/raid1/www/Hosts/bankrupt/TCR_Public/050111.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, January 11, 2005, Vol. 9, No. 8
Headlines
1100 ARDENWOOD LLC: Case Summary & 6 Largest Unsecured Creditors
AIR CARGO: U.S. Trustee Appoints 7-Member Creditors Committee
ALASKA COMMS: Moody's Rates Proposed $385M Sr. Sec. Debts at B1
ALLEGHENY ENERGY: Asks Court to Rule on Environmental Dispute
ARGUS CORP: Needs More Funds to Pay Preferred Dividends
ATHEROGENICS INC: Prices $175 Million Convertible Debt Offering
BM USA INC: Emerges from Chapter 11 Protection
BURNS EQUPMENT: Disclosure Statement Hearing Set for Jan. 18
CENTENNIAL COMMS: Nov. 30 Balance Sheet Upside-Down by $517.9 Mil.
CITYSCAPE HOME: S&P's Rating on Class B1-F Slides to D After Loss
CLEARLY CANADIAN: Raises Cdn$258,750 in Private Equity Placement
CONCENTRA OPERATING: 100% of $155MM Sr. Notes Tendered in Exchange
CONSOLIDATED COMMS: Moody's Puts B1 Rating on $390M Sr. Sec. Loan
CONSTELLATION BRANDS: Third Quarter Net Sales Top $1 Billion
CSFB MORTGAGE: Moody's Junks Four Mortgage Securitization Classes
DELPHI CORP: Names Rodney O'Neal Pres. & Chief Operating Officer
DUO DAIRY: Trustee Taps Connolly Rosania as Counsel
EATON FAMILY: Case Summary & 20 Largest Unsecured Creditors
EB2B COMMERCE: June 30 Balance Sheet Upside-Down by $4.2 Million
EL PASO: Reports $2.4 Billion of Liquidity as of Dec. 31
ENRON: EESI Gets Court Nod on Four Settlement Agreements
FALCON NEST: Judge Riegke Formally Dismisses Bankruptcy Case
FEDERAL-MOGUL: Judge Lyons Approves Inter-Court Communication Plan
FINOVA GROUP: Counsel Presents Final Report on Chapter 11 Cases
FISHER COMMS: President & CEO William W. Krippaehne Jr. Resigns
GENERAL NUTRITION: Moody's Rates Proposed $150M Sr. Notes at B3
GENERAL NUTRITION: S&P Rates Proposed $150M Sr. Unsec. Notes B-
GREAT ATLANTIC: 3rd Quarter Sales Rise to $2.52 Billion from 2003
GREEN VALLEY: S&P Withdraws B+ Corporate Credit & Debt Ratings
HAPPY KIDS: Has Until Feb. 25 to File Bankruptcy Schedules
HAPPY KIDS: Can Continue Hiring Ordinary Course Professionals
HAWAIIAN AIRLINES: IRS Objects to Trustee's 2nd Amended Joint Plan
HAYES LEMMERZ: Wheel Group Names Don Septer Managing Director
HOLLYWOOD ENTERTAINMENT: Receives Nasdaq Delisting Notice
IESI CORP: 99.7% of Noteholders Agree to Amend 10-1/4% Indenture
INDYMAC HOME: Moody's Junks Three Asset-Backed Certificate Classes
INTERNATIONAL SHIPHOLDING: Completes $40M Public Equity Offering
INTERNATIONAL STEEL: New USWA Trust Fund to Benefit Union Retirees
INTERSTATE BAKERIES: Court Okays Calif. Property Sale to C. Coseo
IWO HOLDINGS: New Entity Raises $232.7 Mil. from Private Placement
KAISER ALUMINUM: Jan. 21 is Intercompany Claims Discovery Cut-Off
KEY ENERGY: Soliciting Consents to Extend Reporting Deadlines
KNOWLEDGE LEARNING: Moody's Downgrades Sr. Implied Rating to B1
LAIDLAW INT'L: Shareholders to Elect Directors in Feb. 8 Meeting
LYNX THERAPEUTICS: Receives Anticipated Nasdaq Delisting Notice
MDU COMMS: Posts $7.7 Million Net Loss for F.Y. Ended Sept. 2004
METROWEST HEALTH: S&P Assigns 'R' Rating Following Insolvency
MWAM CBO: Moody's Junks Two Floating Rate Note Classes Due 2031
NAAC REPERFORMING: Moody's Puts Low-B Ratings on Two Loan Certs.
NATIONAL CENTURY: Trust Asks Court to Disallow CSFB Claims
NEP SUPERSHOOTERS: Moody's Rates $76 Million Term Loan at B1
NEW ENGLAND: Moody's Affirms Long-Term Rating at Ba2
NEW WORLD: Has Until July 5 to Make Lease-Related Decisions
NOVOSTE CORP: Considering Liquidation as One of Many Options
OCEANVIEW CBO: Moody's Junks $2 Million Fixed Rate Debt Rating
PARMALAT: PBGC Says Disclosure Statement is Inadequate
PAXSON COMMS: Appraiser Values 60 TV Stations at $2.65 Billion
PAYLESS SHOESOURCE: December Same-Store Sales Tumble by 3%
PLAC INC: Voluntary Chapter 11 Case Summary
RES-CARE INC: S&P Raises Senior Unsecured Debt Rating to 'B'
RESIDENTIAL ASSET: Fitch Affirms 4 Low-B Mortgage Certif. Ratings
RYLAND GROUP: Sells $250 Million of 5-3/8% Senior Notes Due 2015
SAN JOAQUIN: Moody's Affirms Ba2 Rating for TCA Revenue Bonds
SCHLOTZSKY'S INC: Bobby Cox Closes Purchase of All Assets
SCHUFF INT'L: Extends 10-1/2% Consent Solicitation Until Friday
SHAW GROUP: Reports First Quarter 2005 Financial Results
SIX FLAGS: Prices $195 Million of New 9-5/8% Senior Notes Due 2014
SOLUTIA INC: Wants Bankr. Court to Approve Claim Waiver Procedures
SUPERIOR NATIONAL: Zurich Agrees to Pay Liquidator $110 Million
TEXAS DOCKS & RAIL: Case Summary & 20 Largest Unsecured Creditors
TV AZTECA: Fitch Withdraws 'B+' Rating on $300 Mil. Senior Notes
UAL CORPORATION: Flight Attendants Reach Tentative Agreement
UAL CORP: Judge Wedoff Won't Approve Letter Agreement with ALPA
UAL CORP: Asks Court to Clarify Terms of Deloitte's Engagement
WARNER CHILCOTT: Moody's Assigns B2 Senior Implied Rating
WESTPOINT STEVENS: Closes Facilities & Reduces Workforce
YUKOS OIL: Gets Interim Okay to Maintain Existing Bank Accounts
* Alvarez & Marsal Adds Eight Tax Advisory Services Directors
* H. Slayton Dabney Joins King & Spalding as New York Partner
* Large Companies with Insolvent Balance Sheets
*********
1100 ARDENWOOD LLC: Case Summary & 6 Largest Unsecured Creditors
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Debtor: 1100 Ardenwood, LLC
Attn: David Reyes, Manager
1100 North Ardenwood Drive
Baton Rouge, Louisiana 70806
Bankruptcy Case No.: 05-10049
Chapter 11 Petition Date: January 7, 2005
Court: Middle District of Louisiana (Baton Rouge)
Debtor's Counsel: Barry W. Miller, Esq.
Barry W. Miller, APLC
PO Box 86279
Baton Rouge, Louisiana 70879-6279
Tel: (225) 296-0600
Estimated Assets: $500,000 to $1 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 6 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Luis Melendez $200,000
1615 East Greenway Road
Phoenix, Arizona 85042
Momentum Investment Company, LLC $174,000
PO Box 6477
Baton Rouge, Louisiana 70896
Melva Reyes $112,000
258 West Oakwood Boulevard
Redwood City, California 94061
Maria Johnson $60,000
1355 Henderson Avenue
Menlo Park, California 94025
Yamely Pulido $36,000
1355 Henderson Avenue
Menlo Park, California 94025
Jose Ferman $21,000
2400 Olive Street, Apartment 13
Bakersfield, California 93301
AIR CARGO: U.S. Trustee Appoints 7-Member Creditors Committee
-------------------------------------------------------------
The United States Trustee for Region 4 appointed seven creditors
to serve on the Official Committee of Unsecured Creditors in
Air Cargo, Inc.'s chapter 11 case:
1. Griley Airfreight
Attn: Tom Griley
5341 W. 104th
Los Angeles, California 90045
Phone: 310-642-0462, Fax: 310-645-1190
2. Cargo Connection Logistics Corp.
Attn: Scott Goodman
600 Bayview Avenue
Inwood, New York 11096
Phone: 516-239-7000, Fax: 516-239-2508
3. HBI Priority Freight
Attn: Edward J. Hogan
45080 Old Ox Road #100
Sterling, Virginia 20166
Phone: 703-834-5557, Fax: 703-834-9094
4. Eagle Air Freight, Inc.
Attn: Bernard Sexton
140 Eastern Avenue
Chelsea, Massachusetts 02150
Or
100 Cummings Center, Suite 106
Beverly, Massachusetts 01915
Phone: 978-922-8342, Fax: 978-922-5132
5. Land Air Express
Attn: Jerry Schneller
P.O. Box 2250
Bowling Green, Kentucky 42102
Phone: 270-781-0658, Fax 270-781-0079
6. RoadSprint, Inc.
Attn: Gary K. Woolley or William A. Pock
610 Airport S. Pkwy., #100
Atlanta, Georgia 30349
Phone: 770-909-0218, Fax: 770-909-7646
7. Black Hawk Freight Services, Inc.
Attn: John Husk, Esq.
P.O. Box 857
Milan, Illinois 61264-0857
Or
Seaton & Husk
2240 Gallows Road
Vienna, Virginia
Phone: 22142 703-573-0700
Official creditors' committees have the right to employ legal and
accounting professionals and financial advisors, at the Debtors'
expense. They may investigate the Debtors' business and financial
affairs. Importantly, official committees serve as fiduciaries to
the general population of creditors they represent. Those
committees will also attempt to negotiate the terms of a
consensual chapter 11 plan -- almost always subject to the terms
of strict confidentiality agreements with the Debtors and other
core parties-in-interest. If negotiations break down, the
Committee may ask the Bankruptcy Court to replace management with
an independent trustee. If the Committee concludes reorganization
of the Debtors is impossible, the Committee will urge the
Bankruptcy Court to convert the Chapter 11 cases to a liquidation
proceeding.
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.
ALASKA COMMS: Moody's Rates Proposed $385M Sr. Sec. Debts at B1
---------------------------------------------------------------
Moody's Investors Service assigned a B1 rating to the proposed new
senior secured credit facility for Alaska Communications Systems
Holdings, Inc. -- ACS. Moody's also affirmed all existing ratings
for the company's debt instruments, as well as the senior implied
rating for the company, but lowered the senior unsecured issuer
rating. The rating outlook remains negative.
The affected ratings are:
* Senior implied rating affirmed at B1
* Issuer rating downgraded to B3 from B2
* $50 million senior secured revolving credit facility due 2011
assigned B1
* $335 million senior secured term loan due 2012 assigned B1
* $182 million 9.875% Senior Notes due 2011 affirmed at B2
* $150 million 9.375% Senior Subordinated Notes due 2009
affirmed at B3
The B1 senior implied rating reflects the highly levered capital
structure of ACS, even after the proposed refinancing as the
benefits of the debt reduction from the equity offering are
largely offset by the October 2004 implementation of a substantial
dividend payout program. While Moody's considers the company's
liquidity to be sufficient over the ratings horizon of the next
two years, the negative outlook continues to reflect Moody's
concerns that, absent material improvements in cash flows,
liquidity will erode and the ratings are likely to fall should the
cash flow benefits of the company's current capital spending
program not materialize and future capital spending requirements
be underestimated by management.
Alaska Communications is an integrated telecommunications operator
providing local telephone service as the incumbent in most of the
state (including the largest population centers of Anchorage,
Juneau and Fairbanks), as well as wireless, data and long distance
services across the state. From 2001 through 2003, Alaska
Communications did not generate enough cash provided by operations
to cover its capital spending, as the company expanded its
wireless network and implemented its long distance and data
services strategy. While ACS was essentially free cash flow
neutral for the first nine months of 2004, going forward Moody's
expects ACS to consume the majority of the cash on its balance
sheet due to dividend payouts as well as continued capital
spending above what ACS considers to be maintenance levels in 2005
and 2006, to further build-out its CDMA wireless networks and to
purchase IRU fiber capacity to the lower 48 states. In 2007, the
company expects capital spending to decline closer to maintenance
levels and to achieve positive free cash flow after dividends.
To achieve this goal, however, EBITDA must increase and capital
spending must decline. Moody's is concerned that EBITDA increases
will be difficult to achieve in the very competitive Alaskan
communications market, particularly due to softness in the local
and long distance lines of business. Local retail access lines
declined 5.6% in 3Q04 compared to 3Q03, and local telephone
revenues declined 3.8%. ACS does benefit from a relatively benign
competitive environment for its wireless services with only one
other network-based competitor in Alaska. ACS has grown its
wireless subscriber base almost 14% in 3Q04 over 3Q03, and
wireless ARPU has also grown almost $4/month to $47.43 in that
period. For the company to achieve its targets, wireless
operations must continue to grow subscribers at double-digit rates
with ARPUs continuing to expand as well.
For the rating outlook to stabilize, Moody's must become more
confident that ACS can continue to profitably grow its wireless
business at such a rapid pace to offset the slower erosion of its
wireline business. If the benefits of the company's current
capital spending plan do not yield growth in operating cash flows
and future capital spending requirements do not moderate, leading
Moody's to believe that the company will not become free cash flow
positive in 2007, the ratings are likely to be lowered.
The B1 rating on the proposed $385 million senior secured credit
facilities reflects their large share in the company's capital
structure at over 70% of total debt pro forma for the proposed
refinancing. Moody's considers these lenders to be well protected
through their collateral and guarantee package from all
subsidiaries of the borrower. These lenders further benefit from
a dividend suspension covenant that will block payment of common
dividends if ACS fails to meet a leverage ratio test. The B2
rating for the company's senior unsecured debt incorporates the
effective subordination of this claim to the substantial amount of
secured bank debt, but also the perceived benefits ascribed to the
upstream guarantees received from the company's operating
subsidiaries. The downgrade of the issuer rating reflects Moody's
opinion of the senior unsecured and unguaranteed risk of the
company. With the expected removal of the existing subordinated
notes, which had an upstream guarantee, the issuer rating no
longer reflects the benefits of any guarantees.
Based in Anchorage, Alaska Communications Systems Holdings, Inc.,
is an integrated telecommunications provider with approximately
200,000 retail local access lines, 100,000 wireless subscribers,
and LTM revenues of $304.9 million.
ALLEGHENY ENERGY: Asks Court to Rule on Environmental Dispute
-------------------------------------------------------------
Subsidiaries of Allegheny Energy, Inc. (NYSE:AYE) asked a United
States court in West Virginia to declare that their coal-fired
power plants are in compliance with the federal Clean Air Act.
Allegheny Energy Supply Company, LLC, and Monongahela Power
Company are seeking a declaratory judgment against the attorneys
general of New York, New Jersey and Connecticut, who filed a
notice of intent to sue Allegheny in May 2004. In that notice,
the attorneys general alleged that the Allegheny companies
undertook maintenance projects at power stations in Pennsylvania
and West Virginia in violation of the Clean Air Act. Allegheny
believes that its actions were within the law. In the action
disclosed Thursday, Allegheny has requested the court to rule in
an effort to resolve the matter.
"We believe that over the years we have fully complied with all
applicable laws and regulations," said Paul Evanson, Chairman,
President and Chief Executive Officer of Allegheny Energy. "After
eight months of discussions, we believe it's time to seek the
clarity that only a court can provide on these issues.
"We remain committed to reducing absolute emissions at our plants,
but our financial condition limits our options. That's why we are
working actively with the states of West Virginia and Pennsylvania
to find a way to improve the environment sooner than we could on
our own," Mr. Evanson added.
The Allegheny subsidiaries filed their legal action in the U.S.
District Court for the Northern District of West Virginia because
most of the power stations at issue are located there, as are more
than 700,000 Allegheny customers.
Headquartered in Greensburg, Pa., Allegheny Energy --
http://www.alleghenyenergy.com/-- is an energy company consisting
of two major businesses: Allegheny Energy Supply, which owns and
operates electric generating facilities, and Allegheny Power,
which delivers low-cost, reliable electric service to customers in
Pennsylvania, West Virginia, Maryland, Virginia and Ohio.
* * *
As reported in the Troubled Company Reporter on Sept. 14, 2004,
Fitch Ratings revised the Rating Outlook of Monongahela Power
Company to Stable from Negative and affirmed existing ratings of
Allegheny Energy, Inc., and its subsidiaries. Fitch rates many
layers of Allegheny debt obligations and preferred stock issues in
the double-B and single-B range.
ARGUS CORP: Needs More Funds to Pay Preferred Dividends
-------------------------------------------------------
Argus Corporation Limited (TSX:AR.PR.A)(TSX:AR.PR.D)(TSX:AR.PR.B)
owns or controls 61.8% of the Retractable Common Shares of
Hollinger, Inc. Hollinger in turn owns 68% of the voting shares
and 18.2% of the equity of Hollinger International, Inc.
As the shares Argus owns of Hollinger are the primary asset held
by Argus and the shares of International in turn are the primary
asset held by Hollinger, this Report includes certain updates
regarding each of Hollinger and International.
Argus filed its 2003 audited financial statements on a market
valuation basis as it had historically which was then in
compliance with GAAP.
However, Argus is now required to consolidate its financial
statements with those of Hollinger for fiscal periods beginning
after January 1, 2004 due to a change in GAAP.
As a result of the change in accounting policy, Argus has been
unable to prepare financial statements in compliance with GAAP for
each of the first three Quarters of 2004. Argus has instead
provided its bi-weekly reports.
In order to inform the marketplace of key economic developments,
Argus has additionally prepared and released financial statements
for the first three Quarters of 2004. These statements have been
presented as alternative financial information and were appended
to its Reports dated August 19 and November 12, 2004.
Argus will be unable to prepare financial statements consolidated
with those of Hollinger and bring its financial reporting up to
date until Hollinger has prepared its financial statements. Argus
is however unable to determine when it may complete its financial
statements consolidated with those of Hollinger.
Argus' intention is to prepare consolidated financial statements
with those of Hollinger as soon as practicable after Hollinger
files its statements.
Argus presently contemplates, however, that it will need to
continue to file additional financial statements that are not
consolidated with those of Hollinger for current and upcoming
financial periods on an alternative financial basis.
Financial Position of Argus
Argus had Cdn. $263,950 of cash as of the close of business on
January 7, 2005.
Argus indirectly owns 21,596,387 Retractable Common Shares of
Hollinger with a market value at the close of trading on
January 7, 2005 on the Toronto Stock Exchange of Cdn. $6.60 per
share or an aggregate of Cdn. $142,536,154.
The market value of its shareholdings is subject to the minority
interest of The Ravelston Corporation Limited, the parent of
Argus. 11,862,342 of the Shares, being approximately fifty-five
percent of the Shares, are owned by a subsidiary of Argus in which
Ravelston has a significant minority interest.
The amount of that minority interest was stated to be $20,585,670
in the financial statements that Argus publicly filed as
alternative financial information as at September 30, 2004.
Argus has further set out a liability for an amount on account of
future income taxes on unrealized net capital gains. The amount
of that liability was stated to be $14,793,176 in Argus'
alternative financial information as at September 30, 2004.
Dividends
Argus will require additional funds to be able to continue to pay
dividends on its Class A and Class B Preference Shares on an
uninterrupted basis, including an additional amount of
approximately $251,703 for dividends that are scheduled to be paid
on February 1, 2005.
Argus intends to make efforts to ensure that such dividend
payments can be made on February 1, 2005, and continue to be made
thereafter on an uninterrupted basis.
Proposed Privatization of Hollinger
Ravelston proposed a going private transaction involving Hollinger
on October 28, 2004.
The proposed going private transaction is to be structured as a
share consolidation and retirement of Hollinger's shares held by
parties other than by Argus and Ravelston directly and indirectly.
On November 16, 2004, Ravelston announced that it will support the
proposed privatization on the basis that holders of Shares (other
than Ravelston and certain of its affiliated entities including
Argus) would receive Cdn. $7.25 in cash for each Share held by
them and holders of Series II Preference Shares of Hollinger would
receive 0.46 of a share of Class A Common Stock of International
for each Series II Share held by them.
No further terms have yet been announced.
The Hollinger going private transaction would result in Argus
holding a greater percentage of the Shares of Hollinger.
Hollinger would then be a private company without the public
company liquidity that currently exists.
Argus will review and consider whether the terms of the proposal
are acceptable when they are announced. Argus' Independent
Committee comprised of Jonathan H. Marler and Robert E. Tyrrell
will retain the independent professional advisers as it deems
necessary and make recommendations to the Board of Directors of
Argus.
Hollinger has established a Privatization Committee to review the
proposed transaction. That committee has retained independent
financial and legal advisors to assist it.
Based on the company's alternative financial reporting, as of
September 30, 2004, Argus has a $44,034,263 stockholders' deficit
compared to $6,522,159 positive equity at Dec. 31, 2003.
ATHEROGENICS INC: Prices $175 Million Convertible Debt Offering
---------------------------------------------------------------
AtheroGenics, Inc., (Nasdaq: AGIX), reported the pricing of
$175 million aggregate principal amount of its Convertible Notes
due 2012 in a private placement to qualified institutional buyers,
pursuant to an exemption from the registration requirements of the
Securities Act of 1933, as amended. The notes will bear interest
at a rate of 1.5% per annum and be convertible into shares of
AtheroGenics' common stock at an initial conversion rate of
38.5802 shares of common stock per $1,000 principal amount of
notes, subject to adjustment (equivalent to a conversion price of
approximately $25.92 per share and a conversion premium of
approximately 35% to the last reported sale price of $19.20 per
share on January 6, 2005).
AtheroGenics may not redeem any of the notes prior to maturity.
Upon the occurrence of certain designated events prior to the
maturity of the notes, subject to specified exceptions, investors
will have the right to require AtheroGenics to redeem the notes.
AtheroGenics has granted the initial purchasers of the notes an
option to purchase up to an additional $25 million aggregate
principal amount of the notes. The offering is expected to close
on January 12, 2005.
AtheroGenics expects to use the proceeds of the offering to fund
the ongoing costs of the ARISE trial of AGI-1067 and other
research and development activities, including clinical trials,
process development and manufacturing support, and for general
corporate purposes, including working capital.
The notes and the shares of common stock issuable upon conversion
of the notes have not been registered under the Securities Act of
1933, as amended, or any state securities laws, and may not be
offered or sold in the United States absent registration or an
applicable exemption from registration requirements.
AtheroGenics, Inc., (Nasdaq: AGIX) is a pharmaceutical company
focused on the treatment of chronic inflammatory diseases.
As of September 30, 2004, the company had an $18,839,547
stockholders' deficit, compared to a $30,377,006 in positive
equity at December 31, 2003.
BM USA INC: Emerges from Chapter 11 Protection
----------------------------------------------
BM USA Incorporated, (the U.S. subsidiary of Bruno Magli S.p.A.,
the Italian luxury shoemaker whose primary investor is the
Bulgari-sponsored private equity fund, Opera) emerged from Chapter
11 protection on Jan. 6, 2005. The Company officially concluded
its reorganization process after completing all required actions
and conditions to its Plan of Reorganization, which was confirmed
by the U.S. Bankruptcy Court for the Eastern District of Texas by
order dated November 9, 2004.
About BRUNOMAGLI S.p.A.
BRUNOMAGLI S.p.A., interprets the luxury of Italian style through
its exceptionally fine handcrafted shoes and accessories. The
label offers its sophisticated and fashion conscious clientele
seductive selections of extraordinary comfort and style that is
contemporary and innovative.
About Opera
Opera, the Bulgari sponsored private equity fund, is the first
investment company to focus on Made in Italy manufacturing and
service companies, where being Italian lends a competitive edge.
Opera invests in companies with a secure product equity and a
successful brand name that are in need of management and financing
support. An investment vehicle funded by Opera acquired a
majority interest in BRUNOMAGLI S.p.A., and since early 2002 has
been involved in the strategic oversight of the Company.
Headquartered in Carlstadt, New Jersey, BM USA Incorporated is
engaged into a business of crafting shoes that began in Bologna,
Italy in the 1930's in a family-owned and operated basement
workshop. The Company, together with two of its affiliates, filed
for chapter 11 protection on April 14, 2004 (Bankr. E.D. Tex. Case
No. 04-41816). J. Mark Chevallier, Esq., and David L. Woods,
Esq., at McGuire, Craddock & Strother represent the Debtors in
their restructuring efforts. When the Debtors filed for
protection from their creditors, they estimated over $10 million
in total debts and assets.
BURNS EQUPMENT: Disclosure Statement Hearing Set for Jan. 18
------------------------------------------------------------
The Honorable David H. Adams of the U.S. Bankruptcy Court for the
Eastern District of Virginia will convene a hearing at 11:00 a.m.,
on January 18, 2005, to consider the adequacy of the Amended
Disclosure Statement explaining the Amended Plan of Reorganization
filed by Burns Equipment Company, Inc.
The Debtor filed its Amended Disclosure Statement and Amended Plan
on November 23, 2004.
The Plan proposes to pay secured creditors the fair market value
of their collateral and unsecured creditors the aggregate amount
of $450,000, which represents an estimated distribution of between
40% and 50%. These percentages are based upon an unsecured claims
base of approximately $10 million.
General unsecured claims are divided into two classes,
Administrative Convenience Claims of $1,000 or less and all other
remaining Unsecured Creditors.
The Plan groups claims and interest into eight classes and
provides for these recoveries:
a) Class 1 impaired claims of the Komatsu Financial Corporation
Allowed Claims will be paid in full and entitled to retain
its lien on the Komatsu Collateral pending a sale of any
equipment in the Komatsu Collateral;
b) Class 2 impaired claims consisting of the Caterpillar
Financial Services Allowed Claims will be paid in full and
entitled to retain its liens on the Caterpillar Collateral
pending a sale of any equipment in the Caterpillar
Collateral;
c) Class 3 impaired claims consisting of the Burris
Construction Company will be paid with the Debtor's
surrender to Burris Construction of its Suffolk Property in
full satisfaction of their claims;
d) Class 4 impaired claims consisting of the Gateway Bank &
Trust Allowed Claims will be paid in full and retain its
liens pending the sale of any equipment included in the
Gateway Collateral;
e) Class 5 impaired claims consisting of the
CitiGroup/Equipment Financing Allowed Claims will be paid in
Full and entitled to retain its lien on its collateral
pending a sale of the collateral;
f) Class 6 impaired claims consisting of the Bank of Hampton
Roads Allowed Secured Claims will be paid in full and
entitled to retain its liens on its collateral pending a
sale of the collateral;
g) Class 7 impaired claims consisting of all Allowed Unsecured
Claims holding amounts equal to or less than $1,000 will be
paid in full with a lump sum payment equal to or less than
$1,000; and
h) Class 8 impaired claims consisting of all Allowed Unsecured
Claims other than the Class 7 claims will receive on the
Effective Date, an Unsecured Creditors Note that provides
payments of equal to those creditors' Pro Rata share of
$25,000 per month.
Full-text copies of the Amended Disclosure Statement and Amended
Plan are available for a fee at:
http://www.researcharchives.com/download?id=040812020022
Objections to the approval of the Disclosure Statement, if any,
must be filed and served on or before Thursday, Jan. 13, 2005.
Headquartered in Chesapeake, Virginia, Burns Equipment Company,
Inc., sells machines, equipment and equipment parts. The Company
filed for chapter 11 protection on June 29, 2004 (Bankr. E.D. Va.
Case No: 04-74024). John D. McIntyre, Esq., at Willcox & Savage,
P.C., represent the Debtors in their restructuring efforts. When
the Company filed for bankruptcy protection, it reported
$1,328,750 in total assets and $4,636,287 in total debts.
CENTENNIAL COMMS: Nov. 30 Balance Sheet Upside-Down by $517.9 Mil.
------------------------------------------------------------------
Centennial Communications Corp. (NASDAQ: CYCL) reported income
from continuing operations of $18.6 million, or earnings per
diluted share from continuing operations of $0.18, for the fiscal
second quarter of 2005. This includes a $9.6 million after-tax
gain related to the Company's sale of Midwest spectrum and
compares to a loss from continuing operations of $2.0 million, or
$0.02 per diluted share in the fiscal second quarter of 2004.
Adjusted operating income from continuing operations for the
fiscal second quarter was $89.8 million, as compared to
$76.3 million for the prior year quarter.
"Centennial continues to deliver robust growth by tailoring the
customer experience in each of its local markets," said Michael J.
Small, Centennial's Chief Executive Officer. "These financial
results demonstrate our ongoing ability to execute in a rapidly
changing and evolving market."
Centennial reported fiscal second-quarter 2005 consolidated
revenue from continuing operations of $214.1 million, which
included $98.0 million from U.S. wireless and $116.1 million from
Caribbean operations. Consolidated revenue from continuing
operations grew 12 percent versus the fiscal second quarter of
2004.
"We remain encouraged by our strong operating momentum and
continue to make steady progress toward our stated goal of
deleveraging," said Centennial Chief Financial Officer Thomas J.
Fitzpatrick. "We have the financial flexibility and strength to
build on our competitive advantage and support future success."
Other Highlights
-- On October 4, 2004 the Company announced that it purchased
10 MHz of spectrum from AT&T Wireless for $19.5 million,
covering an aggregate of approximately 4.1 million
population equivalents (POPs) contiguous to its existing
properties in the Midwest. In addition, the Company
simultaneously completed its sale of a portion of this
spectrum to Verizon Wireless for $24 million. The net
effect of these transactions is approximately 2.2 million
incremental POPs acquired and $4.5 million cash received.
The Company expects to launch service in the Grand Rapids
and Lansing, Michigan markets in the spring of 2005.
-- On December 28, 2004, the Company completed the sale of its
Puerto Rico cable television properties to an affiliate of
Hicks, Muse, Tate & Furst Incorporated for approximately
$155 million in cash. The net proceeds from the transaction
will be used to fund ongoing capital requirements.
-- On December 28, 2004, the Company also announced the
redemption of $115 million aggregate principal amount of its
$300 million outstanding 10-3/4 percent Senior Subordinated
Notes due December 15, 2008. The redemption will occur on
or about January 27, 2005 at a redemption price of 103.583
percent.
Centennial Segment Highlights
U.S. Wireless Operations
-- Revenue was $98.0 million, an 8 percent increase from last
year's second quarter. U.S. wireless revenue included $4.3
million in Universal Service Fund (USF) support. Retail
revenue grew by $2.8 million a 4 percent year-over-year
increase. Roaming revenue increased 3 percent from the
prior year quarter as a result of the Company's launch of
global system for mobile communications technology in all of
its markets.
-- AOI was $41.5 million, a 17 percent year-over-year increase,
representing an AOI margin of 42 percent. AOI was favorably
impacted by $4.3 million in USF support during the quarter.
Solid retail operations contributed to AOI growth during the
quarter, as retail AOI margins grew by approximately 1
percent from the year-ago quarter. AOI was also positively
impacted by growth in roaming revenue.
-- The Company ended the quarter with 544,900 U.S. wireless
subscribers, which compares to 548,200 for the year-ago
quarter and 551,400 for the previous quarter ended Aug. 31,
2004.
-- Capital expenditures were $16.2 million as U.S. wireless
continued to invest in its network and completed the GSM
overlay of the Company's Southeast footprint.
Caribbean Wireless Operations
-- Revenue was $85.8 million, an increase of 13 percent from
the prior-year second quarter, driven primarily by solid
subscriber and minutes-of-use growth.
-- Average revenue per user (ARPU) declined during the quarter
primarily due to the continued impact of strong prepaid
subscriber growth in the Dominican Republic. A changing
postpaid rate plan mix in Puerto Rico also negatively
impacted ARPU due to the Company's marketing of rate plans
designed to reduce churn.
-- AOI totaled $33.9 million, a 13 percent year-over-year
increase, representing an AOI margin of 40 percent.
-- The Company ended the quarter with 543,400 Caribbean
wireless subscribers, which compares to 445,900 for the
prior year quarter and to 516,700 for the previous quarter
ended August 31, 2004.
-- Capital expenditures were $12.9 million for the fiscal
second quarter.
Caribbean Broadband Operations
-- Revenue was $33.1 million, an increase of 21 percent year-
over-year, driven largely by strong access line growth.
-- AOI was $14.3 million, a 32 percent year-over-year increase,
representing an AOI margin of 43 percent.
-- Switched access lines totaled approximately 56,500 at the
end of the fiscal second quarter, an increase of 11,400
lines from the prior year quarter. Dedicated access line
equivalents were 230,100 at the end of the fiscal second
quarter, a 16 percent year-over-year increase.
-- Wholesale termination revenue was $5.6 million, a 48 percent
year-over-year increase, primarily due to an increase in
southbound terminating traffic to the Dominican Republic.
-- Capital expenditures were $7.8 million for the fiscal second
quarter.
Revised Fiscal 2005 Outlook
-- The Company projects growth in consolidated AOI from
continuing operations to be at the high end of its
previously announced 7-12 percent range for the full fiscal
year 2005 over fiscal year 2004. Consolidated AOI from
continuing operations for fiscal year 2004 was $315.5
million.
The Company has not included a reconciliation of projected
AOI because projections for some components of this
reconciliation are not possible to forecast at this time.
-- The Company is announcing a network replacement and upgrade
primarily impacting its wireless network in Puerto Rico.
The upgrade, which is expected to cost $15 million in fiscal
2005, will improve the network's performance and quality
while also reducing future operating expenses and capital
expenditures. The net book value of the network equipment
to be retired is approximately $65-$75 million, which the
Company expects to depreciate over the next two fiscal
quarters. The Company estimates that the after-tax payback
period for this project will be approximately one year.
As a result of this network upgrade, the Company now expects
capital expenditures of approximately $170 million for fiscal year
2005, net of a $5 million reduction due to the Company's sale of
its cable television operations. This is an increase from the
Company's previous target of $160 million. As previously
disclosed, this outlook also includes approximately $25 million
for the build-out of new markets in Grand Rapids and Lansing,
Michigan.
In consideration of the network replacement and upgrade in Puerto
Rico, the Company is evaluating the useful lives of its U.S. and
Caribbean wireless network equipment based on industry,
competitive and technological developments.
About the Company
Centennial Communications (NASDAQ: CYCL), based in Wall, N.J., is
a leading provider of regional wireless and integrated
communications services in the United States and the Caribbean
with over 1 million wireless subscribers. The U.S. business owns
and operates wireless networks in the Midwest and Southeast
covering parts of six states. Centennial's Caribbean business
owns and operates wireless networks in Puerto Rico, the Dominican
Republic and the U.S. Virgin Islands and provides facilities-based
integrated voice, data and Internet solutions. Welsh, Carson
Anderson & Stowe and an affiliate of the Blackstone Group are
controlling shareholders of Centennial. For more information
regarding Centennial, visit the Company's websites at
http://www.centennialwireless.com/http://www.centennialpr.com/
and http://www.centennialrd.com/
At Nov. 30, 2004, Centennial Communications' balance sheet showed
a $517,906,000 stockholders' deficit, compared to a $548,641,000
deficit at May 31, 2004.
CITYSCAPE HOME: S&P's Rating on Class B1-F Slides to D After Loss
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its rating on class
B1-F of Cityscape Home Equity Loan Trust 1997-C to 'D' from 'CCC'.
Concurrently, ratings are affirmed on all other classes from this
series and all other Cityscape Home Equity Loan Trust transactions
rated by Standard & Poor's.
The lowered rating reflects that the fact that the class suffered
a principal loss of $96,488.80 during the distribution period
ending Nov. 26, 2004. An additional loss was applied to the class
for the period ending Dec. 27, 2004. Based on the current
performance, it is not likely that the principal losses will be
recoverable. In addition, future interest payments will be
determined on the new, lower balance.
The affirmations reflect adequate credit support percentages,
which are provided by subordination, overcollateralization, and
excess interest. In addition, the affirmed 'AAA' ratings on
various classes from series 1996-2, series 1996-3,and series
1996-4 are insured by policies issued by MBIA Insurance Corp.,
Financial Security Assurance Inc., or Financial Guaranty Insurance
Co., thus reflecting the financial strength of the underlying
insurance providers.
As of the December 2004 distribution date, total delinquencies for
the two nonbond-insured transactions ranged from 36.02% (series
1997-C group 1) to 44.34% (series 1997-B group 2). Serious
delinquencies ranged from 27.75% (series 1997-C group 1) to 44.34%
(series 1997-B group 2), and cumulative losses ranged from 4.28%
(series 1997-C group 2) to 9.48% (series 1997-C group 1).
As of the December 2004 distribution date, total delinquencies for
the bond-insured transactions ranged from 32.78% (series 1996-4)
to 37.65% (series 1996-2). Serious delinquencies ranged from
21.47% (series 1996-3) to 26.65% (series 1996-2), and cumulative
losses ranged from 9.68% (series 1996-4) to 11.51% (series
1996-2).
All of the transactions are backed by fixed- or adjustable-rate
subprime home equity mortgage loans secured by first and second
liens on owner-occupied one- to four-family residences.
Rating Lowered
Cityscape Home Equity Loan Trust 1997-C
Home equity pass-thru certs
Rating
Series Class To From
------ ----- -- ----
1997-C B-1F D CCC
Ratings Affirmed
Cityscape Home Equity Loan Trust 1997-C
Home equity pass-thru certs
Series Class Rating
------ ----- ------
1996-2 A-5 AAA
1996-3 A-8, A-IO AAA
1996-4 A-8, A-9, A-IO AAA
1997-B A-6, A-7 AAA
1997-B M-1F AA+
1997-B M-2A BBB
1997-B M-2F A
1997-B B-1F BB
1997-C A-3, A-4, M-1A AAA
1997-C M-1F, M-2A AA
1997-C M-2F A
1997-C B-1A BBB
CLEARLY CANADIAN: Raises Cdn$258,750 in Private Equity Placement
----------------------------------------------------------------
Clearly Canadian Beverage Corporation (OTCBB:CCBC) (TSX:CLV)
completed a private placement of 1,035,000 shares at a price of
Cdn$0.25 per share, generating gross proceeds of Cdn$258,750. The
private placement was originally announced by news release dated
December 9, 2004, and at that time the Company indicated a
placement of up to 1,500,000 shares, of which 1,035,000 shares
were issued. Directors, offices and employees of the Company
subscribed for all of the 1,035,000 shares, which was the maximum
number of shares that such non-arms-length parties were permitted
to acquire under applicable Toronto Stock Exchange rules and
policies. The proceeds from the private placement will be used to
fund the Company's current inventory production requirements.
In connection with the private placement, directors and/or
officers of the Company acquired shares as follows:
-- Douglas L. Mason, President and C.E.O. acquired 700,000
shares;
-- Bruce E. Morley, C.L.O. acquired 115,000 shares;
-- Stuart R. Ross, C.F.O. acquired 25,000 shares;
-- Philip J. Langridge, director, acquired 100,000 shares;
-- Neville W. Kirchmann, director, acquired 50,000 shares; and
-- Glen D. Foreman, director, acquired 25,000 shares.
Due to the relationship between the directors and officers and the
Company, the private placement is considered to be a "related
party transaction" as defined under Ontario Securities Commission
Rule 61-501, however, it is exempt from certain applications of
the Rule on the basis that the common shares of the Company issued
to the directors and officers represents less than 25% of the
current market capitalization of the Company. On a diluted basis,
directors and officers of the Company have collectively increased
their ownership in the Company by 8.36%. The private placement
shares are subject to a required four-month hold period and no
discounts or warrants were offered or issued in connection with
the private placement.
About Clearly Canadian
Based in Vancouver, B.C., Clearly Canadian --
http://www.clearly.ca/-- markets premium alternative beverages,
including Clearly Canadian(R) sparkling flavoured water, Clearly
Canadian O+2(R) oxygen enhanced water beverage and Tre Limone(R)
which are distributed in the United States, Canada and various
other countries.
At September 30, 2004, Clearly Canadian's balance sheet showed a
$681,000 stockholders' deficit, compared to $1,125,000 in positive
equity at December 31, 2003.
CONCENTRA OPERATING: 100% of $155MM Sr. Notes Tendered in Exchange
------------------------------------------------------------------
Concentra Operating Corporation reported the final results of its
offer to exchange $155,000,000 aggregate principal amount of its
outstanding 9-1/8% Senior Subordinated Notes due 2012 for
$155,000,000 aggregate principal amount of its 9-1/8% Senior
Subordinated Notes due 2012, which have been registered under the
Securities Act of 1933.
The Exchange Offer expired Jan. 6, 2004, at 5:00 p.m., New York
City time. Based on the final count by the exchange agent, 100%
of the $155,000,000 aggregate principal amount of the outstanding
Old Notes was tendered for exchange.
About the Company
Concentra Operating Corporation, a wholly owned subsidiary of
Concentra Inc., is the comprehensive outsource solution for
containing healthcare and disability costs. Serving the
occupational, auto and group healthcare markets, Concentra
provides employers, insurers and payors with a series of
integrated services which include employment-related injury and
occupational health care, in-network and out-of-network medical
claims review and repricing, access to specialized preferred
provider organizations, first notice of loss services, case
management and other cost containment services. Concentra provides
its services to over 135,000 employer locations and more than
3,700 insurance companies, health plans and third party
administrators nationwide.
At September 30, 2004, Concentra Operating's balance sheet showed
a $65,674,000 stockholders' deficit, compared to $44,010,000 in
positive equity at December 31, 2003.
CONSOLIDATED COMMS: Moody's Puts B1 Rating on $390M Sr. Sec. Loan
-----------------------------------------------------------------
Moody's Investors Service has assigned a B1 rating to Consolidated
Communications Acquisition Texas, Inc.'s -- CCAT -- and
Consolidated Communications Inc.'s -- CCI -- $390 million senior
secured term loan. At the same time, Moody's is affirming the B1
rating on CCAT's and CCI's existing senior secured term loans and
revolving credit facility as well as Consolidated Communications
Texas Holdings, Inc.'s -- CCTH -- B1 senior implied rating and
SGL--2 liquidity rating and the B3 rating on CCTH's and
Consolidated Communications Illinois Holdings, Inc.'s -- CCIH --
senior unsecured notes. Moody's intends to withdraw the ratings
on CCAT's and CCI's existing term loans once their $390 million
credit facility and initial public offering are consummated. At
that time, CCTH and Homebase Acquisition LLC will merge into CCIH
and be renamed Consolidated Communications Holdings Inc. -- CCH.
Moody's has assigned these rating:
-- CCAT and CCI
* $390 million Senior Secured Term Loan due 2011 -- B1
Moody's has affirmed these ratings:
-- CCAT and CCI
* $30 Million Revolving Senior Secured Credit Facility due
2010 -- B1
* $122 Million Senior Secured Term Loan A due 2011 -- B1
* $314 Million Senior Secured Term Loan C due 2011 -- B1
-- CCTH
* Senior Implied Rating -- B1
* Senior Unsecured Issuer rating -- B3
* Liquidity rating -- SGL-2
-- CCTH and CCIH
* $200 Million 9.75% Senior Unsecured Notes due 2014 -- B3
Moody's has changed the outlook on all ratings from negative to
stable.
The ratings reflect Consolidated's high leverage (roughly 4x total
debt to TTM adjusted EBITDA as of Q3'04 on a pro forma basis),
vulnerability to heightened wireless or cable telephony
competition in its rural markets, and its relatively flat top-line
growth prospects and limited post-dividend free cash flow. Stable
and dependable operating cash flow, a favorable regulatory
environment, barriers to competitive entry, and a shift in the
company's capital structure, subsequent to the planned IPO, to one
with a higher equity weighting, support the ratings.
The change in outlook from negative to stable outlook reflects the
company's success in navigating the challenges inherent to its
April 2004 acquisition of TXU Communications, which increased the
company's access lines by roughly 190%. Consolidated has reduced
headcount at its Texas operations by 70 employees and is within
cost targets for implementation of its integration strategy.
If Consolidated were to meet or exceed our expectations with
respect to free cash flow generation, and it begins to deleverage
materially, the outlook and ratings could improve over time.
However, the common dividend payment, subsequent to the IPO, will
consume much of the free cash flow available for debt reduction.
Consequently, Moody's does not anticipate significant debt
reduction going forward unless margins improve to at least 45% so
long as anticipated dividends, concurrently, remain unchanged. If
EBITDA margins were to fall below 40% for a protracted period, the
company's ratings would likely decline.
In early December 2004, the company announced an IPO of up to
$400 million of its common equity ($81.5 million in net proceeds
from the offering after deducting offering-related expenses).
Concurrent with the IPO, the company expects to amend and restate
its credit facilities by increasing the amount of term loans from
$314 million to $390 million. Proceeds from the $390 million term
loan and a portion of the proceeds from the IPO will be used to
pay down the existing $119 million Term A loan, refinance the Term
C loan and $70 million of the 9.75% senior unsecured notes
(leaving $130 million of senior notes outstanding).
Upon completion of the IPO, the company's organizational structure
will have been simplified. Subsequent to the IPO, Homebase
Acquisition, CCTH and CCIH will have consolidated into one entity,
CCH. CCH will succeed and assume the obligations of CCTH and CCIH
under the indenture. Homebase, the parent prior to the
contemplated transaction, guarantees the several obligations of
CCTH, CCIH, CCAT and CCI on a limited basis. The company expects
that the bank lenders will release CCH, as successor to Homebase
Acquisition, from the downstream limited recourse guarantee.
Moody's expects that CCH and each of the borrowers' (i.e. CCAT and
CCI) subsidiaries, with the exception of Illinois Consolidated
Telephone Co. -- ICTC, will jointly and severally, fully and
unconditionally guarantee the bank credit facilities. Moody's
notes that Illinois Consolidated Telephone Co. comprises over 20%
of the company's consolidated revenue, EBITDA, and nearly 30% of
its net plant. The credit facilities are secured by a perfected
lien and pledge of all capital stock and inter-company notes of
CCH (and each of its direct and indirect subs, including a pledge
of stock of ICTC) and a perfected lien and security interest in
all assets. These facilities are not notched relative to the
senior implied rating since they comprises the preponderance of
the company's debt. The 9.75% senior unsecured notes are rated
two notches below the B1 senior implied rating since these notes
lack security and do not benefit from upstream guarantees, and are
effectively subordinated to all of the company's subsidiaries'
payables.
Consolidated's SGL-2 rating reflects Moody's view that the company
possesses good liquidity and has an ability to meet its estimated
obligations over the next twelve months through internal
resources. Subsequent to the IPO, and accounting for an
anticipated $48 million annual common dividend payment, Moody's
expects the company to generate roughly $10-15 million annually in
free cash flow. Moody's understands that the amended credit
agreement will contain provisions that restrict the company's
ability to pay dividends should EBITDA generation falter, and will
mandate compliance with a total net leverage test -- TBD. As of
9/30/04, the company could have paid out upwards of $63 million
under the amended and restated credit agreement. Consolidated's
total net leverage (as defined in the credit agreement) was 3.9x
for the TTM ending 9/30/04 pro forma for the transaction.
Moody's believes that stable and predictable cash flows, which
characterize most rural telephone properties, result in a
relatively low risk business model. Historically, Consolidated's
properties have experienced little competition due to market
demographics and a favorable regulatory regime in Texas. Low
customer density (as low as 66 people per square mile in five
counties in Illinois served by Consolidated) and the high
residential component (roughly 66% of the company's access lines)
to the company's operations provide an effective barrier to entry
as it is not economically feasible for a competitor to build out a
new network in their Texas and Illinois service territories.
Consolidated's RLEC status also exempts it from interconnection
requirements that would otherwise allow competitors to use the
company's access lines.
Moody's expects only nominal revenue growth and EBITDA margin
improvement, primarily at the Texas operations, over the next
several years. Free cash flow generation will depend largely on
careful operating expense and capital investment management,
little net revenue impact from any changes to Federal and Texas
USF subsidies, and effective hedging of floating rate interest
rate exposure. Federal and state subsidies currently exceed 15%
of total revenues -- with higher reliance on subsidies being a
credit negative from Moody's perspective. Subsequent to the
amendment and restatement of the credit facility and the
anticipated purchase of $70 million of the 9.75% senior notes,
roughly 75% of the company's debt will be floating rate. Moody's
assumes that at least half the floating rate debt (i.e. the senior
secured bank debt) will be hedged to a fixed rate as is currently
the case.
The company has employed a disciplined investment strategy in
maintaining and steadily upgrading its network. Moody's expects
the company to continue spending at roughly the industry norm of
10-13% of revenues on capital investment. In addition, Moody's
expects the company to remain in compliance with its bank
covenants, affording it full access to the $30 million undrawn
revolver. Subsequent to the amendment and restatement of the
credit facility, Consolidated's assets will remain largely
encumbered and therefore provide little if any additional
alternative funding flexibility. Moody's assessment of present
trading levels for RLEC assets indicates that debt holders benefit
from adequate asset protection metrics, particularly holders of
the senior secured bank debt.
Consolidated Communications is a rural local exchange carrier
headquartered in Mattoon, Illinois.
CONSTELLATION BRANDS: Third Quarter Net Sales Top $1 Billion
------------------------------------------------------------
Constellation Brands, Inc. (NYSE: STZ, ASX: CBR), a leading
international producer and marketer of beverage alcohol brands,
reports an increase in record net sales for its third quarter
ended Nov. 30, 2004, topping $1 billion for the second consecutive
quarter. Net sales increased 10 percent, driven by growth across
the company's branded wine, U.K. wholesale and spirits businesses.
Currency contributed four percent of the increase.
"Constellation's beverage alcohol business growth continues to be
dynamic, with growth coming from existing brands in our wine and
spirits portfolios, as well as from new product introductions,
line extensions and marketing initiatives," stated Richard Sands,
Constellation Brands chairman and chief executive officer. "We're
also experiencing healthy growth from the Australian and New
Zealand wines, as well as from our wholesale business in the
United Kingdom. We're confident in the sustainability of our
business growth trend, as well as our ability to create
incremental value for our shareholders, customers and retailers."
Net sales for the quarter grew 14 percent, to $773.8 million,
driven by growth in branded wine net sales and the U.K. wholesale
business, as well as a six percent favorable impact from currency.
Worldwide branded wine net sales increased 11 percent, to reach
$509.5 million, driven by volume growth and a four percent benefit
from currency.
"To ensure we continue to deliver profitable growth, we are
vigilant in our quest for new opportunities that enhance and
expand the breadth of our portfolio of offerings and operational
scale," explained Mr. Sands. The acquisition of The Robert
Mondavi Corporation strengthens Constellation's position as the
largest wine producer and marketer in the world, and makes it the
top premium wine company in the U.S., as well as the largest wine
company in the U.S. based on dollar sales.
About the Company
Constellation Brands, Inc. -- http://www.cbrands.com./-- is a
leading international producer and marketer of beverage alcohol
brands with a broad portfolio across the wine, spirits and
imported beer categories. Constellation Brands is also the
largest fine wine company in the United States. Well-known brands
in Constellation's beverage alcohol portfolio include: Corona
Extra, Pacifico, St. Pauli Girl, Black Velvet, Fleischmann's, Mr.
Boston, Paul Masson Grande Amber Brandy, Franciscan Oakville
Estate, Estancia, Simi, Ravenswood, Blackstone, Banrock Station,
Hardys, Nobilo, Alice White, Vendange, Almaden, Arbor Mist,
Stowells and Blackthorn.
* * *
As reported in the Troubled Company Reporter on Dec. 9, 2004,
Moody's Investors Service assigned a Ba2 rating to Constellation
Brands, Inc.'s proposed $2.9 billion senior secured credit
facility from which the proceeds will be used to finance the
approximately $1.4 billion purchase of The Robert Mondavi
Corporation (no debt rated by Moody's) announced in November 2004.
The secured debt rating is one notch lower than the Ba1 rating for
Constellation's existing $1.2 billion facility due to the
substantial amount of incremental debt and the reduction in excess
collateral coverage in a distress scenario. Concurrent with the
rating assignment (and prospective withdrawal of the existing
secured debt rating), Moody's confirmed Constellation's existing
ratings and assigned a stable ratings outlook. These rating
actions conclude the review for possible downgrade initiated on
November 9, 2004. Constellation's Speculative Grade Liquidity
rating of SGL-1, denoting very good liquidity, is unaffected by
the rating actions and will be revisited after the completion of
the proposed acquisition and financings.
CSFB MORTGAGE: Moody's Junks Four Mortgage Securitization Classes
-----------------------------------------------------------------
Moody's Investors Service has upgraded 29 classes of mezzanine and
subordinated tranches from 7 fixed rate mortgage securitizations
issued by Credit Suisse First Boston Mortgage Securities Corp. in
2002. In addition, Moody's has confirmed the ratings on 12
classes of mezzanine and subordinated tranches from 4 mortgage
securitizations issued by Credit Suisse First Boston Mortgage
Securities Corp. in 2002. Moody's has also downgraded 11 classes
of mezzanine and subordinated tranches from 5 fixed rate mortgage
securitizations issued by Credit Suisse First Boston Mortgage
Securities Corp. in 2002. According to Michael Labuskes,
Associate Analyst, "The actions are based on the fact that the
bonds' current credit enhancement levels, including excess spread
where applicable, are either high or low compared to the current
projected loss numbers for the current rating level."
According to Mr. Labuskes, "In general, the securitizations being
upgraded have benefited from rapid prepayments resulting in the
deleveraging of the transactions. In addition, many of these
mortgage pools underlying most of these securitizations have
performed better than our original expectations."
The securitizations being downgraded suffer primarily from the
performance of the underlying loans with cumulative losses
exceeding our original expectations. Existing credit enhancement
levels may be low given the current projected losses on the
underlying pools.
The complete rating actions are:
Issuer: Credit Suisse First Boston Mortgage Securities Corp.
Upgrade:
* Series 2002-9; Group 2; Class II-M-1, upgraded to Aa1 from
Aa2
* Series 2002-19; Group 1; Class C-B-1, upgraded to Aaa from
Aa3
* Series 2002-19; Group 1; Class C-B-2, upgraded to Aaa from A3
* Series 2002-19; Group 1; Class C-B-3, upgraded to A2 from
Baa3
* Series 2002-19; Group 1; Class C-B-4, upgraded to Baa3 from
Ba3
* Series 2002-5; Group 1; Class C-B-1, upgraded to Aaa from Aa3
* Series 2002-5; Group 1; Class C-B-2, upgraded to Aaa from A3
* Series 2002-5; Group 1; Class C-B-3, upgraded to A2 from Baa2
* Series 2002-5; Group 1; Class C-B-4, upgraded to Baa3 from
Ba3
* Series 2002-7; Class M-1, upgraded to Aaa from Aa2
* Series 2002-7; Class M-2, upgraded to Aaa from A2
* Series 2002-7; Class B, upgraded to A2 from Baa2
* Series 2002-24; Group 1; Class I-B-1, upgraded to Aaa from
Aa1
* Series 2002-24; Group 2; Class C-B-1, upgraded to Aaa from
Aa2
* Series 2002-24; Group 2; Class C-B-2, upgraded to Aa2 from A2
* Series 2002-24; Group 2; Class C-B-3, upgraded to A2 from
Baa2
* Series 2002-26; Group 1; Class I-B-2, upgraded to Aaa from
Aa2
* Series 2002-26; Group 1; Class I-B-4, upgraded to Baa2 from
Baa3
* Series 2002-26; Group 2; Class II-B-1, upgraded to Aaa from
Aa1
* Series 2002-26; Group 4; Class IV-B-1, upgraded to Aaa from
Aa3
* Series 2002-26; Group 4; Class IV-B-2, upgraded to Aaa from
A2
* Series 2002-26; Group 4; Class IV-B-3, upgraded to A2 from
Baa3
* Series 2002-26; Group 4; Class IV-B-4, upgraded to Baa2 from
Ba3
* Series 2002-34; Group 1; Class D-B-1, upgraded to Aaa from
Aa3
* Series 2002-34; Group 1; Class D-B-2, upgraded to Aa3 from A3
* Series 2002-34; Group 1; Class D-B-3, upgraded to Baa1 from
Baa3
* Series 2002-34; Group 3; Class C-B-1, upgraded to Aaa from
Aa3
* Series 2002-34; Group 3; Class C-B-2, upgraded to Aa2 from A3
* Series 2002-34; Group 3; Class C-B-3, upgraded to Baa1 from
Baa3
Confirm:
* Series 2002-10; Group 1; Class I-B, confirmed at Baa2
* Series 2002-10; Group 2; Class II-B-3, confirmed at Baa3
* Series 2002-5; Group 4; Class IV-B-5 confirmed at Ba3
* Series 2002-26; Group 1; Class I-B-3, confirmed at A2
* Series 2002-26; Group 2; Class II-B-2, confirmed at Aa3
* Series 2002-26; Group 2; Class II-B-3, confirmed at A3
* Series 2002-29; Group 1; Class I-B-1, confirmed at Aa2
* Series 2002-29; Group 1; Class I-B-2, confirmed at A3
* Series 2002-29; Group 1; Class I-B-3, confirmed at Baa2
* Series 2002-29; Group 1; Class I-B-4, confirmed at Ba2
* Series 2002-29; Group 2; Class II-B-4, confirmed at Ba3
* Series 2002-30; Group 1; Class D-B-1, confirmed at Aa3
Downgrade:
* Series 2002-9; Group 1; Class I-B-3, downgraded to Baa3 from
Baa2
* Series 2002-9; Group 1; Class I-B-4, downgraded to B1 from
Ba2
* Series 2002-9; Group 1; Class I-B-5, downgraded to Caa2 from
B3
* Series 2002-10; Group 2; Class II-B-4, downgraded to B2 from
Ba3
* Series 2002-10; Group 2; Class II-B-5, downgraded to Ca from
B3
* Series 2002-18; Group 1; Class I-M-1, downgraded to A1 from
Aa2
* Series 2002-18; Group 1; Class I-M-2, downgraded to Caa2 from
Baa2
* Series 2002-19; Group 2; Class II-M-1, downgraded to A2 from
Aa2
* Series 2002-19; Group 2; Class II-M-2, downgraded to Caa1
from A2
* Series 2002-26; Group 3; Class III-M-3, downgraded to Baa2
from A2
* Series 2002-26; Group 3; Class III-B, downgraded to Ba1 from
A3
DELPHI CORP: Names Rodney O'Neal Pres. & Chief Operating Officer
----------------------------------------------------------------
Delphi Corporation's (NYSE: DPH) Board of Directors has approved
the following appointments, effective immediately:
Rodney O'Neal is named president and chief operating officer, with
responsibility for Delphi's three operating segments, its three
regional operations, Global Supply Management and Sales and
Marketing. Mr. O'Neal, 51, previously was president of the
Dynamics, Propulsion, Thermal & Interior business sector of the
company and the customer champion for the Ford Motor Company
account. Mr. O'Neal also was named to the Delphi Board of
Directors.
The appointment marks the first time that a single officer other
than founding chairman, CEO and President J. T. Battenberg III
will be responsible for all of Delphi's global business units.
Mr. O'Neal will continue to report to Mr. Battenberg, who remains
chairman and CEO and also chair of the Delphi Strategy Board, the
company's top policy-making group.
David B. Wohleen is named to a new vice chairman position, with
responsibility for several of Delphi's major growth engines,
including commercial vehicles, Delphi Medical Systems Corp., and
Delphi's research and development group. Mr. Wohleen, 54, also
retains responsibility for the company's largest commercial
account, General Motors. He previously had been president of the
Electrical, Electronics & Safety business sector of the company,
including its Product & Service Solutions business unit, which
transitions to O'Neal. Mr. Wohleen will continue to report to
Battenberg.
Donald L. Runkle, 59, who had been vice chairman, enterprise
technologies, will consult with the management team on a
transitional basis until his retirement later this year. He also
had been the customer champion for commercial vehicles and
DaimlerChrysler accounts, and a member of the Delphi Board of
Directors.
Mr. Battenberg praised Mr. Runkle for his long and distinguished
career with Delphi and General Motors. "Don has been an important
member of our leadership team, and one of the architects of our
lean enterprise and cost reduction efforts. His technical acumen
and his understanding of lean concepts have been important
contributions to our success in both areas. I'm grateful for the
part of his career that he spent with Delphi."
Alan S. Dawes, 50, remains vice chairman and chief financial
officer, and will continue to report to Mr. Battenberg. His
previous responsibility for Delphi's Automotive Holdings Group
transitions to Mr. O'Neal.
Mark Weber, executive vice president, and Logan Robinson, vice
president and general counsel, will continue to report to Mr.
Battenberg, with their responsibilities unchanged.
Mr. Battenberg said the appointments will bring sharper focus to
the company's growth, lean, and cost reduction efforts. "Rod will
have responsibility for the operating performance of the company's
core business and our focus on becoming a truly global and lean
enterprise," Mr. Battenberg said. "Dave's focus will be on
specific areas where we are moving our technical capability into
adjacent markets such as commercial vehicles and medical, and he
will also oversee our advanced research and development for both
automotive and other applications."
Reporting to Mr. O'Neal are:
-- Volker J. Barth, 57, president, Europe, Middle East and
Africa;
-- James A. Bertrand, 47, president, Automotive Holdings Group,
who also retains responsibility for coordinating customer
satisfaction and quality initiatives.
-- Choon T. Chon, 58, president, Asia-Pacific.
-- Gabor Deak, 55, president, South America.
-- Guy C. Hachey, 48, president, Energy & Chassis. Hachey
assumes responsibility for coordinating corporate-wide
manufacturing initiatives.
-- Francisco A. Ordonez, 54, president, Product &
Service Solutions.
-- Jeffrey J. Owens, 49, president, Electronics and Safety.
Mr. Owens assumes responsibility for coordinating corporate-
wide engineering initiatives, and retains oversight for
corporate-wide program management.
-- Ronald M. Pirtle, 50, president, Thermal and Interior.
Mr. Pirtle assumes responsibility for the DaimlerChrysler
customer account, previously held by Runkle.
-- Robert J. Remenar, 49, president, Steering. Mr. Remenar
assumes oversight for coordinating common initiatives across
the company's business lines.
-- James A. Spencer, 51, president, Delphi Packard Electric.
Mr. Spencer assumes responsibility for the Ford Customer
account, previously held by Mr. O'Neal.
-- R. David Nelson, 67, vice president, Global Supply
Management; and
-- F. Timothy Richards, 50, vice president, Sales & Marketing.
Mr. Battenberg said that while all of the operating units will
report to Mr. O'Neal, the company will continue to report
financials for three segments: Automotive Holdings; Dynamics,
Propulsion, Thermal & Interior; and Electrical, Electronics &
Safety. All other officer assignments and reporting relationships
remain the same.
About the Company
Delphi -- http://www.delphi.com/-- is a world leader in mobile
electronics and transportation components and systems technology.
Multi-national Delphi conducts its business operations through
various subsidiaries and has headquarters in Troy, Michigan, USA,
Paris, Tokyo and Sao Paulo, Brazil. Delphi's two business sectors
-- Dynamics, Propulsion, Thermal & Interior Sector and Electrical,
Electronics & Safety Sector -- provide comprehensive product
solutions to complex customer needs. Delphi has approximately
186,500 employees and operates 171 wholly owned manufacturing
sites, 42 joint ventures, 53 customer centers and sales offices
and 34 technical centers in 41 countries.
* * *
As reported in the Troubled Company Reporter on Dec. 23, 2004,
Standard & Poor's Ratings Services lowered its corporate credit
rating on Delphi Corp. to 'BB+' from 'BBB-' and its short-term
corporate credit rating to 'B' from 'A-3'. The ratings were
removed from CreditWatch where they were placed Dec. 2, 2004. The
outlook is stable.
"The action reflected our view that Delphi's earnings outlook will
remain weak for the next few years because of challenging
conditions in the automotive industry, a heavy dependence on
General Motors Corp. (BBB-/Stable/A-3), which is losing market
share in the U.S., and continued heavy underfunded employee
benefit obligations," said Standard & Poor's credit analyst Martin
King.
DUO DAIRY: Trustee Taps Connolly Rosania as Counsel
---------------------------------------------------
Dennis W. King, the chapter 7 Trustee of Duo Dairy, Ltd., LLLP,
asks the U.S. Bankruptcy Court for the District of Colorado for
permission to employ Connolly, Rosania & Lofstedt, PC, as his
counsel.
Mr. King requires the professional services of Connolly Rosania to
assist him in the investigation and recovery of the estate's
assets and in any legal matters related to Duo Dairy's bankruptcy
case.
Douglas C. Pearce II, Esq., an associate at Connolly Rosania will
be the Trustee's primary attorney. Mr. Pearce will charge the
Debtor $165 per hour for his professional services.
To the best of the Trustee's knowledge, Connolly Rosania is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
Headquartered in Loveland, Colorado, Duo Dairy, LTD., LLP, filed
for chapter 11 protection on March 12, 2004 (Bankr. D. Colo. Case
No. 04-14827). The case was converted to chapter 7 on October 27,
2004, and Dennis W. King was appointed as the Chapter 7 Trustee to
oversee the company's liquidation. Jeffrey A. Weinman, Esq., and
William A. Richey, Esq., at Weinman & Associates, P.C., represent
the Debtor. When the Debtor filed for protection from its
creditors, it estimated assets of $50 Million and estimated debts
of $50 million.
EATON FAMILY: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------
Lead Debtor: Eaton Family Properties, LLC
200 Church Street, Suite 300
Nashville, Tennessee 37201
Bankruptcy Case No.: 05-00241
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
Eaton Family Properties General Partnership 05-00242
Chapter 11 Petition Date: January 9, 2005
Court: Middle District of Tennessee (Nashville)
Judge: Marian F. Harrison
Debtors' Counsel: Steven L. Lefkovitz, Esq.
Law Offices Lefkovitz & Lefkovitz
618 Church Street, Suite 410
Nashville, TN 37219
Tel: 615-256-8300
Fax: 615 250-4926
Total Assets: $2,615,000
Total Debts: $4,670,967
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Fifth Third Bank(s) Secured Value: $1,830,000
P.O. Box 630778 $1,200,000
Cincinnati, OH 45263
Pinnacle Bank Secured Value: $1,400,000
211 Commerce Street $700,000
Nashville, TN 37201
Capitol Bank and Trust Secured Value: $785,000
c/o Amy B. Smith $500,000
424 Church Street
Nashville, TN 37219
Stark, John Senior Lien: $350,000
4207 Lebanon Road $4,303,695
Hermitage, TN 37076
1st Trust Bank Secured Value: $150,000
$110,000
National Bank of Commerce Secured Value: $138,695
$115,000
S&E Properties $13,000
Ervin, John R. $325
Calbert, Omeda $300
Demoss, Courtney $300
McCray, Shirley $300
Teasley, Charlene $300
Carnahan, Richard $275
Spence, Richard $275
Crittenden, Mary $250
Johnson, Kisha $250
Smith, Vanoly $250
Venoy, Lisa $250
Wescott, Rosalyn $248
Randolph, Linda $200
EB2B COMMERCE: June 30 Balance Sheet Upside-Down by $4.2 Million
----------------------------------------------------------------
eB2B Commerce, Inc. (PK: EBTBQ.PK), a leading provider of
business-to-business transaction management and supplier
enablement solutions reported its second quarter 2004 results.
Revenue for the second quarter ended June 30, 2004 was $1,053,000,
compared to $1,213,000 for the same period in 2003, a decrease of
$160,000, or 13%. Compared to revenue of $833,000 for the first
quarter of 2004, total revenue increased by $220,000, or 26%.
Revenue for the six-month periods ended June 30, 2004 and 2003
amounted to $1,886,000 and $2,244,000, respectively, a decrease of
$358,000, or 16%. The year-over-year decrease for the three and
six months period was caused by reduced IT spending by the
Company's largest client and the Company's reduction in marketing
and selling expenses, as it focused on generating revenue from
existing relationships. The sequential increase in revenue was
primarily attributable to the timing of completed large projects
for which revenue is recognized on completion and ramp up of a
large customer on the Company's Trade Gateway platform.
Total expenses for the second quarter ended June 30, 2004 were
$893,000. Excluding a $566,000 one-time adjustment in 2003, total
expenses for the second quarter 2004 decreased $103,000 or 10%
from $996,000 in the same period in 2003. Total expenses for the
six-months ended June 30, 2004 were $1,734,000. Excluding a
$566,000 one-time adjustment in 2003, total expenses for the six
months ended June 30, 2004 decreased $522,000 or 23% from
$2,256,000 in the same period in 2003.
Income from continuing operations for the quarter ended June 30,
2004 was $160,000 compared to income from continuing operations of
$217,000 for the same period in 2003, excluding the one-time
adjustment of $566,000 in 2003. Income from continuing operations
for the six months ended June 30, 2004 was $152,000 compared to a
loss from continuing operations of $12,000 for the same period in
2003, excluding the one-time adjustment of $566,000 in 2003.
Net income in the second quarter of 2004 was $17,000, or $0.00 per
share compared to income of $632,000, a decrease of $615,000.
Excluding the $566,000 one-time adjustment in the second quarter
of 2003, net income decreased $49,000 in the second quarter of
2004. Net loss for the six months ended June 30, 2004 was
$162,000, compared to net income of $217,000, a decrease of
$379,000. Excluding the $566,000 one-time adjustment in the six
months ended June 30, 2003, net income improved $187,000 in the
six months ended June 30, 2004.
Net cash provided by operating activities for the six months ended
June 30, 2004 was $125,000 versus cash used in operating
activities of $118,000 for the same period in 2003.
At June 30, 2004, the Company had approximately $271,000 of cash,
and a negative working capital position of $4,592,000.
On October 27, 2004, the Company filed a Plan of reorganization
under Chapter 11 of the U.S. Bankruptcy Code in the Southern
District of New York, Bankruptcy Case Number 04-16926(CB) in order
to effectuate a settlement with its Senior Secured Noteholders,
who had demanded acceleration of their Notes as a result of the
Company's default on interest payments. A confirmation hearing
has been scheduled in the case for January 26, 2005.
Investors may secure a copy of the Disclosure Statement in the
bankruptcy case at the Bankruptcy Court's Internet site at
http://www.nysb.uscourts.gov/ Alan Halperin and Bob Raicht of
Halperin, Battaglia, and Raicht, LLP are representing the Company.
About eB2B Commerce, Inc.
eB2B Commerce is a leading provider of business-to-business
transaction management services that simplify trading partner
integration, automation, and data exchange across the order
management life cycle. eB2B's Trade Gateway and supplier
enablement services provide enterprises large and small with
robust and reliable alternatives for establishing trading hubs
with their small and mid-size supplier base.
At June 30, 2004, eB2B Commerce's balance sheet showed a
$4.2 million stockholders' deficit.
EL PASO: Reports $2.4 Billion of Liquidity as of Dec. 31
--------------------------------------------------------
El Paso Corporation (NYSE: EP) provided this financial and
operational update late last week:
"I'm pleased with our progress in 2004 given all the obstacles we
faced," said Doug Foshee, president and chief executive officer of
El Paso. "Our pipelines continued to deliver solid results, and
we continued to capture a significant share of the expansion
opportunities in our markets. In exploration and production,
after a period of evaluation, we are now increasing our activity
levels in key basins. Production volumes have stabilized, and we
expect to be able to show growth from current levels in 2005 and
beyond, both through the drillbit and through acquisitions. The
other remaining businesses continue to deliver on their
commitments. We also made great strides in improving our
financial health in 2004. We reduced net debt by $3.4 billion
during the year and expect to continue to reduce debt this year.
And importantly, we renewed our $3-billion credit facility for a
longer term, at lower rates, and with fewer banks--further
evidence of our improving condition.
"While we are pleased with this progress, we are not satisfied,
and we look forward to showing continued progress throughout 2005.
I want to thank our thousands of employees around the world for
their tireless efforts in 2004 on behalf of Team El Paso and
assure our shareholders of our continued focus on stewardship of
their investment in 2005."
For the nine months ended September 30, 2004, El Paso had cash
flow from operating activities totaling $799 million, which was
impacted by a $604- million payment for its western energy
settlement. The $1.4 billion of cash flow prior to this payment
was equal to the company's spending for capital expenditures and
dividends during the nine-month period.
As of December 31, 2004, El Paso had $2.4 billion of liquidity,
comprised of $1.8 billion of available cash and $560 million of
borrowing capacity under its credit facilities. The company
defines available cash as cash on deposit or held in short-term
investments that is easily accessible for general corporate
purposes.
El Paso Corporation -- http://www.elpaso.com/-- provides natural
gas and related energy products in a safe, efficient, dependable
manner. The company owns North America's largest natural gas
pipeline system and one of North America's largest independent
natural gas producers.
* * *
As reported in the Troubled Company Reporter on Nov. 17, 2004,
Moody's Investors Service confirmed El Paso Production Holding's
senior unsecured note and senior implied B3 ratings and moved the
rating outlook to stable. Given El Paso Production's weak
production trend and natural gas price volatility, the outlook and
the ratings will be closely monitored. El Paso Corporation wholly
owns El Paso Production.
ENRON: EESI Gets Court Nod on Four Settlement Agreements
--------------------------------------------------------
Pursuant to Rule 9019(a) of the Federal Rules of Bankruptcy
Procedure, Enron Energy Services, Inc., sought and obtained the
Court's permission to enter into settlement agreements with each
of these counterparties:
1) OCM BOCES Entities -- Onondaga Cortland Madison Board of
Cooperative Educational Services, and Onondaga Cortland
Madison Board of Cooperative Educational Services, as
Administrative Participant for New York School and
Municipal Energy Consortium;
2) the Briad Entities -- Briad Corp., Briad Restaurant Group,
LLC, Briad Wenco, LLC, Briad Manchester, LLC, Briad Lodging
Group, LLC, and The Briad Group;
3) Acapulco Restaurants, Inc.; and
4) Rodgers Engineering Corporation
Edward A. Smith, Esq., at Cadwalader Wickersham & Taft, in New
York, relates that prior to the Petition Date, EESI and the
Counterparties entered into various contracts for the sale of
energy. Discussions between EESI and the Counterparties resulted
in EESI's agreeing to enter into a Settlement Agreement with each
of the Counterparties. Among others, the Settlement Agreements
provide a mutual release of claims related to the Contracts.
Pursuant to the Settlement Agreements, EESI and the
Counterparties also agree that:
(a) the Counterparties will pay EESI these settlement amounts:
Counterparty Settlement Amount
------------ -----------------
OCM BOCES $3,950,000
Briad Entities 99,500
Acapulco Restaurants 685,000
Rodgers Engineering 36,235
(b) each Scheduled Liability related to the Counterparties, or
claims filed by or on behalf of the Counterparties against
EESI in connection with the Contracts, will be deemed
irrevocably withdrawn with prejudice and, to the extent
applicable, expunged and disallowed in their entirety.
The Settlement Agreements will clearly benefit EESI and its
creditors. Mr. Smith asserts that the Settlement Payments
adequately compensate the estate for the value of the Contracts.
Moreover, the Settlement Agreements will avoid future disputes
and litigation concerning the Contracts.
The Debtors believe that the Settlement Agreements will allow
EESI to capture the value of the Contracts for its estate, while
avoiding the costs associated with possible future litigation.
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.
FALCON NEST: Judge Riegke Formally Dismisses Bankruptcy Case
------------------------------------------------------------
The Honorable Linda B. Riegke of the U.S. Bankruptcy Court for the
District of Nevada formally dismissed the bankruptcy case filed by
Falcon Nest, LLC, on December 27, 2004.
The Debtor filed a motion to dismiss its chapter 11 case on
October 21, 2004.
The Debtor tells the Court that it filed a chapter 11 petition
with the Court in order to stop a pending foreclosure on its only
asset, a real property located in Mesquite, Nevada.
The Debtor relates that on August 13, 2004, one of its secured
creditors, Vestin Mortgage, Inc., with a claim in excess of
$7,700,000 filed a motion to the Court for relief from the
automatic stay as to conclude foreclosure on the Debtor's real
property located in Mesquite, Nevada.
The Court granted Vestin Mortgage's motion on September 28, 2004,
and the Court's order became effective on October 1, 2004. Vestin
Mortgage eventually foreclosed on the Debtor's real property in
Mesquite, Nevada.
Judge Riege based her decision on the two facts cited by Falcon
Nest on its motion for dismissal:
a) since Vestin Mortgage has foreclosed on the Debtor's only
asset, it has no more assets and its bankruptcy proceeding is
no longer necessary; and
b) the Debtor cannot obtain funding to fund a rehabilitation or
reorganization, resulting in the absence of a reasonable
likelihood of rehabilitation.
The Court concludes that these facts demonstrate causes to dismiss
the Debtor's bankruptcy case as required under Section 1112(b) of
the Bankruptcy Code.
Headquartered in Las Vegas, Nevada, Falcon Nest, LLC, filed for
chapter 11 protection on August 9, 2004 (Bankr. Nev. Case No.
04-18579). The Court dismissed the case on December 27, 2004.
Alan R. Smith, Esq., at Law Offices of Alan R. Smith represented
the Debtor. When the Debtor filed for chapter 11 protection, it
estimated $10 million to $50 million in assets and $1 million to
$10 million of liabilities.
FEDERAL-MOGUL: Judge Lyons Approves Inter-Court Communication Plan
------------------------------------------------------------------
More than 300,000 asbestos claims have been filed against Federal-
Mogul's U.K. Debtor-affiliates. Approximately 95% of the
claimants are U.S.-based and assert claims arising from injury
sustained in the United States as a result of business conducted
by the U.K. Debtors in the U.S.
The Plan Proponents:
-- the Debtors,
-- the Unsecured Creditors Committee,
-- the Asbestos Claimants Committee,
-- the Equity Security Holders Committee,
-- the Legal Representative for Future Asbestos-Related
Claimants, and
-- JPMorgan Chase Bank as Administrative Agent for the
Debtors' prepetition lenders,
believe that an estimation proceeding is a critical step for
determining:
-- the relative share of the value of the U.K. Debtors as
between holders of Asbestos Claims and holders of other
claims; and
-- the relative share of that value among the holders of
Asbestos Claims, as between U.K. and U.S. holders, for both
the Chapter 11 and the Administration Cases.
According to James E. O'Neill, Esq., at Pachulski, Stang, Ziehl,
Young, Jones & Weintraub, P.C., in Wilmington, Delaware, the
validity and quantification of asbestos claims of the U.S and
U.K. claimants are likely to be determined in accordance with the
principles of law of the corresponding countries. Thus, the Plan
Proponents assess that the most appropriate and economical
allocation of tasks is for:
-- the U.S. Court to estimate the amount of Asbestos Claims of
U.S. claimants, and for the English Court to estimate the
amount of Asbestos Claims of U.K. claimants; and
-- each Court to accept the determination of the other with
respect thereto.
"It would make little sense to adopt a parochial U.S. or U.K.
centric approach and for both courts to determine the asbestos
holders' entitlement against the value of the U.K. Debtors because
of the location of the different claimants and the laws to be
applied," Mr. O'Neill remarks. "An approach suggesting that the
U.S. Court should estimate all Asbestos Claims 'for purposes of
the Plan' and that the English Court and the Administrator should
determine, assess or estimate all Asbestos Claims for purposes of
a U.K. scheme of arrangement or Company Voluntary Arrangement is
also not sensible. Absent coordination of the courts, the risk of
inconsistent determinations relating to the same asbestos claims
is great, and the cost to the parties in having to resolve this
issue in two forums is not economical."
Therefore, pursuant to the Inter-Court Communication Procedures,
the Plan Proponents ask the Bankruptcy Court and the English Court
to authorize:
(a) a communication with the English Court to discuss the
estimation process of the asbestos personal injury claims;
and
(b) the purposes for which the determination should be used
through an in-person or telephonic conference.
Objections
(1) U.K. Administrators
Christopher S. Sontchi, Esq., at Ashby & Geddes, in Wilmington,
Delaware, tells the Court that the Joint Administrators of the
U.K. Debtors are in favor of inter-court communications as a means
of avoiding conflicts between the two jurisdictions. However,
contrary to the Plan Proponents' contentions, there is nothing to
be achieved by communication between the U.S. Bankruptcy Court and
the U.K. Court regarding any estimation of Asbestos Personal
Injury Claims in connection with confirmation of the Plan.
Mr. Sontchi points out that:
(a) the estimation process would not correspond to any process
that is necessary or even likely to take place in the U.K.
proceedings after any confirmation of the Plan;
(b) the U.K. Court made clear in the judgment of Justice David
Richards on October 21, 2004, that Schemes or Collective
Bargaining Agreements are the only mechanisms by which the
Plan could be enforced in the U.K. against the creditors
of the U.K. Debtors, given that the U.K. Debtors are
incorporated and have their principal places of business
in the U.K., and all of their material assets are situated
in or controlled from the U.K.;
(c) the Administrators will not, absent agreement of all
relevant parties-in-interest, propose Schemes or CVAs to
implement the Plan as currently drafted, but will instead
pursue a controlled realization of the U.K. Debtors'
assets;
(d) the distribution process under U.K. law, whether pursuant
to a Scheme or CVA or some other distribution process
following a controlled realization, does not involve any
estimation of claims by the U.K. Court but is based on the
submission of claims by individual claimants and admission
of those claims in the U.K. process, and the adoption by
the relevant office holders of an appropriate reserving
strategy;
(e) any ruling by the Bankruptcy Court regarding the
estimation of asbestos liabilities would not be binding on
the Administrators or the U.K. Court as a matter of U.K.
law; and
(f) the Plan Proponents have known for a very long time that
the Administrators were not prepared to promote Schemes or
CVAs designed to implement the Plan in the U.K., and the
reasons for the Administrators' decision.
Thus, the Administrators ask the Bankruptcy Court to deny the
proposed communication in its entirety.
Because the reasons why a substantive communication is unnecessary
and inappropriate as of this time are largely matters of U.K. law,
the Administrators recognize that a preliminary communication
pursuant to Paragraph A.7.ii.b.2 of the Procedures and Issues for
Inter-Court Communications may be helpful to both Courts to inform
the other of the nature of the processes being or to be undertaken
in the two jurisdictions.
(2) PD Committee
According to Theodore J. Tacconelli, Esq., at Ferry, Joseph &
Pearce, P.A., in Wilmington, Delaware, the Property Damage
Committee has no objection to inter-court communications on the
topic of estimation of asbestos bodily injury claims. "It does
not appear likely, however, that the proposed inter-court
communications will result in any measure of clarity . . . with
respect to the scope of the estimation hearing, or that the Plan
Proponents' proposed allocation of responsibilities for bodily
injury claims estimation between the U.S. and the U.K. courts is
feasible under the current circumstances."
Mr. Tacconelli notes that the Plan Proponents now concede that the
proposed Third Amended Plan of Reorganization will have to be
amended yet again based on the results of any estimation hearing.
But by suggesting a bifurcation of responsibility for estimation
between the two courts, Mr. Tacconelli says, the Plan Proponents
all but ensure that any ruling by the Court on estimation will be
incomplete, leaving the Plan in limbo once again. "And because
there is no procedure under UK law for estimation of claims in the
absence of a proposed scheme of arrangement or company voluntary
arrangement, the proposal that the U.K. court conduct that
estimation now, or even in the near future, appears infeasible.
This is particularly true in [Federal-Mogul's] case where the U.K.
Administrators have sought and received authority from the U.K.
court to oppose the Plan and have indicated that they cannot
support a Scheme or CVA to implement the Plan in the U.K."
"While little is clear in this matter, what is clear is that the
protocol for estimation put forth by the Plan Proponents is not
tenable," Mr. Tacconelli asserts.
* * *
Pursuant to Section 7.S.ii.b.i.1 of the Inter-Court Communication
Procedures and subject to the agreement of the English Court,
Judge Lyons rules that a communication with the English Court will
take place, regarding the estimation process of the aggregate
amount of all Asbestos Claims against the U.K. Debtors and the
purposes for which that determination should be used.
The Court overrules the objections of the Administrators and the
PD Committee.
If the English Court approves a communication pursuant to the
Inter-Court Communications Procedures, Judge Lyons rules, that
communication is in good faith and is required to take place
urgently and should be heard on 36 hours' notice thereafter.
Judge Lyons authorizes and directs the Clerk of Court of the U.S.
Court to coordinate with the Clerk of the English Court, the Plan
Proponents, the Administrators and any other necessary parties to
establish the time, place and manner of the communication,
including scheduling a conference call.
Headquartered in Southfield, Michigan, Federal-Mogul Corporation
-- http://www.federal-mogul.com/-- is one of the world's largest
automotive parts companies with worldwide revenue of some
$6 billion. The Company filed for chapter 11 protection on
October 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J.
Nyhan, Esq., James F. Conlan, Esq., and Kevin T. Lantry, Esq., at
Sidley Austin Brown & Wood, and Laura Davis Jones, Esq., at
Pachulski, Stang, Ziehl, Young, Jones & Weintraub, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $10.15 billion in
assets and $8.86 billion in liabilities. (Federal-Mogul
Bankruptcy News, Issue No. 70; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
FINOVA GROUP: Counsel Presents Final Report on Chapter 11 Cases
---------------------------------------------------------------
Richard Lieberman, Senior Vice President, General Counsel and
Secretary of The FINOVA Group, Inc., presents to the Court a
final report in the Chapter 11 cases of:
1. The FINOVA Group, Inc.,
2. FINOVA (Canada) Capital Corporation,
3. FINOVA Capital, plc,
4. FINOVA Loan Administration, Inc.,
5. FINOVA Mezzanine Capital, Inc.,
6. FINOVA Technology Finance, Inc., and
7. FINOVA Finance Trust
Mr. Lieberman provides a breakdown of the results in the seven
Cases:
Type of Payment Amount
--------------- ------
Trustee's Compensation Not Applicable
Trustee non-operating expenses Not Applicable
U.S. Trustee's Fees for:
The FINOVA Group $115,000
FINOVA (Canada) Capital Corp. 40,250
FINOVA Capital, plc 84,500
FINOVA Loan Administration 46,250
FINOVA Mezzanine Capital 38,000
FINOVA Tech. Finance 3,750
FINOVA Finance Trust 34,000
No Chapter 11 trustee or examiner was appointed in the Cases.
Hence, no fees were incurred for a trustee or trustee's counsel.
All payments to professionals in the Debtors' cases were made by
FINOVA Capital Corporation. The fees and expenses awarded to
retained professionals, members of the Official Committee of
Unsecured Creditors, and members of Official Committee of Equity
Security Holders will be provided on a consolidated basis at the
closing of FINOVA Capital Corp.'s bankruptcy case.
As reported in the Troubled Company Reporter on Jan. 10, 2005,
Judge Walsh entered a final decree closing six Chapter 11 cases:
Reorganized Debtor Case No.
------------------ --------
The FINOVA Group, Inc. 01-697
FINOVA (Canada) Capital Corporation 01-699
FINOVA Capital, PLC 01-700
FINOVA Loan Administration, Inc. 01-701
FINOVA Mezzanine Capital, Inc. 01-702
FINOVA Technology Finance, Inc. 01-704
FINOVA Finance Trust 01-705
Judge Walsh keeps the Chapter 11 case of FINOVA Mezzanine
Capital, Inc., open in view of the pending adversary proceeding
commenced by Teltronics.
The Debtors' right to renew their request to seek closure of the
FINOVA Mezzanine Case in the future, notwithstanding the pendency
of the Teltronics Adversary Proceeding, is reserved.
The Closing Cases may be reopened at any time in accordance with
and for the purpose established by Section 350(b) of the
Bankruptcy Code.
Judge Walsh directs the Clerk of the Court to maintain one file
and docket for the Remaining Case of FINOVA Capital Corporation,
Case No. 01-698 (PJW). All subsequent pleadings will be filed in
the Remaining Case.
Headquartered in Scottsdale, Arizona, The Finova Group, Inc.,
provides commercial financing to small and mid-sized businesses;
other services include factoring, accounts receivable management,
and equipment leasing. The firm has three segments: Commercial
Finance, Specialty Finance, and Capital Markets. FINOVA targets
such markets as transportation, wholesaling, communication, health
care, and manufacturing. Loan write-offs had put the firm on
shaky ground. The Company and its debtor-affiliates and
subsidiaries filed for Chapter 11 protection on March 7, 2001
(U.S. Bankr. Del. 01-00697). Daniel J. DeFranceschi, Esq., at
Richards, Layton & Finger, P.A., represents the Debtors. FINOVA
has since emerged from Chapter 11 bankruptcy. Financial giants
Berkshire Hathaway and Leucadia National Corporation (together
doing business as Berkadia) own FINOVA through the almost
$6 billion lent to the commercial finance company.
FISHER COMMS: President & CEO William W. Krippaehne Jr. Resigns
---------------------------------------------------------------
Fisher Communications, Inc.'s (Nasdaq:FSCI) President and Chief
Executive Officer William W. Krippaehne Jr., has resigned. Mr.
Krippaehne also resigned as a member of Fisher Communication's
Board of Directors. The resignation will become effective on
January 6, 2005. Mr. Krippaehne's resignation was requested by
the Board of Directors.
Benjamin W. Tucker, Jr., currently President of Fisher
Broadcasting Company, a subsidiary of Fisher Communications, will
serve as Fisher Communication's acting President and Chief
Executive Officer.
Upon announcing his resignation, Mr. Krippaehne stated, "With the
corporate restructuring and refinancing work behind us, it is
appropriate for the company to seek new leadership with more
direct operating experience in the broadcasting business. After
23 years of service to the company, it is time for me to move on
and I wish the employees, management and the Board continued
success."
Phelps K. Fisher, the Chairman of Fisher Communication's Board of
Directors, stated that, "We appreciate the many contributions Bill
Krippaehne has made to our company and his dedication over the
past 23 years and we wish him well."
Mr. Tucker, 57, has been President of Fisher Broadcasting Company
since 2001. Mr. Tucker was Executive Vice President of
Broadcasting Operations of Fisher Broadcasting Company during
2001. He also served as Senior Vice President of Fisher
Television Regional Group -- Fisher Broadcasting Company from 1999
to 2001 and was Vice President of Retlaw Enterprises, Inc., a
broadcasting company, from 1991 to 1999. He served as National
Association of Broadcasters' TV Board Chairman in 2000-2001, as
Chairman of the CBS Affiliate Advisory Board from 1987 to 1989 and
as Chairman of the Network Affiliate Station Alliance from 1994 to
1995.
Mr. Fisher also stated, "We are confident in the leadership
ability of Ben Tucker to run the day-to-day operations of Fisher
Communications and to work with the Board until a new Chief
Executive Officer is selected."
About the Company
Fisher Communications, Inc. is a Seattle-based integrated media
company. Its 9 network-affiliated television stations, and a
tenth station 50% owned by Fisher Communications, are located in
Washington, Oregon, and Idaho, and its 27 radio stations broadcast
in Washington and Montana. It also owns and operates Fisher
Plaza, a facility located near downtown Seattle.
* * *
As reported in the Troubled Company Reporter on Sept. 10, 2004,
Standard & Poor's Ratings Services assigned its 'B-' corporate
credit rating to Fisher Communications, Inc. At the same time,
Standard & Poor's assigned a 'B-' rating to the company's proposed
$150 million senior unsecured notes due in 2014. Proceeds from
the proposed notes offering are expected to be used to refinance
the company's existing credit facilities and to unwind a variable
forward sale transaction. The outlook is stable.
The Seattle, Washington-based television and radio station owner
and operator had approximately $140 million of debt outstanding at
June 30, 2004.
GENERAL NUTRITION: Moody's Rates Proposed $150M Sr. Notes at B3
---------------------------------------------------------------
Moody's Investors Service assigned a rating of B3 to the proposed
$150 million senior note issue of General Nutrition Centers, Inc.,
upgraded the Bank Loan rating to B1 from B2, and affirmed all
other ratings. Together with excess cash, proceeds from the new
debt will be used to pay down $185 million of the Term Loan. The
Bank Loan upgrade recognizes that the collateral package remains
the same even after substantial reduction of the bank commitment.
Moody's expectation that sales and debt protection measure trends
will remain poor over the medium-term, the uncertainty regarding
long-term strategy, and the need for continuous product
development constrain the ratings. Providing credit support are
the belief that the company will obtain the announced bank loan
amendment, Moody's opinion that free cash flow will not fall below
break-even in spite of continued weak sales, and potential
advantages from GNC's position as the leading retailer of vitamin,
mineral, & nutritional supplement -- VMS -- products. The rating
outlook is stable.
The rating assigned is:
* $150 million senior note (2011) at B3.
The rating raised is:
* $358 million secured Bank Facility commitment to B1 from B2.
Ratings affirmed are:
* $215 million of 8.5% senior subordinated notes (2010) at
Caa1,
* Senior implied rating at B2, and the
* Long-term unsecured issuer rating at B3.
Following the transaction, the Bank Facility commitment will fall
to $173 million. Moody's does not rate the 12.0% redeemable
preferred stock.
Constraining the ratings are the poor sales results over the
previous two quarters as low-carbohydrate food products have
become more widely available, the challenges in achieving sales
initiatives and operating efficiency gains over the next year, and
uncertainty regarding the long-term strategy during a period of
transition in senior management. The need for continuous
innovation given the short life cycle of many new VMS products,
the intense competition within the fragmented VMS retailing
industry, and the practice of providing financial support to the
majority of new domestic franchisee stores (while acknowledging
that over the medium-term most new store development will be
outside the U.S. and Canada) also adversely impact the ratings.
Over the longer term, failure to resolve the rapidly accreting
redeemable preferred stock at the holding company level also will
become a concern.
However, credit strengths are Moody's expectation that free cash
flow will remain modestly positive, the positive contribution to
corporate overhead from most company-operated stores, and
potential scale advantages in purchasing and marketing as the
leading VMS retailer. The revenue diversity from operations
across many geographies, several revenue categories, and a large
franchisee base and the purchase frequency from the large base of
loyalty card customers also reduce the potential risks to the
company's business plan.
The stable rating outlook reflects our expectation that free cash
flow will not become negative while total revenue and average unit
volume recover and GNC will drive incremental traffic with a
steady pipeline of new products. Continued declines in retail
margin from further deterioration in store performance, permanent
usage of the revolving credit facility, or substantial incremental
investment in working capital would place downward pressure on the
ratings. Financial difficulties at a significant proportion of
franchisees also would negatively impact the ratings, given
exposure to franchisees derived from $240 million of royalty
payments and wholesale revenue, $23 million of direct loans, and
approximately 1321 subleased store locations. Over the longer
term, ratings could rise as fixed charge coverage comfortably
exceeds 2 times, lease adjusted leverage falls toward 5 times, and
the system expands both from new store development (particularly
in international markets) and existing store performance.
The B1 rating on the bank loan (comprised of a $75 million
Revolving Credit Facility and a post-transaction $98 million Term
Loan B) considers that this debt is secured by substantially all
of the company's tangible and intangible assets. The bank
amendment of December 14, 2004, loosened financial covenants in
return for repaying at least $185 million of the Term Loan before
January 31, 2005. Following the contemplated transaction, the
bank loan rating relative to the senior implied rating reflects:
(1) Moody's opinion that fair market value of tangible assets
comfortably exceeds the loan commitment; and
(2) the increased proportion of junior debt in the capital
structure.
Moody's expects that the revolving credit facility will provide
adequate liquidity for seasonal working capital needs and
occasional cash flow timing differences, but will not become
permanent capital.
The B3 rating on the senior notes considers that this debt is
guaranteed by the company's wholly owned domestic operating
subsidiaries on a senior basis. As of September 2004, this senior
class of debt would be contractually subordinated to the bank loan
and approximately $14 million of mortgages, and would rank equally
with $80 million of trade accounts payable.
The Caa1 rating on the senior subordinated notes considers that
this debt is guaranteed by the company's wholly owned domestic
operating subsidiaries, but is contractually subordinated to
substantantial amounts of secured and senior debts. In a
hypothetical default scenario with the revolving credit facility
fully utilized, Moody's believes that recovery for this
subordinated class of debt would partially rely on residual
enterprise value.
Lease adjusted leverage equaled 6.0 times (based on gross rent
without netting out subrental income) and fixed charge coverage
was 1.8 times for the twelve months ending September 30, 2004.
Comparable store sales declined by 3.2% and 10.7% in the second
and third quarters of 2004, respectively, principally due to
substantial declines in the diet category as low-carbohydrate
products have become widely available at many retailers. Revenue
and margins had been pressured for the previous several years
because of the lack of exciting new products to drive incremental
sales and the abrupt declines of ephedra sales in 2002 and
low-carbohydrate sales in 2004. Moody's anticipates that
franchisees will open most new stores over the next several years
and that a portion of cash flow after interest expense and
maintenance capital expenditures will be available for
discretionary purposes.
General Nutrition Centers, Inc., with headquarters in Pittsburgh,
Pennsylvania, retails vitamin, mineral, and nutritional supplement
products domestically and internationally through about 5700
company-operated and franchised stores. Revenue for the twelve
months ending September 2004 was about $1.4 billion.
GENERAL NUTRITION: S&P Rates Proposed $150M Sr. Unsec. Notes B-
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B-' rating to
General Nutrition Centers Inc.'s proposed $150 million senior
unsecured notes due 2011, to be issued under Rule 144A with
registration rights. The existing ratings for GNC, including the
'B' corporate credit rating, were affirmed. The outlook is
stable.
The rating on the proposed senior unsecured notes is one notch
below the corporate credit rating, in accordance with Standard &
Poor's policy of notching down senior unsecured debt when there is
significant senior secured debt that has a priority claim to the
company's assets. GNC plans to use proceeds from the proposed
notes offering, together with cash on hand, to repay about
$185 million of its $285 million term loan. Pro forma for the
transaction, the company will have total lease-adjusted debt
(including debt-like preferred stock) of about $862 million, and
debt leverage (debt to EBITDA) of 5.2x.
"Ratings on GNC, a leading specialty retailer of nutritional
supplements, reflect the company's recent weak operating
performance, expectations of continued operational challenges, its
product liability risk, and high debt leverage," said Standard &
Poor's credit analyst Kristi Broderick. 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
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.
GREAT ATLANTIC: 3rd Quarter Sales Rise to $2.52 Billion from 2003
-----------------------------------------------------------------
The Great Atlantic & Pacific Tea Company, Inc. (A&P, NYSE Symbol:
GAP) reported unaudited fiscal 2004 third quarter and year to date
results for the 12 and 40 weeks ended Dec. 4, 2004.
Sales for the third quarter were $2.52 billion, compared with
$2.48 billion in the third quarter of fiscal 2003. Comparable
store sales for company-operated stores declined 1.0% vs. year-
ago. The loss for the quarter was $1.96 per share this year
versus a loss of $0.66 per share last year.
The current quarter's results from continuing operations, as shown
on Schedule 1, were a loss of $73 million or $1.89 per share and
were in line with last year's results of $73 million or $1.89 per
share. The current year's results include charges totaling $37
million related to certain items that the Company believes are of
a non-operating nature. These items include $35 million related
to impairment charges on long-lived assets in its Midwest
operations, $1 million for costs related to the previously
announced Canadian Food Basics settlement, $4 million related to
the reorganization announced on December 9, offset by a $3 million
reversal of prior year restructuring charges. Last year's results
include $60 million related to asset impairment charges on long-
lived assets in its Midwest operations. Excluding these non-
operating items, EBITDA for the quarter was $48 million as
compared to $42 million for the same period last year.
Sales for the 40 weeks year to date were $8.29 billion versus
$8.18 billion in fiscal year 2003. Comparable store sales for
company-operated stores declined 0.1%. The net loss per share was
$4.74 for 2004, compared with a loss of $2.51 for 2003, which
included earnings of $1.60 per share from discontinued operations.
Excluding all year to date non-operating items, EBITDA for the 40
weeks of fiscal years 2004 and 2003 was $164 million and $155
million, respectively.
Christian Haub, Chairman of the Board and Chief Executive Officer,
said, "Although we remained unprofitable overall, we maintained
market share in a difficult sales environment, while achieving our
second consecutive year-over-year increase in operating results.
"Our Canadian operations produced another profitable performance
with strong results from our fresh food marketing initiatives, and
an improving trend in our Food Basics discount operations. We
completed the acquisition of 24 previously franchised Canadian
Food Basics stores, and look forward to further improving our
discount business. Our U.S. operations continued to improve
despite intense competition in all markets, as U.S. operating
results again contributed to our EBITDA growth in the quarter.
"To accelerate our return to overall profitability, we have
initiated significant organizational changes in the U.S.,
including the management consolidation announced on November 4,
and the subsequent reorganization of U.S. administration, support
services and operating staff announced on December 9. This will
strengthen central management control, substantially reduce costs,
and drive the implementation of our Fresh and Discount retail
strategies.
"Our near-term outlook remains conservative as we expect no major
upturn in consumer confidence and spending in the U.S., and
therefore no easing of competitive pressures. We will continue to
manage costs, investment and liquidity closely, maintain our
successful growth course in Canada, and implement our U.S. retail
strategies, as the benefits of our leaner organization and cost
structure materialize," Mr. Haub said.
Founded in 1859, A&P, one of the nation's first supermarket
chains, is today among North America's largest. The Company
operates 650 stores in 10 states, the District of Columbia and
Ontario, Canada under the following trade names: A&P, Waldbaum's,
The Food Emporium, Super Foodmart, Super Fresh, Farmer Jack, Sav-
A-Center, Dominion, The Barn Markets, Food Basics and Ultra Food &
Drug.
Replays of the audio Webcast of the Company's quarterly discussion
of earnings broadcast January 7 are available until February 4 by
accessing a link on the "Investor Relations" page of its Web site
at http://www.aptea.com/
* * *
As reported in the Troubled Company Reporter on Oct. 27, 2004,
Standard & Poor's Ratings Services lowered its ratings on the
Great Atlantic & Pacific Tea Co. Inc. The corporate credit
rating was lowered to 'B-' from 'B'. The outlook is negative.
"The downgrade reflects weak sales, along with continued poor
profitability and cash flow protection," said Standard & Poor's
credit analyst Mary Lou Burde. "Although the company is expected
to have adequate liquidity to fund its operations through the
current fiscal year, additional resources and improved profits
will likely be needed to fund its longer-term strategies." A&P
reported that same-store sales fell 1% in the U.S., a downward
trend from the past several quarters. Although profitability in
the U.S. rose marginally, this was nearly all offset by a decline
in Canada. Excluding one-time items, EBITDA for the quarter was
$43 million, versus $38 million in the prior year. The
lease-adjusted operating margin of 4.3% is well below the 7.0%
average for rated supermarkets.
"The rating reflects poor profitability and high debt leverage,
tempered somewhat by important market positions in Canada and the
metropolitan New York area," said Ms. Burde. Soft consumer
spending and increasing competition from both conventional and
nontraditional food retailers are pressuring gross margins.
Combined with rising costs, this resulted in significant drops in
operating profit over the past two fiscal years.
GREEN VALLEY: S&P Withdraws B+ Corporate Credit & Debt Ratings
--------------------------------------------------------------
Standard & Poor's Ratings Services withdrew its 'B+' corporate
credit and senior secured debt ratings on Green Valley Ranch
Gaming LLC following the refinancing of the company's bank
facility.
Green Valley Ranch Resort is a luxury hotel just a few minutes
drive from the excitement of the Las Vegas Strip. An adjacent
casino offers gaming, dining, spa and entertainment options.
Recently awarded the AAA Four Diamond Award and voted "Best Local
Hotel" by the Las Vegas Review Journal, Green Valley Ranch offers
a world-class hotel, a European-style spa and a casino with
everyone's favorite games.
HAPPY KIDS: Has Until Feb. 25 to File Bankruptcy Schedules
----------------------------------------------------------
The Honorable Cornelius Blackshear of the U.S. Bankruptcy Court
for the Southern District of New York gave Happy Kids Inc. and its
debtor-affiliates more time to file their Schedules Of Assets and
Liabilities, Statements of Financial Affairs, Schedules of Current
Income and Expenditures, and Schedules of Executory Contracts and
Unexpired Leases. The Debtors have until February 25, 2005, to
file those documents.
The Debtors tell the Court that there are four debtor-affiliates
in their chapter 11 cases and they have a small staff that must
continue to operate their businesses while simultaneously
compiling and gathering the necessary information for their
Schedules and Statements.
Because of this situation, the Debtors relate that they cannot
complete the preparation and filing of their Schedules and
Statement within 15 days after the Petition Date as required by
Bankruptcy Rule 1007(c).
The Debtors assure Judge Blackshear that the extension will give
them more time in working diligently to accurately gather and
prepare their Schedules and Statements and file it on or before
the extension deadline.
Headquartered in New York, New York, Happy Kids Inc. and its
affiliates are leading designers and marketers of licensed,
branded and private label garments in the children's apparel
industry. The Debtors' current portfolio of licenses includes
Izod (TM), Calvin Klein (TM) and And1 (TM). The Company and its
debtor-affiliates filed for chapter 11 protection on January 3,
2005 (Bankr. S.D.N.Y. Case No. 05-10016). Sheldon I. Hirshon,
Esq., at Proskauer Rose LLP represents the Debtors' restructuring.
When the Debtor filed for protection, it listed total assets of
$54,719,000 and total debts of $82,108,000.
HAPPY KIDS: Can Continue Hiring Ordinary Course Professionals
-------------------------------------------------------------
The Honorable Cornelius Blackshear of the U.S. Bankruptcy Court
for the Southern District of New York gave Happy Kids Inc. and its
debtor-affiliates permission to continue to retain, employ and pay
professionals they turn to in the ordinary course of their
business without bringing formal employment applications to the
Court.
In the Debtors' day-to-day operation of their businesses, they
regularly call upon different professional firms throughout the
U.S. to provide them with various ongoing legal and professional
services, including auditing, accounting and tax advisory
services.
The Debtors tell the Court that it would be costly, time-consuming
and administratively cumbersome on their part to require each
Ordinary Course Professional to submit formal employment and
compensation applications to the Court.
The Debtors assure the Court that:
a) no Ordinary Course Professional will be paid in excess of
$20,000 per month, and no more than $100,000 per month for
all the Professionals they will employ;
b) in the event that an Ordinary Course Professional's
fess and expenses exceeds $20,000 per month, that
Professional will submit a formal approval to the Court for
his compensation; and
c) each Ordinary Course Professional will submit to the Court,
the U.S. Trustee, and the counsel for the Debtors an
affidavit describing the Professional's nature of services
and their billing procedures and practices.
Although some of Ordinary Course Professionals may hold minor
amount of unsecured claims, the Debtors believe that none of them
have an interest materially adverse to the Debtors, their
creditors or other parties in interest.
Headquartered in New York, New York, Happy Kids Inc. and its
affiliates are leading designers and marketers of licensed,
branded and private label garments in the children's apparel
industry. The Debtors' current portfolio of licenses includes
Izod (TM), Calvin Klein (TM) and And1 (TM). The Company and its
debtor-affiliates filed for chapter 11 protection on January 3,
2005 (Bankr. S.D.N.Y. Case No. 05-10016). Sheldon I. Hirshon,
Esq., at Proskauer Rose LLP represents the Debtors' restructuring.
When the Debtor filed for protection, it listed total assets of
$54,719,000 and total debts of $82,108,000.
HAWAIIAN AIRLINES: IRS Objects to Trustee's 2nd Amended Joint Plan
------------------------------------------------------------------
The U.S. Internal Revenue Services filed an objection with the
U.S. Bankruptcy Court for the District of Hawaii against the
confirmation of the Second Amended Joint Plan of Reorganization
filed on Oct. 4, 2004, by Hawaiian Airlines, Inc.'s chapter 11
Trustee Joshua Gotbaum, the Official Committee of Unsecured
Creditors, Hawaiian Holdings, Inc., RC Aviation LLC and HHIC, Inc.
On Aug. 26, 2004, the IRS filed tax claims totaling $128,560,412.
In Dec., the IRS amended its claim and lowered it to $89,365,151.
The Trustee objected to this claim. A hearing on this objection
will be held on Friday, Jan. 14, 2005.
According to the IRS, Hawaiian Airlines and its affiliates filed
their income tax return for 2003 in Sept. 2004. The Plan states
that the bar date for administrative claims is 30 days after the
Effective Date. The Government says it should not be bound by a
bar date that's so short without the opportunity to determine the
correctness of the 2003 tax return. Also, the bar date provision
will present problems should there be any unfiled tax returns at
that time.
The IRS complains that the Plan fails to provide for default
remedies should the Debtors fail to make any installment payment
required under the Plan within 30 days after it becomes due. The
discharge of taxes, the IRS stresses, should not occur unless all
priority taxes are paid in full and the Debtors remain liable for
all unpaid tax claims after confirmation.
The Government questions the viability of the Plan since it
provides that the amount for disputed claims should not exceed $22
million when the IRS' unsecured tax claim exceeds $38 million.
Headquartered in Honolulu, Hawaii, Hawaiian Airlines, Inc., --
http://hawaiianair.com/-- is a subsidiary of Hawaiian Holdings,
Inc. (Amex and PCX: HA). The Company provides primarily scheduled
transportation of passengers, cargo and mail. Flights operate
within the South Pacific and to points on the west coast as well
as Las Vegas. Since the appointment of a bankruptcy trustee in May
2003, Hawaiian Holdings has had no involvement in the management
of Hawaiian Airlines and has had limited access to information
concerning the airline. The Company filed for chapter 11
protection on March 21, 2003 (Bankr. D. Hawaii Case No. 03-00817).
Joshua Gotbaum serves as the chapter 11 trustee for Hawaiian
Airlines, Inc. Mr. Gotbaum is represented by Tom E. Roesser, Esq.,
and Katherine G. Leonard at Carlsmith Ball LLP and Bruce Bennett,
Esq., Sidney P. Levinson, Esq., Joshua D. Morse, Esq., and John L.
Jones, II, Esq., at Hennigan, Bennett & Dorman LLP. When the
Debtors filed for protection from its creditors, it listed $100
million in assets and $100 million in debts.
HAYES LEMMERZ: Wheel Group Names Don Septer Managing Director
-------------------------------------------------------------
Hayes Lemmerz International, Inc. (Nasdaq: HAYZ) disclosed the
appointment of Don Septer to the position of Managing Director of
the Company's International Wheel Group's South American
Operations, effective February 1, 2005. He was previously
Director of Operations for Hayes Lemmerz' Brake and Powertrain
Group. Mr. Septer will report directly to Fred Bentley, President
of the Company's International Wheel Group.
Mr. Septer will have responsibility for the Company's
International Wheel businesses with operations in Guarulhos and
Santo Andre, Brazil and Chihuahua, Mexico. Mr. Septer replaces
Nini Degani, who is leaving the Company to pursue other
opportunities. Mr. Degani's assistance has been greatly
appreciated.
Mr. Septer is an experienced manufacturing professional who began
his career as a plant superintendent with the Kelsey-Hayes
Company, in Romulus, Michigan. He also contributed to the
successful manufacturing operations of Borg Warner, ITT
Automotive, MascoTech Tubular and Newcor Powertrain.
"Don's experience in manufacturing and operations and previous
leadership roles make him a valuable asset to our strategy," said
Mr. Bentley. "In his new role, he will drive our strategic
initiative to reinforce our position as a world-leading supplier
of wheels."
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., and Mark S. Chehi, Esq., at Skadden, Arps, Slate,
Meager & Flom represent the Debtors' in their restructuring
efforts.
HOLLYWOOD ENTERTAINMENT: Receives Nasdaq Delisting Notice
---------------------------------------------------------
Hollywood Entertainment Corporation (Nasdaq:HLYW) received a
letter from The Nasdaq Stock Market, Inc., on January 3, 2005,
indicating that, because Hollywood did not comply with Marketplace
Rules 4350(e) and 4350(g) requiring Hollywood to hold an annual
shareholder meeting in 2004 and solicit proxies for that meeting,
its securities are subject to delisting from The Nasdaq National
Market at the opening of business on January 12, 2005. Hollywood
has requested a hearing before a Nasdaq Listing Qualifications
Panel to review the staff's determination and, under Nasdaq rules,
the delisting of Hollywood's securities will be stayed pending the
panel's decision.
Hollywood did not hold an annual shareholder meeting in 2004
because it anticipated that a date for a special shareholders
meeting to approve Hollywood's acquisition by affiliates of
Leonard Green & Partners, L.P., would have been set before the end
of 2004. The special shareholders meeting for the LGP transaction
was delayed however, because of Hollywood's efforts to pursue a
superior sale transaction. Hollywood is prepared to take any
steps required by Nasdaq to avoid delisting. Nevertheless, the
Nasdaq hearing panel may not grant Hollywood's request for
continued listing.
* * *
As reported in the Troubled Company Reporter on Aug. 10, 2004,
Standard & Poor's Ratings Services' ratings for Hollywood
Entertainment Corporation, including the 'B+' corporate credit
rating, remain on CreditWatch with negative implications. The
ratings were initially placed on CreditWatch March 29, 2004, when
Hollywood had announced it entered into a definitive merger
agreement to be acquired by an affiliate of Leonard Green &
Partners L.P. Wilsonville, Oregon-based Hollywood Entertainment
operates more than 1,900 Hollywood Video stores in 47 states and
approximately 600 Game Crazy video game specialty stores.
This CreditWatch update follows the announcement that Leonard
Green & Partners has informed Hollywood Entertainment that it
believes the financing condition to consummate the merger will not
be satisfied due to industry and market conditions. Hollywood and
a special committee of its board of directors are currently
considering the company's alternatives to determine the course of
action that would be in the best interest of shareholders.
Standard & Poor's will review any proposed transaction and its
impact on the company's credit quality.
"Hollywood's operating performance has been under pressure since
the second quarter of 2003 due to increased costs related to the
expansion of the Game Crazy business (video games) and a lack of
sales leverage in the video rental business," said Standard &
Poor's credit analyst Diane Shand. "Profitability is expected to
remain under pressure in 2004 given the weakness in the overall
video rental industry and the company's continuing investments in
Game Crazy." Hollywood is already leveraged, with total debt to
EBITDA of 4.2x before any additional transactions.
IESI CORP: 99.7% of Noteholders Agree to Amend 10-1/4% Indenture
----------------------------------------------------------------
IESI Corporation has determined the price for its previously
announced tender offer and consent solicitation for its 10-1/4%
Senior Subordinated Notes due 2012. The Notes are being tendered
pursuant to the Company's Offer to Purchase and Consent
Solicitation Statement, dated November 29, 2004, which more fully
sets forth the terms and conditions of the cash tender offer to
purchase any and all of the $150,000,000 outstanding principal
amount of the Notes and the consent solicitation to eliminate
substantially all of the restrictive and reporting covenants,
certain events of default and certain other provisions contained
in the indenture governing the Notes. As of 5:00 p.m., New York
City time, on January 5, 2005, the Company had received tenders
and consents for approximately 99.7% of the outstanding principal
amount of the Notes. The percentage of consents received exceeds
the requisite consents needed to amend the indenture governing the
Notes.
If the tender offer expires at the expiration date and time as
currently scheduled (9:00 a.m., New York City time on January 21,
2005, unless extended), the Total Consideration (as that term is
defined in the Offer to Purchase) will be $1,187.87 for each
$1,000 principal amount of Notes tendered and accepted for payment
in accordance with the terms of the Offer to Purchase.
The Total Consideration includes a consent payment of $20.00 for
each $1,000 principal amount of Notes. All holders who validly
tender their Notes pursuant to the Offer to Purchase prior to the
expiration time will receive the Total Consideration. In
addition, each validly tendering holder of Notes will be paid
accrued and unpaid interest, if any, from the last interest
payment date up to, but not including, the payment date. The
payment date for Notes validly tendered and accepted for payment
is expected to be Friday, January 21, 2005, unless the tender
offer is extended or earlier terminated.
The Tender Offer Consideration (as that term is defined in the
Offer to Purchase) for the Notes was determined by reference to a
fixed spread of 75 basis points over the bid side yield to
maturity on the 3.125% U.S. Treasury Note due May 15, 2007 as of
10:00 a.m., New York City time, on January 6, 2005.
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. 20, 2004,
Standard & Poor's Ratings Services raised its ratings on waste
management company IESI Corp. to 'BB' from 'B+' following a review
of the proposed purchase of IESI by BFI Canada Income Fund (the
fund). Standard & Poor's also assigned its 'BB' senior secured
debt rating to the company's proposed US$375 million senior
secured credit facilities, and a recovery rating of '2' to the
facilities, indicating a substantial recovery of principal (80%-
100%) in a post-default scenario. At the same time, the ratings
were removed from CreditWatch where they were placed Nov. 30,
2004. The outlook is currently stable.
INDYMAC HOME: Moody's Junks Three Asset-Backed Certificate Classes
------------------------------------------------------------------
Moody's Investors Service has downgraded nine certificates issued
by IndyMac Home Equity Mortgage Loan Asset Backed Trust, Series
SPMD 2000-C, 2001-A and 2001-B. The certificates have been on
review for downgrade. One of the certificates from the IndyMac
2001-B transaction being downgraded, the BF class, will also
remain on review for downgrade pending the liquidation of loans
classified as REO.
The securitizations are backed by subprime mortgage and
manufactured housing loans that were originated by IndyMac Bank
F.S.B.
The certificates are being downgraded due to higher-than-
anticipated rates of default on the loans backing the certificates
and by the low rates of recovery realized on the sale of
repossessed manufactured homes. The erosion of credit support and
continued pipeline of seriously delinquent loans will likely
contribute to ongoing weak pool performance.
The transactions have lender-paid mortgage insurance which may
reduce the severity of loss associated with many of the riskier
loans. The mortgage insurance may not, however, fully insulate
investors against the losses associated with defaulted loans.
IndyMac Bank F.S.B. is servicing the transaction and Deutsche Bank
National Trust Company is the trustee.
Moody's complete rating actions are:
Issuer: IndyMac Home Equity Mortgage Loan Asset Backed Trust
Depositor: IndyMac ABS, Inc
Series 2000-C; Class MF-2, downgraded to Ca from B2
Series 2000-C; Class BV, downgraded to Caa2 from B2
Series 2001-A; Class AF-5, downgraded to A1 from Aa2
Series 2001-A; Class AF-6, downgraded to A1 from Aa2
Series 2001-A; Class MF-1, downgraded to Ba3 from Baa3
Series 2001-A; Class MF-2, downgraded to Ca from Caa3
Series 2001-A; Class MV-2, downgraded to Ba3 from Baa2
Series 2001-A; Class BV, downgraded to B1 from Ba2
Series 2001-B; Class BF, downgraded to B2 from Baa2
INTERNATIONAL SHIPHOLDING: Completes $40M Public Equity Offering
----------------------------------------------------------------
International Shipholding Corporation (NYSE:ISH) has completed its
public offering of $40 million of its 6% Convertible Exchangeable
Preferred Stock.
The preferred stock, which has a liquidation preference of $50 per
share, will accrue cumulative quarterly cash dividends from the
date of issuance at a rate of 6% per annum. The preferred stock
is initially convertible into two million shares of ISH common
stock, equivalent to an initial conversion price of $20.00 per
share of ISH common stock and reflecting a 34% conversion premium
to the $14.90 per share closing price of ISH's common stock on the
New York Stock Exchange on December 29, 2004.
The underwriter for the offering was Ferris, Baker Watts,
Incorporated, which has an option, exercisable at any time on or
before January 28, 2005, to purchase up to an additional $4.0
million of the preferred stock to cover over-allotments, if any.
All shares of the preferred stock, which is a new series of ISH's
capital stock, were sold by ISH.
The preferred stock will be listed on the NYSE under the symbol
"ISH Pr." ISH expects that trading in the preferred stock will
commence no later than February 7, 2005.
A registration statement relating to these securities has been
filed with the Securities and Exchange Commission and has become
effective. This press release does not constitute an offer to
sell or the solicitation of an offer to buy these securities, nor
shall there be any sale of these securities in any jurisdiction in
which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any
such jurisdiction.
About the Company
International Shipholding Corporation operates a diversified fleet
of United States and foreign flag vessels that provide
international and domestic maritime transportation services to
commercial and governmental customers primarily under medium- to
long-term charters or contracts through its subsidiaries
* * *
As reported in the Troubled Company Reporter on Aug. 04, 2004,
Standard & Poor's Ratings Services lowered its corporate credit
rating on International Shipholding Corp. to 'B+' from 'BB-' and
senior unsecured rating to 'B-' from 'B'. The outlook is stable.
"The rating action reflects concerns that International
Shipholding Corp.'s financial profile, while improving gradually,
will remain below previous expectations and at levels more
consistent with the revised rating," said Standard & Poor's credit
analyst Kenneth L. Farer. The New Orleans, Louisiana-based
shipping company has about $300 million of lease-adjusted debt.
INTERNATIONAL STEEL: New USWA Trust Fund to Benefit Union Retirees
------------------------------------------------------------------
The United Steelworkers of America said retirees who lost health
care benefits in four steel company bankruptcies will have a
measure of that coverage restored March 1, through an innovative
trust fund bargained by USWA and International Steel Group, Inc.
(NYSE:ISG).
"Nothing can undo the damage inflicted by the termination of
retiree health care benefits," said USWA President Leo W. Gerard,
"but we could - and did - negotiate a commitment that our retirees
will not be forgotten.
"Today, we are pleased to announce the first step in keeping that
promise, a new prescription drug program for USWA retirees from
LTV, Bethlehem Steel, Acme Metals and Georgetown Steel," he said.
The union's December 2002 collective bargaining agreement with ISG
established an innovative trust fund - the ISG Voluntary
Employees' Beneficiary Association (ISG VEBA) - for the sole
purpose of restoring a measure of coverage for retirees, surviving
spouses and their dependents who lost health care benefits as a
result of the bankruptcy and liquidation of the four companies.
The ISG VEBA is funded by contributions from ISG, based on company
earnings and steel tonnage. Benefits are jointly determined by
ISG and the USWA, depending on funds available in the trust and
the needs of eligible retirees.
"The program was not designed to restore everything that was taken
away from our retirees in bankruptcy court," explained David
McCall, Director of USWA District 1 and the union's chief
negotiator with ISG. "Our goal was to provide a meaningful,
ongoing benefit, as quickly as possible, that meets one of our
retirees' most urgent needs."
The ISG VEBA has projected assets of approximately $180 million as
of the end of 2004, with continuing contributions required from
ISG through 2008. In contrast, Bethlehem Steel's salaried
retirees who also lost health coverage have received $2.7 million
in a settlement approved by the bankruptcy court.
The Steelworker-negotiated VEBAs at ISG and other steel companies
are historic in being the first ever to restore benefits to
retirees who had worked for bankrupt or liquidated companies that
had been purchased by new firms.
About the Company
ISG is one of the largest integrated steel producers in North
America and among the top ten globally. Since being formed in
April 2002, it has grown rapidly by acquiring the steel making
assets of LTV, Acme Steel, Bethlehem Steel, Weirton Steel and
Georgetown. ISG has annual total raw steel production capacity of
approximately 20 million tons and is targeting 2004 revenues of
approximately $9 billion.
* * *
As reported in the Troubled Company Reporter on Oct. 29, 2004,
Moody's Investors Service placed the debt ratings of Ispat Inland
Inc., (Senior Implied B3) and its affiliate Ispat Inland U.L.C.
under review for possible upgrade. In a related action, Moody's
placed the debt ratings of International Steel Group Inc.
(ISG -- Senior Implied Ba2) under review for possible upgrade.
Ratings placed under review for possible upgrade are:
* Ispat Inland Inc.,:
-- B3 senior implied,
-- B3 senior secured first mortgage bonds and secured
pollution control bonds,
-- Caa2 unsecured industrial revenue bonds, Caa2 senior
unsecured issuer rating.
* Ispat Inland U.L.C.:
-- B3 guaranteed senior secured notes due 2010 (floating
rate) and due 2014 (9.75%)
* International Steel Group Inc:
-- Ba2 senior implied,
-- Ba3 guaranteed global notes due 2014,
-- Ba3 senior unsecured issuer rating
Ratings continuing under review for possible upgrade:
* International Steel Group Inc.:
-- Ba2 guaranteed senior secured revolving credit facility
due 2006
INTERSTATE BAKERIES: Court Okays Calif. Property Sale to C. Coseo
-----------------------------------------------------------------
As of the Petition Date, Interstate Bakeries Corporation and its
debtor-affiliates owned numerous parcels of commercial real estate
around the country. As a part of their reorganization, the
Debtors continue to evaluate all owned and leased real estate as
part of their efforts to maximize the value of their businesses
and assets.
According to J. Eric Ivester, Esq., at Skadden Arps Slate Meagher
& Flom, LLP, in Chicago, Illinois, the Debtors have initiated a
systematic review of opportunities to cut costs and dispose of
surplus assets. As part of this initiative, the Debtors
determined that the efforts that had been undertaken prepetition
to sell a certain property at 1401 Imperial Avenue in San Diego,
California, should be continued and concluded.
The Debtors have engaged the services of Colliers International,
a broker specializing in the sale of real property, to assist
them in the sale and marketing of the California Property. The
Debtors have agreed to compensate the Broker 6% of the Purchase
Price up to $1,000,000 and 5% of the Purchase Price to the extent
it exceeds $1,000,000 pursuant to an Exclusive Listing Agreement-
Sale between the Debtors and the Broker.
After exploring several alternatives and significant prepetition
marketing efforts, the Debtors decided to proceed with the
Standard Offer, Agreement and Escrow Instructions for Purchase of
Real Estate, as amended by the First Amendment to Standard Offer,
Agreement and Escrow Instructions for Purchase of Real Estate,
which they entered into with Chris Coseo.
Pursuant to the Sale Agreement, the Debtors agreed to sell the
Property to Mr. Coseo for $1,100,000. Mr. Coseo has deposited
$100,000, which is being held by the escrow agent until all
conditions to closing are satisfied by the Debtors. The sale of
the Property to Mr. Coseo will include all of the Debtors'
rights, title and interests in and to the real property and any
buildings, fixtures or equipment permanently attached to it. The
Debtors will deliver good and marketable fee simple title to the
Land and Improvements, free and clear of liens, other than
Permitted Exceptions. The Property is being sold "as-is, where-
is," with no representations or warranties, reasonable wear and
tear and casualty and condemnation expected.
At the Debtors' behest, the Court authorizes and approves the
sale of the Debtors' interest in the Property to Mr. Coseo and
the payment of a commission to Colliers.
Headquartered in Kansas City, Missouri, Interstate Bakeries
Corporation is a wholesale baker and distributor of fresh baked
bread and sweet goods, under various national brand names,
including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R),
Merita(R) and Drake's(R). The Company employs approximately
32,000 in 54 bakeries, more than 1,000 distribution centers and
1,200 thrift stores throughout the U.S.
The Company and seven of its debtor-affiliates filed for chapter
11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No.
04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at
Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in
their restructuring efforts. When the Debtors filed for
protection from their creditors, they listed $1,626,425,000 in
total assets and $1,321,713,000 (excluding the $100,000,000 issue
of 6.0% senior subordinated convertible notes due August 15, 2014,
on August 12, 2004) in total debts. (Interstate Bakeries
Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
IWO HOLDINGS: New Entity Raises $232.7 Mil. from Private Placement
------------------------------------------------------------------
IWO Escrow Company has raised gross proceeds of $232.7 million
through a private placement of its senior secured floating rate
notes and senior discount notes. This offering is being conducted
as part of a series of transactions intended to reorganize the
capital structure of IWO Holdings, Inc. Upon completion of such
reorganization, IWO Escrow Company will be merged with and into
IWO Holdings, Inc. Proceeds from the offering have been placed in
escrow pending consummation of the reorganization.
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
such registration requirements.
Based in Albany, New York, IWO Holdings is a wireless network
partner of Sprint Corp. with franchise area in the northeastern US
including 6.3 million people, and LTM revenues of $184 million.
* * *
As reported in the Troubled Company Reporter on Dec. 15, 2004,
Standard & Poor's Ratings Services assigned its 'CCC+' corporate
credit rating to IWO Escrow Co. The outlook is positive. The
company is a newly formed entity that will be merged into IWO
Holdings, Inc., an affiliate of Sprint PCS, after IWO Holdings
completes a prepackaged Chapter 11 bankruptcy reorganization.
A 'CCC+' rating and a recovery rating of '3' were assigned to IWO
Escrow's proposed $150 million senior secured floating-rate notes
due 2012. The '3' recovery indicates the expectation for a
meaningful (50%-80%) recovery of principal in the event of a
default.
KAISER ALUMINUM: Jan. 21 is Intercompany Claims Discovery Cut-Off
-----------------------------------------------------------------
To recall, the Kaiser Aluminum Corporation, its debtor-affiliates
and the Official Committee of Unsecured Creditors have reached an
agreement to resolve a myriad of complex issues relating to the
treatment of intercompany claims among the Debtors. The
disposition of the Intercompany Claims is one of the key issues
that must be addressed for the Debtors to proceed with the
formulation and promulgation of plans of reorganization and
liquidation.
All the various creditor constituencies on the Creditors Committee
support the Intercompany Settlement Agreement. Additionally, in
support of the Debtors' efforts toward achieving ultimate
resolution of their cases, the Debtors' postpetition lenders have
agreed to amend the credit facility to accommodate the terms and
conditions of the Intercompany Settlement Agreement. Although at
this juncture, the Official Committee of Asbestos Claimants,
Martin J. Murphy as the legal representative for future asbestos
claimants, and Anne M. Ferazzi as the legal representative for the
Future Silica Claimants have not agreed with or consented to the
Intercompany Settlement Agreement, the Debtors and the Creditors
Committee anticipate having further discussions with the creditors
and the Future Claimants representatives before the hearing on the
Intercompany Settlement Agreement.
Objections to Bifurcation of Hearing
A. Debtors
The Debtors assert that the request by Martin J. Murphy, the legal
representative for future asbestos claimants, and the Official
Committee of Asbestos Claimants for an additional hearing to
consider whether the ISA constitutes a sub rosa plan only creates
the prospect of additional costs and Court time, rather than less.
The Debtors point out that extensive discovery has already been
propounded and responded to. To date, the Debtors have produced
or made available hundreds of thousands of pages of documents in
response to requests of the Asbestos Committee and Asbestos
Representative. The Creditors Committee, likewise, has produced
documents responsive to requests by the Asbestos Committee and
Asbestos Representative.
More important, the Debtors say, the sub rosa issue cannot just be
conveniently severed and considered separately. For the Court to
adjudicate the sub rosa issue, the Debtors and the Official
Committee of Unsecured Creditors will need to present all or
substantially all of their case-in-chief so that the Court has a
complete understanding of:
-- the numerous claims and issues resolved by the ISA;
-- the reasons for the various compromises embodied in the
ISA;
-- the structure of the ISA; and
-- the reasons therefore and the effect of the Intercompany
Claims Settlement on the Debtors' various estates.
An additional hearing, the Debtors believe, will only require the
Court and the parties to spend additional time on the issue for no
real benefit or purpose. The request for a separate hearing on
the sub rosa issue is simply a "request for two bits at the apple
and should be denied."
B. Creditors Committee
The Official Committee of Unsecured Creditors agrees with the
Debtors that bifurcation of the Evidentiary Hearing is
inappropriate, unnecessary and will not provide the Court, the
estates or the parties with any type of cost or time benefit.
The purported time and cost savings asserted by the Asbestos
Committee are illusory. The Creditors Committee notes that the
Asbestos Committee and the Asbestos Representative's arguments
assume that the hearing will be concluded in one day and the
Court will rule immediately on the issue.
An analysis of the sub rosa issue in isolation is highly
inappropriate because the Court should consider all of the facts
surrounding the negotiation process and the terms of the ISA as
well as all of the factual and legal arguments supporting the
resolution of the intercompany claims issues incorporated in the
Settlement before rendering a decision. This is particularly
true, the Committee says, given the highly complex nature of the
Debtors' reorganization process, the complex factual and legal
issues surrounding the ISA and the effect an approval or
disapproval of the ISA will have on other facets of the Debtors'
cases.
The Creditors Committee explains that undertaking a complete
analysis of all the issues surrounding the ISA is consistent with
-- if not mandated by -- the jurisprudence detailing the standards
for approving settlements under Rule 9019(a) of the Federal Rules
of Bankruptcy Procedure in the Third Circuit. The Committee notes
that in Myers v. Martin (In re Martin), 91 F.3d 389, 394 (3d Cir.
1996), the court held that to determine where a debtor's
settlement is appropriate, courts weigh:
* the probability of success in litigation,
* the likely difficulties in collection,
* the complexity of the litigation involved, and
* the expense, inconvenience and delay necessarily attending
it and the paramount interests of the creditors.
The Creditors Committee also insists that the ISA is not a sub
rosa plan. A cursory review of the Settlement, the Committee
points out, reveals that it simply provides for the release of
certain intercompany claims among the various estates and
authorizes the payment of certain amounts between various estates.
The ISA does not dictate the terms of a future reorganization
plan. It is not fixing or even determining distribution to the
Debtors' creditors and does not impair any creditor's claim
against any of the Debtors, or restrict any creditor's right to
vote as it sees fit on a subsequent plan.
C. U.S. Bank
U.S. Bank, N.A., is the indenture trustee for approximately
$400,000,000 in principal amount of senior public notes issued by
Kaiser Aluminum & Chemical Corporation. The Senior Notes are
guaranteed by KACC's subsidiaries.
U.S. Bank asserts that the requested bifurcation of the
Evidentiary Hearing would be inefficient, illogical and will only
result in a waste of time and money. U.S. Bank believes that the
ISA is a fair and necessary compromise of claims between separate
bankruptcy estates and is not a sub rosa plan.
U.S. Bank suspects that the Asbestos Committee's objection to the
ISA and request to bifurcate the Evidentiary Hearing are part of
the Committee's efforts to prevent the separate bankruptcy estates
of Alpart Jamaica, Inc., Kaiser Jamaica Corp., and Kaiser Alumina
Australia Corp. from concluding their bankruptcy liquidations and
preventing the separate creditors of the three KACC Subsidiaries
from obtaining prompt distribution from the liquidations. By
attempting to delay the administration of the Subsidiaries'
bankruptcy estates until KACC emerges, the Asbestos Committee
hopes to extract economic concessions for its constituencies from
the Senior Notes holders who desire a plan distribution from the
three Subsidiaries in the near future.
U.S. Bank explains that the holders of the Senior Notes are the
largest creditors of and economic stakeholders in each of the
separate bankruptcy estates of the three KACC Subsidiaries. By
virtue of their economic stake, the Senior Noteholders have a
strong interest in having the Subsidiaries' bankruptcy estates
promptly administered.
U.S. Bank reminds the Court that the Asbestos Claimants are only
creditors of KACC. Therefore, the Asbestos Claimants are only
entitled to receive distribution from KACC's estate based on a
fair settlement of claims between KACC, on the one hand, and its
Subsidiaries, on the other.
Hearing on Jan. 31 in Pittsburgh
Judge Fitzgerald will convene a hearing January 30, 2005, at 10
a.m. in Pittsburgh, Pennsylvania, to consider approval of the
ISA.
Judge Fitzgerald authorizes these parties to conduct discovery:
1. the Debtors,
2. the Creditors Committee,
3. the Asbestos Committee,
4. the Asbestos Representative,
5. the legal representative for future silica and coal tar
pitch volatile claimants,
6. the U.S. Trustee and the U.S. Government,
7. the official committee of salaried retirees, and
8. other parties who objected to the Intercompany Claims
Settlement.
All discovery and depositions must be completed by January 21,
2005.
Any party may file a hearing brief in response to the request for
approval of the ISA by January 24, 2005. No reply briefs may be
filed.
Each party will provide the other parties with reports for experts
retained under Rule 26(a)(2) three days prior to any expert
deposition. Expert reports must be filed with the Court no later
than January 24, 2005.
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. 56;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
KEY ENERGY: Soliciting Consents to Extend Reporting Deadlines
-------------------------------------------------------------
Key Energy Services, Inc. (NYSE: KEG) said it is soliciting
consents from the holders of its outstanding 6-3/8% senior notes
due 2013 and 8-3/8% senior notes due 2008, to extend until
March 31, 2005 the period in which the Company must deliver its
2003 10-K and 2004 10-Q reports.
The Company had received notice from the trustee that the Company
is in breach of the financial reporting covenants contained in the
indentures, and stating that unless the deficiency is remedied
within 60 days, an event of default would occur under the
indentures. Unless the deficiency is cured or waived within the
60-day cure period, the trustee or holders of 25% of the
outstanding principal amount of either series of notes will have
the right to accelerate the maturity of that series of notes.
The Consent Solicitation is scheduled to expire at 5:00 p.m. (EST)
on January 18, 2005, unless extended or terminated earlier.
Holders of Notes who deliver their consent on or prior to 5:00
p.m. (EST) on January 18, 2005, unless extended or terminated
earlier, will be eligible to receive a consent payment of $2.50
per $1,000 principal amounts of Notes validly consented. In
addition, the Company will pay within three business days of each
of February 1, 2005 and March 1, 2005 to each consenting holder,
an additional $2.50 in cash for each $1,000 principal amount of
consenting notes if the Company has not provided, by such dates,
the 2003 10-K and 2004 10-Q reports.
The Consent Solicitation is conditioned upon the satisfaction of
certain conditions, including that consents for a majority of each
particular series of notes must be received, a majority of the
other series of notes must be received and the supplemental
indenture for both series must be executed. A more comprehensive
description of the Consent Solicitation and its conditions can be
found in the Consent Solicitation Statement.
The Company has retained Lehman Brothers to serve as the
Solicitation Agent and D.F. King & Co., Inc., to serve as the
Information Agent and Tabulation Agent for the Offer. Requests
for documents may be directed to:
D.F. King & Co., Inc.
48 Wall Street
22nd Floor
New York, N.Y. 10005
Toll-free: (800) 848-2998
(212) 269-5550
Questions regarding the solicitation of consents may be directed
to Lehman Brothers, at (800) 438-3242 (toll-free) or
(212) 528-7581, Attention: Liability Management.
This announcement is not an offer to purchase or sell, a
solicitation of an offer to purchase or sell or a solicitation of
consents with respect to any securities. The solicitation is
being made solely pursuant to the Consent Solicitation Statement
dated January 7, 2005.
The Company intends to hold a conference call today, January 11,
2005 at 4:30 PM EST, at which time it will provide a restatement
update and operations review.
About the Company
Key Energy Services, Inc., is the world's largest rig-based well
service company. The Company provides oilfield services including
well servicing, contract drilling, pressure pumping, fishing and
rental tools and other oilfield services. The Company has
operations in all major onshore oil and gas producing regions of
the continental United States and internationally in Argentina and
Egypt.
* * *
As reported in the Troubled Company Reporter on August 19, 2004,
Standard & Poor's Ratings Services' 'B' corporate credit rating on
Key Energy Services Inc. remains on CreditWatch with developing
implications.
Midland, Texas-based Key had about $485 million of total debt
outstanding as of June 30, 2004.
KNOWLEDGE LEARNING: Moody's Downgrades Sr. Implied Rating to B1
---------------------------------------------------------------
Moody's Investors Service concluded the review for possible
downgrade of the ratings of Knowledge Learning Corporation and
Kindercare Learning Centers, Inc., which was initiated Dec. 17,
2004 due to the pending acquisition of Kindercare by KLC for
$550 million in cash and the assumption of debt for a total of
approximately $1.1 billion. The senior implied of KLC was
downgraded to B1 from Ba3 and the senior implied of Kindercare was
confirmed at B1. At the same time Moody's upgraded the rating on
the proposed senior secured credit facility of the combined
company to B1 from B2 which is expected to close shortly. The
rating outlooks are stable.
The downgrade of the ratings of KLC reflects the pro forma
additional leverage of the combined company despite a cash equity
injection of $200 million and the impact of large cash
restructuring costs for 2005. Moody's expects rent adjusted
leverage, measured as debt plus 8 times rent to EBITDAR (adjusted
for synergies), to be 5.7 times by the end of 2005 with free cash
flow to total debt at about 8.2% by year-end 2005.
The ratings also reflect:
-- the benefits of the combined entity, including a strong
market position as the leading for-profit provider of early
childhood education services;
-- expected cost improvements of up to $30 million due to the
streamlining of overhead, including personnel;
-- the potential to increase occupancy and profitability in
certain markets through the rationalization of duplicate
facilities;
-- the introduction of new products and services and the
expansion of existing businesses; and
-- the management team's commitment and focus on improving EBIT
return on assets.
The upgrade of the rating on the KLC's proposed 7-year,
$640 million guaranteed senior secured credit facility reflects
Moody's understanding of the positive impact of potential real
estate strategies, which if considered in light of the June 2005
call date on the $300 million Commercial Mortgage Pass-Through
Certificates of Kindercare, should provide the issuer with greater
financial flexibility and quicker deleveraging than previously
thought.
The rating outlooks are stable. Moody's expectation of the
company's level of free cash flow generation and leverage places
the issuer in the lower range of the B1 rating for the first year
of consolidated operations. Should the company not be able to
meet targeted improvements in free cash flow and debt reduction,
the ratings could be pressured. In addition, Moody's will closely
watch the level of both operating leases and the secured mortgage
loan in relationship to total debt to monitor the potential for
effective subordination of creditors to these lenders.
The B1 rating on the proposed $640 million senior secured credit
facility reflects size of the credit facility in the capital
structure as well as its subordination to the $300 million ($295
million current balance) CMBS facility which in a distress
scenario has prior claim on the cash flow and on the assets of the
mortgaged real estate.
The proposed credit facility will consist of a 5-year, $100
million revolving credit and a 7-year, minimally amortizing $540
million term loan. The borrower will be KLC. The borrowings will
be guaranteed by the direct operating subsidiaries of KLC
(including Kindercare) as well as by its parent, Knowledge
Schools, Inc., which is a holding company for the KLC asset. The
facility will be secured by first priority perfected liens on
substantially all tangible and intangible property, excluding the
475 Kindercare centers pledged to the $300 million CMBS facility.
The latter facility has a prior claim over the bank facility on
cash generated from the pledged centers as well as on the proceeds
from the disposition of pledged assets.
The following ratings were affected:
* KLC:
-- Senior Implied rating downgraded to B1 from Ba3;
-- $260 million senior secured credit facility due 2010,
downgraded to B1 from Ba3;
-- Issuer Rating downgraded to B2 from B1;
The rating outlook changed to stable from rating under review.
* Kindercare:
-- Senior Implied rating of B1 was confirmed;
-- $125 million senior secured credit facility due 2008, rated
Ba3 was confirmed.
-- $179 million issue of 9.5% senior subordinated notes due
2009 rated B3 was confirmed;
-- Issuer Rating of B2 was confirmed.
The rating outlook was changed to stable from rating under review.
* KLC post Kindercare acquisition:
-- Proposed $640 million guaranteed senior secured credit
facility due 2012, was upgraded to B1 from B2.
Moody's notes that the existing $179 million issue of 9.5% senior
subordinated notes due 2009 of Kindercare contains change in
control provisions which will require the refinancing of this
debt. Upon refinancing, the ratings on the existing credit
facilities of KLC and Kindercare and the Kindercare subordinated
notes will be withdrawn. Upon the closing of the Kindercare
acquisition, the senior implied rating, the issuer rating and the
rating outlook of Kindercare will be withdrawn.
Knowledge Learning Corporation, headquartered in Golden, Colorado
is a leading provider of childcare services. It operates 801
centers in 33 states through its three business segments: Early
Childhood Education, School Partnerships, and Distance Learning.
The company acquired Aramark Educational Resources, in May of
2003. Combined pro forma revenue for fiscal year 2003 was $612
million.
Kindercare Learning Centers, headquartered in Portland, Oregon is
a leading provider of early childcare services with 1225 centers
across 39 states. The company operates community centers and
employer sponsored centers under the Kindercare and Mulberry brand
names. Total revenue for the last twelve months ending September
2004 was approximately $867 million.
LAIDLAW INT'L: Shareholders to Elect Directors in Feb. 8 Meeting
----------------------------------------------------------------
Kevin E. Benson, Laidlaw International, Inc.'s President and
Chief Executive Officer, relates that the purpose of the 2005
Annual Meeting of Stockholders on February 8, 2005, will be to:
* elect two directors to the Board of Directors;
* approve the Laidlaw International, Inc. Amended and Restated
2003 Equity and Performance Incentive Plan; and
* approve the Laidlaw International, Inc. Short-Term Incentive
Plan.
The current terms of office of directors Richard P. Randazzo, 60,
and Carroll R. Wetzel, 61, will expire at the Annual Meeting.
However, the company's Nominating and Governance committee has
nominated Messrs. Randazzo and Wetzel to serve another term as
directors.
In addition, the vacancy created by the resignation of Vicki
O'Meara from the Board in September 2004 will be filled by a
majority of the members of the Board presently in office or voted
into office at the Annual Meeting.
Laidlaw's Board of Directors has fixed the close of business on
December 16, 2004, as the record date for the determination of
stockholders entitled to notice of, and to vote at, the Annual
Meeting or any adjournment or postponement thereof.
Headquartered in Arlington, Texas, Laidlaw, Inc., now known as
Laidlaw International, Inc., -- http://www.laidlaw.com/-- is
North America's #1 bus operator. Laidlaw's school buses transport
more than 2 million students daily, and its Transit and Tour
Services division provides daily city transportation through more
than 200 contracts in the US and Canada. Laidlaw filed for
chapter 11 protection on June 28, 2001 (Bankr. W.D.N.Y. Case No.
01-14099). Garry M. Graber, Esq., at Hodgson Russ LLP, represents
the Debtors. Laidlaw International emerged from bankruptcy on
June 23, 2003.
* * *
As reported in the Troubled Company Reporter on Dec. 27, 2004,
Moody's Investors Service has placed the long-term debt ratings of
Laidlaw International, Inc., under review for possible upgrade.
The review is prompted by the recent announcement by the company
that it had entered into a definitive agreement to sell both of
its healthcare businesses to Onex Partners LP, an affiliate of
Onex Corporation, for $820 million. Net proceeds after fees and
assumption of a small amount of debt by the buyer is estimated at
$775 million, with a majority of the proceeds intended to be used
to repay substantial levels of Laidlaw's existing debt. Moody's
has also assigned a Speculative Grade Liquidity Rating of SGL-2 to
Laidlaw International, Inc. As part of the rating action, Moody's
has reassigned to Laidlaw International, Inc., certain ratings,
including the senior implied and senior unsecured issuer ratings,
originally assigned at Laidlaw, Inc., in order to reflect more
appropriately the company's current organizational structure.
As reported in the Troubled Company Reporter on Dec. 9, 2004,
Standard & Poor's Ratings Services placed its ratings, including
its 'BB' corporate credit rating, on Laidlaw International Inc. on
CreditWatch with positive implications. The rating action follows
Laidlaw's announcement that it has entered into definitive
agreements to sell both of its health care companies, American
Medical Response and Emcare, to Onex Partners L.P. for
$820 million. Laidlaw expects to receive net cash proceeds of
$775 million upon closing of the transaction, which is expected by
the end of March 2005. Naperville, Illinois-based Laidlaw
currently has about $1.5 billion of lease-adjusted debt.
LYNX THERAPEUTICS: Receives Anticipated Nasdaq Delisting Notice
---------------------------------------------------------------
Lynx Therapeutics, Inc. (Nasdaq:LYNX) received a Nasdaq Staff
Determination letter on Jan. 4, 2005, indicating that its
securities are subject to delisting from the Nasdaq SmallCap
Market based on the Company's failure to hold an annual meeting of
stockholders by Dec. 31, 2004, in accordance with Nasdaq
Marketplace Rule 4350(e) and solicit proxies and provide proxy
statements to Nasdaq in accordance with Nasdaq Marketplace Rule
and 4350(g).
"We will appeal this decision as we plan to hold an annual meeting
of stockholders during the current quarter to vote on our proposed
business combination with Solexa," stated Mary L. Schramke, Ph.D.,
Lynx's acting chief executive officer. "This notice does not come
as a surprise as we elected to avoid the costs of holding multiple
annual stockholders' meetings in a relatively short time period.
Following our planned upcoming stockholders' meeting, we believe
Lynx will again be in full compliance with Nasdaq listing
requirements. In the meantime, our appeal will stay Nasdaq's
decision to delist, and concurrently we have filed an application
for initial listing of our shares following consummation of the
proposed transaction with Solexa."
Lynx intends to request a hearing before a Nasdaq Listing
Qualifications Panel to review the Staff's determination.
However, there can be no assurance that the Listing Qualifications
Panel will grant Lynx's request for continued listing. Lynx's
common stock will continue to be listed on the Nasdaq SmallCap
Market pending a final ruling. Lynx has delayed holding its
annual meeting until its registration statement on Form S-4,
initially filed with the Securities and Exchange Commission on
October 29, 2004, as amended, has been approved by the SEC and has
tentatively scheduled its annual meeting for February 17, 2005 in
order to, among other things, approve the proposed transaction
with Solexa Limited. Pending approval by the Lynx stockholders
and acceptance by the Solexa shareholders, the transaction is
expected to close in the first quarter of 2005. Lynx has applied
for listing of its shares on the Nasdaq SmallCap Market following
consummation of the proposed transaction with Solexa and
anticipates that trading will continue on the Nasdaq SmallCap
Market on a post-closing basis. The Registration Statement, as
amended, is available at the SEC's Web site at http://www.sec.gov/
On September 28, 2004, Lynx and United Kingdom-based Solexa
Limited announced the signing of a definitive agreement providing
for the combination of the two companies. On January 5, 2005 Lynx
filed a second amendment to the Registration Statement on Form S-4
regarding the proposed transaction with Solexa and other matters
with the Securities and Exchange Commission, which is available at
the SEC Web site at http://www.sec.gov/ The transaction, which is
subject to approval by the Lynx stockholders and acceptance by the
Solexa shareholders, is expected to close in the first quarter of
2005.
About the Company
Lynx believes that it is a leader in the development and
application of novel genomic analysis solutions. By "novel," Lynx
means next generation technology that will take the engagement of
thought leaders before broader commercial acceptance can occur.
Lynx's Massively Parallel Sequencing System (MPSS(TM)) consists of
proprietary instrumentation and software that are used to analyze
millions of DNA molecules in parallel, enabling genome structure
characterization at an unprecedented level of resolution. As
applied to gene expression analysis, MPSS(TM) provides
comprehensive and quantitative digital information important to
modern systems biology research in the pharmaceutical,
biotechnology and agricultural industries. For more information,
visit Lynx's Web site at http://www.lynxgen.com/
* * *
Going Concern Doubt
In its Form 10-Q for the quarterly period ended Sept. 30, 2004,
filed with the Securities and Exchange Commission, Lynx
Therapeutics' accountants, Ernst & Young LLP, included a going
concern opinion in its financial statements for the year ended
Dec. 31, 2003, due to losses incurred since inception.
These losses continue in 2004, with a $4.3 million net loss for
the three months ended Sept. 30, 2004.
"We are considering various options, which include securing
additional equity financing, obtaining new collaborators and
customers and other strategic actions," the Company said in its
SEC filing. "If we raise additional capital by issuing equity or
convertible debt securities, our existing stockholders may
experience substantial dilution. There can be no assurance that
additional financing will be available on satisfactory terms, or
at all. If we are unable to secure additional financing on
reasonable terms, or are unable to generate sufficient new sources
of revenue through arrangements with customers, collaborators and
licensees, we will be forced to take substantial restructuring
actions, which may include significantly reducing our anticipated
level of expenditures, the sale of some or all of our assets, or
obtaining funds by entering into financing or collaborative
agreements on unattractive terms, or we will not be able to fund
operations."
MDU COMMS: Posts $7.7 Million Net Loss for F.Y. Ended Sept. 2004
----------------------------------------------------------------
MDU Communications International, Inc. (OTC: MDTV) --
http://www.mduc.com/-- concentrates exclusively on installing and
delivering state-of-the-art digital satellite television and high-
speed Internet solutions to the United States multi-dwelling unit
residential market, estimated to include 26 million residences.
MDUs include apartment buildings, condominiums, gated communities,
universities, nursing homes, hospitals, hotels, motels and other
properties having multiple units located within a defined area.
Multi-family properties present unique technological, management
and marketing challenges, as compared to single-family homes -
challenges the Company has a certain experience and expertise in
overcoming. It seeks to differentiate itself from other multi-
family service providers through a unique strategy of balancing
the information and communication needs of today's MDU residents
with the technology concerns of property managers and owners and
providing the best overall service to both.
To accomplish this objective and to understand and meet the
technology needs of these groups, the Company has partnered with
DIRECTV,Inc., and have been working with large property owners and
real estate investment trusts (REITs), such as:
-- AvalonBay Communities,
-- Trammell Crow Residential,
-- Roseland Property Company,
-- KSI Services, and
-- other groups.
Its Canadian operating company, MDU Communications Inc., was
incorporated in March 1998. In November 1998, MDU Canada's
shareholders sold all of their MDU Canada stock to Alpha Beta
Holdings, Ltd., an inactive U.S. public reporting company, in
exchange for Alpha Beta stock, and renamed it "MDU Communications
International,Inc." Alpha Beta had been incorporated in Colorado
in July 1995, but never conducted any significant business
activities and was essentially inactive in November 1998.
In April 1999, the Company reincorporated MDU Communications
International, Inc., in Delaware and MDU Canada became a
wholly owned subsidiary and at its peak, had over 15,000
subscribers and seven offices across Canada. In March 2000, the
Company formed MDU Communications (USA) Inc., a Washington
corporation to conduct business in the United States.
In early 2001, the Company made a fundamental re-assessment of its
business plan and determined that the most profitable markets lay
in densely populated areas of the United States. The Company
changed its corporate focus and business strategy from serving the
entire North American MDU market, to several key U.S. markets,
beginning with the Northeast United States.
To further this change, in 2001, it completed an agreement with
Star Choice Television Network, Inc., for the sale of certain of
its Canadian satellite television assets. As a result, by
May 30, 2001, the Company relocated its operations and certain key
employees to its New York Metro Area office in Totowa, New Jersey.
MDU Communications International, Inc., now operates essentially
as a holding company with MDU Canada and MDU USA as its wholly
owned operating subsidiaries.
MDU Communications International, Inc., reported a net loss of
$7,666,600 for the year ended Sept. 30, 2004, compared to a net
loss of $2,117,707 for the year ended Sept. 30, 2003. The Company
has incurred operating losses since inception. However, with
consolidated operations in the most profitable U.S. markets,
expansion into the military segment and efforts to position the
Company to increase its subscriber base, the Company expects to be
EBITDA positive in fiscal year 2005.
At Sept. 30, 2004, it had cash and cash equivalents of $4,705,722
compared to $507,775 at Sept. 30, 2003. The increase in cash
position was primarily due to the net proceeds of November and May
equity private placements.
MDU believes that it has sufficient cash resources to cover
current levels of operating expenses and working capital needs for
at least through Sept. 30, 2005. However, this is a capital-
intensive business and continued growth is dependent partially on
raising additional financing. There is no assurance that it will
be successful in any of these initiatives.
The Company has incurred losses since inception and may incur
future losses. To date, the Company has not shown a profit in its
operations. As of the Company's year-end Sept. 30, 2004, it has
accumulated losses of approximately $24,990,000. The Company does
not expect to have profitable operations until sometime in fiscal
year 2005, and it cannot assure that it will ever achieve or
attain profitability. If it cannot achieve operating
profitability, the Company may not be able to meet its
working capital requirements, which could have a material adverse
effect on its business and may impair its ability to continue as a
going concern.
METROWEST HEALTH: S&P Assigns 'R' Rating Following Insolvency
-------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'R' financial
strength rating to Metrowest Health Plan Inc.
"We took this rating action after the Texas Department of
Insurance ordered the company to be placed on temporary
receivership based on financial insolvency," explained Standard &
Poor's credit analyst Terence Tan.
On June 30, 2004, Metrowest had about $7 million in liabilities
and only about $6.7 million in assets, resulting in total capital
of approximately negative $330,000. Total projected capital as of
Dec. 31, 2004, was about negative $1.4 million.
An insurer rated 'R' is under regulatory supervision owing to its
financial condition. During the pending of the regulatory
supervision, the regulators may have the power to favor one class
of obligations over there or pay some obligations and not others.
The rating does not apply to insurers subject only to non-
financial actions such as market conduct violations.
MWAM CBO: Moody's Junks Two Floating Rate Note Classes Due 2031
---------------------------------------------------------------
Moody's Investors Service has taken rating actions on the
following classes of notes issued by MWAM CBO 2001-1, LTD.:
(1) the U.S.$21,875,000 Class B Floating Rate Notes Due
January 30, 2031, formerly rated Aa3 on watch for
possible downgrade, is downgraded to Baa3, and remaining
on watch for possible downgrade, and
(2) the U.S.$12,500,000 Class C-1 Floating Rate Notes Due
January 30, 2031 and the U.S.$8,125,000 Class C-2 Fixed
Rate Notes Due January 30, 2031, each formerly rated Ba1
on watch for possible downgrade, are each downgraded to
Ca.
Moody's said the actions reflect Moody's determination that the
overall deterioration to the credit quality of the underlying
pool, with exposures to manufactured housing asset backed
securities (greater than 10% of aggregate pool balance) and
aircraft leasing securities (approximately 10% of aggregate pool
balance), has increased the expected losses on the notes. Moody's
further noted that in a rising interest rate environment, the
ratings of the issuer's liabilities could face additional stress
given the issuer's current portfolio and existing interest rate
hedging features.
Issuer: MWAM CBO 2001-1, LTD.
Affected Classes of Notes:
* U.S.$21,875,000 Class B Floating Rate Notes Due January 30,
2031
-- Previous Rating: Aa3, on Watch for Downgrade
-- New Rating: Baa3, on Watch for Downgrade
* U.S.$12,500,000 Class C-1 Floating Rate Notes Due January 30,
2031
-- Current Rating: Ba1, on Watch for Downgrade
-- New Rating: Ca
* U.S.$8,125,000 Class C-2 Fixed Rate Notes Due January 30,
2031
-- Current Rating: Ba1, on Watch for Downgrade
-- New Rating: Ca
NAAC REPERFORMING: Moody's Puts Low-B Ratings on Two Loan Certs.
----------------------------------------------------------------
Moody's Investors Service has assigned Aaa to B2 ratings to the
senior and subordinate classes of the NAAC Reperforming Loan Remic
Trust 2004-R3 mortgage pass-through certificates. The transaction
consists of the securitization of FHA insured and VA guaranteed
reperforming loans virtually all of which were repurchased from
GNMA pools.
The credit quality of the mortgage loans underlying securitization
is comparable to that of mortgage loans underlying subprime
securitizations. However after the FHA and VA insurance is
applied to the loans, the credit enhancement levels are comparable
to the credit enhancement levels for prime-quality residential
mortgage loan securitizations. The insurance covers a large
percent of any losses incurred as a result of borrower defaults.
The rating of this pool is based on the credit quality of the
underlying loans and the insurance provided by Federal Housing
Administration (FHA) and the guarantee provided by Veterans
Administration (VA). Specifically, about 84% of the loans have
insurance provided by FHA while the rest of the loans have a
guarantee provided by VA. The rating is also based on the
transaction's cash flow and legal structure.
The complete rating actions are:
Issuer: NAAC Reperforming Loan Remic Trust 2004-R3
Class Amount ($) Rate Rating
----- ------------- ----------------- ------
A1 $213,251,326 6.50% Aaa
AF $ 77,202,673 Variable Aaa
AS Notional Variable Aaa
PT $ 14,574,216 Variable Aaa
M $ 1,730,000 6.7658% Aa2
B-1 $ 1,729,000 6.7658% A2
B-2 $ 1,572,000 6.7658% Baa2
B-3 $ 1,572,000 6.7658% Ba2
B-4 $ 1,084,000 6.7658% B2
The notes are being offered in privately negotiated transactions
without registration under the 1933 Act. The issuance was
designed to permit resale under Rule 144A. Additional research is
available on http://www.moodys.com/
NATIONAL CENTURY: Trust Asks Court to Disallow CSFB Claims
----------------------------------------------------------
Sydney Ballesteros, Esq., at Gibbs & Bruns, LLP, in Houston,
Texas, relates that Credit Suisse First Boston acted as an
underwriter or "Placement Agent" with respect to most recent
issuances of notes by NPF VI, Inc., and NPF XII, Inc. CSFB also
owned some of the outstanding notes of NPF VI and NPF XII.
CSFB acted in various roles as a financial advisor to NCFE, NPF
VI and NPF XII, and in those capacities had significant influence
and control over NPF VI and NPF XII's issuances of notes and
related disclosures. CSFB also had influence and control over
those entities' refinancing and repayment of notes and issuance of
new notes to replace existing notes and reduce the exposure of
some creditors at the expense of others. At the same time, CSFB
had substantial non-public information concerning those programs,
the notes and the underlying collateral.
The CSFB Claims
CSFB filed Claim Nos. 502-529 and 822-855, under the names CSFB
New York, CSFB Cayman, and CSFB, LLC, against the Debtors. The
CSFB Claims include:
Basis of Claim Claim Amount
-------------- ------------
NPF VI and NPF XII Note Claims $353,000,000
Fee Claims $1,242,813
Indemnity/Contribution Claims unliquidated
Costs and Expenses Claim $9,375 + unliquidated
Breach of Duty Claims unliquidated
The Court disallowed the Note Claims on April 27, 2004, on grounds
that they were duplicative of the claims asserted by the Indenture
Trustee. The Fee Claims were allowed in the reduced amount of
$500,000, pursuant to the Fourth Amended Joint Plan, dated April
16, 2004.
Ms. Ballesteros argues that the other claims are objectionable
because they are insufficiently detailed, explained or supported,
and no calculation is provided verifying the amount or nature of
the components of the claims.
Though CSFB's direct Note Claims were disallowed, CSFB seeks, by
its status as a holder of Notes, to participate in the
distributions by the Trust and Unencumbered Assets Trust and the
VI/XII Collateral Trusts. Pursuant to the Plan, CSFB or any other
holder of a disputed claim may tentatively participate in
distributions until the disputed issue may be resolved.
Accordingly, the Trust and Erwin I. Katz, Ltd., as Trustee, ask
the Court to disallow, subordinate or avoid the CSFB Claims,
including CSFB's purported right or ability to participate in
distributions as a holder of the Notes of NPF VI and NPF XII.
Ms. Ballesteros asserts that the Trust's request is warranted for
four reasons:
(a) Equitable Subordination
CSFB engaged in inequitable conduct that has given it an
unfair advantage and has resulted in injury to all other
competing creditors of the Debtors and their estates.
In the event that any of CSFB's claims are allowed over
the Trust's objections, the claims should be subordinated
to the level of equity, so that CSFB will be entitled to
collect on its claims only if and only after the Debtors'
other creditors are paid in full on their claims.
Thus, the CSFB Claims should be equitably subordinated
pursuant to Section 510 of the Bankruptcy Code.
(b) Duplicative Claims
CSFB filed 32 [sic.] substantially identical proofs of
claim, under three separate names and against virtually
every Debtor. The description of claims is identical and
each claim asserts the same claims for the same expenses,
reimbursements, rights or debts.
(c) Unenforceable Claims
CSFB had extensive knowledge concerning the insolvency of
NCFE, NPF VI and NPF XII. Nonetheless, CSFB orchestrated
repeated debt issuance, taking fees, and ensuring itself
purported contractual rights for fees and expenses and
indemnity against the inevitable lawsuits that would occur
when its scheme was revealed.
All of the CSFB Claims are unenforceable under applicable
law, as they are subject to equitable defenses precluding
recovery, under the doctrines of unjust enrichment,
unclean hands and equitable estoppel.
(d) Avoidable Transfers
CSFB is the recipient of transfers avoidable under
Sections 544, 547 and 548 of the Bankruptcy Code. CSFB
has not repaid nor relinquished the fraudulent or
preferential transfers. Thus, the CSFB Claims should be
disallowed pursuant to Section 502(d) of the Bankruptcy
Code.
Furthermore, the Trust asks the Court to:
(a) direct CSFB to disgorge any distributions already received
through the bankruptcy process or pursuant to the Plan;
and
(b) exclude CSFB from any future distributions from any of the
Trusts established under the Plan.
Headquartered in Dublin, Ohio, National Century Financial
Enterprises, Inc. -- http://www.ncfe.com/-- through the CSFB
Claims Trust, the Litigation Trust, the VI/XII Collateral Trust,
and the Unencumbered Assets Trust, is in the midst of liquidating
estate assets. The Company filed for Chapter 11 protection on
November 18, 2002 (Bankr. D. Ohio Case No. 02-65235). The Court
confirmed the Debtors' Fourth Amended Plan of Liquidation on
April 16, 2004. Paul E. Harner, Esq., at Jones Day, represents the
Debtors in their restructuring efforts. (National Century
Bankruptcy News, Issue No. 50; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
NEP SUPERSHOOTERS: Moody's Rates $76 Million Term Loan at B1
------------------------------------------------------------
Moody's Investors Service assigned a B1 rating to NEP
Supershooters, L.P.'s new $76 million first lien term loan
facility and downgraded the $25 million second lien term loan
facility to B3 from B2. Moody's also affirmed the senior implied
and existing first lien ratings. The outlook remains stable. The
downgrade of the second lien term loan is based on its increasing
subordination to the first lien debt in NEP's capital structure.
The proceeds of the transaction will be used to finance the
acquisition of two of NEP's competitors in the mobile production
business, National Mobile Television and U.K.-based Visions.
The ratings and outlook continue to incorporate the high financial
and business risk of the company, the acquisition strategy and
capital intensive nature of NEP's business offset by the increased
exposure to the higher cash-generating mobile production unit
business and the elimination of NEP's closest competitor in the
U.S. While we believe that as a result of the transaction, NEP is
likely to de-lever more slowly than previously anticipated, the
acquisitions further solidify NEP's operations and competitive
position in the high-end mobile facilities segment.
NEP Supershooters, L.P.:
Moody's assigned the following rating:
(i) a B1 to the $76 million senior secured term loan C.
Moody's downgraded the following ratings:
(i) $25 million 2nd lien term loan to B3 from B2, and
(ii) senior unsecured issuer rating to Caa1 from B3.
Moody's affirmed the following ratings to NEP Supershooters, L.P.:
(i) a B1 on the $20 million senior secured revolving credit
facility,
(ii) a B1 on the $140 million senior secured term loan B, and
(iii) a B1 senior implied rating.
The rating outlook is stable.
The ratings remain constrained by the likelihood of further debt-
financed acquisitions, NEP's high leverage of 4.4 times EBITDA,
modest interest coverage after capital expenditures and the
potential for future capital expenditure requirements. Moody's
notes that while NEP has a prominent market share in both mobile
production facilities (Supershooters) and mobile and modular video
systems (Screenworks), there are limited barriers to entry. Thus,
it is our belief that NEP remains somewhat vulnerable to it's
better-capitalized client base. Capital expenditures are likely
to continue to pressure free cash flow generation, as NEP attempts
to maintain its attractive pool of clients. The ratings are also
constrained by the volatility of the business where organic cash
flow growth remains dependent on replacement revenues for events
that tend to be cyclical (i.e. Olympics, concert touring).
Particularly, we note that concert touring experienced significant
weakness in 2004, reducing the expected profitability at
Screenworks.
The ratings benefit from the enhanced competitive position in the
high-end mobile production business (NMT acquisition increases
market share to 90% of the U.S. premier market), prominent market
share with top television and cable and music customers,
recurring, contracted revenue streams, and strong operating
margins. We note that the acquisitions strengthen the operations
of the Supershooter's segment by increasing the proportion of hi-
definition facilities in its fleet, which demand a premium in the
market. Further, certain of NEP's facility upgrades are
contingent upon commitments from clients to pay higher rates. The
ratings are also supported by the willingness of the sponsors and
management to contribute equity to complete the acquisitions while
maintaining leverage below 4.4x.
The stable outlook reflects our belief that the increase in
leverage is offset by the benefits of the acquisitions.
Additionally, it is our expectation that leverage will improve
modestly over the near-term as NEP uses free cash flow to reduce
debt. The outlook may be revised to negative if there are further
large debt-financed acquisitions or continued softness in the
music touring business in 2005 such that it has a material
negative impact on leverage. The outlook may experience positive
momentum if the growth in operating cash flow of the mobile
productions business reduces leverage faster than Moody's
anticipates.
The B1 rating on the 1st lien revolving credit and term loan
facilities reflect the benefits of the credit agreement, including
guarantees from the parent and all the domestic and foreign
subsidiaries and a first priority lien on the collateral package.
The B3 rating on the 2nd lien facility reflects its subordination
to the sizeable, and now larger first lien portion of the capital
structure. The ratings also recognize the debt protection
measures within the credit agreement, including limitations on
leverage and restrictions on capital expenditures that are not
linked to new contracts.
Moody's believes that the coverage provided to secured lenders in
a default scenario is likely to provide only modest cushion versus
the company's current debt levels given the high proportion of
intangible assets.
NEP Supershooters, L.P., a subsidiary of NEP Broadcasting, LLC,
headquartered in Pittsburgh, Pa., is a leading national provider
of outsourced media services, supporting the delivery of live and
broadcast sports and entertainment events.
NEW ENGLAND: Moody's Affirms Long-Term Rating at Ba2
----------------------------------------------------
Moody's Investors Service has affirmed New England Center for
Children's Ba2 long-term rating. The outlook for the rating is
stable. The rating applies to $15.8 million of outstanding Series
1998 bonds issued through the Massachusetts Development Finance
Agency.
Credit strengths are:
-- Established history and strong reputation in providing
services, especially for autistic children
-- Very consistent operating history, expected to be sustained
by largely government payors
-- Limited additional capital needs will keep leverage steady
Credit challenges are:
-- Thin levels of cash compared to debt or annual expenses
-- Primary source of revenue is subject to state regulation
Opinion:
The New England Center for Children has continued to generate
relatively consistent levels of operating surpluses and cash flow,
with an operating cash flow margin of 6.5% in 2004 (fiscal year
ending June 30, 2004). Although the operating margin of 2.2% in
2004 was slightly below prior year performance (2.6% in 2003 and
3.2% in 2002), year-to-date 5-month performance as of November,
2004 shows some moderate improvement in the year-to-date FY2005
period over the comparable 2004 period. Given the Center's
reliance on stable government payors for the vast majority of
revenues (primarily municipalities and the Commonwealth of
Massachusetts), Moody's expects operating performance to remain
stable. The Center responded well to a rate freeze by the
Commonwealth for its residential programs in FY2004, by managing
salary and other expenses to maintain its operating performance
(salary expense is 75% of total operating expenses). The
Commonwealth approved a 3.29% increase in rates for FY2005, but
increases for FY2006 are still uncertain.
Liquidity remains thin with just 25 days of cash on hand at the
end of FY2004, a total of $2.2 million. Given modest operating
cash flow and mission driven budgeting, liquidity is unlikely to
grow substantially.
Enrollment in the Center's primary programs (two residential and
two day programs) has been steady with 127 residential students
and 74 day students. The Center continues to report no difficulty
in filling vacancies as they arise, as demand for its services is
high. In addition, total census has grown from 205 students in
1998 to 237 students in 2005.
No significant expansion plans are anticipated at the Center's
primary location and strategic efforts are focused on serving
children outside of the Center's own facilities. For instance,
management reports growth in its consulting business line and a
private school classrooms program wherein schools contract with
the Center to have a staff member serve in a classroom at the
school, rather than on the Center's own campus. Fundraising
efforts, which have recently been expanded, will target
construction of an indoor swimming pool as part of a larger $5
million capital campaign. The majority of campaign proceeds will
be spent on capital projects and are not expected to boost
liquidity. The Center borrowed approximately $1.5 million under a
pooled variable rate bond offering in December of 2002 to finance
the purchase of a property near its primary location. The
property consisted of several residences now being utilized to
house staff. The bonds are supported by a letter of credit
agreement that expires in December, 2007. Although the letter of
credit and variable interest rates add an element of risk to the
Center's debt structure, Moody's believes the relatively small
size of the borrowing makes these risks manageable at the current
rating level.
Outlook
New England Center for Children's rating outlook remains stable
reflecting our expectation for steady demand for its services,
maintenance of break-even or positive operating results and no
additional borrowing plans.
Key Ratios And Data
(based on audited Fiscal Year ending 6/30/04 results)
Total Revenue: $33.0 million
Days cash on hand: 25.3 days
Debt to Cash flow: 9.7 times
Total Debt Outstanding: $19.8 million
Operating Cash flow Margin: 6.5%
Maximum annual debt service coverage: 1.60x
NEW WORLD: Has Until July 5 to Make Lease-Related Decisions
-----------------------------------------------------------
The U.S. Bankruptcy Court for the Middle District of Pennsylvania
gave New World Pasta Company and its debtor-affiliates an
extension until July 5, 2005, to decide whether to assume, assume
and assign, or reject two unexpired leases of nonresidential real
property pursuant to Section 365(d)(4) of the Bankruptcy Code.
The Debtors submit that they are actively engaged in developing
and refining their business plan and are not in the position to
make an informed decision regarding these leases. The leased
premises include critical components of the Debtors' ongoing
business operations, which are principal assets of the estates.
Premature assumption or rejection might disrupt the Debtors'
business and impair the value of their estates.
Headquartered in Harrisburg, Pennsylvania, New World Pasta Company
-- http://www.nwpasta.com/-- is a pasta manufacturer in the
United States. The Company, along with its debtor-affiliates,
filed for chapter 11 protection (Bankr. M.D. Penn. Case No. 04-
02817) on May 10, 2004. Eric L. Brossman, Esq., and Robert Bein,
Esq., at Saul Ewing LLP, in Harrisburg, serve as the Debtors'
local counsel. Bonnie Steingart, Esq., and Vivek
Melwani, Esq., at Fried, Frank, Harris, Shriver & Jacobson LLP,
represent the Creditors' Committee. In its latest Form 10-Q for
the period ended June 29, 2002, New World Pasta reported
$445,579,000 in total assets and $451,816,000 in total
liabilities.
NOVOSTE CORP: Considering Liquidation as One of Many Options
------------------------------------------------------------
Novoste Corporation (NASDAQ: NOVT) has been actively seeking new
product opportunities, as well as a merger, business combination
or other disposition of its business or assets, due to the
continuing challenges facing its vascular brachytherapy products
business, which have resulted in a sustained decline in its
revenues.
As previously announced, the Company retained an investment
banking and strategic advisor, Asante Partners LLC, in April 2004,
to assist the Company in its efforts to identify and implement
strategic and financial alternatives. Based on the outcome of
this process, the Company expects to determine in the near term
how best to proceed.
As part of its review of potential strategic alternatives, the
Company has received inquiries from, and has engaged in
discussions with, companies potentially interested in a merger or
business combination with the Company. Based on these inquiries
and discussions, the Company cannot assure its stockholders that
any such transaction will be successfully concluded. Further,
even if such a transaction is successfully concluded, the value of
consideration that would be received by, or the transaction value
to, its stockholders in such a merger or business combination may
be less than the prices at which our common stock has recently
traded.
If a suitable transaction resolving the Company's future on
acceptable terms does not become available in the relatively near
term, the Company will need to consider other alternatives, which
could include the shutdown of our operations and dissolution and
liquidation. If the Company were to liquidate, the Company cannot
predict when it would be able to make a distribution to its
stockholders. However, the amount paid in liquidation would be
significantly lower than the prices at which the Company's common
stock has recently traded. Any distributions in liquidation would
be reduced by cash expenditures and by additional liabilities we
may incur, and by the ultimate amounts paid in settlement of our
liabilities.
Discloses NOL Impairment Determination
Also, the Company had previously reported in the audited
consolidated financial statements included in its Annual Report on
Form 10-K for the year ended December 31, 2003, that it had
approximately $108 million of net operating loss carryforwards
which were fully reserved and will expire beginning 2007 through
2023. Section 382 of the Internal Revenue Code imposes an annual
limitation on the utilization of NOL carryforwards based on a
statutory rate of return and the value of the corporation at the
time of a change in ownership as defined by Section 382 of the
IRC. As a result the Company evaluates whether there are
limitations on the use of its NOL carryforwards, including the
impact of cumulative changes in the ownership of the Company's
common stock. This evaluation includes reliance upon the filings
on Schedules 13D and 13G by certain stockholders in accordance
with Securities and Exchange Commission rules as well as
additional reviews by the Company.
In connection with its review of a potential strategic
alternative, the Company recently completed a review of whether
there are limitations on the use of its NOL carryforwards. During
the foregoing review, the Company became aware of what it believes
are potential inaccuracies contained in certain Schedules 13D and
13G filings made by certain persons with the SEC during the past
several years and has determined that certain purchases and sales
of its common stock were not reported accurately. As a result,
the Company has determined that a change in ownership, as defined
in Section 382 of the IRC, took place on September 17, 2003, which
imposes annual limitations restricting the timing and amounts of
the future use of available NOL carryforwards. As a consequence
of these limitations, approximately two-thirds of the NOL
carryforwards will expire unused.
As of September 17, 2003 the future use of NOL carryforwards is
limited to $1.8 million annually, and approximately $36 million in
total. All of the NOL carryforwards are fully reserved and will
expire over a 17-year period beginning in 2007. The change in
ownership had no impact on reported net income or loss per share
for the year ended December 31, 2003 or the nine months ended
September 30, 2004.
The utilization of these NOL carryforwards could be further
restricted in future periods as a result of any future change in
ownership, as defined in Section 382 of the IRC. Such future
change in ownership, if any, may result in significant additional
amounts of these NOL carryforwards expiring unused.
About Novoste Corporation
Novoste Corporation, based in Atlanta Georgia, develops advanced
medical treatments for coronary and vascular diseases and is the
worldwide leader in vascular brachytherapy. The Company's Beta-
Cath(TM) System is commercially available in the United States, as
well as in the European Union and several other countries.
Novoste Corporation shares are traded on the NASDAQ National Stock
Market under the symbol NOVT. For general company information,
call (770) 717-0904 or visit the Company's website at
http://www.novoste.com/
OCEANVIEW CBO: Moody's Junks $2 Million Fixed Rate Debt Rating
--------------------------------------------------------------
Moody's Investors Service has downgraded the ratings of four
classes of Notes issued by Oceanview CBO I, Ltd. The affected
tranches are:
(1) $28,000,000 Class A-2 Floating Rate Notes due June 2037,
(2) $10,000,000 Class B-F Fixed Rate Notes due June, 2037,
(3) $5,000,000 Class B-V Floating Rate Notes due June 2037,
and
(4) $2,800,000 Class C Fixed Rate Notes due June 2037.
According to Moody's, the underlying collateral pool has
experienced credit deterioration such that the outstanding ratings
on the above class of Notes are no longer representative of the
risks presented to the holders of such Notes. The issuer, as of
December 3, 2004 monthly surveillance report, is violating all of
its interest coverage tests and Weighted Average Rating Factor
Test.
Rating Action: Downgrade
Tranches affected:
(1) $28,000,000 Class A-2 Floating Rate Notes due June 2037
Previous rating: Aa2 and on watch for possible downgrade
New rating: A1
(2) $10,000,000 Class B-F Fixed Rate Notes due June, 2037
Previous rating: Baa3 and on watch for possible downgrade
New rating: B3
(3) $5,000,000 Class B-V Floating Rate Notes due June 2037
Previous rating: Baa3 and on watch for possible downgrade
New rating: B3
(4) $2,800,000 Class C Fixed Rate Notes due June 2037
Previous rating: B2 and on watch for possible downgrade
New rating: C
PARMALAT: PBGC Says Disclosure Statement is Inadequate
------------------------------------------------------
The Pension Benefit Guaranty Corporation tells Judge Drain that
Parmalat USA Corporation and its debtor-affiliates' Disclosure
Statement lacks adequate information concerning:
(a) the ability of Reorganized Farmland to maintain the
defined benefit pension plans for which it will be
responsible; and
(b) the proposed exculpation, discharge and release provisions
of the Debtors as envisioned in the Plan of
Reorganization.
The Disclosure Statement suggests that Reorganized Farmland will
maintain the Pension Plans. However, the U.S. Debtors have
disclosed that Reorganized Farmland will have substantial secured
indebtedness. If the Pension Plans are terminated, the PBGC
notes that its claims would mature and become immediately due and
owing. This would result in a substantial dilution of the
expected recovery from the Debtors' estates, particularly the
estate of Milk Products of Alabama.
The PBGC asserts claims for unfunded benefit liabilities against
the U.S. Debtors in the estimated cumulative amount of
$33,142,300. The PBGC filed liquidated and unliquidated claims
for minimum funding contributions due the Pension Plans in the
estimated cumulative amount of $3,934,667. The PBGC also filed
unliquidated claims for premiums that may be due the PBGC with
respect to the Pension Plans. The claims were filed assuming
that the termination date of the Pension Plans was April 16,
2004.
The PBGC complains that Reorganized Farmland's ability to
maintain and fund the Pension Plans is not adequately discussed.
Lacking this necessary information, the PBGC cannot gauge whether
Reorganized Farmland will have the wherewithal to support its
financial obligations related to the Pension Plans.
The PBGC projects the minimum funding requirements of the Pension
Plans over the next several years as:
2005: $1,989,000
2006: $1,847,000
2007: $1,087,000
2008: $360,000
The income statements provided in the Disclosure Statements do
not reflect any Pension Plan expense for the next several years.
The U.S. Debtors also failed to disclose how Reorganized Farmland
will be able to fund the Pension Plans once the Plan of
Reorganization becomes effective. For the PBGC to properly
evaluate whether Reorganized Farmland can fund and maintain the
Pension Plans, the PBGC will require income tax returns, as well
as financial statements and operating results for all United
States affiliates.
The PBGC further contends that the Disclosure Statement fails to
adequately explain why it is appropriate and necessary for the
Reorganization Plan to contain expansive release and discharge
provisions that could be read to preclude potential Pension
Plans-related claims of creditors against the Debtors and other
non-debtor third parties. The release and discharge provisions
do not specifically state which Pension Plan-related claims would
be released, and do not discuss whether the proposed releases
apply to potential present and future claims of the PBGC or the
Pension Plans' participants.
Headquartered in Wallington, New Jersey, Parmalat USA Corporation
-- http://www.parmalatusa.com/-- generates more than 7 billion
euros in annual revenue. The Parmalat Group's 40-some brand
product line includes milk, yogurt, cheese, butter, cakes and
cookies, breads, pizza, snack foods and vegetable sauces, soups
and juices and employs over 36,000 workers in 139 plants located
in 31 countries on six continents. The Company filed for chapter
11 protection on February 24, 2004 (Bankr. S.D.N.Y. Case No.
04-11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at
Weil, Gotshal & Manges, LLP, represent the Debtors in their
restructuring efforts. On June 30, 2003, the Debtors listed
EUR2,001,818,912 in assets and EUR1,061,786,417 in debts.
(Parmalat Bankruptcy News, Issue No. 39; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
PAXSON COMMS: Appraiser Values 60 TV Stations at $2.65 Billion
--------------------------------------------------------------
Paxson Communications Corporation (AMEX:PAX) has received the
appraisal of the value of its 60 full power television stations in
compliance with the terms of its $365 million Senior Secured
Floating Rate Notes due 2010. The appraiser concluded that, as of
December 1, 2004, the estimated fair market value of the 60
television stations owned or operated by the Company was
$2.65 billion as start-up entities, based entirely on the
broadcasting stick value of these stations, without consideration
of the digital spectrum or analog band clearing value associated
with these stations, if any. Additionally, the scope of the
appraisal did not consider any values attributable to other assets
of the Company, including its program library or the 32.4 million
television households which receive the PAX TV network signal
through cable and satellite distribution and which are not served
by the Company's broadcast television stations.
The Company has had appraisals of its broadcast television
stations prepared by independent valuation firms from time to
time, and is required under the terms of the Senior Notes to
obtain an annual appraisal of the value of its stations. Each
appraisal was prepared in accordance with certain procedures and
methodologies set forth therein. In general, appraisals represent
the analysis and opinions of each of the appraisers as of their
respective dates, subject to the assumptions and limitations set
forth in the appraisal. An appraisal may not be indicative of the
present or future values of the Company's assets upon liquidation
or resale. The estimates and assumptions contained in the
appraisals are subject to significant business, economic,
competitive and regulatory uncertainties and contingencies, many
of which are beyond the Company's control or the ability of the
appraisers to accurately assess and estimate, and are based upon
assumptions with respect to future business decisions and
conditions which are subject to change. The opinions of value set
forth in any appraisal and the actual values of the assets being
appraised will vary, and those variations may be material. The
Company provides no assurance that it would actually be able to
realize, in any sale, liquidation, merger or other transaction
involving the Company's assets, the estimated values of such
assets set forth in any appraisal. Prospective investors in the
Company's securities should not place undue reliance on the
appraisals.
About the Company
Paxson Communications Corporation -- http://www.pax.tv/-- owns
and operates the nation's largest broadcast television
distribution system and the PAX TV network. PAX TV reaches 87% of
U.S. television households via nationwide broadcast television,
cable and satellite distribution systems. PAX TV's original
programming slate for the 2004-2005 broadcast season features the
critically acclaimed unscripted series, "Cold Turkey"; a new
scripted drama, "Young Blades"; two entertaining variety programs,
"America's Most Talented Kids" and "World Cup Comedy," executive
produced by Kelsey Grammer; and two fast-paced game shows, "On the
Cover" and "Balderdash." Returning series include PAX's top-rated
dramas, "Doc" and "Sue Thomas: F.B.Eye."
* * *
As reported in the Troubled Company Reporter on Dec. 27, 2004,
Moody's Investors Service lowered Paxson Communications
Corporation's speculative grade liquidity rating to SGL-3 from
SGL-2.
The SGL-3 rating reflects Paxson's adequate liquidity profile as
projected over the next twelve months. The downward revision to
the SGL rating incorporates our expectation that Paxson may be
unable to cover fixed charges and capital expenditure requirements
with operating cash flow over the time horizon of the liquidity
rating. Thus, going forward, Paxson may not remain free cash flow
neutral and it is our belief that while Paxson's moderate cash
balances (about $80 million as of 3Q'04) provide sufficient near
term liquidity to comfortably service all of the company's
obligations, Paxson is likely to burn slowly through this cushion.
Also influencing the rating, Moody notes that cash flow and
existing cash balances provide only minimal coverage relative to
the Paxson's total debt burden (about 3% of total debt including
preferreds).
The SGL-3 rating also considers the continuing challenges Paxson
faces regarding its operating strategy, and the potential for a
still weaker operating environment in 2005 as the company
repositions the PAX TV network.
As reported in the Troubled Company Reporter on June 12, 2003,
Moody's Investors Service's ratings on Paxson Communications Corp.
took a downward slide after the investors service's review.
Outlook is revised to stable from negative.
Downgraded Ratings:
* approximately $355 million of bank facilities to B1
from Ba3,
* approximately $556 million of senior subordinated notes
to Caa1 from B3,
* approximately $366 million of cumulative exchangeable junior
preferred stock to Caa2 from Caa1,
* senior implied rating to B2 from B1,
* senior unsecured issuer rating to B3 from B2.
On December 12, 2003, Moody's assigns B1 rating on $365 million
issuance of floating rate notes.
PAYLESS SHOESOURCE: December Same-Store Sales Tumble by 3%
----------------------------------------------------------
Payless ShoeSource, Inc. (NYSE: PSS) reported that same-store
sales decreased 3.0 percent during the December reporting period,
the five weeks ended January 1, 2005.
Company sales totaled $284.2 million, a 5.8 percent decrease from
$301.8 million during fiscal December of last year.
Total sales for the first eleven months of fiscal 2004 were
$2.63 billion, compared with $2.65 billion during the similar
period in fiscal 2003. Same- store sales decreased 0.8 percent
during the first eleven months of the fiscal year.
In August the company announced a series of strategic initiatives
as part of a plan designed to sharpen the company's focus on its
core business strategy, reduce expenses, accelerate decision-
making, increase profitability, improve operating margin, and
build value for shareowners over the long-term. The initiatives
include:
-- exiting Parade, Peru and Chile;
-- the closing of approximately 260 additional Payless
ShoeSource stores;
-- the reduction of wholesale businesses that provide no
significant growth opportunity; and
-- a reduction of the company's expense structure.
The company estimates that the total costs relating to the
strategic initiatives could be in the range of $70 million to
$80 million, a reduction from previously disclosed estimates due
to lower than expected costs for store closings.
The company expects to complete all of the strategic initiatives
by the end of fiscal 2004, and to end the year with its inventory
assortment appropriately positioned for Spring 2005.
The company also recently announced that it is reviewing its
agency account relationship for North American advertising.
Payless ShoeSource, Inc. -- http://www.payless.com/-- is the
largest specialty family footwear retailer in the Western
Hemisphere. As of the end of December 2004, the Company operated a
total of 4,709 stores offering quality family footwear and
accessories at affordable prices.
* * *
As reported in the Troubled Company Reporter on Sept. 6, 2004,
Standard & Poor's Ratings Services lowered its ratings on Topeka,
Kansas-based specialty footwear retailer Payless ShoeSource Inc.
The corporate credit rating was lowered to 'BB-' from 'BB'. All
ratings were removed from CreditWatch, where they were placed with
negative implications on March 2, 2004. The outlook is negative.
PLAC INC: Voluntary Chapter 11 Case Summary
-------------------------------------------
Debtor: PLAC, Inc.
aka Pennsylvania Land Abstract Company
aka Access National Settlement Services
aka Metro Title & Escrow, LLC
212 West Gay Street
West Chester, Pennsylvania 19380
Bankruptcy Case No.: 05-10327
Type of Business: The Debtor provides settlement and title
insurance services.
See http://www.palandab.com/
Chapter 11 Petition Date: January 6, 2005
Court: Eastern District of Pennsylvania (Philadelphia)
Judge: Bruce I. Fox
Debtor's Counsel: Robert Mark Bovarnick, Esq.
Law Offices of Robert M. Bovarnick
Two Penn Center Plaza
1500 JFK Boulevard, Suite 1310
Philadelphia, PA 19102
Tel: 215-568-4480
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 creditors.
RES-CARE INC: S&P Raises Senior Unsecured Debt Rating to 'B'
------------------------------------------------------------
Standard & Poor's Ratings Services raised its ratings on
Louisville, Kentucky-based special-needs services provider Res-
Care Inc. The corporate credit rating was raised to 'B+' from
'B', the senior secured debt rating to 'BB-' from 'B+', and the
senior unsecured debt rating to 'B' from 'B-'. At the same time,
Standard & Poor's revised its outlook on the company to stable
from positive.
"The upgrade reflects Res-Care's improved liquidity following an
equity infusion from its financial sponsor, as well as the
company's improved operating performance, its execution of a
controlled acquisition strategy, and the anticipated improvements
in its financial profile as a result of acquisitions and new
contracts," said Standard & Poor's credit analyst Jesse
Juliano.
Standard & Poor's expects Res-Care to continue to use the proceeds
from a $47 million equity infusion from financial sponsor Onex
Partners L.P. to acquire a number of relatively small special-
needs service providers. In addition, the company just signed a
three-year, $90 million New York City human resources
administration contract. Res-Care's credit profile should
continue to improve as it generates greater EBITDA and free cash
flow from acquisitions and new contracts. Res-Care has a history
of successfully completing small tuck-in acquisitions, and
Standard & Poor's does not anticipate significant integration
issues.
The low-speculative-grade ratings on Res-Care Inc. reflect the
rate pressures it faces from government and related payors dealing
with overburdened budgets. These pressures are exacerbated by the
company's thin EBITDA margins. Res-Care also faces rising
insurance expenses and relatively high debt levels. (The company
had $187 million of debt outstanding as of Sept. 30, 2004). These
credit factors are somewhat offset by Res-Care's successful
expansion of its core operations, as well as its top standing in a
unique market (providing support services to individuals with
special needs) and its improved financial flexibility following
the Onex equity infusion.
Res-Care provides residential services, training, education, and
support services to populations with special needs throughout the
U.S., Puerto Rico, and Canada, including people with developmental
or other disabilities, as well as at-risk and troubled youths.
The company's market has grown rapidly, as state agencies have
stopped providing services to at-risk populations. The eligible
client base is large and underpenetrated, and only about 10% of
qualified candidates receive service.
RESIDENTIAL ASSET: Fitch Affirms 4 Low-B Mortgage Certif. Ratings
-----------------------------------------------------------------
Fitch has taken rating actions on Residential Asset Mortgage
Products, Inc. (RAMP) issues:
RAMP home equity mortgage asset-backed pass-through certificates,
series 2003-RM2, group I and II:
-- Class A-I and A-II 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'.
RAMP home equity mortgage asset-backed pass-through certificates,
series 2003-RM2, group III:
-- Class A-III affirmed at 'AAA';
-- Class M-III-1 upgraded to 'AA+' from 'AA';
-- Class M-III-2 upgraded to 'A+' from 'A';
-- Class M-III-3 upgraded to 'BBB+' from 'BBB';
-- Class B-III-1 affirmed at 'BB';
-- Class B-III-2 affirmed at 'B'.
RAMP home equity mortgage asset-backed pass-through certificates,
series 2003-SL1:
-- Class A affirmed at 'AAA'.
The affirmations, reflecting approximately $375 million, are due
to credit enhancement consistent with future loss expectations.
The upgrade rating actions, reflecting approximately $6.7 million,
are being taken as a result of low delinquencies and losses, as
well as increased credit support levels. As of the Dec. 25, 2004,
distribution date, RAMP 2003-RM1 group III suffered neither losses
nor delinquencies and is supported by continuously increasing
credit enhancement.
Above deals have pool factors (i.e. current mortgage loans
outstanding as a percentage of the initial pool) ranging from 42%
to 62%, consisting of 15- to 30-year fixed-rate mortgage loans,
secured by first liens on one- to four-family residential
properties.
RYLAND GROUP: Sells $250 Million of 5-3/8% Senior Notes Due 2015
----------------------------------------------------------------
The Ryland Group, Inc. (NYSE: RYL), sold $250 million of 5-3/8%
senior notes due 2015 pursuant to a shelf registration statement
on file with the U.S. Securities and Exchange Commission. The
offering was led by UBS Securities LLC and Banc of America
Securities LLC as joint book-runners, and J.P. Morgan Securities
Inc. and Wachovia Capital Markets, LLC as co-managers.
This press release shall not constitute an offer to sell or the
solicitation of an offer to buy the senior notes. This press
release is being issued pursuant to and in accordance with Rule
135 under the Securities Act of 1933, as amended.
With headquarters in Southern California, Ryland --
http://www.ryland.com/-- is one of the nation's largest
homebuilders and a leading mortgage-finance company. The Company
currently operates in 27 markets across the country and has built
more than 225,000 homes and financed over 195,000 mortgages since
its founding in 1967. Ryland is a Fortune 500 company listed on
the New York Stock Exchange under the symbol "RYL."
* * *
As reported in the Troubled Company Reporter on Dec. 29, 2004,
Moody's Investors Service raised the ratings on three issues of
senior notes of The Ryland Group, Inc., to Baa3 from Ba1 and
confirmed the company's other ratings. The ratings outlook
remains stable.
The upgrades reflect Ryland's decision to attach the guarantees of
its major homebuilding subsidiaries to the senior note issues.
Previously, the senior notes did not carry upstream subsidiary
guarantees and thus were rated one notch below the senior implied
rating.
These rating actions were taken:
* Senior implied rating is confirmed at Baa3
* Senior unsecured issuer rating is raised to Baa3, from Ba1
* $100 million of 8% senior notes due 8/15/2006 is raised to
Baa3, from Ba1
* $150 million of 5.375% senior notes due 6/1/2008 is raised to
Baa3, from Ba1
* $147 million of 9.75% senior notes due 9/01/2010 is raised to
Baa3, from Ba1
* $143.5 million of 9.125% senior subordinated notes due
6/15/2011 is confirmed at Ba2
The rating on the senior subordinated notes was left unchanged
because the subsidiary guarantees will not apply to this issue.
Ryland's ratings reflect the continuing improvement in its
financial profile, a highly disciplined growth strategy that
avoids acquisitions, a conservative land policy, tight cost
controls, and strong liquidity. At the same time, the ratings
consider Ryland's size relative to its peer group, the ongoing
share repurchase program, and the cyclical nature of the
homebuilding industry.
The stable ratings outlook reflects Moody's expectation that
Ryland will continue to maintain capital structure discipline
while pursuing its expansion opportunities.
SAN JOAQUIN: Moody's Affirms Ba2 Rating for TCA Revenue Bonds
-------------------------------------------------------------
Moody's Investors Service has confirmed the underlying Ba2 rating
for the revenue bonds of the San Joaquin Hills Transportation
Corridor Agency (SJHTCA). The rating outlook is negative.
This concludes our Watchlist review of the Agency initiated in
February 2004 in light of the failure of a planned consolidation
with the F/ETCA and the lack of board consensus on mitigation
alternatives to avert a potential default. The rating applies to
$1.9 billion of outstanding Series 1997 and 1993 revenue bonds
revenue bonds issued by the Agency to construct a 15-mile limited
access toll road in Orange County. The rating and outlook are
based on weak traffic and revenue performance as compared to
forecast and the possibility of a cash default as early as 2014
absent dramatic growth in traffic and revenues or external
financial support. The availability of some accumulated reserves
and external liquidity in the form of a Federal line of credit
(FLOC) as well as the economic strength of the service area
somewhat mitigate credit risks in the near term. Some of the
bonds are insured by MBIA and rated Aaa based on the financial
strength of the bond insurer.
Recent Developments/Results:
Toll revenues for FY 2004 and FY 2003 were 78% and 77% of forecast
respectively. While year-to-date FY 2005 traffic growth appears
to be accelerating, notwithstanding the impact of a recent toll
rate increase, Moody's believes it unlikely that revenue will grow
fast enough to match a steep increase in debt service requirements
in FY 2006, and certainly not after the FLOC expiration in 2007.
The SJH pledged revenue has only met the 1.3x rate covenant over
the last several years by virtue of the use of one-time, non-toll
revenues to defease some bonds. Based on the current pace of
traffic and revenue growth, Moody's expects that the bonds will
fail to meet the rate covenant by FY 2006 or 2007. A cash default
could occur by FY 2014 or 2015, after the Agency exhausts all
available reserves.
The Agency has not met its traffic and revenue forecast and is
dependent on accelerated toll rate increases starting in 2009 to
boost revenues and meet steadily increasing debt service
requirements over the near to medium term. Further, there is a
protracted lack of clear political consensus on the boards of both
SJHTCA and its sister agency Foothill/Eastern Transportation
Corridor Agency (F/ETCA rated Baa3, stable outlook) on a
mitigation plan to avert a the potential default.
The governing boards of both F/ETCA and SJHTCA are currently
evaluating a mitigation proposal to avert the potential payment
default by SJHTCA. Though the proposal has not yet been
formalized, at the time it was drafted it called for a one-time
payment of $120 million as well as a $1 billion loan from the
excess revenues of F/ETCA to SJHTCA. The $120 million payment
would serve as a litigation settlement to compensate SJHTCA for
the projected toll revenue loss related to the planned Foothill-
South project (currently undergoing environmental review) and is
projected to help the agency meet its covenanted DSCR of 1.3x
through 2010. The loan would subsidize debt service payments and
coverage after 2010. In order to be implemented the proposal
would require the approval of bondholders and both agency boards,
as well as possible amendments to the F/ETCA bond indenture.
Moody's will continue to monitor the progress of the proposed
mitigation plan and its potential credit impact on both the F/ETCA
and the SJHTCA.
As of October, 2004, the agency held $4.2 million in unrestricted
cash reserves and nearly $182 million in funds restricted under
the bond indenture, including a debt service reserve fund balance
of approximately $96 million, a capitalized interest account
balance of $19 million and a $15 million use and occupancy fund
that may be used for debt service if needed.
Credit strengths are:
-- Recently accelerated growth in revenue due to increased
tolls and continued stable traffic
-- Limited ramp-up risk
-- No construction risk
-- Autonomy to raise tolls
-- Above average income service area
-- Management continuity with nearly 15 years of history with
essentially the same team
-- Availability of $12 million annual FLOC through 2007
-- Some liquidity, with approximately $96 million in debt
service reserves, $19 million in capitalized interest
account and $4.2 million in general reserves
Credit challenges are:
-- Toll revenues, while growing, remain more than 20% below
forecast
-- Rate covenant of 1.3x has been met only by use of one-time,
non-toll revenues to defease some bonds
-- At current traffic growth rates, Agency may be in technical
default by FY 2006 or FY 2007 and cash default by FY 2014 or
2015
-- The FLOC expires at the end of 2007
-- Revenue growth depends on regular toll rate increases, as
well as continued development along corridor
-- Proposed mitigation plan to avert technical and cash default
requires approval of boards of both agencies as well as
consensus on Foothill-South expansion project
-- Protracted lack of political of consensus on mitigation plan
makes potential default more likely
The San Joaquin Hills Transportation Corridor consists of a single
15- miles of high speed, electronically tolled four to six lane
road in Southern Orange County. The road opened to traffic in
1996. In 1997 the Agency restructured its debt and extended
payment of principal maturities by three years to improve the DSRC
due to slower than projected traffic and revenue ramp-up. The
agency is a joint exercise of powers agency organized under state
law and governed by an independent board comprised of local
government representatives. Additional structural enhancements
include required cash reserves and the FLOC.
What Could Change the Rating - UP
The Agency's credit could benefit from implementation of a
mitigation or restructuring plan to bolster revenues and avert
both technical and cash defaults.
What Could Change the Rating - DOWN
Absent dramatic acceleration of traffic and revenue, external
financial support or debt restructuring, the SJHTCA rating faces
additional downward pressure.
Outlook
The rating outlook is negative based on traffic and revenue growth
that remains slower than needed to pay for escalating debt service
and the lack of a mitigation plan to provide financial support
after FLOC expires.
Key Indicators
System: 15-mile single asset toll road in Southern Orange County
FY04 Toll Revenues to revised Forecast:78.2%
FY03 Toll Revenues to revised Forecast:76.8%
FY 04 DSCR:1.38/1.46x[1]
FY 03 DSCR:1.35/1.42x[1]
SJHTCA Average Annual Traffic/Revenue Growth, 1998-2003:6.4%/13%
Note: [1] Excluding/including toll stabilization account.
SCHLOTZSKY'S INC: Bobby Cox Closes Purchase of All Assets
---------------------------------------------------------
Bobby Cox Companies, Inc., has closed on its purchase of
substantially all of the assets of Schlotzsky's, Inc. Bobby Cox
Companies will:
-- operate the Schlotzsky's franchise system as a privately
owned company;
-- keep its headquarters in Austin; and
-- retain all current Schlotzsky's employees.
The sale was approved on Dec. 8, 2004, by Judge Leif Clark of the
United States Bankruptcy Court for the Western District of Texas,
San Antonio Division after the Company filed for Chapter 11
protection and subsequently auctioned off its assets to the Bobby
Cox Companies.
The new management group will include Bobby D. Cox as Chairman,
Bob Barnes as President and Ronny Jordan as Chief Financial
Officer. Darrell Kolinek will remain as Vice President of
Operations. This group brings more than 90 years experience in
the restaurant industry, as both a franchisor and a franchisee,
providing a unique and valuable perspective on how to position the
Company and its franchisees for success. Initial steps toward
that goal will be to focus on cost efficiencies and more effective
and localized marketing.
"We have long admired the passion customers have for Schlotzsky's
and its Original sandwich, and we are excited to take the Company
to a new level of respect and success. Based on the feedback I
have received from employees, franchisees and suppliers, that
excitement is spreading like wildfire throughout our community.
Everyone is enthusiastic about the tremendous opportunities
ahead," said Bob Barnes. "By remaining in Austin, we intend to
continue to be a part of the community that helped build our brand
and to retain all of the Schlotzsky's home office staff, thereby
preserving continuity for our franchisees. In addition, we have
created an unparalleled management team to spearhead what we think
will be one of the most inspiring turnaround stories in the
restaurant industry."
"From the day the sale was approved by the bankruptcy court, the
management team from Bobby Cox Companies has been visible in the
franchise system, taking the time to listen to our concerns and
truly understand the steps necessary to return Schlotzsky's to the
position it deserves in the restaurant industry," said Jan
Carmean, a Schlotzsky's franchisee in Athens, Georgia. "I believe
this management group is equipped to help us become a stronger and
more viable system, and I'm excited to be a part of the
Schlotzsky's concept."
Bobby Cox Companies, Inc., is a dynamic family of service
businesses dedicated to meeting the needs of today's consumers.
Under the guidance of its founder, Bobby D. Cox, the company has
grown from its humble beginnings as a single coffee shop
restaurant in 1961 in Odessa to a multi-concept organization
operating more than 30 businesses throughout the southwestern
United States. From entertainment, restaurants, and
telecommunications to oil and gas production, custom food
manufacturing, ranching and real estate development, the Bobby Cox
Companies is the embodiment of the entrepreneurial spirit of free
enterprise. The company is headquartered in the International
Plaza Building in Ft. Worth, Texas, and employs more than 2,200
people throughout Texas, Oklahoma, Missouri, Arkansas and New
Mexico. As of Jan. 7, 2005 there were 445 Schlotzsky's
restaurants open and operating in 36 states, the District of
Columbia and six foreign countries.
Headquartered in Austin, Texas, Schlotzsky's, Inc. --
http://www.schlotzskys.com/-- is a franchisor and operator of
restaurants. The Debtors filed for chapter 11 protection on
August 3, 2004 (Bankr. W.D. Tex. Case No. 04-54504). Amy Michelle
Walters, Esq., and Eric Terry, Esq., at Haynes & Boone, LLP,
represent the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they listed
$111,692,000 in total assets and $71,312,000 in total debts.
SCHUFF INT'L: Extends 10-1/2% Consent Solicitation Until Friday
---------------------------------------------------------------
Schuff International Inc. (Pink Sheets:SHFK), a family of
companies providing fully integrated steel construction services,
has increased the consent fee and further extended the consent
solicitation in connection with a certain proposed amendment to
the Indenture pursuant to which its 10-1/2% Senior Notes due 2008
were issued. Schuff has increased the consent fee, payable to all
holders of record whose consent is received before expiration or
earlier termination of the consent solicitation, from $0.50 per
$100 principal amount of Notes owned by the consenting holder as
of the record date to $0.75 per $100. Schuff also has further
extended the expiration date until 5 p.m., New York City time, on
Friday, Jan. 14, 2005, unless the consent solicitation is further
extended or earlier terminated if the requisite consent is
obtained before the expiration date.
The adoption of the proposed amendment is conditioned on delivery
of consents from holders of at least a majority of the principal
amount of the Notes. The adoption of the proposed amendment is
also subject to certain other conditions, which are described in
Schuff's Consent Solicitation Statement dated Dec. 8, 2004, as
supplemented to reflect the increased consent fee and the extended
expiration date. The consent solicitation is being made solely by
means of the Consent Solicitation Statement. Except as otherwise
described above, all terms and conditions of the consent
solicitation are unchanged. This announcement is not an offer to
purchase, a solicitation of an offer to purchase, or a
solicitation of consent with respect to any securities.
Guggenheim Capital Markets LLC is serving as Solicitation Agent in
connection with the consent solicitation. Questions regarding the
terms of the consent solicitation may be directed to the
Solicitation Agent at 212-381-7500, Attention: Joe Bencivenga.
Global Bondholder Services Corp. is serving as Tabulation Agent
and Information Agent in connection with the consent solicitation.
Questions regarding the delivery procedures for the consents and
requests for additional copies of the Consent Solicitation
Statement or related documents may be directed to the Information
Agent at 212-430-3774.
About the Company
Schuff International Inc. is a family of steel fabrication and
erection companies providing a fully integrated range of steel
construction services, including design engineering, detailing,
joist manufacturing, fabrication and erection, and project
management expertise. The company has multi-state operations
primarily focused in the U.S. Sunbelt.
* * *
As reported in the Troubled Company Reporter on June 21, 2004,
Standard & Poor's Ratings Services lowered its corporate credit
and senior unsecured debt ratings on Schuff International, Inc.,
to 'CCC' from 'B-'. The outlook was negative.
SHAW GROUP: Reports First Quarter 2005 Financial Results
--------------------------------------------------------
The Shaw Group Inc. (NYSE: SGR) reported financial results for its
first quarter fiscal 2005 ended November 30, 2004. Net income
from continuing operations for the first quarter of fiscal 2005
was $10.8 million. The Company also reported a loss from
discontinued operations of $0.8 million for the period. In
comparison, for the three months ended November 30, 2003, the
Company reported a net loss from continuing operations of
$49.6 million, and discontinued operations of $0.1 million. For
the first quarter of fiscal 2005, revenues were $828.1 million
compared to $646.9 million in the prior year's first quarter.
Shaw's backlog totaled $5.4 billion at November 30, 2004, with
approximately $2.4 billion, or 44%, of the backlog is expected to
be converted during the next 12 months. Approximately
$2.6 billion, or 49%, of the backlog is in the environmental and
infrastructure sector, primarily contracts with Federal government
agencies and commercial entities; approximately $2.0 billion, or
38%, of the backlog is comprised of projects for fossil-fuel,
nuclear and other power generating plants; and approximately
$0.7 billion, or 13%, is projects for process industry facilities.
J.M Bernhard, Jr., Chairman and Chief Executive Officer of The
Shaw Group Inc., said, "We are pleased with our first quarter net
income from continuing operations of $0.17 per diluted share and
positive net cash from operations of $10.0 million. This quarter
marks a sharp improvement from our last year's first quarter
results, both in revenues and net income and continues the
positive trend we started three quarters ago. We are especially
excited by the improving markets we see in the energy and process
industries including the increase in our maintenance work. Our
environmental and infrastructure segment has remained strong and
pursued market opportunities aggressively, especially in rapid
response services."
Mr. Bernhard added, "We are well positioned to continue to expand
and diversify our business. We have recently replaced our
Engineering, Construction and Maintenance Division with two new
divisional segments: the Energy and Chemicals Division and a
separate Maintenance Division. We believe these organizational
refinements will not only improve our overall operational
capabilities, but also will enhance our company-wide sales and
marketing efforts."
About the Company
The Shaw Group Inc. -- http://www.shawgrp.com/-- is a global
provider of technology, engineering, procurement, construction,
maintenance, fabrication, manufacturing, consulting, remediation,
and facilities management services for government and private
sector clients in the power, process, environmental,
infrastructure and emergency response markets. A Fortune 500
Company, The Shaw Group is headquartered in Baton Rouge,
Louisiana, and employs approximately 18,000 people at its offices
and operations in North America, South America, Europe, the Middle
East and the Asia-Pacific region.
* * *
As reported in the Troubled Company Reporter on Dec. 08, 2004,
Standard & Poor's Ratings Services lowered its corporate credit
rating on The Shaw Group to 'BB-' from 'BB.' Other ratings were
also lowered one notch. The outlook is negative. At
Aug. 31, 2004, the Baton Rouge, Louisiana-based engineering and
construction services provider had about $476 million total debt
outstanding (including present value of operating leases).
"The ratings downgrade reflects weak earnings quality and cash
flow generation that is more consistent with the lower rating,"
said Standard & Poor's credit analyst Paul Kurias. "Ratings may
be lowered further if liquidity were to decline meaningfully,
which might occur if operations underperform expectations or if
challenged projects require greater-than-expected resources to
complete."
SIX FLAGS: Prices $195 Million of New 9-5/8% Senior Notes Due 2014
------------------------------------------------------------------
Six Flags, Inc. (NYSE: PKS) has priced $195 million aggregate
principal amount of its 9-5/8% senior notes due 2014, pursuant to
Rule 144A and Regulation S under the Securities Act of 1933, as
amended. The notes are being issued as additional debt securities
under an indenture pursuant to which, on December 5, 2003, the
Company previously issued and sold $325 million aggregate
principal amount of its 9-5/8% senior notes due 2014.
As previously announced, all of the net proceeds of the offering
will be used to redeem all of the Company's outstanding 9 1/2%
senior notes due 2009 that have not been previously called for
redemption.
The 9-5/8% senior notes due 2014 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
such registration requirements.
This announcement is not an offer to sell or the solicitation of
an offer to buy any securities, nor shall there be any sale of the
securities in any state where such offer, solicitation or sale
would be unlawful prior to registration or qualification under the
securities laws of any such state.
The information contained in this news release, other than
historical information, consists of forward-looking statements
within the meaning of Section 27A of the Securities Act and
Section 21E of the Exchange Act. These statements may involve
risks and uncertainties that could cause actual results to differ
materially from those described in such statements. Although Six
Flags believes that the expectations reflected in such forward-
looking statements are reasonable, it can give no assurance that
such expectations will prove to have been correct.
This release and prior releases are available on the Company's
website at http://www.sixflags.com/
* * *
As reported in the Troubled Company Reporter on Jan. 10, 2005,
Standard & Poor's Ratings Services assigned its 'CCC' rating to
Six Flags Inc.'s privately placed, Rule 144A $195 million add-on
to its 9.625% senior notes due 2014. Proceeds from the offering
will be used to redeem the company's 9.5% senior notes due 2009.
At the same time, Standard & Poor's affirmed its ratings for the
company, including the 'B-' corporate credit rating. The rating
outlook is stable. The Oklahoma City, Oklahoma-based operator of
30 regional theme parks had total debt and preferred stock of
$2.4 billion as of Sept. 30, 2004.
"The rating reflects Six Flags' high debt leverage, disappointing
operating performance trends, and slightly negative discretionary
cash flow, despite lower capital spending," said Standard & Poor's
credit analyst Hal F. Diamond.
SOLUTIA INC: Wants Bankr. Court to Approve Claim Waiver Procedures
------------------------------------------------------------------
Solutia, Inc. and its debtor-affiliates have undergone an
extensive review of their executory contracts to identify those
that are not profitable for them. As a result of the review, the
Debtors found that they could achieve cost savings by terminating
certain contracts, allowing other contracts to expire by their
terms, consolidating service providers in certain areas,
requesting new bids for certain services and otherwise
renegotiating certain terms and conditions of their contracts.
The Debtors acknowledge that there are legitimate prepetition
amounts owing to a significant number of vendors and service
providers with whom they do business. The Debtors believe that
the prudent course in connection with these vendors and providers
is to strive to minimize the prepetition claims asserted against
their estates at the same time that the Debtors seek to improve
the terms and conditions of vendor and supplier contracts.
Therefore, as they negotiate new or revised procurement-related
contractual relationships with their vendors and providers, the
Debtors from time to time seek waivers of a vendor's or a service
provider's prepetition claim as an incentive for the Debtors to
continue to do business with them. In that regard, the Debtors
have already successfully obtained waivers of certain prepetition
claims in connection with amending, extending or entering into new
contracts with their vendors and suppliers. The Debtors
anticipate seeking and achieving similar results in the future.
While the Debtors believe that Court approval is not generally
required for waivers of prepetition claims, the Debtors recognize
that the award of a future contract in connection with a claim
waiver may be construed as a compromise or settlement of a claim
within the meaning of Rule 9019 of the Federal Rules of
Bankruptcy Procedure.
Requiring Court approval of each miscellaneous waiver of a claim
would be administratively burdensome to the Court and costly for
the Debtors' estates, especially in light of the small size of the
claims involved in the transactions compared to the overall
magnitude of claims against the Debtors' estates. In certain
cases, the costs and delays associated with seeking individual
Court approval of a claim waiver potentially would eliminate, or
substantially undermine, the economic benefits of the transaction.
To reduce the burdens and costs, the Debtors ask the United States
Bankruptcy Court for the Southern District of New York to approve
a modified process for review and approval of small claim waivers
falling within certain specified economic parameters.
Under the proposed process, the Debtors will use the Claim Waiver
Procedures to obtain more expeditious and cost-effective review by
interested parties, in lieu of individual court approval, of
certain waivers of small dollar amount claims. All other
settlements would remain subject to Court approval on an
individual basis pursuant to Section 363 of the Bankruptcy Code
and Bankruptcy Rule 9019.
Claim Waiver Procedures
The salient terms of the Debtors' proposed Claim Waiver
Procedures are:
A. Transactions for which the Claim Waiver Procedures may be used
The Claim Waiver Procedures would apply to a waiver of all or
a portion of a prepetition claim where the size of the waiver
amounts to, in each case, $500,000 or less.
B. Notice and opportunity to object for Non-De Minimis Claim
Waivers
For Claim Waivers between $100,000 and $500,000, the Debtors
propose that after a Debtor enters into a contract or
contracts contemplating a Claim Wavier, the Debtors will serve
a notice of the Proposed Waiver by e-mail, facsimile or
overnight delivery service on:
-- the United States Trustee for the Southern District of
New York;
-- counsel to the Official Committee of Unsecured
Creditors;
-- counsel to the Official Committee of Retirees;
-- counsel to the agents for the Debtors' postpetition
secured lenders;
-- counsel to the indenture trustee for the secured public
debt securities issued by the Debtors;
-- counsel to the ad hoc committee for the secured public
debt securities issued by the Debtors;
-- counsel to the Official Committee of Equity Security
Holders; and
-- the creditor agreeing to the Claim Waiver and its
counsel, if known.
The Debtors propose that each Waiver Notice include these
information with respect to the Proposed Waiver:
(a) a description of and the basis for the claim or claims
that are the subject of the Proposed Waiver and the Debtor
party against whom the claim or claims are being asserted;
(b) any known defenses to the claim that is the subject of the
Proposed Waiver;
(c) the identity of the non-debtor party or parties to the
Proposed Waiver and any relationships between the party or
parties and the Debtors;
(d) the nature of any new contractual relationship that the
Debtors will enter into as a result of the Proposed
Waiver;
(e) the business justifications for the Proposed Waiver and an
assurance that any negotiations with the non-debtor party
or parties to the Proposed Waiver occurred on an
arm's-length basis;
(f) instructions consistent with the procedures to assert
objections to the Proposed Waiver; and
(g) the Debtors' basis for believing that the Proposed Waiver
is in the best interests of the estates as well as the
probability of success of litigation of the claim.
With respect to each Waiver Notice, Interested Parties have
through 5:00 p.m., Eastern time, on the 10th calendar day
after the date of service thereof to object to the Proposed
Waiver. If no Objections are properly asserted before the
expiration of the Notice Period, the applicable Debtor or
Debtors would be authorized, without further notice and
without further Court approval, to consummate the Proposed
Waiver in accordance with the terms and conditions of the
underlying contract or contracts. If each Interested Party
consents in writing to the Proposed Waiver before the
expiration of the applicable Notice Period, then the Debtors
would be authorized to consummate the Proposed Waiver without
waiting for the Notice Period to expire. Upon either the
expiration of the Notice Period without the receipt of any
Objections or the written consent of all Interested Parties,
the Proposed Waiver would be deemed final and fully authorized
by the Court.
If any significant economic terms of a Proposed Wavier are
amended after transmittal of the Waiver Notice, but before the
expiration of the Notice Period, the applicable Debtor would
be required to send a revised Waiver Notice to all Interested
Parties describing the Proposed Waiver, as amended. If a
revised Waiver Notice is required, the Notice Period would be
extended for an additional five calendar days.
C. Objection procedures
Objections to any proposed Claim Waiver must:
(a) be in writing;
(b) be served on the Interested Parties and counsel to the
Debtors so as to be received by all such parties before
expiration of the Notice Period; and
(c) state with specificity the grounds for objection.
If an Objection to a Proposed Waiver is properly and timely
served, the Debtors and the objecting Interested Party would
use good faith efforts to resolve the Objection. If the
Debtors and any objecting Interested Party were unable to
achieve a consensual resolution, the Debtors would not be
permitted to proceed with the Proposed Waiver pursuant to
these procedures, but would have the ability to seek Court
approval of the Proposed Waiver upon expedited notice and an
opportunity for a hearing, subject to the Court's
availability.
Within 45 days after the end of each quarter, the Debtors will
provide to the Interested Parties a report itemizing the
assets sold and consideration received for each De Minimis
Waiver completed during the quarter.
Headquartered in St. Louis, Missouri, Solutia, Inc. --
http://www.solutia.com/-- with its subsidiaries, make and sell a
variety of high-performance chemical-based materials used in a
broad range of consumer and industrial applications. The Company
filed for chapter 11 protection on December 17, 2003 (Bankr.
S.D.N.Y. Case No. 03-17949). When the Debtors filed for
protection from their creditors, they listed $2,854,000,000 in
assets and $3,223,000,000 in debts. (Solutia Bankruptcy News,
Issue No. 29; Bankruptcy Creditors' Service, Inc., 215/945-7000)
SUPERIOR NATIONAL: Zurich Agrees to Pay Liquidator $110 Million
---------------------------------------------------------------
Zurich Financial Services Group announced yesterday that the
Insurance Commissioner of the State of California, as liquidator
of the Superior National Insurance Companies, and Centre Insurance
Company, have settled longstanding differences between them
regarding CIC's transactions with various Superior National
entities. The settlement in the case of Insurance Commissioner v.
Centre Insurance Company, et al., results in a comprehensive
resolution of the disputes between the Liquidator
and CIC and its affiliated entities.
The case, originally filed on January 16, 2002, was principally a
preferential transfer action that involved claims against the
defendants of approximately USD 250 million. The settlement will
result in substantial recoveries for the estates of Superior
National and eliminate significant ongoing costs of the
litigation. As part of the settlement, CIC will transfer assets
to or for the benefit of the Liquidator having an aggregate
estimated value of up to USD 110 million, comprised of USD 80
million in cash; USD 20 million to be paid from the proceeds of
certain securities with such payments guaranteed by a surety bond;
and up to an additional USD 10 million to be paid from the
proceeds of certain securities, with USD 5 million of this last
USD 10 million conditionally guaranteed by the same surety bond
being used to guarantee the payment of the USD 20 million. CIC has
advised the Liquidator that CIC has already reserved for
this settlement.
Under the settlement, the Liquidator is also permitted to release
funds (USD 22 million) that are currently being held in reserve by
the Liquidator pending resolution of certain CIC claims. In
addition, at the election of the Liquidator, CIC and other
defendants would also withdraw all of their claims against the
estates of the Superior National insurers, or assign them to the
Liquidator.
The settlement should streamline the issues with which the
Liquidator must contend, lower costs of estate administration, and
expedite the ultimate closure of these insolvent estates. The bulk
of the recoveries will ultimately be channeled to the California
Insurance Guarantee Association and used to pay workers'
compensation claims against the insolvent entities.
The settlement benefits CIC and the Liquidator in that it resolves
extensive and complex claims and regulatory issues relating to
business transactions between CIC and the Superior National
insurance companies now in liquidation without the need for
further costly and protracted litigation. The settlement must be
approved by the Court that is presiding over the liquidation of
the estates of the Superior National insurers.
Zurich Financial Services is an insurance-based financial services
provider with a global network that focuses its activities on its
key markets in North America and Europe. Founded in 1872, Zurich
is headquartered in Zurich, Switzerland. Zurich has offices in
more than 50 countries and employs about 62,000 people.
The Superior National Insurance Group, Inc., consists of five
companies. Four of the companies -- California Compensation
Insurance Co., Combined Benefits Insurance Co., Superior National
Insurance Co., and Superior Pacific Casualty Co. Son March 3,
2000, California Department of Insurance seized the assets and
operations of Superior's insurance subsidiaries. The California
Department of Insurance appeared before the Los Angeles and
Sacramento superior courts on March 6, 2000, seeking conservation
orders for Superior National Insurance Group to allow the
commissioner to use department staff to conduct the business of
the conserved company as he sees appropriate. The California
Courts entered conservation orders on March 7, 2000. Superior
National Insurance Group, Inc., and non-insurer affiliates
Business Insurance Group, Inc., SN Insurance Services, Inc., and
SN Insurance Administrators, Inc., filed chapter 11 petitions on
April 26, 2000. Prior to its bankruptcy and the conservation of
its insurance company units, Superior National Insurance Group had
been the ninth largest workers' compensation insurance group in
the nation and the largest private sector underwriter of workers'
compensation insurance in California.
TEXAS DOCKS & RAIL: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------------
Lead Debtor: Texas Docks & Rail, Ltd.
6746 Up River Road
Corpus Christi, TX 78409
Bankruptcy Case No.: 05-20047
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
C C Energy & Carbon, Ltd. 05-20048
Type of Business: The Debtor is a marine terminal operator and
stevedore for port of Corpus Christi and South
Texas. See http://www.texdockrail.com/
Chapter 11 Petition Date: January 7, 2005
Court: Southern District of Texas (Corpus Christi)
Judge: Richard S. Schmidt
Debtors' Counsel: Harrell Zeekie Browning, Esq.
Law Offices of Harrell Z. Browning
600 Leopard Street, Suite 103
Corpus Christi, TX 78473
Tel: 361-883-1940
Fax: 361-883-3820
Total Assets Total Debts
------------ -----------
Texas Docks & Rail, Ltd. $38,097,085 $20,435,639
C C Energy & Carbon, Ltd. $38,000,000 $38,400,000
Texas Docks & Rail, Ltd.'s 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
City of Corpus Christi $19,049
P.O. Box 9257
San Antonio, TX 78469
Port of Corpus Christi Authority $19,049
P.O. Box 1541
San Antonio, TX 78403
Fedelity National Insurance Co. $1,752
P.O. Box 650346
Dallas, TX 75265
H&S Constructors, Inc. $1,580
Dawson Recycling & Disposal, Inc. $336
CT Corporation $290
Unifirst $178
CPL Rental Energy $124
Texas Commission on Environmental $100
Quality
TV AZTECA: Fitch Withdraws 'B+' Rating on $300 Mil. Senior Notes
----------------------------------------------------------------
The recent U.S. Securities and Exchange Commission filing of civil
fraud charges against TV Azteca S.A. de C.V. and some of its
officers will likely result in litigation and the continuation of
legal risks for TV Azteca over the near future, according to Fitch
Ratings.
Fitch has incorporated a measure of litigation risk into the
ratings of TV Azteca since early 2004 after the SEC launched an
investigation into several related party transactions between
Mexican wireless provider Unefon, a subsidiary 46.5% owned and
controlled by TV Azteca until its spin-off last year, and
investment company Codisco, co-owned by Ricardo Salinas Pliego,
chairman of TV Azteca, and Moises Saba, chairman of Unefon.
Litigation risk also includes several pending shareholder
lawsuits.
Independent of the SEC announcement and following the prepayment
of all of TV Azteca's international debt securities on Dec. 23,
2004, Fitch has affirmed and withdrawn the 'B+' international
scale foreign and local currency senior unsecured ratings of TV
Azteca as well as the 'B+' rating of TV Azteca's $300 million
10.5% senior notes due 2007. The prepayment was funded with
proceeds from a $125 million bank loan and a $175 million issuance
of peso-denominated certificados bursatiles. Fitch rates the
structured certificados bursatiles issuance 'AA' on the Mexican
national rating scale and will continue to monitor this security.
TV Azteca is the second-largest broadcasting company in Mexico.
The company operates two national television channels, Azteca 13
and Azteca 7, through more than 300 owned and operated stations
across the country. TV Azteca is controlled by holding company
Azteca Holdings, which is not rated by Fitch.
UAL CORPORATION: Flight Attendants Reach Tentative Agreement
------------------------------------------------------------
The Association of Flight Attendants-CWA disclosed that union has
reached a tentative agreement with United Airlines. United
management had sought additional concessions as the airline
continues to reorganize in bankruptcy. The agreement for contract
changes is now subject to approval by the flight attendants'
Master Executive Council and ratification by the union's
membership.
"Under the onerous realities of the bankruptcy process, flight
attendants are faced with difficult decisions about our future,"
said Greg Davidowitch, President of the AFA's United Master
Executive Council. "We have fought management every step of the
way to ensure that this agreement would not provide a penny more
from flight attendants than is legally necessary. We sought to
ensure that any contractual change would be shaped in a way that
avoids destruction of our career."
This newest agreement for concessions does not include changes in
the area of pensions, and AFA continues to forcefully oppose the
elimination of the flight attendants' pension plan. Additional
details of the agreement will not be announced until after the
union's leadership meets to review and consider approval of the
contractual changes.
"While a consensual agreement avoids the destructive potential for
court rejection of the flight attendant contract, no one should
minimize the decision our members face in considering additional
sacrifices," Mr. Davidowitch stated.
The AFA United Master Executive Council will meet in Chicago for a
special closed session today, January 11, 2005, to discuss the
agreement.
UAL Issues Statement
Following the tentative agreements with its flight attendants, UAL
said: "We are pleased to have reached a tentative agreement with
the Association of Flight Attendants on the permanent labor cost
savings we need to successfully complete our restructuring, while
leaving pension issues to be resolved. Over the next 90 days, we
will work with the AFA to attempt to resolve pension issues. This
tentative agreement will now go the AFA's Master Executive Council
for review and approval and then go out to the AFA members for a
ratification vote. At this time, United is deferring to the AFA
to explain the terms of this tentative agreement to its members.
Because of the tentative agreements with the AFA and AMFA --
Aircraft Mechanics Fraternal Association -- we will not be moving
forward with an 1113(c) trial at this time."
More than 46,000 flight attendants, including 21,000 at United,
join together to form AFA, the world's largest flight attendant
union. AFA is part of the 700,000 member strong Communications
Workers of America, AFL-CIO. Visit us at http://www.unitedafa.org/
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: Judge Wedoff Won't Approve Letter Agreement with ALPA
---------------------------------------------------------------
As reported in the Troubled Company Reporter on Jan. 04, 2005, UAL
Corporation and its debtor-affiliates ask the Court for
authorization to enter into a letter agreement with the pilots
represented by the Air Line Pilots Association.
Under the Letter Agreement, pilot base pay will be reduced by
14.7%, effective January 1, 2005. Pilot wage rates will not
increase until 2006 as per the previous pilot contract. Hourly
pay will be increased by:
1.5% on May 1, 2006;
1.5% on May 1, 2007;
1.0% on January 1, 2008;
1.5% on May 1, 2008; and
1.5% on May 1, 2009.
The Debtors will no longer provide the pilots with incentive pay
for late night and international flights. Retiree life insurance
will be eliminated for pilots who retire after January 1, 2005.
The ALPA will not object to the Debtors' efforts to terminate the
United Airlines Pilot Defined Benefit Pension Plan. The ALPA
will waive any claim that the termination violates its collective
bargaining agreement. If the Pilot's Plan is terminated, the
Debtors will make additional monthly contributions to the United
Airlines Pilot Directed Account Plan of 6% of pilot compensation.
Objections
(1) The Association of Flight Attendants
The Association of Flight Attendants-CWA, AFL-CIO, wants the
Court to deny the Debtors' request for approval of the Letter
Agreement with the Air Line Pilots Association. The Debtors
propose to enforce certain terms of employment on the AFA or face
the unraveling of the Letter Agreement, plus the imposition of
penalties. As a result, the Debtors will surely bargain with a
take-it-or-leave-it strategy. The AFA will be forced to agree to
termination of its defined benefit plan or risk complete
rejection of its collective bargaining agreement by the Court.
The Letter Agreement prevents the Debtors from engaging in honest
bargaining with the AFA or any other employee group. The Debtors
cannot bargain meaningfully and in good faith over retention of
the Flight Attendants' pension plan if they are required to
terminate all defined benefit pension plans. Thus, the Letter
Agreement was not negotiated with the AFA, but it affects its
members' wages, rules and working conditions.
The Letter Agreement violates the mandate under Section 1113 of
the Bankruptcy Code that the Debtors bargain in good faith,
Robert S. Clayman, Esq., at Guerrieri, Edmond & Clayman, in
Washington, D.C., argues. Good faith is absent in negotiations
where one party is already committed to an outcome.
(2) The United Retired Pilots Benefit Protection Association
Throughout these proceedings, the ALPA has stated that it will
not represent the Debtors' retired pilots. As a result, the
United Retired Pilots Benefit Protection Association was not
represented in the negotiations that produced the Letter
Agreement. It is inequitable for the Debtors to reduce the
URPBPA's members collectively bargained, vested pension rights
without allowing them to sit at the negotiating table. The
Debtors believe that they can unilaterally terminate the vested
pension rights of the URPBPA's members without consulting an
authorized representative. This is a violation of Section 1113's
requirements, Jack J. Carriglio, Esq., at Meckler, Bulger &
Tilson, in Chicago, Illinois, states.
The Bankruptcy Code does not contain a provision that permits a
debtor and a union that refuses to represent its retired
employees with a mechanism for stripping unrepresented retirees
of their vested, collectively bargained pension rights. In
contrary, Sections 1113 and 1114 mandate that active and retired
employees should be afforded procedural and substantive
protections before their collectively bargained rights are taken
away. Indeed, other employee groups are being given replacement
plans, convertible notes, profit sharing and other benefits to
ameliorate the hardships caused by the Letter Agreement, while
the retired pilots have been offered nothing. These funds could
be used to create a package for the retired pilots.
(3) The Pension Benefit Guaranty Corporation
While the Debtors proclaim that they can no longer afford the
pilot's pensions, they ask the Court to approve a new set of
promises at the expense of the federal government, other
employees and creditors, Jeffrey B. Cohen, Pension Benefit
Guaranty Corporation Deputy General Counsel, in Washington, D.C.,
tells Judge Wedoff.
The Letter Agreement does far more than provide labor cost
savings, as it sidesteps the Employee Retirement Income Security
Act's safeguards against abuse of termination. The Debtors
presented the Letter Agreement to the Court under Section 363 as
a typical settlement of a collective bargaining agreement.
Nothing could be less typical, as the Letter Agreement upsets a
carefully crafted statutory scheme while negotiating away the
rights of third parties, like the PBGC and the Debtors' other
unions. The Court should see the Letter Agreement for what it is
-- an attempt to exploit the termination insurance program.
Mr. Cohen reminds parties that 29 U.S.C. Section 1341 limits a
debtor's ability to terminate a pension plan by imposing strict
tests before termination is authorized. The termination
requirements must be satisfied on a plan-by-plan basis. Mr.
Cohen asserts that the Debtors bypass the procedures for each of
the pension plans by bundling them into a package deal. In other
words, the Debtors seek distress terminations of all the pension
plans before filing a request to terminate any of the pension
plans.
The Letter Agreement mandates that any plan of reorganization
supported by the Debtors must issue $550,000,000 in Convertible
Notes to a trust established by the ALPA for eventual
distribution to pilots. This mechanism diverts $550,000,000 to
the pilots that should go to the PBGC for the unfunded pension
liabilities that the Debtors will owe to the PBGC upon the
termination of the pilots' plan. Plan participants, like the
pilots, have no direct claims against their employer for
unguaranteed benefits. When a pension plan is terminated, only
the PBGC owns claims for unfunded benefit liabilities against the
employer and its controlled group. Issuance of consideration to
plan participants, with the intention of mitigating damage to a
pension fund, is an improper diversion of value away from the
PBGC, which is rightfully entitled to the compensation.
(4) The International Association of Machinists
Sharon L. Levine, Esq., at Lowenstein Sandler, in Roseland, New
Jersey, on behalf of the International Association of Machinists
and Aerospace Workers, says that while the "IAM applauds ALPA and
the Debtors' quest to reach a consensual resolution of the
Section 1113(c) issues, it objects in the strongest terms" to the
Letter Agreement's status as a sub rosa plan. The Bankruptcy
Code provides numerous procedural protections to creditors in the
development and approval of a plan of reorganization, including
the right to receive a detailed disclosure statement and the
right to vote on the proposed plan. The Letter Agreement ignores
these procedural requirements for plan confirmation. It
improperly determines sub rosa material terms of any future plan
of reorganization, including a requirement that the Debtors issue
$550,000,000 in Convertible Notes to the ALPA upon exit.
Additionally, the Letter Agreement increases the pilots' share of
any equity distribution to unsecured creditors by $300,000,000.
Potential lenders or investors may balk at the issuance of
$550,000,000 in Convertible Notes to one creditor constituency.
This represents over a quarter of the $2,000,000,000 in exit
financing that the Debtors claim they need to emerge from
bankruptcy. The Letter Agreement deprives the Debtors of the
ability to negotiate this issue at plan confirmation, which is
the appropriate time to debate exit capital structure. The
Debtors' restructuring may be hamstrung if a potential lender or
investor wants this distribution reduced or eliminated before
providing exit financing.
The Letter Agreement precludes any future reorganization plan
that funds any of the Debtors' defined benefit pension plans or a
capital structure for the Reorganized Debtors with which the ALPA
disagrees. Failure to abide by these terms will result in a
financial penalty to the ALPA in the form of an administrative
claim for double the amount of cash savings realized by the
Debtors. The cumulative effect of these provisions is to settle
material terms of the Debtors' reorganization plan now, before
any plan has been formally proposed or a disclosure statement
filed. This is sufficient reason to deny the Debtors' motion.
(5) The Aircraft Trustees
In the guise of an ordinary transaction, The Bank of New York and
Wells Fargo Bank, as Trustees for various aircraft financing
transactions, note that the Debtors will provide the ALPA with a
potential financial windfall. Specifically, the Agreement would
give the ALPA an allowed administrative claim, under Section
503(b), equal to twice the cash savings realized by the Debtors
from the Effective Date through the earlier of termination of the
Letter Agreement or exit from Chapter 11. This administrative
claim would be extinguished upon the Effective Date of a plan
that complies with the Letter Agreement in all material respects.
This provision is designed to provide the ALPA with an
administrative claim if the Debtors are liquidated.
James E. Spiotto, Esq., at Chapman and Cutler, in Chicago,
Illinois, asserts that an administrative claim for double the
cash savings, without regard for the claims of other creditors,
is not permitted under Section 503(b). The wage and benefit
modifications may help alleviate the financial burdens that the
Debtors are facing. However, the proposed claim is not valid
because it bears no relationship to any benefits to the estate.
The modifications to the ALPA collective bargaining agreement are
not actual and necessary costs of the estates, and therefore, are
not administrative expenses. If the ALPA is entitled to an
administrative claim, it should be in the amount that is realized
as a benefit to the estate.
(6) The Official Committee of Unsecured Creditors
Fruman Jacobson, Esq., at Sonnenschein, Nath & Rosenthal, in
Chicago, Illinois, notes that the ALPA may -- at its sole
discretion -- terminate the Letter Agreement if:
a) the Court does not approve the Letter Agreement by
January 13, 2005;
b) there is no final order prohibiting the Debtors from
terminating the pilots' "A" plan;
c) the Debtors fail to terminate the defined benefit plans of
any other union;
d) the Debtors fail to implement at least $500,000,000 in
annual cash savings with unions and other employees by
January 31, 2005;
e) the Court impairs or terminates the Debtors' exclusive right
to file a plan;
f) there are provisions in a plan that are not consistent with
the Letter Agreement or the ALPA collective bargaining
agreement; and
g) a viable plan proposes or confirms a capital structure or
ownership structure that is not acceptable to the ALPA.
These provisions, Mr. Jacobson says, essentially grant the ALPA a
veto power over the future course of these proceedings and any
plan of reorganization. This is an extraordinary power for any
particular group to hold over the plan process. The proposed
structure may chill creative or alternative approaches for
facilitating the Debtors' exit from bankruptcy.
The Debtors should be open to exploring the most effective means
to maximize value for creditors, whatever form the plan might
take. Instead, the Debtors have opted for an arrangement that
scares off resourceful, innovative or unexplored financial
possibilities. The Court should deny the motion.
* * *
At a hearing Friday morning in Chicago, Judge Wedoff denied the
Debtors' request to enter into a letter agreement with the Air
Line Pilots Association.
Judge Wedoff said the Letter Agreement would "unduly tilt the
bankruptcy process," according to a report from Dave Carpenter at
the Associated Press.
Kevin Orland at Bloomberg News reports Judge Wedoff made his
decision with extreme reluctance but held that the Letter
Agreement improperly gave the ALPA veto power over the Debtors'
negotiations with the other labor unions.
ALPA Disappointed
The bankruptcy court rejected on Jan. 7, an historic pilot
agreement that would permit the Company to emerge from Chapter
11. "We are disappointed with the judge's ruling and even more
disappointed with the objections of the creditors and others who
prompted the ruling," the United Master Executive Council of the
Air Line Pilots Association said in a statement.
"The court's decision affirms the substance of the pilot agreement
over the objections of other creditors but states that certain
legal aspects of the agreement may be inconsistent with the
requirements of the bankruptcy code. We will promptly review the
judge's decision with the United Master Executive Council, the
governing body of United pilots union.
"While we intend to meet with the Company over the next few
days to explore the consequences of the judge's decision, there
can be no assurance that the parties will reach another
settlement. In addition, any further agreements with United on
this matter will be subject to review and decision by the full
United Master Executive Council and, in all likelihood, to an
additional membership ratification vote.
"One thing will remain certain and steadfast as we consider
the consequences of [Friday]'s decision. The pilots of United
Airlines are committed to the success of our company, but we will
not participate in any restructuring of the airline in which our
pensions or our contract are unfairly sacrificed for the benefit
of any other group in this case."
Flight Attendants Pleased
The bankruptcy court rejection of the United Airlines contract
agreement with its pilots demonstrates that UAL management needs
to take a different approach in its efforts to restore the
troubled airline to solvency, officials of the Association of
Flight Attendants-CWA said.
"This decision indicates that United Airlines management is wrong
in trying to pit one employee group against another," said Greg
Davidowitch, president of the AFA's United Master Executive
Council. "We're obviously pleased that the court has declared
that he would not accept any agreement that would be tied to the
elimination of any other union's pensions."
Mr. Davidowitch pointed out that AFA already had a proposal on
the table that would yield the savings that UAL is seeking. AFA
has forcefully opposed the elimination of the flight attendants'
pension. "The court has clearly signaled that the airline should
work with each employee group separately, giving each individual
union the leeway to construct contracts tailored to its own
members' needs," he said. "We hope this ruling convinces United
that it should take a new look at our contract proposal."
Patricia Friend, AFA's international president, also urged United
management to negotiate individually with its unions, "instead of
resorting to gamesmanship in the bankruptcy courts."
"Flight attendants have demonstrated an enormous amount of good
faith in working to help struggling airlines like United and
US Airways," she said. "It's wrong for the company to try to
impose its will on employees through an abusive use of the
courts. This case shouldn't even be in court; it should be dealt
with in good faith at the negotiating table. We've shown at US
Airways we can get it done in a consensual manner."
More than 46,000 flight attendants, including 21,000 at United,
join together to form AFA, the world's largest flight attendant
union. AFA -- http://www.unitedafa.org/-- is part of the 700,000
member strong Communications Workers of America, AFL-CIO.
Headquartered in Chicago, Illinois, UAL Corporation --
http://www.united.com/-- through United Air Lines, Inc., is the
holding company for United Airlines -- the world's second largest
air carrier. The Company filed for chapter 11 protection on
December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M.
Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq.,
and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $24,190,000,000
in assets and $22,787,000,000 in debts. (United Airlines
Bankruptcy News, Issue No.72; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
UAL CORP: Asks Court to Clarify Terms of Deloitte's Engagement
--------------------------------------------------------------
UAL Corporation and its debtor-affiliates ask the U.S. Bankruptcy
Court for the Northern District of Illinois to clarify the Order
that approved their employment of Deloitte & Touche as auditors,
accountants and tax services providers.
On the Petition Date, Deloitte was retained to provide various
tax services, including certain property tax services, tax
compliance services, bankruptcy tax computation, analysis
services, and expatriate tax services. Subsequently, Deloitte
reorganized its business units, including the tax services unit.
The reorganization aligned Deloitte's organizational structure
more closely with its businesses. Deloitte will continue to
provide the Debtors with accounting and auditing services.
However, as of August 22, 2004, Deloitte Tax LLP began providing
tax services to its clients, including the Debtors. Deloitte Tax
is an affiliate of Deloitte.
The Debtors want to modify the scope of services provided by
Deloitte & Touche LLP to eliminate the Tax Services, which, since
August 22, 2004, have been provided by Deloitte Tax. Deloitte &
Touche LLP is no longer providing the Tax Services, so it makes
no sense that it should continue to be retained for these
services. Moreover, it is not necessary to separately retain
Deloitte Tax to provide the Tax Services, since they do not
involve the Chapter 11 cases. Accordingly, Deloitte Tax is not a
"professional" under Section 327 of the Bankruptcy Code.
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.71; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
WARNER CHILCOTT: Moody's Assigns B2 Senior Implied Rating
---------------------------------------------------------
Moody's Investors Service assigned a first-time SGL-3 speculative-
grade liquidity rating to Warner Chilcott Company, Inc., on
January 4, 2005. This press release elaborates on the speculative
grade liquidity rating rationale. Warner Chilcott's senior
implied rating is B2, with a stable rating outlook.
Warner Chilcott's internal sources of liquidity comprise cash and
free cash flow, both of which Moody's believes are somewhat
limited. Following the leveraged buyout transaction, Moody's
expects the company will have very modest (e.g. $20-$40 million)
of cash on hand, which is low compared to other specialty
pharmaceutical companies. Moody's anticipates Warner Chilcott
will generate free cash flow (after capital expenditures and
contingency payments to third parties) in the range of $75-$100
million over the twelve months ending December 31, 2005. This
places the company's ratio of free cash flow to adjusted debt in
the 3-5% range over the next four quarters, which Moody's believes
is slim compared to other specialty pharmaceutical companies.
Warner Chilcott maintains a $150 million revolving credit
facility, which Moody's expects will remain undrawn following the
close of the transaction. Because of the modest free cash flow
and cash on hand, Moody's believes the revolver size at $150
million appears modest. The primary financial covenants are
minimum interest coverage and maximum leverage. At close, Moody's
expects that the company will have a comfortable cushion under
these covenants. In the future, however, it is possible the
company may not be able to access the full $150 million without
tripping its covenants.
Warner Chilcott's assets are essentially encumbered, as most
assets serve as security in the new transaction, thereby leaving
few monetizeable assets to provide alternate sources of liquidity.
The Company is a marketer and developer of branded pharmaceutical
products focused on the U.S. women's healthcare and dermatology
markets. The company reported $490 million in revenues in for the
fiscal year ended September 30, 2004.
WESTPOINT STEVENS: Closes Facilities & Reduces Workforce
--------------------------------------------------------
WestPoint Stevens (OTC Bulletin Board: WSPTQ) said it will realign
and consolidate its Bed Products manufacturing capacity in 2005
with the closing of its Alamance Plant and Distribution Center,
Burlington, N.C., Clemson (S.C.) Fabricating and Greige plants and
Distribution Center and Middletown (Ind.) Plant, as well as a
reduction of more than 50 percent of its Clemson Finishing Plant
workforce. The Company's Bath Products manufacturing capacity
will also be consolidated with the closing of its Drakes Branch
(Va.) Plant.
These closings and workforce reduction are directly related to the
removal of textile quotas from low-wage countries. While some of
the production at these locations will be shifted to other Company
facilities, a significant amount will now be sourced from other
countries.
"This is another move in our ongoing strategy of adjusting as
necessary to meet the challenges of doing business globally," said
WestPoint Stevens President and CEO M.L. (Chip) Fontenot. "We
must be flexible in maintaining the most profitable balance
between our domestic manufacturing and goods sourced from
overseas. This becomes more critical with quotas removed.
"This restructuring will strengthen the Company, with better-
aligned capacity and greater freedom to market in a cost-efficient
way those products most in-demand. Our goal, of course, is to
ensure the Company's growth and profitability in a global
economy," he emphasized.
About 2,465 associates will be affected:
-- Alamance Plant and Distribution Center have some 560;
-- Clemson Fabricating Plant and Distribution Center,
approximately 760;
-- Clemson Greige Plant, about 340;
-- Drakes Branch Plant, about 450; and
-- Middletown Plant, approximately 110.
At Clemson Finishing Plant, some 245 jobs will be eliminated.
Preparations for shutdowns at the individual facilities will get
under way this month for an anticipated closing in late March or
early April. Likewise, the workforce reduction at Clemson
Finishing is expected to be completed by this time.
"We deeply appreciate the associates at these locations - indeed
all our associates," said Mr. Fontenot. "Their skills and
perseverance over the years have made WestPoint Stevens a leader
in our industry, and we sincerely regret that this restructuring
is made necessary by today's global marketplace, where so many of
our products can be produced much less expensively in countries
other than the U.S."
As in past closings and workforce reductions, WestPoint Stevens
will apply by individual facility for assistance for laid-off
associates from the Trade Act of 1974. In areas where affected
plants are located near other WestPoint Stevens facilities, the
Company will attempt to place laid-off associates in jobs at the
other plants.
Headquartered in West Point, Georgia, WestPoint Stevens, Inc.,
-- http://www.westpointstevens.com/-- is the #1 US maker of bed
linens and bath towels and also makes comforters, blankets,
pillows, table covers, and window trimmings. It makes the Martex,
Utica, Stevens, Lady Pepperell, Grand Patrician, and Vellux
brands, as well as the Martha Stewart bed and bath lines; other
licensed brands include Ralph Lauren, Disney, and Joe Boxer.
Department stores, mass retailers, and bed and bath stores are its
main customers. (Federated, J.C. Penney, Kmart, Sears, and Target
account for more than half of sales.) It also has nearly 60
outlet stores. Chairman and CEO Holcombe Green controls 8% of
WestPoint Stevens. The Company filed for chapter 11 protection on
June 1, 2003 (Bankr. S.D.N.Y. Case No. 03-13532). John J.
Rapisardi, Esq., at Weil, Gotshal & Manges, LLP, represents the
Debtors in their restructuring efforts.
At Sept. 30, 2004, Westpoint Stevens Inc.'s balance sheet showed a
$996,601,000 stockholders' deficit, compared to a $949,135,000
deficit at Dec. 31, 2003.
YUKOS OIL: Gets Interim Okay to Maintain Existing Bank Accounts
---------------------------------------------------------------
As previously reported, Yukos asks the United States Bankruptcy
Court for the Southern District of Texas for authority to:
(a) designate, maintain and continue to use any or all of the
existing Bank Accounts in the names and with the account
numbers existing immediately prior to its Chapter 11 case;
provided, however, that it reserves the right to close
some or all of its prepetition Bank Accounts and open new
debtor-in-possession accounts;
(b) deposit funds in and withdraw funds from any accounts by
all usual means including, but not limited to, checks,
wire transfers, automated clearing house transfers,
electronic funds transfers, and other debits;
(c) treat its prepetition Bank Accounts and any accounts
opened after the Petition Date for all purposes as debtor-
in-possession accounts.
Yukos also seeks permission to continue utilizing its existing
cash management system including, without limitation, waiving any
requirement that it establish separate accounts for cash
collateral or tax payments. Yukos intends to pay costs or
expenses associated with the maintenance of the cash management
system.
* * *
The Court granted the Debtor's request on an interim basis.
Headquartered in Houston, Texas, Yukos Oil Company --
http://www.yukos.com/-- is an open joint stock company existing
under the laws of the Russian Federation. Yukos is involved in
the energy industry substantially through its ownership of its
various subsidiaries, which own or are otherwise entitled to enjoy
certain rights to oil and gas production, refining and marketing
assets. The Company filed for chapter 11 protection on Dec. 14,
2004 (Bankr. S.D. Tex. Case No. 04-47742). Zack A. Clement, Esq.,
C. Mark Baker, Esq., Evelyn H. Biery, Esq., John A. Barrett, Esq.,
Johnathan C. Bolton, Esq., R. Andrew Black, Esq., Fulbright &
Jaworski, LLP, represent the Debtor in its restructuring efforts.
When the Debtor filed for protection from its creditors, it listed
$12,276,000,000 in total assets and $30,790,000,000 in total
debts. (Yukos Bankruptcy News, Issue No. 6; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
* Alvarez & Marsal Adds Eight Tax Advisory Services Directors
-------------------------------------------------------------
Alvarez & Marsal, a global professional services firm, said it has
expanded its tax advisory business, known as Alvarez & Marsal Tax
Advisory Services, LLC, with the addition of eight veteran tax
professionals who have joined as Managing Directors. A&M also
said it has opened a new office in Washington, D.C., bringing the
firm's global presence to 17 locations.
Thomas Aiello, a former tax partner with Arthur Andersen, and
James Eberle, a former tax partner with KPMG and Arthur Andersen,
joined the firm as Managing Directors in the Washington, D.C. tax
practice. The Houston tax practice added two new Managing
Directors: Craig Beaty, a former tax partner with Ernst & Young,
and Lynn Loden, formerly with Deloitte and Arthur Andersen. In
addition, four Managing Directors have joined the West region's
tax practice. Brian Pedersen, formerly a tax partner with KPMG
and Arthur Andersen, joined the firm in Seattle. Martin O'Malley,
a former tax partner with PricewaterhouseCoopers and Arthur
Andersen, joined the firm in Silicon Valley. Anthony Fuller and
Melody Summers, both of whom previously worked in the tax
practices of Arthur Andersen and Deloitte, also joined the firm in
San Francisco.
"The need for management teams and boards of directors to maintain
independence from their auditors has led to increased scrutiny of
tax services provided by an audit firm. This need for independent
tax advisors has begun to spur an exodus of senior tax
professionals from Big Four accounting firms," said Bob Lowe, CEO
of Alvarez & Marsal Tax Advisory Services, LLC. "Since launching
Alvarez & Marsal Tax Advisory Services earlier this year, we
continue to attract the industry's leading tax professionals who
are excited by the opportunity to work with a multidisciplinary
firm that does not and will not perform audits. Since we will not
offer audit services, our Managing Directors will not be faced
with the types of independence conflicts that hinder a Big Four
firm tax partner's ability to serve clients. We are honored that
these eight outstanding individuals have chosen to join our
growing team."
Mr. Aiello spent more than 30 years with Arthur Andersen where he
held several leadership positions including Managing Partner for
the National Federal Business Tax Practice and Regional Managing
Director of Tax for the Southeast Region. He has extensive
experience advising real estate companies and closely-held
businesses in all phases of development and assisting clients in
growing first-class construction or real estate investment
businesses. Immediately prior to joining A&M, Mr. Aiello founded
Aiello & Associates, an independent tax consulting firm focused on
the real estate industry. A graduate of Stetson University, he
earned a J.D. from Georgetown University Law Center.
With over 25 years of tax advisory experience, including 12 years
focused on research and experimentation credit consulting, Mr.
Eberle has conducted large scale research and experimentation
studies ranging from credit feasibility to audit defense and
litigation support in a number of industries, including aerospace,
automotive, defense, internet, telephony, and pharmaceutical. In
addition, he has led long-term contract accounting method reviews
and tax litigation assistance engagements. Prior to joining A&M,
Mr. Eberle led the Research Tax Credit Services practices of KPMG
and Arthur Andersen. Mr. Eberle has worked with various taxpayer
coalitions in crafting regulatory comments for consideration by
the IRS and Treasury Department. He received a bachelor's degree
in Accounting from the University of Missouri.
Mr. Beaty brings more than 20 years of experience advising clients
in a range of industries on sales and use tax matters, including
reverse audits, audit management and controversy, event-based tax
planning, tax process improvement, and accounts payable recovery.
Prior to joining A&M, Mr. Beaty was a partner with Ernst & Young
where he led the Sales and Use Tax consulting practice for the
Gulf Coast region. Earlier in his career he served as an auditor
and supervisor with the Texas Comptroller of Public Accounts. Mr.
Beaty earned a bachelor's degree in Accounting from Stephen F.
Austin State University.
With over 26 years of experience, Mr. Loden has served clients in
several industries, including energy, utilities, oil field
services, real estate, commercial services, transportation, and
financial services. He has advised public and private buyers and
sellers on tax aspects of mergers and acquisitions, IPOs, spin-
offs, joint ventures and bankruptcy. He has also advised clients
on domestic and cross-border tax issues of leasing and similar
structured finance transactions involving diverse asset types.
Prior to joining A&M, Mr. Loden was with Deloitte where he served
as a member of Deloitte's national SFAS No. 109 Competency Team.
Previously, Mr. Loden was a tax partner with Arthur Andersen where
he was a member of Andersen's team focused on corporate taxation
and the firm's national technical reviewer of leasing
transactions. Mr. Loden received a B.B.A. in Accountancy from the
University of Mississippi. He is a frequent speaker on tax issues
at various business forums.
Mr. O'Malley brings more than 25 years of tax advisory experience
primarily serving technology companies in Silicon Valley. He
advises clients on corporate income tax matters, including capital
formation, cross-border structuring, acquisitions, divestiture,
joint ventures, compensation, controversies and compliance. Prior
to joining A&M, Mr. O'Malley was a tax partner with
Pricewaterhouse Coopers and Arthur Andersen. He led Andersen's
Silicon Valley Tax Practice for seven years. Mr. O'Malley earned
a Bachelor of Science Degree in Business Administration from
Georgetown University.
Mr. Pedersen has 20 years of experience advising clients on multi-
state income tax, sales and use tax, and property tax matters. He
has served clients throughout the Pacific Northwest and the United
States in the telecommunications, high-tech and retail industries.
Prior to joining A&M, Mr. Pedersen was a tax partner with KPMG and
Arthur Andersen in Seattle. He was the National Partner in Charge
of Income and Franchise Tax for KPMG. He also led Andersen's
State and Local Tax practice for the Pacific Northwest Region.
Mr. Pedersen graduated from the University of Montana with a
Master's Degree in Business Administration and a Bachelor of Arts
in Political Science. He is a frequent speaker on multi-state tax
issues.
Mr. Fuller advises clients in a diverse array of industries on
state and local tax matters with an emphasis on income taxes for
multi-state corporations and pass-through entity structures. His
experience includes representing clients in controversies before
various state taxing authorities, strategic tax planning,
restructuring, mergers and acquisitions consulting, due diligence,
and tax compliance. Prior to joining A&M, Mr. Fuller spent more
than 11 years with Deloitte and Arthur Andersen. He earned a J.D.
from the University of California, Davis and a bachelor's degree
from the University of Colorado, Boulder.
Ms. Summers advises clients on federal tax matters that impact
business strategies. She has advised a broad client base,
including clients in the real estate, financial services,
agricultural and manufacturing industries. Prior to joining A&M,
Ms. Summers spent more than 12 years with Deloitte and Arthur
Andersen. She obtained a J.D. from Santa Clara University School
of Law and a bachelor's degree in Managerial and Agricultural
Economics from the University of California, Davis.
A&M's Tax Advisory Services include: consulting on federal,
international, and state and local tax matters; advising on tax
aspects of mergers, acquisitions and dispositions; and providing
tax advocacy services.
Founded in 1983, Alvarez & Marsal is a global professional
services firm that helps businesses and organizations in the
corporate and public sectors navigate complex business and
operational challenges. With professionals based in locations
across the U.S., Europe, Asia, and Latin America, Alvarez & Marsal
delivers a proven blend of leadership, problem solving and value
creation. Drawing on its strong operational heritage and hands-on
approach, Alvarez & Marsal works closely with organizations and
their stakeholders to, implement change and favorably influence
results. The firm's range of service offerings includes Turnaround
Management Consulting, Crisis and Interim Management, Creditor
Advisory, Financial Advisory, Dispute Analysis and Forensics, Real
Estate Advisory, Business Consulting and Tax Advisory. For more
information about the firm, please visit www.alvarezandmarsal.com
or contact Rebecca Baker, Chief Marketing Officer at 212.759.4433.
* H. Slayton Dabney Joins King & Spalding as New York Partner
-------------------------------------------------------------
King & Spalding LLP, a leading international law firm, said that
H. Slayton "Slate" Dabney, Jr., a commercial bankruptcy authority
with 20 years of experience in the field, has joined the firm's
180-lawyer New York office as partner. Mr. Dabney brings an
extensive background handling major Chapter 11 cases and other
bankruptcy proceedings to the firm's financial restructuring
practice group.
"Slate's experience handling complex bankruptcy matters further
expands our ability to resolve our clients' bankruptcy-related
challenges," said Michael J. O'Brien, managing partner of the
firm's New York office. "We are proud to welcome him to the firm
and look forward to his contributions as we continue to grow our
New York office."
Mr. Dabney joins King & Spalding from McGuireWoods LLP, where he
had practiced since 1974. Since 1985 he has practiced in the area
of commercial bankruptcy and corporate restructuring. He has
served as debtor's counsel, co-counsel and committee counsel in
many large Chapter 11 cases and represents Fortune 500 companies
on a national basis in bankruptcy proceedings involving their
major accounts and contractual relationships. He also frequently
represents clients in the acquisition of assets from companies
that are in financial distress. He earned a B.A. from the
University of Virginia and a J.D. from the University of Virginia
School of Law.
King & Spalding's 30-lawyer financial restructuring group, based
in New York and Atlanta, is one of the nation's preeminent
financial restructuring practices and is frequently ranked among
the most active in the nation by industry publications. The
firm's lawyers are regularly retained in large bankruptcy matters
and workouts to represent debtors, trustees, creditors'
committees, institutional lenders, other critical creditors and
parties-in- interest, and potential acquirers of businesses and
large assets.
"King & Spalding's reputation for really learning and
understanding its clients' needs and business objectives is second
to none, and its financial restructuring group is one of the top
in the nation," said Mr. Dabney. "I am excited to be joining such
a well respected firm and look forward to contributing to the
growth of the financial restructuring practice and the New York
office."
King & Spalding's New York office employs 180 attorneys practicing
in a variety of areas including banking, business litigation,
corporate finance, energy, financial restructuring, intellectual
property, Islamic finance, mergers and acquisitions, private
equity, tax and real estate, among others.
About King & Spalding LLP
King & Spalding LLP is an international law firm with more than
800 lawyers in Atlanta, Houston, London, New York and Washington,
D.C. The firm represents more than half of the Fortune 100, and in
a Corporate Counsel survey in October 2004 was ranked one of the
top ten firms representing Fortune 250 companies overall. For
additional information, visit http://www.kslaw.com/
* Large Companies with Insolvent Balance Sheets
-----------------------------------------------
Total
Shareholders Total Working
Equity Assets Capital
Company Ticker ($MM) ($MM) ($MM)
------- ------ ------------ ------- --------
Airgate PCS Inc. CSA (80) 267 24
Akamai Tech. AKAM (144) 189 63
Alaska Comm. Syst. ALSK (29) 642 73
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
Arbinet-Thexchan. ARBX (1) 70 11
Atherogenics Inc. AGIX (19) 93 77
Bally Total Fitness BFT (172) 1,461 (290)
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)
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-A DISH (1,711) 6,170 (503)
Empire Resorts NYNY (13) 61 7
Foster Wheeler FWHLF (441) 2,268 (212)
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 IMX (49) 222 9
Immersion Corp. IMMR (5) 26 9
Indevus Pharm. IDEV (63) 174 131
Int'l Wire Group ITWG (80) 410 97
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
Majesco Holdings MJES (41) 26 9
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 (4,132) 7,567 1,118
Per-se Tech. Inc. PSTI (25) 169 31
Phosphate Res. PLP (484) 280 6
Pinnacle Airline PNCL (18) 147 26
Primedia Inc. PRM (1,163) 1,577 (203)
Qwest Communication Q (2,477) 24,926 (509)
Riviera Holdings RIV (31) 224 1
SBA Comm. Corp. SBAC (27) 915 11
Sepracor Inc. SEPR (380) 974 600
St. John Knits Inc. SJKI (57) 206 77
Syntroleum Corp. SYNM (8) 48 11
Triton PCS Holding A TPC (254) 1,443 62
US Unwired Inc. UNWR (234) 709 (280)
U-Store-It Trust YSI (34) 536 N.A.
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, Dylan
Carlo Gallegos, Jazel P. Laureno, Cherry Soriano-Baaclo, Marjorie
Sabijon, Terence Patrick F. Casquejo and Peter A. Chapman,
Editors.
Copyright 2005. All rights reserved. ISSN: 1520-9474.
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