/raid1/www/Hosts/bankrupt/TCR_Public/050218.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, February 18, 2005, Vol. 9, No. 41
Headlines
ACS HOLDINGS: Hires Mark Width as President
AIRCRAFT FINANCE: S&P's Rating on Class C Notes Tumbles to D
ALLIED WASTE: Cash Flow Guidance Prompts Moody's to Review Ratings
AMERICAN AUTOMOTIVE: Case Summary & 12 Largest Unsecured Creditors
AMERICAN COLOR: Declining Performance Prompts S&P to Junk Ratings
ATA AIRLINES: Inks First Amendment to Credit Pact with Southwest
AT&T CORP: S&P Places BB+ Ratings on CreditWatch Positive
ATHEROGENICS INC: Equity Deficit Widens to $35.9 Mil. at Dec. 31
BAKER ENERGY INC: Case Summary & 20 Largest Unsecured Creditors
BEAR STEARNS: Moody's Puts B2 Rating on $37,305,708 Class A Notes
BEAR STEARNS: Moody's Puts Ba2 Rating on $23.738M Class M-7 Certs.
BEARINGPOINT INC: Names R. Roberts as COO & R. Lineberger as EVP
BOMBARDIER RECREATIONAL: Debt Reduction Cues S&P to Review Ratings
CATHOLIC CHURCH: Portland Wants to Compensate Priests' Counsel
CORNING INC: S&P Places BB+ Ratings on CreditWatch Positive
DIGITAL LIGHTWAVE: Names Robert Hussey as Interim President & CEO
EDISON INT'L: S&P Lifts Corporate Credit Rating to BBB from BB+
EXIDE TECH: Stanfield Capital Discloses 7.4% Equity Stake
EYE CARE: Extends Tender Offer for 9-1/8% Sr. Notes to March 1
FLYI INC: Expects to Make Interest Payment on 6% Notes Next Month
GREAT LAKES: Moody's Junks $175 Million Senior Subordinated Notes
GREAT 2000 ENTERPRISES: Case Summary & Largest Unsecured Creditors
GREENVILLE HOUSING: Moody's Cuts Rating on $14.3 Mil. Bonds to B2
HAYES LEMMERZ: Deutsche Bank Discloses 5.95% Equity Stake
HEALTHTRONICS INC: Moody's Puts Ba3 Rating on $175MM Secured Debt
HEALTHTRONICS INC: S&P Rates Proposed $175M Sr. Sec. Debts at BB-
HILITE INT'L: S&P Places BB- Credit Rating on CreditWatch Negative
HOUSING AUTHORITY: Moody's Downgrades Rating on $9.4MM Bonds to B2
HUNTSMAN CORP: IPO Transaction Prompts Moody's to Upgrade Ratings
INTERFACE INC: Hosting Fourth Quarter Webcast on Feb. 24
INTERSTATE BAKERIES: Can Honor Prepetition Employee Obligations
INTERSTATE BAKERIES: Court Approves Use of Ball Fields Until 2006
iSTAR FINANCIAL: Declares $0.50 Dividend on Preferred Shares
KGEN LLC: Moody's Puts B2 Rating on $225MM Sr. Secured Term Loan
LEE COUNTY: Moody's Cuts Rating on $8.1MM Revenue Bonds to B2
LOGOATHLETIC: Has Until Mar. 7 to File Final Reports
MADISON RIVER: S&P Places BB- Rating on $530.6M Secured Facility
MANDALAY RESORT: FTC Clears MGM MIRAGE's Pending Acquisition
MCI INC: Verizon Acquisition Prompts DBRS to Review B+ Rating
MEDITERRANEAN HEATING: Case Summary & Largest Unsecured Creditors
MEDQUEST INC: S&P Places Low-B Ratings on CreditWatch Negative
MERISTAR HOSPITALITY: Fourth Quarter Net Loss Narrows to $18 Mil.
MGM MIRAGE: Receives FTC Clearance of Pending Mandalay Acquisition
MICRO COMPONENT: Dec. 31 Balance Sheet Upside-Down by $2.7 Million
MIRANT: Fitch Withdraws Ratings on Pass-Through Certificates
NOVA CHEMICALS: Declares $0.10 Quarterly Dividend on Common Shares
O-CEDAR HOLDINGS: Taps Seitz Sublett as Accountants
ORION TELECOM: Court Okays Sale of Assets to Cetus for $18 Million
PACIFIC BAY: S&P Upgrades Ratings on Preference Shares to BB+
PEABODY ENERGY: Buys 327 Million Tons of Coal Reserves
POLYONE CORP: Moody's Revises Outlook on Low-B Ratings to Stable
POLYPORE INTL: Moody's Junks $300MM of 10.5% Senior Discount Notes
PRESTIGE BRANDS: IPO Prompts S&P to Lift Credit Rating to B+
RIVIERA HOLDINGS: S&P Puts Low-B Ratings on CreditWatch Developing
SENECA GAMING: Earns $21.1 Million of Net Income in First Quarter
SENECA GAMING: Names John Pasqualoni As Chief Operating Officer
SOUTH CAROLINA JOBS: Moody's Junks $8.9 Million Revenue Bonds
SUNBELT SCENIC: Case Summary & 20 Largest Unsecured Creditors
SUFFIELD CLO: Fitch Downgrades $14.7 Million Combination Notes
TAYLOR METAL WORKS: Case Summary & 41 Largest Unsecured Creditors
TCW LINC: Fitch Holds Junk Ratings on Five Note Classes
TELCORDIA TECHNOLOGIES: Moody's Puts B1 Rating on $100MM Sr. Loan
TRICOM S.A.: Dec. 31 Balance Sheet Upside-Down by $195.3 Million
TRUMP HOTELS: Judge Wizmur Approves Solicitation Procedures
TRUMP HOTELS: Treatment of Claims & Interests in 2nd Amended Plan
ULTIMATE ELECTRONICS: Mark Wattles Replaces David Workman as CEO
ULTIMATE ELECTRONICS: Same Store Sales Tumble 19.4% from Year Ago
UNIFLEX INC: Administrative Claims Bar Date Set for March 30
VEO: Wants to Hire David A. Boone as Bankruptcy Counsel
VEO: U.S. Trustee to Meet Creditors on Mar. 2
VERESTAR INC: Asks Court for Open-Ended Plan Exclusivity Period
WICKES INC: Creditor Wants to Conduct Rule 2004 Examination
WINN-DIXIE: Q Investments Reportedly Holds 1/3 of Bond Debt
WODO LLC: U.S. Trustee Appoints 2-Member Creditors Committee
WORLDCOM INC: Baltimore Gas Wants to Set Aside Claim Transfer
YUKOS OIL: Classification of Claims Under Plan of Reorganization
* BOOK REVIEW: Health Care and Insurance
*********
ACS HOLDINGS: Hires Mark Width as President
-------------------------------------------
ACS Holdings, Inc. (OTCBB:ACSJ), reports that Mark Width has
agreed to take the position as the Company's President effective
Feb. 14, 2005.
Mr. Width has been in the business of technical and management
consulting for the past 28 years. Prior to that, Mr. Width worked
at the University of Michigan as an Engineering Technician in the
Electrical and Computer Engineering Department, Mechanical
Engineering CAD Lab and College of Engineering Computer Graphics
Lab. Mr. Width has consulted for small emerging companies,
troubled companies, and projects for Fortune 500 companies,
domestically and abroad. Mr. Width attended Lake Superior State
College and received his degrees in Electrical Engineering
Technology and Computer Engineering Technology.
As reported in the Troubled Company Reporter on Feb. 16, the
Company engaged KMA Capital Partners, LTD. of Orlando, Florida on
Nov. 11, 2004, to reorganize the Company. As part of the
transaction KMA has acquired a controlling interest in the
Company. KMA stated that the reorganization is proceeding
and that it is the Company's intention to remain a Business
Development Company regulated under the Investment Act of 1940.
The Company has discontinued the debit card business and at
present has no operations. It cannot be ruled out that the
Company may need to seek bankruptcy protection. However, KMA
has been working diligently with creditors and investors to
effectuate a settlement outside of bankruptcy.
A spokesperson for KMA stated, "We appreciate Mr. Width accepting
the position of President. Mr. Width understands the Company's
current situation and looks forward to the challenge of
reorganizing ACSH. Mr. Width's prior consulting experience with
troubled companies will be extremely helpful in the restructuring
of the Company."
KMA plans a series of press releases to keep the investing public
aware of the progression of the reorganization plan.
About the Company
ACS Holdings Inc., is a Business Development Company under the
Investment Act of 1940 and upon the completion of the
reorganization will aggressively seek opportunities in emerging
and fast growth industries.
AIRCRAFT FINANCE: S&P's Rating on Class C Notes Tumbles to D
------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on the
class B and C notes issued by Aircraft Finance Trust -- AFT --
and, at the same time, removed its rating on class B from
CreditWatch with negative implications. In addition, Standard &
Poor's placed its ratings on the class A-1 and A-2 notes on
CreditWatch with negative implications.
The default of the class C notes reflects the missed interest
payment to the class C noteholders that was due this month. In
addition, $700,000 of liquidity for the class B noteholders has
been drawn this month from a $10 million liquidity reserve. This
raises the possibility of a deferral of interest on the class B
notes in the near term.
The transaction has suffered from continued revenue declines due
to the high number of off-lease aircraft and lower lease rates on
remarketed aircraft. In addition, AFT faces eight remarketing
events during 2005, representing 24% of the portfolio.
The ratings on the class A-1 and A-2 notes have been placed on
CreditWatch pending Standard & Poor's review and analysis of
further information, including projections of expected revenues,
maintenance expenses, and an updated assessment of the portfolio
of aircraft in the transaction.
More information on the AFT transaction can be found on
RatingsDirect, Standard & Poor's Web-based credit analysis system,
at http://www.ratingsdirect.com/
Rating Actions
Aircraft Finance Trust
Rating Lowered
Rating
Class To From
----- -- ----
C D CC
Rating Lowered and Removed from CreditWatch Negative
Rating
Class To From
----- -- ----
B CC B/Watch Neg
Ratings Placed on CreditWatch Negative
Rating
Class To From
----- -- ----
A-1 BBB/Watch Neg BBB/Stable
A-2 A/Watch Neg A/Stable
ALLIED WASTE: Cash Flow Guidance Prompts Moody's to Review Ratings
------------------------------------------------------------------
Moody's Investors Service placed the ratings of Allied Waste North
America, Inc., on review for possible downgrade, along with its
wholly-owned subsidiary, Browning-Ferris Industries, Inc., and its
parent company Allied Waste Industries, Inc. At the same time
Moody's affirmed the existing SGL-4 rating of Allied Waste
Industries.
The review is triggered by the Company's weaker than anticipated
free cash flow guidance for 2005 issued on February 1, 2005 and
Moody's concern about the forecasted level of cash generation in
relationship to the Company's high leverage, high maintenance
expense and substantial investment requirements for its aging
fleet. Also, Moody's believes there is a risk of cash erosion
from industry-wide margin compression and a weak pricing
environment.
Moody's projected that free cash flow to total debt would range
between 2.5% to 3% for 2005 at the time of its last rating action
in October 2004. Moody's now believes that the company's best
case scenario for free cash flow under its 2005 guidance is
break-even inclusive of the potential IRS payment.
The review will focus on, among other things, the Company's
ability to offset higher costs with top line growth, new fuel
recovery and administrative fees and anticipated benefits from its
Excellence-Driven Standards and Best Practices Program. The
Company's guidance on costs include about $100 million in
inflation-related costs of about 2.5%, $40 million of higher fuel
expense, and a potential IRS cash payment (which has been
accrued). The review will also take into account the impact of
any potential refinancing plans on the Company's capital structure
and liquidity. Such an announcement by the Company could trigger a
review of the existing SGL-4 rating.
The ratings placed under review for downgrade are:
-- Allied Waste Industries, Inc.
* Senior Implied Rating of B2;
* Senior Unsecured Issuer Rating of Caa2;
* $230 million issue of 4.25% guaranteed senior subordinated
convertible bonds due 2034, rated Caa2;
* $345 million issue of mandatory convertible preferred stock
-- conversion date of April 2006, rated Caa3;
-- Allied Waste North America, Inc. --
* $1.5 billion guaranteed senior secured revolving credit
facility due 2008, rated B1;
* $189 million guaranteed senior secured Tranche A Credit-
Linked Deposits due 2010, rated B1;
* $1.163 billion senior secured Tranche B Term Loan due 2010,
rated B1;
* $245 million senior secured Tranche C Term Loan due 2010,
rated B1;
* $147 million senior secured Tranche D Term Loan due 2010,
rated B1;
* $600 million issue of 7.625% guaranteed senior secured
notes due 2006, rated B2;
* $750 million issue of 8.5% guaranteed senior secured notes
due 2008, rated B2;
* $600 million issue of 8.875% guaranteed senior secured
notes due 2008, rated B2;
* $425 million issue of 6.125% guaranteed senior secured
notes due 2014, rated B2;
* $350 million issue of 6.5% guaranteed senior secured notes
due 2010, rated B2;
* $400 million issue of 5.75% guaranteed senior secured notes
due 2011, rated B2;
* $275 million issue of 6.375% guaranteed senior secured
notes due 2011, rated B2;
* $375 million issue of 9.25% guaranteed senior secured notes
due 2012, rated B2;
* $450 million issue of 7.875% guaranteed senior secured
notes due 2013, rated B2;
* $400 million issue of 7.375% guaranteed senior unsecured
notes due 2014, rated Caa1;
* $195 million issue of 10% guaranteed senior subordinated
notes due 2009, rated Caa2;
-- Browning-Ferris Industries, Inc. -
(assumed by Allied Waste North America, Inc.)
* $69.4 million issue of 7.875% senior secured notes due
2005, rated B2;
* $161.1 million issue of 6.375% senior secured notes due
2008, rated B2;
* $99.5 million issue of 9.25% secured debentures due 2021,
rated B2;
* $360 million issue of 7.4% secured debentures due 2035,
rated B2;
* $23 million 7.5% Pollution Control Bond Series 1995-A due
2010 rated Caa1;
* Approximately $200 million of industrial revenue bonds
rated Caa1.
Allied Waste North America, Inc., a wholly owned operating
subsidiary of Allied Waste Industries, Inc., is based in
Scottsdale, Arizona. Allied is a vertically integrated, non-
hazardous solid waste management company providing collection,
transfer, and recycling and disposal services for residential,
commercial and industrial customers. The Company had sales of
approximately $5.362 billion in 2004.
AMERICAN AUTOMOTIVE: Case Summary & 12 Largest Unsecured Creditors
------------------------------------------------------------------
Debtor: American Automotive Center Inc.
13050 Firestone Boulevard
Santa Fe Springs, California 90670
Bankruptcy Case No.: 05-12618
Type of Business: The Debtor provides auto maintenance and repair
services.
Chapter 11 Petition Date: February 10, 2005
Court: Central District of California (Los Angeles)
Judge: Samuel L. Bufford
Debtor's Counsel: Mark S. Rosen, Esq.
600 West Santa Ana Boulevard
Santa Ana, CA 92701
Tel: 714-285-9838
Total Assets: $348,100
Total Debts: $1,288,980
Debtor's 12 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Banco Popular $514,000
[address not provided]
Norwalk Village $450,000
[address not provided]
Carmelita Leasing $159,800
[address not provided]
Banco Popular SBC $156,880
Edison Co. $2,500
Edison $2,500
Telephone Co. Manpower Comun. $700
Telephone Company $700
Teletrack $600
Teletrack $600
Jackson Trash Co. $350
Jackson Trash Co. $350
AMERICAN COLOR: Declining Performance Prompts S&P to Junk Ratings
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on
Brentwood, Tennessee-based commercial printer American Color
Graphics, Inc. -- ACG, including its corporate credit rating to
'CCC+' from 'B'.
The outlook remains negative. Total debt outstanding at
Dec. 31, 2004, was $316 million.
"The downgrade follows the company's earnings announcement for the
third quarter ended Dec. 31, 2004, in which operating performance
continued to deteriorate due to significant volume decreases
driven by an intensely competitive pricing environment. We do not
expect the operating environment to improve meaningfully in the
next several quarters," said Standard & Poor's credit analyst
Sherry Cai. As a result, ACG's liquidity position is expected to
continue to weaken during its fiscal year ending March 31, 2006.
The company's secured revolving credit facility was amended in
February 2005 to reset the fixed charge covenant for various
quarters through March 2006. This has provided $20 million in
near-term availability. However, Standard & Poor's expects this
liquidity cushion to erode during the next several quarters as the
company funds operating needs (including maintenance-related
capital spending and required pension contributions), and makes
interest payments under its second lien senior notes.
Ongoing price competition is a significant concern and will be
monitored closely. Ratings could be further lowered if sector
trends fail to stabilize, debt leverage continues to escalate, or
if the company's liquidity position deteriorates further, which
may require the company to pursue a financial restructuring.
ATA AIRLINES: Inks First Amendment to Credit Pact with Southwest
----------------------------------------------------------------
ATA Holdings Corp., Senior Vice-President and General Counsel
Brian T. Hunt discloses in a regulatory filing with the
Securities and Exchange Commission that ATA Holdings and
Southwest Airlines have agreed to amend the December 23, 2004
Southwest Bid Proposal. Under the Bid Proposal, ATA Holdings and
Southwest entered into a Secured Debtor-In-Possession Credit and
security Agreement that provides up to $40 million in cash to ATA
plus a guaranty by Southwest of up to $7 million. During the term
of the DIP Facility, ATA is subject to certain financial
covenants.
Mr. Hunt relates that Southwest and ATA Holdings entered into a
First Amendment to Credit Agreement. The parties agreed to change
the date upon which the Minimum Consolidated EBITDARR and Minimum
Adjusted EBITDARR financial covenants would be effective from
January 1, 2005, to February 1, 2005. Without the First
Amendment, ATA Holdings would not have complied with the financial
covenants in the DIP Facility, Mr. Hunt says.
The Air Transportation and Stabilization Board and Unofficial
Committee of Unsecured Creditors have consented to the First
Amendment.
* * *
As previously reported, Southwest Airlines Co. has committed to
provide ATA Airlines, Inc., with up to $47,000,000 in postpetition
financing pursuant to a Secured Debtor-in-Possession Credit and
Security Agreement.
Southwest Airlines agrees to provide up to $40,000,000 in cash
plus a guaranty of up to $7,000,000 for amounts outstanding under
two separate loans made to ATA Airlines by the City of Chicago to
fund a jet bridge extension at Midway.
On a final basis, Judge Lorch authorized the Debtors to borrow up
to $47,000,000 from Southwest Airlines Co. pursuant to the terms
of the DIP Credit Agreement and pay all requisite fees and
expenses payable to or on behalf of Southwest Airlines.
Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA
Holdings Corp. -- http://www.ata.com/-- is the nation's 10th
largest passenger carrier (based on revenue passenger miles) and
one of the nation's largest low-fare carriers. ATA has one of the
youngest, most fuel-efficient fleets among the major carriers,
featuring the new Boeing 737-800 and 757-300 aircraft. The
airline operates significant scheduled service from
Chicago-Midway, Hawaii, Indianapolis, New York and San Francisco
to over 40 business and vacation destinations. Stock of parent
company, ATA Holdings Corp., is traded on the Nasdaq Stock
Exchange. The Company and its debtor-affiliates filed for chapter
11 protection on Oct. 26, 2004 (Bankr. S.D. Ind. Case No. 04-
19866, 04-19868 through 04-19874). Terry E. Hall, Esq., at Baker
& Daniels, represents the Debtors in their restructuring efforts.
When the Debtors filed for protection from their creditors, they
listed $745,159,000 in total assets and $940,521,000 in total
debts. (ATA Airlines Bankruptcy News, Issue No. 15; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
AT&T CORP: S&P Places BB+ Ratings on CreditWatch Positive
---------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on various
AT&T Corp.-related synthetic transactions on CreditWatch with
positive implications.
The rating actions follow the Feb. 1, 2005 placement of the
long-term corporate credit and senior unsecured debt ratings
assigned to AT&T Corp. on CreditWatch with positive implications.
With the exception of SATURNS Trust No. 2001-8, which is a
swap-dependent synthetic transaction, each of the remaining
synthetics affected by the AT&T Corp. CreditWatch placement is
swap-independent. Each of the transactions is weak-linked to the
underlying securities, AT&T Corp.'s senior unsecured debt. The
CreditWatch placements reflect the credit quality of the
underlying securities issued by AT&T Corp.
Ratings Placed on CreditWatch Positive
Corporate Backed Trust Certificates
Series 2001-21 Trust
$28 Million Corporate Backed Trust Certs
Series 2001-21
Rating
Class To From
----- -- ----
A-1 BB+/Watch Pos BB+
A-2 BB+/Watch Pos BB+
Corporate Backed Trust Certificates
AT&T Note-Backed Series 2001-33 Trust
$33 Million Corporate-Backed Trust Certs
Series 2001-33
Rating
Class To From
----- -- ----
A-1 BB+/Watch Pos BB+
A-2 BB+/Watch Pos BB+
Corporate Backed Trust Certificates
AT&T Note Backed Series 2003-18
$40 Million Certificates Series 2003-18
Rating
Class To From
----- -- ----
A-1 BB+/Watch Pos BB+
A-2 BB+/Watch Pos BB+
Corporate Backed Trust Certificates
AT&T Note Backed Series 2004-2
$50 Million Certificates Series 2004-2
Rating
Class To From
----- -- ----
A-1 BB+/Watch Pos BB+
A-2 BB+/Watch Pos BB+
PreferredPLUS Trust Series ATT-1
$35 Million Trust Certs Series ATT-1
Rating
Class To From
----- -- ----
certs BB+/Watch Pos BB+
SATURNS Trust No. 2003-17
$30 Million Callable Units Series 2003-17
Rating
Class To From
----- -- ----
A BB+/Watch Pos BB+
B BB+/Watch Pos BB+
SATURNS Trust No. 2004-3
$45 Million Adjustable Rate Callable Unit
Series 2004-3
Rating
Class To From
----- -- ----
A BB+/Watch Pos BB+
B BB+/Watch Pos BB+
SATURNS Trust No. 2004-7
$26 Million Adjustable Rate Callable Unit
Series 2004-7
Rating
Class To From
----- -- ----
A BB+/Watch Pos BB+
B BB+/Watch Pos BB+
STRATS Trust For AT&T Corp Securities
Series 2004-4
$25 Million Certificates Series 2004-4
Rating
Class To From
----- -- ----
A-1 BB+/Watch Pos BB+
A-2 BB+/Watch Pos BB+
Structured Asset Trust Unit Repackagings (SATURNS)
AT&T Corp Debenture Backed Series Trust No. 2001-8
$44 Million Callable units Series 2001-8
Rating
To From
-- ----
BB+/Watch Pos BB+
Structured Asset Trust Unit Repackagings (SATURNS)
AT&T Corp Debenture Backed Series 2003-14
$35 Million Callable Units Series 2003-14
Rating
Class To From
----- -- ----
A Units BB+/Watch Pos BB+
B Units BB+/Watch Pos BB+
Trust Certificates (TRUCs) Series 2001-1
$25 Million Corporate Bond Backed Certs
Series 2001-1
Rating
Class To From
----- -- ----
A-1 BB+/Watch Pos BB+
ATHEROGENICS INC: Equity Deficit Widens to $35.9 Mil. at Dec. 31
----------------------------------------------------------------
AtheroGenics, Inc., (Nasdaq: AGIX) reported financial results for
the fourth quarter and year ended December 31, 2004.
For the fourth quarter ended December 31, 2004, AtheroGenics
incurred a net loss of $17.5 million, or $0.47 per share, compared
to a net loss of $15.8 million, or $0.43 per share, for the fourth
quarter of 2003. For the year ended December 31, 2004, the
Company reported a net loss of $69.6 million, or $1.88 per share,
compared to a net loss of $53.3 million, or $1.49 per share, for
the year ended December 31, 2003.
Research and development expenses for the quarter and year ended
December 31, 2004, increased to $14.8 million and $59.2 million,
respectively, from $13.3 million and $46.7 million, respectively,
for the comparable periods in 2003. The increase in both periods
versus the prior periods reflects the costs associated with the
ARISE (Aggressive Reduction of Inflammation Stops Events) Phase
III trial for AGI-1067 in atherosclerosis.
General and administrative expenses for the quarter and year ended
December 31, 2004, increased to $1.8 million and $6.6 million,
respectively, from $1.6 million and $5.9 million, respectively,
for the comparable periods in 2003. The increase in both periods
reflects higher business development expenses related to
partnership activities. Also affecting the full year comparison
were higher insurance premiums. Interest expense was $1.3 million
and $5.2 million in the quarter and year ended December 31, 2004,
respectively, compared to $1.3 million and $2.0 million for the
comparable periods in 2003. The increase in the full year
comparison results from incurring a full year of interest in 2004,
compared to only a partial year of interest in 2003 on the
convertible note financing that was completed in August 2003.
AtheroGenics ended the year with approximately $67 million in
cash, cash equivalents and short-term investments, which was
supplemented in January 2005 by the proceeds from the Company's
$200 million convertible note financing.
"This past year was one of significant progress for AtheroGenics,
highlighted by the encouraging results from our CART-2 Phase II
atherosclerosis study," stated Russell M. Medford, M.D., Ph.D.,
President and Chief Executive Officer of AtheroGenics. "Looking
forward to 2005, we expect to complete enrollment in our pivotal
ARISE Phase III program addressing coronary heart disease, and to
advance our pipeline of other products addressing inflammatory
disease."
Full Year 2005 Financial Guidance
AtheroGenics reiterates its 2005 financial guidance and expects
that net cash use for the year will be in the range of
$85 to $89 million and net loss per share for 2005 will be in the
range of $2.35 to $2.45. Loss per share guidance for 2005
excludes any charges related to stock-based compensation to be
incurred as a result of the planned adoption of Financial
Accounting Standards Board Statement No. 123(R), "Shared-Based
Payments" in July 2005.
AtheroGenics, Inc. -- http://www.atherogenics.com/-- is focused
on the discovery, development and commercialization of novel drugs
for the treatment of chronic inflammatory diseases, including
heart disease (atherosclerosis), rheumatoid arthritis and asthma.
The Company has two drug development programs currently in the
clinic. AtheroGenics' lead compound, AGI-1067, is being evaluated
in the pivotal Phase III clinical trial called ARISE, as an oral
therapy for the treatment of atherosclerosis. AGI-1096 is a
novel, oral agent in Phase I that is being developed for the
prevention of organ transplant rejection in collaboration with
Fujisawa. AtheroGenics also has preclinical programs in
rheumatoid arthritis and asthma using its novel vascular
protectant(R) technology.
As of December 31, 2004, AtheroGenics' stockholders' deficit
widened to $35,942,382 compared to a $18,839,547 deficit at
September 30, 2004.
BAKER ENERGY INC: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Baker Energy, Inc.
38 Old Hickory Cove, Suite 100 A
Jackson, Tennessee 38305
Bankruptcy Case No.: 05-10749
Type of Business: The Debtor owns and supplies gas to 119
convenience stores and is a distributor for
Marathon (TM), BP (TM), Phillips 66 (TM),
Texaco (TM), Sinclair (TM), Premcor (TM),
Transmontaine (TM), and Pure and Lion (TM).
The Debtor also operates a nail salon, a car
stereo store, and a Goodyear (TM) Tire Center.
See http://www.bakerenergycfn.com/
Chapter 11 Petition Date: February 15, 2005
Court: Western District of Tennessee (Jackson)
Judge: G. Harvey Boswell
Debtor's Counsel: Michael T. Tabor, Esq.
203 South Shannon
PO Box 2877
Jackson, Tennessee 38302-2877
Tel: (731) 424-3074
Estimated Assets: $500,000 to $1 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Marathon Ashland Petroleum, LLC $1,900,000
539 South Main Street
Findlay, OH 45840
Chevron $1,000,000
2005 Diamond Boulevard, Room 2184
Concord, CA 945205739
Kentucky Department of Revenue $308,617
PO Box 5222
Frankfort, KY 40602
Charles C. Parks Company $99,876
500 Belvedere Drive
Gallatin, TN 37066
Lion Oil Company $69,182
PO Box 23028
Jackson, MS 392253028
Hollingsworth Inc. $62,277
1503 Memorial Blvd.
Springfield, TN 37172
South Eastern Canopies $40,000
PO Box 126
Shelby, AL 35143
Perfection Petroleum Services $38,445
580 Old Drake Temerance Road
PO Box 33
Drake, KY 42128
Eby Brown Company $32,520
PO Box 51137
Indianapolis, IN 46251
Western Kentucky Coca Cola $28,358
PO Box 988
Bowling Green, KY 421020988
Coca Cola Tullahoma $21,000
1502 East Carroll Street
Wildersville, TN 38388
Benedict & Benedict $20,000
219 Industrial Dr.
Glasgow, KY 42141
Pepsi Mid America $18,000
PO Box 18241F
Saint Louis, MO 63150
Ale8One Bottling Company $7,000
PO Box 645
Winchester, KY 40392
The Southern Company $7,000
PO Box 2059
Memphis, TN 38101
Modern Systems Inc. $7,000
3844 South Highway 27, Suite B
Somerset, KY 42501
Federated Insurance Unknown
PO Box 64304
Saint Paul, MN 55164
IRS Unknown
PO Box 1107, MDP 146
Nashville, TN 37202
Kentucky Department of Revenue Unknown
PO Box 5222
Frankfort, KY 40602
Tennessee Department of Revenue Unknown
State of Tennessee, Attorney General
PO Box 20207
Nashville, TN 372020207
BEAR STEARNS: Moody's Puts B2 Rating on $37,305,708 Class A Notes
------------------------------------------------------------------
Moody's has assigned a rating of B2 to the Class A Notes offered
to investors under the Bear Stearns Structured Products 2004-10
transaction. The Class A Notes issued in this resecuritization
represent beneficial interests in sixteen underlying subordinate
mortgage pass-through certificates from four securitization
transactions. The Class A Notes bear a 7.50% interest rate.
The Notes receive credit protection from the credit quality of the
mortgage loans backing the underlying certificates and from the
subordination within the underlying securitizations.
The offered certificates were sold in a privately negotiated
transaction without registration under the Securities Act of 1933
(the "Act") under circumstances reasonably designed to preclude a
distribution thereof in violation of the Act. The issuance has
been designed to permit resale under Rule 144A.
Moody's complete rating actions are:
Issuer: Bear Stearns Structured Products Inc. Trust 2004-10,
Series 2004-10
* $37,305,708, Class A Notes, rated B2
BEAR STEARNS: Moody's Puts Ba2 Rating on $23.738M Class M-7 Certs.
------------------------------------------------------------------
Moody's Investors Service has assigned a Aaa rating to the senior
certificates issued by Bear Stearns Asset Backed Securities I
Trust 2004-HE11, and ratings ranging from Aa2 to Ba2 to the
subordinate certificates in the deal.
The securitization is backed by mortgage loans primarily
originated by Ameriquest Mortgage Company (24.53%), People's
Choice Home Loan (24.38%) and Decision One Mortgage (21.35%). The
remaining mortgage loans were originated by various originators,
none of which have originated more than 10% of the loans in the
aggregate.
The pool consists of both adjustable-rate (79.68%) and fixed-rate
(20.32%) subprime mortgage loans acquired by EMC Mortgage
Corporation (EMC). The ratings are based primarily on the credit
quality of the loans, and on the protection from subordination,
over-collateralization, and excess spread. The credit quality of
the loan pool is in line with the average loan pool backing recent
subprime securitizations.
EMC will act as master servicer of the loans. Moody's has
assigned EMC its top servicer quality rating (SQ1) as a primary
servicer of subprime loans.
The complete rating actions are:
-- Bear Stearns Asset Backed Securities I Trust 2004-HE11,
Asset-Backed Certificates, Series 2004-HE11
* Class I-A-1, $338,640,000, rated Aaa
* Class I-A-2, $153,211,000, rated Aaa
* Class I-A-3, $42,722,000, rated Aaa
* Class II-A-1, $594,540,000, rated Aaa
* Class II-A-2, $148,635,000, rated Aaa
* Class M-1, $117,870,000, rated Aa2
* Class M-2, $62,209,000, rated A2
* Class M-3, $51,569,000, rated A3
* Class M-4, $19,646,000, rated Baa1
* Class M-5, $21,282,000, rated Baa2
* Class M-6, $17,189,000, rated Baa3
* Class M-7, $23,738,000, rated Ba2
The Class M-7 certificates are being offered in privately
negotiated transactions without registration under the 1933 Act.
The issuance was designed to permit resale under Rule 144A.
BEARINGPOINT INC: Names R. Roberts as COO & R. Lineberger as EVP
----------------------------------------------------------------
BearingPoint, Inc. (NYSE: BE), one of the world's largest business
consulting and systems integration firms, reported a
reorganization that includes the promotion of two senior public
service executives and the departure of three other members of its
senior management team. The Company also disclosed the
integration of its Communications and Content business unit into
its Consumer, Industrial & Technology business unit.
The Company named Richard J. Roberts, 52, who has been executive
vice president of its Public Services industry sector, as its new
Chief Operating Officer, reporting to Rod McGeary, Chairman and
Chief Executive Officer. Robin Lineberger, 45, currently
Executive Vice President of the Company's Federal Government and
Commercial Healthcare Services practice, was named to succeed
Roberts.
In connection with these strategic initiatives, the Company has
eliminated the management roles of:
-- Bradley Schwartz, Group Executive Vice President, Worldwide
Client Service;
-- Michael Donahue, Group Executive Vice President and Chief
Operating Officer; and
-- Nathan Peck, Jr., Executive Vice President and Chief
Administrative Officer.
The departures are effective immediately. BearingPoint expects to
incur a one-time charge to earnings in the first quarter of 2005
to cover the cost of severance payments.
The Company is integrating its Consumer, Industrial & Technology
business unit with its Communications and Content business unit,
which serves primarily telecommunications firms and content
providers. The combination of these business units, now called
the Communications, Consumer, Industrial & Technology business
unit, is effective immediately.
"These moves underscore BearingPoint's strategy to implement a
leaner management and organizational model, with fewer reporting
levels," said Mr. McGeary. "This strategy will result in an
organizational structure that provides more accountability for the
BearingPoint executives who are running our business units and
fewer layers between the CEO and our teams serving clients in the
marketplace.
"The BearingPoint team and I want to express our thanks to Brad,
Mike and Nate for their years of service to BearingPoint," said
Mr. McGeary. "All three individuals played important roles at
BearingPoint as the company became a wholly independent, publicly
traded, global operation."
As COO, Mr. Roberts will be responsible for the effective
execution of the Company's business plan and for all global
operations. Mr. Roberts has been executive vice president of the
Company's largest business unit, Public Services, since August
2003 and led its federal government services practice as it became
the Company's fastest-growing business unit. He is a certified
public accountant.
Mr. Lineberger has more than 22 years of systems integration
experience, 18 years as a systems integration consultant with
BearingPoint and four years in development and testing with the
United States Air Force. In March 2004, Mr. Lineberger was named
to Federal Computer Week's Federal 100 list of elite individuals
who have made an impact on the way the U.S. government uses
information technology.
The alignment of Mr. Roberts and Mr. Lineberger, as well as the
recent appointments of the Company's Chief Financial Officer and
Chief Risk Officer to the management team, reinforce the Company's
efforts to address corporate performance and accountability
issues. Besides Joe Corbett, the former Intelsat finance chief
who was named CFO in January 2005, the Company appointed Ron
Salluzzo to the newly created position of Chief Risk Officer.
"We are pleased to have completed these important management
initiatives at BearingPoint so that we can seize on new
marketplace opportunities, strengthen investor confidence and make
BearingPoint a truly great place to work, " said Mr. McGeary.
About the Company
BearingPoint, Inc. (NYSE: BE) -- http://www.BearingPoint.com/--
is one of the world's largest business consulting, systems
integration and managed services firms serving Global 2000
companies, medium-sized businesses, government agencies and other
organizations. We provide business and technology strategy,
systems design, architecture, applications implementation, network
infrastructure, systems integration and managed services. Its
service offerings are designed to help our clients generate
revenue, reduce costs and access the information necessary to
operate their business on a timely basis. Based in McLean, Va.,
BearingPoint has been named by Fortune as one of America's Most
Admired Companies in the computer and data services sector.
* * *
As reported in the Troubled Company Reporter on Dec. 17, 2004,
Standard & Poor's Ratings Services lowered its corporate credit
and senior unsecured ratings on McLean, Virginia-based
BearingPoint, Inc., to `BB+' from `BBB-'.
At the same time, Standard & Poor's assigned a 'BB-' rating to the
company's $325 million in Series A and Series B convertible
subordinated notes due Dec. 14, 2024.
"The downgrade reflects currently weak profitability and cash flow
measures in a very competitive operating environment," said
Standard & Poor's credit analyst Philip Schrank. The ratings
reflect a currently high-cost structure, improving but low margins
in relation to historical levels, and weakened cash flow
protection measures. Offsetting these factors, the company
maintains a good competitive position specifically in the Public
Services sector (representing more than half of revenues), strong
client relationships, and increased global scale.
BOMBARDIER RECREATIONAL: Debt Reduction Cues S&P to Review Ratings
------------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings, including
its 'B+' long-term corporate credit ratings, on recreational-
products manufacturer Bombardier Recreational Products -- BRP --
on CreditWatch with positive implications, as a result of recent
debt reduction.
"The CreditWatch placement reflects significant deleveraging that
results from BRP's replacement of its US$280 million term loan
facility with a much smaller US$50 million term loan facility,"
said Standard & Poor's credit analyst Kenton Freitag. The debt
repayment was financed by BRP's large cash balances, which had not
formerly been netted out of Standard & Poor's calculations of
leverage. Consequently, the company's debt-to-capital ratio is
expected to drop to about 45% from former levels of 63%. Interest
and cash flow coverage measures are also expected to demonstrate
material improvement.
BRP used to carry large cash balances to bolster its liquidity
against volatile working capital requirements. Although BRP's
working capital flows are still seasonal, they are less volatile
than expected. The company's remaining liquidity, which consists
primarily of a C$250 million credit revolver, therefore, is
expected to be adequate to support BRP's operations.
Despite the significant deleveraging, Standard & Poor's has
lingering concerns about the company's profitability. The
strengthening of the Canadian dollar against the U.S. dollar has
affected margins in 2004 and is expected to continue to exert
negative pressure on margins. The company has recently instituted
some cost-cutting measures such as layoffs and plant closures.
Standard & Poor's expects to meet with BRP's management to review
its financial policies and its efforts to stem margin decline due
to currency volatility to resolve the CreditWatch. The review is
expected to be completed by the end of March and could result in a
modest upgrade.
CATHOLIC CHURCH: Portland Wants to Compensate Priests' Counsel
--------------------------------------------------------------
Fr. Donald Durand, Fr. Joseph Baccellieri, Fr. Martin Thielen, and
Fr. John Brouillard are living priests who have been named as
co-defendants of the Archdiocese of Portland in Oregon in 15
claims alleging sexual abuse of minors. Fr. Michael Johnston has
been named as a co-defendant in a claim filed by Paul E. DuFresne.
"These men lack the disposable income needed to cover the cost of
legal representation," Thomas W. Stilley, Esq., at Sussman Shank
LLP, in Portland, Oregon, tells U.S. Bankruptcy Court for the
District of Oregon.
Archdiocesan priests, Mr. Stilley explains, are not wealthy
people. They earn what is essentially a subsistence income, with
provision for lodging, health care, and a moderate retirement.
For this reason, Portland seeks Judge Perris' permission to
compensate:
* Gooney & Crew, LLP, as counsel to Fr. Durand, Fr.
Baccellieri, Fr. Thielen, and Fr. Brouillard; and
* Cable Huston Benedict Haagensen & Lloyd, LLP, as counsel
to Fr. Johnston.
The proposed compensation will be subject to application and
Court approval, just as if they were professionals employed by
Portland. The proposed compensation will also be payable on a
monthly basis.
Mr. Stilley asserts that Portland must be allowed to compensate
the law firms because consistent with Section 327 of the
Bankruptcy Code, Portland is authorized to compensate counsel for
third parties to serve the best interests of the estate. Section
327 allows trustees to retain professionals and thereby, obtain
advice from attorneys, accountants, appraisers, and the like, when
doing so is in the "best interest of the estate." Courts have
acknowledged circumstances where the cost of providing
professional services to a third party may be "incurred by the
estate in the interest of self-preservation."
Mr. Stilley notes that the proposed attorneys have previously
represented priests and the requested order would continue
standard procedures of the Archdiocese. Portland has provided
compensation to Cooney & Crew for a number of years for its legal
representation of individual priests in various civil lawsuits
involving sex abuse claims against the Archdiocese and its
employees. Cooney & Crew requires no "start up" time to learn
about its clients, the circumstances of their employment, the
applicable law, or the basic facts underlying the claims against
them.
The DuFresne case was filed on May 11, 2004, prior to the
bankruptcy. Portland retained Cable Huston in early June 2004 to
represent Fr. Johnston in that case. Cable Huston, therefore,
will face no "learning curve."
Mr. Stilley assures the Court that Cooney & Crew and Cable Huston
will not duplicate the services already provided to Portland by
other law firms. While the effective representation of the
priests is critical to the estate, the priests also have personal
interests in defending the claims, and counsel for the priests are
accustomed to maintaining a well-defined role in this type of
litigation.
The proposed rates of compensation for attorneys at Cooney & Crew
and Cable Huston are:
Cooney & Crew
-------------
Thomas E. Cooney $225
Thomas M. Cooney $200
Paul A. Cooney $200
David J. Madigan $175
Paralegals $85
Cable Huston
------------
G. Kevin Kiely $250
Laura J. Walker $250
William Lehman $225
Chad Stokes $175
Lindsay Kandra $150
Michelle Bradley, Paralegal $90
Mr. Stilley relates that the rates for Cable Huston are at the low
end of the range currently charged to other clients because the
firm has taken Portland's charitable purpose and non-profit status
into consideration. Compensation will be limited to $25,000 per
claim unless prior Court approval is obtained to increase the
$25,000 limit before any additional services are performed.
Cooney & Crew and Cable Huston will maintain detailed,
contemporaneous records of time and any actual and necessary
expenses incurred in connection with rendering of the legal
services by category and nature of the services rendered.
Mr. Stilley also reminds Judge Perris that Section 105 of the
Bankruptcy Code permits the Court to apply existing code
provisions to third parties where equity so demands.
"If bankruptcy courts can appoint receivers to manage the
partnership assets and affairs of non-debtors, and stay entire
lawsuits against non-debtor employees, then this court can approve
the compensation by the estate of attorneys to defend the civil
lawsuits filed against living priests for torts for which the
Archdiocese can be found liable under a theory of respondeat
superior," Mr. Stilley asserts.
Given the number of claims and the amounts of damages at stake in
Portland's case, equitable considerations apply, and in some
respects, are quite urgent. Additionally, the parties in the
bankruptcy proceedings have undertaken discovery and have
commenced depositions. To insure the smooth and fair
administration of discovery, the priests need representation and
the tort claimants need the involvement of a legal professional
-- not a priest -- when dealing with routine discovery matters
affecting the priests' privacy interests or legal rights.
Mr. Stilley maintains that the Court has ample authority to grant
the request, in light of its fundamental importance to the fair
and expeditious liquidation of tort claims against the estate.
Without the benefit of the estate's funds, Mr. Stilley says the
priests will be forced to proceed without representation or seek
the protection of bankruptcy themselves. Either scenario would be
equally detrimental to both the estate and the Court-approved
accelerated claims resolution procedures. Forcing the priests
into bankruptcy could stall the claims resolution process
significantly or could subvert the essential purpose of the
Archdiocese's Chapter 11 plan, which is to liquidate pending tort
claims efficiently and fairly. Proceeding against priests who are
unrepresented, on the other hand, poses serious risks to the
estate and practical problems in the administration of claims.
The Archdiocese of Portland in Oregon filed for chapter 11
protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004.
Thomas W. Stilley, Esq. and William N. Stiles, Esq. of Sussman
Shank LLP represent the Portland Archdiocese in its restructuring
efforts. Portland's Schedules of Assets and Liabilities filed
with the Court on July 30, 2004, the Portland Archdiocese reports
$19,251,558 in assets and $373,015,566 in liabilities. (Catholic
Church Bankruptcy News, Issue No. 17; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
CORNING INC: S&P Places BB+ Ratings on CreditWatch Positive
-----------------------------------------------------------
Standard & Poor's Ratings Services placed its 'BB+' ratings on
three synthetic transactions related to Corning Inc. on
CreditWatch with positive implications.
The rating actions reflect the Feb. 8, 2005 placement of the
ratings assigned to Corning, Inc.'s senior unsecured debt on
CreditWatch with positive implications.
The three transactions are swap-independent synthetic transactions
that are weak-linked to the underlying collateral, Corning Inc.'s
debt. The CreditWatch placements reflect the credit quality of
the underlying securities issued by Corning, Inc.
Ratings Placed on CreditWatch Positive
Corporate Backed Trust Certificates
Corning Debenture-Backed Series 2001-28 Trust
$15 Million Corning Debenture-Backed Series 2001-28
Rating
Class To From
----- -- ----
A-1 BB+/Watch Pos BB+
A-2 BB+/Watch Pos BB+
Corporate Backed Trust Certificates
Corning Debenture-Backed Series 2001-35 Trust
$29 Million Corning Debenture-Backed Series 2001-35
Rating
Class To From
----- -- ----
A-1 BB+/Watch Pos BB+
A-2 BB+/Watch Pos BB+
CorTs Trust For Corning Notes
$39 Million Corporate-Backed Trust Securities
Rating
Class To From
----- -- ----
A BB+/Watch Pos BB+
DIGITAL LIGHTWAVE: Names Robert Hussey as Interim President & CEO
-----------------------------------------------------------------
Digital Lightwave, Inc.'s (Nasdaq:DIGL) Board of Directors
appointed Robert F. Hussey as the Company's Interim President and
Chief Executive Officer, on Feb. 15, 2005. Mr. Hussey has been a
long time member of the Company's Board of Directors, joining the
Board in August 2000. He succeeds James R. Green, who resigned as
President and Chief Executive Officer effective Feb. 15, 2005.
Mr. Hussey will continue as a director, and as a member of the
Executive Committee of the Board, and will initiate the search for
a permanent President and Chief Executive Officer.
Mr. Hussey served as the Company's Strategic Restructuring Advisor
from December 2002 to December 2003 at the request of the Board.
Most recently, Mr. Hussey has served as Chief Operating Officer of
H.C. Wainwright and Company, Inc. beginning in July 2001.
Previously, he was President and Chief Executive Officer of Metro
Vision of North America, Inc. and was founder and Chief Executive
Officer of Pop Radio Corporation. Mr. Hussey serves on a number
of boards of directors of both public and private corporations and
as an advisor to two private equity funds.
Dr. Bryan Zwan, Chairman of the Board of the Company, commented,
"Mr. Hussey brings tremendous leadership to our management team.
I look forward to working with Bob as the Company pursues new
growth opportunities and a return to profitability in the rapidly
changing telecommunications industry. His knowledge of the
Company uniquely positions him to effectively direct the execution
of our strategic plan and assist the Board in its search for a
permanent President and Chief Executive Officer." Dr. Zwan went
on to say, "I would like to thank Jim Green for his leadership and
many contributions during a difficult period in our history. We
offer Jim our thanks and best wishes towards his future success."
"Digital Lightwave has been both challenging and rewarding over
the five years I have had the pleasure of working with the
Company," said Mr. Green. "I am grateful for having had the
opportunity to be its Chief Executive and to be associated with
the many fine people there."
About Digital Lightwave, Inc.
Based in Clearwater, Florida, Digital Lightwave, Inc. provides the
global communications networking industry with products,
technology and services that enable the efficient development,
deployment and management of high-performance networks. Digital
Lightwave's customers -- companies that deploy networks, develop
networking equipment, and manage networks -- rely on its offerings
to optimize network performance and ensure service reliability.
The Company designs, develops and markets a portfolio of portable
and network-based products for installing, maintaining and
monitoring fiber optic circuits and networks. Network operators
and telecommunications service providers use fiber optics to
provide increased network bandwidth to transmit voice and other
non-voice traffic such as internet, data and multimedia video
transmissions. The Company provides telecommunications service
providers and equipment manufacturers with product capabilities to
cost-effectively deploy and manage fiber optic networks. The
Company's product lines include: Network Information Computers,
Network Access Agents, Optical Test Systems, and Optical
Wavelength Managers. The Company's wholly owned subsidiaries are
Digital Lightwave (UK) Limited, Digital Lightwave Asia Pacific
Pty, Ltd., and Digital Lightwave Latino Americana Ltda.
At September 30, 2004, Digital Lightwave's balance sheet showed a
$22,560,000 stockholders' deficit, compared to a $21,140,000
deficit at December 31, 2003.
EDISON INT'L: S&P Lifts Corporate Credit Rating to BBB from BB+
---------------------------------------------------------------
Standard & Poor's Ratings Services raised its corporate credit
rating on Edison International to 'BBB' from 'BB+'. Standard &
Poor's also raised its corporate credit rating on Southern
California Edison Co. -- SCE -- to 'BBB+' from 'BBB'. The outlook
is stable.
"The upgrade follows favorable regulatory developments that are
viewed as supportive of credit quality and strengthening
legislative and regulatory protections created in response to
California's 2000-2001 energy crisis," said Standard & Poor's
credit analyst David Bodek.
In particular, a December 2004 California Public Utilities -- CPUC
-- decision administratively extended legislative protection of
the electric procurement component of operating cash flow that was
set to expire in late 2005. Also, in late 2004, Edison
International retired all of its debt with cash on hand, thereby
strengthening the consolidated companies' credit metrics.
The ratings reflect the consolidated financial and credit profiles
of Edison International, SCE, and Edison Funding Co., an Edison
International subsidiary. The utility's current and projected
financial profile and the regulatory and operational risks facing
the utility are the principal influences on Edison International's
and SCE's credit quality.
The stable outlook on Edison International and SCE reflects an
expectation that on, a consolidated basis, Edison International,
SCE, and Edison Funding should be able to produce financial
results that provide a cushion sufficient to support sound credit
quality.
Standard & Poor's also said that preservation of the ratings will
depend on SCE's ability to sustain sound credit metrics in the
face of resource needs that will require either additional debt or
give rise to debt equivalents, a demonstration of an ongoing
ability to recover costs in a timely manner that protects cash
flow, and an absence of actions by Edison International and Edison
Funding that are detrimental to the consolidated companies' credit
metrics.
Edison International's and SCE's ratings were evaluated
independently of their merchant energy affiliates' financial
performance, based on expectations that Edison International, SCE,
Edison Capital, and its Edison Funding subsidiary, will be
shielded from the financial difficulties that their affiliate
merchant energy companies are experiencing.
EXIDE TECH: Stanfield Capital Discloses 7.4% Equity Stake
---------------------------------------------------------
Stanfield Capital Partners, LLC, discloses with the Securities
and Exchange Commission that as of December 31, 2004, it is
deemed to beneficially own 1,801,825 shares of Exide Technologies
Common Stock. As of Feb. 10, 2005, 24,407,068 shares of common
stock were outstanding.
Accounts managed on a discretionary basis by Stanfield Capital
Partners are known to have the right to receive or the power to
direct the receipt of dividends from, or the proceeds from, the
sale of those securities. At December 31, 2004, Stanfield
Offshore Leveraged Assets, Ltd., owned more than 5% of Exide
common stock.
Headquartered in Princeton, New Jersey, Exide Technologies is the
worldwide leading manufacturer and distributor of lead acid
batteries and other related electrical energy storage products.
The Company filed for chapter 11 protection on Apr. 14, 2002
(Bankr. Del. Case No. 02-11125). Matthew N. Kleiman, Esq., and
Kirk A. Kennedy, Esq., at Kirkland & Ellis, represent the Debtors
in their restructuring efforts. Exide's confirmed chapter 11 Plan
took effect on May 5, 2004. On April 14, 2002, the Debtors listed
$2,073,238,000 in assets and $2,524,448,000 in debts. (Exide
Bankruptcy News, Issue No. 60; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
EYE CARE: Extends Tender Offer for 9-1/8% Sr. Notes to March 1
--------------------------------------------------------------
Eye Care Centers of America, Inc., is extending its offer to
purchase for cash all of its $100 million aggregate principal
amount of 9-1/8% Senior Subordinated Notes due 2008 and all of its
$30 million aggregate principal amount of Floating Interest Rate
Subordinated Term Securities due 2008.
The tender offer, which was to have expired at 12:00 Midnight, New
York City time, on Feb. 16, 2005, will be extended to 9:00 a.m.,
New York City time, on March 1, 2005, unless further extended or
earlier terminated by ECCA.
The depositary, Global Bondholder Services Corporation, has
advised ECCA that $92,135,000 aggregate principal amount of the
Fixed Rate Notes, representing approximately 92% of the Fixed Rate
Notes outstanding, and $30,000,000 aggregate principal amount of
the Floating Rate Notes, representing 100% of the Floating Rate
Notes outstanding, had been validly tendered and not withdrawn as
of 5:00 p.m., New York City time, on Feb. 15, 2005.
ECCA accepted all consents validly tendered prior to 5:00 p.m.,
New York City time, on Jan. 14, 2005, and the supplemental
indenture, which eliminates substantially all of the restrictive
covenants and certain events of default contained in the indenture
governing the Notes, has been executed and will become effective
upon acceptance for payment of the Notes. Notes tendered and
consents delivered prior to 5:00 p.m., New York City time, on
Jan. 14, 2005 may no longer be withdrawn or revoked.
The terms of the extended offers remain unchanged from the
original offers as set forth in the offering materials. The total
consideration to be paid to holders that tendered their Notes and
delivered their consents prior to 5:00 p.m., New York City time,
on Jan. 14, 2005, is equal to $1,032.92 per $1,000 principal
amount of the Fixed Rate Notes and $1,002.50 per $1,000 principal
amount of the Floating Rate Notes, each of which includes a
consent payment of $2.50 per $1,000 principal amount of the Notes.
Holders that tender their Notes after 5:00 p.m., New York City
time, on Jan. 14, 2005, and prior to the expiration of the tender
offer will receive $1,030.42 per $1,000 principal amount of the
Fixed Rate Notes and $1,000.00 per $1,000 principal amount of the
Floating Rate Notes. In addition, in all cases, ECCA will pay
accrued and unpaid interest on the Notes up to, but not including,
the date of payment.
The tender offer is being extended in order to satisfy, and
remains subject to, various conditions including the completion of
the acquisition of ECCA by Moulin International Holdings Limited
and Golden Gate Capital. It is currently anticipated that the
acquisition of ECCA will be completed as soon as practicable
following, but subject to, the approval of the acquisition by
Moulin's shareholders at a meeting scheduled to be held on Monday,
Feb. 28, 2005.
ECCA currently intends, but is not committed, to redeem all Notes
not tendered and accepted for payment shortly after the expiration
or termination of the tender offer at the applicable redemption
prices set forth in the Notes, plus accrued and unpaid interest
to, but not including, the redemption date.
Information regarding the pricing, tender and delivery procedures
and conditions of the tender offer and consent solicitation is
contained in the Offer to Purchase and Consent Solicitation
Statement dated Jan. 3, 2005, and related documents. Copies of
these documents can be obtained by contacting Global Bondholder
Services Corporation, the information agent and depositary, at
(866) 294-2200 (toll free) or (212) 430-3774 (collect). J.P.
Morgan Securities Inc. is the exclusive dealer manager and
solicitation agent for the tender offer and consent solicitation.
Additional information concerning the terms and conditions of the
tender offer and consent solicitation may be obtained by
contacting J.P. Morgan Securities Inc. at (212) 270-7407
(collect).
About the Company
Eye Care Centers of America, Inc. is the third largest operator of
optical retail stores in the United States as measured by revenue.
The company currently operates 377 stores in 33 states. The
company's brand names include EyeMasters, Binyon's, Visionworks,
Hour Eyes, Dr. Bizer's VisionWorld, Dr. Bizer's ValuVision,
Doctor's ValuVision, Stein Optical, Vision World, and Eye DRx.
Founded in 1984, the company is headquartered in San Antonio,
Texas.
* * *
As reported in the Troubled Company Reporter on Jan. 21, 2005,
Standard & Poor's Ratings Services affirmed its ratings on Eye
Care Centers of America, Inc., including the 'B' corporate credit
rating. All ratings were removed from CreditWatch, where they
were placed with developing implications on Dec. 7, 2004. The
outlook is stable.
At the same time, Standard & Poor's assigned its 'B' bank loan
rating to Eye Care Centers' proposed $190 million secured credit
facility. A recovery rating of '3' also was assigned to the loan,
indicating that lenders can expect a meaningful recovery of
principal (50%-80%) in the event of a default.
In addition, a 'CCC+' rating was assigned to Eye Care's proposed
$150 million subordinated note issuance.
Proceeds from the credit facility and subordinated notes, along
with $163 million in equity contribution, will be used to fund the
buyout of Eye Care Centers by Moulin International and Golden Gate
Capital. Moulin International (unrated), a Hong Kong based
optical frames manufacturer and distributor, will own a
controlling equity interest in the company. Pro forma for the
transaction, Eye Care will have about $315 million in funded debt.
"Ratings on the San Antonio-based specialty optical retail chain
reflect Eye Care Centers' participation in the increasingly
competitive and promotional optical retail industry, its small
size relative to key competitors, and high debt leverage," said
Standard & Poor's credit analyst Ana Lai.
FLYI INC: Expects to Make Interest Payment on 6% Notes Next Month
-----------------------------------------------------------------
FLYi, Inc. (Nasdaq: FLYI), parent of low-fare airline Independence
Air, stated that, because it is continuing to engage in
negotiations with its aircraft lenders and lessors to restructure
its obligations, it determined not to make the Feb. 15, 2005,
interest payment on its 6% Convertible Notes due 2034. Under the
Note indenture, an "Event of Default" will not occur provided that
the defaulted interest is paid within 30 calendar days.
The company expects to pay the interest owing before the
expiration of the 30-day period provided that it is able to
successfully and timely conclude its ongoing restructuring
efforts. As a matter of policy FLYi does not comment on or
respond to speculation on the status of its restructuring efforts,
but will provide a statement following determination of the
outcome of the negotiations.
About the Company
FLYi, Inc. -- http://www.FLYi.com/-- is the parent company of
low-fare airline Independence Air. The company employs over 4,700
aviation professionals.
Independence Air is the low-fare airline that makes travel fast
and easy for its customers with a customer-first attitude,
innovative thinking and a willingness to challenge the status quo.
* * *
As reported in the Troubled Company Reporter on Jan. 13, 2005,
Standard & Poor's Ratings Services lowered its ratings on FLYi,
Inc., including lowering the corporate credit rating to 'CC' from
'CCC-', and placed all ratings on CreditWatch with negative
implications. The airline announced that it has reached an
agreement with General Electric Capital Aviation Services (GECAS,
a unit of General Electric Capital Corp., AAA/Stable/A-1+) to
restructure aircraft leases and return some leased regional jets
early. The agreement also provides for a secured $19.5 million
five-year term loan, contingent on the lease restructurings and on
other lenders and lessors agreeing to restructure their
obligations. Dulles, Virginia-based FLYi has about $1.3 billion
of lease-adjusted debt.
"The planned lease and loan restructurings, though they may avert
a bankruptcy filing by FLYi, would still very likely be considered
a default by Standard & Poor's, resulting in lowering the
corporate credit rating to 'D'," said Standard & Poor's credit
analyst Philip Baggaley. The company has reported heavy losses in
recent quarters, including a third-quarter 2004 loss of
$83 million on revenues of $120 million. As a result, the
company's unrestricted cash and short-term investments declined
significantly, to $198 million at Sept. 30, 2004, from
$345 million at June 30, 2004. The company has indicated it
expects to lose a similar amount in the fourth quarter of 2004.
GREAT LAKES: Moody's Junks $175 Million Senior Subordinated Notes
-----------------------------------------------------------------
Moody's Investors Service has downgraded the ratings of Great
Lakes Dredge & Dock Corporation -- senior implied to B3 from B2,
senior secured credit facilities to B3 from B2, and senior
subordinated notes to Caa3 from Caa2. The ratings outlook is
negative. This completes the ratings review opened on
July 30, 2004.
The ratings downgrade reflects continuing weak dredge market
conditions, particularly in the capital projects sector, which has
historically been the company's largest and most reliable revenue
source. Great Lakes and the entire U.S. dredging sector had
encountered an unexpected decrease in work requirements in the
middle of 2004 owing largely to deferral of funding from the
industry's dominant customer -- the U.S. Army Corp of Engineers --
CoE.
This has negatively affected Great Lakes' fleet utilization and
contract rates, which resulted in a dramatic weakening of the
company's financial position. The Company's backlog and bid
market levels have improved from the prior year's levels, however,
and the B3 senior implied rating reflects Moody's expectations
that operating results in FY 2005 will improve from the recent
downward trend.
The negative outlook reflects Moody's expectations that, although
the company's operating results should improve modestly in 2005,
liquidity will be thin and the Company's ability to remain in
compliance with financial covenants, as re-negotiated per Great
Lakes' amended senior secured credit facility, will remain tight
over the near term. In addition, Moody's remains concerned about
the continued uncertainty surrounding the timing and scope of the
recovery in the dredge sector, the U.S. Army CoE-funded capital
projects sector in particular.
Once the recovery begins, the Company could face the need to
increase debt to support any build-up on working capital. Ratings
or their outlook may be downgraded if overall recovery in industry
rates or work volume were to fail to materialize in FY 2005, which
would possibly result in negative free cash flow generation, or if
leverage (lease-adjusted debt/EBITDAR) exceeds 9x. The ratings or
outlook may be subject to upward revision if market improvements
were to result in free cash flow generation of over 5% of total
debt, EBIT coverage of over 1.0x interest, and adjusted
debt/EBITDAR of below 6.0x by the end of the year.
Through 2004, Great Lakes' operating performance and credit
metrics have deteriorated significantly from prior year's levels.
Due to a slow-down in domestic dredging activity that began in the
second half of 2003 and continued into the first nine months of
2004, the Company experienced a material reduction in revenue and
earnings. For the year ending December 2004, Great Lakes' revenue
was $351 million, a 12% drop from FY 2003 levels, while gross
profit margins decreased from about 18% to 10%, which illustrates
the effect of both decreased asset utilization and lower contract
pricing inherent in a weak market cycle.
EBITDA was more dramatically reduced by almost one-half, from $60
million in FY 2003 to about $32 million in 2004. As a result,
credit metrics suffered appreciably. The Company's total December
2004 debt of $254 million represents leverage (lease-adjusted
debt/EBITDAR) of about 8x. EBIT/interest coverage was weak,
estimated at about 0.2 x, while Moody's estimates FY 2004 free
cash flow to be slightly negative.
However, Moody's believes that the year-end improvement in
financial performance, along with the significant improvement in
backlog and bidding levels support a projection of modest
improvements in operating results in FY 2005. Revenues in the
fourth quarter ($108 million) improved by 12% over Q4 2003 levels,
owing to strengthening in fleet utilization. The sector
experienced a surge in bidding activity in the second half of
2004, as the total domestic dredging bid market increased from
$425 million in 2003 to about $740 million as of 2004.
Great Lakes' backlog, in turn, increased about 45% from year-end
2003 levels, to about $291 million as of December 2004.
Accordingly, Moody's expects that this substantial increase in
backlog and bid market levels will likely translate into improved
sales and EBITDA levels over the near-term. Furthermore, assuming
that the company's capital expenditures for FY 2005 represent
essentially only maintenance CAPEX, Moody's anticipates that Great
Lakes will be moderately free cash flow generative over the next
year.
This suggests an adequate ability to cover debt service over the
near term, as none of the company's debt matures until 2008.
However, if working capital requirements were to increase
substantially, Moody's would be concerned that the Company's
liquidity position may tighten significantly, possibly requiring
drawings on the company's $15 million revolving credit facility.
The ratings downgraded are:
* $92.8 million bank facilities, comprising a $35 million
revolving credit facility (with a sub-limit of $25 million
for letters of credit and $15 million for revolver
borrowings) due 2008 and a $57.8 million term loan B due
2010, to B3 from B2,
* $175 million senior subordinated notes, due 2013, to Caa3
from Caa2,
* Senior Implied rating to B3 from B2, and
* Senior Unsecured Issuer rating to Caa2 from Caa1.
Headquartered in Oakbrook, Illinois, Great Lakes Dredge & Dock
Corporation, through its operating company Great Lakes Dredge &
Dock Company, is the largest provider of dredging services in the
United States. The Company had LTM September 2004 revenue of $339
million.
GREAT 2000 ENTERPRISES: Case Summary & Largest Unsecured Creditors
------------------------------------------------------------------
Debtor: Great 2000 Enterprises Inc.
250 Benjamin Drive
Corona, California 92879
Bankruptcy Case No.: 03-11668
Type of Business: The Debtor manufactures electronics & electrical
equipment.
Chapter 11 Petition Date: February 15, 2005
Court: Central District of California (Riverside)
Judge: Meredith A. Jury
Debtor's Counsel: Leonard M. Shulman, Esq.
Marshack Shulman Hodges & Bastian LLP
26632 Towne Centre Drive, Suite 300
Foothill Ranch, CA 92610
Tel: 949-340-3400
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Halsey Enterprise Co. Ltd. Amount owing is as $1,288,298
No. 7 Land 974 Feng Shih Rd. of 2/4/03
Feng Yuan, TA ROC product supplier
New Chao Feng Group Amount owing is as $373,489
Shi Jing Village Town of of 2/4/03
Waigang, Jiading Dit. product supplier
Shanghai City, PROC
Q-Max Inc. (Halsey) Amount owing $276,653
#52 Lane 480 Sec. 2 is as of 2/4/03
Fengsh RD product supplier
Genesis Sourcing Service Inc Amount owing $243,480
is as of 2/4/03
product supplier
ULTEC(China) Lighting Coltd. Amount owing $96,732
is as of 2/4/03
product supplier
Air Cool Industrial Co. Ltd. Amount owing $69,859
is as of 2/4/03
product supplier
Harnett & Hayes LLP Amount owing $67,765
is as of 2/4/03
Attorney
Law Off of James Bruce Amount owing $31,255
Minton is as of 2/4/03
Attorney
United Parcel Service (UPS) Amount owing $27,748
is as of 2/4/03
Freight
Susan Huang Amount owing $25,000
is as of 2/4/03
Rent
Liu Ching Lung Amount owing $20,750
is as of 2/4/03
Board fee
Central Transp. Int'l Inc. Amount owing $17,511
is as of 2/4/03
Freight
Gigalite Industrial Ltd. Amount owing $15,800
is as of 2/4/03
product supplier
Lighting Essentials Amount owing $15,468
is as of 2/4/03
Sales Rep. Commission
August G. Carloni Amount owing $14,798
is as of 2/4/03
Attorney
Dallas Market Center Amount owing $14,403
is as of 2/4/03
Rent
Lighting One (Ilucio) Amount owing $10,775
is as of 2/4/03
Rebate
Kaiser Permanente Amount owing $10,080
is as of 2/4/03
Insurance
Very Luck Glass Co./Loong Po Amount owing $9,741
is as of 2/4/03
product supplier
Ming Chuan Huang Amount owing $8,300
is as of 2/4/03
Buying commission
GREENVILLE HOUSING: Moody's Cuts Rating on $14.3 Mil. Bonds to B2
-----------------------------------------------------------------
Moody's Investors Service has downgraded to B2 from A1 the rating
on the $14.3 million of outstanding Greenville Housing Finance LLC
Taxable Mortgage Backed Revenue Bonds (Cameron Crossing I and II)
2003 Series A. The original rating was based on the pledged
mortgage loan, which is guaranteed by the United States Department
of Agriculture Rural Development Section 538 guarantee, and trust
estate assets associated with the project. The outlook on the
bonds is developing.
This rating downgrade is based on a combination of factors:
1) a tap on the Debt Service Reserve Fund on December 1, 2004;
2) the uncertainty associated with the trustee using the
remaining balance of funds in the Debt Service Reserve Fund
to make the next bond payment on June 1, 2005; and
3) the lack of a favorable resolution to date regarding the
viability of the underlying USDA guarantee.
This project was financed with a loan that was guaranteed by USDA
with a combination construction/permanent guarantee. The USDA has
taken the position that once the 24-month construction period
ends, that the permanent guarantee does not take effect until the
project achieves 90% occupancy for 90 days. The regulations state
that "for combination construction and permanent loans, the Agency
will guarantee advances during the construction loan period (which
cannot exceed 24 months).
The guarantee of construction loan advances will convert to a
permanent loan guarantee once the required level of occupancy has
been reached." Moody's believes that the 24 months is the period
of time during which USDA will guarantee advances -- such that
advances made after 24 months would not be guaranteed -- and that
the guarantee would not terminate, but rather would convert to a
permanent guarantee at a later point in time upon meeting
sufficient occupancy. There is no provision for termination of
the guarantee after 24 months in the regulations.
Nonetheless, the USDA has taken a position which leaves these
projects without a guarantee during the period between the end of
24 months and the time they achieve 90% occupancy for 90 days.
Moody's had placed the bonds on watch for downgrade based on the
ongoing review by USDA of its interpretation of the regulations.
The USDA has reviewed the facts as it relates to these bonds and
stands by its interpretation.
In addition, there is another bond financing with a similar set of
circumstances including a USDA 538 guarantee, a tap on the Debt
Service Reserve fund, and the same bond trustee. In that
transaction (South Carolina Jobs Economic Development Authority
Multifamily Housing Revenue Bonds (The Legacy at Anderson Project)
2002 Series A and 2002 Series B, the trustee did not pay interest
due on the bonds on February 1, 2005 despite having sufficient
monies in the Debt Service Reserve Fund to make such payment. In
light of this, Moody's believes that there is a level of
uncertainty associated with trustee using the remaining balance of
funds in the Debt Service Reserve Fund to make the next bond
payment on June 1, 2005.
Therefore, based on the USDA interpretation, the tap on the Debt
Service Reserve Fund and the uncertainty associated with the
trustee using the funds in the Debt Service Reserve Fund to make
the next bond payment on June 1, 2005, Moody's has downgraded the
rating to B2.
Outlook:
The outlook on the bonds is developing pending final determination
of the status of the project and the guarantee.
What Could Change the Rating - UP
The participants are considering a plan to restructure the project
and have the USDA issue a permanent guarantee in conjunction with
this restructuring. If the restructuring takes place and
depending on the economics of the restructuring, the credit
quality of the bonds could improve.
What Could Change the Rating - DOWN
If the restructuring does not occur and the project does not
receive the permanent guarantee and does not generate cashflow
sufficient to pay debt service, the debt service reserve fund will
need to be tapped again.
HAYES LEMMERZ: Deutsche Bank Discloses 5.95% Equity Stake
---------------------------------------------------------
On February 9, 2005, Deutsche Bank AG disclosed in a regulatory
filing with the Securities and Exchange Commission that it is now
deemed to beneficially own 2,250,800 shares of Hayes Lemmerz
International, Inc., Common Stock:
No. of Shares Percentage
Beneficially Outstanding
Reporting Person Owned of Shares
---------------- ------------- -----------
Deutsche Bank AG 2,250,800 5.95%
Deutsche Bank AG, London Branch 2,239,820 5.92%
Deutsche Bank Alternative Trading, Inc. 10,980 0.03%
Deutsche Bank AG is the parent holding company of Deutsche Bank
AG, London Branch, a bank, and Deutsche Bank Alternative Trading,
Inc., an investment advisor.
Deutsche Bank disclaims beneficial ownership of the securities
beneficially owned by their clients and certain investment
entities.
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. (Hayes Lemmerz Bankruptcy News, Issue No. 60; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
HEALTHTRONICS INC: Moody's Puts Ba3 Rating on $175MM Secured Debt
-----------------------------------------------------------------
Moody's Investors Service assigned ratings to the proposed debt of
HealthTronics Inc. Prime Medical Services Inc. acquired
HealthTronics Surgical Services Inc. on November 11, 2004, and
subsequently changed the name of the company to HealthTronics Inc.
The proceeds from the proposed transaction will be used to
refinance the existing debt of HealthTronics.
HealthTronics Inc., is a general partner in 93 partnerships with
approximately 3,000 local urologists in 47 states, where the
company provides the personnel and operating infrastructure
required to deliver lithotripsy treatments to hospitals and other
healthcare settings. Concurrently, Moody's upgraded
HealthTronic's senior implied rating to Ba3 from B1 reflecting
improved operations and a more favorable outlook. The ratings
outlook is stable.
A list of Moody's rating actions:
* Ba3 assigned to the proposed $175 million senior secured
facility consisting of a $50 million Senior Secured Credit
Facility, due 2010, and a $125 million Senior Secured Term
Loan B, due 2011
* Ba3 assigned to the Senior Secured Revolving Credit Facility,
due 2005 (to be withdrawn concurrent with the proposed
transaction)
* upgraded the existing Senior Implied Rating to Ba3 from B1
* affirmed the existing Prime Medical $100 million 8.75% Senior
Subordinated Notes, due 2008, rated B3 (to be withdrawn upon
closing of the proposed tender)
* affirmed the Senior Unsecured Issuer Rating, rated B2 (non-
guaranteed exposure; effectively subordinated to sizable
liabilities of the limited partnerships)
The ratings outlook is stable.
The ratings are predicated upon review of executed documents.
The upgrade of the senior implied rating to Ba3 from B1 reflects
the stabilization of the same store sales growth rate of
HealthTronics Inc.'s lithotripsy services due to higher rates,
strong demand for its services and the re-engineering of its
physician partnerships. In addition, HealthTronics intends to
realize approximately $10 million in merger cost synergies by
eliminating redundant corporate overhead expenses, lowering
payroll expenses, and rationalizing its manufacturing capacity and
facilities.
The improved outlook for its core lithotripsy services and the
acquisition-related cost savings should result in continued
expansion of operating margins and higher free cash flow
generation, as a minimal amount of capital spending will be
required to maintain current operations and to support future
growth. Additional factors supporting the ratings include market
leadership in the lithotripsy markets, greater revenue
diversification from the merger, and future growth opportunities
from its portfolio of emerging technologies, products and
services.
Despite having credit statistics that are strong for the Ba3
category, the senior implied rating is constrained by the
company's small size, its short history as a combined company, and
continued reliance on acquisitions to support future growth. The
risks inherent in commercializing new products and therapies, and
a cautious outlook for its orthopedic services also constrain the
ratings. Moreover, the ratings are also limited by the technology
risk inherent in the Company's business, potential product
liability issues, and possible changes in the regulatory
environment.
The stable ratings outlook anticipates that the Company will
continue to grow its base business, acquire small innovative
companies, and roll out new products and services. Operating
margins are expected to expand through tight cost control, merger
related synergies, and a more favorable product mix. Revenue
growth and increased margins should translate into higher free
cash flow generation and debt reduction over time, improving debt
coverage statistics.
Moody's is concerned with the potential disruption to its business
as the company integrates its operations. In addition, there is
also a risk that the adoption rate for new services and products
may be slower than originally anticipated. These adverse events
could inhibit the company's recent progress, and prevent an
improvement in its credit metrics.
The ratings outlook could move up if the Company is able to
successfully execute its new growth initiatives, deliver higher
cost savings than anticipated or generate greater than expected
operating cash flow resulting in an adjusted free cash flow to
adjusted debt ratio in the high 20% to low 30% range.
On the other hand, the ratings outlook could move down if
integration of the two companies proves to be more difficult than
anticipated and disrupts the performance of the core business, the
pace of acquisitions accelerates or the acceptance of new products
and services proves to be disappointing, resulting in lower
operating cash flow and a meaningful depression in the adjusted
free cash flow to adjusted debt ratio in the low single digits to
low teens.
Pro forma for the transaction, credit statistics are solid for a
company in the Ba3 rating category. During the intermediate term,
adjusted free cash flow as a percentage of adjusted debt is
expected to be in the mid 20% range. Financial leverage, as
measured by the ratio of Debt/EBITDA, is expected to decline from
close to 3 times to 2 times over the next two years. Similarly,
the level of interest coverage (EBIT to interest) is expected to
increase from 3 times to 6 times.
The Company is proposing to issue a $50 million revolver and a
$125 million Term Loan. The majority of proceeds will be used to
tender Prime Medical's existing $100 million 8.75% senior notes
due March 2007 and repay the company's existing revolver facility.
The upgrade of the rating of HealthTronics Inc.'s existing senior
revolving credit facility to Ba3 from B1, and the assignment of a
Ba3 rating to the proposed senior credit facility reflects the
priority position in the capital structure and the expectation of
asset coverage in a distressed scenario. In Moody's opinion,
excess collateral coverage in a distressed scenario would not
likely be ample enough to support notching above the Ba3 senior
implied rating. Further supporting the rating is the fact that
total committed bank facilities account for almost all of the
total pro-forma debt, and that goodwill represents over 60% of
total pro-forma assets.
The credit facilities are secured by a first lien on the assets of
the borrower and its consolidated entities, exclusive of
partnerships in which the borrower owns less than 50%. There is a
guarantee from the borrower's direct and indirect subsidiaries
excluding partnerships where the borrower owns less than 50%.
The affirmation of the B3 rating for the existing notes reflects
the subordination to all existing and future senior debt. The
notes benefit from the same guarantee as the senior credit
facility.
The overall liquidity of HealthTronics Inc., is considered good as
it is expected that internally generated cash flow should be more
than sufficient to fund working capital, capital expenditures and
debt service over the next year. The company should also be able
to access external liquidity through its $50 million revolving
credit facility.
The Company's liquidity is constrained by the minimal amount of
cash on hand. Additionally, there is a limited amount of
alternate sources of liquidity, since all assets will be
encumbered under the credit agreement and any asset sale would
diminish the value of the company.
HealthTronics Inc., provides lithotripsy and orthotripsy services
through partnerships with physicians in over 47 states. The
Company is also one of the leading manufacturers of urologic and
orthopedic medical devices. The Company is a global leader in the
design, engineering, and manufacturing of specialty vehicles used
for the transport of high technology, medical, broadcast and
communications equipment. On a pro-forma basis for the twelve
months ended September 30, 2004, revenue was approximately $280
million.
HEALTHTRONICS INC: S&P Rates Proposed $175M Sr. Sec. Debts at BB-
-----------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'BB-' corporate
credit rating on Austin, Texas-based urology services provider and
specialty vehicle manufacturer HealthTronics, Inc. At the same
time, Standard & Poor's also assigned its 'BB-' senior secured
debt rating and '3' recovery rating to HealthTronics, Inc.'s
proposed $50 million senior secured revolving credit facility
maturing in 2010 and a $125 million senior secured term loan B
maturing in 2011. The outlook on the company is stable.
The company is expected to use the proceeds from the term debt, in
addition to approximately $5 million to $10 million of borrowings
under the new revolving credit facility, to refinance $30 million
of existing revolving credit facility borrowings, refinance
$100 million of unsecured senior subordinated notes, and fund
about $5 million of related fees and premiums. The transaction
will lower the company's cost of debt, improve its maturity
schedule, and increase flexibility for pre-paying its debt. After
the transaction, HealthTronics will have just over $150 million of
total debt outstanding.
"The ratings on HealthTronics, Inc. (formerly Prime Medical
Services, Inc.) reflect the company's participation in two
disparate niche business lines," said Standard & Poor's credit
analyst Jesse Juliano. As a niche medical services provider, the
company is vulnerable to third-party reimbursement rates,
significant minority interest obligations, and integration risks
associated with recent and future acquisitions. As a manufacturer
of specialized vehicles, HealthTronics is vulnerable to
fluctuating demand. The ratings also reflect the company's
acquisition-based growth strategy and the decline in
HealthTronics' EBITDA (adjusted for minority interest) over the
past few years. These challenges are partly offset by
HealthTronics' market leadership and expanded platform in the
lithotripsy medical segment, improved demand for its specialty
vehicles, and its moderate financial policies.
HealthTronics is a leading provider of urology and orthopedic
services, including noninvasive lithotripsy services to treat
kidney stones. The company services its patients through a
network of about 3,000 physicians at 675 hospitals and surgical
centers. The company's other business is the production of
specialized trailers and coaches that transport medical,
broadcasting, communications, and homeland security equipment.
HealthTronics' urology and specialty vehicle manufacturing
divisions account for 47% and 39% of company revenues,
respectively, with orthotripsy and medical sales and services
contributing the other 14%.
HealthTronics' urology segment is predominantly comprised of its
lithotripsy business. The company has recently completed a
three-year reengineering of its lithotripsy physician contracts,
which reduced the size of the business and lessened the company's
partnership equity (the company's affiliated physicians now hold a
larger ownership interest). Management believes that the
lithotripsy division is now healthier and more stable, however,
HealthTronics owns less of a smaller business, as evidenced by its
large minority interest payments. With the reorganization
completed, Standard & Poor's expects that the lithotripsy business
will at least stabilize.
HILITE INT'L: S&P Places BB- Credit Rating on CreditWatch Negative
------------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'BB-' corporate
credit rating on Hilite International on CreditWatch with negative
implications, following the company's announcement that it
withdrew its planned issuance of $150 million of senior
subordinated notes because of adverse market conditions. In
addition, the company's plan to replace its existing $50 million
revolving facility with a new $85 million senior secured revolving
credit facility has been cancelled. The company had intended to
use proceeds from the debt issuance to pay, in part, outstanding
term loan balances totaling $162 million. Hilite is expected to
pursue an alternate financing in the near term.
"The CreditWatch listing reflects our concern that Hilite's
liquidity will be under pressure from deteriorated industry
conditions, given amortization requirements on its existing term
loan," said Standard & Poor's credit analyst Nancy Messer. "Also,
Hilite will likely need to either amend or refinance its existing
revolving credit facility to enable compliance with its 2005
covenants."
Privately held Hilite is controlled by its primary equity
sponsors, Citicorp Venture Capital, Kelso & Co., and Blue Point
Capital Partners Fund LP. Hilite supplies transmission and engine
components, including electronic valves, to automotive original
equipment manufacturers -- OEMs -- and Tier I auto suppliers, with
the majority of sales (about 90%) in the U.S. or Germany.
Cleveland, Ohio-based Hilite had total balance sheet debt of
$185 million at Sept. 30, 2004.
The proposed transaction that has been withdrawn, including the
issuance of senior subordinated notes and new credit facility,
would have modestly benefited Hilite's financial flexibility
because of an extended maturity profile, larger revolving credit
facility, and the elimination of near-term amortization
requirements. Industry-wide pricing and cost pressures that
reduced Hilite's EBITDA margins in the past year have continued
into this year. Furthermore, industry production volumes are
expected to be weak in the first half of 2005 and remain uncertain
for the second half. Hilite, however, expects to mitigate this
volume weakness with recent program launches that should benefit
sales in the second half of the year.
HOUSING AUTHORITY: Moody's Downgrades Rating on $9.4MM Bonds to B2
------------------------------------------------------------------
Moody's Investors Service has downgraded to B2 from A1 the rating
on the $9.4 million of outstanding Housing Authority of the City
of Dallas Georgia (The Legacy at Dallas Project) Series 2002A and
Series 2002B bonds. The original rating was based on the pledged
mortgage loan, which is guaranteed by the United States Department
of Agriculture (USDA) Rural Development Section 538 guarantee, and
trust estate assets associated with the project. The outlook on
the bonds is developing.
This rating downgrade is based on a combination of factors:
1) a tap on the Debt Service Reserve Fund on December 1, 2004;
2) the uncertainty associated with the trustee using the
remaining balance of funds in the Debt Service Reserve Fund
to make the next bond payment on June 1, 2005; and
3) the lack of a favorable resolution to date regarding the
viability of the underlying USDA guarantee.
This project was financed with a loan that was guaranteed by USDA
with a combination construction/permanent guarantee. The USDA has
taken the position that once the 24-month construction period
ends, that the permanent guarantee does not take effect until the
project achieves 90% occupancy for 90 days. The regulations state
that "for combination construction and permanent loans, the Agency
will guarantee advances during the construction loan period (which
cannot exceed 24 months).
The guarantee of construction loan advances will convert to a
permanent loan guarantee once the required level of occupancy has
been reached." Moody's believes that the 24 months is the period
of time during which USDA will guarantee advances -- such that
advances made after 24 months would not be guaranteed -- and that
the guarantee would not terminate, but rather would convert to a
permanent guarantee at a later point in time upon meeting
sufficient occupancy.
There is no provision for termination of the guarantee after 24
months in the regulations. Nonetheless, the USDA has taken a
position, which leaves these projects without a guarantee during
the period between the end of 24 months and the time they achieve
90% occupancy for 90 days. Moody's had placed the bonds on watch
for downgrade based on the ongoing review by USDA of its
interpretation of the regulations. The USDA has reviewed the
facts as it relates to these bonds and stands by its
interpretation.
In addition, there is another bond financing with a similar set of
circumstances including a USDA 538 guarantee, a tap on the Debt
Service Reserve fund, and the same bond trustee. In that
transaction (South Carolina Jobs Economic Development Authority
Multifamily Housing Revenue Bonds (The Legacy at Anderson Project)
2002 Series A and 2002 Series B, the trustee did not pay interest
due on the bonds on February 1, 2005 despite having sufficient
monies in the Debt Service Reserve Fund to make such payment. In
light of this, Moody's believes that there is a level of
uncertainty associated with trustee using the remaining balance of
funds in the Debt Service Reserve Fund to make the next bond
payment on June 1, 2005.
Therefore, based on the USDA interpretation, the tap on the Debt
Service Reserve Fund and the uncertainty associated with the
trustee using the funds in the Debt Service Reserve Fund to make
the next bond payment on June 1, 2005, Moody's has downgraded the
rating to B2.
Outlook:
The outlook on the bonds is developing pending final determination
of the status of the project and the guarantee.
What Could Change the Rating - UP
The participants are considering a plan to restructure the project
and have the USDA issue a permanent guarantee in conjunction with
this restructuring. If the restructuring takes place and
depending on the economics of the restructuring, the credit
quality of the bonds could improve.
What Could Change the Rating - DOWN
If the restructuring does not occur and the project does not
receive the permanent guarantee and does not generate cashflow
sufficient to pay debt service, the debt service reserve fund will
need to be tapped again.
HUNTSMAN CORP: IPO Transaction Prompts Moody's to Upgrade Ratings
-----------------------------------------------------------------
Moody's Investors Service upgraded the ratings of Huntsman LLC
(senior implied upgraded to B1- HLLC), Huntsman International
Holdings LLC (senior implied upgraded to B1- HIH), Huntsman
International LLC (senior unsecured upgraded to B2- HI), and
Huntsman Advanced Materials LLC (senior implied upgraded to Ba3
-- Advanced Materials).
The action follows the successful initial public offering (IPO)
transaction for Huntsman Corporation, along with a better
understanding of Huntsman Corporation's future strategies to
reduce debt and simplify its operating structure. Moody's
affirmed the B1 senior implied rating and Caa1 senior unsecured
rating of the new parent company Huntsman Corporation. The
outlook for Huntsman Corporation's rating and ratings for the
other rated companies is stable. It is our belief that the IPO
proceeds, to be used for debt reduction, will reach subsidiaries
via equity injections as opposed to inter-company debt
obligations.
The rating actions reflect that Huntsman Corp. has successfully
priced the IPO of its common stock. Huntsman Corp. is the new
holding company that will own or control the existing Huntsman
companies. Moody's expects HC to raise approximately $1.5 billion
in net proceeds from the IPO offering along with the proceeds of
an issue of mandatory convertible preferred stock, which Huntsman
Corp. will use to repay indebtedness at various subsidiaries.
The offerings raised some $150 million more in proceeds for debt
reduction than was originally anticipated. Moody's believes that,
subject to improvements in cash flow from operations, further
material reductions in indebtedness are likely over the next
several years. The rating incorporates Moody's belief that
management will avoid large debt financed acquisitions to grow the
group.
While the rating upgrades incorporate strategic bolt-on
acquisitions they are not expected to be material or to delay the
expected improvement in credit metrics as debt is reduced.
Existing Huntsman stockholders also participated in the offering
and HC will not benefit from these secondary sale proceeds.
Moody's believes the Huntsman family will continue to have
effective control of the new public corporation.
The ratings affirmed are:
-- Huntsman Corporation
* Senior Implied -- B1
* Issuer Rating -- Caa1
* Outlook -- Stable
The ratings upgraded are:
-- Huntsman LLC
* Guaranteed senior secured revolving credit facility, $350
million due 2009 -- to Ba3 from B1
* Guaranteed senior secured term loan B, $715 million due
2010 -- to B1 from B2
* Guaranteed senior secured notes, $451 million due 2010 --
to B1 from B2
* Guaranteed senior unsecured notes, $300 million due 2012 --
to B2 from B3
* Guaranteed senior unsecured floating rate notes, $100
million due 2011 -- to B2 from B3
* Senior Implied -- to B1 from B2
* Issuer Rating -- to B3 from Caa1
-- Huntsman International Holdings LLC
* Guaranteed senior secured revolving credit facility, $375
million due 2008 -- to Ba3 from B1*
* Guaranteed senior secured multi currency facility, $50
million due 2008 -- to Ba3 from B1*
* Guaranteed senior secured term loan B, $1,340 million due
2010 -- to Ba3 from B1
* Approximately $479 million accreted value senior discount
notes, due 2009 -- to B3 from Caa2
* Senior Implied -- to B1from B2
* Issuer Rating -- to B3 from Caa2
These two facilities in combination total $375 million:
-- Huntsman International LLC
* Guaranteed senior secured revolving credit facility, $375
million due 2008 -- to Ba3 from B1*
* Guaranteed senior secured multi currency facility, $50
million due 2008 -- to Ba3 from B1*
* Guaranteed senior secured term loan B, $1,340 million due
2010 -- to Ba3 from B1
* Guaranteed senior unsecured notes, $150 million due 2009 --
to B2 from B3
* Guaranteed senior unsecured notes, $300 million due 2009 --
to B2 from B3
* Guaranteed senior subordinated notes, $350 million due 2015
-- to B3 from Caa1
* Guaranteed senior subordinated notes due 2009 -- to B3 from
Caa1
* These two facilities in combination total $375 million:
-- Huntsman Advanced Materials LLC
* Guaranteed senior secured notes, $250 million due 2010 --
to Ba3 from B2
* Guaranteed senior secured floating rate notes, $100
million due 2008 -- to Ba3 from B2
* Senior Implied -- to Ba3 from B2
* Issuer Rating -- to B1 from Caa1
Currently the only debt, rated by Moody's, that has been
identified in the Form S-1 filing for reduction includes
approximately $539.4 million to redeem in full all of HIH's
13.375% Senior Discount Notes due 2009 (the "HIH Senior Discount
Notes"); approximately $177.9 million to repay $159.4 million in
aggregate principal amount of HLLC's 11 5/8% Senior Secured Notes
due 2010 (the "HLLC Senior Secured Notes"); approximately $87.0
million to repay $78.0 million in aggregate principal amount of
HLLC's 11.5% senior unsecured fixed rate Notes due 2012 (the "HLLC
Senior Fixed Rate Notes").
Total debt at the Huntsman Corp., level pro forma for the IPO is
likely to be reduced to approximately $5 billion from $6.2
billion. There will also be substantial debt reduction at the HMP
Equity Holdings Corporation (HMP) entity.
The affirmation and rating upgrades and stable outlooks reflect
the effect of the IPO on the debt profile of the Company, and the
prospect of changes in HC's financial policies, which we believe
include additional debt reduction. Moody's believes the
completion of the IPO will have a positive impact on the group's
credit metrics. The affirmations and upgrades assume the strong
likelihood for continued debt reduction given the expected
improvement in the operating performance of the various entities.
This assumption is supported by the group's recent strength in
business fundamentals. The stable outlooks assume that the
various companies will benefit from the cyclical upside in the
company's key commodity markets over the next 2 years. Moody's
notes that free cash flow generation at the group has been
relatively weak over the last several years.
Moody's believes that the companies, even after the IPO, remain
highly levered and the ratings and outlooks are based on the
expectation of material debt reduction over the next twelve
months. If this debt reduction is slowed the ratings or outlooks
could be pressured downward. If, however, free cash flow
generation were to reach or exceed $500 million in 2005 and be
used for debt reduction and this was combined with ongoing
positive industry fundamentals, over the intermediate term, the
outlook or ratings would be positively pressured.
Moody's notes that Huntsman Corp.'s principal operating
subsidiaries, HIH, HLLC and Advanced Materials, are currently
financed separately from each other and this may continue for some
time. The debt instruments of each such subsidiary limit Huntsman
Corp.'s ability to allocate cash flow or resources from one
subsidiary, and its related group of subsidiaries, to another
subsidiary group. It is for this reason Moody's rates these
companies primarily on a stand-alone basis.
Advanced Materials rating on its senior secured notes was upgraded
to Ba3 and this company is not directly benefiting from the IPO
proceeds in terms of specific debt reduction. Moody's upgrade
expects that Advanced Materials will remain relatively un-levered
going forward and thus warrants a higher rating. The upgrade at
Advanced Materials also results from an improved operating outlook
and a meaningful change in the group's financial philosophy. The
stable outlook at Advanced Materials reflects the prospect of
uncertainty surrounding the efforts to simplify HC's corporate
structure over time.
Huntsman Corporation is a global manufacturer of differentiated
and commodity chemical products. Huntsman Corp.'s products are
used in a wide range of applications, including those in the
adhesives, aerospace, automotive, construction products, durable
and non-durable consumer products, electronics, medical,
packaging, paints and coatings, power generation, refining and
synthetic fiber industries. Huntsman Corp. had pro forma revenues
for the nine months ended September 30, 2004 and the year ended
December 31, 2003 of $8.4 billion and $9.3 billion, respectively.
INTERFACE INC: Hosting Fourth Quarter Webcast on Feb. 24
--------------------------------------------------------
Interface, Inc. (Nasdaq: IFSIA) intends to release its fourth
quarter and full year 2004 results on Wednesday, February 23,
2005, after the close of the market. In conjunction with this
release, Interface will host a conference call on Thursday,
Feb. 24, 2005, at 9:00 AM Eastern Time that will be simultaneously
broadcast live over the Internet. Certain information discussed
on the conference call will be available on Interface's website,
at http://www.interfaceinc.com/results/investorunder the heading
"Press Releases." Daniel T. Hendrix, President and Chief
Executive Officer, and Patrick C. Lynch, Vice President and Chief
Financial Officer, will host the call.
Listeners may access the conference call live over the Internet at
http://www.interfaceinc.com/results/investoror at
http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=112931&eventID=954176
The archived version of the conference call will be available at
these sites beginning approximately one hour after the call ends
through Feb. 24, 2006, at 11:59 PM Eastern Time.
About the Company
Interface, Inc., is a recognized leader in the worldwide interiors
market, offering floorcoverings and fabrics. The Company is
committed to the goal of sustainability and doing business in ways
that minimize the impact on the environment while enhancing
shareholder value. The Company is the world's largest manufacturer
of modular carpet under the Interface, Heuga, Bentley and Prince
Street brands, and, through its Bentley Mills and Prince Street
brands, enjoys a leading position in the high quality, designer-
oriented segment of the broadloom carpet market. The Company is a
leading producer of interior fabrics and upholstery products,
which it markets under the Guilford of Maine, Toltec, Intek,
Chatham and Camborne brands. The Company provides specialized
carpet replacement, installation, maintenance and reclamation
services through its Re:Source Americas service network. In
addition, the Company provides specialized fabric services through
its TekSolutions business and produces InterCell brand
raised/access flooring systems.
* * *
As reported in the Troubled Company Reporter on Nov. 1, 2004,
Standard & Poor's Ratings Services revised the outlook on Atlanta,
Georgia-based carpet manufacturer Interface Inc. to stable from
negative.
At the same time, Standard & Poor's affirmed its ratings on
Interface, including its 'B-' corporate credit rating. The
company's total debt outstanding at July 4, 2004, was about
$476 million.
"The outlook revision follows the company's announcement that it
will exit its owned Re:Source Americas dealer businesses, which
should reduce the company's cost structure. In addition, the
revision reflects more favorable industry trends in Interface's
core floorcovering operations," said Standard & Poor's credit
analyst Susan Ding.
INTERSTATE BAKERIES: Can Honor Prepetition Employee Obligations
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of Missouri
authorized Interstate Bakeries Corporation and its debtor-
affiliates to continue the majority of their employee benefits on
a final basis. The Court's Prior Orders did not approve the
Debtors' Bonus Plan, Severance Plans, Pension Plans, and IBC SERP,
Deferred Compensation Plan and Individual Retirement Agreements on
a final basis. Under the Prior Orders, all parties other than the
Debtors' secured lenders, the U.S. Trustee, the Creditors
Committee and the Equityholders' Committee are precluded from
raising further issues relating to or objections to the Interim
Benefits.
The Debtors have withdrawn their requests for authority to
continue to honor the Bonus Plan, IBC SERP and Deferred
Compensation Plan.
The Debtors and the Principal Parties have agreed to continue the
final hearing regarding the Severance Plans, Pension Plans and
Individual Retirement Agreements to the omnibus hearing scheduled
on February 16, 2005.
Paul M. Hoffmann, Esq., at Stinson Morrison Hecker, LLP, in
Kansas City, Missouri, informs the Court that the Debtors have
paid the majority of the $920,000 Termination Benefits to the
Terminated Monroe Employees, the Other Terminated Employees and
the Terminated Delivery Employees. However, the Debtors have not
yet paid any of the $2,200,000 Termination Benefits with respect
to the Terminated Florence Employees. The Debtors expect that
all of the Termination Benefits for the Terminated Florence
Employees will become due and payable beginning in early
February.
The Debtors, Mr. Hoffmann discloses, did not pay any Termination
Benefits to Additional Terminated Employee, which the Debtors
indicated could be up to $1,000,000.
Excluding the remaining Termination Benefits for the Terminated
Monroe Employees, the Other Terminated Employees and the
Terminated Delivery Employees and the Termination Benefits for
the Terminated Florence Employees, the Debtors estimate that the
amount of Termination Benefits likely to become payable in the
ordinary course of business between January and February will not
exceed $3,000,000, including the $1,000,000 of Termination
Benefits for the Additional Terminated Employees. The Debtors
will confer with the Principal Parties before paying any amounts
in excess of $3,000,000.
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. 12; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
INTERSTATE BAKERIES: Court Approves Use of Ball Fields Until 2006
-----------------------------------------------------------------
Interstate Bakeries Corporation (OTC: IBCIQ) has received approval
from the U.S. Bankruptcy Court for the Western District of
Missouri, on an agreement with the Board of Directors of the San
Pedro (California) Eastview Little League that will grant the
League use of three acres of baseball fields through the 2006
Little League baseball season. Under the terms of the agreement,
IBC will also contribute $250,000 to assist in the League's
relocation to a new site.
"We are pleased to be able to provide the Little League not only
the time necessary to ensure an uninterrupted season this year and
next, but resources to assist it in relocating to a new site,"
said Mark Cooper, IBC vice president for southern California
operations. "Interstate Bakeries and its predecessors have
proudly been part of the San Pedro community for nearly half a
century. For 43 years we have enthusiastically supported the
area's youth by providing a site for countless Little League games
and a wholesome place for thousands of children to participate in
the Nation's pastime and appreciate the importance of
sportsmanship and teamwork in everything they do."
Mr. Cooper said he was particularly appreciative of the role
played by City Councilmember Janice Hahn in bringing the two sides
together and helping find a resolution.
The site, approximately 9.83 acres in total, now comprises some of
the most valuable commercial real estate in the area. IBC has
said that it has received several unsolicited offers to purchase
the property, and has no choice but to sell in order to benefit
creditors in its bankruptcy case.
"Because of our history, our commitment to youth and our strong
ties to the community and the families of San Pedro, it was very
important for us to find a way to facilitate the transition to a
new home for the League," Mr. Cooper said, "and I believe we have
done just that."
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.
iSTAR FINANCIAL: Declares $0.50 Dividend on Preferred Shares
------------------------------------------------------------
iStar Financial Inc.'s (NYSE: SFI) Board of Directors has declared
dividends on the Company's Series D, Series E, Series F, Series G,
and Series I Preferred Stock. For all five series of Preferred
Stock, dividends are payable on March 15, 2005, to holders of
record on March 1, 2005.
A dividend of $0.50 per share will be paid on the 8.00% Series D
Preferred Stock; a dividend of $0.492188 per share will be paid on
the 7.875% Series E Preferred Stock; a dividend of $0.4875 per
share will be paid on the 7.80% Series F Preferred Stock; a
dividend of $0.478125 per share will be paid on the 7.65% Series G
Preferred Stock; and a dividend of $0.46875 per share will be paid
on the 7.50% Series I Preferred Stock.
About the Company
iStar Financial --http://www.istarfinancial.com--isthe leading
publicly traded finance company focused on the commercial real
estate industry. The Company provides custom-tailored financing to
high-end private and corporate owners of real estate nationwide,
including senior and junior mortgage debt, senior and mezzanine
corporate capital, and corporate net lease financing. The Company,
which is taxed as a real estate investment trust, seeks to deliver
a strong dividend and superior risk-adjusted returns on equity to
shareholders by providing the highest quality financing solutions
to its customers.
* * *
As reported in the Troubled Company Reporter on Jan. 24, 2005,
iStar Financial, Inc., plans to acquire Falcon Financial
Investment Trust. Fitch expects no change to iStar's rating and
Outlook as a result of this transaction. The iStar's ratings are:
-- Senior unsecured debt: 'BBB-';
-- Preferred stock 'BB';
-- Rating Outlook Stable.
KGEN LLC: Moody's Puts B2 Rating on $225MM Sr. Secured Term Loan
----------------------------------------------------------------
Moody's Investors Service assigned a B2 rating to the $225 million
first priority senior secured term loan (Tranche A) due 2011 of
KGen LLC, and assigned a B3 rating to the $250 million second
priority senior secured term loan (Tranche B) due 2011. The
outlook is stable.
The ratings for the term loan facilities consider these strengths:
1. Expected commencement of a seven-year power purchase
contract with Georgia Power Company (A2, senior unsecured)
at the Company's Murray operating unit (KGen Murray)
provides a source of cash flow stability for the Company;
2. The funding of substantial liquidity reserves to allow the
company to meet its maintenance and capital spending needs
over the next several years. This funding is likely to be
needed because internal cash flow will be well short of
necessary levels if existing poor spark spread conditions
continue for several years;
3. The requirement to fund and maintain a cash debt service
reserve account (CDS Account) equivalent to six months of
scheduled debt service for the term loans;
4. A loan structure that includes a project style cash flow
waterfall mechanism and the inclusion of a cash sweep that
prepays debt with excess cash flow. No dividends will be
distributed until all debt is repaid;
5. Meaningful collateral value relative to the debt load, which
Moody's believes provides a high likelihood for full recovery
value for the first priority loans and substantial recovery
for the second priority loans under a distress scenario;
6. Experienced operating management, with an affiliate of Duke
Energy to be the operator of the Murray facility and O&M
agreements with an affiliate of Cinergy Corp. for the
remaining assets.
These strengths are offset by these weaknesses:
1. Reliance upon recovery of the merchant wholesale power
market is necessary within a few years or the project may
have insufficient internal cash flow to meet its needs;
2. An asset portfolio that is subject to seasonality and
weather related cash flow volatility;
3. Geographic concentration of the asset portfolio in the SERC
market, which currently has a significant imbalance between
supply and demand;
4. Limited operating history for the asset portfolio;
5. Heavy reliance upon liquidity reserves to supplement weak
expected cash flow from merchant operations and to provide
for approximately $55 million of major maintenance funding
requirements expected during the first two to three years of
the loans;
6. A business plan that entails a likely reliance upon the sale
of peaker assets to supplement internal cash flow and
liquidity reserves.
The ratings consider the stable underlying cash flow expected to
be derived from a seven-year power purchase agreement with Georgia
Power Company that involves Kgen LLC's Murray 1 combined-cycle
generating facility. The contract with Georgia Power provides for
fixed capacity payments regardless of the level of dispatch of
this plant.
The Company has also entered into a gas supply contract with
Sequent Energy Management L.P. that supports the energy production
requirements under the PPA. Additionally, KGen LLC has engaged a
marketing affiliate of Cinergy Corp. to provide commercial
marketing services for all assets of the company other than the
Murray I unit, which benefits from the PPA.
The capacity revenues of approximately $47 to $51 million per
annum during the life of the term loans, while providing a core
level of cash flow for the Company, are well short of what is
needed to cover the company's overall cash needs. The ratings
incorporate the view that the company's ability to service its
debt is highly reliant upon achieving eventual margin improvement
in its merchant power sales. Given the location of the generating
units in the Southeast, the merchant margins are expected to
remain somewhat depressed in the early years of the term loans.
The KGen LLC assets are substantially weather dependent for
dispatch, resulting in these merchant cash flows being subject to
a particularly high degree of volatility. Approximately 2,305 MW
of the company's 2,945 MW simple cycle facilities are currently in
lay-up status and not expected to generate any operating cash flow
in the near term. KGen's strategy includes opportunistically
selling these simple-cycle assets with proceeds used for liquidity
and debt paydown.
The ratings incorporate the expectation that the company will be
required to rely heavily upon its liquidity reserves to supplement
its internal cash flow. KGen LLC has budgeted for approximately
$55 million of major maintenance spending at its combined-cycle
facilities during the first two to three years, but may have some
flexibility on the timing of these outlays. The Company would
have to further rely upon asset sales to supplement liquidity
reserves during these years in the event that cash flow is lower
than expected due to weak spark spreads or lower than expected
dispatch due to adverse weather conditions.
Management expects to supplement liquidity reserves when needed
from the sale of turbines from its simple-cycle peaker units, four
of which are currently in lay-up status. However, Moody's notes
that there is significant execution risk associated with this
business model.
The ratings consider the inclusion of a cash funded debt service
account (CDS Account) that is sized to be equivalent to at least
six months of scheduled debt service and will be funded at
closing. Additionally, approximately $50 million of additional
liquidity is expected to be funded with proceeds from the term
loans at closing. The total liquidity and CDS Account balance
including current cash on hand is expected to be approximately $88
million upon closing of the financing. The structure includes a
project style cash waterfall payment mechanism that will include
the requirement to maintain the CDS Account balance and to top up
a required liquidity reserve balance of $85 million.
The ratings also consider the inclusion in the structure of an
annual cash sweep mechanism such that the first $20 million of
gross excess cash flow that is available after the required
liquidity reserve balance is replenished will be used to prepay
the Tranche A loan, with any remaining excess cash amount
available to pay accrued PIK amounts under the Tranche B loan.
Any excess cash remaining thereafter shall be applied 100% to
prepay Tranche A and Tranche B debt on a pro rata basis. Under
the terms of the transaction, no distributions will allowed until
the term loans are fully repaid.
The ratings incorporate Moody's expectation of relative recovery
in the event of default of each tranche of the loans based upon
the expected collateral value for the portfolio assets relative to
the loans. Moody's notes that the debt per kW based on the entire
portfolio is approximately $89/kW (approximately $200/kW based
only upon the combined-cycle assets). The first lien tranche on a
debt per kW basis is approximately $42/kW ($95/kW on a combined-
cycle only basis). The KGen LLC assets were acquired from Duke
Energy North America in August 2004 for a total cash consideration
of $475 million, or $89/kW.
An independent appraisal by Stone and Webster subsequent to the
acquisition and the valuations implied by several recent natural
gas combined-cycle asset auctions, suggest that the market value
of the assets might cover both term loan tranches. Under a
distress scenario, Moody's believes that full recovery would be
highly likely for Tranche A and that substantial recovery might be
expected for Tranche B.
The stable outlook is based upon our expectation of near term
adequacy of operating cash flows combined with funded liquidity
reserves to meet ongoing debt service and considers the need to
execute asset sales in a timely manner to supplement liquidity
reserves in the event of lower than expected merchant margins.
The assignment of the rating is predicated upon the sizing of the
loan tranches as currently anticipated and subject to final
documentation being consistent with Moody's current understanding
of the transaction structure.
KGen LLC (KGen) is a newly formed power generating company, which
is wholly owned by MatlinPatterson Global Opportunities Partners
II (MatlinPatterson). MatlinPatterson purchased the Southeast
Portfolio from Duke Energy North America in August 2004 to form
KGen. The Company maintains its corporate headquarters in
Houston, Texas.
LEE COUNTY: Moody's Cuts Rating on $8.1MM Revenue Bonds to B2
-------------------------------------------------------------
Moody's Investors Service has downgraded to B2 from A1 the rating
on the $8.1 million of outstanding Lee County Industrial
Development Authority, FL Multifamily Housing Revenue Bonds (The
Legacy at Lehigh Project) 2003 Series A and 2003 Series B.
The original rating was based on the pledged mortgage loan, which
is guaranteed by the United States Department of Agriculture
(USDA) Rural Development Section 538 guarantee, and trust estate
assets associated with the project. The outlook on the bonds is
developing.
This rating downgrade is based on a combination of factors:
1) a tap on the Debt Service Reserve Fund on December 1, 2004;
2) the uncertainty associated with the trustee using the
remaining balance of funds in the Debt Service Reserve Fund
to make the next bond payment on June 1, 2005; and
3) the lack of a favorable resolution to date regarding the
viability of the underlying USDA guarantee.
This project was financed with a loan that was guaranteed by USDA
with a combination construction/permanent guarantee. The USDA has
taken the position that once the 24-month construction period
ends, that the permanent guarantee does not take effect until the
project achieves 90% occupancy for 90 days. The regulations state
that "for combination construction and permanent loans, the Agency
will guarantee advances during the construction loan period (which
cannot exceed 24 months).
The guarantee of construction loan advances will convert to a
permanent loan guarantee once the required level of occupancy has
been reached." Moody's believes that the 24 months is the period
of time during which USDA will guarantee advances -- such that
advances made after 24 months would not be guaranteed -- and that
the guarantee would not terminate, but rather would convert to a
permanent guarantee at a later point in time upon meeting
sufficient occupancy.
There is no provision for termination of the guarantee after 24
months in the regulations. Nonetheless, the USDA has taken a
position which leaves these projects without a guarantee during
the period between the end of 24 months and the time they achieve
90% occupancy for 90 days. Moody's had placed the bonds on watch
for downgrade based on the ongoing review by USDA of its
interpretation of the regulations. The USDA has reviewed the
facts as it relates to these bonds and stands by its
interpretation.
In addition, there is another bond financing with a similar set of
circumstances including a USDA 538 guarantee, a tap on the Debt
Service Reserve fund, and the same bond trustee. In that
transaction (South Carolina Jobs Economic Development Authority
Multifamily Housing Revenue Bonds (The Legacy at Anderson Project)
2002 Series A and 2002 Series B, the trustee did not pay interest
due on the bonds on February 1, 2005 despite having sufficient
monies in the Debt Service Reserve Fund to make such payment. In
light of this, Moody's believes that there is a level of
uncertainty associated with trustee using the remaining balance of
funds in the Debt Service Reserve Fund to make the next bond
payment on June 1, 2005.
Therefore, based on the USDA interpretation, the tap on the Debt
Service Reserve Fund and the uncertainty associated with the
trustee using the funds in the Debt Service Reserve Fund to make
the next bond payment on June 1, 2005, Moody's has downgraded the
rating to B2.
Outlook:
The outlook on the bonds is developing pending final determination
of the status of the project and the guarantee.
What Could Change the Rating - UP
The participants are considering a plan to restructure the project
and have the USDA issue a permanent guarantee in conjunction with
this restructuring. If the restructuring takes place and
depending on the economics of the restructuring, the credit
quality of the bonds could improve.
What Could Change the Rating - DOWN
If the restructuring does not occur and the project does not
receive the permanent guarantee and does not generate cashflow
sufficient to pay debt service, the debt service reserve fund will
need to be tapped again.
LOGOATHLETIC: Has Until Mar. 7 to File Final Reports
----------------------------------------------------
LogoAthletic of Nevada, Inc., dba Collegiate Graphics, sought and
obtained an extension to file their final reports. The U.S.
Bankruptcy Court for the District of Delaware gives the Debtor
until March 7, 2005, to file that report. The entry of a final
decree in the Debtor's chapter 11 case should occur by Mar. 31.
The Court allowed the extension to give the Debtors time to settle
pending preference litigation in its chapter 11 cases. Those
preference suits contend that unsecured creditors receiving more
than their fair share within the 90-day period prior to the
chapter 11 filing should return those payments for redistribution
to other unsecured creditors who didn't receive payments.
Headquartered in Indianapolis, Indiana, LogoAthletic, Inc., filed
for chapter 11 protection on Nov. 6, 2000 (Bankr. D. Del. Case No.
00-04126). Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl,
Young & Jones P.C. represents the Debtor in its restructuring
efforts. When the Debtor filed for protection from its creditors,
it estimated assets and liabilities of $100 million. The Debtors'
Amended Chapter 11 Liquidating Plan was confirmed on Nov. 17,
2003.
MADISON RIVER: S&P Places BB- Rating on $530.6M Secured Facility
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB-' corporate
credit rating to Madison River Communications Corp., which will
become the new parent company of Madison River Telephone Co. LLC
upon the successful completion of its initial public offering.
The outlook is negative.
Simultaneously, Standard & Poor's assigned its 'BB-' rating to
Madison River Capital LLC's $530.6 million secured bank facility
due 2012. A recovery rating of '4' also was assigned to the loan,
denoting the expectation of a marginal recovery of principal
(25%-50%) in the event of a payment default. The new credit
facility is contingent upon closing the proposed IPO; if the IPO
is not completed, the ratings on the loan will be withdrawn.
Cash proceeds of about $182.6 million from the IPO and proceeds
from the bank facility will be used to repay all outstanding
indebtedness and related transaction fees, and to purchase 3,800
access lines in North Carolina. At the same time, certain
existing shareholders are selling a significant ownership stake to
the public. The corporate credit rating of Madison River
Telephone Co. LLC will be withdrawn after the entity has been
merged into the new parent company. In addition, the corporate
credit rating of Madison River Capital LLC will be withdrawn due
to the guarantee provided by the new parent company. If the
proposed transactions are not completed, existing ratings will
remain at their current levels with a stable outlook; therefore,
these ratings were removed from CreditWatch.
The new ratings reflect the deleveraging impact of the proposed
IPO on this rural telephone operator. However, the negative
rating outlook assigned for Madison River addresses the potential
longer-term impact of cable telephony on the company's competitive
position. Pro forma for the transaction, total debt outstanding
was about $455.6 million.
Madison River is an established rural local exchange carrier --
RLEC -- that provides local, long-distance, Internet, and data
services to residential and business customers in Alabama,
Georgia, Illinois, and North Carolina. As of Dec. 31, 2004,
access lines totaled 193,092.
"Ratings reflect Madison River's aggressive, shareholder-oriented
financial policy with the intention to provide a substantial
dividend, as well as low-growth revenue trends due to the maturity
of the RLEC industry," said Standard & Poor's credit analyst
Rosemarie Kalinowski. "These factors are tempered by the
company's healthy EBITDA margin, its supportive regulatory
environment, and the depth of management experience."
MANDALAY RESORT: FTC Clears MGM MIRAGE's Pending Acquisition
------------------------------------------------------------
MGM MIRAGE (NYSE: MGG) and Mandalay Resort Group (NYSE: MBG) have
been notified by the Federal Trade Commission -- FTC -- that the
FTC has completed its review of the pending acquisition by MGM
MIRAGE of Mandalay Resort Group and voted unanimously that no
further action is required by the FTC. The transaction is subject
to customary closing conditions and receipt of state regulatory
approvals. MGM MIRAGE anticipates the transaction will be
completed in the first quarter of 2005.
About MGM MIRAGE
MGM MIRAGE (NYSE: MGG) -- http://www.mgmmirage.com/--
headquartered in Las Vegas, Nevada, is one of the world's leading
and most respected hotel and gaming companies. The Company owns
and operates 11 casino resorts located in Nevada, Mississippi and
Michigan, and has investments in three other casino resorts in
Nevada, New Jersey and the United Kingdom.
About Mandalay Resort Group
Mandalay Resort Group owns and operates 11 properties in Nevada:
Mandalay Bay, Luxor, Excalibur, Circus Circus, and Slots-A-Fun in
Las Vegas; Circus Circus -- Reno; Colorado Belle and Edgewater in
Laughlin; Gold Strike and Nevada Landing in Jean and Railroad Pass
in Henderson. The company also owns and operates Gold Strike, a
hotel/casino in Tunica County, Mississippi. The company owns a 50%
interest in Silver Legacy in Reno, and owns a 50% interest in and
operates Monte Carlo in Las Vegas. In addition, the company owns a
50% interest in and operates Grand Victoria, a riverboat in Elgin,
Illinois, and owns a 53.5% interest in and operates MotorCity in
Detroit, Michigan.
* * *
Mandalay Resort's 6-3/8% senior notes due Dec. 15, 2011, currently
carry Moody's Ba2 ratings. Fitch and Standard & Poor's rate the
$250 million note issue at BB+. Bloomberg data shows the notes
trading at 105 this week.
MCI INC: Verizon Acquisition Prompts DBRS to Review B+ Rating
-------------------------------------------------------------
Dominion Bond Rating Service has placed the rating of MCI,
Inc., "Under Review with Developing Implications" after Verizon
Communications, Inc., announced that it intends to acquire MCI for
US$4.8 billion in stock plus net debt of approximately
US$4 billion. In addition, MCI shareholders will receive special
dividends and cash merger considerations totalling approximately
US$1.95 billion. At the same time, DBRS has confirmed the ratings
of Verizon Global Funding Corp., VZ Network Funding Corp., and
Verizon Wireless Capital LLC.
MCI, Inc., has a B+ rating, which is considered highly speculative
and there is a reasonably high level of uncertainty as to the
ability of the entity to pay interest and principal on a
continuing basis in the future, especially in periods of economic
recession or industry adversity.
The "Under Review with Developing Implications" will remain in
place until Verizon indicates exactly how it will integrate MCI
into the Verizon organizational structure and MCI shareholders
approve the transaction. This transaction, if successfully
completed, will help alleviate several of the challenges that MCI
faces as a stand-alone operator. These include:
(1) The announced synergies related to cost reductions will
help MCI mitigate the decline in cash flow from operations
that the Company has experienced over the past several
years;
(2) MCI will gain further inroads into the small to medium
business size segment in Verizon's core northeastern U.S.
franchise. This will help reduce some of the pressure that
MCI was facing through the Regional Bell Operating
Companies -- RBOCs -- becoming more aggressive in this
customer segment;
(3) The addition of Verizon's wireless services to sell to its
government and large enterprise customer base will give MCI
the ability to offer customers integrating communications
offerings all on one bill;
(4) The merger provides the ability to increase capital
expenditures in IP-related growth areas that were somewhat
restricted while under bankruptcy protection and upon
emergence from bankruptcy; and
(5) The merger removes customer concerns over MCI's ability to
operate in the future, and will help overcome the
reputational challenges associated with MCI's predecessor
company.
DBRS does note that several challenges exist that could prevent
ratings improvement. These include:
(1) the transaction requires approval from the U.S. Department
of Justice, the Federal Communications Commission, and the
Public Utility Commissions of several states;
(2) pricing in the Business Enterprise segment and related cash
flow from operations could still come under pressure. This
relates to the degree of migration from older data
products, such as frame relay and ATM, to IP-based
solutions and struggling communications providers using
price discounting as a way of gaining market share; and
(3) Finally, in terms of the overall market for long haul
communications, the supply/demand equilibrium may not be
significantly reduced through this transaction since it
does not eliminate a network.
MEDITERRANEAN HEATING: Case Summary & Largest Unsecured Creditors
-----------------------------------------------------------------
Debtor: Mediterranean Heating & Air Conditioning, Inc.
21450 Strathern Street
Canoga Park, California 91304
Bankruptcy Case No.: 05-10807
Type of Business: The Debtor is a solar, heating and air
conditioning contractor.
See http://www.mhac.com/
Chapter 11 Petition Date: February 14, 2005
Court: Central District of California (San Fernando Valley)
Judge: Kathleen T. Lax
Debtor's Counsel: Lewis R. Landau, Esq.
23564 Calabasas Road #104
Calabasas, CA 91302
Tel: 888-822-4340
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Lennox Industries Trade $365,750
2100 Lake Park Blvd.
Richardson, TX 75080
California State Board of Sales Tax $210,000
Equalization
Special Procedures
Section, MIC 55
P.O. Box 942879
Sacramento, CA 94279
Internal Revenue Service Payroll Taxes $119,812
Insolvency I Stop 5022
300 North Los Angeles
Street, Room 4062
Los Angeles, CA 90012
SBC Smart Yellow Pages Trade $94,874
State Compensation Fund Insurance $51,000
Citibank (West), FSB Bank Line of Credit $50,255
Verizon Trade $40,911
Air Supply Trade $40,750
Time Warner Communications Trade $36,217
6201 Katella Ave., Ste. 100
Cypress, CA 90630
Allied Refrigeration Trade $30,250
Bank of America Bank Loan $22,812
Johnston Supply Co. Trade $20,026
Infinity Broadcasting Trade $15,514
Msi Trade $13,429
Key International Trade $13,200
Goodman Distribution, Inc. Trade $11,793
Blue Cross Insurance $11,236
Los Angeles Times Trade $10,448
Chambers Sheet Metal Trade $9,035
Golden Eagle Insurance Insurance $8,334
MEDQUEST INC: S&P Places Low-B Ratings on CreditWatch Negative
--------------------------------------------------------------
Standard & Poor's Ratings Services placed the ratings on MedQuest,
Inc. and its parent, MQ Associates, Inc., on CreditWatch with
negative implications.
As reported in the Troubled Company Reporter on Aug. 11, 2004,
Standard & Poor's Ratings Services assigned a 'B+' corporate
credit rating to MQ Associates Inc., the parent holding company of
diagnostic imaging firm MedQuest Inc. (B+/Stable/--). The outlook
on MQ is stable. At the same time, a 'B-' senior unsecured debt
rating was assigned to MQ's proposed $85 million in notes due 2012
registered under rule 144A. Interest payments on this facility
will accrue on a non-cash paid-in-kind basis for the first four
years and turn to cash pay in 2008. As senior unsecured
obligations of the holding company, the notes are structurally
subordinate to obligations at MedQuest. Proceeds will be used to
fund a distribution to shareholders; J.P. Morgan Partners LLC owns
about 70% of MQ, which in turn owns 100% of MedQuest. All ratings
on MedQuest and its debt securities are affirmed.
"Although the company obtained a limited waiver from its lenders
(under its bank credit agreement), the rating action reflects the
potential for strained liquidity if MedQuest is unable to cure a
technical default by March 31, 2005," said Standard & Poor's
credit analyst Cheryl Richer.
MedQuest breached its covenants by failing to deliver 2005 fiscal
year projections to its lenders by Feb. 14, 2005. The company may
be required to make certain write-downs of accounts receivable,
which would result in charges against 2004 income and also affect
2005 projections. Such charges could result in subsequent
covenant defaults, which would need to be permanently waived by
lenders as well. An extension has been granted to deliver the
2005 projections by the earlier of March 31, 2005, or delivery of
audited 2004 financial statements to the lenders. Until that
time, MedQuest has agreed to withdraw no more than $5 million of
the $51 million currently available under the revolving credit
facility. The company had $300,000 in cash at Sept. 31, 2004.
While Standard & Poor's is not aware of any imminent liquidity
concerns, MedQuest has limited financial cushion.
MERISTAR HOSPITALITY: Fourth Quarter Net Loss Narrows to $18 Mil.
-----------------------------------------------------------------
MeriStar Hospitality Corporation (NYSE: MHX), one of the nation's
largest hotel real estate investment trusts (REIT), reported
financial results for the fourth quarter and year ended Dec. 31,
2004.
The Company reported a net loss of $17,728,000 in fourth quarter
2004, compared to $62,064,000 of net loss in fourth quarter 2003.
RevPAR for the company's comparable hotels in the fourth quarter
rose 5.8 percent to $64.62 and for the full year 2004 rose 6.4
percent to $69.81, based on rooms not out-of-service due to
renovations and the impact of the Florida hurricanes. The
improvement resulted primarily from an 8.5 percent increase in
average daily rate (ADR) to $101.64 in the fourth quarter, and a
5.0 percent increase in ADR to $100.28 for the full year 2004.
Occupancy, based on rooms not out-of-service, decreased 1.6
percentage points to 63.6 percent in the fourth quarter, due in
part to a strategy to displace lower-rated contract business, and
increased 0.9 percentage points to 69.6 percent for the full year
2004.
"The continued increase in ADR is a strong signal that the hotel
industry recovery is gaining momentum," said Paul W. Whetsell,
chairman and chief executive officer. "Business travel continues
to increase, supported by strong leisure demand and inbound travel
particularly in gateway markets and resorts. The ability to raise
room rates has a positive impact on hotel operating margins, which
improved by approximately 100 basis points in the fourth quarter
over the prior year."
Mr. Whetsell noted that the company continued to upgrade its
portfolio, completing approximately $45 million in renovations at
its properties in the 2004 fourth quarter and $125 million for all
of 2004. "We have made significant progress on our multi-year
renovation program, with the vast majority of the more disruptive
work in public spaces behind us. In 2005, we expect to spend $85
million on new projects at our properties in addition to
completing approximately $15 million of projects under way at year
end. Renovated properties already are showing the positive
effects of the work we've done." For example, the Crowne Plaza
Chicago O'Hare, which was renovated and converted to the brand in
2004, receiving a completely new exterior, expansive landscaping,
and remodeled lobby, produced a 12.7 percent RevPAR gain in the
fourth quarter of 2004 versus the fourth quarter of 2003.
Total revenues from continuing operations for the fourth quarter
2004 were materially impacted by Florida property closures
following the hurricanes. Revenue produced by the nine most
significantly affected hurricane properties was less than 2.5
percent of total revenue in the fourth quarter of 2004, compared
to 13.4 percent of total revenue in the fourth quarter of 2003.
Fourth quarter 2004 operating costs for those properties were
offset by insurance recoveries, before considering depreciation.
The company expects to receive business interruption proceeds
beyond cost recovery for the quarter, although such recoveries
will not be recognized until future periods. Therefore, the
company's results reflected only depreciation expense from those
properties in the fourth quarter of 2004.
Adjusted EBITDA grew 33.6 percent from $30.4 million in the fourth
quarter 2003 to $40.6 million during the 2004 fourth quarter,
despite having 19 fewer hotels at year end. The break-even results
of the nine significantly affected hurricane properties were
offset by the solid year-over-year growth at the company's
comparable hotels, the impact of the strong earnings from the
Marriott Irvine and Ritz-Carlton Pentagon City acquisitions, and
the contribution of the recent Radisson Lexington Avenue
investment. In addition, the completion of the planned
restructuring of its MIP investment enabled the company to resume
full earnings recognition of the current return and receive its
first payment on the accrued return since 2001. This restructuring
allowed the company to recognize previously reserved returns,
resulting in an incremental $4 million to adjusted EBITDA.
The company's Washington, D.C. portfolio recorded strong
performances, reporting an average RevPAR increase of 11.9 percent
in the fourth quarter and an approximate 19 percent RevPAR
increase in January 2005. "We continue to benefit from our
significant presence in the Washington market," Whetsell said.
Florida Hotels Update
Business continues to show exceptional growth in Florida, driven
by strong leisure travel, favorable exchange rates, and the
continued economic recovery. For example, the company's two open
Orlando hotels produced over 30 percent RevPAR gains in January
2005.
Whetsell stated that the company continues to make steady progress
on the restoration work currently under way at the properties
damaged by hurricanes that struck Florida in the fall, noting that
eight of these properties were closed for most of the quarter and
a ninth had a substantial number of rooms out of service. "We are
diligently working to get these hotels up and running as quickly
as possible. We are very bullish about the ability of our Florida
properties to produce exceptional results, especially as
hurricane-affected properties resume normal operations."
Acquisitions and Dispositions
During the 2004 fourth quarter, MeriStar continued to make
selective investments to seek solid returns with attractive growth
potential, a key element of the company's strategy to redefine its
asset base. In October, the company acquired an interest in the
landmark, 705-room Radisson Lexington Avenue Hotel in Midtown
Manhattan. The $50 million structured investment includes a loan
that will provide MeriStar with a $5.75 million cumulative annual
preferred return and a 49.99 percent equity participation.
"This is an excellent property in one of the strongest markets in
the country and it has already exceeded our expectations,"
Whetsell said. "RevPAR in the fourth quarter grew 17.6 percent
year-over-year, and we were able to report more than $800,000 of
equity participation in our adjusted EBITDA."
The Ritz-Carlton Pentagon City, which the company acquired in May,
had a strong fourth quarter and full year, achieving RevPAR gains
of 9.9 percent and 11.7 percent, respectively. The Marriott
Irvine, acquired in June, began a complete guestroom renovation
during the fourth quarter of 2004. The renovation, which includes
such key guest areas as an expanded fitness center and concierge
lounge, should position the hotel for strong performance in 2005.
The company sold three hotels in the fourth quarter, bringing the
total to 21 dispositions in 2004 and an aggregate of 36 since
January 2003. "We have essentially completed our non-core asset
disposition program and reinvested those proceeds in strategic
acquisitions, capital improvements to our existing portfolio, and
debt repayments," Whetsell remarked. "Over the past two years, we
have reshaped our portfolio into a stronger group of hotels with
higher growth potential and have positioned it to take greater
advantage of the recovery in the lodging industry, which we have
been experiencing." Excluding the nine most significantly affected
hurricane properties, RevPAR for the total year-end 2004 portfolio
was 16.6 percent higher than the RevPAR for the total portfolio
held at December 31, 2003.
Capital Structure
Donald D. Olinger, chief financial officer, noted that the company
continued to improve its balance sheet in 2004. "We were able to
reduce our borrowing costs by over 40 basis points year-over-year
by completing an interest rate swap on our $303 million CMBS loan
and placing low fixed-rate mortgages on our two hotel acquisitions
this year." The company also repurchased approximately $100
million in senior notes and $49 million in subordinated notes in
2004.
In January 2005, the company placed a 5.84 percent fixed-rate, 10-
year, $38 million mortgage on the Hilton Crystal City hotel at
National Airport. "Initially, the proceeds will be used to fund
capital expenditures to repair hurricane damage to other
properties due to the time lag in receiving insurance payments,"
stated Olinger. "Ultimately, we will use the proceeds for
selective investment opportunities or to pay down higher interest
rate debt. We will continue to look for opportunities to improve
our leverage ratios and credit statistics in 2005."
2005 Outlook and Guidance
The company estimates 2005 RevPAR improvement of 7.5 percent to
8.5 percent on its comparable hotels and a 100 to 150 basis point
increase in hotel operating margins. For the first quarter of 2005
the company expects RevPAR increases of 4.0 percent to 5.0 percent
and hotel operating margin increases of 50 to 100 basis points.
Total company revenue will continue to be impacted in the first
quarter and full year 2005 by the closures of the hurricane-
affected properties. Additionally, adjusted EBITDA and FFO results
for the 2005 first quarter will be impacted by the timing of
recognition of business interruption insurance for hurricane-
affected properties. "We have comprehensive property and business
interruption insurance which we expect to cover most of the losses
resulting from the hurricanes," Olinger added. "While it is
difficult to predict the timing or exact amounts of recognition of
the insurance claims during the year, we remain confident in our
estimates of full year EBITDA."
About the Company
Arlington, Va.-based MeriStar Hospitality Corporation --
http://www.meristar.com/-- owns 73 principally upscale, full-
service hotels in major markets and resort locations with 20,319
rooms in 22 states and the District of Columbia. The company owns
hotels under such internationally known brands as Hilton,
Sheraton, Marriott, Ritz-Carlton, Westin, Doubletree and Radisson.
* * *
As reported in the Troubled Company Reporter on Nov. 24, 2004,
Standard & Poor's Ratings Services revised its outlook on hotel
operating company MeriStar Hospitality Corp. to stable from
negative. At the same time, Standard & Poor's affirmed its
ratings on the company, including the 'B-' corporate credit
rating. As of September 30, 2004, MeriStar had about
$1.6 billion in debt outstanding.
"The outlook revision reflects MeriStar's gradually stabilizing
operating performance in 2004, aided by a recovery in the lodging
industry and the company's sale of several non-strategic and
underperforming hotels," said Standard & Poor's credit analyst
Sherry Cai. "Moreover, Standard & Poor's expects the lodging
operating environment to remain healthy in 2005. This alleviates
near-term pressure on MeriStar's liquidity and allows the company
opportunity to further improve its credit measures."
MGM MIRAGE: Receives FTC Clearance of Pending Mandalay Acquisition
------------------------------------------------------------------
MGM MIRAGE (NYSE: MGG) and Mandalay Resort Group (NYSE: MBG) have
been notified by the Federal Trade Commission -- FTC -- that the
FTC has completed its review of the pending acquisition by MGM
MIRAGE of Mandalay Resort Group and voted unanimously that no
further action is required by the FTC. The transaction is subject
to customary closing conditions and receipt of state regulatory
approvals. MGM MIRAGE anticipates the transaction will be
completed in the first quarter of 2005.
About Mandalay Resort Group
Mandalay Resort Group owns and operates 11 properties in Nevada:
Mandalay Bay, Luxor, Excalibur, Circus Circus, and Slots-A-Fun in
Las Vegas; Circus Circus -- Reno; Colorado Belle and Edgewater in
Laughlin; Gold Strike and Nevada Landing in Jean and Railroad Pass
in Henderson. The company also owns and operates Gold Strike, a
hotel/casino in Tunica County, Mississippi. The company owns a 50%
interest in Silver Legacy in Reno, and owns a 50% interest in and
operates Monte Carlo in Las Vegas. In addition, the company owns a
50% interest in and operates Grand Victoria, a riverboat in Elgin,
Illinois, and owns a 53.5% interest in and operates MotorCity in
Detroit, Michigan.
About MGM MIRAGE
MGM MIRAGE (NYSE: MGG) -- http://www.mgmmirage.com/--
headquartered in Las Vegas, Nevada, is one of the world's leading
and most respected hotel and gaming companies. The Company owns
and operates 11 casino resorts located in Nevada, Mississippi and
Michigan, and has investments in three other casino resorts in
Nevada, New Jersey and the United Kingdom.
* * *
As reported in the Troubled Company Reporter on Sept. 16, 2004,
Fitch Ratings has assigned a 'BB+' rating to MGM MIRAGE's
$400 million add-on to the 6% senior notes due 2009. Proceeds
will be used to help repay a portion of the $1.7 billion
outstanding under its $2 billion revolver maturing 2005. MGM
MIRAGE's long-term ratings have been on Rating Watch Negative
by Fitch since June.
The action followed the announcement of MGM MIRAGE's proposed
acquisition of Mandalay Resort Group for $4.9 billion in cash plus
the assumption of $2.8 billion in debt. Fitch expects the Rating
Watch status to be resolved when final terms of financing and pace
of deleveraging following the acquisition are announced.
Financing terms have yet to be announced; however, management has
suggested that the Mirage acquisition (completed in May 2000) is a
good 'proxy' for the final structure. In this context, the
assumptions detailed in the following paragraphs can be made.
First, credit measures of the combined entity at close will likely
mirror those of the Mirage acquisition. The Mirage acquisition
closed May 2000 with 5.5 times (x) net debt-to-EBITDA, 4.5x senior
leverage, and 2.5x-2.75x net interest coverage. This entailed
roughly $5.2 billion in debt and $1.2 billion in equity. While
this level of leverage was relatively high, the aggressive pace
for deleveraging outlined by the company post-acquisition (below
4.0x within two years) provided comfort. Notably, MGM MIRAGE
never achieved its goal of below 4.0x leverage (due in part to the
impact of severe travel shocks of 9/11 and SARs) and MGM MIRAGE
has since backed off that target in favor of aggressive share
repurchases and heavy capital spending. In the case of the
Mandalay Resort acquisition, Fitch projections suggest that 5.5x
total debt to EBITDA would require a $1 billion equity infusion,
while an all-debt transaction would result in roughly 6.0x
leverage. Both scenarios would likely result in at least a notch
downgrade at the various levels of debt.
Second, a substantial portion of the transaction is likely to be
financed with bank debt. At the time of the Mirage acquisition,
MGM MIRAGE was able to arrange $4.3 billion in bank financing to
support the $6.4 billion transaction. Strong free cash flow
prospects provided the investors comfort that the company would
quickly delever. Given the significant liquidity in the bank
market today, the strong free cash flow generating ability of the
combined entity, and extremely attractive interest rates, it is
reasonable to expect bank debt to also account for the majority of
the Mandalay deal. Notably, on a Sept. 9 investor call MGM
MIRAGE's president and chief financial officer, Jim Murren, stated
that this would be the company's last senior note offering for
some time. In addition, he indicated that a larger bank deal is
in the works. MGM MIRAGE currently has a $2.5 billion revolver on
a stand-alone basis (the $1 billion term loan was merged into the
$1.5 billion revolver in July 2004). Given MGM MIRAGE's past
success in raising bank debt, the availability of capital, and the
attractiveness of interest rates, Fitch believes that it is not
unreasonable to envision MGM MIRAGE assembling a $5.0 billion
credit facility to execute the deal. Under this scenario,
subordinated debt is likely to become even further subordinated,
potentially resulting in a multiple-notch downgrade.
Third, proceeds from asset sales and the equity component will be
limited. As in the Mirage acquisition, MGM MIRAGE appears to be
content with the entire collection of Mandalay Resort assets
(unless one counts the Golden Nugget properties that were sold
four years after closing). The only exception in the case of the
Mandalay Resort acquisition appears to be in Detroit where state
regulation will force the sale of one of two licenses the combined
company will own. Fitch projections have incorporated the sale of
Mandalay Resort's 53.5% interest in Detroit MotorCity assuming
roughly $450 million in proceeds. Anti-trust and regulatory
issues could force the sale of Nevada assets given the combined
company's dominant market position on the Las Vegas Strip.
Potential cash infusions from equity issuance are also limited
given MGM MIRAGE's recent successful forays in the debt market and
the fact that MGM MIRAGE has been an aggressive purchaser of stock
over the last two years. Fitch projects that over 75% of the
transaction will be debt-financed.
Finally, the transaction will likely be structured such that
Mandalay Resort senior paper ranks pari passu with that of MGM
MIRAGE. MGM MIRAGE's senior debt is currently secured due to
springing lien clauses in the 6.875% senior notes due 2008 and the
6.95% senior notes due 2005, which were triggered by a rating
downgrade. Mandalay Resort senior debt on the other hand is
unsecured, creating the potential for MGM MIRAGE notes to be
structurally superior to the Mandalay Resort notes. While this
scenario was not the case at the time of the Mirage acquisition,
the precedent for a simple structure was set, with MGM MIRAGE
taking pains to ensure the notes on both sides were on equal
footing. Trading activity has suggested some investor speculation
that removal of the 6.875% and 6.95% notes would release the
security and simplify this task. However, given the high level of
leverage, Fitch believes the banks are not likely to easily give
up their security. Moreover, MGM MIRAGE is not in a rush itself
to release security, particularly if it requires a premium in
finance costs, as it has by no means limited the company's access
to the capital markets. Fitch believes the more likely scenario
is that security is extended to the Mandalay Resort notes.
Current ratings reflect MGM MIRAGE's market leading assets,
significant discretionary free cash flow, and visible growth
prospects. Current operations are benefiting heavily from Las
Vegas exposure in light of extremely strong Strip fundamentals.
Fitch also highlights the significant operating leverage inherent
in this business, as solid topline growth has translated to strong
margin increases in recent quarters. Recently reported second-
quarter 2004 results were very strong, with record EBITDA of
$365.5 million, up 25.6% versus last year, on a revenue increase
of 10.1% to $1.07 billion. The overall EBITDA margin improved 374
bps to 34.1%. Gaming revenues grew a solid 8% in the quarter,
while hotel revenues also posted a strong 9% increase. Revenue
per available room (REVPAR) increased 12% at the MGM MIRAGE's Las
Vegas Strip properties in the quarter due to improvements in both
rate and occupancy.
Nonetheless, MGM MIRAGE's lack of geographic diversification is a
long-term concern. With roughly 75% of the company's cash flow
derived from the Las Vegas Strip (both before and after the
potential Mandalay Resort acquisition), MGM MIRAGE faces
significant exposure to travel demand shocks, regulatory changes,
regional economic downturns, and new competition. Notably, MGM
MIRAGE faces formidable new Strip competition from Wynn Las Vegas,
which is expected to open in second quarter 2005. Other key
concerns include the potential deterioration of MGM MIRAGE's
capital structure upon close of Mandalay Resort acquisition, and
the ongoing risk that free cash flow will be directed toward share
repurchases and/or other investment opportunities rather than
further capital structure strengthening. MGM MIRAGE has a
propensity for share repurchases which continued through the
second quarter ($343 million year-to-date), and there remains a
vast number of capital projects in the pipeline, which are not yet
included in the already high capex budget (UK Gaming, Macau,
Detroit permanent facility).
MICRO COMPONENT: Dec. 31 Balance Sheet Upside-Down by $2.7 Million
------------------------------------------------------------------
Micro Component Technology, Inc. (OTCBB:MCTI) reported results for
its fourth quarter and fiscal year ended Dec. 31, 2004.
Net sales for the fourth quarter ended December 31, 2004 were
$2.3 million, a decrease of 39.7% from net sales of $3.7 million
in the comparable period ended Dec. 31, 2003 and a decrease of
41.6% from the previous 2004 quarter. The net loss for the
current quarter was $1.8 million, compared to income of $32,000 in
the fourth quarter of 2003 for basic earnings per share.
Net sales for the year ended December 31, 2004, were
$14.6 million, an increase of 31.3% from net sales of $11.1
million in the prior year. The net loss for the 2004 was
$2 million, compared to a net loss of $3.7 million in prior year.
MCT's Chief Executive Officer, Roger E. Gower, commented,
"Although our fourth quarter sales and profits were down as a
result of the general semiconductor equipment market decline, our
annual sales in 2004 were up 31% and our annual loss was also
reduced compared to the prior year. It should also be noted that
we were profitable in our first two quarters of 2004 and incurred
the majority of our annual loss in the fourth quarter of this
year. Additionally, two new products were designed and shipped
successfully in the latter part of 2004, which will provide us
with a portfolio of new products going forward in 2005. As a
result of completing these development projects, we expect a
significant reduction in our research and development expense in
2005. Further we will continue to monitor market conditions and
take additional actions, as required, to reduce costs." concluded
Mr. Gower.
Micro Component Technology, Inc. -- http://www.mct.com/-- is a
leading manufacturer of test handling and automation solutions
satisfying the complete range of handling requirements of the
global semiconductor industry. MCT has recently introduced
several new products under its Smart Solutions(TM) line of
automation products, including Tapestry(R), SmartMark(TM),
SmartSort(TM), and SmartTrak(TM), which are designed to automate
the back-end of the semiconductor manufacturing process. MCT
believes it has the largest installed IC test handler base of any
manufacturer, with over 11,000 units worldwide. MCT is
headquartered in St. Paul, Minnesota, with its core manufacturing
operation in Penang, Malaysia. MCT is traded on the OTC Bulletin
Board under the symbol MCTI.
At Dec. 31, 2004, Micro Component's balance sheet showed a
$2,676,000 stockholders' deficit, compared to a $5,026,000 deficit
at Dec. 31, 2003.
MIRANT: Fitch Withdraws Ratings on Pass-Through Certificates
------------------------------------------------------------
Fitch Ratings affirms the ratings of the debt obligations of
Mirant Corporation, Mirant American Generating Co LLC -- MAGI --
and Mirant Mid-Atlantic Generation LLC - MIRMA -- and
simultaneously withdraws all the ratings. Fitch will no longer
provide ratings of these issues.
Mirant Corporation and its affiliates entered Chapter 11
proceedings in July of 2003. Mirant filed its proposed plan of
reorganization in the bankruptcy proceedings on Jan. 19, 2005, and
hearings are scheduled later this month on the evaluation of
claims, with subsequent hearings on the proposed plan. The Mirant
companies are expected to emerge from bankruptcy no sooner than
mid-2005. Holders of MIRMA's pass-through certificates have
received current payments during the bankruptcy up to this time
and Fitch expects them to receive full recovery.
Ratings affirmed and withdrawn:
Mirant
-- Senior notes and convertible senior notes 'DD';
-- Convertible trust preferred securities 'D'.
MIRMA
-- Pass-through certificates 'C'.
MAGI
-- Bank credit facility and senior notes 'DD'.
NOVA CHEMICALS: Declares $0.10 Quarterly Dividend on Common Shares
------------------------------------------------------------------
NOVA Chemicals Corporation's Board of Directors has declared a
$0.10 quarterly dividend on outstanding common shares, payable on
the May 15, 2005, to shareholders of record at the close of
business on April 29, 2005.
As reported in the Troubled Company Reporter on Jan. 28, 2005,
NOVA Chemicals reported net income to common shareholders of
$162 million ($1.78 per share diluted) for the fourth quarter of
2004. This compares to net income to common shareholders of
$56 million ($0.60 per share diluted) in the third quarter of
2004.
In the fourth quarter of 2003, NOVA Chemicals reported a net loss
to common shareholders of $15 million ($0.18 per share loss
diluted).
For the full year 2004, net income to common shareholders was
$252 million ($2.71 per share diluted) compared with a net loss of
$1 million ($0.02 per share loss diluted) for 2003.
NOVA Chemicals -- http://www.novachemicals.com/-- produces
ethylene, polyethylene, styrene monomer and styrenic polymers,
which are used in a wide range of consumer and industrial goods.
NOVA Chemicals manufactures its products at 18 operating
facilities located in the United States, Canada, France, the
Netherlands and the United Kingdom. The company also has five
technology centers that support research and development
initiatives. NOVA Chemicals Corporation shares trade on the
Toronto and New York stock exchanges under the trading symbol NCX.
* * *
As reported in the Troubled Company Reporter on Jan. 27, 2005,
Moody's Investors Service affirmed the Ba2 senior unsecured
ratings of NOVA Chemicals Corporation, and revised its ratings
outlook to stable from negative.
Moody's also changed the company's speculative grade liquidity
rating to SGL-1 from SGL-2. The outlook revision was prompted by
NOVA's announcement that it expects to receive a cash payment of
approximately $110 million stemming from its resolution of a tax
dispute with U.S. Internal Revenue Service. This is in addition
to the $80 million received in the fourth quarter of 2004 from the
sale of its ethane gathering system. The ratings affirmations
reflects Moody's view that the combination of the cyclical upturn
in petrochemicals, and these one-time cash inflows, will enable
the company to maintain a robust cash balance despite anticipated
share repurchases and the pending maturity of $100 million of
debentures in September 2005.
As reported in the Troubled Company Reporter on Dec. 23, 2004,
Standard & Poor's Ratings Services revised its outlook on
petrochemicals producer Nova Chemicals Corp. to stable from
negative. At the same time, Standard & Poor's affirmed the 'BB+'
long-term corporate credit and senior unsecured debt ratings on
Nova.
O-CEDAR HOLDINGS: Taps Seitz Sublett as Accountants
---------------------------------------------------
Jeoffrey L. Burtch, the chapter 7 Trustee handling the liquidation
of O-Cedar Holdings, Inc., and its debtor-affiliates' estates,
asks the U.S. Bankruptcy Court for the District of Delaware for
authority to retain Seitz, Sublett & Associates, LLC, as his
accountants, nunc pro tunc to Dec. 1, 2004.
M. Cynthia Sublett, a managing member at Seitz, informs the Court
that her Firm's professionals will bill the estate at their
customary hourly rates. Ms. Sublett didn't disclose the Firm's
specific hourly billing rates in papers filed with the Bankruptcy
Court.
To the best of the Trustee's knowledge, Seitz Sublett is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Court.
Headquartered in Springfield, Ohio, O-Cedar Holdings, Inc.,
through its debtor-affiliate, manufactures brooms, mops, and scrub
brushes for household and industrial use. The Company filed for
chapter 11 protection on August 25, 2003 (Bankr. Del. Case No. 03-
12667). John Henry Knight, Esq., at Richards, Layton & Finger,
P.A., and Adam C. Harris, Esq., at O'Melveny & Myers LLP represent
the Debtors in their restructuring efforts. When the Company
filed for protection from its creditors, it listed over $50
million in both assets and debts. On May 26, 2004, the cases were
converted to chapter 7 and Jeoffrey L. Burtch was appointed
trustee.
ORION TELECOM: Court Okays Sale of Assets to Cetus for $18 Million
------------------------------------------------------------------
Orion Telecommunications Corp. sought and obtained permission from
the U.S. Bankruptcy Court for the Southern District of New York to
sell substantially all of its assets -- assets related to its
international and domestic prepaid calling card business -- to
Cetus Telecommunications, Inc., for $18 million. Cetus has until
Feb. 25 to close the deal.
The $18 million purchase price comes to Orion in four parts:
* a $1 million upfront cash deposit;
* $6 million in cash delivered at the closing of the sale;
* a $5 million promissory note accruing 7.5% interest; and
* $6 million in convertible redeemable preferred stock.
Headquartered in New York, New York, Orion Telecommunications
Corp. -- http://www.oriontelecommunications.com/-- is a market-
leading manufacturer and distributor of telecommunication
services. The company filed for chapter 11 protection on April 1,
2004 (Bankr. S.D.N.Y. Case No. 04-12203). Frank A. Oswald, Esq.,
at Togut, Segal & Segal LLP represents the Debtor in its
restructuring efforts. When the Company filed for protection from
its creditors, it listed $16,347,957 in total assets and
$97,588,754 in total debts.
PACIFIC BAY: S&P Upgrades Ratings on Preference Shares to BB+
-------------------------------------------------------------
Standard & Poor's Ratings Services raised its ratings on the class
C notes and preference shares issued by Pacific Bay CDO Ltd., a
CDO of ABS transaction, and removed them from CreditWatch with
positive implications, where they were placed Jan. 12, 2005.
At the same time, the ratings on the class A-1, A-2, and B notes
are affirmed due to the credit enhancement available to support
them.
The raised ratings reflect factors that have positively affected
the credit enhancement available to support the rated notes since
origination. These factors include a paydown of the class C notes
due to a turbo feature, which pays down the class C notes and the
overall steady credit quality of the underlying portfolio.
Standard & Poor's noted that the class C notes have paid down a
total of $4,310,366.30 (approximately 25% of original balance).
According to the Jan. 31, 2005, report, the class A/B
overcollateralization ratio was 109.09% versus a minimum trigger
of 103.25%, and the class C overcollateralization ratio was
105.85% versus a minimum trigger of 101.00%.
Ratings Raised
Off Watch Positive
Pacific Bay CDO Ltd.
Rating
Class To From
----- -- ----
C A- BBB/Watch Pos
Pref. Sh. BB+ BB-/Watch Pos
Ratings Affirmed
Pacific Bay CDO Ltd.
Class Rating
----- ------
A-1 AAA
A-2 AAA
B AA
Transaction Information
Issuer: Pacific Bay CDO Ltd.
Co-issuer: Pacific Bay CDO Inc.
Current manager: Pacific Investment Management Co. LLC
Underwriter: Merrill Lynch & Co. Inc.
Trustee: Wells Fargo Bank N.A.
Transaction type: Cash Flow CDO of ABS
Tranche Initial Current
Information Report Action
----------- ------- -------
Date (MM/YYYY) 11/2003 02/2005
Cl. A-1 note rtg. AAA AAA
Cl. A-1 note bal. $315.000mm $315.000mm
Cl. A-2 note rtg. AAA AAA
Cl. A-2 note bal. $64.000mm $64.000mm
Cl. B note rtg. AA AA
Cl. B note bal. $45.000mm $36.000mm
Cl. A/B OC test 109.06% 109.09%
Cl. A/B OC min. 103.25% 103.25%
Cl. C note rtg. BBB A-
Cl. C note bal. $17.000mm $12.690mm
Cl. C OC test 105.26% 105.85%
Cl. C OC min. 101.00% 101.00%
Portfolio Benchmarks Current
-------------------- -------
S&P Wtd. Avg. Rtg. (excl. defaulted) A
S&P Default Measure (excl. defaulted) 0.29%
S&P Variability Measure (excl. defaulted) 0.80%
S&P Correlation Measure (excl. defaulted) 1.86
Wtd. Avg. Coupon (excl. defaulted) 6.47%
Wtd. Avg. Spread (excl. defaulted) 2.25%
Oblig. Rtd. 'BBB-' and above 96.40%
Oblig. Rtd. 'BB-' and above 99.84%
Oblig. Rtd. 'B-' and above 100.00%
Oblig. Rtd. in 'CCC' range 0.00%
Oblig. Rtd. 'CC', 'SD' or 'D' 0.00%
Obligors on Watch Neg (excl. defaulted) 0.00%
S&P Rated Current
OC (ROC) Rating Action
--------- -------------
Cl. A-1 notes 110.56% (AAA)
Cl. A-2 notes 107.41% (AAA)
Cl. B notes 109.09% (AA)
Cl. C notes 105.00% (A-)
Pref. shares 106.45% (BB+)
For information on Standard & Poor's CDO Portfolio Benchmarks and
Rated Overcollateralization (ROC) Statistic, please see "ROC
Report February 2005," published on RatingsDirect, Standard &
Poor's Web-based credit analysis system, and on the Standard &
Poor's Web site at http://www.standardandpoors.com/ Go to "Credit
Ratings," under "Browse by Business Line" choose "Structured
Finance," and under Commentary & News click on "More" and scroll
down to the desired articles.
PEABODY ENERGY: Buys 327 Million Tons of Coal Reserves
------------------------------------------------------
One of Peabody Energy's (NYSE: BTU) companies is the winning
bidder for 327 million tons of ultra-low sulfur coal reserves in
the Powder River Basin of Wyoming.
The new "West Roundup" reserve area, combined with existing
Peabody reserves north of the North Antelope Rochelle Mine,
creates a reserve block of nearly 800 million tons of ultra-low
sulfur premium Btu coal. Peabody believes the strategic reserve
block will provide a low-cost, high-quality base to support new
mining facilities in the future.
Peabody controls more than 3.5 billion tons of Powder River Basin
coal reserves, and is well-positioned to meet the strong expected
long-term demand growth from the region. Industry analysts
project that coal demand from the Southern Powder River Basin
could grow by as much as 85 percent, to 700 million tons per year
or more, within 20 years.
The winning bid for the reserves was $0.97 cents per mineable ton,
made through a sealed bid auction process. If the Bureau of Land
Management determines that the offer meets the agency's fair
market analysis, Peabody expects to finalize the lease acquisition
over the next 60 to 90 days.
Peabody's North Antelope Rochelle Mine, located in Campbell
County, Wyo., shipped more than 80 million tons in 2004.
Peabody's Powder River Coal Company mines last year shipped a
record 115 million tons of coal. Government data demonstrates
that Powder River Coal operated the most productive mine in
America, and three of the four most productive mines through the
first nine months of 2004.
About the Company
Peabody Energy (NYSE: BTU) is the world's largest private-sector
coal company, with 2004 sales of 227 million tons of coal and
$3.6 billion in revenues. Its coal products fuel more than 10
percent of all U.S. electricity and 3 percent of worldwide
electricity.
* * *
Moody's Rating Services and Standard & Poor's assigned their low-B
ratings to Peabody Energy's $650 million of outstanding 6-7/8%
Senior Notes in March 2003. Bloomberg data shows that those
notes, maturing on Mar. 15, 2013, trade around 108 today. Peabody
posted losses for two quarters in the middle of 2003 and has
reported profits every quarter thereafter.
POLYONE CORP: Moody's Revises Outlook on Low-B Ratings to Stable
----------------------------------------------------------------
Moody's Investors Service affirmed PolyOne Corp.'s Senior Implied
rating at B2. In addition, Moody's ratings for the Company's
senior unsecured notes and issuer rating were affirmed at B3. The
rating outlook has been changed to stable from negative.
The outlook change to stable reflects reduced near term debt
maturities, increased dividends from the Company's joint ventures,
as well as greater working capital discipline in its wholly owned
operations. Specifically the stable outlook reflects Moody's
belief that PolyOne Corp. will continue to receive substantial
cash dividends from its affiliates through 2006 and that free cash
flow from its wholly owned operations will remain modestly
positive in 2005 ($20 million).
However, Moody's remains concerned over the Company's ability to
generate more reasonable levels of free cash flow (roughly
$40 million) from its wholly owned operations through the cycle,
since operating margins on an LTM basis remain below 4%.
In 2004, the combination of two divestitures and increased cash
dividends from affiliates has allowed PolyOne Corp. to
significantly reduce near-term debt maturities by over $90
million, repay outstandings under its accounts receivable program
($74 million), and make a meaningful, voluntary pension
contribution ($65 million). The debt repayments and pension
contribution in 2004 should limit 2005 cash outflows to the debt
maturities of $50 million. Furthermore, debt maturities in
2006-2008 timeframe are less than $25 million, and there are no
significant debt maturities until $300 million due in 2010.
However, Moody's believes that the company may make modest (less
then $20 million in any year) pension contributions to reduce
future mandatory requirements. PolyOne Corp. has no mandatory
pension payments required in 2005 or 2006. The repayment of debt
and advance funding of pension obligations has resulted in a
substantial improvement in liquidity with over $180 million of
availability versus the $50 million of debt maturities. Lastly,
PolyOne expects to divest two more businesses in 2005, which could
increase available cash by $50-75 million. PolyOne has just under
$700 million of debt outstanding at year-end 2004 and guarantees
$85 million of debt at its Sunbelt chlor alkali joint venture.
The Company's B2 rating reflects weak operating margins and
minimal free cash flow from its wholly owned operations. PolyOne
Corp. generated roughly $69 million of after-tax free cash flow in
2004, excluding pension contributions and repayment of the
accounts receivable program, which included $60 million of pre-tax
distributions from its equity affiliates. The B2 rating is also
supported by good near term liquidity, which is provided by an
undrawn $175 million accounts receivable facility, a $30 million
revolving credit facility, and minimal debt maturities in the
2006-2008 timeframe.
PolyOne Corp.'s rating could be raised if the company is
consistently able to generate operating margins in the 5% range
and meaningful levels of free cash flow ($35-45 million) from its
wholly owned operations. PolyOne's ratings could be lowered if
distributions from its joint ventures decline unexpectedly and
free cash flow from its wholly owned operations turns negative or
operating margins remain below 4%.
PolyOne Corp. continues to reduce costs and take other steps to
improve the profitability of its US operations. PolyOne's
European operations have remained profitable over the past several
years. PolyOne expects continued strong demand growth and is
actively pursuing price increases in order to offset increased raw
material, freight and energy costs.
In contrast to its wholly owned operations, the Company's joint
ventures, OxyVinyls (PVC resins) and Sunbelt (chlor alkali),
should demonstrate a significant growth in profitability in 2005.
Moody's projects that distributions could exceed $80 million in
2005; this is up from $59 million in 2004.
PolyOne Corp.'s back-integration into chlor-alkali and PVC provide
support for the rating and should be a significant source of
liquidity over the next two years. In addition to the dividends,
PolyOne is advantaged by a cost-based PVC resin supply contact
with OxyVinyls, Inc. (24% equity interest by PolyOne), the largest
PVC resin producer in the US.
PolyOne's other significant joint venture, Sunbelt Chlor-Alkali
(50% equity interest by PolyOne), should also experience
meaningful improvements in 2005 and 2006 due to improving prices
for caustic soda and access to cost-advantaged energy contracts
(i.e., their cost of electricity is tied to the price of coal, not
natural gas like most other Gulf Coast chlor-alkali producers).
PolyOne Corporation, headquartered in Cleveland, Ohio, is a custom
compounder of PVC and other thermoplastic resins, a supplier of
additives and colorants, and a distributor of resins. PolyOne
Corp. assumed the assets and liabilities of both MA Hanna Company
and The Geon Company in 2000. PolyOne had sales of $2.1 billion
in 2004.
POLYPORE INTL: Moody's Junks $300MM of 10.5% Senior Discount Notes
------------------------------------------------------------------
Moody's Investors Service assigned a Caa2 rating for the
$300 million of 10.5% unguaranteed senior discount notes that were
issued by Polypore International, Inc. -- Holdco, the ultimate
holding company of Polypore, Inc. These notes are defined here as
the "Holdco discount notes." The rating outlook is stable.
Moody's additionally confirmed the ratings of Polypore, Inc.'s
existing debt facilities. This action concluded the review for
possible downgrade that had been initiated during October 2004 in
connection with the Company's announcement of plans to issue the
Holdco discount notes. Moody's continues to remain concerned
regarding the fact that the Holdco discount notes offering
represented a significant leveraging event within less than six
months following the company's May 2004 leveraged acquisition.
Approximately 59% of the sponsor's $321 million initial cash
investment was returned utilizing the net proceeds of the Holdco
discount notes offering. Nonetheless, Polypore continues to
generate positive free cash flow from operations and maintains
very good liquidity relative to its size and rating category.
The corporate-level senior implied rating and senior unsecured
issuer rating were moved to Polypore International, from Polypore,
as a byproduct of the issuance of new notes at the holding company
tier of the legal structure. While the senior implied rating
remains unaffected by the move, the senior unsecured issuer rating
assigned at Polypore International is lower due to the presumed
structural subordination and lack of subsidiary guarantees.
The details of Moody's specific rating actions are:
-- Polypore International, Inc.
* Assignment of a Caa2 rating for Polypore International's
$300 million (fully accreted value) of 10.5% unguaranteed
senior discount notes due October 2012, issued under Rule
144A with registration rights;
* Assignment of a B2 senior implied rating at Polypore
International (coordinating with the withdrawal of B2
senior implied rating at Polypore)
* Assignment of a Caa2 senior unsecured issuer rating at
Polypore International (coordinating with the withdrawal of
Caa1 senior unsecured issuer rating at Polypore)
-- Polypore, Inc.
* Confirmation of the B1 rating for Polypore's approximate
$500 million of guaranteed senior secured credit
facilities, consisting of:
* $90 million revolving credit facility due May 2010;
* $370 million term loan due November 2011;
* Euro 36 million term loan due November 2011;
* Confirmation of the Caa1 rating for Polypore's $225
million guaranteed senior subordinated notes due May
2012;
* Confirmation of the Caa1 rating for Polypore's Euro 150
million guaranteed senior subordinated notes due May
2012;
* Withdrawal of the B2 senior implied rating
* Withdrawal of the Caa1 senior unsecured issuer rating
Polypore International utilized the approximately $200 million of
closing net proceeds from the Holdco discount notes to pay returns
to the company's equity holders through:
(i) the redemption of all $150 million perpetual preferred
stock tranche that was infused by Warburg Pincus affiliates
during May 2004 in connection with the equity sponsor's
acquisition of the company, and
(ii) the payment of an approximately $43 million dividend to the
company's common shareholders (primarily Warburg Pincus
affiliates and management).
Whereas the rating agency had previously granted equity credit for
the preferred stock that was redeemed, Moody's considers the
Holdco discount notes as debt since they transition to cash pay
interest after about 4 1/2 years and have a final maturity of
eight years in 2012. Interest accretion will occur through
October 2008, thereby increasing the principal balance to
$300 million assuming that cash coupon payments begin as scheduled
during April 2009.
The Holdco discount notes may be redeemed prior to October 2008,
subject to accretion and a make-whole premium. The Holdco
discount notes additionally contain a 35% equity clawback
provision prior to October 2007 and a change of control provision
at 101% of the accreted value. These notes had an initial
accreted value of $667.30 per $1,000 principal amount at maturity
in October 2012.
The confirmations of Polypore International's debt ratings and the
stable outlooks reflect Polypore's strong liquidity position,
positive operating cash flows, and approximately 2.0x cash
interest coverage. Polypore was supported by $37 million of cash
and an undrawn $90 million revolver at the end of the third
quarter of 2004. Management believes the company will retain full
access to the revolver after taking into account the modest
tightening of covenants over the next 12-18 months.
The Company also has minimal letters of credit needs that would
otherwise utilize revolver availability. Polypore International
has additionally maintained solid #1 or #2 worldwide market
positions for its critical product lines, along with diversity of
its customer base, geographic regions, and end markets served.
While Polypore's microporous membranes represent a relatively
small percentage of the final cost of most customer end products,
these membranes contain significant technology that is critical to
performance of those products.
Demand in the energy storage segment is supported by stable growth
in the vehicle population which results in a predictable and
recurring revenue stream for Polypore due to regular automotive
battery replacement cycles. There are also favorable long-term
growth prospects for lithium batteries, which are utilized in the
expanding market for consumer electronic products. Polypore
additionally continues to improve manufacturing yields.
The ratings more negatively reflect Moody's opinion that Warburg
Pincus' steps to recoup a significant portion of its investment
just five months after the initial outlay are indicative of the
sponsor's willingness to aggressively manage the financial
structure of the company. While Moody's did not downgrade the
senior implied rating or the long-term debt ratings of Polypore,
the increase in consolidated adjusted debt to EBITDAR leverage to
6.9x, from 6.2x, positions the company more weakly at the current
rating level.
Consolidated debt will also increase to an unusually high 201% of
revenues. The ratios are reflected pro forma for the offering as
of October 2, 2004. Consolidated cash interest payments will
increase by approximately $31.5 million p.a. upon completion of
the pay-in-kind interest period conversion to cash payments that
will occur in 2009. However, absent any future amendments to
Polypore's debt agreements, Polypore would only be permitted to
upstream the cash to Polypore International to the extent
permitted by formulas defining the restricted payment baskets at
that time. The material increase in the Company's leverage
profile in connection with the partial replacement of the
company's equity base using the proceeds of the Holdco notes
issuance notably did not require approval by Polypore's lenders
under its credit agreement.
The return of capital to investors was also initiated at a time
when several near-term operating challenges had begun placing some
pressure on Polypore's margins. Revenues in the separations media
segment are somewhat weakened due to a decision by the segment's
largest customer to outsource production of hemodialysis products
to a third party manufacturer. Polypore is currently working with
the new party to receive the requisite qualification to supply
synthetic hemodialysis membranes and hopes to recover the business
that was lost.
In addition, manufacturers of lithium batteries have also been
cutting production schedules in an effort to reduce inventories,
which accumulated in the first half of 2004 in conjunction with
aggressive efforts by certain competing battery manufacturers to
capture greater market shares. Management anticipates a return to
a more balanced pace of lithium battery production in 2005. Due
to aggressive lithium battery competition, there is also an
ongoing shift of production to lesser-developed countries, which
could result in increased degrees of future volatility of the
lithium battery market.
Future events that could result in a reduction in the rating or
outlook include any incremental leveraging acquisitions or
investments or incremental returns of capital to investors that
increase debt or further delay the debt reduction that was
anticipated at the time of the leverage buyout; evidence that
Polypore International is either losing market share or
technological dominance in its key markets; indications of
declining margins due to price compression, lower manufacturing
yields or operating inefficiencies; an inability to pass through
raw material cost increases to customers; sustained work
stoppages; significant product liability claims or awards;
evidence of product warranty issues; a prolonged delay in
receiving FDA approval for successor medical membrane products; or
a decline in liquidity.
Future events that could potentially improve Polypore
International's ratings or outlook include absolute debt reduction
in combination with stable or improving operating margins and
revenues, completion of an initial public offering with the net
proceeds applied against outstanding debt, continued organic
growth with both existing and new customers, continued product,
customer and geographic diversification, faster-than-projected
inroads into specialized new markets that will expand Polypore's
maximum potential revenue base and also likely command above
average gross margins, or a significant reduction in debt and
leverage through an offering of permanent equity capital.
The Holdco discount notes will not benefit from subsidiary
guarantees and are unsecured obligations of Polypore
International, which has no operations and no material assets
other than its indirect ownership of Polypore. Cash flow
upstreamed from the operating subsidiaries is the ultimate source
of cash for principal and interest payments on the notes.
Dividends or other distributions to Holdco are nevertheless
subject to restrictions in Polypore's credit agreement and senior
subordinated notes indenture.
To the extent Polypore's leverage is below 3.25x, Polypore is
permitted under the credit agreement to upstream excess cash flow
that is not required to be paid to the bank group. The senior
subordinated notes indenture restricts the upstreaming of
dividends to 50% of cumulative positive consolidated net income,
which percentage increases to 75% if leverage at Polypore falls
below 4.5x. A default of the operating company debt would be an
event of default under the senior discount note indenture, but
recourse is limited.
Debt at the operating company level notably does not cross default
or cross accelerate if there is a default on the Holdco discount
notes. Due to the fact that the Holdco discount notes are
considered "Applicable High-Yield Discount Obligations" according
to IRS regulations, interest is not tax deductible until paid in
cash. Moreover, the Company will be unable to deduct from U.S.
federal income taxes approximately 100 basis points of any cash
interest payments due to the fact that the yield-to-maturity
exceeds certain IRS limits.
Polypore International, Inc., headquartered in Charlotte, North
Carolina, is a leading worldwide developer, manufacturer and
marketer of specialized polymer-based membranes used in separation
and filtration processes. The Company is managed under two
business segments. The energy storage segment, which currently
represents approximately two-thirds of total revenues, produces
separators for lead-acid and lithium batteries. The separations
media segment, which currently represents approximately one-third
of total revenues, produces membranes used in various healthcare
and industrial applications. Annual revenues approximate
$500 million.
PRESTIGE BRANDS: IPO Prompts S&P to Lift Credit Rating to B+
------------------------------------------------------------
Standard & Poor's raised its ratings on Prestige Brands, Inc.,
including its corporate credit rating to 'B+' from 'B' and removed
the ratings from CreditWatch, where they were placed on
Nov. 16, 2004.
The upgrade is based on the company's parent, Prestige Brands
Holdings, Inc., successful IPO of common stock that raised
$448 million and the subsequent reduction in consolidated debt
leverage. Since completion of the IPO on Feb. 9, 2005, the
company has repaid its $100 million term loan C due 2011, and
preferred stock issued at Prestige Brands International LLC.
Also, it is expected that $84 million of senior subordinated notes
due 2012 will be repaid from IPO proceeds on or about
March 17, 2005. The Irvington, New York-based company also
amended and increased its existing first priority lien senior
secured bank facility to $430 million from $400 million. The
outlook is stable. Approximately $500 million of debt is affected
by these actions.
The recovery rating on the amended senior secured bank loan was
revised to '3' from '2', which indicates an expected meaningful
recovery of principal (50% to 80%) in the event of a default. In
addition, the 'CCC+' second lien senior secured bank loan rating
and '5' recovery rating were withdrawn.
"Prestige Brands' lower leverage as a result of the recently
completed IPO and stable operating performance provide support for
the existing ratings. However, the company's small size relative
to larger competitors and aggressive acquisition strategy limit
the potential for an upgrade over the intermediate term," said
Standard & Poor's credit analyst Patrick Jeffrey.
RIVIERA HOLDINGS: S&P Puts Low-B Ratings on CreditWatch Developing
------------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on Riviera
Holdings Corp., including its 'B' corporate credit rating, on
CreditWatch with developing implications.
The CreditWatch listing follows the company's announcement
yesterday that it has requested its financial advisor, Jeffries
Company, Inc., to explore strategic alternatives to maximize
shareholder value. Riviera Holdings had about $215 million in
debt outstanding as of Dec. 31, 2004.
Developing implications suggest that ratings could be affected
either positively or negatively, depending on whether a
transaction ultimately occurs. An example of a transaction that
might have a positive impact would be an acquisition by a
higher-rated entity. An example of a transaction that could have
a negative impact might include a decision to increase debt levels
to pursue an acquisition or a recapitalization.
"In resolving its CreditWatch listing, we will continue to monitor
developments associated with the company's pursuit of alternatives
to maximize shareholder value. As the company may not provide
ongoing guidance relative to its progress, we may decide to
resolve the CreditWatch listing at a later date if it appears a
transaction is not likely to occur," said Standard & Poor's credit
analyst Peggy Hwan.
SENECA GAMING: Earns $21.1 Million of Net Income in First Quarter
-----------------------------------------------------------------
Seneca Gaming Corporation reported its financial results for the
three months ended Dec. 31, 2004.
For the First Quarter 2005, SGC reported consolidated gaming
revenues of $104.3 million compared to $67.9 million in the First
Quarter 2004, an increase of $36.4 million, or 54%. Seneca
Niagara Casino gaming revenues increased $4.9 million to $72.8
million in the First Quarter 2005, or a 7% increase compared to
First Quarter 2004. Most of the increase represents higher slot
revenues due to an additional 315 slot machines, an 11% increase,
and higher slot handle of $57.7 million, or a 9% increase, offset
by a lower hold percentage, 8.8% in the First Quarter 2004
compared to 8.5% in the First Quarter 2005. Included in the $72.8
million of gaming revenues is $1.4 million of Class II poker
revenues. Seneca Allegany Casino had gaming revenues of $31.5
million for the First Quarter 2005, with Class III slot revenues
representing $25.5 million of the total. Included in the $31.5
million of gaming revenues in the First Quarter 2005 is $1.9
million of Class II revenues, which included poker, bingo and
Class II slot revenue. Management attributes the growth in gaming
revenues at both of its casinos to the growth in membership of the
Seneca Link Player's Card, now over 700,000, patron acceptance of
our Pennies from Heaven slot area located on the mezzanine level
of our Seneca Niagara Casino, effective targeted marketing, and
the successful introduction of electronic slot bonusing.
Effective January 1, 2005, SGC discontinued all of its Class II
gaming operations. These Class II operations are now directly
managed by the Nation. Class II gaming revenues included in
consolidated gaming revenues for the First Quarter 2005 and First
Quarter 2004 were $3.9 million and $0, respectively. The transfer
and or termination by us of the Class II operations is consistent
with our understanding of the Nation's Council intent that we
operate and manage the Nation's Class III operations and that
Council directly manages and operates the Nation's Class II
operations as it has historically done.
Non-gaming revenues, consisting principally of food and beverage
and retail operations, were $13.9 million and $8.7 million for the
First Quarter 2005 and First Quarter 2004, respectively, an
increase of $5.2 million, or 60%. Seneca Niagara Casino and
Seneca Allegany Casino contributed $1.7 million and $3.5 million
of this increase, respectively. The increase in these revenues is
directly attributable to higher gaming volume. In the First
Quarter 2005 and the First Quarter 2004, approximately 74% and
55%, respectively, of these revenues were complimentary, primarily
due to the points earned by our patrons on their Seneca Link
Player's Card.
Consolidated Earnings Before Interest, Taxes, Depreciation and
Amortization (EBITDA) was $38.4 million for the First Quarter
2005, compared to $27.4 million for the same 2003 period, an
increase of $11.0 million, or 40%. Seneca Niagara Casino
generated EBITDA for the First Quarter 2005 and First Quarter 2004
of $28.4 million and $27.6 million, respectively, an increase of
$800,000, or 3%. Our EBITDA margin at Seneca Niagara Casino
decreased in the First Quarter 2005 to 37.6% from 38.5% in the
First Quarter 2004 due to higher labor costs in casino support
departments, and increases in cost of sales due to higher
complimentary food and beverage and retail sales. Seneca Allegany
Casino generated $10.1 million of EBITDA in the First Quarter
2005.
Consolidated net income for SGC for the First Quarter 2005 and
First Quarter 2004 was $21.1 million and $19.1 million,
respectively. The increase results principally from the income
contributed from Seneca Allegany Casino, which opened May 1, 2004,
offset by higher interest costs associated with the May 2004
offering of $300 million 7 1/4% Senior Notes, and the interest
costs from having borrowed an additional $22.7 million available
under SNFGC's existing term loan in April 2004.
G. Michael Brown, President and CEO of SGC stated, "Our operating
results for the First Quarter 2005 for Seneca Niagara Casino were
in line with our expectations considering our increased cost of
business. We continue to be pleased with the operating
performance at our Seneca Allegany Casino. Its operating
performance since its May 1, 2004 opening has exceeded our
expectations. We continue to plan for the expansions at both of
our properties."
Property Expansions
During the First Quarter 2005, SGC spent $47.8 million for
construction and the purchase of property and equipment compared
to $4.8 million in the First Quarter 2004. In the 2004 period,
SGC expended $13.3 million for the construction of the luxury spa
hotel at Seneca Niagara Casino, and $23.5 million for the
construction of the Seneca Allegany Casino parking garage and
resort hotel. The remaining balance of capital expenditures
relates to other construction and equipment purchases for both
casinos.
As of this date, construction on the luxury spa hotel remains on
schedule. We continue to estimate that the hotel will have a
partial opening in December 2005, and all rooms will be available
during the first calendar quarter 2006. The estimated cost to
construct and equip the luxury spa hotel is $200.0 million.
The opening of the Seneca Allegany Casino 1,850 space-parking
garage has been delayed due to weather and construction issues.
The construction issues relate to a portion of the garage being
out-of acceptable plumb tolerance limits. The SGC Board of
Directors (Board) has accepted the recommendation from the garage
construction manager to dismantle, partially, to the extent
necessary, and reassemble, to correct the out of plumb condition
with the southeast portion of the garage. The Board accepted this
recommendation because, based on the construction manager's
representations, it will correct the problem with certainty. This
process will delay the opening of the parking garage until July or
August of 2005.
The construction of the Seneca Allegany Casino resort hotel has
been delayed due to the delayed opening of the parking garage.
The foundation for the hotel has been completed, and construction
of the hotel will commence upon the completion and opening of the
parking garage. We anticipate that the resort hotel will open in
the latter part of 2006. The estimated cost to construct the
parking garage, and construct and equip the resort hotel is
between $180.0 and $185.0 million.
Barry E. Snyder, Sr., President of the Nation and Chairman of the
SGC Board of Directors commented: "The progress at the Seneca
Niagara Casino luxury spa hotel remains on schedule. We look
forward to our December 2005 opening, and the additional
excitement and amenities this hotel will provide to our valued
patrons. We expect our parking garage at Seneca Allegany Casino
to open in July or August 2005. When opened, the parking garage
will provide our patrons with convenient safe parking with direct
access to our gaming facility. These expansions clearly
demonstrate the Seneca Nation of Indians' commitment to expanding
its gaming operations to provide our patrons with the premier
gaming entertainment facilities in the Western New York region."
Earnings Conference Call
Management intends to hold an earnings conference call for the
year ended Sept. 30, 2004, and for the First Quarter 2005 after
filing its Annual Report on Form 10-K and Quarterly Report on Form
10-Q. SGC intends to file its Annual and Quarterly Reports with
the Securities and Exchange Commission (SEC) after completion of
the investigation by the Independent Counsel appointed by the
Nation's government and obtaining Ernst & Young's audit report on
SGC's financial statements for the fiscal year ended Sept. 30,
2004. At this conference call, management will discuss financial
results for the fiscal year ended Sept. 30, 2004, and the First
Quarter 2005, and provide an update regarding our expansion
projects.
About the Company
Seneca Gaming Corporation is an incorporated instrumentality of
the Seneca Nation of Indians of New York, is federally recognized,
and has a compact with the State of New York that provides the
Nation with the right to establish and operate three Class III
gaming facilities in western New York. Seneca Gaming currently
owns and operates the Seneca Niagara Casino and the Seneca
Allegany Casino.
* * *
As reported in the Troubled Company Reporter on Jan. 10, 2005,
Moody's Investors Service revised Seneca Gaming Corporation's
ratings outlook to negative from stable in response to the
company's delay in filing its Annual Report on Form 10-K. This
delay follows the election of a new President of the Seneca
Nation, appointment of new Board members, and the decision by the
Seneca Nation to hire an independent counsel to conduct a review
of all actions taken, including actions taken by the Seneca
Nation, in the building, financing, management and operation of
the Nation's gaming facilities, including the Seneca Niagara
Casino and the Seneca Allegany Casino. SGC's Ba3 senior implied
rating, B2 senior note rating, B2 long-term issuer rating, and
SGL-2 speculative grade liquidity rating were affirmed.
As reported in the Troubled Company Reporter on Apr. 23, 2004,
Standard & Poor's Ratings Services assigned its 'BB-' rating to
the Seneca Gaming Corporation's $225 million senior unsecured
notes due 2012.
In addition, a 'BB-' corporate credit rating was assigned to the
Niagara Falls, New York-based company.
The negative outlook considers the near-term uncertainty
associated with the independent counsel investigation. Material
negative financial and/or governance findings would likely result
in a ratings downgrade of at least one-notch. Assuming operating
results continue as expected, satisfactory resolution of the
independent investigation would likely result in a revision of the
ratings outlook back to stable.
SENECA GAMING: Names John Pasqualoni As Chief Operating Officer
---------------------------------------------------------------
Seneca Gaming Corporation's board of directors appointed John
Pasqualoni as Chief Operating Officer. In this position, Mr.
Pasqualoni will direct and oversee the day-to-day operations of
the Seneca Niagara Casino, supervise the COO of Seneca Allegany
Casino, and report directly to SGC's President and Chief Executive
Officer, G. Michael Brown.
Prior to his appointment, as COO of both of its casinos, Mr.
Pasqualoni served as Senior Vice President of Slot
Operations/Marketing overseeing these activities for SGC, and has
been with us since October 2002. Mr. Pasqualoni has over 27 years
of experience in the gaming industry. He has served in senior
management positions at Resorts International Hotel and Casino,
Foxwoods Resort Casino, Bally's Park Place and Trump Plaza.
"John Pasqualoni and I have worked together on numerous casino
projects over the past 20 years," said Mickey Brown. "John brings
a wealth of knowledge and experience to this position, and I am
pleased that he has agreed to assume additional operational
responsibilities," Mr. Brown stated.
SGC Chairman Barry Snyder said, "John was one of the first Vice-
Presidents hired by the company. He, along with Mickey, was
instrumental in getting us open and has continued to assist in
making our casinos highly successful. We are pleased that we are
able to fill the number 2 position from our existing management
team. The selection of John demonstrates the confidence the Board
has in our current team, which has consistently achieved positive
growth for the Nation's Class III gaming operations."
About the Company
Seneca Gaming Corporation is an incorporated instrumentality of
the Seneca Nation of Indians of New York, is federally recognized,
and has a compact with the State of New York that provides the
Nation with the right to establish and operate three Class III
gaming facilities in western New York. Seneca Gaming currently
owns and operates the Seneca Niagara Casino and the Seneca
Allegany Casino.
* * *
As reported in the Troubled Company Reporter on Jan. 10, 2005,
Moody's Investors Service revised Seneca Gaming Corporation's
ratings outlook to negative from stable in response to the
company's delay in filing its Annual Report on Form 10-K. This
delay follows the election of a new President of the Seneca
Nation, appointment of new Board members, and the decision by the
Seneca Nation to hire an independent counsel to conduct a review
of all actions taken, including actions taken by the Seneca
Nation, in the building, financing, management and operation of
the Nation's gaming facilities, including the Seneca Niagara
Casino and the Seneca Allegany Casino. SGC's Ba3 senior implied
rating, B2 senior note rating, B2 long-term issuer rating, and
SGL-2 speculative grade liquidity rating were affirmed.
As reported in the Troubled Company Reporter on Apr. 23, 2004,
Standard & Poor's Ratings Services assigned its 'BB-' rating to
the Seneca Gaming Corporation's $225 million senior unsecured
notes due 2012.
In addition, a 'BB-' corporate credit rating was assigned to the
Niagara Falls, New York-based company.
The negative outlook considers the near-term uncertainty
associated with the independent counsel investigation. Material
negative financial and/or governance findings would likely result
in a ratings downgrade of at least one-notch. Assuming operating
results continue as expected, satisfactory resolution of the
independent investigation would likely result in a revision of the
ratings outlook back to stable.
SOUTH CAROLINA JOBS: Moody's Junks $8.9 Million Revenue Bonds
-------------------------------------------------------------
On February 1, 2005 Moody's Investors Service downgraded to Caa1
from A1 the rating on $8.9 million South Carolina Jobs Economic
Development Authority Multifamily Housing Revenue Bonds (The
Legacy at Anderson Project) 2002 Series A and 2002 Series B based
on the trustee's failure to pay interest due on the bonds on
February 1, 2005.
This project was financed with a loan that was guaranteed by USDA
with a combination construction/permanent guarantee. The USDA has
taken the position that once the 24-month construction period
ends, that the permanent guarantee does not take effect until the
project achieves 90% occupancy for 90 days. The regulations state
that "for combination construction and permanent loans, the Agency
will guarantee advances during the construction loan period (which
cannot exceed 24 months).
The guarantee of construction loan advances will convert to a
permanent loan guarantee once the required level of occupancy has
been reached." Moody's believes that the 24 months is the period
of time during which USDA will guarantee advances -- such that
advances made after 24 months would not be guaranteed -- and that
the guarantee would not terminate, but rather would convert to a
permanent guarantee at a later point in time upon meeting
sufficient occupancy.
There is no provision for termination of the guarantee after 24
months in the regulations. Nonetheless, the USDA has taken a
position that leaves these projects without a guarantee during the
period between the end of 24 months and the time they achieve 90%
occupancy for 90 days. Moody's had placed the bonds on watch for
downgrade based on the ongoing review by USDA of its
interpretation of the regulations. The USDA has reviewed the
facts as it relates to these bonds and stands by its
interpretation.
As of February 1, 2005, the trustee reported that the project was
22% occupied. Since February 1, 2005, the participants have
reported that they are working on a plan to restructure the
project and have the USDA issue a permanent guarantee in
conjunction with this restructuring.
Outlook:
The outlook on the bonds is developing pending final determination
of the status of the project and the guarantee.
What Could Change the Rating - UP
The participants are working on a plan to restructure the project
and have the USDA issue a permanent guarantee in conjunction with
this restructuring. If the restructuring takes place and
depending on the economics of the restructuring, the bonds could
be made current.
What Could Change the Rating - DOWN
If the restructuring does not occur and the project does not
receive the permanent guarantee and does not generate cashflow
sufficient to pay debt service, the debt service reserve fund will
need to be tapped again.
SUNBELT SCENIC: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Sunbelt Scenic Studios Inc.
8980 South McKemy Street
Tempe, Arizona 85284
Bankruptcy Case No.: 05-02001
Type of Business: The Debtor provides sound and audiovisual
equipment rental and leasing services.
See http://www.sunbeltscenic.com/
Chapter 11 Petition Date: February 11, 2005
Court: District of Arizona (Phoenix)
Judge: Randolph J. Haines
Debtor's Counsel: S. Cary Forrester, Esq.
Forrester & Worth, PLLC
3636 North Central Avenue, Suite 700
Phoenix, AZ 85012
Tel: 602-271-4250
Fax: 602-271-4300
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
United States Treasury Payroll Taxes $210,175
Ogden, UT 84201
Wells Fargo CC Trade Debt $161,605
P.O. Box 9272
Des Moines, IA 50306
Wilson & Associates Trade Debt $115,798
401 West Baseline, #207
Tempe, AZ 85283
St. Paul / Traveler's Trade Debt $106,545
CL Remittance Center
American Hardwoods Trade Debt $90,501
Electronic Theatre Central Trade Debt $79,899
Arizona Dept. of Revenue Payroll Taxes $72,963
MFS Investors 401K Contributions $71,451
DMK Electric, Inc. Trade Debt $64,228
Image Craft Trade Debt $45,135
RC Lurie Company, Inc. Trade Debt $39,485
Installation America Trade Debt $36,598
Pacific Staging Company Inc. Trade Debt $29,658
Diamond Millwork Trade Debt $25,515
On Time Express Trade Debt $25,311
Stage Call Corp. Trade Debt $24,811
Superior Neon Co., Inc. Trade Debt $24,230
Zack Electronics, Inc. Trade Debt $24,099
Color Kinetics Trade Debt $18,511
Ryder Truck Trade Debt $18,375
SUFFIELD CLO: Fitch Downgrades $14.7 Million Combination Notes
--------------------------------------------------------------
Fitch Ratings affirms eight classes and downgrades one class of
notes issued by Suffield CLO, Limited, effective immediately:
These classes are affirmed:
-- $365,000,000 class I senior notes at 'AAA';
-- $53,000,000 class II senior notes at 'AA+';
-- $42,000,000 class III-A mezzanine notes at 'A';
-- $15,000,000 class III-B mezzanine notes at 'A';
-- $35,000,000 class IV mezzanine notes at 'BBB+';
-- $6,000,000 class V-A mezzanine notes at 'BBB';
-- $15,000,000 class V-B mezzanine notes at 'BBB';
-- $3,182,374 class VI participation notes at 'BB';
-- $9,410,367 preferred shares at 'B-'.
-- $12,009,185 class K combination notes at 'BBB+'.
This class is downgraded:
-- $14,700,000 class L combination notes to 'BB' from 'BBB-'.
Suffield is a collateralized loan obligation - CLO -- managed by
Babson Capital Management LLC which closed Sept. 13, 2000.
Suffield is composed of approximately 93% senior secured loans and
7% high yield bonds. Included in this review, Fitch discussed the
current state of the portfolio with the asset manager and their
portfolio management strategy going forward. In addition, Fitch
conducted cash flow modeling utilizing various default timing and
interest rate scenarios to measure the breakeven default rates
going forward relative to the minimum cumulative default rates
required for the rated liabilities.
Since the last rating action, the collateral has continued to
perform within expectations. The weighted average rating factor
-- WARF -- has remained consistent at 'BB-' as of the most recent
trustee report dated Dec. 20, 2004. The senior, class III/IV
mezzanine and class V mezzanine par value test ratio has decreased
slightly, however, passing its required thresholds. The class V
mezzanine test is approaching its trigger of 100%, with a ratio of
100.7%. The weighted average spread is continuing to compress and
the weighted average coupon is currently failing at 9.63%, with a
required threshold of 10.15%. As of the most recent trustee
report available, Suffield's defaulted assets represented
approximately 2.9% of the total collateral and eligible
investments.
The ratings of the class I and II notes address the likelihood
that investors will receive full and timely payments of interest
on scheduled interest payment dates, as well as the stated balance
of principal by the legal final maturity date. The ratings of the
class III-A, III-B, IV, V-A, and V-B notes address the likelihood
that investors receive ultimate and compensating interest payments
as well as the stated balance of principal by the legal final
maturity date. The rating of the participation notes addresses
the receipt of the stated balance of principal by the legal final
maturity date and an internal rate of return on the original
investment of 6%.
The rating of the preferred shares addresses the return of
original investment only. The rating of the class K combination
securities addresses the likelihood that investors will receive
the stated balance of principal by the legal final maturity date.
The rating of the class L combination securities addresses the
likelihood that investors will receive the stated balance of
principal by the legal final maturity date, as well as a yield of
8.4% on the original investment.
The class K combination notes comprise $15 million of the class V
notes and $5 million of the preferred shares. As of the latest
payment date report on Sept. 27, 2004, the class K combination
notes had distributions totaling approximately $7.9 million, which
represents principal repayment of approximately 39.9%.
The class L combination notes comprise $2 million of the class III
notes, $10 million of the class IV notes, and $2.7 million of the
preferred shares. As of the latest payment date report, the class
L combination notes had distributions totaling approximately $4.1
million. The class L combination notes obtain 78% of their value
from two floating rate notes (the class III-A and IV) that pay
interest based on LIBOR spreads. As a result, a low interest rate
environment makes it difficult to meet a fixed 8.4% yield. Since
inception, the class L combination notes have only received a per
annum yield of 8.4% on one payment period directly following the
ramp-up. As a result, Fitch has determined that the current
rating of the class L combination notes no longer reflects the
current risk to noteholders due to the prolonged low interest rate
environment.
Fitch will continue to monitor and review this transaction for
future rating adjustments. Additional deal information and
historical data are available on the Fitch Ratings web site at
http://www.fitchratings.com/
TAYLOR METAL WORKS: Case Summary & 41 Largest Unsecured Creditors
-----------------------------------------------------------------
Debtor: Taylor Metal Works & Pipe Company, Inc.
dba Taylor Metal Works
215 West Farm Road 365
Port Arthur, Texas 77640
Bankruptcy Case No.: 05-10207
Type of Business: The Debtor fabricates sheet metals and
manufactures pipes.
Chapter 11 Petition Date: February 16, 2005
Court: Eastern District of Texas (Beaumont)
Debtor's Counsel: Floyd A. Landrey, Esq.
Moore Landrey, L.L.P.
390 Park Street, Suite 500
Beaumont, Texas 77701
Tel: (409) 835-3891
Fax: (409) 835-2707
Total Assets: $435,751
Total Debts: $1,340,587
Debtor's 41 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Department of Treasury 940 & 941 Taxes $388,715
Internal Revenue Service for 2000, 2001,
350 Pine Street, #750 2002, 2003 &
Beaumont, TX 77701 2004
Thomas H. Taylor & Loan $212,414
Charmaine A. Taylor $135,276
5250 Frances Street
Groves, TX 77619
Service Environmental Company Materials $87,581
PO Box 2355
Beaumont, TX 77704
Arch Insurance Company Insurance $44,932
PO Box 515695
Dallas, TX 75251
Texas Workforce Commission Taxes $34,750
Tax Collector for Property Taxes $22,867
Jefferson County for 2003 & 2004
NES Equipment Services Services $21,229
c/o M. Michael Douglas
Douglas & Scruta, LLC
Brammer Construction, Inc. Services $14,875
Knape Associates Services $13,281
Redfish Rental, Inc. Services $7,813
Polk Mechanical Materials $6,724
Overhead Door Company Materials $5,548
American Alloy Steel, Inc. Materials $4,572
Kelley Brothers, Inc. Services $4,500
Superior Supply & Steel Materials $4,379
REE Holding, Inc. Services & Materials $3,554
Brand Scafford Builders, Inc. Services $3,491
Airgas, Inc. Supplies $3,450
AT&T Wireless Telephone Services $3,116
New Wave Technology Services $2,965
Anatec International Materials $1,857
Johnnie On The Spot Services $1,335
Drago Supply Company Supplies $1,050
Swisher Services $926
Prime Equipment Services $884
Motion Industries, Inc. Services $805
Fastenal Supplies $633
Causeway Steel Products LP Materials $597
Applied Standards Materials $443
Inspection, Inc.
Metrocall Services $414
Riley Abrasives, Inc. Services $385
Sabine Emergency Pharmacy Services $348
Carbide & Supply Supplies $328
CPI Wirecloth & Screens Materials $325
ADT Security Services Services $290
Deluxe Business Forms Supplies $249
Sampson Steel Services $212
Centricut, Inc. Services $165
MSC Industrial Supply Materials $117
Austin Hardware & Supply Materials $95
Federal Ex Freight Services $37
TCW LINC: Fitch Holds Junk Ratings on Five Note Classes
-------------------------------------------------------
Fitch Ratings upgrades four classes of notes issued by TCW LINC
III CBO, Ltd. These rating actions are effective immediately:
-- $846,628 class A-1F notes upgraded to 'AAA' from 'AA-';
-- $5,418,419 class A-1 notes upgraded to 'AAA' from 'AA-';
-- $21,500,000 class A-2L notes upgraded to 'BB-' from 'B+';
-- $82,000,000 class A-2 notes upgraded to 'BB-' from 'B+';
-- $34,000,000 class A-3A notes remain at 'CC';
-- $45,000,000 class A-3B notes remain at 'CC';
-- $26,497,074 class B-1 notes remain at 'C';
-- $15,902,110 class B-2A notes remain at 'C';
-- $8,073,780 class B-2B notes remain at 'C'.
TCW LINC III is a collateralized bond obligation - CBO -- managed
by TCW Investment Management Company - TCW -- which closed July
13, 1999. TCW LINC III is composed of 92% high-yield bonds and 8%
collateralized debt obligations -- CDOs. Included in this review,
Fitch discussed the current state of the portfolio with the asset
manager and their portfolio management strategy going forward.
Since the last rating action on Dec. 18, 2003, TCW LINC III has
applied $234.7 million of principal proceeds resulting in the
class A-1L notes being paid in full and the class A-1F notes and
class A-1 notes being redeemed by 94.4%. Since the last rating
action the weighted average rating has remained the same at
'CCC+'. The total collateral consists of 58.9% of assets rated
'CCC+' or lower and 20.7% of defaulted assets. The class A
overcollateralization - OC -- and class B OC ratios have decreased
slightly to 84.4% and 70.5%, respectively, as of the most recent
trustee report dated Jan. 18, 2005, from 90.8% and 80.9% as of the
Nov. 17, 2003, trustee report. Currently, there is $187 million
of collateral to cover $6.3 million of liabilities for the class
A-1F and class A-1 notes and $103.5 million of liabilities for the
class A-2L and A-2 notes.
As a result of this analysis, Fitch has determined that the
current ratings assigned to the class A-1F, A-1, A-2L, and A-2
notes no longer reflect the current risk to noteholders and have
improved, while the current ratings for the classes A-3A, A-3B, B-
1, B-2A, and B-2B notes still reflect the current risk to
noteholders.
The ratings of the class A-1F, A-1, A-2L, A-2, A-3A, and A-3B
notes address the likelihood that investors will receive full and
timely payments of interest, as per the governing documents, as
well as the stated balance of principal by the legal final
maturity date. The ratings of the class B-1, B-2A, and B-2B notes
address the likelihood that investors will receive ultimate and
compensating interest payments, as per the governing documents, as
well as the stated balance of principal by the legal final
maturity date.
Fitch will continue to monitor and review this transaction for
future rating adjustments. Additional deal information and
historical data are available on the Fitch Ratings web site at
http://www.fitchratings.com/
TELCORDIA TECHNOLOGIES: Moody's Puts B1 Rating on $100MM Sr. Loan
-----------------------------------------------------------------
Moody's Investors Service assigned first-time ratings to Telcordia
Technologies, Inc., a subsidiary of Science Applications
International Corp. (SAIC) that is being purchased by private
equity buyers in a highly leveraged transaction. Providence
Equity Partners and Warburg Pincus, joint acquirers of the
telecommunications software provider, expect to close the
transaction in March 2005.
The ratings assigned to Telcordia are:
* Senior implied rating of B1
* $100 million senior secured revolving credit facility
maturing 2011 rated B1
* $520 million senior secured term loan maturing 2012 rated B1
* $350 million senior subordinated notes due 2013 rated B3
* Senior unsecured issuer rating of B2
The rating outlook is stable.
Proceeds from the transactions will be applied towards the $1.35
billion purchase of Telcordia Technologies from its parent company
SAIC, and to fund Telcordia's beginning cash balances and
transaction fees and expenses. The ratings are subject to review
of final documentation that is consistent with Moody's
understanding of the proposed transaction.
The ratings reflect Telcordia Technologies':
(i) legacy position as the primary supplier of embedded
operations system support (OSS) software for the regional
Bell operating companies (RBOCs),
(ii) solid but contracting margins from reduced
telecommunications infrastructure spending and price
declines on its core wireline OSS maintenance contracts,
(iii) limited consolidated revenue growth and margin enhancement
expected over the intermediate term, and
(iv) high degree of leverage and low interest coverage resulting
from the acquisition financing transaction.
The ratings also reflect the challenges the company faces as a
newly independent entity with transitioning product lines away
from a heavy reliance on legacy wireline software products for a
very concentrated customer base. The B3 subordinated rating
further reflects its contractual subordination to senior
indebtedness.
Prior to its acquisition by SAIC in 1997, Telcordia Technologies
(previously Bellcore) was the internal research and development
arm of the RBOCs. Due to its origin as a captive software
provider, Telcordia enjoys a dominant market position in providing
OSS software for wireline networks of RBOCs and major telecom
providers. However, the Company has experienced declines in
revenue from its legacy RBOC business, persistent pressure on
pricing and margins, and intense competition in new products and
markets the company is targeting for future growth.
In response, the Company hopes to increase its presence in
providing OSS software for wireless and cable networks as well as
in transaction-based services and consulting, a strategy made
challenging due to the intense competition from both domestic and
foreign software suppliers. Less than 10% of Telcordia's revenue
is from non-U.S. markets.
Resulting from a curtailment in telecommunications carrier
spending and voluntary reductions in pricing of its OSS
maintenance contracts, Telcordia Technologies' revenue dropped 39%
from $1.5 billion in the fiscal year ended January 31, 2002 to
$899 million in fiscal 2004. Significant reduction in headcount
and operating expenses has helped stabilize operating margins to
16.6% in fiscal 2004 and 16.2% for the first nine months of fiscal
2005.
Spending on research and investment declined from $97.8 million in
fiscal 2002 (6.7% of revenue) to $64.7 million (7.2% of revenue)
in fiscal 2004, with further reductions expected for fiscal 2005.
Low capital investment requirements and a minimal cash conversion
cycle due to RBOC contract prepayments have historically resulted
in substantial free cash flow generation. Going forward, however,
interest payments on the newly issued debt and working capital
investment will constrain cash flow generation.
The Company reports two segments: Software license and maintenance
(Software) and Services. Software, the larger segment, includes
Telcordia's historically high margin, legacy OSS business. Under
long term support agreements, Telcordia manages wireline OSS
maintenance contracts with RBOCs and other major carriers.
Software also includes the Company's next generation OSS products
for wireline services, a smaller market that faces greater
competitive threat from emerging technologies and providers.
Software also houses Telcordia's development effort for new,
higher growth markets such as wireless and cable. Although the
wireless and cable business is relatively small, Telcordia expects
growth in this market to help offset revenue declines from
wireline customers. The second segment, Services, comprises
transaction services, consulting services and applied research.
This segment is not expected to be a significant contributor to
the company's growth.
The stable outlook considers the visibility of recurring revenue
streams from Telcordia Technologies' long-term software
maintenance contracts with its core RBOC customers and the
expectation that the Company's leverage may modestly improve over
the intermediate term. The ratings could be positively influenced
to the extent that the Company is able to materially de-leverage
through cash flow generation or the subsequent issuance of equity,
or if the company is able to profitably grow revenue from new
products and markets to offset revenue decline from its highly
profitable legacy RBOC business.
Alternatively, the ratings could be negatively influenced to the
extent the company has additional borrowings under its credit
facilities, revenue and profitability decline further than
expected, or currently weak pro forma credit metrics show signs of
deterioration. Current consolidation of the telecommunications
industry could have negative long-term impact on the Company's
core businesses, as RBOCs seek to reduce capital spending and
consolidate duplicative infrastructure and related software costs.
Given the Company's desire to grow its wireless and cable software
offerings amidst rationalization of R&D spending, Moody's expects
Telcordia Technologies to pursue "fill-in" acquisitions, which
could have a negative impact on leverage and liquidity. The
current transaction will result in pro forma debt to EBITDA
leverage for the twelve month period ended October 31, 2004, of
approximately 5.0 times, and EBITDA to interest coverage of
approximately 2.8 times.
The Company's credit facilities are secured by substantially all
the tangible and intangible assets of Telcordia Technologies and
its domestic subsidiaries and are subject to guarantees from
domestic subsidiaries. Tangible asset coverage is modest, with
approximately $30 million of net PP&E and $330 million of other
assets, pro forma for the transaction. The remaining collateral
consists of Telcordia's intellectual property rights, including an
extensive portfolio of patents.
The revolving credit facility is not expected to be drawn over the
intermediate term. The Company can borrow an additional $200
million under the existing terms of the term loan, subject to
senior leverage remaining below 3.0 times EBITDA, pro forma for
the incremental borrowing. The term loans contain mandatory
excess cash flow sweep provisions that take effect starting in
fiscal 2007. The excess cash flow sweep, in which the company is
required to offer partial repayment of the term loan, is 50% of
defined cash flow if leverage is greater than 4.0 times trailing
EBITDA, stepping down to 0% of defined cash flow if total leverage
falls below 3.5 times trailing EBITDA.
The subordinated notes are contractually subordinated to the large
amount of secured debt and are structurally subordinated to
liabilities of non-guarantor subsidiaries. Because of their
subordinated position in the capital structure, senior
subordinated notes could be more sensitive to any weakening credit
metrics of the company.
The indenture provides limited protection against dividends and
restricted payments. The debt incurrence test requires fixed
charge coverage of 2.0 times, but includes somewhat generous
baskets. The senior subordinated notes are being issued under
Rule 144A and will not be exchanged for SEC registered notes. The
company will not provide SEC filings, but will provide annual and
interim financial reports.
Telcordia Technologies, Inc., currently a subsidiary of Science
Applications International Corp., is headquartered in Piscataway,
New Jersey. The Company is a leading provider of operations
systems support software and network systems products for
telecommunications providers. Revenues were $899 million in
fiscal 2004.
TRICOM S.A.: Dec. 31 Balance Sheet Upside-Down by $195.3 Million
----------------------------------------------------------------
Tricom, S.A. (OTC Pink Sheets: TRICY) reported consolidated
unaudited financial results for the fourth quarter and year ended
December 31, 2004. For the fourth quarter 2004, Tricom reported
an increase in revenues by 13.9% from results for the fourth
quarter of 2003. The increase reflected increased subscriber
growth in core domestic businesses as well as improved
macroeconomic condition. During the 2004 fourth quarter, the
average value of the Dominican peso with respect to the U.S.
Dollar increased by approximately 26 percent from the third
quarter of 2004. However, despite recent macroeconomic
improvements, the Company's financial results for 2004 were
affected by a decrease over the full year in the U.S. dollar
translation value of the Company's Dominican Peso revenues.
During 2004, the average value of the Dominican peso declined by
approximately 36 percent compared to the average value in 2003.
"We are pleased to report our first quarter of double-digit-
revenue-growth in over two years", said Carl Carlson, Chief
Executive Officer. "In 2004 we improved the quality of our
customer base and achieved strong subscriber growth in our core
domestic businesses despite historically low levels of capital
investments. The sale of non-strategic assets and stronger
collections performance improved our liquidity position during the
past year. We are encouraged by the recent improvements in the
Dominican economy and anticipate a modest macroeconomic recovery
in 2005."
Results of Operations
Operating revenues grew 13.9 percent to $54.6 million for the 2004
fourth quarter compared to the same period in the previous year,
driven primarily by domestic telephony and mobile services, offset
by lower long distance revenues. For the year, operating revenues
totaled $188.0 million, a 5.5 percent decrease from total
operating revenues in 2003.
Long distance revenues decreased by 28.3 percent to $17.2 million
in the 2004 fourth quarter, and by 22.0 percent to $71.8 million
for the year, primarily due to lower international long distance
traffic, derived from the Company's wholesale and retail
operations in the U.S., as well as lower average termination rates
to the Dominican Republic.
Domestic telephony revenues increased by 60.9 percent to $21.3
million in the 2004 fourth quarter, and by 9.4 percent to $65.1
million for the year, primarily as a result of a higher average
number of lines in service and price increases, together with the
positive impact of the appreciation of the average value of the
Dominican peso during the fourth quarter. At December 31, 2004,
the Company had approximately 153,000 lines in service,
representing an 8.2 percent increase from lines in service at
December 31, 2003. New line sales totaled approximately 45,000
during 2004 compared to 34,000 during 2003. Net line additions,
representing new local access line customers less cancellations
and Company-initiated disconnections, totaled approximately 12,000
during 2004 compared to a decrease in net lines of approximately
9,000 in 2003.
Mobile revenues increased by 46.4 percent to $9.8 million in the
2004 fourth quarter driven primarily by higher mobile subscriber
additions coupled with the increase in the average value of the
Dominican peso. For the year, mobile revenues increased by 9.7
percent to $32.1 million primarily due to higher airtime minutes,
offset by a lower average mobile subscriber base. Mobile
subscribers at December 31, 2004 decreased by 20.6 percent to
approximately 346,000 compared to the number of mobile subscribers
at the end of 2003. The decline in subscriber resulted primarily
from Company initiated disconnections of approximately 200,000
low-usage subscribers in the first half of 2004. During the 2004
fourth quarter, the Company's gross mobile subscribers additions
totaled approximately 72,000 compared to 57,000 added during the
2003 fourth quarter. Net mobile subscribers additions (new mobile
subscribers less cancellations and Company-initiated
disconnections) were approximately 12,000 during the 2004 fourth
quarter compared to approximately 6,300 during the 2003 fourth
quarter. During the year, the Company added approximately 290,000
gross mobile subscribers, and approximately 112,000 net mobile
subscribers, excluding Company initiated disconnections.
Cable revenues increased by 52.9 percent to $4.6 million for the
2004 fourth quarter and by 0.5 percent to $13.7 million during the
year. The growth in 2004 fourth quarter cable revenues resulted
from the increase in the average value of the Dominican peso as
well as higher monthly cable service fees. For the year, the
lesser growth rate resulted from higher service fees being offset
by currency devaluation over the entire period as well as a lower
average cable subscriber base. At December 31, 2004, cable
subscribers totaled approximately 59,000, a 3.4 percent decrease
from the number of cable subscribers at December 31, 2003. The
decline in cable subscribers is primarily attributable to a weak
economic environment. During 2004 the Company instituted a number
of customer care and retention programs designed to reduce churn
and increase customer satisfaction. As a result, the Company's
average monthly churn rate for cable television services declined
to 1.3 percent during the 2004 fourth quarter compared to 2.8
percent during the 2003 fourth quarter, and to 1.8 percent in 2004
compared to 3.9 in 2003.
Data and Internet revenues increased by 63.5 percent to $1.7
million for the 2004 fourth quarter, and by 19.3 percent to $5.4
million for the year, mainly due to the growth of the Company's
data and Internet subscriber base, as well as the positive impact
of the rise of the average value of the Dominican peso during the
fourth quarter. At December 31, 2004, data and Internet access
accounts totaled approximately 15,000, representing a 7.2 percent
increase from the number of data and Internet subscribers at
December 31, 2003.
Consolidated operating costs and expenses, net of impairment
charges on the Company's long-lived assets recorded during the
fourth quarter of 2003, decreased by 11.7 percent to $61.1 million
in the 2004 fourth quarter, and decreased by 3.8 percent to $230.1
million for the entire year 2004. The decrease in fourth quarter
operating costs and expenses resulted primarily from lower special
item charges and restructuring costs related to the Company's
financial restructuring efforts, as well as lower costs of sales
and services. These decreases were partly offset by higher non-
cash depreciation and amortization charges and higher selling,
general and administrative expenses (SG&A). SG&A expenses
increased by 25.0 percent to $18.5 million in the 2004 fourth
quarter, primarily due to higher energy and occupancy costs,
marketing expenses, as well as the impact of the currency
appreciation over peso-denominated expenses. For the full year
2004, SG&A expenses decreased 9.0 percent to $56.4 million due to
cost control and expense reduction efforts, as well as lower
Dominican peso-denominated expenses resulting from currency
devaluation during the first nine months of the year.
Cost of sales and services decreased by 17.9 percent to $22.1
million during the 2004 fourth quarter, and by 1.8 percent to
$89.4 million during the year primarily due to lower transport and
access charges, resulting from reduced international long distance
traffic volume and cable programming fees. Depreciation and
amortization charges increased by 26.2 percent to $19.0 million
during the 2004 fourth quarter, and by 8.3 percent to $76.1
million during the year due to a shorter estimated life of the
Company's depreciable asset base following its 2003 year-end asset
impairment analysis.
Interest expense totaled approximately $19.2 million in the 2004
fourth quarter and $63.6 million for the year, compared to $18.6
million in the 2003 fourth quarter and $65.6 million in 2003. The
Company suspended principal and interest payments on its unsecured
debt obligations and principal payments on its secured
indebtedness beginning in October 2003. The Company recorded
$591,000 in foreign currency exchange losses during the 2004
fourth quarter, and $2.7 million during the year, attributed to
the impact of the rise of average value of the Dominican peso on
the Company's peso-denominated liabilities.
The Company recognized losses from discontinued operations in
Central America totaling $40.7 million for the fourth quarter of
2003 and $46.7 million for 2003. The Company will continue to
report losses from discontinued operations in the periods they
occur. Net loss totaled $25.5 million, or $0.40 per share for the
2004 fourth quarter, compared to a net loss of $276.1 million, or
$4.27 per share during the 2003 fourth quarter. For 2004, net
loss totaled $102.7 million, or $1.59 per share compared to a net
loss of $338.9 million, or $5.25 per share in 2003.
Liquidity and Capital Resources
Total debt amounted to $448.3 million at December 31, 2004,
compared to $449.3 million at December 31, 2003. Total debt
included $200 million principal amount of 11-3/8 percent Senior
Notes due in September 2004, approximately $33.7 million of
secured debt and approximately $214.6 million of unsecured bank
and other debt.
At December 31, 2004, the Company had approximately $17.7 million
of cash on hand compared to $2.4 million on hand at December 31,
2003. The increase in cash resulted from the sale of non-strategic
assets, including the Company's former Central American trunking
operations and idle mobile frequencies in the Dominican Republic,
for an aggregate of approximately $17 million, of which we have
received approximately $14 million during 2004, as well as from
higher cash provided by the Company's operating activities. For
the year, the Company's net cash provided by operating activities
totaled $22.9 million compared to net cash provided by operating
activities of $7.3 million in 2003.
Capital expenditures totaled $9.8 million during the 2004 fourth
quarter and $15.8 million during the year, compared to $3.6
million during the 2003 fourth quarter and $10.8 million during
2003. Capital expenditures were made primarily for the
installation of additional lines, mobile network enhancements and
other network improvements.
Financial Restructuring Update
Since October 2003, the Company has suspended principal and
interest payments on its outstanding unsecured indebtedness and
principal payments on its secured indebtedness. As a result, the
Company is in default with respect to its outstanding
indebtedness, approximately $400 million principal amount as of
December 31, 2004.
As previously announced, the Company continues to engage in
discussions with the holders of its indebtedness, which includes
an ad hoc committee of holders of its 11-3/8 percent Senior Notes
due 2004, regarding an agreement on a consensual financial
restructuring of its balance sheet. The Company's future results
and its ability to continue operations will depend on the
successful conclusion of the restructuring of its indebtedness.
Since these negotiations are ongoing, the value and treatment of
the Company's existing secured and unsecured obligations, as well
as that of the interest of its existing shareholders, is uncertain
at this time. Even if a restructuring can be completed, the value
of the Company's existing debt securities and instruments is
expected to be substantially less than the current recorded face
amount of such obligations, and investors in the Company's equity
interests, including the American Depository Shares, are expected
to receive little or no value with respect to their investment.
About the Company
Tricom, S.A. -- http://www.tricom.net/-- is a full service
communications services provider in the Dominican Republic. We
offer local, long distance, mobile, cable television and broadband
data transmission and Internet services. Through Tricom USA, we
are one of the few Latin American based long distance carriers
that is licensed by the U.S. Federal Communications Commission to
own and operate switching facilities in the United States. Through
our subsidiary, TCN Dominicana, S.A., we are the largest cable
television operator in the Dominican Republic based on our number
of subscribers and homes passed.
At Dec. 31, 2004, Tricom's stockholders' deficit, widened to
$195,330,587, from $93,493,322 at Dec. 31, 2003.
TRUMP HOTELS: Judge Wizmur Approves Solicitation Procedures
-----------------------------------------------------------
Judge Wizmur of the U.S. Bankruptcy Court for the District of New
Jersey approves Trump Hotels & Casino Resorts, Inc., and its
debtor-affiliates' proposed procedures for the solicitation and
tabulation of votes to accept or reject the Plan.
The record date for purposes of determining creditors and equity
security holders entitled to vote on the Plan will be February 9,
2005.
Judge Wizmur also approves the Debtors' proposed ballot forms,
the Solicitation Notice and the contents of the Solicitation
Packages, pursuant to Rules 2002 and 3017 of the Federal Rules of
Bankruptcy Procedure.
The Debtors will mail the Solicitation Packages to creditors and
equity security holders no later than February 22, 2005.
Headquartered in Atlantic City, New Jersey, Trump Hotels & Casino
Resorts, Inc. -- http://www.thcrrecap.com/-- through its
subsidiaries, owns and operates four properties and manages one
property under the Trump brand name. The Company and its
debtor-affiliates filed for chapter 11 protection on Nov. 21, 2004
(Bankr. D. N.J. Case No. 04-46898 through 04-46925). Robert A.
Klymman, Esq., Mark A. Broude, Esq., John W. Weiss, Esq., at
Latham & Watkins, LLP, and Charles Stanziale, Jr., Esq., Jeffrey
T. Testa, Esq., William N. Stahl, Esq., at Schwartz, Tobia,
Stanziale, Sedita & Campisano, P.A., represent the Debtors in
their restructuring efforts. When the Debtors filed for
protection from their creditors, they listed more than
$500 million in total assets and more than $1 billion in total
debts.
TRUMP HOTELS: Treatment of Claims & Interests in 2nd Amended Plan
-----------------------------------------------------------------
To address the objections brought by creditors and parties-in-
interest during the Disclosure Statement Hearing on February 3,
2005, Trump Hotels & Casino Resorts, Inc., and its debtor-
affiliates further amended their Plan of Reorganization and
Disclosure Statement.
Consequently, on February 13, 2005, the Debtors submitted to
Judge Wizmur their Second Amended Plan of Reorganization and
Disclosure Statement dated February 12, 2005. Judge Wizmur
approved the second amended disclosure statement on
February 15, 2005.
Pursuant to their Second Amended Plan of Reorganization, the
debtors emphasize that if holders of TCH Priority Notes Claims --
Class 3 -- reject the Plan, they will receive treatment
consistent with Section 1129(b) Bankruptcy Code, and any
recoveries on account of the claims may be adversely affected in
the event certain provisions of the Priority Intercreditor
Agreement are enforced. The Debtors estimates the recovery for
Class 3 at 95.5%.
"Unless otherwise specifically provided for or contemplated
elsewhere in the Plan or Confirmation Order, or required by
applicable bankruptcy law to render a Class 7 Claim Unimpaired,
postpetition interest shall not accrue or be paid on any Class 7
Claim and no holder of a Class 7 Claim shall be entitled to
interest accruing on or after the Petition Date with respect to
such Claim."
The Debtors also estimate that the amount of Allowed
Administrative Claims under the Bankruptcy Code, that are unpaid
as of the Effective Date, will include severance payments, if
any, and professional fees of the Debtors, the TAC Noteholder
Committee, the TCH Noteholder Committee and the Official
Committee of Equity Security Holders, including the fees of:
Professional Estimated Fee
------------ -------------
Jefferies & Company, Inc. $1.20 million
Houlihan Lokey Howard & Zukin $2.00 million
Chanin & Company, LLC $1.60 million
CIBC World Markets Corp. $____ million
Morgan Stanley Senior Funding, Inc.,
as joint lead arranger and bookrunner
and sole administrative agent in
connection with the Exit Facility $10.50 million
UBS Securities LLC, as senior
co-financial advisor to the Debtors
and UBS Securities LLC and UBS Loan
Finance LLC, as joint lead arrangers
and bookrunners of the Exit Facility $10.35 million
Lazard FrSres & Co. LLC, as
postpetition co-financial advisor
to the Debtors $2.00 million
Headquartered in Atlantic City, New Jersey, Trump Hotels & Casino
Resorts, Inc. -- http://www.thcrrecap.com/-- through its
subsidiaries, owns and operates four properties and manages one
property under the Trump brand name. The Company and its
debtor-affiliates filed for chapter 11 protection on Nov. 21, 2004
(Bankr. D. N.J. Case No. 04-46898 through 04-46925). Robert A.
Klymman, Esq., Mark A. Broude, Esq., John W. Weiss, Esq., at
Latham & Watkins, LLP, and Charles Stanziale, Jr., Esq., Jeffrey
T. Testa, Esq., William N. Stahl, Esq., at Schwartz, Tobia,
Stanziale, Sedita & Campisano, P.A., represent the Debtors in
their restructuring efforts. When the Debtors filed for
protection from their creditors, they listed more than
$500 million in total assets and more than $1 billion in total
debts.
ULTIMATE ELECTRONICS: Mark Wattles Replaces David Workman as CEO
----------------------------------------------------------------
Ultimate Electronics, Inc. (Nasdaq: ULTEQ) disclosed changes to
its management with the departure of various members of management
including David Workman, CEO and President, Neal Bobrick, SVP of
Sales and Gerry Demple, SVP of Services. The Board of Directors
has appointed Mark Wattles, the Company's Chairman of the Board,
to be the Company's CEO. Seven individuals, who have previous
experience working with Mr. Wattles, will be joining the Company's
management team this week, including:
-- Bill Besselman will be VP of Strategic Planning and
Analysis. Mr. Besselman's experience includes five years of
consulting at McKinsey & Company, and he was most recently
VP of Strategic Planning and Analysis at Hollywood Video.
-- Lon Weingart will be a consultant to the Company for
approximately six months overseeing the operations of the
business. Mr. Weingart's experience includes Director of
Merchandising and Director of Product Development at
Starbucks, VP and SVP of Marketing at Hollywood Video, and
most recently SVP of Operations at Hollywood Video.
-- Jim Marcum, who joined the Company's Board of Directors when
Mark Wattles became Chairman, has been asked by the Board to
take an active role with respect to the Company's financial
operations and restructuring strategy. Mr. Marcum's prior
experience includes Treasurer of Melville Corporation, CFO
of Marshall's, Vice Chairman and CFO of Stage Stores, CFO of
Hollywood Video, and most recently a private investor.
Commenting on the changes, Mark Wattles, Chairman and CEO, said,
"I am excited to be working with some of the talent that led
Hollywood Video through its successful turnaround. As a result of
these changes, Ultimate is now a large Company with management
experienced in running a large Company. As a Company, we want to
thank David Workman for his partnership with Bill Pearse, our
Company's founder, in building a great company and a great brand.
Ultimate Electronics and Soundtrack have the best selection of mid
to high end audio/video products with a low price guarantee and we
are dedicated to being the Ultimate destination for entertainment.
Our employees are known for having the best product knowledge in
the industry. So, if you want to make sure you are buying the
right product for your needs Ultimate and Soundtrack are the
places to shop. I am confident with this team in place, not only
will Ultimate and Soundtrack be great places to shop but,
Ultimately, we will be financially successful as well."
Headquartered in Thornton, Colorado, Ultimate Electronics, Inc. --
http://www.ultimateelectronics.com/-- is a specialty retailer of
consumer electronics and home entertainment products located in
the Rocky Mountain, Midwest and Southwest regions of the United
States. The Company operates 65 stores and focuses on mid- to
high-end audio, video, television and mobile electronics products.
The Company and its debtor-affiliates filed for chapter 11
protection on January 11, 2005 (Bankr. D. Del. Case No. 05-10104).
J. Eric Ivester, Esq., at Skadden, Arps, Slate, Meagher & Flom
LLP, represents the Debtors in their restructuring efforts. When
the Debtor filed for protection from its creditors, it listed
total assets of $329,106,000 and total debts of $160,590,000.
ULTIMATE ELECTRONICS: Same Store Sales Tumble 19.4% from Year Ago
-----------------------------------------------------------------
Ultimate Electronics, Inc. (Nasdaq: ULTEQ) reports that sales for
the quarter ended January 31, 2005 were approximately $195.9
million -- a decrease of 19.4% from $243.2 million for the same
period in the previous year. Comparable store sales were down
approximately 19% for the quarter ended January 31, 2005. The
Company had previously reported comparable store sales for the
month of November as down approximately 6% and December as down
approximately 18%.
Sales for the year ended January 31, 2005 were approximately
$658.3 million, a decrease of 8% from $712.9 million for the
previous year. Comparable store sales were down approximately 13
percent for the year ended January 31, 2005.
In light of the Company's Chapter 11 filing, recent changes in
management and the Board, and other financial issues that the
Company is currently addressing, the Company is not providing any
guidance on its earnings or results of operations. In addition,
the reported sales figures in this press release are preliminary
and subject to adjustment.
Commenting on the Company's financial outlook, Mark Wattles,
Chairman and CEO, said, "Despite the Company's recent difficulties
caused in part by aggressive growth strategies of prior
management, I believe that this remains a good business. The
reorganization will give us the opportunity to fix the Company's
financial and operational structure. I believe the outcome of our
reorganization will provide future opportunities for our creditors
and our employees."
Headquartered in Thornton, Colorado, Ultimate Electronics, Inc. --
http://www.ultimateelectronics.com/-- is a specialty retailer of
consumer electronics and home entertainment products located in
the Rocky Mountain, Midwest and Southwest regions of the United
States. The Company operates 65 stores and focuses on mid- to
high-end audio, video, television and mobile electronics products.
The Company and its debtor-affiliates filed for chapter 11
protection on January 11, 2005 (Bankr. D. Del. Case No. 05-10104).
J. Eric Ivester, Esq., at Skadden, Arps, Slate, Meagher & Flom
LLP, represents the Debtors in their restructuring efforts. When
the Debtor filed for protection from its creditors, it listed
total assets of $329,106,000 and total debts of $160,590,000.
UNIFLEX INC: Administrative Claims Bar Date Set for March 30
------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware set
March 30, 2005, as the deadline for Uniflex, Inc.'s creditors
holding administrative claims to file proofs of those claims.
Excluded from the Bar Date order are:
* Dilworth Paxson, LLP -- Debtor's counsel;
* Lowenstein Sandler PC -- Official Committee of Unsecured
Creditors' counsel;
* Young Conaway Stargatt and Taylor -- Creditors Committee's
counsel;
* Corporate Revitalization Partners LLC -- Debtor's crisis
manager; and
* Weiser LLC -- Creditors Committee's financial advisor.
The Court approved the sale of substantially all of the Debtor's
assets to Uniflex Holdings, LLC, for $6 million. The purchase
price consists of $1,274,000 in cash and a $4,726,000 credit bid
on account of the Debtor' secured claim.
The Debtor has until March 2 to file modified version of its
Chapter 11 Plan and the Disclosure Statement, which provides for
liquidation of the Debtor's remaining assets.
Headquartered in Hicksville, New York, Uniflex, Inc. --
http://www.uniflexbags.com/-- makes custom-printed plastic bags
and other plastic packaging for promotions and advertising. The
Company filed for chapter 11 protection on June 24, 2004 (Bank.
Del. Case No. 04-11852). Peter C. Hughes, Esq., at Dilworth
Paxson LLP, represents the Debtor in its restructuring efforts.
When the Company filed for protection from its creditors, it
estimated debts and assets of over $10 million.
VEO: Wants to Hire David A. Boone as Bankruptcy Counsel
-------------------------------------------------------
Veo, fdba Xirlink, Inc., asks the U.S. Bankruptcy Court for the
Northern District of California for permission to employ The Law
Offices of David A. Boone as its general bankruptcy counsel.
David A. Boone will:
a) advise the Debtor on its duties and powers as a debtor-in-
possession in the continued management and operation of its
business;
b) assist and advise the Debtor in the restructuring or
reorganization of its business under chapter 11, in the
formulation of a disclosure statement and plan of
reorganization and in the approval of the disclosure
statement and confirmation of the plan; and
c) perform all other legal services to the Debtor that
necessary and required in its chapter 11 case.
David A. Boone, an Associate at Law Offices of David A. Boone, is
the lead attorney for the Debtor. Mr. Boone will bill the Debtor
$285 per hour for his services. Mr. Boone discloses that his Firm
received a $15,000 retainer.
Mr. Boone reports his Firm's professionals bill:
Professional Designation Hourly Rate
----------- ----------- -----------
Raymond R. Miller Counsel $285
Leela V. Menon Counsel $265
Susan D. Silveira Counsel $265
Pearl Maldonado Legal Assistant $150
Jane Tanikawa Legal Assistant $150
Daniel Wang Legal Assistant $150
David A. Boone assures the Court that it does not represent any
interest adverse to the Debtor or its estate.
Headquartered in San Jose, California, Veo, fdba Xirlink, Inc., --
http://www.veo.com/--is a hardware technology company that
develops quality digital imaging devices. The Company filed for
chapter 11 protection (Bankr. N.D. Calif. Case No. 05-50680) on
February 9, 2005. When the Debtor filed for protection from its
creditors, it estimated assets and debts between $10 million to
$50 million.
VEO: U.S. Trustee to Meet Creditors on Mar. 2
---------------------------------------------
The U.S. Trustee for Region 15 will convene a meeting of Veo's
creditors at 10:00 a.m., on March 2, 2005, at the U.S. Federal
Bldg., 280 S. 1st Street, #130, San Jose, California 95113. This
is the first meeting of creditors required under U.S.C. Sec.
341(a) in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Headquartered in San Jose, California, Veo fdba Xirlink, Inc. --
http://www.veo.com/--is a hardware technology company that
develops quality digital imaging devices. The Company filed for
chapter 11 protection (Bankr. N.D. Calif. Case No. 05-50680) on
February 9, 2005. David A. Boone, Esq., at Law Offices of David
A. Boone, represents the Debtor in its restructuring efforts.
When the Debtor filed for protection from its creditors, it
estimated assets and debts between $10 million to $50 million.
VERESTAR INC: Asks Court for Open-Ended Plan Exclusivity Period
---------------------------------------------------------------
Verestar, Inc., and its debtor-affiliates ask the U.S. Bankruptcy
Court for the Southern District of New York, for an open-ended
extension of their exclusive periods to file and solicit
acceptances of a chapter 11 plan.
The Debtors got the Court's approval to sell their sole remaining
terrestrial teleport site, located in Cedar Hill, Texas to SES
Americom, Inc. The Debtors and SES Americom are finalizing the
sale and anticipate closing the transaction shortly. The Debtors
are still negotiating with their Official Committee of Unsecured
Creditors and American Tower Corporation -- Verestar Inc.'s parent
company and largest creditor -- to resolve certain issues in
connection with the Chapter 11 Plan they've proposed.
Consummation of the Cedar Hill Transaction is integral to the
implementation of the Plan.
The Debtors ask the Court to extend their exclusive period through
the conclusion of a hearing to consider confirmation of their
proposed chapter 11 plan.
As reported in the Troubled Company Reporter on Nov. 8, 2004,
American Tower intends to vote to reject the Plan the Company's
proposed because it fails to provide sufficient information on the
treatment of it's $535 million claim against Verestar. Being
Verestar's largest creditor, the Plan will not be confirmed
without American Tower's affirmative vote.
The Amended Disclosure Statement states that a Liquidation Trust
will be established for the benefit of holders of Allowed Claims.
The Plan provides for the Debtors and the Committee to jointly
designate a Plan Administrator who will administer and manage the
wind-down of the Debtors' affairs, make all distributions required
under the Plan, and prosecute and settle litigations and claims.
Holders of allowed general unsecured claims will receive their pro
rata share of available cash after the effective date of the plan.
Holders of allowed subordinated claims and equity interests will
not receive nothing.
Full-text copies of the Amended Disclosure Statement and Joint
Plan are available for a fee at:
http://www.researcharchives.com/download?id=040812020022
The Honorable Allan L. Gropper will consider the Debtors' request
on Feb. 24, 2005. The Debtors' exclusive periods will remain
intact through the conclusion of that hearing.
Headquartered in Fairfax, Virginia, Verestar, Inc., --
http://www.verestar.com/-- is a provider of satellite and
terrestrial-based network communication services. The Company and
two of its affiliates filed for chapter 11 protection on
December 22, 2003 (Bankr. S.D.N.Y. Case No. 03-18077). Matthew
Allen Feldman, Esq., at Willkie Farr & Gallagher LLP represents
the Debtors. When the Company filed for protection from its
creditors, it listed assets and debts of more than $100 million
each.
WICKES INC: Creditor Wants to Conduct Rule 2004 Examination
-----------------------------------------------------------
Wickes, Inc., and GLC Division, Inc.'s creditor, Jack Dykstra
Excavating, Inc., seek the authority of the U.S. Bankruptcy Court
for the Northern District of Illinois, Eastern, Division to
conduct an examination of the Debtors pursuant to Rule 2004 of the
Federal Rules of Bankruptcy Procedures.
Prior to filing for bankruptcy protection, the Debtors owned and
operated a facility, Wickes Manufacturing Plant #122, located in
Walker, Michigan. Jack Dykstra owns property adjacent to that
facility.
As reflected in the Debtors' Statement of Financial Affairs, the
Debtors sold the Plant to TWR Properties, LLC, for $1,472,583, on
Oct. 3, 2003, just over 90 days before the Petition Date.
Jack Dykstra subsequently learned that although the property's
purchase price is not reflected on the deed. Additionally, the
property transfer affidavit on file in the assessor's office shows
the consideration for the purchase to be $825,000.
On October 22, 2004, Jack Dykstra formally requested information
related to the Sale from the Debtors. The Debtors haven't
provided a substantive response to the request.
Jack Dykstra wants to know:
(1) the total amount and form of consideration the Debtors'
received;
(2) the nature of the indebtedness which was part of the
consideration;
(3) what other property was involved in the Sale; and
(4) the relationship, if any, between the Debtors or any of
their insiders and the Buyer or any of its insiders.
Jack Dykstra is also asking for copies of the real estate purchase
agreement and any underlying documentation regarding the Sale.
Nathan Q. Rugg, Esq., at Adelman & Gettleman, Ltd., in Chicago,
Illinois, contends that Jack Dykstra is a party-in-interest and is
allowed to inquire into the Debtors' "acts, conduct, or property
or to the liabilities and financial condition" pursuant to Rule
2004 of the Bankruptcy Rules.
Headquartered in Vernon Hills, Illinois, Wickes Inc.
-- http://www.wickes.com/-- is a retailer and manufacturer of
building materials, catering to residential and commercial
building professionals, repairs and remodeling contractors and
project do-it-yourself consumers Wickes, Inc., and GLC Division,
Inc., filed for chapter 11 protection on January 20, 2004 (Bankr.
N.D. Ill. Case No. 04-02221). Richard M. Bendix Jr., Esq., at
Schwartz Cooper Greenberger & Krauss represents the Debtors in
their restructuring efforts. When the Debtors filed for
protection from their creditors, it listed $155,453,000 in total
assets and $168,199,000 in total debts.
WINN-DIXIE: Q Investments Reportedly Holds 1/3 of Bond Debt
-----------------------------------------------------------
Jon Springer at Supermarket News reports that some Winn-Dixie
bondholders met this week "in hopes of forming an ad hoc committee
to represent their interests in the event of continued struggles
at the retailer." Mr. Springer reports that Q Investments, a Fort
Worth, Texas, company reportedly holding one-third of Winn-Dixie's
$300 million of outstanding 8-7/8% Senior Notes due 2008, urged
bondholders in a conference call "to get together and speak in a
unified voice" to Winn-Dixie management. Q Investments' Scott
McCarty, who hosted the call, declined to comment to Supermarket
News about specific plans. Q Investments, which manages $2
billion in investments, Mr. Springer learned, is associated with a
group that late last year purchased the Minyard's Food Stores
chain in Texas.
EBITDA Restatement
Bloomberg data shows that the price of those 8-7/8% Senior Notes
tumbled to 53.5 this week after Winn-Dixie filed an Amended Form
10-Q with the SEC for the 12-week period ending Sept. 22, 2004.
The Amendment was necessary to report that the grocer's net
borrowing availability as of September 22, 2004 was $288.5 million
and its total liquidity at that date was $352.5 million. The
lower borrowing available and total liquidity numbers result from
a miscalculation of EBITDA in the Original Form 10-Q.
Three Key Deadlines
As previously reported in the Troubled Company Reporter, WINN-
DIXIE STORES, INC., WINN-DIXIE SUPERMARKETS, INC., WINN-DIXIE
MONTGOMERY, INC., WINN-DIXIE PROCUREMENT, INC., and WINN-DIXIE
RALEIGH, INC., as Borrowers under a Second Amended and Restated
Credit Agreement dated as of June 29, 2004, obtained a waiver of
an EBITDA test through June 29, 2005, from the consortium of
lenders under that credit facility. Winn-Dixie had promised the
lenders that EBITDA would hit $132 million on a trailing 13-week
basis by this time. Winn-Dixie's failure to meet the EBITDA test
is not an event of default so long as borrowings are below the
maximum availability -- which they were. The sole result of not
meeting the EBITDA target is a $100 million decrease in borrowing
availability. The waiver restores $100 million of borrowing
availability under the facility, subject to Winn-Dixie's
compliance with three key requirements by three critical
deadlines:
-- Financial Advisor. By no later than March 1, 2005, Winn-
Dixie must engage, at it own expense, a Financial Advisor
acceptable to the Lenders;
-- Operating Plan. The Financial Advisor must deliver to
the Lenders, no later than May 31, 2005, a report
describing in reasonable detail Winn-Dixie's projections,
financial and operating plans, in satisfactory scope,
form and substance;
-- Leasehold Mortgages. By no later than March 31, 2005,
Winn-Dixie must receive duly executed counterparts of
mortgages, in form and substance reasonably satisfactory
to them, pledging properties as collateral to secure
repayment of the company's obligations to the Lenders.
The leasehold properties must be acceptable to the
Collateral Monitoring Agent, and must have an appraised
value on a net orderly liquidation basis (as demonstrated
by an appraisal satisfactory to the Collateral Monitoring
Agent from appraisers satisfactory to the Collateral
Monitoring Agent) such that 37.5% thereof is equal to at
least $75 million.
Winn-Dixie paid the Lenders a $600,000 fee (0.10% of the total
$600 million commitment) in connection with this waiver, and paid
all of the lenders' legal fees and expenses. The known
participants in the lending consortium are:
* WACHOVIA BANK, NATIONAL ASSOCIATION,
as the Administrative Agent, Issuer and Swing Line Lender
* WACHOVIA CAPITAL MARKETS, LLC,
as the Arranger
* WACHOVIA BANK, NATIONAL ASSOCIATION (successor by merger
to Congress Financial Corporation (Florida)),
as the Collateral Monitoring Agent
* GMAC COMMERCIAL FINANCE LLC,
as the Syndication Agent
* WELLS FARGO FOOTHILL, LLC,
as Co-Documentation Agent
* GENERAL ELECTRIC CAPITAL CORPORATION,
as Co-Documentation Agent
* THE CIT GROUP/BUSINESS CREDIT, INC.,
as Co-Documentation Agent
At June 20, 2004, the Lending Syndicate was comprised of:
* AMSOUTH BANK
* BANK ONE
* FLEET RETAIL GROUP, INC.
* ISRAEL DISCOUNT BANK
* MERRILL LYNCH CAPITAL
* NATIONAL CITY BUSINESS CREDIT, INC.
* PNC BUSINESS CREDIT
* RZB FINANCE LLC
* SIEMENS FINANCIAL SERVICES, INC.
* SUNTRUST BANK
* UBS AG, STAMFORD BRANCH, and
* WEBSTER BUSINESS CREDIT CORP.
About the Company
Winn-Dixie Stores, Inc., -- http://www.winn-dixie.com/-- is one
of the nation's largest food retailers. Founded in 1925, the
Company is headquartered in Jacksonville, Florida. Winn-Dixie
operates 1,078 supermarkets primarily in the Southeast. Revenue
for the 12 months ending January 12, 2005 was about $10.4 billion.
* * *
As reported in the Troubled Company Reporter on Nov. 1, 2004,
Standard & Poor's Ratings Services lowered its ratings on Winn-
Dixie Stores Inc., to 'B-' from 'B', and said the outlook is
negative.
"The downgrade is based on weaker-than-expected profitability and
cash flow," explained Standard & Poor's credit analyst Mary Lou
Burde. "Although the company should have sufficient liquidity
to fund its near-term operating and capital needs, improved
operating results or additional funding will be needed to execute
longer-term strategic initiatives."
WODO LLC: U.S. Trustee Appoints 2-Member Creditors Committee
------------------------------------------------------------
The United States Trustee for Region 18 appointed two creditors
to serve on the Official Committee of Unsecured Creditors of
Wodo, LLC's chapter 11 case:
1. Sterling Equities, Inc.
Attn: Barry J. Goldstein, Committee Chair
950 South Cherry Street, Suite 320
Denver, Colorado 80246
Phone: 303-757-8865, Fax: 303-757-7691
2. Central Parking System
Attn: Laray Brown
475 - 17th Street #750
Denver, Colorado 80202
Phone: 303-893-9402, Fax: 303-893-5312
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 Bellingham, Washington, Wodo, LLC, is a real
estate company. The Company filed for chapter 11 protection on
January 18, 2005 (Bankr. W.D. Wash. Case No. 05-10556). Gayle E.
Bush, Esq., at Bush Strout & Kornfeld represents the Debtor in its
restructuring efforts. When the Debtor filed for protection from
its creditors, it listed total assets of $90,380,942 and total
debts of $21,451,210.
WORLDCOM INC: Baltimore Gas Wants to Set Aside Claim Transfer
-------------------------------------------------------------
Baltimore Gas and Electric Company holds several claims against
several different Debtors. In the winter of 2002 -- before
Baltimore Gas had filed any proofs of claim in the WorldCom, Inc.
and its debtor-affiliates' bankruptcy cases -- Longacre Master
Fund, Ltd., approached Baltimore Gas to purchase the utility
company's claims against the Debtors. Specifically, Longacre
sought to purchase two claims scheduled by the Debtors as claims
of "Baltimore Gas & Electric Company" against "MCI WorldCom
Network Services, Inc." aggregating $538,363:
Claim No. Claim Amount
--------- ------------
229009490 $525,425
229009500 $12,938
Baltimore Gas offered to sell all of its claims against the
Debtors, including claims relating to certain unexpired fiber
optic telecommunications leases between Baltimore Gas and the
Debtors, including those claims that Baltimore Gas had against
the Debtors other than MCI WorldCom Network Services, Inc.
Longacre declined. It was only interested in the two Scheduled
Claims because neither the Debtors nor the United States
Bankruptcy Court for the Southern District of New York had yet
recognized any claim of Baltimore Gas against the Debtors in any
amount greater than the amount of the two Scheduled Claims.
Baltimore Gas subsequently agreed to sell its two Scheduled
Claims to Longacre for $231,496.
The parties agreed that Baltimore Gas, not Longacre, would file a
proof of claim in the Debtors' bankruptcy cases that would
include the Scheduled Claims being assigned to Longacre.
Accordingly, Baltimore Gas filed Claim No. 8290 against MCI
WorldCom Network Services, Inc., for $823,366, which includes:
-- $463,100 relating to the Scheduled Claims purchased by
Longacre; and
-- $360,265 relating to amounts due and owing to Baltimore Gas
pursuant to certain fiber optic telecommunications leases
between Baltimore Gas and the Debtors.
On January 22, 2003, Longacre filed a Notice of Transfer of
Claim, which stated that Baltimore Gas transferred the full
amount of Claim No. 8290 to Longacre.
Andrew M. Thaler, Esq., at Thaler & Gertler, LLP, in Westbury,
New York, relates that as "evidence" of the alleged transfer of
claim, Longacre filed an Evidence of Transfer of Claim form that
Baltimore Gas had signed. "But prior to submitting that Evidence
of Transfer of Claim to the Court, Longacre altered the amount of
the claim shown thereon by whiting out the $538,363, which had
originally been typed in as the claim amount, and writing in
$823,365.68 as the amount of the claim allegedly being
transferred," Mr. Thaler says.
To hide this fraud, Mr. Thaler tells the Court, Longacre used an
incorrect service address for Baltimore Gas on the Notice of
Transfer form. As a result, Baltimore Gas never received
service of the Transfer Notice. Baltimore Gas only learned
recently about Longacre's wrongdoing. Baltimore Gas
confronted Longacre about this and tried to remedy the issue.
But Longacre failed and refused to correct the fraudulent
transfer.
By this motion, Baltimore Gas asks the Court to set aside the
unauthorized transfer of claim accomplished by Longacre.
In addition, Baltimore Gas asks Judge Gonzalez to set aside the
subsequent unauthorized transfer of Claim No. 8290 from Longacre
to Deutsche Bank Securities, Inc.
Longacre purported to transfer the full amount of Claim No. 8290
to Deutsche Bank, which filed a Notice of Transfer on June 9,
2003.
Baltimore Gas further asks the Court to deem that only $463,100
of Claim No. 8290 was transferred to Longacre, and subsequently,
to Deutsche Bank.
Baltimore Gas asserts that it is the current holder of the
remaining $360,265 of Claim No. 8290, which relates to unexpired
leases between Baltimore Gas and the Debtors that the Debtors
have assumed.
Headquartered in Clinton, Mississippi, WorldCom, Inc., now known
as MCI -- http://www.worldcom.com/-- is a pre-eminent global
communications provider, operating in more than 65 countries and
maintaining one of the most expansive IP networks in the world.
The Company filed for chapter 11 protection on July 21, 2002
(Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the
Debtors listed $103,803,000,000 in assets and $45,897,000,000 in
debts. The Bankruptcy Court confirmed WorldCom's Plan on
October 31, 2003, and on April 20, 2004, the company formally
emerged from U.S. Chapter 11 protection as MCI, Inc. (WorldCom
Bankruptcy News, Issue No. 71; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
YUKOS OIL: Classification of Claims Under Plan of Reorganization
----------------------------------------------------------------
Under its Plan of Reorganization, YUKOS Oil Company groups claims
and interests into nine classes.
Class Description Treatment
----- ----------- ---------
n/a Administrative Claims Paid in full, in cash.
n/a Priority Tax Claims Paid in full, in cash.
1 Priority Non-Tax Claims Paid in full, in cash.
2 Secured Claims Each holder of an Allowed
Claim in Class 2 will receive
in full satisfaction,
settlement, release, and
discharge of, and in exchange
for that Allowed Claim
treatment in the manner set
forth in Option A, B or C, at
the election of the Debtor.
The Debtor will be deemed to
have elected Option B except
with respect to any Allowed
Claim as to which the Debtor
elects Option A or Option C in
one or more certifications
filed prior to the conclusion
of the Confirmation Hearing.
Option A:
Paid in Cash, in full.
Option B:
Claim will be Reinstated.
Option C:
Holder will receive collateral
securing the Allowed Claim.
3 General Unsecured Claims Each holder will receive on
account of its Allowed General
Unsecured Claim, in full
satisfaction, settlement,
release and discharge of the
Allowed General Unsecured
Claim, distributions in an
aggregate amount equal to that
holder's Pro Rata Share of (i)
Creditor Cash and (ii)
Litigation Trust Interests.
Holders of Allowed Claims of
$50,000 or more; or Holders
who elect to reduce their
Allowed Claims to $50,000 will
receive Cash in an amount
equal to the applicable
Convenience Claim Distribution
Percentage of that Allowed
Convenience Claim.
4 Yukos Guaranty Claims Each holder of an Allowed
Yukos Guaranty Claim will be
entitled to receive
distributions in an aggregate
amount equal to that holder's
Pro Rata Share of (i) Creditor
Cash and (ii) Litigation Trust
Interests.
Holders of Allowed Claims of
$50,000 or more; or Holders
who elect to reduce their
Allowed Claims to $50,000 will
receive Cash in an amount
equal to the applicable
Convenience Claim Distribution
Percentage of that Allowed
Convenience Claim; provided,
however, that, under no
circumstances, will a holder
of an Allowed Yukos Guaranty
Claim receive aggregate
distributions in excess of
100% of that holder's
corresponding Allowed General
Unsecured Claim.
5 Convenience Claims Each holder of an Allowed
Convenience Claim against a
Debtor will receive Cash in an
amount equal to the applicable
Convenience Claim Distribution
Percentage of that Allowed
Convenience Claim.
6 Claims of Yukos Existing & Former Yukos
Subsidiaries Subsidiary Claims will be
listed by the Debtor in its
Schedules of Assets and
Liabilities as disputed. Any
Allowed Existing & Former
Yukos Subsidiary Claim will be
entitled to treatment as an
Allowed Class 7 Claim and will
receive distributions, if any,
pari passu with other holders
of Allowed Class 7 Claims.
7 Subordinated Claims No distribution until all
Allowed Claims in Class 3, 4
and 5 have been paid 100%.
Thereafter, any distribution
to Allowed Class 7 Claims will
be pari passu.
8 Claims of Holders of On the Effective Date, the
Existing Preferred Stock rights of Holders of Existing
Preferred Stock as of the
Distribution Record Date will
be Reinstated, subject to
certain limitations and
restrictions.
9 Claims of Holders of On the Effective Date, the
Existing Common Stock rights of Holders of Existing
Common Stock as of the
Distribution Record Date will
be Reinstated, subject to
certain limitations and
restrictions.
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. 9; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
* BOOK REVIEW: Health Care and Insurance
----------------------------------------
Author: George Ross Fisher
Publisher: Beard Books
Softcover: 228 pages
List Price: $9.22
Order your personal copy at
http://www.amazon.com/exec/obidos/ASIN/1893122565/internetbankrupt
Health-care insurance is deeply and inevitably inter-twined with
health care. The way health insurance is paid determines to a
large extent the way the health-care system is structured and
health services are delivered. Health insurance is shaped by
government regulations and programs, particularly the giant
programs of Medicare and Medicaid, more than the actual health
needs and concerns of individuals and the desires of doctors and
other health-care workers in providing and administering health
care. Doctor Fisher, as have others before and since this still
timely book was first published in 1980, sees through personal
experiences and keen analysis how the contradictions and
irrationalities in the health-care system are reflected in health
insurance. This author's particular contribution to correction of
the faults of health care unnecessarily costing individuals,
employers, and the government billions of dollars while at the
same time negatively affecting the health care of the public is to
analyze the fundamentals of how and why health insurance works the
way it does.
Fisher not only analyzes the numbers for eye-opening revelations
about what is really going on in the insurance payment for health
care, but he often also explains the thinking, the social
psychology and values, and the economic principles accounting for
the health insurance industry's practices. There's a network of
such practices which cannot be justified financially. Nor can
they be justified on the ground that they are effective even if
they make no sense financially. However innocuous or apropos a
wide variety of fundamental financial structures and practices may
have seemed in the beginning days of the large government health-
care programs, their counterproductive effects have grown to
seriously affect health care. It is not alarmist to say that
there is a crisis in health care. The troubles in the health care
field have taken on a life of their own which so far has been
impermeable to rationality, criticism, and the pleas of countless
individuals and professionals. Dr. Fisher is not alone in
recognizing the senseless, bewildering nature of the health-care
system. But unlike most other authors seeking solutions to its
problems, he realizes that changes in insurance coverage for
health care would lead to changes in health-care services and the
costs of health care. He realistically recognizes that there is
barely any likelihood that changes could come to health insurance
without changes in the health-care industry that leaders in it
would agree to. But in widening the scope of factors involved in
the ongoing and worsening troubles of health care, Fisher
increases the possibilities that something positive can be done.
Health insurance along with health care have gone awry because of
two improper premises guiding them. The first is that "modern
health care is such a fundamental right of all citizens that it
ought to be subsidized by income tax concessions." Fisher is not
saying that all citizens do not deserve health care. But they
ought to be able to afford most basic services, including things
like medication and eyeglasses. And citizens ought to be able to
have medical needs such as costly surgery or long-term intensive
care they cannot individually afford covered for them by
government programs, private plans, health insurance, or some
combination of these. Thus, Fisher proposes bringing health care
into the reach of nearly all citizens in other ways than
considering it as an incontestable right to be guaranteed by the
government in league with private organizations no matter what the
cost. Paradoxically, considering health care a right takes good
health care away from a large part of the population. It's become
for many a meaningless right, like the right to walk on water. In
going way too far in trying to offer this right to all citizens,
the government has ended up denying many adequate and timely
coverage.
Fisher's second improper premise is that "the insurance mechanism
is an appropriate way to finance the entire health system." The
health insurance industry's devising coverage for virtually every
conceivable health condition, possibility, and requirement had
resulted in a confusing plethora of insurance policies and the
high cost of health insurance. In one analysis, Fisher shows how
this premise that insurance is the most desirable way to finance
the entire health system has led to much higher costs for
elementary health needs, and incredibly high costs for surgery and
other specialized health costs and hospital stays. One contrarian
perspective Fisher takes is that by paying directly for basic
health services, consumers would come out ahead in lower insurance
premiums and stronger assurances regarding the truly costly health
care. The book is filled with such revealing analyses pertinent
to the problems in the health-care system.
The book uses a format shifting from made-up, but true-to-life
anecdotes with characters and dialogue which illustrate the
effects of the misguided or manipulated behavior of different
types of individuals on the health-care system to examples of
accounting practices in health insurance and health organizations
along with analyses of these. The different aspects of the mixed
format demonstrate the talents of a fiction writer and the skills
of an accountant. For readers not wishing to follow Fisher's
sometimes microscopic analyses of complex accounting practices and
explanations of accounting and economic principles, the author
always makes clear the point he is making with these. He says in
his "Introduction" some readers may want to "jump to the set of
solutions I propose in the second half of the book." The author's
critical analyses and ideas for health care are indispensable for
anyone--private citizen, policymaker, health-care worker--aspiring
to play any part in reforming the health-care system. As the
author realizes by his remark that "apparently, only the public
can resolve" the deep-seated and continuing problems of the system
by understanding how health-insurance policies and payments
contribute to irrelevant and harmful health-care practices.
"This book was written to stimulate public awareness of a problem
which, apparently, only the public can resolve." Fisher succeeds
estimably in fulfilling this aim. The average reader as well as
many with a more-than-average knowledge of the problems of the
field, hearing all the time the criticisms of health care, focus
almost exclusively on it. Fisher's accomplishment is to place the
interrelated contradictions and irrationalities, the financial
mismanagement and myopia, etc., in the health insurance field on a
par with those of the field of health care. In widening the view
on the sources of the problems, Fisher concomitantly opens up new
avenues for solutions to them. With "Health Care and Insurance,"
ones sees that the problems with health care cannot be reduced,
much less eliminated, by altering health-care organizations and
services alone. Reforms have to be made to health insurance in
conjunction with any changes in the health-care field.
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania,
USA, and Beard Group, Inc., Frederick, Maryland USA. Yvonne L.
Metzler, Emi Rose S.R. Parcon, Rizande B. Delos Santos, Jazel P.
Laureno, Cherry Soriano-Baaclo, Marjorie Sabijon, Terence Patrick
F. Casquejo and Peter A. Chapman, Editors.
Copyright 2005. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers. Information contained
herein is obtained from sources believed to be reliable, but is
not guaranteed.
The TCR subscription rate is $675 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same firm
for the term of the initial subscription or balance thereof are
$25 each. For subscription information, contact Christopher Beard
at 240/629-3300.
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