidation
became effective on September 8, 2004.
Mark E. Freedlander, Esq., at McGuireWoods, LLP, in Pittsburgh,
Pennsylvania, relates that as an active participant on the
Official Committee of Unsecured Creditors appointed by the Office
of the U.S. Trustee in Weirton's case, HSBC substantially
contributed to Weirton's bankruptcy case, and is thus entitled to
payment for trustee fees and the fees and expenses of outside
counsel.
The Weirton Steel Corporation Liquidating Trustee disputes the
validity and amount of the HSBC Administrative Claim, and
question the extent to which HSBC is entitled to an
administrative claim for the services it has provided.
To resolve their dispute, the United States Bankruptcy Court for
the Northern District of West Virginia, approved the settlement
entered between the Liquidating Trustee and HSBC stipulating that:
(a) the HSBC Administrative Claim will be fixed and allowed
against Weirton for $164,195, and will be given
administrative priority status in accordance with the
Confirmed Plan;
(b) HSBC will forever release and discharge Weirton and the
Trustee from any and all claims, past, present or future,
for fees and expenses of HSBC on an administrative
priority basis. However, this will not release:
-- any claims filed by HSBC, as an indenture trustee, in
respect of the bond claims under the applicable
indenture for which HSBC serves as indenture trustee;
and
-- the charging lien HSBC has vis-a-vis the distributions
to bondholders for the unpaid amount, if any, of fees
and expenses; and
(c) Weirton and the Trustee will forever release and discharge
HSBC from any and all claims, past, or future, related in
any manner to Weirton's bankruptcy filing or to HSBC's
role as indenture trustee under the applicable indenture.
Headquartered in Weirton, West Virginia, Weirton Steel Corporation
was a major integrated producer of flat rolled carbon steel with
principal product lines consisting of tin mill products and sheet
products. The company was the second largest domestic producer of
tin mill products with approximately 25% of the domestic market
share. The Company filed for chapter 11 protection on May 19,
2003 (Bankr. N.D. W. Va. Case No. 03-01802). Judge L. Edward
Friend, II administers the Debtors cases. Robert G. Sable, Esq.,
Mark E. Freedlander, Esq., David I. Swan, Esq., James H. Joseph,
Esq., at McGuireWoods LLP represent the Debtors in their
liquidation. Weirton sold substantially all of its assets to
Wilbur Ross' International Steel Group. Weirton's confirmed Plan
of Liquidation became effective on Sept. 8, 2004. (Weirton
Bankruptcy News, Issue No. 38; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
WILLIAMS CO: Fitch Upgrades Senior Secured Debt Rating to 'BB'
--------------------------------------------------------------
The Williams Companies, Inc.'s -- WMB -- senior unsecured debt
rating has been upgraded to 'BB' from 'B+' by Fitch Ratings. In
addition, the senior unsecured debt ratings of WMB's two pipeline
issuing subsidiaries, Transcontinental Gas Pipe Line Corp. -- TGPL
-- and Northwest Pipeline Corp. -- NWP, have been upgraded to
'BB+' from 'BB'. Williams Production RMT Co.'s -- RMT --
outstanding secured term loan B is affirmed at 'BB+'. The Rating
Outlook for each entity has been revised to Stable from Positive.
The rating action reflects WMB's significantly deleveraged balance
sheet, the company's stable liquidity position and limited debt
refinancing risk through 2010, the continued solid financial
performance of WMB's core natural gas businesses, and good
prospects for continued deleveraging and strengthening of
consolidated credit measures through 2006. In addition, the
revised ratings reflect Fitch's expectation that WMB's Power
segment, notwithstanding the longer term risks associated with its
contractual portfolio, will not adversely affect near-term
consolidated cash flows.
WMB's corporate restructuring has narrowed the scale and scope of
the company. With WMB's asset sale program now complete, the
company has emerged as a more focused integrated natural gas
company with core operations encompassing FERC-regulated
interstate pipelines (TGPL and NWP), exploration and production --
E&P, and midstream gas and liquids services. These businesses
should continue to generate a relatively predictable earnings and
cash flow stream with potential commodity price volatility in the
E&P segment offset by the cash flow stability of TGPL and NWP and
WMB's growing portfolio of fee-based midstream gas gathering
assets. Commodity price risk at E&P is further mitigated by WMB's
hedging strategy and focus on developing lower risk Rocky
Mountain-based tight sands and coalbed methane gas reserves.
Although WMB has been successful in winding down speculative
trading positions, there is longer term uncertainty associated
with Power's sizable tolling contract portfolio. WMB currently
has long-term tolling agreements for approximately 7,700 megawatts
of generating capacity, under which it is obligated to make fixed
payments averaging $400 million over the next several years, with
a total remaining net present value of about $2.5 billion.
Importantly, WMB has sold forward a significant portion of its
tolling exposure at above-market spark spreads thus minimizing the
near-term cash flow strain at Power. Fitch estimates that
existing physical power sales contracts, combined with financial
hedges and projected merchant sales will cover a significant
portion of Power's fixed cost structure, including overhead,
through 2010.
Since announcing its restructuring plan in 2002, WMB has decreased
consolidated debt by $6.0 billion, primarily utilizing cash
generated from asset sales and the early conversion of Feline
PACs. At the same time, WMB has expanded the cash flow generating
capabilities of its core natural gas businesses, effectively
offsetting a good portion of income lost due to asset sales. As a
result, near-term consolidated credit protection measures should
continue to trend toward levels solidly within Fitch's 'BB'
targets for diversified energy merchants. Specifically, Fitch
expects consolidated cash interest coverage to exceed 3.5 times
with total debt to EBITDA dropping below 4.0x by year-end 2005.
While the current commodity price outlook for natural gas prices
could lead to further strengthening of credit ratios, the future
direction of WMB's ratings will largely be determined by the
company's ability to further mitigate the unhedged exposure of
Power beyond 2010.
The Williams Companies, Inc.:
-- Senior unsecured notes and debentures upgraded to 'BB'
from 'B+';
-- Senior secured to 'BB+' from 'BB';
-- Junior subordinated convertible debentures to 'B+' from
'B-'.
Williams Production RMT Co.:
-- Senior secured term loan B affirmed at 'BB+'.
Northwest Pipeline Corp.:
-- Senior unsecured notes and debentures to 'BB+' from 'BB'.
Transcontinental Gas Pipe Line Corp.:
-- Senior unsecured notes and debentures to 'BB+' from 'BB'.
WINN-DIXIE: Grants Restricted Stock Award to New President & CEO
----------------------------------------------------------------
Winn-Dixie Stores, Inc. (NYSE: WIN) has hired Peter L. Lynch to
serve as its president and chief executive officer.
In connection with hiring Mr. Lynch, the Company made an
inducement grant of 3,000,000 restricted stock units, payable only
in shares of the Company's common stock. The RSUs were granted
with the approval of the compensation committee of the Company's
Board of Directors. As long as Mr. Lynch remains an employee
through the applicable vesting date:
(1) 2,000,000 of the RSUs will vest five years from the date
of grant; and
(2) 1,000,000 of the RSUs will vest in equal installments on
the first five anniversaries of the grant date.
About Winn-Dixie
Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/-- is one of
the nation's largest food retailers. Founded in 1925, the Company
is headquartered in Jacksonville, Florida.
* * *
As reported in the Troubled Company Reporter on Nov. 01, 2004,
Standard & Poor's Ratings Services lowered its ratings on Winn-
Dixie Stores Inc. The corporate credit rating was lowered to 'B-'
from 'B'. The outlook is negative.
"The downgrade is based on weaker-than-expected profitability and
cash flow," explained Standard & Poor's credit analyst Mary Lou
Burde. "Although the company should have sufficient liquidity to
fund its near-term operating and capital needs, improved operating
results or additional funding will be needed to execute longer-
term strategic initiatives."
* Jonathan Halpern Joins Winston & Strawn as Partner in NY Office
-----------------------------------------------------------------
Winston & Strawn LLP reported that Jonathan N. Halpern joined the
firm as a partner in the New York office. Mr. Halpern joins the
firm from the United States Attorney's Office for the Southern
District of New York, where he was an Assistant U.S. Attorney in
its Criminal Division and Chief of the Major Crimes Unit.
As Chief of the Major Crimes Unit, Mr. Halpern supervised
approximately 25 prosecutors specializing in large-scale and
complex white collar criminal matters, including:
-- money laundering;
-- tax crimes;
-- financial institution, investment and insurance fraud;
-- illegal banking practices; foreign corrupt practices;
-- false claims; and
-- intellectual property and computer crimes.
In that role, he also worked regularly with law enforcement
officials to review suspicious activities reported by the banking
community; routinely conferred with regulators of financial
institutions; and chaired a bankruptcy fraud task force in the
SDNY. In addition, while serving in the Public Corruption Unit,
Mr. Halpern was responsible for investigating and prosecuting
racketeering, bribery, extortion, campaign finance and civil
rights offenses. A 15-year veteran of the U.S. Attorney's Office,
he was recipient of the Department of Justice Director's Award for
Superior Performance.
"We are very pleased to welcome Jonathan to Winston," said James
M. Neis, managing partner of the firm. "He has had great New
York-focused expertise in the U.S. Attorney's office and will be
an excellent addition to that office."
At Winston & Strawn, Mr. Halpern will focus his practice on
complex commercial litigation, appellate matters, white collar
crime and internal corporate investigations.
"Jonathan's strong track record at the U.S. Attorney's Office and
his breadth of knowledge and experience in white-collar criminal
investigations and prosecutions is a natural fit with our current
white collar group in New York and nationally," said Dan K. Webb,
head of Winston & Strawn's litigation practice.
Prior to joining the U.S. Attorney's Office, Mr. Halpern practiced
with Patton, Boggs & Blow in Washington, D.C. He received his J.D.
from Boston University School of Law, where he was editor-in-chief
of the Boston University International Law Journal, and his A.B.
degree, cum laude, from Cornell University.
"We are pleased to welcome Jonathan to Winston & Strawn," said
Jonathan Goldstein, head of the firm's New York office. "He joins
a great group of litigators -- many of whom are also former
federal and state prosecutors -- in representing Winston &
Strawn's clients in federal and state court litigation and before
grand juries and appellate courts. His prosecutorial experience
will be a real asset in our work for our clients."
Winston & Strawn LLP is a commercial law firm that celebrated its
150th anniversary in 2003. It has more than 850 attorneys in
eight offices including Chicago, New York, Washington, D.C., Los
Angeles, San Francisco, London, Paris and Geneva. Additional
information about the firm is available on the firm's website:
http://www.winston.com/
* Davis Polk Elects Five New Counsel
------------------------------------
Davis Polk & Wardwell elected Susan Betteridge Baker, Jeannette
Boot, James Murray, Diem-Suong Thi Nguyen and D. Scott Tucker
Counsel to the firm as of December 1, 2004.
Ms. Baker is Counsel in the Investment Management/Private Funds
Group. She advises on the Investment Company Act, Investment
Adviser Act and related federal laws. Her clients include
investment management companies, advisers, financial institutions
and mutual fund directors. Recently, Ms. Baker has been
counseling advisers, mutual funds, funds of hedge funds, Chief
Compliance Officers and fund directors on the development,
implementation, review and approval of written policies and
procedures that are reasonably designed to prevent violation of
federal securities laws. In addition, she has counseled advisers
on regulatory filings, fee or service agreement matters and
offering document disclosure. Ms. Baker has also worked on
acquisitions and reorganizations of investment advisers.
Ms. Boot is Counsel in the Equity Derivatives Group and the
Financial Institutions Group. Her work is principally focused on
representation of hedge fund, broker-dealer and bank clients with
respect to the development and negotiation of specialized
financing arrangements, derivatives and other financial products,
including prime brokerage and securities lending agreements,
various option, swap, repurchase and forward arrangements, and a
wide variety of equity, credit and hedge fund-linked structures.
Mr. Murray is Counsel in the Litigation Department. He has
represented a wide range of institutional clients in a variety of
civil and regulatory matters, including most recently a
pharmaceutical company in connection with consumer protection and
False Claims Act litigation and a broker-dealer and a mutual fund
complex in connection with matters involving mutual fund trading.
He has also worked on a number of complex commercial, antitrust,
and white collar criminal matters, including several internal
investigations, and has represented numerous financial
institutions and other clients facing potential actions by the
SEC, state attorneys general and other regulators.
Ms. Nguyen is Counsel in the Litigation Department. She has
represented individual and corporate clients in a variety of civil
and regulatory matters, with an emphasis on complex, multi-
district cases involving patent-related antitrust issues,
securities litigation and commercial disputes. Her recent
representations include an accounting firm in numerous lawsuits
alleging violation of securities laws in connection with the
bankruptcy of a Belgian software firm; pharmaceuticals companies
in connection with governmental investigations and antitrust
litigation involving patent disputes; a storage software company
in a securities enforcement and internal investigation matter; an
electric company in connection with a state administrative matter;
an oil company in a trial in the Federal Court of Canada seeking
to set aside a judgment in a patent infringement case on the basis
of the fraud; a non-profit sailing organization in a cancellation
proceeding involving several trademark registrations; various
investment banking and accounting firms in securities class action
lawsuits and securities enforcement matters; a cable provider in
connection with disputes involving a Malaysian joint venture; and
a distillery in a contract dispute.
Mr. Tucker is Counsel in the Litigation Department. He has
extensive experience in complex commercial litigation, regulatory
investigations, and securities and consumer class action
litigation. He has also represented clients in connection with a
variety of criminal matters, confidential internal investigations
and arbitrations. His recent matters include several significant
professional liability cases, SEC investigations related to
auditor independence and insider trading, antitrust litigation,
several cases related to financial institutions, civil litigation
related to the insurance industry, and a criminal matter related
to a former senior executive of a major software company.
* 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 (41) 654 36
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) 423 103
CableVision System CVC (1,669) 11,795 223
CCC Information CCCG (131) 80 8
Cell Therapeutic CTIC (52) 174 87
Centennial Comm CYCL (538) 1,532 152
Choice Hotels CHH (175) 271 (16)
Cincinnati Bell CBB (600) 1,987 (20)
Clean Harbors CLHB (3) 471 31
Compass Minerals CMP (109) 642 99
Conjuchem Inc. CJC (16) 24 19
Cotherix Inc. CTRX (44) 25 20
Cubist Pharmacy CBST (75) 155 (6)
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)
Empire Resorts NYNY (13) 61 7
Foxhollow Tech. FOXH (60) 28 16
Graftech International GTI (44) 1,036 284
Hawaiian Holding HA (160) 236 (60)
Hercules Inc. HPC (40) 2,658 362
IMAX Corp. IMAX (49) 222 9
Indevus Pharm. IDEV (34) 205 164
Isis Pharm. ISIS (18) 255 116
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 (1,379) 16,963 3,765
Maxxam Inc. MXM (649) 1,017 72
McDermott Int'l MDR (338) 1,245 (33)
McMoran Exploration MMR (85) 156 29
Northwest Airline NWAC (2,166) 14,450 (431)
Northwestern Corp. NWEC (603) 2,445 (692)
ON Semiconductor ONNN (298) 1,221 270
Owens Corning OWENQ (4,259) 7,373 1,114
Per-se Tech. Inc. PSTI (25) 169 31
Phosphate Res. PLP (439) 316 5
Pinnacle Airline PNCL (18) 147 26
Primedia Inc. PRM (1,163) 1,577 (203)
Primus Telecomm PRTL (113) 735 (23)
Qwest Communication Q (2,477) 24,926 (509)
SBA Comm. Corp. SBAC (27) 915 11
Sepracor Inc. SEPR (380) 974 600
St. John Knits Int'l SJKI (57) 206 77
Syntroleum Corp. SYNM (8) 48 11
US Unwired Inc. UNWR (234) 709 (280)
Valence Tech. VLNC (48) 16 2
Vector Group Ltd. VGR (48) 528 110
Vertrue Inc. VTRU (44) 445 0
WR Grace & Co. GRA (118) 3,087 774
Young Broadcasting YBTVA (12) 798 85
*********
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 ***