/raid1/www/Hosts/bankrupt/TCR_Public/050311.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, March 11, 2005, Vol. 9, No. 59
Headlines
ACCESS WORLDWIDE: Acquires Offshore Capability with Manila Lease
ADELPHIA COMMS: Devcon Completes Acquisition of Security Business
ADELPHIA COMMS: Wants Until Sept. 16 to Remove State Court Actions
ALON USA: S&P Revises Rating Outlook to Positive After Asset Sale
AMERICAN PROD: Court Grants Prelim Approval on Combined Plans
AMERICAN TIRE: S&P Junks Planned $200M Senior Subordinated Notes
ATA AIRLINES: Court Okays Stipulation Rejecting Simulator Pacts
BRISTOL CDO: S&P Junks Class C Notes After Review
CABLEVISION SYSTEMS: S&P Revises Rating Outlook to Developing
CANDESCENT TECH: U.S. Trustee Objects to Disclosure Statement
CANNONDALE CORP: Asks for Mar. 31 Administrative Claims Bar Date
CATHOLIC CHURCH: St. George Diocese Makes Canadian BIA Proposal
CHI-CHI'S: Court Approves 363 Sale of Monroeville Lot to Frisch
CHI-CHI'S: Court Okays $1.6MM Settlement to 25 Hepatitis A Victims
CORAM HEALTHCARE: Court Allows Ch. 11 Trustee to Establish Reserve
CROMPTON CORP: Moody's Reviews Ba3 Sr. Implied Rating for Upgrade
CROMPTON CORP: Plans to Buy Great Lakes Spur S&P to Review Ratings
DELTA AIR: Annual Report Contains Another Bankruptcy Warning
DIMON INC: Launches Cash Tender Offer for Senior Notes
DVI INC: Removal Period Extended Until May 24
EMPIRE FINANCIAL: Inks Agreements to Obtain More Capital
ETOYS INC: Robert K. Alber Wants Court to Remove Attorneys
FALCONBRIDGE LTD: Noranda Merger Prompts S&P to Review Ratings
FASTNET CORP: Court Approves Disclosure Statement
FEDERAL-MOGUL: Magnatek Wants to File Late $2.4M Proof of Claim
FENDER MUSICAL: S&P Rates Proposed $320 Million Loans at Single B
FERRELLGAS PARTNERS: Weak Performance Prompts S&P to Pare Ratings
FIBERMARK: Confirmation Hearing Continued to Mar. 17
FINOVA GROUP: Asks Court to Close Finova Mezzanine Case
FOOTSTAR INC: Names & Addresses of Active Trade Claim Buyers
FTD INC: Moody's Affirms B1 Senior Implied Rating
GENESCO INC: S&P Revises Outlook on Low-B Ratings to Stable
GEO SPECIALTY: Citibank Wants Secured Claim Paid Now
HAWAIIAN AIRLINES: Paul Boghosian Arrested for Bankruptcy Fraud
HAYES LEMMERZ: To Close La Mirada Facility & Terminate 120 Workers
INTERNATIONAL WIRE: Court Closes Chapter 11 Case
KAISER ALUMINUM: Judge Fitzgerald Approves Solicitation Procedures
LAIDLAW INT'L: Will Release 2nd Quarter Earnings on April 6
LOGOATHLETIC INC: Asks Court to Formally Close Chapter 11 Case
LONE STAR: S&P Lifts Credit Rating to BB- & Sub. Debt Rating to B
MIRANT CORP: Judge Lynn Refers PEPCO Issues to Mediation
NATIONAL WASTE: CapitalSource Wants Chapter 11 Trustee Appointed
NAVIGATOR GAS: Court Imposes Confirmation & Winding Up Orders
NET SERVICOS: Extends Exchange Offer for 12-5/8% Notes to Mar. 17
NEW WORLD: Wants Court to Approve Premium Financing from AFCO
NORANDA INC: S&P Rates Planned $1.25B Jr. Preferred Shares at BB
NRG ENERGY: Board Approves 2004 AIP Payout to Five Officers
N-STAR REAL: S&P Assigns BB Rating to $16 Million Class D Notes
RANGE RESOURCES: Moody's Puts B3 Rating on $150MM Sr. Sub. Notes
RCN CORP: Inks Pact to Settle St. Paul Claim for $245,772
REVLON CORP: Moody's Junks $205 Million Senior Notes Due 2011
REVLON CONSUMER: S&P Junks Planned $205 Mil. Senior Unsec. Notes
ROOMLINX INC: Names Casimir Capital as Financial Advisor
ROYAL & SUNALLIANCE: Moody's Withdraws Ba3 Insurance Ratings
SEMCO ENERGY: Prices New 5% Series B Preferred Convert. Shares
SHOWTIME ENTERPRISES: Blank Rome Approved as Bankruptcy Counsel
SHOWTIME ENTERPRISES: U.S. Trustee Names 6-Member Committee
SHOWTIME ENTERPRISES: Section 341 Meeting Scheduled for March 16
SPECIAL VALUE: Moody's Withdraws Ba2 Rating on $9MM Jr. Sub. Notes
STANDARD COMMERCIAL: Soliciting Consents to Amend Indenture
TOWER AUTOMOTIVE: Keller Rohrback Starts Probe on 401(K) Plans
UAL CORPORATION: Can Walk Away from 8 Boeing 737 Aircraft Leases
UAL CORP: Court Okays Fishman Engagement as Local Counsel
VALOR COMMS: Earns $11.1 Million Net Income in Fourth Quarter
VALOR COMMS: Board Approves $0.18 Per Share Dividend
WHX CORP: Section 341(a) Meeting Slated for March 16
WINN-DIXIE: Final Hearing on Reclamation Procedures on Mar. 15
WINN-DIXIE: Four Utilities Object to Adequate Assurance Proposal
WOLVERINE TUBE: S&P Affirms Low-B Ratings After Review
WORLDCOM INC: BofA Settles Shareholder Suit For $460.5 Million
WORLDCOM INC: Four Banks Settle Securities Suit for $428.4 Mil.
WORLDCOM INC: Four More Banks Settle Class Suit for $100.3 Mil.
W.R. GRACE: Acquires Some Midland Dexter Venezuela, S.A., Assets
W.R. GRACE: Appoints Greg Poling to Lead Davison Chemicals
W.R. GRACE: Settling Tax Issues with Internal Revenue Service
XTREME COS: Inks Distribution Pact with Challenge Offshore
YUKOS OIL: Asks District Court to Stay Dismissal Order
* Cadwalader Names S. Sunshine, J. Biggio & D. Wales as Partners
* Marshack Shulman Changes Firm Name to Shulman Hodges & Bastian
* Sheppard Mullin Names Robert Beall as Administrative Partner
* BOOK REVIEW: Entrepreneurship - Back to Basics
*********
ACCESS WORLDWIDE: Acquires Offshore Capability with Manila Lease
-----------------------------------------------------------------
Access Worldwide Communications, Inc. (OTC Bulletin Board: AWWC),
a leading marketing services organization, has signed a lease for
a 350-seat communication center based in Manila, Philippines.
Access Philippines will employ up to 600 people at full capacity.
Services conducted at the site will include inbound and outbound
customer service, customer recruitment, win-back programs, product
recalls, special promotions and coupons, and database maintenance,
among others. Access currently operates communication centers in
Arlington, Virginia, Hyattsville, Maryland, Augusta, Maine and
Boca Raton, Florida.
"Over the past year, we have evaluated a number of off-shore
locations and found that the Philippines provided the best
alternative to base our first off-shore facility. The Philippines
provides a highly educated work force, excellent English language
skills, low labor cost, a reliable technology infrastructure and
an enduring American influence," commented Shawkat Raslan,
Chairman, President and Chief Executive Officer of Access
Worldwide. "This will be our first entry into the growing off-
shore Business Process Outsource (BPO) market."
"We can now support our clients on a global basis," commented
Georges Andre, Senior Vice President of Access Worldwide and
President and CEO of TelAc, who will oversee the operations of
Access Philippines. "We expect to start operations in about 90
days and benefit from the highly educated and skilled workforce,
lower turnover and a competitive cost structure."
Access Worldwide -- http://www.accessww.com/-- is an established
marketing company that provides a variety of sales, communication
and medical education services. Our spectrum of services includes
medical meetings management, medical publishing, editorial
support, clinical trial recruitment, patient compliance,
multilingual teleservices, product stocking and database
management, among others. Headquartered in Boca Raton, Florida,
Access Worldwide has over 1,000 employees in offices throughout
the United States and the Philippines.
At Sept. 30, 2004, Access Worldwide's balance sheet showed a
$4,428,243 stockholders' deficit, compared to a $3,749,674 deficit
at Dec. 31, 2003.
ADELPHIA COMMS: Devcon Completes Acquisition of Security Business
-----------------------------------------------------------------
Devcon International Corp. (Nasdaq: DEVC) reported that, through
Devcon Security Services Corp. (DSS), one of its indirect wholly
owned subsidiaries, it completed the acquisition of certain net
assets of the electronic security services operation of Adelphia
Communications Corporation for $40.2 million in cash based
substantially upon estimated contractually recurring monthly
revenue of approximately $1.15 million.
The electronic security services operation assets acquired include
a modern, full-service monitoring center located in Naples,
Florida, from which more than 57,000 subscribers' homes and
businesses are monitored. The operation has sales and services
offices in Boca Raton, Bonita Springs, Miami, Naples, Orlando and
Tampa, Florida as well as in Buffalo, New York.
DSS and its direct parent, Devcon Security Holdings, Inc.,
financed this acquisition through available cash and a $35 million
senior secured revolving credit facility provided by CIT Financial
USA, Inc.
Stephen J. Ruzika, President of Devcon and DSS, said, "The
acquisition of Adelphia's security services operation makes DSS a
leader in the Florida electronic security services market and will
serve as our platform from which we will deliver customer focused
security services to businesses, large and small, as well as to
the ever-expanding residential market."
About Devcon
Devcon has three operating divisions and an operating joint
venture. The Security Services Division provides electronic
security services to commercial and residential customers in
selected Florida markets. The Construction Division dredges
harbors, builds marine facilities, constructs golf courses
and prepares residential, commercial and industrial sites,
primarily in the Bahamas and the eastern Caribbean. The
Materials Division produces and distributes crushed stone, ready-
mix concrete and concrete block in the eastern Caribbean with
principal operations on St. Croix and St. Thomas in the U.S.
Virgin Islands, on St. Maarten in the Netherlands Antilles, on
St. Martin in the French West Indies, on Puerto Rico, and on
Antigua in the independent nation of Antigua and Barbuda.
DevMat, an 80-percent-owned joint venture, was formed in 2003 to
build, own and operate fresh water, waste water treatment and
power systems.
Headquartered in Coudersport, Pennsylvania, Adelphia
Communications Corporation (OTC: ADELQ) is the fifth-largest cable
television company in the country. Adelphia serves customers in
30 states and Puerto Rico, and offers analog and digital video
services, high-speed Internet access and other advanced services
over its broadband networks. The Company and its more than
200 affiliates filed for Chapter 11 protection in the Southern
District of New York on June 25, 2002. Those cases are jointly
administered under case number 02-41729. Willkie Farr & Gallagher
represents the ACOM Debtors. (Adelphia Bankruptcy News, Issue
No. 81; Bankruptcy Creditors' Service, Inc., 215/945-7000)
ADELPHIA COMMS: Wants Until Sept. 16 to Remove State Court Actions
------------------------------------------------------------------
Adelphia Communications Corporation and its debtor-affiliates ask
the U.S. Bankruptcy Court for the Southern District of New York to
further extend the time by which they may file notices of removal
with respect to civil actions pending on the Petition Date, until
the later to occur of:
(a) September 16, 2005; or
(b) 30 days after entry of an order terminating the automatic
stay with respect to the particular action sought to be
removed.
Since they filed for bankruptcy, the ACOM Debtors have been called
to respond to myriad and complex issues related to filing of their
Chapter 11 cases. Despite many competing demands, the Debtors
undertook the process of reviewing civil state court actions or
proceedings to determine whether removal is appropriate.
"[T]he proposed extension is necessary to allow the Debtors the
additional time required to continue the process of reviewing the
State Court Actions," Shelley C. Chapman, Esq., at Willkie Farr &
Gallagher, in New York, asserts.
The ACOM Debtors are currently party to several hundred State
Court Actions. The extension sought would afford the Debtors the
opportunity to make fully informed decisions concerning removal
of State Court Actions without prematurely waiving the automatic
stay and assure that the Debtors do not forfeit valuable rights
under Section 1452 of the Judiciary Procedures Code, Ms. Chapman
adds.
Headquartered in Coudersport, Pennsylvania, Adelphia
Communications Corporation (OTC: ADELQ) is the fifth-largest cable
television company in the country. Adelphia serves customers in
30 states and Puerto Rico, and offers analog and digital video
services, high-speed Internet access and other advanced services
over its broadband networks. The Company and its more than
200 affiliates filed for Chapter 11 protection in the Southern
District of New York on June 25, 2002. Those cases are jointly
administered under case number 02-41729. Willkie Farr & Gallagher
represents the ACOM Debtors. (Adelphia Bankruptcy News, Issue
No. 81; Bankruptcy Creditors' Service, Inc., 215/945-7000)
ALON USA: S&P Revises Rating Outlook to Positive After Asset Sale
-----------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B' corporate
credit rating on independent petroleum refiner and retail marketer
Alon USA, Inc. At the same time, Standard & Poor's revised its
outlook on the company to positive from stable following the
company's completion of its pipeline and terminal asset sale.
Alon sold select pipeline and terminal assets to Holly Energy
Partners L.P. for approximately $150 million, consisting of
$120 million of cash and about $30 million of subordinated units
from the purchaser.
Dallas, Texas-based Alon had about $145 million of debt
outstanding as of Dec. 31, 2004.
"The outlook revision to positive reflects the possibility for a
ratings upgrade over the intermediate term if continued debt
reduction is achieved through excess cash flow during fiscal
2005," said Standard & Poor's credit analyst Brian Janiak.
"A ratings upgrade could also occur if any potential acquisitions
that strengthen Alon's business profile are prudently financed and
do not impair its overall leverage and financial profile,"
continued Mr. Janiak.
Standard & Poor's also said that the rating action incorporates
Alon's continued improvement in its financial profile position
primarily due to the very favorable refining margins in 2004, as
well as its improved liquidity, with net cash proceeds of about
$92 million received from the completed asset sale.
AMERICAN PROD: Court Grants Prelim Approval on Combined Plans
-------------------------------------------------------------
The United States Bankruptcy Court for the Eastern District of
Michigan, Detroit, granted preliminary approval to the combined
plans and disclosure statements of three plan proponents in the
Chapter 11 case of American Production Machining, LLC, on Feb. 25,
2005. AmeriChip International Holdings, LLC, a wholly owned
subsidiary of AmeriChip International Inc., filed one of the three
plans. One plan was filed by a creditor, and one by the debtor,
APM. Only one plan will be confirmed.
AmeriChip Holdings' plan provides for the acquisition by AmeriChip
Holdings of APM's business as a going concern. The acquisition by
AmeriChip Holdings of the business of APM will provide AmeriChip
with a vehicle for an accelerated implementation of its patented
Laser-Assisted Chip Control process in a production setting. A
certain percentage of jobs already in production at the APM
facility can benefit from the LACC process. AmeriChip's goal is
to secure term production jobs using the LACC process.
AmeriChip Holdings' plan provides for the repayment to creditors
of substantially all of the amounts owing to them. Unlike the
other two plans, AmeriChip Holdings' plan provides for payments
which are contingent upon a certain level of earnings being
reached. AmeriChip believes that the level of earnings which
would have to be reached under either of the other two plans in
order for creditors to receive substantial payments are unlikely
to be achieved.
The three plans have been distributed to creditors along with
ballots for them to vote in favor of one or more of the plans, and
to express their preference among the three plans if they choose
to do so. AmeriChip Holdings' plan provides a detailed
explanation of the terms of AmeriChip Holdings' proposed
acquisition as well as other important information. Creditors are
encouraged to read the plan and the accompanying disclosure
statement before voting on the plan in order to have a full
understanding of the various proposals.
All ballots must be returned no later than April 8, 2005. A
hearing on final objections to the disclosure statements and on
confirmation of the plans is scheduled for April 13, 2005, at
11:00 a.m. at the United States Bankruptcy Court for the Eastern
District of Michigan.
American Production Machining, LLC, filed for chapter 11
protection on May 15, 2003.
AMERICAN TIRE: S&P Junks Planned $200M Senior Subordinated Notes
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' corporate
credit rating to American Tire Distributors, Inc. -- ATD, At the
same time, assigned a 'B-' rating to the company's proposed
$130 million senior floating-rate notes due 2012 and a 'CCC+'
rating to its proposed $200 million senior subordinated notes due
2015, both to be issued under rule 144A with registration rights.
Huntersville, North Carolina-based ATD has pro forma total debt of
about $600 million, including the present value of operating
leases. The rating outlook is stable.
"The corporate credit rating reflects the company's heavy debt
load, which more than offsets its leading niche market positions,"
said Standard & Poor's credit analyst Martin King. Proceeds from
the debt issues, combined with $165 million of borrowings under a
new asset-based revolving credit facility and $210 million of
sponsor equity, will be used to purchase ATD and refinance its
existing debt. The company is being acquired for about 9x EBITDA
by Investcorp S.A., a global investment group.
ATD has a narrow scope of operations and modest size,
notwithstanding its niche market leadership position, combined
with a highly leveraged capital structure and thin cash flow
protection. ATD is the largest wholesale distributor of
passenger-car and light-truck tires to the $24 billion U.S.
replacement-tire industry. The company operates 70 distribution
centers servicing 35,000 customers, primarily independent tire
dealers, the largest channel for replacement tire sales.
"We expect that market conditions will remain stable, earnings and
cash flow will increase gradually, and debt leverage will decline
during the next two years. Upside potential is limited by a heavy
debt load and the modest scale of operations. Downside risk is
limited by stable demand and ATD's positive free cash flow," Mr.
King said.
ATA AIRLINES: Court Okays Stipulation Rejecting Simulator Pacts
---------------------------------------------------------------
As reported in the Troubled Company Reporter on January 19, 2005,
ATA Airlines, Inc., and its debtor-affiliates asked the United
States Bankruptcy Court for the Southern District of Indiana to
approve a stipulation rejecting of some Flight Simulator Lease
Agreements.
General Electric Capital Corporation and ATA Airlines, as
successor-in-interest to American Trans Air, Inc., entered into a
Flight Simulator Lease Agreement. GECC leased to ATA a Boeing
737-800 aircraft simulator currently located in Marietta, Georgia.
On December 23, 2003, the parties entered into a binding Letter of
Intent, pursuant to which GECC agreed to lease a Boeing 757-200
aircraft simulator currently located in Phoenix, Arizona.
Since the Petition Date, ATA Airlines and its debtor-affiliates
have conducted a review of their aircraft simulator usage
requirements and determined that the Simulators will no longer be
needed.
Parties Amend Stipulation
ATA Airlines, Inc., advised General Electric Capital Corporation
of certain circumstances that necessitated the acceleration of the
effective rejection dates of the Simulator Leases.
Accordingly, the parties agree to revise the terms of their
Stipulation:
(a) The 737 and 757 Simulator Agreements will be rejected
effective March 31, 2005;
(b) The Debtors will pay $1,860,884 for rental and other
payments in respect of the Simulators:
(1) $500,000, on or before February 25, 2005; and
(2) $340,221 on the final business day of March, April,
May and June 2005.
A failure to timely pay any of the amounts will result in
the automatic acceleration of payment, without the
requirement of notice, of all remaining unpaid amounts.
All payments will be deemed an allowed administrative
expense pursuant to Sections 503(b)(1) and 507(a)(1) of
the Bankruptcy Code;
(c) The Simulators will be returned to GECC on the applicable
Effective Dates in accordance with the terms set forth in
the Agreements;
(d) ATA Airlines reserves its rights with respect to any Buyer
Furnished Equipment now located in or on the Simulators,
which was not paid for, or reimbursed by, GECC. The
parties will use mutual best efforts to resolve any issues
pertaining to the BFE by March 15, 2005, and may agree to
apply sums attributable to ATA's surrender or sale of the
BFE to GECC against sums otherwise due hereunder, without
further Court order; and
(e) GECC reserves its right to file any proof of claim in
respect of the Agreements, including on account of the
rejection and prepetition amounts due, and to apply to the
Court for any order appropriate under the Bankruptcy Code,
subject to the right of the Debtors or any party-in-
interest to object. GECC may file a proof of claim
asserting damages, if any, relating to the Debtors'
rejection of the Agreements and any other claim by no
later than May 15, 2005.
Judge Lorch approves the parties' amended stipulation.
The Debtors and GECC also disclosed to the Court two agreements
between the Debtors and a division of GECC, which are related to
the Boeing 737-800 flight simulator lease:
(1) the Marietta Simulator Space Lease dated October 15, 2001
and the side letter dated on or about January 7, 2003; and
(2) the Services Agreement dated October 15, 2001.
The parties agree that that the payments under the Space Lease and
the Services Agreement were included under the Stipulation and it
was implied that the Agreements would be rejected in conjunction
with the rejection of the 737 Simulator Lease.
The Court approves the rejections of the Space Lease and Service
Agreement simultaneous with the Simulator Agreements.
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. 16; Bankruptcy Creditors' Service, Inc., 215/945-7000)
BRISTOL CDO: S&P Junks Class C Notes After Review
-------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on the
class B and C notes issued by Bristol CDO I Ltd., a cash flow
arbitrage CDO of ABS/RMBS, and removed them from CreditWatch with
negative implications, where they were placed Jan. 6, 2005.
At the same time, the ratings on the class A-1 and A-2 notes are
affirmed based on the credit enhancement available to support the
notes. The ratings on the class B and C notes were previously
lowered on April 27, 2004.
The lowered ratings reflect factors that have negatively affected
the credit enhancement available to support the notes since the
prior downgrade, primarily a continued negative migration in the
credit quality of the assets within the collateral pool. Standard
& Poor's noted that approximately $10 million (or approximately
4.2%) of the underlying collateral debt securities have ratings in
the 'CCC' range and come from bonds issued in ABS manufactured
housing transactions.
Standard & Poor's also noted that for purposes of calculating its
overcollateralization ratios, Bristol CDO I Ltd. "haircuts" (or
reduces the principal value of) a percentage of assets rated below
its rating threshold. According to the Jan. 31, 2005 trustee
report, Bristol CDO I Ltd.'s overcollateralization ratios include
a $12.57 million haircut to the numerator. Without haircutting
the principal value of these assets, the class A/B
overcollateralization ratio, as of the Jan. 31, 2005 monthly
report, would have been approximately 108.19% instead of 102.882%;
and the class C overcollateralization ratio would have been
approximately 102.51% instead of 96.78%.
Standard & Poor's reviewed the results of the current cash flow
runs generated for Bristol CDO I Ltd. to determine the level of
future defaults the rated classes can withstand under various
stressed default timing and interest rate scenarios, while still
paying all of the interest and principal due on the notes. When
the results of these cash flow runs were compared with the
projected default performance of the performing assets in the
collateral pool, it was determined that the ratings assigned to
the class B and C notes were no longer consistent with the credit
enhancement available.
Ratings Lowered and Removed Creditwatch Negative
Bristol CDO I Ltd.
Rating
Class To From
----- -- ----
B A A+/Watch Neg
C CCC+ BB-/Watch Neg
Ratings Affirmed
Bristol CDO I Ltd.
Class Rating
----- ------
A-1 AAA
A-2 AAA
Transaction Information
Issuer: Bristol CDO I Ltd.
Co-issuer: Bristol CDO I Inc.
Current manager: Vanderbilt Capital Advisors
Underwriter: Credit Suisse First Boston
Trustee: Wells Fargo Bank N.A.
Transaction type: CDO of ABS
Tranche Initial Previous Current
Information Report Downgrade Action
----------- ------- --------- -------
Date (MM/YYYY) 11/2002 4/2004 3/2005
Cl. A-1 notes rtg. AAA AAA AAA
Cl. A-2 notes rtg. AAA AAA AAA
Cl. B note rtg. AA A+ A
Cl. A/B OC ratio 107.296% 105.885% 102.882%
Cl. A/B OC ratio min. 104.50% 104.50% 104.50%
Cl. A-1 note bal. $223.50mm $197.36mm $167.533mm
Cl. A-2 note bal. $20.50mm $18.10mm $15.366mm
Cl. B note bal. $30.00mm $30.00mm $30.00mm
Cl. C note rtg. BBB BB- CCC+
Cl. C OC ratio 102.436% 101.002% 96.781%
Cl. C OC ratio min. 102.00% 102.00% 102.00%
Cl. C note bal. $13.00mm $11.79mm $12.114mm
Portfolio Benchmarks Current
-------------------- -------
S&P Wtd. Avg. Rtg. (excl. defaulted) BBB
S&P Default Measure (excl. defaulted) 0.65%
S&P Variability Measure (excl. defaulted) 1.27%
S&P Correlation Measure (excl. defaulted) 1.39%
Wtd. Avg. Coupon (excl. defaulted) 7.02%
Wtd. Avg. Spread (excl. defaulted) 1.45%
Oblig. Rtd. 'BBB-' and Above 84.35%
Oblig. Rtd. 'BB-' and Above 85.62%
Oblig. Rtd. 'B-' and Above 91.68%
Oblig. Rtd. in 'CCC' Range 4.24%
Oblig. Rtd. 'CC', 'SD' or 'D' 4.08%
Rated OC Ratios Current
--------------- -------
Class A-1 notes 105.55% (AAA)
Class A-2 notes 105.55% (AAA)
Class B notes 102.57% (A)
Class C notes 101.88% (CCC+)
For information on Standard & Poor's CDO Portfolio Benchmarks and
Rated Overcollateralization (ROC) Statistic, 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 article.
CABLEVISION SYSTEMS: S&P Revises Rating Outlook to Developing
-------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on
Bethpage, New York-based cable operator Cablevision Systems Corp.
to developing from positive. All ratings on Cablevision and
related subsidiaries, including the 'BB' corporate credit rating,
were affirmed. At Dec. 31, 2004, the company had $9.4 billion of
total debt outstanding, excluding collateralized debt.
"The outlook revision reflects reduced clarity regarding
governance and implications on the company's strategic direction,"
explained Standard & Poor's credit analyst Catherine Cosentino.
"Most recently, changes in the composition of the board of
directors could potentially lead to a shift to a more risky
overall corporate strategy, which could pressure ratings."
In the past, the company has undertaken various business
initiatives that have proved to be much riskier than its solid
cable TV business, including the Wiz retail stores and the VOOM
direct broadcast satellite business. The company has divested
most of these higher risk operations and recently announced it is
working toward finalization of a separation of the DBS operation
from Cablevision. However, the new board representation may
portend for a return to a less conservative business plan. Even
before these board changes, the company's Madison Square Garden
unit recently offered to pay the Metropolitan Transportation
Authority $600 million to develop its West Side Hudson Rail Yards
properties. Such real estate development is clearly outside
Cablevision's purview as a cable TV, media, and entertainment
operator, and could represent a substantial change in the
company's risk profile.
CANDESCENT TECH: U.S. Trustee Objects to Disclosure Statement
-------------------------------------------------------------
The U.S. Trustee for the Northern District of California complains
that the injunction described in the Disclosure Statement for the
Joint Plan of Reorganization filed by Candescent Technologies
Corporation and Candescent Technologies International, Ltd.,
appears to include prohibited releases of non-debtor parties which
violates Section 524(e) of the Bankruptcy Code.
The U.S. Trustee also reminds the U.S. Bankruptcy Court for the
Northern District of California that the Debtors and Plan
participants should be held liable for ordinary negligence as well
as gross negligence, and willful misconduct contrary to what's
written in the Disclosure Statement.
* * *
As previously reported in the Feb. 24, 2005, issue of the Troubled
Company Reporter, Candescent Technologies Corporation and
Candescent Technologies International, Ltd., delivered their Joint
Plan of Reorganization to the U.S. Bankruptcy Court for the
Northern District of California, San Jose Division.
The Plan proposes to monetize Candescent's assets to achieve the
maximum net distribution to stakeholders. Ultimately, Candescent-
Corp. will be dissolved and Candescent-International's shares of
stock in Bermuda will be sold or disposed of.
A liquidating Trustee will be appointed on the Plan's Effective
Date to oversee the liquidation of the assets and distribution of
proceeds to creditors.
Allowed administrative, tax and priority claims will receive full
payment in cash on the Effective Date.
Holders of allowed secured claims will receive either:
a) full cash payment;
b) their collateral; or
c) otherwise have left unaltered the legal, equitable
and contractual rights to which the holders are
entitled.
General unsecured creditors, owed $715 million, will receive their
pro rata share from an Unsecured Distribution Fund. Preferred and
common stock holders will receive nothing under the Plan.
Headquartered in Los Gatos, California, Candescent Technologies
Corp. -- http://www.candescent.com/-- is a supplier of flat panel
displays for notebook computers, communications and consumer
products. The Company filed for chapter 11 protection on June 16,
2004 (Bankr. N.D. Calif. Case No. 04-53803). Ramon Naguiat, Esq.,
at Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C.,
represents the Debtors in their restructuring efforts. When the
Company filed for protection from creditors, it reported debts and
assets of over $100 million each.
CANNONDALE CORP: Asks for Mar. 31 Administrative Claims Bar Date
----------------------------------------------------------------
CB Liquidation Corp. f/k/a Cannondale Corporation asks the U.S.
Bankruptcy Court for the District of Connecticut to set March 31,
2005, as the administrative claims bar date in the Company's
chapter 11 case.
Because the Court confirmed the Debtor's Plan of Reorganization on
December 7, 2004, it is necessary to determine all administrative
claims that have accrued against the estate through plan
confirmation and give notice to administrative claimants of a
deadline to file administrative claims.
The Debtor will provide notice to all claimants by serving a copy
of the proposed order on:
a) any party who has provided post-petition goods or services
to the Debtor and has not been paid for such goods or
services; and
b) all other parties known by the Debtor who may hold
administrative claims.
Headquartered in Bethel, Connecticut, Cannondale Corp.,
manufactures and distributes high performance bicycles, all-
terrain vehicles, motorcycles and bicycling and motorsports
accessories and equipment, filed for chapter 11 protection on
January 29, 2003 (Bankr. Conn. Case No. 03-50117). James Berman,
Esq., at Zeisler and Zeisler represents the Debtors in their
restructuring efforts. When the Company filed for protection from
its creditors, it listed $114,813,725 in total assets and
$105,245,084 in total debts.
CATHOLIC CHURCH: St. George Diocese Makes Canadian BIA Proposal
---------------------------------------------------------------
The Most Rev. Douglas Crosby, Bishop of St. George's Diocese, said
the Roman Catholic Episcopal Corporation of St. George's, the
civil arm of the Diocese, filed a Notice of Intention to file a
proposal pursuant to the Bankruptcy and Insolvency Act. This
filing will effect a "stay of proceedings" in civil actions
against the Corporation including those launched since 1991 on
behalf of 36 victims of sexual abuse by Kevin Bennett, then a
priest of St. George's Diocese. The intent of the filing is to
provide the Corporation with adequate time to develop a proposal
to its creditors offering a better compensation plan than would be
available if the Corporation were forced to declare bankruptcy.
In 1990 Rev. Bennett was sentenced for the sexual abuse of a
number of young men over a period of almost 20 years and served
four years in prison. Since that time a number of victims have
launched civil suits at a total claimed value in excess of $50
million. In March 2004 the Supreme Court of Canada found the
Corporation directly and vicariously liable for claims by 36
individuals.
"No amount of money can compensate for the abhorrent taking of
innocence, which is priceless," said Bishop Crosby. "We are
determined to treat the victims fairly with the greatest possible
value of our assets. We are asking them to work with us so that
we can all move past the horror that has brought us to this
place."
The Corporation is currently reviewing its financial resources
including land holdings, loans receivable, investments and
insurance coverage. The ability of the Corporation to access
insurance coverage to assist in payment of the claims is still an
unresolved question and is being addressed by legal counsel.
"Bishop Leonard Whitten, retired Anglican Bishop of Western
Newfoundland, has generously agreed to serve as an independent and
external reviewer of our financial resources," said Bishop Crosby.
"We are most grateful to the bishop for his support and assistance
during this difficult time."
The initial stay of proceedings is for a period of 30 days, with
possible extensions available at the discretion of the Court.
Once finalized, the Corporation's proposal will be made available
to creditors including the claimants in civil actions for their
acceptance or rejection. If accepted by the creditors, it is
further subject to approval by the Court. If not approved, the
Corporation is automatically bankrupt and a Trustee will liquidate
the Corporation's assets.
The Diocese of St. George's -- http://www.rcchurch.com/--
established in 1904, is located in Western Newfoundland. It
serves a Catholic population of 32,060 found in 20 parishes under
the pastoral care of 18 priests. St. George's is one of four
Catholic dioceses in the province. The Diocesan Centre is located
in Corner Brook.
The Roman Catholic Church of the Diocese of Tucson filed for
chapter 11 protection (Bankr. D. Ariz. Case No. 04-04721) on
September 20, 2004, and delivered a plan of reorganization to the
Court on the same day. Susan G. Boswell, Esq., and Kasey C. Nye,
Esq., at Quarles & Brady Streich Lang LLP, represent the Tucson
Diocese.
The Archdiocese of Portland in Oregon filed for chapter 11
protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004.
Thomas W. Stilley, Esq. and William N. Stiles, Esq. at
Sussman Shank LLP represent the Portland Archdiocese in its
restructuring efforts. In its Schedules of Assets and
Liabilities filed with the Court on July 30, 2004, the Portland
Archdiocese reports $19,251,558 in assets and $373,015,566 in
liabilities.
The Roman Catholic Church of the Diocese of Spokane filed for
chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on
Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen,
Coffin, Brooke & Miller, LLP, represents the Spokane Archdiocese
in its restructuring efforts. When the Debtor filed for
protection from its creditors, it listed $11,162,938 in total
assets and $81,364,055 in total debts.
CHI-CHI'S: Court Approves 363 Sale of Monroeville Lot to Frisch
---------------------------------------------------------------
The United States Bankruptcy Court for the District of Delaware
approved the sale of Chi-Chi's, Inc., and its debtor-affiliates'
commercial property located in Monroeville, Pennsylvania, to
Frisch Pennsylvania, Inc., for $125,000, free and clear of all
liens under Section 363(f) of the Bankruptcy Code.
As reported in the Troubled Company Reporter on Feb. 3, 2005,
Walnut Capital Acquisitions made an initial offer to buy the
property for $300,000 in May 2004. WCA withdrew the offer after
it failed to acquire the parcels adjacent to the property.
As reported in the Class Action Reporter on Feb. 24, 2004,
Chi-Chi's has to resolve claims asserted by some 600 Hepatitis
Claimants, three of which died from the virus after eating tainted
green onions imported from Mexico at a restaurant located in the
Beaver Valley Mall, about 25 miles northwest of Pittsburgh, in
November 2003. Chi-Chi's reports approximately 250 of those
claims have been settled to date. It's impossible, the Debtor
indicates, to propose a confirmable plan until the extent of the
Hepatitis Claims is quantified. The restaurant owner and
operator's exclusive period to file a chapter 11 plan is intact
until Oct. 3, 2005.
Headquartered in Irvine California, Chi-Chi's, Inc., is a direct
or indirect operating subsidiary of Prandium and FRI-MRD
Corporation and each engages in the restaurant business. The
Debtors filed for chapter 11 protection on October 8, 2003 (Bankr.
Del. Case No. 03-13063-CGC). Bruce Grohsgal, Esq., Laura Davis
Jones, Esq., Rachel Lowy Werkheiser, Esq., and Sandra Gail McLamb,
Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C.,
represent the Debtors in their restructuring efforts. When the
Debtor filed for bankruptcy, it estimated $50 to $100 million in
assets and more than $100 million in liabilities.
CHI-CHI'S: Court Okays $1.6MM Settlement to 25 Hepatitis A Victims
------------------------------------------------------------------
The Honorable John L. Patterson of the U.S. Bankruptcy Court for
the District of Delaware approved a settlement agreement between
Chi-Chi's Inc., and its debtor-affiliates, and 25 Hepatitis A
claimants for $1,644,000.
The Hepatitis A outbreak at the Beaver Valley Chi-Chi's arose from
exposure to contaminated green onions. Despite the fact that only
one of Chi-Chi's restaurant was involved, approximately 600
customers and 13 employees contracted the disease.
The settlement will be covered by the Debtors' insurance policies,
which provide aggregate coverage of $51 million for the Hepatitis
A claims.
Headquartered in Irvine California, Chi-Chi's, Inc., is a direct
or indirect operating subsidiary of Prandium and FRI-MRD
Corporation and each engages in the restaurant business. The
Debtors filed for chapter 11 protection on October 8, 2003 (Bankr.
Del. Case No. 03-13063-CGC). Bruce Grohsgal, Esq., Laura Davis
Jones, Esq., Rachel Lowy Werkheiser, Esq., and Sandra Gail McLamb,
Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C.,
represent the Debtors in their restructuring efforts. When the
Debtor filed for bankruptcy, it estimated $50 to $100 million in
assets and more than $100 million in liabilities.
CORAM HEALTHCARE: Court Allows Ch. 11 Trustee to Establish Reserve
------------------------------------------------------------------
The Honorable Mary F. Walrath of the U.S. Bankruptcy Court for the
District of Delaware gave Arlin M. Adams, the Chapter 11 Trustee
for the estate of Coram Healthcare Corp., and its debtor-
affiliate, Coram, Inc., permission to establish a Reserve on
account of certain Claims that have not yet been determined by the
Court to be Allowed Claims.
The Court confirmed the Trustee's Second Amended Joint Plan of
Reorganization on Oct. 27, 2004, and the Plan became effective on
Dec. 1, 2004.
Article 6 of the Plan and paragraph 55 of the Confirmation Order
require the Chapter 11 Trustee to hold in reserve the total amount
of any Distribution attributable to a Disputed Claim or disputed
Equity Interest pending resolution by the Court or agreement by
the Trustee and the holders of those Disputed Claims or disputed
Equity Interests.
Mr. Adams explains to the Court that in connection with his first
distribution to holders of Allowed General Unsecured Claims and
CHC Equity Interests, he filed a request to the Court on Feb. 10,
2005, for authorization to establish a reserve of approximately
$44 million of the presently available $71 million balance of the
Plan Funding Cash.
Mr. Adams will set aside the $44 million as a Reserve for payments
of unpaid and disputed Claims.
The approximate amounts of distributions under the Reserve based
on claims and interests are:
Distribution
Amount
------------
Unpaid and Disputed Administrative Expense Claims $24,376,887
Disputed Claims & Claims requiring further review $ 8,444,108
Claims with settlements subject to Court approval $ 1,879,500
Contingency Reserve $ 9,300,000
-----------
Total $44,000,495
Mr. Adams relates that the Contingency Reserve affords protection
to the holders of disputed, unliquidated claims and sets aside
funds for any additional Administrative Claims that may be filed
after the March 4, 2005, Administrative Claims Bar Date, possible
administrative expense enhancements, U.S. Trustee fees and other
expenses. The Contingency Reserve also takes into account the
possibility of inadvertent error or oversight by the Court-
appointed claims agent, the Debtors or the Chapter 11 Trustee in
identifying the universe of Allowed Claims.
The establishment of the Reserve will allow for timely
distribution of the full amount of all Allowed Unsecured Claims
and an initial distribution of approximately $15.5 million to
holders of Allowed Equity Interests, while preserving enough cash
to pay 100% of all Claims that have not yet been allowed by the
Court.
Coram Healthcare Corporation is a provider of infusion-therapy
services. The Company filed for chapter 11 protection on
August 8, 2000 (Bankr. D. Del. Case No. 00-03299), and emerged
from chapter 11 in 2004 under a Plan of Reorganization prosecuted
to confirmation by the Chapter 11 Trustee. Sam Zell, represented
by Richard F. Levy, Esq., at Jenner & Block, LLC, led the Equity
Committee in its charge to defeat confirmation of two plans
proposed by the Debtors.
CROMPTON CORP: Moody's Reviews Ba3 Sr. Implied Rating for Upgrade
-----------------------------------------------------------------
Moody's Investors Service placed the ratings of Crompton
Corporation (Crompton -- Ba3 senior implied) on review for
possible upgrade. In addition, Great Lakes Chemical' unsecured
ratings remain under review for possible downgrade and Great
Lakes' Prime-2 commercial paper rating has been placed under
review for possible downgrade. The reviews are prompted by the
announcement that Crompton and Great Lakes have reached an
agreement to merge, and that Crompton will be the surviving entity
in the stock for stock exchange.
The ratings placed on review for possible upgrade are:
-- Crompton Corporation
* Guaranteed Secured Credit Facility due 2009, $220 million
-- Ba2
* Senior Unsecured Notes due 2012, $375 million -- B1
* Senior Unsecured Floating Rate Notes due 2010, $225 million
-- B1
* Senior Secured Notes, $260 million due 2023 and 2026
-- Ba3
* Senior Unsecured Notes, $10 million due 2006 -- B1
* Pollution Control Revenue Bonds, $10 million due 2023 -- B1
* Senior Implied Rating -- Ba3
* Issuer Rating -- B1
The ratings remaining on review for possible downgrade are:
-- Great Lakes Chemical Company
* Senior Unsecured Notes, $400 million due 2009 A3
* Senior Unsecured Shelf (P) A3
* Subordinated Shelf (P) Baa1.
The ratings placed on review for possible downgrade is:
-- Great Lakes Chemical Company
* Commercial paper at Prime-2
The ratings of Crompton Corp. have been placed under review for
possible upgrade as debt holders will likely benefit from the
improvement in the combined company's financial profile. The
initial credit profile of the combined company is likely to be
materially stronger than Crompton's current financial profile on a
stand alone basis.
The ratings of Great Lakes remain under review for possible
downgrade as the combined initial credit profile will be
materially weaker than expected when Moody's placed the Great
Lakes ratings under review in November of 2004. Even with the
benefit of a stock for stock merger, debt at the combined company,
subsequent to the transaction, would be over $1.3 billion
unadjusted for leases and pensions. Moody's notes, that while
this merger will more than double Great Lakes' revenue base it
will also potentially triple Great Lakes' total debt.
However, the combined company will also have substantial cash
balances approaching $300 million. Nevertheless, this merger will
result in a significant deterioration in Great Lakes credit
metrics. Furthermore, as Crompton Corp. will be the surviving
entity, there may be issues of structural subordination for the
debt holders at Great Lakes, subject to efforts to insure that all
debt at the combined companies is viewed as structurally pari
passu. Hence, there is the possibility that the ratings at Great
Lakes may fall below investment grade as a result of this
transaction. Even if the merger were to not take place, Moody's
would assess Great Lakes management's willingness to enter into
such a transaction and determine the effect or change, if any, on
management's overall financial philosophy.
The combined company had pro-forma 2004 revenues and EBITDA (as
estimated by Moody's and EBITDA adjusted for one time charges) of
$4.2 billion and approximately $400 million, respectively. Total
debt, the majority of which is contributed by Crompton Corp., is
about $1.3 billion. Further, the company expects to realize about
$ 95 million per year in synergies through the integration and
optimization of its operations. The combined company will be owned
approximately 51% by existing Crompton shareholders and 49% by
existing Great Lakes shareholders.
While many of the product lines are complimentary, particularly in
plastic additives, Moody's also noted that there is only partial
operational overlap between the companies, which may limit the
initial synergies. Moreover, Moody's is concerned that
integration implementation for this transaction may be
challenging, due, in part, to the weak financial performance of
both companies over the past few years combined with more recent
successful cost saving restructuring efforts at both companies.
The review will focus on the details of the financing for the
transaction, of specific concern is the determination that all
debt at the combined companies is viewed as structurally pari
passu. Moody's will also review the potential synergies between
the businesses, the combined company's financial flexibility and
liquidity, the ability to utilize the substantial cash balances at
both companies to quickly reduce debt, and the capacity to utilize
Crompton Corp.'s net operating loss carry-forwards and tax credits
of approximately $300 million. Specific emphasis will be placed on
the combined company's ability to generate free cash flow and the
likely pace of debt reduction subsequent to the transaction.
This transaction is subject to votes by both Crompton Corp. and
Great Lakes shareholders and the prospect of regulatory review.
Moody's expects the parties to complete the transaction within the
next five months. In the event the merger is not completed
Crompton's ratings would likely be affirmed and Moody's will
conclude its review of Great Lakes and may confirm or lower the
ratings, after consideration of the outlook for its core products,
its financial liquidity, its ability to service its debt, and
management's willingness to increase leverage.
Headquartered in Middlebury, Connecticut, Crompton Corp.,
manufactures a variety of polymer and rubber additives, castable
urethane pre-polymers, ethylene propylene diene monomer (EPDM),
extruders, crop protection chemicals, white oils, petrolatum,
microcrystalline waxes and other refined hydrocarbons. The
company recorded revenues of $2.5 billion for 2004.
Great Lakes Chemical Corporation, headquartered in Indianapolis,
Indiana, is a leading supplier of brominated flame-retardants,
recreational water treatment chemicals, and brominated/fluorinated
specialty chemicals. Great Lakes reported revenues of $1.6
billion for 2004.
CROMPTON CORP: Plans to Buy Great Lakes Spur S&P to Review Ratings
------------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings, including
the 'BB-' corporate credit rating, on Middlebury,
Connecticut-based Crompton Corp. on CreditWatch with positive
implications.
At the same time, Standard & Poor's placed the ratings, including
the 'BBB+' corporate credit rating, on Indianapolis, Indiana-based
Great Lakes Chemical Corp. on CreditWatch with negative
implications.
The CreditWatch actions follow the announcement of Crompton's
proposed acquisition of Great Lakes Chemical for approximately
$1.6 billion in common stock, plus the assumption of debt. If the
transaction proceeds, Standard & Poor's would raise Crompton's
corporate credit rating to 'BB+' from 'BB-' and assign a stable
outlook.
"The upgrade would reflect an immediate strengthening of
Crompton's business mix and cash flow protection and debt leverage
measures as a result of the acquisition of a much higher-rated
company entirely with equity," said Standard & Poor's credit
analyst Wesley Chinn. Standard & Poor's would expect that
Crompton's notes and debentures, currently notched down from the
corporate credit rating because of priority claims of secured bank
lenders on the company's assets, could be rated as high as 'BB+',
if the existing bank credit facility is replaced with an unsecured
bank facility and Standard & Poor's concludes that the existing
noteholders are not disadvantaged by other priority claims.
The potential acquisition would accelerate the strengthening of
Crompton's credit quality statistics, which are expected to reach
appropriate levels for the revised ratings during the next two
years.
Upon completion of the proposed acquisition, the corporate credit
rating of Great Lakes Chemical would be lowered to 'BB+' from
'BBB+'. The senior unsecured debt rating would also likely be
lowered to 'BB+', subject to a review of any priority claims,
while the commercial paper rating would be lowered to 'B' from
'A-2'.
DELTA AIR: Annual Report Contains Another Bankruptcy Warning
------------------------------------------------------------
As previously reported in the Troubled Company Reporter on
Jan. 26, 2005, Delta Air Lines reported a $5.2 billion net loss in
2004, and at Dec. 31, 2004, Delta's liabilities exceeded assets by
$5.8 billion.
In its annual report filed with the Securities and Exchange
Commission yesterday, Delta says that air travel competition is
intense. Delta points to the continuing growth of low-cost
carriers, including Southwest, AirTran and JetBlue, in the United
States and the fact that other hub-and-spoke carriers, like United
Airlines, US Airways and ATA Airlines, operating under chapter 11
protection, have reduced or are reducing their operating costs by
cutting labor costs, terminating pension plans, and restructuring
lease and debt obligations. American Airlines has restructured
some of its labor costs and reduced its operating cost base. These
reorganizations and restructurings have enabled these competitors
to lower their operating costs significantly. The Star Alliance
(among United Airlines, Lufthansa German Airlines and others) and
the oneworld alliance (among American Airlines, British Airways
and others), have significantly increased competition in
international markets too.
"If we are unsuccessful in further reducing our operating expenses
and continue to experience significant losses, we will need to
seek to restructure our costs under Chapter 11 of the U.S.
Bankruptcy Code," Delta warns.
Deloitte & Touche LLP, Delta's independent registered public
accounting firm, has expressed doubt about Delta's ability to
continue as a going concern. Delta hints Deloitte isn't likely to
change its opinion any time soon.
Delta is pursuing its transformation plan and looks to achieve
financial viability by way of an out-of-court restructuring,
including reduction of pilot costs of at least $1 billion annually
by the end of 2006 and other benefits of at least $1.7 billion
annually by the end of 2006 (in addition to the approximately $2.3
billion of annual benefits (compared to 2002) achieved by the end
of 2004 through previously implemented profit improvement
initiatives). This plan, however, is based on a number of
material assumptions, including, without limitation, assumptions
about fuel prices, yields, competition and Delta's access to
additional sources of financing on acceptable terms. Any number
of these assumptions, many of which, such as fuel prices, are not
within Delta's control, could prove to be incorrect.
"Even if we achieve all of the approximately $5 billion in
targeted annual benefits from our transformation plan, we may need
even greater cost savings because our industry has been subject to
progressively increasing competitive pressure," Delta says. "We
cannot assure you that these anticipated benefits will be achieved
or that if they are achieved that they will be adequate for us to
maintain financial viability.
"In addition, our transformation plan involves significant changes
to our business. We cannot assure you that we will be successful
in implementing the plan or that key elements, such as employee
job reductions, will not have an adverse impact on our business
and results of operations, particularly in the near term. Although
we have assumed that incremental revenues from our transformation
plan will more than offset related costs, in light of the
competitive pressures we face, we cannot assure you that we will
be successful in realizing any of such incremental revenues.
"If we are not successful in further reducing our operating
expenses and continue to experience significant losses, we would
need to seek to restructure our costs under Chapter 11 of the U.S.
Bankruptcy Code," the carrier warns.
"A restructuring under Chapter 11 of the U.S. Bankruptcy Code may
be particularly difficult because we pledged substantially all of
our remaining unencumbered collateral in connection with
transactions we completed in the December 2004 quarter as a part
of our out-of-court restructuring," the carrier adds.
About the Company
Delta Air Lines -- http://delta.com/-- is the world's second
largest airline in terms of passengers carried and the leading
U.S. carrier across the Atlantic, offering daily flights to 493
destinations in 87 countries on Delta, Song, Delta Shuttle, the
Delta Connection carriers and its worldwide partners. Delta's
marketing alliances allow customers to earn and redeem frequent
flier miles on more than 14,000 flights offered by SkyTeam,
Northwest Airlines, Continental Airlines and other partners.
Delta is a founding member of SkyTeam, a global airline alliance
that provides customers with extensive worldwide destinations,
flights and services. At Dec. 31, 2004, Delta's balance sheet
shows $21.8 billion in assets and $27.6 billion in liabilities.
DIMON INC: Launches Cash Tender Offer for Senior Notes
------------------------------------------------------
DIMON Incorporated (NYSE: DMN) disclosed the commencement of a
cash tender offer to purchase any and all of its outstanding:
(i) $200.0 million aggregate principal amount of 9-5/8%
Senior Notes due 2011; and
(ii) $125.0 million aggregate principal amount of 7-3/4%
Senior Notes due 2013.
The tender offer is scheduled to expire at 5:00 p.m., New York
City time, on April 5, 2005, unless extended or earlier
terminated.
In conjunction with the tender offer, DIMON is soliciting consents
to proposed amendments to each of the indentures governing the
Notes. Among other things, the proposed amendments would eliminate
substantially all of the restrictive covenants in such indentures
as well as certain events of default.
Tenders of Notes may be validly withdrawn and consents may be
validly revoked at any time prior to 5:00 p.m., New York City
time, on March 21, 2005, unless extended or earlier terminated.
The consideration offered for each $1,000 principal amount of
9-5/8% Notes or 7-3/4% Notes validly tendered and accepted for
payment under the tender offer and the consent solicitation shall
be the price equal to:
(i) the present value on the Payment Date of
(a) the earliest redemption price for each of the 9-5/8%
Notes or the 7-3/4% Notes, as applicable, in each
case as set forth in the Securities Table below, on
the earliest optional redemption date provided in
each of the indentures governing the Notes, as
applicable, in each case as set forth in the
Securities Table below, and
(b) the interest that would accrue on the 9-5/8% Notes
or the 7-3/4% Notes, as applicable, from the last
interest payment date preceding the Payment Date to
the applicable Earliest Redemption Date, determined
in accordance with standard market practice on the
basis of a yield to the Earliest Redemption Date
equal to the sum of:
(x) the yield to maturity on the U.S. Treasury Note
specified for the 9-5/8% Notes or the 7-3/4%
Notes, as applicable, in each case as set forth
in the Securities Table below, as calculated by
the dealer managers and solicitation agents in
accordance with standard market practice, based
on the bid price for the applicable Reference
Security as of 10:00 a.m., New York City time,
on April 1, 2005, the second business day
immediately preceding the scheduled expiration
time for the tender offer for the Notes, as
displayed on the applicable page of the
Bloomberg Government Pricing Monitor or any
recognized quotation source selected by the
dealer managers and solicitation agents in their
sole discretion if the Bloomberg Government
Pricing Monitor is not available or is
manifestly erroneous, and
(y) the fixed spread for the 9-5/8% Notes or the
7-3/4% Notes, as applicable, in each case as
specified in the Securities Table below (that
price being rounded to the nearest cent per
$1,000 principal amount of Notes), minus accrued
and unpaid interest, from the last interest
payment date, up to, but not including, the
Payment Date, minus
(ii) $30.00 per $1,000 principal amount of Notes, which is
equal to the Consent Payment referred to below. A
consent payment of $30.00 per $1,000 principal amount of
Notes will be paid only to holders of Notes who tender
their Notes and validly deliver their consents, and who
do not validly withdraw their Notes or revoke their
consents, on or prior to the consent payment deadline.
In addition to the Total Consideration or Tender Offer
Consideration, as applicable, with respect to each $1,000
principal amount of Notes purchased pursuant to the
tender offer, DIMON will pay applicable accrued and
unpaid interest on the Notes from the most recent payment
of semi-annual interest preceding the Payment Date up to,
but not including, the Payment Date.
Securities Table
Outstanding Earliest Earliest
Principal Title of Redemption Redemption
CUSIP No. Amount Security Date Price (1)
---------- ------------ ------------- ---------- ----------
254394AE9 $200,000,000 9 5/8% Senior October 15, $1,048.13
Notes due 2011 2006
254394AJ8 $125,000,000 7 3/4% Senior June 1, $1,038.75
Notes due 2013 2008
Reference Reference Fixed Consent
Security Page Spread Payment (1)
------------- --------- ------ -------
6.50% U.S. PX4 50 $30.00
Treasury Note basis
due points
October 15, 2006
2.625% U.S. PX5 50 $30.00
Treasury Note basis
due points
May 15, 2008
(1) Per $1,000.00 principal amount of Notes
The "Payment Date" in respect of any Notes validly tendered (and
not previously validly withdrawn) is expected to be promptly
following the expiration of the tender offer and the consent
solicitation, which may be extended.
The terms and conditions of the tender offer and the consent
solicitation are specified in, and qualified in their entirety by,
the Offer to Purchase for Cash and Consent Solicitation Statement
and related materials that are being distributed to holders of the
Notes, copies of which may be obtained from MacKenzie Partners,
Inc., the information agent for the tender offer and the consent
solicitation, at (800) 322-2885 (U.S. toll free) or (212) 929-5500
(collect).
DIMON has engaged Wachovia Securities and Deutsche Bank Securities
Inc. to act as the dealer managers and solicitation agents in
connection with the tender offer and consent solicitation.
Questions regarding the tender offer and the consent solicitation
may be directed to Wachovia Securities at (866) 309-6316 (U.S.
toll free) or (704) 715-8341 (collect) and Deutsche Bank
Securities Inc. at (212) 250-7466 (collect).
The tender offer and the consent solicitation are being conducted
in connection with, and are subject to, simultaneous completion of
the proposed merger of Standard Commercial Corporation with and
into DIMON. DIMON will be the surviving corporation, and
simultaneously with the closing of the merger, DIMON will change
its name to Alliance One International, Inc.
The tender offer and the consent solicitation are subject to the
satisfaction of certain conditions, including DIMON having entered
into arrangements satisfactory to it with respect to financing
necessary to complete the tender offer, the consent solicitation
and the merger, the receipt by DIMON of consents to the proposed
amendments by holders of at least a majority in aggregate
principal amount outstanding of each series of Notes, the
simultaneous closing of the merger and other customary conditions.
Standard also commenced a tender offer and consent solicitation to
purchase any and all of its outstanding 8% Senior Notes due 2012,
Series B, and to amend the indenture under which such notes were
issued. DIMON's tender offer and consent solicitation are also
conditioned upon Standard receiving the requisite consents to
amend such indenture.
This announcement is for informational purposes only and is not an
offer to purchase, a solicitation of an offer to purchase or a
solicitation of consents with respect to any securities. The
tender offer is being made solely pursuant to the terms of the
Offer to Purchase for Cash and Consent Solicitation Statement,
dated March 8, 2005, and the related Letter of Transmittal (as
they may be amended from time to time), and those documents should
be consulted for additional information regarding delivery
procedures and the terms and conditions of the tender offer and
the consent solicitation.
About the Company
DIMON Incorporated is the world's second largest dealer of leaf
tobacco with operations in more than 30 countries. For more
information on DIMON, visit DIMON's Web site at
http://www.dimon.com/
* * *
As reported in the Troubled Company Reporter on Nov. 15, 2004,
Moody's Investors Service placed the ratings of Standard
Commercial Corporation and Dimon Incorporated under review with
direction uncertain, following the announcement by the two
companies of a definitive merger agreement. The transaction
remains subject to shareholders and regulatory approvals.
Ratings placed under review with direction uncertain:
* Standard Commercial Corporation
-- Senior implied, at Ba3
-- Senior unsecured, at Ba3
-- Issuer rating, at B1
* Standard Commercial Tobacco Company
-- Bank Credit facility, at Ba3
* Dimon Incorporated
-- Senior guaranteed unsecured, at B1
-- Issuer rating, at B2
Dimon and Standard Commercial have announced their intent to
merge. Under the terms of the agreement, Standard Commercial
common shareholders would receive three shares of Dimon common
stock per each share of Standard Commercial common stock, making
Dimon the surviving entity. The merged company should have
proforma annual revenue of approximately $1.9 billion, based on
combined results for the twelve months ended June 30, 2004.
The direction of the review reflects uncertainty on the final
level of the senior implied rating of the new entity at conclusion
of the review. Moody's does not believe that it has sufficient
information at this stage to determine a higher likelihood for a
Ba3 senior implied rating than for a B1. The direction of the
review also reflects uncertainty about the ultimate structure of
the new company, whether this new structure will create structural
subordination of some debt, and whether -- as Dimon has indicated
it might be a possibility -- Dimon's debt will be tendered.
DVI INC: Removal Period Extended Until May 24
---------------------------------------------
The United States Bankruptcy Court for the District of Delaware
extended DVI, Inc., and its debtor-affiliates' removal period
until May 24, 2005, within which they may file notices of removal
actions pending in the state court.
The extension gives the Debtors more time to determine which, if
any, of the state court actions should be removed and transferred
to Delaware.
Moreover, it serves to protect the Debtors' valuable right to
economically adjudicate lawsuits under Section 1452 if
circumstances warrant removal.
DVI, Inc., the parent company of DVI Financial Services, Inc., and
DVI Business Credit Corporation, provide lease or loan financing
to healthcare providers for the acquisition or lease of
sophisticated medical equipment. The Company, along with its
affiliates, filed for chapter 11 protection (Bankr. Del. Case
No. 03-12656) on Aug. 25, 2003. Bradford J. Sandler, Esq., at
Adelman Lavine Gold and Levin PC, represents the Debtors in their
restructuring efforts. When the Company filed for protection from
its creditors, it listed $1,866,116,300 in total assets and
$1,618,751,400 in total debts. On Nov. 24, 2004, Judge Walrath
confirmed the Amended Joint Plan of Liquidation filed by DVI,
Inc., and its debtor-affiliates.
EMPIRE FINANCIAL: Inks Agreements to Obtain More Capital
--------------------------------------------------------
Empire Financial Holding Company (Amex: EFH), a financial
brokerage services firm serving retail and institutional clients,
has entered into a series of agreements, which if consummated,
would result in the Company obtaining additional capital and
converting outstanding debt and obligations into convertible
preferred stock as well as a change in control of the Company.
Consummation of the transactions is subject to obtaining
regulatory approvals and there can be no assurance that these
approvals will be granted. The transactions resulting from these
agreements are expected to close within 120 days.
Under the terms of the various agreements, the Company will sell
to EFH Partners, LLC, a new investor group, shares of new
convertible preferred stock with a stated value of $700,000, in
exchange for $500,000 of cash and redemption of a $200,000 note
previously issued by the Company. The preferred stock is
convertible into shares of Company common stock at $.60 per share.
In addition to the issuance of the preferred stock, the Company
will receive at closing a loan from EFH Partners in the amount of
$250,000. Concurrent with these transactions, the Company will
also be granting to EFH Partners an option to acquire an
additional 1,666,666 shares of Company's common shares at an
exercise price of $.60 per share. This option will expire in two
years unless accelerated as provided in the option.
Also, the Company has reached an agreement with Kevin M. Gagne,
its founder and former chief executive officer, to retire all
outstanding debt and severance obligations owed to him in exchange
for the issuance of convertible preferred stock with a stated
value of $800,000. The preferred stock is convertible into shares
of Company common stock at $2.00 per share.
EFH Partners has also entered into a separate agreement with Mr.
Gagne. For an undisclosed amount, EFH Partners will acquire at
the closing from Mr. Gagne 500,000 shares of Company common stock
and an option to purchase an additional 1,050,000 shares of
Company common stock. Mr. Gagne has granted to EFH Partners an
irrevocable proxy to vote the shares of company common stock
covered by the option with certain limited exceptions.
Upon the closing of these transactions, the new investor group
would beneficially own 1,666,666 shares (approximately 35% of the
outstanding common shares) of Company common stock and have the
right to acquire an additional 2,716,666 shares, which if
purchased would result in EFH Partners owning approximately 65% of
the Company's common stock. In addition, upon the closing of the
transactions, EFH Partners will have the right to designate three
directors who must be reasonably acceptable to the Company, two of
whom must be independent directors. Effective as of the closing,
Bradley Gordon and John J. Tsucalas will resign as directors of
the Company.
President Donald A. Wojnowski Jr. stated, "We are delighted with
EFH Partners' decision to invest in the Company. EFH Partners
understands the potential value that exists in the Company and we
are excited and look forward to this new business relationship."
Mr. Wojnowski continued, "The additional equity and the related
balance sheet improvements that will occur in connection with
these transactions will increase our stockholders' equity, and
provide additional capital to allow the Company to grow its
business."
About the Company
Empire Financial Holding Company, through its wholly owned
subsidiary, Empire Financial Group, Inc., provides full-service
retail brokerage services through its network of independently
owned and operated offices and discount retail securities
brokerage via both the telephone and the Internet. Through its
market-making and trading division, the Company offers securities
order execution services for unaffiliated broker dealers and makes
markets in domestic and international securities. Empire
Financial also provides turn-key fee based investment advisory and
registered investment advisor custodial services through its
wholly owned subsidiary, Empire Investment Advisors, Inc.
Empire Financial's Sept. 30, 2004, balance sheet shows a
$1,809,701 stockholders' deficit, compared to an $801,183 deficit
at Dec. 31, 2003.
ETOYS INC: Robert K. Alber Wants Court to Remove Attorneys
----------------------------------------------------------
Robert K. Alber, a shareholder of eToys, Inc., and its debtor-
affiliates asks the U.S. Bankruptcy Court for the District of
Delaware, the U.S. Trustee and the Securities and Exchange
Commission to initiate an investigation and remove Robert Dehney,
Esq., Michael Busenkell, Esq., Gregory Werkheiser, Esq., and their
Firm -- Morris, Nichols, Arsht & Tunnell -- as the Debtors'
counsel.
Mr. Alber feels that Morris Nichols is riddled with debilitating
conflicts of interest which adversely affect eToys' estates.
Allegedly, the Firm failed to disclose its involvement in the
Finova Bankruptcy Case as counsel for Goldman Sachs Credit
Partners, LP. This, Mr. Alber says, means that the Firm can't
litigate against Goldman Sachs.
Bankruptcy Rule 2014 requires professionals to disclose all
connections that are not so remote as to be "de minimis," Mr.
Alber says. Mr. Alber argues that courts prohibit multiple
representations where there are conflicts, even if waived.
Mr. Alber stresses that Messrs. Werkheiser, Dehney and Busenkell
clearly violate 18 U.S.C. Section 152(2) and 152(3) for failing to
disclose their conflicts of interest.
Mr. Alber urges the Court to prohibit the Firm and its attorneys
from doing any legal work for eToys' estates and direct the Firm
to disgorge all fees paid from the estates.
* * *
As previously reported in the May 25, 2004, issue of the Troubled
Company Reporter, New York's Appellate Division, First Department
upheld eToys' complaint charging Goldman Sachs with breaches of
contract, fiduciary duty and professional malpractice relating to
Goldman's role as lead underwriter of eToys' May 20, 1999 Initial
Public Offering. The complaint alleges that on Goldman's
recommendation the IPO was priced at $20 per share. On the first
day of trading 13 million shares changed hands with prices
reaching over $85 per share. The extraordinary demand for eToys'
shares -- and the high price the public was willing to pay for
them -- continued for many months after the IPO with approximately
300 million shares trading at prices as high as $86.
It is claimed that Goldman knew that a substantially high price
was warranted given the tremendous demand for the stock and
existing market conditions but underpriced the shares to benefit
its select customers from whom they expected, in return,
investment banking business, brokerage commissions and other
benefits. The case is now being prepared for trial. eToys is
represented by Stanley Grossman, Esq., at Pomerantz Haudek Block
Grossman & Gross LLP and William Wachtel, Esq., at Wachtel &
Masyr. Special bankruptcy counsel to plaintiff is Traub,
Bonacquist & Fox.
eToys, Inc., now known as EBC I Inc, operated a web-based toy
retailer based in Los Angeles, California. The Company filed a
Chapter 11 Petition on March 7, 2001. When the company filed for
protection from its creditors, it listed $416,932,000 in assets
and $285,018,000 in debt. eToys sold its assets and name to toy
retailer KB Toys.
FALCONBRIDGE LTD: Noranda Merger Prompts S&P to Review Ratings
--------------------------------------------------------------
Standard & Poor's Ratings Services changed its CreditWatch
implications on mining companies Noranda, Inc., and its
subsidiary, Falconbridge Ltd., to negative from developing, after
the companies announced their intention to combine the businesses.
As reported in the Troubled Company Reporter on Mar. 3, 2004,
Standard & Poor's Ratings Services assigned its 'BB' global scale
and 'P-3' Canadian national scale ratings to diversified metal and
mining company Falconbridge Ltd.'s C$78 million par value
cumulative preferred shares series 3. At the same time, all other
ratings on Falconbridge, including the 'BBB-' corporate credit
rating, were affirmed.
At the same time, Standard & Poor's assigned its 'BB' rating to
Toronto, Ontario-based Noranda's proposed US$1.25 billion junior
preferred shares.
"The change in the CreditWatch implications does not suggest an
increased risk of downgrade, but reflects a more limited range of
rating outcomes, whereby ratings will not be raised," said
Standard & Poor's credit analyst Donald Marleau. CreditWatch with
negative implications means that ratings could be affirmed or
lowered. "Should the transaction be completed as currently
proposed, the ratings on the new combined entity will be
'BBB-/Stable/A-3'," he added.
Successful completion of this transaction without material changes
or cost escalations will virtually eliminate the ambiguity with
respect to the ownership linkages between Noranda and
Falconbridge, thereby giving the combined entity uninhibited
access to consolidated cash flows. On the other hand, the
issuance of US$1.25 billion of junior preferred shares will
increase Noranda's debt burden and weaken its credit metrics.
Notwithstanding the flexibility stemming from the company's
ability to satisfy its obligations under the junior preferred
shares with common equity, Standard & Poor's views the instruments
as highly debt-like, with a periodic coupon and fixed maturity
dates. As such, Standard & Poor's estimates that with the
company's preferred stock treated as debt and dividends as
interest, consolidated pro forma 2004 EBITDA interest coverage
drops to about 6x from 11x, while funds from operations to total
debt falls to below 40% from 45%. Nevertheless, the combination
of currently large cash balances and strong free cash flow in the
next 12-18 months provides considerable support for the
investment-grade ratings on Noranda.
FASTNET CORP: Court Approves Disclosure Statement
-------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Pennsylvania
approved the Disclosure Statement explaining the Joint Plan of
Liquidation of Fastnet Corporation and its debtor-affiliates.
Judge Thomas M. Twardowski finds that the Disclosure Statement
contains the right amount of the right kind of information
necessary for creditors to make informed decisions as they vote to
accept or reject the Plan.
The Court authorized the Debtors to distribute the Disclosure
Statement and solicit plan acceptances.
Terms of the Plan
The Plan provides for the liquidation of the Debtor's assets to
pay secured and unsecured creditors. As previously reported, the
Debtors have sold substantially all of their assets as a result of
several Sec. 363 sale transactions between December 15, 2003 and
May 4, 2004.
Under the terms of the proposed Plan:
-- administrative claims, U.S. Trustee fees, priority tax
claims, and priority non-tax claims will be paid in full;
-- general unsecured creditors will receive their pro rata
share of all remaining cash after payment in full of all
allowed claims; and
-- Daslic creditors and equity holders will neither receive nor
retain any property or interest in the Debtors' assets.
An initial Administrative Agent will be installed as of the Plan's
effective date to:
-- conduct an orderly liquidation of the Debtor's remaining
assets pursuant to the terms of the Plan;
-- control and authorize over the management and disposition of
the Debtor's assets;
-- authorize the retention and compensation of professionals;
and
-- consult with the Oversight Board regarding material issues
affecting the Debtors' assets.
A full-text copy of the Plan is available at no charge at:
http://www.sec.gov/Archives/edgar/data/1092536/000101968704002954/fnestate_8kex99-1.txt
The Court will consider confirmation of the Plan on March 24,
2005.
Fastnet Corporation (n/k/a FN Estate, Inc.) provides Internet
access and enhanced products and services to businesses and
residential customers. The services include high-speed data and
Internet services, data center services, including web hosting and
managed and unmanaged colocation services, small office-home
office Internet access, wholesale ISP services and various
professional services including eSolutions, web design and
development. On June 10, 2003, Fastnet Corporation and on
June 13, 2003, each of its subsidiaries (excluding the Company's
wholly-owned subsidiary "DASLIC", a Delaware Holding Company)
filed voluntary chapter 11 petitions (Bankr. E.D. Pa. Jointly
Administered Case No. 03-23143).
FEDERAL-MOGUL: Magnatek Wants to File Late $2.4M Proof of Claim
---------------------------------------------------------------
MagneTek, Inc., never received notice of the claims bar date of
Federal-Mogul Corporation and its debtor-affiliates and only
learned of it on December 6, 2004, as a result of its own
diligence, MagneTek's Executive Vice President and Chief Financial
Officer David Reiland tells Judge Lyons. Mr. Reiland states that
since that time, MagneTek has been working steadily toward
collecting the necessary information to file a reasonably accurate
proof of claim.
March 3, 2003, was the deadline for filing proofs of claim as
established by the U.S. Bankruptcy Court for the District of
Delaware in the Debtors' Chapter 11 cases.
MagneTek was unaware of the Debtors' Chapter 11 proceedings until
shortly after the Court approved the Debtors' partitioning
agreement with Cooper Industries, Inc., and several other
insurance companies on November 18, 2004. MagneTek subsequently
prepared and filed a motion for reconsideration based on
MagneTek's entitlement to coverage for defense costs and indemnity
for asbestos-related claims under insurance policies that are
subject of the Partitioning Agreement. As a result, the Debtors
filed a certification amending the November 18 Order to
incorporate MagneTek's request.
MagneTek then turned its attention to its "potential claim"
against the Debtors and learned that the Claims Bar Date had been
established. MagneTek is still in the process of reviewing
relevant information to determine the nature and extent of its
indemnification claims against the Debtors.
MagneTek's Claim arises from a litigation commenced against
MagneTek by more than 11,000 claimants in asbestos-related
personal injury lawsuits. Although MagneTek denies that it is or
ever was liable for claims alleging exposure to asbestos, MagneTek
seeks to pursue its unsecured prepetition contractual indemnity
claim against the Debtors based on two agreements:
(1) The Purchase and Sales Agreement between Cooper
Industries, Inc., and Federal-Mogul dated August 17, 1998,
whereby Cooper Industries sold to Federal-Mogul all of its
interest in, among other companies, Moog Automotive
Products, Inc.; and
(2) A settlement agreement between MagneTek and Federal-Mogul
on March 10, 1999, in connection with a civil case before
the United States District Court for the Southern District
of Texas styled, Cooper Industries, Inc., v. MagneTek,
Inc., et al., Civ. No. H-96-4410 (S.D. Tex).
As of March 2, 2005, MagneTek's claim against the Debtors is
$2,455,856.83, which includes defense costs and indemnity payments
incurred in connection asbestos-related claims that fall within
the scope and terms of the March 10 Settlement Agreement and the
1998 Agreement.
MagneTek asks the Court to extend the time for filing proofs of
claim in the Debtors' Chapter 11 cases and permit MagneTek to file
its late proof of claim.
Headquartered in Southfield, Michigan, Federal-Mogul Corporation
-- http://www.federal-mogul.com/-- is one of the world's largest
automotive parts companies with worldwide revenue of some
$6 billion. The Company filed for chapter 11 protection on
October 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J.
Nyhan, Esq., James F. Conlan, Esq., and Kevin T. Lantry, Esq., at
Sidley Austin Brown & Wood, and Laura Davis Jones, Esq., at
Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent
the Debtors in their restructuring efforts. When the Debtors
filed for protection from their creditors, they listed $10.15
billion in assets and $8.86 billion in liabilities.
At Dec. 31, 2004, Federal-Mogul's balance sheet showed a
$1.925 billion stockholders' deficit. (Federal-Mogul Bankruptcy
News, Issue No. 74; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
FENDER MUSICAL: S&P Rates Proposed $320 Million Loans at Single B
-----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B+' corporate
credit rating to Fender Musical Instruments, Inc.
At the same time, Standard & Poor's assigned its 'B+' rating and a
'3' recovery rating to Fender's proposed $220 million first lien
bank loan due 2012, indicating an expectation of meaningful
recovery (50%-80%) of principal in the event of a payment default.
Standard & Poor's also assigned its 'B-' rating and a '5' recovery
rating to Fender's proposed $100 million second lien term loan due
2012, indicating an expectation of negligible recovery (0%-25%) of
principal in the event of a payment default.
The outlook is stable. Pro forma for the transaction, Scottsdale,
Arizona-based Fender will have about $270 million in total debt
outstanding. Proceeds from the transaction will be used to fund a
special dividend and pay a management bonus.
"The ratings are based on Fender's high debt leverage, narrow
business focus, and discretionary nature of its products, somewhat
mitigated by its strong market share and global brand names in the
guitar segment, including Fender, Gretsch, and Guild," said
Standard & Poor's credit analyst Martin S. Kounitz.
FERRELLGAS PARTNERS: Weak Performance Prompts S&P to Pare Ratings
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on retail propane distributor Ferrellgas Partners L.P. and
its operating limited partnership, Ferrellgas L.P., to 'B+' from
'BB-'.
Standard & Poor's also lowered its senior unsecured ratings on
Ferrellgas Partners L.P. and subsidiary Ferrellgas Partners
Finance Corp. to 'B-' from 'B' and lowered its senior unsecured
ratings on subsidiaries Ferrellgas L.P., Ferrellgas Escrow LLC,
and Ferrellgas Finance Escrow Corp. to 'B+' from 'BB-'. In
addition, the outlook was revised to stable from negative.
Overland Park, Kansas-based Ferrellgas Partners had about
$1,132,800,000 of debt as of Jan. 31, 2005, of which roughly 76%
resides at the operating limited partnership.
"The downgrade reflects the partnership's weaker retail operating
performance during the past 18 months and its highly leveraged
financial profile that has been burdened by high fuel costs and
two consecutive warm winter-heating seasons," noted Standard &
Poor's credit analyst Andrew Watt. "The partnership's ability to
improve its core retail operating performance through a successful
execution of its new operating platform, achieve its expected
earnings from the Blue Rhino cylinder exchange business, and
improve its credit metrics are key factors for ratings stability,"
he continued.
Ferrellgas Partners' financial profile remains weak, mainly due to
high fuel costs, a second consecutive warm heating season, and the
increased debt burden associated with the Blue Rhino acquisition
in April 2004. As a result, adjusted funds from operations to
average total debt decreased significantly to 9.3% for the
12-months ended Oct. 31, 2004, from 16.2% for fiscal year-ended
July 31, 2003. During that same period, adjusted debt to EBITDA
increased significantly to 7.2x from 5.2x. Both of those metrics
remain weak for the rating.
The stable outlook is contingent on Ferrellgas Partners' ability
to improve its core retail operating performance through a
successful completion of its new operating platform, achieve its
expected earnings from Blue Rhino's cylinder exchange business,
and materially improve credit measures, which are weak for the
rating. An outlook revision to negative would be likely if the
aforementioned criteria are not met.
FIBERMARK: Confirmation Hearing Continued to Mar. 17
----------------------------------------------------
A hearing to consider confirmation of the Plan of Reorganization
for FiberMark, Inc., has been adjourned and continued until
Thursday, March 17, 2005. This continuance, FiberMark says, is to
provide its three largest noteholders an opportunity to resolve
their remaining differences.
As outlined in its Plan of Reorganization, FiberMark expects to
emerge from chapter 11 as a private company. When the Plan
becomes effective, current bondholders and holders of general
unsecured claims will receive a distribution in accordance with
the terms of the Plan. Its currently existing common stock will
be cancelled.
Headquartered in Brattleboro, Vermont, FiberMark, Inc. --
http://www.fibermark.com/-- produces filter media for
transportation applications and vacuum cleaning; cover stocks and
cover materials for books, graphic design, and office supplies and
base materials for specialty tapes, wallcoverings and sandpaper.
The Company filed for chapter 11 protection on March 30, 2004
(Bankr. D. Vt. Case No. 04-10463). Adam S. Ravin, Esq., D.J.
Baker, Esq., David M. Turetsky, Esq., and Rosalie Walker Gray,
Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $329,600,000 in
total assets and $405,700,000 in total debts.
FINOVA GROUP: Asks Court to Close Finova Mezzanine Case
-------------------------------------------------------
Due to the pendency of the adversary proceeding commenced by
Teltronics, Inc., against Finova Group and its debtor-affiliates,
the Reorganized Debtors decided not to close the Chapter 11 case
of FINOVA Mezzanine Capital, Inc., Case No. 01-702. The
Reorganized Debtors' right to renew their request to seek closure
of the FINOVA Mezzanine Case was fully preserved.
As a result of the voluntary dismissal and closing of the
Teltronics Adversary Proceeding on February 1, 2005, the
Reorganized Debtors now renew their request and ask the Court to
enter a final decree closing the FINOVA Mezzanine Case.
Section 350(a) of the Bankruptcy Code provides in pertinent part
that "after an estate is fully administered . . . the court shall
close the case." Rule 3022 of the Federal Rules of Bankruptcy
Procedure, which implements Section 350 in a Chapter 11 case,
states that "[a]fter an estate is fully administered in a Chapter
11 reorganization case, the court, on its own motion or on motion
of a party in interest, shall enter a final decree closing the
case.
The term "fully administered" is not defined in either the
Bankruptcy Code or the Bankruptcy Rules. However, the Advisory
Committee Note to Bankruptcy Rule 3022 provides a non-exclusive
list of factors to be considered in determining whether a case
has been fully administered. These factors include:
-- whether the order confirming the plan has become final;
-- whether deposits required by the plan have been
distributed;
-- whether the property proposed by the plan to be transferred
has been transferred;
-- whether the debtor or the successor to the debtor under the
plan has assumed the business or the management of the
property dealt with by the plan;
-- whether payments under the plan have commenced; and
-- whether all motions, contested matters, and adversary
proceedings have been finally resolved.
The Reorganized Debtors reiterate that the FINOVA Mezzanine Case
should be closed because:
* the Confirmation Order has become final and unappealable;
* the Debtors' Plan of Reorganization has been implemented;
* no significant property transfers remain unexecuted under
the Plan with respect to FINOVA Mezzanine;
* FINOVA Mezzanine has been successfully reorganized under
the Plan;
* all Plan payments required, including all fees under
28 U.S.C. Section 1930, have been made; and
* no requests or contested matters remain that would preclude
the closing of the FINOVA Mezzanine Case.
Objections and responses to the Reorganized Debtors' renewed
request must be filed and served on or before 4:00 p.m. (Eastern
Time) on March 14, 2005.
If timely objections or responses are received, the Court will
convene a hearing at 9:30 a.m. (Eastern Time) on March 21, 2005,
to consider the Reorganized Debtors' renewed request.
If no timely objections are filed, the Bankruptcy Court may grant
the Reorganized Debtors' renewed request without further notice
or hearing.
Headquartered in Scottsdale, Arizona, The Finova Group, Inc.,
provides commercial financing to small and mid-sized businesses;
other services include factoring, accounts receivable management,
and equipment leasing. The firm has three segments: Commercial
Finance, Specialty Finance, and Capital Markets. FINOVA targets
such markets as transportation, wholesaling, communication, health
care, and manufacturing. Loan write-offs had put the firm on
shaky ground. The Company and its debtor-affiliates and
subsidiaries filed for Chapter 11 protection on March 7, 2001
(U.S. Bankr. Del. 01-00697). Daniel J. DeFranceschi, Esq., at
Richards, Layton & Finger, P.A., represents the Debtors. FINOVA
has since emerged from Chapter 11 bankruptcy. Financial giants
Berkshire Hathaway and Leucadia National Corporation (together
doing business as Berkadia) own FINOVA through the almost
$6 billion lent to the commercial finance company. (Finova
Bankruptcy News, Issue No. 55; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
FOOTSTAR INC: Names & Addresses of Active Trade Claim Buyers
------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
records show these claim traders have purchased trade debt
obligations from creditors of Footstar, Inc., and its debtor-
affiliates:
3V Capital Master Fund Ltd.
c/o 3V Capital Management LLC
One Greenwich Office Park North
51 East Weaver Street
Greenwich, CT 06831
Attn: Jason M. Alper
Canpartners Investments IV, LLC
9665 Wilshire Boulevard, Suite 2000
Beverly Hills, CA 90212
Attn: Dominique Mielle
Contrarian Funds, LLC
Contrarian Capital Trade Claims, LP
411 West Putnam Avenue, S-225
Greenwich, CT 06830
Attn: Alpa Jimenez
Debt Acquisition Company of America V, LLC
1565 Hotel Circle South, #310
San Diego, CA 92108
Defabbio-Wareka, Gina
33 Old Ridge Road
Warwick, NY 10990
Distressed/High Yield Trading Opportunities, Ltd.
c/o 3V Capital Management LLC
One Greenwich Office Park North
51 East Weaver Street
Greenwich, CT 06831
Attn: Jason M. Alper
eCast Settlement Corporation
PO Box 7247-6971
Philadelphia, PA 19170-6971
Tel: (520) 577-1544
Attn: Edna Maldonado
Sharon Sinanan
Arlene Partain
Tina Marin
Kevin Lederman
Dina Alcantara
Fair Harbor Capital, LLC
875 Avenue of the Americas, Suite 2305
New York, NY 10001
KT Trust
One University Plaza, Suite 518
Hackensack, NJ 07601
Liquidity Solutions Inc., dba Revenue Management
One University Plaza, Suite 312
Hackensack, NJ 07601
Tel: (201) 968-0001
Longacre Master Fund, Ltd.
810 Seventh Avenue, 22nd Floor
New York, NY 10019
Attn: Vladimir Jelisavcic
Madison Niche Opportunities, LLC
6310 Lamar Avenue, Suite 120
Overland Park, KS 66202
Next Factors, Inc.
72 Van Reipen Avenue, Suite 37
Jersey City, NJ 07306
O'Laughlin Corporation
13th Floor Printing House
Central, Hong Kong
SPCP Group LLC
600 Steamboat Road
Greenwich, CT 06830
Attn: Brian Jarmain
Headquartered in West Nyack, New York, Footstar Inc., retails
family and athletic footwear. As of August 28, 2004, the Company
operated 2,373 Meldisco licensed footwear departments nationwide
in Kmart, Rite Aid and Federated Department Stores. The Company
also distributes its own Thom McAn brand of quality leather
footwear through Kmart, Wal-Mart and Shoe Zone stores. The
Company and its debtor-affiliates filed for chapter 11 protection
on March 3, 2004 (Bankr. S.D.N.Y. Case No. 04-22350). Paul M.
Basta, Esq., at Weil Gotshal & Manges represents the Debtors in
their restructuring efforts. When the Debtor filed for
protection, it listed $762,500,000 in total assets and
$302,200,000 in total debts.
FTD INC: Moody's Affirms B1 Senior Implied Rating
-------------------------------------------------
Moody's Investors Service upgraded the speculative grade liquidity
rating of FTD, Inc., to SGL-2 from SGL-3 and affirmed the long-
term debt ratings with a stable outlook. The upgrade in the
liquidity rating reflects the improvement in FTD Inc.'s liquidity
as a result of; better operating performance, lower than expected
tax payments, and Moody's expectation that the company's cash
balances will continue to build over the next twelve months.
The affirmation of the long-term debt ratings is based on the fact
that the credit profile of FTD subsequent its IPO remains
unchanged as the proceeds were used to redeem the cumulative
preferred stock of FTD Group, Inc., its parent company.
In February 2005, FTD Group, Inc. completed its initial public
offering. The proceeds of the IPO were used to redeem FTD Group,
Inc. 14% Senior Redeemable Exchangeable Cumulative Preferred Stock
and 12% Junior Redeemable Exchangeable Cumulative Preferred Stock
held by Leonard Green and Partners for an aggregate of $186.8
million (approximately 93% of the total proceeds). Subsequent to
the IPO Leonard Green and Partners beneficially owns approximately
53.6% of the outstanding common stock of FTD Group, Inc.
The long-term ratings reflect high funded leverage, free cash flow
to debt levels appropriate for the rating category, and the
intense competition that the company faces specifically from
Teleflora and 1-800-FLOWERS.COM. The ratings also consider FTD
Inc.'s leading position in the floral industry, its advantageous
business model that requires minimal capital expenditures and
working capital, as well as its balanced consumer and florist
operating segments. Moody's expects that a significant portion of
future free cash flow will be utilized to reduce debt.
The stable outlook reflects Moody's expectation that leverage and
cash flow metrics will remain at levels appropriate for the rating
category and that internally generated cash flow will be
sufficient to cover working capital and capital expenditures. For
the LTM period ended December 31, 2004 Total Debt/EBITDA was 4.8x
and FCF/Debt was 8%.
FTD Inc. continues to perform solidly with revenues rising to $417
million for the LTM period ended December 31, 2004 from $397
million at fiscal year end June 30, 2004. According to Moody's
calculations, EBITDA and EBITDA margin rose to $54 million and 13%
for the LTM period from $46 million and 12% for the fiscal year
end. Total debt to EBITDA for the LTM period was 4.8x and free
cash flow to debt was 8%.
A positive outlook could be assigned should the company reduce its
funded debt levels and if the positive performance trend
continues. Ratings could be upgraded should Total Debt/EBITDA be
reduced to below 4.0x and should Free Cash Flow/Debt rise above
10%. Given the positive trend in the company's performance, a
downgrade at this point is highly unlikely. However, ratings
could move downward should the company's operating performance
deteriorate, causing free cash flow to debt to fall below 5%.
The SGL-2 reflects good liquidity and the fact that FTD Inc.'s
internally generated cash flow and cash on hand will be sufficient
to fund its working capital, capital expenditures, and mandatory
debt amortization requirements over the 12-18 months. FTD's $50
million revolving credit facility was undrawn at December 31, 2004
and may be modestly drawn during the next twelve months. The
company is expected to be in compliance with its debt covenants.
The rating upgraded is:
* Speculative grade liquidity rating to SGL-2 from SGL-3.
The ratings affirmed are:
* Senior implied of B1;
* Senior unsecured issuer rating of B2;
* Senior secured bank facilities of B1;
* Senior subordinated notes of B3.
FTD, Inc., headquartered in Downers Grove, Illinois, is a leading
retailer and order facilitator of flowers and gifts, with revenues
of $397 million for the fiscal year ended June 30, 2004. It
operates the FTD.com website and the 1-800-SEND-FTD telephone
line, and has relationships with approximately 20,000 member
florists.
GENESCO INC: S&P Revises Outlook on Low-B Ratings to Stable
-----------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on
specialty retailer Genesco, Inc., to stable from negative.
At the same time, the recovery rating on Genesco's $175 million
secured credit facility was raised to '2' from '3' due to the
declining balance of outstanding bank debt. The '2' rating
indicates an expectation for substantial recovery (80%-100%) of
principal in the event of a payment default. All other ratings on
the company, including the 'BB-' corporate credit rating, were
affirmed.
"The outlook change reflects Genesco's good operating performance
in the fiscal year ended Jan 29, 2005, resulting in a recovery of
credit protection measures to levels more consistent with the
rating," explained Standard & Poor's credit analyst Ana Lai. "In
addition, we expect that Genesco's operating performance will be
supported by a more diversified business profile following the
successful integration of Hat World."
The speculative-grade ratings on Genesco reflect the high business
risk stemming from the company's participation in the competitive
footwear retailing industry, as well as its aggressive growth
strategy, substantial fashion risk, and significant debt leverage.
Competition in the footwear retailing industry is intense.
Genesco's retail operations, which account for the bulk of total
revenues, faces numerous competitors, including department stores,
discount stores, other specialty chains, and small independents.
GEO SPECIALTY: Citibank Wants Secured Claim Paid Now
----------------------------------------------------
Citibank, N.A., wants the U.S. Bankruptcy Court for the District
of New Jersey to compel GEO Specialty Chemicals, Inc., to pay
Citibank's allowed secured claim in accordance with the terms of
the Debtors' confirmed plan.
As of February 28, 2005, John M. August, Esq., at Herrick,
Feinstein LLP, relates that GEO owes Citibank $746,608.38, plus
legal fees and expenses incurred on and after January 1, 2005.
Background
On May 31, 2001, the Debtor entered into an Amended and Restated
Credit Agreement with various lending institutions, including
Citibank. Under the Credit Agreement, the Prepetition Lenders
agreed to loan an aggregate amount of $145 million.
To secure its obligations, the Debtor entered into an Amended and
Restated Security Agreement granting the Prepetition Lenders
security interests and liens in all of the Debtor's personal
property, together with the proceeds and products.
On Nov. 15, 2001, the Debtor and Citibank executed two interest
rate derivative transactions. The Debtor's obligations under the
Interest Rate Transactions were secured by the Security Agreement.
The Security Agreement provided that Citibank would remain secured
with respect to the Interest Rate Transactions even if Citibank
ceased to be a party under the Credit Agreement.
On Jan. 17, 2003, Citibank sold its interest in the Credit
Agreement. Citibank notified the Debtor that it owed $615,500 as
a result of the termination of the Interest Rate Transactions as
of Jan. 31, 2003.
Despite demand, the Debtor failed to pay. As a result, the Debtor
was required to pay default rate interest and to indemnify
Citibank for all reasonable out-of-pocket expenses, including
legal fees, incurred by Citibank in connection with the
enforcement of its rights.
Bankruptcy Proceeding
Citibank timely filed a secured proof of claim when the Debtor
filed for chapter 11 protection. When the plan was confirmed, the
plan provides that Citibank's claim is secured and presently in
dispute.
According to the Debtor's confirmed Plan, the claims objection
deadline applicable to Citibank is Dec. 31, 2004. No objection
has been timely filed so Citibank's secured claim is allowed
according to the terms of the Debtor's own Plan.
Headquartered in Harrison, New Jersey, GEO Specialty Chemicals,
Inc. -- http://www.geosc.com/-- develops, manufactures and
markets a wide variety of specialty chemicals, including over 300
products sold to major industrial customers for various end-use
applications including water treatment, wire and cable, industrial
rubber, oil and gas production, coatings, construction, and
electronics. The Company filed for chapter 11 protection on March
18, 2004 (Bankr. N.J. Case No. 04-19148). Alan Lepene, Esq.,
Robert Folland, Esq., and Sean A. Gordon, Esq., at Thompson Hine,
LLP, and Brian L. Baker, Esq., Howard S. Greenberg, Esq., and
Stephen Ravin, Esq., at Ravin Greenberg, PC, represent the Debtors
in their restructuring efforts. On September 30, 2003, the
Debtors listed $264,142,000 in total assets and $215,447,000 in
total debts. On Dec. 20, 2004, the Court confirmed the Debtors'
Third Amended Plan of Reorganization and took effect on Dec. 31,
2004.
HAWAIIAN AIRLINES: Paul Boghosian Arrested for Bankruptcy Fraud
---------------------------------------------------------------
Paul Boghosian of St. Louis, Missouri, was arrested and charged
with conspiracy to commit bankruptcy fraud and commercial bribery.
Mr. Boghosian is the principal investor backing a chapter 11 plan
of reorganization proposed by Hawaiian Investment Partners Group
for Hawaiian Airlines, Inc.
The Associated Press and Reuters report that Mr. Boghosian was
arrested in St. Louis Wednesday after allegedly trying to bribe an
F.B.I. agent with $500,000 to pose as a hedge fund manager backing
$2.5 million in financing.
The arrest and unsealing of the criminal complaint came hours
before a confirmation hearing on a plan proposed by Joshua
Gotbaum, the Chapter 11 Trustee for Hawaiian Airlines, Ranch
Capital and the Official Committee of Unsecured Creditors began.
The Trustee has suggested for some time that Mr. Boghosian's
financial statements attached to a proposed disclosure statement
are bogus, and has called the proposed plan a hoax in bankruptcy
court filings.
After the arrest, the three attorneys representing Mr. Boghosian's
company filed notices in the Bankruptcy Court in Honolulu
withdrawing as counsel in the chapter 11 proceedings.
On March 21, 2003, Hawaiian Airlines, Inc., filed a voluntary
petition for reorganization under Chapter 11 of the United States
Bankruptcy Code in the U.S. Bankruptcy Court for the District of
Hawaii (Case No. 03-00827). Joshua Gotbaum serves as the chapter
11 trustee for Hawaiian Airlines, Inc. Mr. Gotbaum is represented
by Tom E. Roesser, Esq., and Katherine G. Leonard, Esq., at
Carlsmith Ball LLP and Bruce Bennett, Esq., Sidney P. Levinson,
Esq., Joshua D. Morse, Esq., and John L. Jones, II, Esq., at
Hennigan, Bennett & Dorman LLP.
HAYES LEMMERZ: To Close La Mirada Facility & Terminate 120 Workers
------------------------------------------------------------------
On February 25, 2005, Hayes Lemmerz International, Inc., approved
plans for the closure of its La Mirada, California, manufacturing
facility and the transfer of production of the aluminum wheels
manufactured at this facility to the Company's Huntington,
Indiana, facility, which is located closer to its customers. The
closure will result in the elimination of approximately 120
employee positions. As part of management's on-going
rationalization initiatives, the decision to close the La Mirada
facility was based on improving capacity utilization and overall
efficiency of the Company.
Hayes estimates that the closure plan will result in a charge to
earnings of approximately $8.8 million in fiscal 2005. Estimates
of the total cost the Company expects to incur for each major type
of cost associated with the plan are:
(i) $2.4 million for lease termination costs;
(ii) $2.2 million for severance benefits and employee
termination costs, including worker's compensation
charges;
(iii) $1.9 million for asset impairments related to a write-
down of the facility's property, plant and equipment
and indirect supplies to net realizable value;
(iv) $1.5 million for plant closing costs and
decommissioning costs; and
(v) $0.8 million in other associated costs.
Net cash outlays during fiscal 2005 and 2006 related to the
closure are expected to be approximately $6.9 million.
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. 61; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
INTERNATIONAL WIRE: Court Closes Chapter 11 Case
------------------------------------------------
At the behest of International Wire Group, Inc., the Honorable
Burton R. Lifland of the U.S. Bankruptcy Court for the Southern
District of New York closed International Wire's chapter 11 case
on Feb. 23, 2005.
The Court finds that:
* the order confirming the Debtor's chapter 11 Plan is final
and nonappealable;
* no deposits were required to be made under the Plan;
* the property required to be transferred pursuant to the Plan
has been transferred;
* the Reorganized Debtor is operating the business and
managing the Debtor's property;
* distributions under the Plan are substantially completed; and
* the docket for these chapter 11 cases reflect that there are
no adversary proceedings or contested matters pending before
the Court.
The Debtor gave holders of subordinated unsecured notes new notes
in the aggregate principle amount of $75 million and 96% of the
new common stock of the reorganized Debtors. Noteholders
recovered 72.9% of their claims. Other senior creditors received
$305 million in full satisfaction of their claims, plus interest.
Under the Plan, the Debtor was substantially deleveraged, reducing
debt from approximately $428.1 million to $187.9 million, creating
interest savings of approximately $31 million per year.
The Debtor paid these professionals:
Fees Expenses
Firm Role Awarded Awarded
---- ---- ------- --------
Weil, Gotshal & Manges Debtor's Counsel $2,178,256 $64,766
Rothschild Inc. Debtor's $2,860,887 $28,0120
Financial Advisor
Stroock & Stroock & Lavan Committee's $510,667 $12,837
Counsel
Houlihan Lokey Howard & Committee's $1,121,790 $10,092
Zukin Capital Financial Advisor
Headquartered in St. Louis, Missouri, International Wire Group,
Inc., designs, manufactures and markets bare and tin-plated copper
wire and insulated copper wire products for other wire suppliers
and original equipment manufacturers. The Company manufactures
and distributes its products in 20 facilities strategically
located in the United States, Mexico, France, Italy and the
Philippines. The company filed for chapter 11 protection (Bankr.
S.D.N.Y. Case No. 04-11991) on March 24, 2004. Alan B. Miller,
Esq., at Weil, Gotshal & Manges LLP represents the Debtor in its
restructuring efforts. When the Company filed for bankruptcy
protection, it listed total assets of $393,000,000 and total debts
of $488,000,000. The Court confirmed the Debtor's chapter 11 plan
on August 25, 2004. The Company emerged from bankruptcy on
Oct. 20, 2004.
KAISER ALUMINUM: Judge Fitzgerald Approves Solicitation Procedures
------------------------------------------------------------------
As previously reported, Debtors Alpart Jamaica, Inc., and Kaiser
Jamaica Corporation, Kaiser Alumina Australia Corporation and
Kaiser Finance Corporation asked the United States Bankruptcy
Court for the District of Delaware and its debtor-affiliates to
establish procedures for the solicitation and tabulation of votes
to accept or reject their plans of liquidation.
The Liquidating Debtors also seek approval of notices and
solicitation materials to be sent to creditors.
* * *
Judge Fitzgerald approves the procedures for solicitation and
tabulation of votes to accept or reject:
* Alpart Jamaica, Inc., and Kaiser Jamaica Corporation's joint
Chapter 11 plan of liquidation; and
* Kaiser Alumina Australia Corporation and Kaiser Finance
Corporation's joint Chapter 11 plan of liquidation.
Judge Fitzgerald also approves a modified form of the ballots that
will be sent creditors entitled to vote on the Plan. A copy of
the modified Ballot, including the instructions attached to each
Ballot, is available at no charge at:
http://bankrupt.com/misc/Kaiser_Ballots_Blackline.pdf
The Court finds that the current Ballot forms:
(1) are consistent with Official Form No. 14;
(2) adequately address the particular needs of the Liquidating
Debtors' Chapter 11 cases;
(3) appropriate for each class of claims entitled to vote to
accept or reject each Liquidation Plan; and
(4) comply with Rule 3017(d) of the Federal Rules of
Bankruptcy Procedure.
Additionally, the Court finds that the contents of the
Solicitation Packages and the procedures for providing notice of
the Confirmation Hearing and the other matters set forth in the
Confirmation Hearing Notice comply with Bankruptcy Rules 2002 and
3017, and constitute sufficient notice to all interested parties
in accordance with the Bankruptcy Code, the Federal Rules of
Bankruptcy Procedure and the Local Rules of Bankruptcy Practice
and Procedures of the U.S. Bankruptcy Court for the District of
Delaware. The Solicitation Packages will be mailed not less than
25 days before the "Confirmation Objection Deadline."
The Court orders that a separate Ballot will be distributed with
respect to the issuance of the 9-7/8% Senior Notes, the 10-7/8%
Senior Notes (Series B), the 10-7/8% Senior Notes (Series D), and
Senior Subordinated Notes so that, among other things, Logan &
Company, Inc., the Solicitation and Tabulation Agent can tabulate
the votes of the Public Noteholders by each Issuance.
Ballots need not be provided to holders of claims in Class 1, 2,
4, and 5 because:
(1) Classes 1 and 2 under each Liquidation Plan are unimpaired
and are conclusively presumed to accept the applicable
Plan in accordance with Section 1126(f) of the Bankruptcy
Code; and
(2) holders of claims in Class 4 -- intercompany claims -- and
Kaiser Aluminum & Chemical Corporation as the holders of
interests in Class 5 under each Liquidation Plan are
deemed to have accepted the applicable Plan.
All Ballots must be turned over to Logan no later than 5:00 p.m.,
Eastern Time, on April 5, 2005.
Additional deadlines that will apply in connection with
confirmation of the Liquidation Plans:
-- All discovery must be completed by April 4, 2005;
-- All briefs in support of the Liquidation Plans must be
filed by March 15, 2005;
-- Any objections to confirmation of the Liquidation Plans
must be filed by 4:00 p.m., Eastern Time, on April 5, 2005;
-- Replies to any objections to the Liquidation Plans must be
filed by April 8, 2005.
The Court will convene a hearing on April 13, 2005, at 9:00 a.m.,
to consider confirmation of the Liquidation Plans.
The Court directs the Liquidating Debtors to publish notice of the
Confirmation Hearing not less than 25 days before the Confirmation
Hearing in the national edition of The Wall Street Journal.
Headquartered in Houston, Texas, Kaiser Aluminum Corporation --
http://www.kaiseral.com/-- operates in all principal aspects of
the aluminum industry, including mining bauxite; refining bauxite
into alumina; production of primary aluminum from alumina; and
manufacturing fabricated and semi-fabricated aluminum products.
The Company filed for chapter 11 protection on February 12, 2002
(Bankr. Del. Case No. 02-10429). Corinne Ball, Esq., at Jones
Day, represents the Debtors in their restructuring efforts. On
June 30, 2004, the Debtors listed $1.619 billion in assets and
$3.396 billion in debts. (Kaiser Bankruptcy News, Issue No. 63;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
LAIDLAW INT'L: Will Release 2nd Quarter Earnings on April 6
-----------------------------------------------------------
Laidlaw International (NYSE:LI) will release financial results for
its fiscal second quarter, ending Feb. 28, 2005, on Wednesday,
April 6, 2005, after market close.
The company will hold a conference call hosted by senior
management to discuss the financial results on Thursday, April 7,
2005, at 10:00 a.m. (Eastern). A webcast of the conference
call will be accessible at Laidlaw International's Web site
http://www.laidlaw.com/
To participate in the call, please dial:
800-370-0740 - (US and Canada)
973-409-9259 - (International)
A replay will be available immediately after the conference call
through May 7, 2005. To access the replay, dial 877-519-4471
(U.S. and Canada) or 973-341-3080 (International); access code:
5807909. Additionally, the web cast will be archived on the
Company's Web site.
Headquartered in Arlington, Texas, Laidlaw, Inc., now known as
Laidlaw International, Inc., -- http://www.laidlaw.com/-- is
North America's #1 bus operator. Laidlaw's school buses transport
more than 2 million students daily, and its Transit and Tour
Services division provides daily city transportation through more
than 200 contracts in the US and Canada. Laidlaw filed for
chapter 11 protection on June 28, 2001 (Bankr. W.D.N.Y. Case No.
01-14099). Garry M. Graber, Esq., at Hodgson Russ LLP, represents
the Debtors. Laidlaw International emerged from bankruptcy on
June 23, 2003.
* * *
As reported in the Troubled Company Reporter on Dec. 27, 2004,
Moody's Investors Service has placed the long-term debt ratings of
Laidlaw International, Inc., under review for possible upgrade.
The review is prompted by the recent announcement by the company
that it had entered into a definitive agreement to sell both of
its healthcare businesses to Onex Partners LP, an affiliate of
Onex Corporation, for $820 million. Net proceeds after fees and
assumption of a small amount of debt by the buyer is estimated at
$775 million, with a majority of the proceeds intended to be used
to repay substantial levels of Laidlaw's existing debt. Moody's
has also assigned a Speculative Grade Liquidity Rating of SGL-2 to
Laidlaw International, Inc. As part of the rating action, Moody's
has reassigned to Laidlaw International, Inc., certain ratings,
including the senior implied and senior unsecured issuer ratings,
originally assigned at Laidlaw, Inc., in order to reflect more
appropriately the company's current organizational structure.
As reported in the Troubled Company Reporter on Dec. 9, 2004,
Standard & Poor's Ratings Services placed its ratings, including
its 'BB' corporate credit rating, on Laidlaw International, Inc.,
on CreditWatch with positive implications. The rating action
follows Laidlaw's announcement that it has entered into definitive
agreements to sell both of its health care companies, American
Medical Response and Emcare, to Onex Partners L.P. for
$820 million. Laidlaw expects to receive net cash proceeds of
$775 million upon closing of the transaction, which is expected by
the end of March 2005. Naperville, Illinois-based Laidlaw
currently has about $1.5 billion of lease-adjusted debt.
LOGOATHLETIC INC: Asks Court to Formally Close Chapter 11 Case
--------------------------------------------------------------
LogoAthletic of Nevada, Inc., dba Collegiate Graphics, and its
debtor-affiliate, LogoAthletic, Inc., fka TKS Acquisition, Inc.,
ask the U.S. Bankruptcy Court for the District of Delaware to
enter final decrees closing their chapter 11 cases.
The Debtors also ask the Court for an order discharging Donlin,
Recano & Company, Inc., as agent for the Clerk of the Court.
The Court confirmed the Debtors' Amended Liquidating Plan of
Reorganization on Nov. 17, 2003, and the Plan became effective on
Dec. 1, 2003.
The Debtors give the Court four reasons militating in favor of
their request:
a) the Debtors have substantially consummated the Plan, with:
(i) all objections to claims resolved, and all allowed
administrative claims, priority tax and non-tax claims,
and secured claims fully paid in accordance with the
Plan, and
(ii) a distribution to general unsecured creditors was
completed on Feb. 28, 2005, with more than 69% of their
allowed claims paid;
b) the Debtors have paid all U.S. Trustee's fees due and owing
for the year ending 2004, and they will soon file the
quarterly report for the first quarter of 2005 and pay all
the related fees prior to the closing of their chapter 11
cases;
c) the Debtors filed a final report on March 3, 2005; and
d) there is no further need for Donlin Recano as agent for the
Clerk of the Court because in the event that any further
distributions to general unsecured creditors are required,
the Plan Administrator will be able to handle those
distributions.
The Debtors submit that these facts demonstrate cause to formally
close their chapter 11 cases pursuant to Bankruptcy Rule 3022 and
Section 350(a) of the Bankruptcy Code.
Objections to the Debtors' request to close their chapter 11 case,
if any, must be filed and served by March 18, 2005. The Court has
yet to schedule a final hearing on the Debtors' request.
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 & Weintraub, P.C., represents the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors, they estimated assets and liabilities of over
$100 million. The Debtors' Amended Chapter 11 Liquidating Plan of
Reorganization was confirmed on Nov. 17, 2003.
LONE STAR: S&P Lifts Credit Rating to BB- & Sub. Debt Rating to B
-----------------------------------------------------------------
Standard & Poor's Ratings Services raised its corporate credit
rating on Dallas, Texas-based Lone Star Technologies, Inc., to
'BB-' from 'B+'.
At the same time, Standard & Poor's raised its subordinated debt
rating on the company to 'B' from 'B-'. The outlook is stable.
Lone Star had $150 million in rated debt outstanding as of
Dec. 31, 2004.
"The upgrade reflects the meaningful improvement in the company's
operating and financial performance, given the significant
turnaround in its key oil and gas market in the past year," said
Standard & Poor's credit analyst Paul Vastola. The upgrade also
reflects the expectation that strong market conditions will
continue for the intermediate term, providing the company with
increased flexibility to withstand the next industry downturn and
to continue to make bolt-on acquisitions while maintaining its
moderate capital structure.
The ratings on Lone Star reflect the extreme volatility associated
with its markets, its exposure to high import levels,
vulnerability of earnings to rising steel costs, and its
aggressive growth strategy. These factors acutely overshadow the
company's adequate liquidity and currently strong credit
protection measures.
Lone Star is a leading U.S. manufacturer of oil country tubular
goods -- OCTG, used in the completion and production of oil and
natural gas wells, and line pipe, used in oil and natural gas
transmission. The company also manufactures specialty tubing
products used in power generation, automotive, construction,
agricultural, and industrial applications. The majority of the
company's earnings and cash flows are generated from OCTG and
other oilfield product sales.
MIRANT CORP: Judge Lynn Refers PEPCO Issues to Mediation
--------------------------------------------------------
Mirant Corporation and its debtor-affiliates, and Potomac
Electric Power Company are willing to mediate their disputes.
Accordingly, Judge Lynn of the U.S. Bankruptcy Court for the
Northern District of Texas orders that:
(1) The litigation pending in the United States Court of
Appeals, the United States District Court for the Northern
District of Texas, and the United States Bankruptcy Court
for the Northern District of Texas, Fort Worth Division,
regarding the APSA and the Back-to-Back Agreement between
the Debtors and PEPCO is referred to mediation at the
earliest possible date. The Honorable Russell F. Nelms,
United States Bankruptcy Judge for the Northern District
of Texas, is appointed to act as mediator.
(2) Representatives of (a) PEPCO, in addition to counsel for
PEPCO, and (b) the Debtors, in addition to counsel for the
Debtors, are directed to attend the meditation conference.
(3) The attending representatives from the Debtors and PEPCO
must have authority to bind each of their constituencies
-- subject only to Court approval of any agreements that
might be reached.
(4) Unless all parties and the Mediator agree otherwise, the
mediation will commence at 9:00 a.m. on March 18, 2005.
(5) All members of PEPCO and the Debtors, their employees,
officers, agents, and attorneys, are bound by the
confidentiality provisions of the Court's Order to
encourage free transmission of information.
(6) To enable the Mediator to prepare for the mediation,
counsel for PEPCO and the Debtors are each directed to
prepare a memorandum or outline describing the litigation
and principal issues and disputed facts and submit it to
the Mediator by March 14, 2005. The submissions are
confidential and subject to the protective order
provisions whether or not the parties separately decide to
exchange memoranda before or during the mediation process.
(7) The Mediator has the discretion to terminate the mediation
at any time if he believes that an impasse has been
reached, or that the mediation should not be continued for
any other reason.
Headquartered in Atlanta, Georgia, Mirant Corporation --
http://www.mirant.com/-- together with its direct and indirect
subsidiaries, generate, sell and deliver electricity in North
America, the Philippines and the Caribbean. Mirant Corporation
filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex.
03-46590). Thomas E. Lauria, Esq., at White & Case LLP,
represents the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they listed
$20,574,000,000 in assets and $11,401,000,000 in debts. (Mirant
Bankruptcy News, Issue No. 55; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
NATIONAL WASTE: CapitalSource Wants Chapter 11 Trustee Appointed
----------------------------------------------------------------
CapitalSource Finance LLC, National Waste Services of Virginia,
Inc.'s primary secured creditor, asks the U.S. Bankruptcy Court
for the District of Delaware to appoint a chapter 11 trustee to
oversee National Waste's restructuring.
Jeffrey C. Wisler, Esq., at Connolly Bove Lodge & Hutz LLP, in
Wilmington, Delaware tells the Court that:
* CapitalSource,
* Page County, Virginia,
* the Virginia Department of Environmental Quality, and
* the Official Committee of Unsecured Creditors,
have substantially negotiated a global settlement which would:
-- resolve all litigation relating to the Debtor's compliance
with state and county laws governing the operations of the
Debtor's landfill;
-- provide recoveries to CapitalSource and unsecured creditors;
and
-- provide a mechanism for the payment of unpaid administrative
expenses in the Debtor's chapter 11 case.
The Debtor's Board of Directors, appointed by the Debtor's
principal equity holder Winston Thayer Partners, refuses to
consent to and assist in effecting this settlement. Mr. Wisler
points out that although the Debtor's equity holders are "far, far
out of the money," the Board of Directors is being driven by
equity holders who think they have hold up value in blocking the
settlement.
The Debtor's Board of Directors has recently and persistently
refused to consider or commit to a settlement. Mr. Wisler
contends that these tactics deplete the assets of the estate and
do not serve the interests of creditors, which the Board of
Directors is charged to protect.
CapitalSource lent more than $17 million to the Debtor prepetition
and about $4 million more through DIP financing, for a total of
more than $21 million (excluding $3 million collected by
CapitalSource on account of a non-debtor third party guaranty).
CapitalSource is one of the leading commercial finance firms in
the United States. CapitalSource makes senior and mezzanine loans
generally ranging in size from $1-50 million and has the
capability to underwrite transactions up to $200 million. It
conducts lending activities through three focused business units.
The Healthcare Finance group provides a variety of financing
products to small and mid-sized healthcare service companies. The
Structured Finance group provides structured debt products to
companies active in the real estate and finance industries. The
Corporate Finance group partners with private equity and leveraged
buyout firms to deliver senior and mezzanine financing to their
portfolio companies.
Headquartered in Little Creek, Delaware, National Waste Services
of Virginia, Inc. -- http://www.natwaste.com/-- collects,
processes and disposes solid non-hazardous waste and recycling
materials. The Company filed for chapter 11 protection on
March 4, 2004 (Bankr. Del. Case No. 04-10709). Michael Gregory
Wilson, Esq., at Hunton & Williams represents the Debtor in its
restructuring efforts. When the Company filed for protection from
its creditors, it listed estimated debts and assets of over
$10 million each.
NAVIGATOR GAS: Court Imposes Confirmation & Winding Up Orders
-------------------------------------------------------------
The Official Committee of Unsecured Creditors appointed in the
chapter 11 cases of Navigator Gas Transport PLC and its
debtor-affiliates asks the U.S. Bankruptcy Court for the Southern
District of New York to:
(1) authorize and direct the Debtors, their directors and
counsel to refrain from taking all steps necessary to delay
or prohibit the implementation of:
(a) the confirmed Second Amended Plan of Reorganization
proposed by the Creditors Committee; and
(b) the Bankruptcy Court's order authorizing the
commencement of winding up proceedings in the Isle of
Man; and
(2) impose contempt sanctions against the Debtors and their
directors, Giovanni Mahler and Shaun Fergusson Cairns, for
failure to comply with the Confirmation Order and the
Winding Up Order of $25,000 per day for each day that the
Debtors and the Directors fail to comply with the Orders.
Following the Bankruptcy Court's rejection of the Debtors'
proposed chapter 11 plan and confirmation of the Committee's Plan,
the Debtors appealed the Confirmation Order twice.
Following that -- through their subsidiary Cambridge Gas Transport
Limited -- the Debtors' Directors opposed the Bankruptcy Court's
Confirmation Order and letter of request in the High Court of
Justice of the Isle of Man.
Through the Debtors' subsidiary, Navigator Gas Management Limited,
the Debtors' Directors opposed the winding up petition filed in
the Manx Court, as authorized by the Bankruptcy Court's Winding Up
Order.
Court Imposes Orders
The Honorable Cornelius Blackshear finds that the Debtors and the
Directors have violated the Confirmation and the Winding Up Order
and reiterates his order to "unconditionally" support the
Committee's Plan, the Confirmation Order and the Winding Up Order.
Judge Blackshear further imposes $25,000 per-day sanctions for
each day that the Debtors and the Directors fail to comply with
his orders.
Headquartered in Castletown, Isle of Man, Navigator Gas Transport
PLC, transports liquefied petroleum gases and petrochemical gases
between ports throughout the world. The Company along with its
debtor-affiliates filed for chapter 11 protection on Jan. 27, 2003
(Bankr. S.D.N.Y. Case No. 03-10471). Adam L. Shiff, Esq., at
Kasowitz, Benson, Torres & Friedman LLP represents the Debtors in
the United States. When the Company filed for protection, it
listed $197,243,082 in total assets and $384,314,744 in total
debts.
NET SERVICOS: Extends Exchange Offer for 12-5/8% Notes to Mar. 17
-----------------------------------------------------------------
Net Servicos de Comunicacao S.A. (Bovespa: PLIM4)(Bovespa:
PLIM3)(NASDAQ: NETC)(Latibex: XNET), a sociedade anonima organized
under the laws of the Federative Republic of Brazil is extending
its exchange offer and consent solicitation regarding its 12-5/8%
Senior Guaranteed Notes due 2004 in aggregate principal amount
US$97,692,000, excluding accrued interest, to 5:00 p.m., Eastern
time, on Thursday, March 17, 2005, unless further extended by the
Company.
In the exchange offer, the Company is offering to exchange up to
US$76,593,068 aggregate principal amount of its 7.0% Senior
Secured Notes due 2009, which have been registered under the
Securities Act of 1933, as amended, and cash, for the Existing
Notes.
Furthermore, the Company is soliciting consents from holders of
the Existing Notes to amendments to certain provisions of the
indenture governing the Existing Notes, dated as of June 18, 1996,
pursuant to which the Existing Notes were issued. Holders who
tender their Existing Notes in the exchange offer and consent
solicitation will be deemed to have given their consent to the
Proposed Amendments to the Indenture.
The exchange offer and consent solicitation was originally
scheduled to expire at 5:00 p.m., Eastern time, on March 9, 2005.
As of the close of business on March 9, 2005, US$95,967,000 in
aggregate principal amount of the Existing Notes have been
confirmed as tendered in exchange for New Notes and cash,
representing 98% of the outstanding aggregate principal amount of
Existing Notes.
The aggregate principal amount of Existing Notes tendered to date
satisfies the minimum condition of the exchange offer and consent
solicitation. The Company is extending the exchange offer and
consent solicitation to provide additional time to satisfy certain
other conditions to the closing of its overall debt restructuring.
Questions regarding the exchange offer and consent solicitation
should be directed to Credit Suisse First Boston LLC, the dealer
manager and global solicitation agent, at Eleven Madison Avenue,
New York, New York 10010-3629, Attention: Liability Management
Group, or call (800) 820-1653 or (212) 325-2547. Non-U.S. holders
outside the United States may also contact Eurovest Global
Securities, Inc., the solicitation agent for non-U.S. holders, at
Rua Sansao Alves dos Santos, 102 - 6th floor, Sao Paulo, SP -
04571-090, Brazil, or call (55 11) 5505-3334 or (55 11) 3346-9400.
Requests for additional copies of the prospectus or other
materials related to the exchange offer and consent solicitation
should be directed to D.F. King & Co., Inc., the information
agent, at 48 Wall Street, 22nd floor, New York, New York 10005, or
call (800) 290-6429 or (212) 269-5550. Copies of the prospectus
related to the exchange offer and consent solicitation and other
materials filed by the Company under the United States Securities
Exchange Act of 1934 may also be obtained free of charge through
the website maintained by the United States Securities and
Exchange Commission at http://www.sec.gov/
Net Servicos' 12-5/8% senior notes currently carry Standard &
Poor's default rating.
NEW WORLD: Wants Court to Approve Premium Financing from AFCO
-------------------------------------------------------------
New World Pasta Company and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Middle District of Pennsylvania for
authority to incur debt from AFCO Premium Credit LLC to finance
their insurance premiums.
The Debtors must maintain their insurance policies to protect the
interest of their estates and creditors. Any lapse in insurance
coverage could lead to large liabilities and significant loss of
value. This, in turn, could adversely affect the Debtors' ability
to reorganize.
The Court will convene a hearing on Mar. 16, 2005, at 1:00 p.m. to
review the motion.
Headquartered in Harrisburg, Pennsylvania, New World Pasta Company
-- http://www.nwpasta.com/-- is a pasta manufacturer in the
United States. The Company, along with its debtor-affiliates,
filed for chapter 11 protection (Bankr. M.D. Penn. Case No. 04-
02817) on May 10, 2004. Eric L. Brossman, Esq., and Robert Bein,
Esq., at Saul Ewing LLP, in Harrisburg, serve as the Debtors'
local counsel. Bonnie Steingart, Esq., and Vivek Melwani, Esq., at
Fried, Frank, Harris, Shriver & Jacobson LLP, represent the
Creditors' Committee. In its latest Form 10-Q for the period ended
June 29, 2002, New World Pasta reported $445,579,000 in total
assets and $451,816,000 in total liabilities.
NORANDA INC: S&P Rates Planned $1.25B Jr. Preferred Shares at BB
----------------------------------------------------------------
Standard & Poor's Ratings Services changed its CreditWatch
implications on mining companies Noranda, Inc., and its
subsidiary, Falconbridge Ltd. to negative from developing, after
the companies announced their intention to combine the businesses.
At the same time, Standard & Poor's assigned its 'BB' rating to
Toronto, Ontario-based Noranda's proposed US$1.25 billion junior
preferred shares.
"The change in the CreditWatch implications does not suggest an
increased risk of downgrade, but reflects a more limited range of
rating outcomes, whereby ratings will not be raised," said
Standard & Poor's credit analyst Donald Marleau. CreditWatch with
negative implications means that ratings could be affirmed or
lowered. "Should the transaction be completed as currently
proposed, the ratings on the new combined entity will be
'BBB-/Stable/A-3'," he added.
Successful completion of this transaction without material changes
or cost escalations will virtually eliminate the ambiguity with
respect to the ownership linkages between Noranda and
Falconbridge, thereby giving the combined entity uninhibited
access to consolidated cash flows. On the other hand, the
issuance of US$1.25 billion of junior preferred shares will
increase Noranda's debt burden and weaken its credit metrics.
Notwithstanding the flexibility stemming from the company's
ability to satisfy its obligations under the junior preferred
shares with common equity, Standard & Poor's views the instruments
as highly debt-like, with a periodic coupon and fixed maturity
dates. As such, Standard & Poor's estimates that with the
company's preferred stock treated as debt and dividends as
interest, consolidated pro forma 2004 EBITDA interest coverage
drops to about 6x from 11x, while funds from operations to total
debt falls to below 40% from 45%. Nevertheless, the combination
of currently large cash balances and strong free cash flow in the
next 12-18 months provides considerable support for the
investment-grade ratings on Noranda.
NRG ENERGY: Board Approves 2004 AIP Payout to Five Officers
-----------------------------------------------------------
On Feb. 25, 2005, the Board of Directors of NRG Energy, Inc.,
approved the 2004 Annual Incentive Plan payout and 2005 base
salary for each executive officer of NRG who is expected to be a
named executive officer, in NRG's Proxy Statement for the annual
meeting of stockholders to be held on May 24, 2005:
* David W. Crane, President and Chief Executive Officer;
* Robert C. Flexon, Executive Vice President and Chief
Financial Officer;
* John P. Brewster, Executive Vice President, International
Operations and Regional President, South Central Region;
* Scott J. Davido, Executive Vice President and Regional
President, Northeast Region; and
* Timothy W. J. O'Brien, Vice President, General Counsel and
Secretary.
The AIP Payout, which includes a combination of cash and equity,
and the base salary for each NEO is set forth in the 2004 AIP
Payout and 2005 Base Salary Table:
2004 Annual Incentive Plan Payout
---------------------------------
Deferred 2005 Base
Name Total Value Cash Stock Units Salary
---- ----------- ---- ----------- ---------
David W. Crane $1,312,500 $590,625 $721,875 $919,000
Robert C. Flexon 400,000 185,000 215,000 450,000
John P. Brewster 216,000 96,750 119,250 309,000
Scott J. Davido 210,000 93,750 116,250 309,000
Timothy O'Brien 203,000 90,625 112,375 299,000
On Feb. 25, 2005, the Board also approved the 2005 Incentive
Design and Financial Targets for Mr. Crane. For fiscal 2005, Mr.
Crane's target incentive for annual incentive compensation will
be 100% of base salary with an additional maximum opportunity of
50% of base salary. Incentive components for Mr. Crane include
targets based on NRG's free cash flow and EBITDA in 2005, as well
as operating performance, staff development and corporate
compliance. The Board also approved the 2005 Senior Staff
Incentive Plan Design, which is applicable to the other NEOs of
NRG. For fiscal 2005, the target incentive for annual incentive
compensation for the other NEOs will range from 50% to 75% of
base salary with an additional maximum opportunity ranging from
25% to 37.5% of base salary. Incentive components for the other
NEOs include targets based on NRG's free cash flow and EBITDA in
2005 and individual performance objectives.
NRG Energy, Inc., owns and operates a diverse portfolio of
power-generating facilities, primarily in the United States. Its
operations include baseload, intermediate, peaking, and
cogeneration facilities, thermal energy production and energy
resource recovery facilities. The company, along with its
affiliates, filed for chapter 11 protection (Bankr. S.D.N.Y. Case
No. 03-13024) on May 14, 2003. The Company emerged from chapter
11 on December 5, 2003, under the terms of its confirmed Second
Amended Plan. James H.M. Sprayregen, Esq., Matthew A. Cantor,
Esq., and Robbin L. Itkin, Esq., at Kirkland & Ellis, represented
NRG Energy in its $10 billion restructuring.
As reported in the Troubled Company Reporter on Dec. 14, 2004,
Standard & Poor's Ratings Services assigned its 'CCC+' rating to
NRG Energy Inc.'s (NRG; B+/Stable/--) proposed $400 million
convertible perpetual preferred stock. The outlook is stable.
N-STAR REAL: S&P Assigns BB Rating to $16 Million Class D Notes
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned its preliminary
ratings to N-Star Real Estate CDO III Ltd./N-Star Real Estate CDO
III Corp.'s $377 million notes.
The preliminary ratings are based on information as of
March 9, 2005. Subsequent information may result in the
assignment of final ratings that differ from the preliminary
ratings.
The preliminary ratings reflect:
-- the expected commensurate level of credit support in the
form of subordination to be provided by the notes junior to
the respective classes and by the preference shares and
overcollateralization;
-- the cash flow structure, which is subject to various
stresses requested by Standard & Poor's;
-- the experience of the collateral adviser;
-- the coverage of interest rate risks through hedge
agreements; and
-- the legal structure of the transaction, which includes the
bankruptcy remoteness of the issuer.
A copy of Standard & Poor's complete presale report for this
transaction can be found on RatingsDirect, Standard & Poor's Web-
based credit analysis system, at http://www.ratingsdirect.com/
The presale can also be found on the Standard & Poor's Web site at
http://www.standardandpoors.com/ Select Credit Ratings, and then
find the article under Presale Credit Reports.
Preliminary Ratings Assigned
N-Star Real Estate CDO III Ltd.
N-Star Real Estate CDO III Corp.
Class Rating Amount (mil. $)
----- ------ ---------------
A-1 AAA 294.0
A-2A AA 15.0
A-2B AA 5.0
B A- 17.0
C-1A BBB+ 10.0
C-1B BBB+ 6.0
C-2A BBB 12.0
C-2B BBB 2.0
D BB 16.0
Income notes N.R. 23.0
N.R. - Not rated
RANGE RESOURCES: Moody's Puts B3 Rating on $150MM Sr. Sub. Notes
----------------------------------------------------------------
Moody's assigned a B3 rating to Range Resources Corporation's new
$150 million 6.375% senior subordinated notes that will repay
borrowings under the company's revolving credit facility. While
Moody's is affirming the B1 senior implied rating, the ratings
outlook is changed to positive to reflect the company's
significant progress in growing the company's reserves and
production through both the drillbit and acquisitions.
Range Resources has achieved this growth while maintaining a
competitive cost structure that along with the continued roll-off
of under market hedges and a very supportive commodity price
environment should deliver ample cash flow support at least
through the remainder of 2005, for management's stated intention
of reducing debt and funding its drilling program internally.
An upgrade of the senior implied rating to Ba3 could occur in the
near future if the company follows through on its debt reduction
commitment and demonstrates an ability to maintain leverage on the
proven developed reserves (PD reserves) under $4.50/boe with clear
visibility of getting closer to $4.00/boe in the near future. The
company has shown its willingness and ability to issue equity to
partially fund acquisitions with over $250 million of new equity
towards $550 million of acquisitions during 2004.
However, Moody's notes that despite the new equity issued, FYE
2004 leverage (adjusted debt/PD reserves) actually increased to
$4.99/boe from $4.66/boe at Q4'03 and that a continued trend of
issuing equity to help fund future acquisitions, particularly
large ones that have a significant PUD component, would be needed
to help reduce leverage on the PD reserve base.
An upgrade will also require the company to continue to replace
its reserves in line with its 2004 all-sources finding and
development (F&D) costs of $8.17/boe, though Moody's expects some
increase in this figure as services costs in general are
escalating sector wide and the company is allocating more capital
than in the recent past to some of its riskier prospects.
The company is planning on drilling about 5 wells in the deeper
horizon Trenton Black River which has been a disappointment for
some other operators as well as to allocate capital to some of its
other newer plays the gas shale play in Pennsylvania that still
have to be developed. These prospects likely contain a
significant learning curve for the company and thus could
contribute to a higher F&D.
The ratings are restrained by Range Resources' still full, though
improved leverage, measured by total debt/proved developed (PD)
reserves and absolute long-term debt pro forma for the new notes;
the lingering effect of some hedging at below market prices that
will still hold back, though to a lesser degree, Range's free cash
flow growth despite robust commodity prices; a still meaningful
percentage of production from shorter-lived Gulf Coast properties;
and high future capital spending needed to bring proved
undeveloped (PUD) reserves to production.
The ratings are supported by the company's significantly increased
scale and diversification through a combination of a successful
drilling program and acquisitions; management's issuance of equity
to partially fund the substantial acquisitions completed in 2004;
a competitive finding and development cost which has helped keep
the company's total full cycle costs on the low end of its peer
group; a solid proved developed reserve life (approximately 9.4
years at Q4'04) which provides a degree of durability and cushion
against the potential of not meeting production and reserve growth
expectations; the improved drilling prospectivity of its
portfolio; and the continued roll-off of below market hedges that
should incrementally add to cash flow available for reinvestment
and/or debt reduction.
With a positive outlook, Moody's ratings for Range are:
* Assigned a B3 - $150 million of 6.375% senior sub notes due
2015
* Affirmed at B3 - $100 million 7.375% senior sub add-on notes
due 2013
* Affirmed at B3 - $100 million 7.375% Senior Sub. Notes due
2013
* Affirmed at B1 - Senior Implied Rating
* Affirmed at B2 - Unsecured Issuer Rating
The note proceeds will fund a portion of the company's revolving
credit facility borrowings that were utilized to partially fund
acquisitions completed in 2004. Pro forma for the bond offering,
the revolver will still have approximately $277 million
outstanding, leaving about $299 million of undrawn capacity for
acquisitions or to augment the capex program if needed.
Range Resources' ratings reflect the company's still full debt/PD
reserves pro forma for the notes offering. Though the company's
leverage had begun to improve in 2003, Range made four significant
acquisitions since December 2003 that utilized a large debt
component, causing the adjusted debt/PD reserves to climb from
$4.72/boe at 9/30/03 to $5.35/boe in Q2'04 before coming down to
$4.99/boe at FYE 2004 with help from the reserves added from
Appalachian coal-bed methane (CBM) properties acquired in December
2004. Further, when including the PUD reserves and adding back
the $601 million of engineered capex (including the Pine Mountain
acquisition in December 2004, leverage on the total proved reserve
base jumps to $6.24/boe, which ranks among the highest among
Range's peers.
While Range Resources continues to improve the diversification of
its reserves and production, there is still a material portion of
total production generated from the shorter-lived Gulf Coast
properties, inclusive of Gulf of Mexico. Approximately 15% of
Range's total production, pro forma for the Pine Mountain
acquisition, is still derived from the Gulf Coast/Gulf of Mexico
region, which possesses a higher capital intensity and
reinvestment risk to keep that portion of production ahead of the
steep decline curve.
Range Resources' ratings are supported by the company's increased
scale and diversification of its reserve and production bases.
Pro forma for the Pine Mountain CBM acquisition, daily production
for Q4'04 will be approximately 35% higher than Q4'03. Further,
this growth has taken place in areas where Range already is
operating or has extensive knowledge of, thus reducing the risk of
integration and eliminating the learning curve usually experienced
with many acquisitions.
Specifically, the company already had a working knowledge of the
Great Lakes properties with its existing 50% interest. These
properties are characterized as longer-lived reserves and provides
the company with some lower risk drilling opportunities. The Pine
Mountain acquisition is also known to the company as it had
attempted to acquire these properties in the past and had followed
their performance over the years, though Range did not have a
working interest in it before.
The company also demonstrated success in its drilling efforts with
2004 extensions and discoveries replacing 217% of production while
keeping its one-year drillbit F&D at a very manageable $8.13/boe.
Range was able to achieve this largely through focus on its core
areas in Appalachia, the Gulf Coast and Southwest where it
possesses extensive knowledge.
The company has been successful in maintaining a very competitive
full cycle cost structure, which is driven primarily by the
company's consistently low F&D relative to its peers. For Q4'04
the company reported full cycle costs of $19.22/boe, which only
includes approximately 2 weeks of the newly acquired coal bed
methane properties. The company also demonstrates a better than
average 3-year average all-sources F&D figure of $7.67/boe, which
reflects the leading edge (2004) F&D of $8.17/boe. Moody's notes
that future F&D will likely increase with the development of the
company's PUD reserves and the general rise in oilfield services
costs.
Moody's believes that Q1'05 full cycle costs might benefit from
the new CBM production. With this acquisition, in addition to
receiving a 50% working interest, the company also obtained a
12.5% royalty interest that provides added benefit without added
costs. However, offsetting some of those benefits is the high
amount of long-term debt and the dividend paid to the common
equity holders which will increase the interest/dividend expense
to around $4.00/boe and will continue to consume a greater
proportion of per unit cash flow, especially in a lower commodity
price environment.
The proved reserve life (9.4 years, or 8.0 years when adjusting
for the full impact of the Pine mountain acquisition) provides the
company with a relatively durable base from which the company can
continue to drill its inventory. As the company plans to drill
and develop some its newer plays in like the Pine Mountain CBM and
the shale gas play in PA, the base line reserve have some cushion
against potential disappointments in those plays.
Range Resources' high percentage of operated properties (over 90%)
also provides the company with significant financial flexibility
as it is able to manage the timing and scale of its capital
program.
Range Resources Corp., is headquartered in Forth Worth, Texas.
RCN CORP: Inks Pact to Settle St. Paul Claim for $245,772
---------------------------------------------------------
For the policy period beginning October 1, 1997, through March 1,
2000, and from August 26, 2000, through October 15, 2004, St.
Paul Fire and Marine Insurance Company issued certain workers
compensation, general and commercial automobile liability, inland
marine, and errors and omissions insurance policies to RCN
Corporation and certain of its affiliates.
RCN Corp. and certain solvent non-debtor subsidiaries have
payment obligations under the Policies and their related premium
payment with St. Paul, which prescribe calculation and payment of
premium and reimbursement obligations.
Payment obligations under certain Policies are based on actual
loss experience of RCN and certain of its affiliates as insureds.
For those coverages, RCN initially paid an estimated premium and
then was required to make payments to St. Paul based on actual
losses and expenses and reimbursement of deductible amounts,
subject to contractual limitations.
As required under the Insurance Program, St. Paul is the
beneficiary of an irrevocable letter of credit issued by JPMorgan
Chase, No. P22677, for $500,000. The L/C, a $100,000 cash
deposit and a loss fund for $100,000, supports RCN's obligations
to St. Paul under the Insurance Program.
St. Paul filed Claim No. 1264, dated August 9, 2004, asserting a
claim against RCN Corp. for obligations under the Insurance
Program in an unliquidated amount.
St. Paul and the RCN parties exchanged information and held
discussions regarding the calculation of the Claim. St. Paul and
RCN have agreed to the allowed amount and payment of the Claim,
the return of the L/C undrawn, and to exchange releases.
Pursuant to a stipulation between St. Paul and RCN:
(a) St. Paul's Claim is reduced and allowed for $245,772;
(b) St. Paul's Allowed Claim Amount will be satisfied by:
-- the application of the $100,000 cash deposit and the
amounts in the Loss Fund; and
-- the payment by RCN of $45,772, on behalf of itself and
the Non-Debtor Subsidiaries in immediately available
funds.
Promptly upon receipt of the payment from RCN, St. Paul
will return the L/C to the issuer undrawn and, if
requested, with instructions to cancel or terminate the
L/C;
(c) RCN and St. Paul exchange mutual releases;
(d) St. Paul will continue to investigate, administer, and,
if required, pay claims covered by the Policies, and the
rights of holders of covered claims will not be impaired
or modified by these terms;
(e) RCN and its affiliates as insureds and their estates, if
any, and their representatives, successors, and assigns,
will cooperate in the actions and continue to perform
their non-financial obligations as provided under the
Policies;
(f) St. Paul's obligation to provide reports and other
information to RCN and its affiliates as insureds will
terminate; and
(g) St. Paul's rights, defenses, and obligations concerning
claims and coverage will remain as provided in the
Insurance Program.
Headquartered in Princeton, New Jersey, RCN Corporation --
http://www.rcn.com/-- provides bundled Telecommunications
services. The Company, along with its affiliates, filed for
chapter 11 protection (Bankr. S.D.N.Y. Case No. 04-13638) on
May 27, 2004. The Debtors' confirmed chapter 11 Plan took effect
on December 21, 2004. Frederick D. Morris, Esq., and Jay M.
Goffman, Esq., at Skadden Arps Slate Meagher & Flom LLP, represent
the Debtors in their restructuring efforts. When the Debtors
filed for protection from their creditors, they listed
$1,486,782,000 in assets and $1,820,323,000 in liabilities. (RCN
Corp. Bankruptcy News, Issue No. 22; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
REVLON CORP: Moody's Junks $205 Million Senior Notes Due 2011
-------------------------------------------------------------
Moody's Investors Service assigned a Caa2 rating to the proposed
$205 million senior notes offering by Revlon Consumer Products
Corporation. In addition, Moody's affirmed Revlon's existing
ratings and its negative rating outlook.
The affirmation and assignment of long-term ratings reflect the
company's continued operational and financial progress, including
the prospective improvement in Revlon Consumer's near-term
liquidity profile as proceeds from the notes are used to refinance
bonds maturing as early as February 2006. However, the
continuation of a SGL-4 speculative grade liquidity rating and a
negative long-term rating outlook reflect the company's ongoing
negative free cash flow profile and ongoing liquidity concerns
beyond the near term.
The ratings affected by this action are:
* New $205 million senior notes due 2011, assigned at Caa2;
* Senior implied rating, affirmed at B3;
* $160 million senior secured revolving credit facility due
2009, affirmed at B2;
* $800 million senior secured term loan facility due 2010,
affirmed at B3;
* $116 million 8.125% senior notes due 2006, affirmed at Caa2;
* $76 million 9% senior notes due 2006, affirmed at Caa2;
* $327 million 8.625% senior subordinated notes due 2008,
affirmed at Caa3;
* Speculative grade liquidity rating, affirmed at SGL-4;
* Senior unsecured issuer rating, affirmed at Caa2.
Proceeds from the proposed senior notes offering will be used to
repay Revlon's existing senior notes and related fees and
expenses. Similar to the existing senior notes, the new notes will
be unsecured and will not benefit from subsidiary guarantees. As
such, the notes are senior to Revlon Consumer's senior
subordinated notes, but are structurally subordinated to
subsidiary indebtedness and effectively subordinated to a large
senior secured debt class. Importantly, Moody's notes that
Revlon's subordinated notes can be repaid ahead of the new senior
notes without triggering acceleration, but only with subordinated
debt.
Moody's views the refinancing as an important near-term liquidity
benefit, as the failure to refinance the two notes series by
October 2005 and July 2006, respectively, would have led to the
accelerated maturity of Revlon Corp.'s senior secured credit
agreement. Moody's will withdraw ratings on the existing senior
notes upon successful completion of the refinancing transactions.
In addition to the aforementioned liquidity gains, the affirmation
of the long-term ratings reflects Revlon's operational and
financial achievements over the past few years, which have
resulted in improved cost efficiency, retailer relationships, and
credit protection measures. Under the guidance of an experienced
management team, Revlon Corp. has harmonized supply chain,
logistics, merchandising and marketing efforts, which have
resulted in regained confidence and shelf space at its key retail
partners.
Further, the company has meaningfully rationalized SKU counts,
controlled discretionary spending, and initiated packaging and
sourcing programs that have enabled margin gains in a rising cost
environment. For the fiscal year ended December 2004, Revlon
Corp. reported relatively flat year-over-year sales, but an over
100 basis point increase in gross margins and an over 350 basis
point increase in EBIT margins. Fourth quarter performance was
particularly strong, largely on the strength of the sell-in of new
products that will be heavily supported in early 2005.
Notwithstanding these supportive elements, the affirmation of the
long-term ratings with a negative outlook, as well as the SGL-4
rating, reflects Revlon's continued negative cash flow profile,
which is exacerbated by higher upfront brand support spending in
2005. Although Moody's recognizes the strong rationale and need
to support growth and new product introductions, uncertain
consumer receptivity and the potential risks associated with
spending more on fewer products present significant concerns,
particularly given Revlon's weak financial profile.
Despite the interest expense savings from last year's refinancing
transactions and $800 million debt-for-equity exchange, Moody's
expects Revlon to remain materially free cash flow negative
through fiscal 2005. Although cash shortfalls over the next year
should comfortably be covered by Revlon's sizeable cash balances
($121 million at December 2004) and revolver availability ($160
million fully available and undrawn, excluding letters of credit),
the maintenance of ratings remains highly contingent on the
successful execution of the proposed refinancing and the
commitment to launch an equity offering by early next year.
Moody's notes that failure to complete a planned equity offering
by March 2006 of at least $109.7 million (the same amount is
backstopped by MacAndrews & Forbes) would constitute an event of
default under Revlon Corp.'s senior secured credit agreement and,
thereby, would accelerate the maturity of that debt.
Additionally, Moody's notes that MacAndrews & Forbes has agreed to
accelerate its backstop commitment to October 2005 in the event
that Revlon is unable to refinance its 8 1/8% senior notes, as is
planned under the proposed refinancing transactions. There is
limited visibility at this point in time regarding the likelihood
of the equity offering being successful or the ability of
MacAndrews & Forbes to provide the back-stop.
Negative rating actions during the next year to eighteen months
would likely be prompted by the inability to complete the proposed
debt and equity offerings, or by the failure to sustain profit
levels following early 2005 brand investments, particularly if
such underperformance constrains borrowing access. Conversely,
successful refinancing of 2006 debt maturities and a successful
equity offering would likely prompt the stabilization of the
rating outlook and positively impact the liquidity rating.
Long-term rating upgrades are possible over a more extended period
through the successful execution of growth and operating
efficiency plans yielding a sustainable positive cash flow
profile, or through a sizeable debt reduction transaction.
Revlon Corp.'s SGL-4 rating continues to reflect the company's
weak liquidity profile over the coming twelve-month period, given
the aforementioned negative free cash flow expectations and
potential debt maturity acceleration during this timeframe.
However, in the absence of such acceleration, the company's $160
million revolving credit facility and its $121 million cash
balance provide adequate capacity to meet likely cash outflows and
moderate term loan amortization requirements over the coming year.
This facility, which is governed by customary borrowing base
calculations, was fully available and undrawn (excluding letters
of credit) at quarter-end December 2004. Prospective compliance
with financial covenants is expected with sufficient (albeit
modest) cushion relative to the maximum senior secured leverage
requirement, and projected borrowing availability well beyond the
$30 million level that would automatically trigger a 1.0x minimum
fixed charge coverage requirement.
Revlon Corp.'s ratings are restrained by weak pro forma cash flow
and high leverage levels, even following over $800 million of debt
reduction and material profit gains. Debt adjustments for under-
funded pension plans further constrain the ratings. The company's
leveraged profile, although improving, remains a rating concern as
it participates in an industry segment that requires material
upfront brand support, fixture, and product development
expenditures with uncertain consumer receptivity.
The industry is characterized by larger and better-resourced
competitors (such as L'Oreal and Proctor & Gamble), nimble niche
companies with low entry barriers, and dominant retailers with
high profit and service demands. Revlon Consumer is dependent on
a limited number of brands, is under-represented in certain
important beauty segments (skin care and fragrance), and may need
to further invest in order to support its weaker brands, including
the Almay franchise. Although, cosmetics sales are not
exceptionally seasonal, merchandising and promotional activity
earlier in the year tends to materially skew cash flow toward the
fourth quarter.
Revlon Consumer's ratings are supported by the strong brand equity
and leading market share of its namesake brand, and by balance
sheet improvements resulting from the $800 million debt-for-equity
exchange last year. The ratings are also supported by the
historical recession resistance that has characterized the mass
cosmetics industry, and by the moderate diversification benefits
offered by Revlon's international and non-cosmetic brands.
Revlon Consumer Products Corporation, headquartered in New York,
is a worldwide cosmetics, skin care, fragrance, and personal care
products company. The company is a wholly-owned subsidiary of
Revlon, Inc., which in turn is majority-owned by REV Holdings,
Inc. (Fidelity Investments also maintains a significant minority
ownership position). REV Holdings, Inc. is controlled by Ronald
O. Perelman through MacAndrews & Forbes Holdings, Inc., and Mafco
Holdings Inc. Revlon's net sales for the fiscal year ended
December 2004 were approximately $1.3 billion.
REVLON CONSUMER: S&P Junks Planned $205 Mil. Senior Unsec. Notes
----------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its ratings on
Manhattan-based cosmetics manufacturer Revlon Consumer Products
Corp., including its 'B-' corporate credit rating.
At the same time, Standard & Poor's assigned a 'CCC' senior
unsecured debt rating to Revlon's planned $205 million senior
unsecured note offering due 2011. The outlook is negative.
Approximately $1.4 billion of debt is affected by this action.
Proceeds from the $205 million senior unsecured note offering will
be used primarily to repay approximately $192 million of debt due
in 2006.
"The refinancing of Revlon's debt maturities due in 2006
significantly improves the company's short-term liquidity,
however, the company will be challenged to improve operations in
fiscal 2005 due to a soft mass-market color cosmetics segment, and
planned increases in marketing and promotional expenses to support
new product introductions," said Standard & Poor's credit analyst
Patrick Jeffrey. While Revlon achieved its revised targeted
EBITDA level of $190 million in fiscal 2004, the company's planned
increased media spending, particularly in the first half of 2005,
will affect the company's EBITDA growth and margins for fiscal
2005. As a result, the company will need to continue to
demonstrate sustained operating stability and adequate liquidity
before a stable outlook is considered.
ROOMLINX INC: Names Casimir Capital as Financial Advisor
--------------------------------------------------------
RoomLinX, Inc. (OTC Bulletin Board: RMLX.OB), a leading provider
of wireless high-speed network solutions to the hospitality
industry, has appointed Casimir Capital as its financial advisor.
RoomLinX has retained Cubitt Jacobs & Prosek Communications (CJP)
as investor relations counsel. CJP will provide infrastructure
and programming for all of RoomLinX's investor communications in
the US.
"The Board and the management team have been encouraged by recent
customer wins and new distribution agreements, illustrating that
RoomLinX is positioned to be the provider of choice in our target
markets," said Aaron Dobrinsky, CEO of RoomLinX. "These
appointments should help the Company to reach its strategic goals
and provide increased value to shareholders."
Richard Sands, CEO of Casimir Capital, added, "We recognize the
strength of RoomLinX's business proposition and pipeline, and are
pleased to be able to assist them. Going forward, Casimir will
work hand in hand with RoomLinX's management team as they move
forward with their M&A and business development strategies."
"We are extremely excited to partner with RoomLinX as the Company
continues to expand its customer base," said Jennifer Prosek,
Partner at CJP. "We have a heritage of assisting up-and-coming
service providers like RoomLinX to increase their visibility in
the financial community, and we are pleased to be a partner in
their growth." Thomas J. Rozycki, Jr., who joined CJP as a Vice
President in January, will lead the account.
"RoomLinX success will not only be measured by its ability to grow
its customer base, but also on its ability to educate current and
potential stakeholders about the Company," Mr. Dobrinsky said.
"We are confident that CJP will truly be a partner to our Company,
and that the agency shares our enthusiasm for our business and the
industry."
About Cubitt Jacobs & Prosek Communications
Cubitt Jacobs & Prosek Communications (formerly Jacobs & Prosek
Public Relations) -- http://www.cjpcom.com/-- is among the 75
largest public relations firms in the U.S. and one of the few
domestic, midsize firms that offers its clients a gateway to
Europe through its London office. Services include media
relations, financial public relations, investor relations,
corporate advisory, executive positioning, issues management,
strategic consumer communications, graphic design and publishing.
About RoomLinX
RoomLinX currently provides high-speed wireless services to hotels
and conference centers throughout the US. The Company conducts
site surveys and custom-designs networks for each property,
installing services within days. RoomLinX offers 24 X 7 customer
support as well as network monitoring and troubleshooting.
At Sept. 30, 2004, RoomLinX, Inc.'s balance sheet showed a
$211,065 stockholders' deficit.
ROYAL & SUNALLIANCE: Moody's Withdraws Ba3 Insurance Ratings
------------------------------------------------------------
Moody's Investors Service has withdrawn the Ba3 insurance
financial strength ratings of seven former members of the Royal &
SunAlliance USA intercompany pool ("RSA USA Pool"). Moody's has
withdrawn the ratings on these entities because they have been
merged into other members of the RSA USA Pool. Please refer to
Moody's Withdrawal Policy on moodys.com.
The ratings withdrawn are:
-- American and Foreign Insurance Company -- insurance financial
strength at Ba3;
-- The Connecticut Indemnity Company -- insurance financial
strength at Ba3;
-- The Fire and Casualty Insurance Company of Connecticut --
insurance financial strength at Ba3;
-- Globe Indemnity Company -- insurance financial strength at
Ba3;
-- Phoenix Assurance Company of New York - insurance financial
strength at Ba3;
-- Royal Insurance Company of America - insurance financial
strength at Ba3; and
-- Safeguard Insurance Company -- insurance financial strength
at Ba3.
Moody's insurance financial strength ratings are opinions of the
ability of insurance companies to repay punctually senior
policyholder claims and obligations. For more information, visit
http://www.moodys.com/insurance
SEMCO ENERGY: Prices New 5% Series B Preferred Convert. Shares
--------------------------------------------------------------
SEMCO ENERGY, Inc. (NYSE: SEN) has priced an offering of 325,000
shares of its 5% Series B Convertible Cumulative Preferred Stock,
generating gross proceeds to the Company of $65 million, to
qualified institutional buyers pursuant to Rule 144A under the
Securities Act of 1933 and to persons in offshore transactions in
reliance on Regulation S under the Act. The sale of the preferred
stock to the initial purchasers is expected to close on March 15,
2005.
The preferred stock is convertible at the holder's option at any
time at an initial conversion rate of 26.1438 shares of SEMCO'S
common stock per $200 liquidation preference, which represents an
initial conversion price of approximately $7.65 per share of
common stock.
SEMCO may redeem the preferred stock for cash after Feb. 20, 2010,
at an initial redemption price equal to 100% of the liquidation
preference, plus accumulated and unpaid dividends to the date of
redemption. The preferred stock is mandatorily redeemable for
cash on Feb. 20, 2015, at a redemption price equal to 100% of the
liquidation preference, plus accumulated and unpaid dividends to
the date of redemption.
SEMCO also has granted the initial purchasers a 30-day option to
purchase up to an additional 25,000 shares of preferred stock in
connection with the offering.
SEMCO will use the proceeds of this offering to repurchase from an
affiliate of k1 Ventures Ltd. all of the outstanding and issued
shares (52,542.94) of SEMCO's 6% Series B Convertible Preference
Stock and warrants to purchase 905,565 shares of SEMCO's common
stock. The aggregate purchase price under the repurchase
agreement is $60 million, plus accrued dividends if the closing
occurs after March 19, 2005. Additional proceeds, and to the
extent that the initial purchasers exercise their option to
purchase the additional shares, will be used to repurchase,
redeem, repay or retire junior capital and other existing
subordinated indebtedness or for general corporate purposes.
This announcement is neither an offer to sell nor a solicitation
of an offer to buy any of these securities. These securities have
not been registered under the Act or any state securities laws,
and unless so registered, may not be offered or sold in the United
States except pursuant to an exemption from the registration
requirements of the Act and applicable state laws. The preferred
stock will be eligible for trading under Rule 144A of the Act.
Purchasers of the preferred stock are being granted rights to
register resales of the preferred stock and underlying common
stock under the Act.
About the Company
SEMCO ENERGY, Inc., distributes natural gas to more than 398,000
customers combined in Michigan, as SEMCO ENERGY GAS COMPANY, and
in Alaska, as ENSTAR Natural Gas Company. It also owns and
operates businesses involved in propane distribution, intrastate
pipelines and natural gas storage in various regions of the United
States.
* * *
As reported in the Troubled Company Reporter on Jan. 28, 2005,
Moody's Investors Service changed the rating outlooks on SEMCO
Energy, Inc.'s and its supported debt (Ba2 senior unsecured) from
negative to stable. The change follows SEMCO's announcement that
it had settled a dispute with Atlas Pipeline Partners, L.P., for a
cash payment of $5.5 million, a much smaller amount than the
$94 million in damages Atlas had sought. The stabilization of
SEMCO's rating outlook reflects the elimination of this large
contingent liability with no material impact to its credit profile
or liquidity.
The stable outlook also acknowledges SEMCO's efforts to improve
its credit quality by reducing debt (6% reduction in long-term
debt during 2004) and suspending its common dividend. The company
has reduced its business risk by eliminating its unprofitable
construction business and narrowing its strategic focus to its
stable regulated gas distribution business. The conclusion of its
two-year divestiture program should also help to make its
financial performance more predictable going forward. Moody's
incorporates in the stable outlook benign outcomes in its pending
Michigan and Battle Creek rate filings, the chief event risks on
the horizon. The stable outlook also is based on the expectation
that SEMCO will maintain adequate liquidity, including continued
compliance with its bank covenants (in particular, with the
minimum interest coverage test which has the least cushion),
renewing its $114 million of credit facilities that terminate in
June 2005.
Nevertheless, with its senior unsecured debt rated Ba2, SEMCO is
the lowest rated local gas distribution company within Moody's
peer group, reflecting its very high leverage (as of
Sept. 30, 2004), 75% adjusted to include leases and convertible
preference stock as debt), poor profitability, a string of losses,
and weak coverages (as of 9/04, FFO/fixed charges of under 2x,
retained cash flow/debt including the convertible preference stock
as debt of 7%). SEMCO did demonstrate a capacity to generate
positive post-capex free cash flow in 2004 (roughly $20 million,
excluding asset sale proceeds). However, an upgrade is unlikely
in the foreseeable future. Given SEMCO's substantial debt load,
it will take some years of debt reduction before the company
achieves meaningful credit accretion from purely organic means.
Credit metrics that would cause us to consider an upgrade include:
a sustained return to profitability and more substantial earnings,
retained cash flow/debt exceeding 10%, FFO/fixed charges of about
3x, and adjusted leverage in the 60% range.
The stabilizing factors for SEMCO's credit make a rating downgrade
unlikely in the foreseeable near future. However, a downgrade is
possible if the mentioned expectations underlying our stable
outlook do not hold, or if SEMCO becomes more aggressively
capitalized as a result of, among other factors, M&A activity or a
change in ownership (an affiliate of K-1 Ventures Limited, a
private equity firm, currently owns preference stock that is
convertible to common stocks equal to about a fifth of SEMCO's
outstanding common stock after giving effect to the conversion).
SHOWTIME ENTERPRISES: Blank Rome Approved as Bankruptcy Counsel
---------------------------------------------------------------
The U.S. Bankruptcy Court for the District of New Jersey gave
Showtime Enterprises, Inc., and its debtor-affiliate, Showtime
Enterprises West, Inc., permission to employ Blank Rome Comisky
and McCauley LLP, as their general bankruptcy counsel.
Blank Rome will:
a) provide legal advise to the Debtors with respect to their
powers and duties as debtor-in-possession in the continued
operation of their businesses and management of their
properties and the formulation and negotiation of a plan of
reorganization;
b) take necessary action to protect and preserve the Debtor's
estates, including:
(i) the filing of objections to disputed claims filed
against the Debtors' estates and prosecution of
actions on behalf of the Debtors, and
(ii) the defense of any actions commenced against the
Debtors to which the automatic stay does not apply and
the defense of other actions in the Debtor's ordinary
course of business;
c) prepare on behalf of the Debtors all necessary applications,
motions, answers, orders, reports and other legal papers in
connection with the administration of the Debtors' estates;
and
d) perform all other legal services for the Debtors that are
necessary in their chapter 11 cases.
Joel C. Shapiro, Esq., a Partner at Blank Rome, is the lead
attorney for the Debtors. Mr. Shapiro discloses that the Firm
received a $100,000 retainer. Mr. Shapiro will bill the Debtors
$495 per hour.
Mr. Shapiro reports Blank Rome's professionals' billing rates:
Professional Designation Hourly Rate
------------ ----------- -----------
Rocco A. Cavaliere Counsel $285
Russel L. Hartz Counsel $250
Shlomo B. Troodler Associate $195
Blank Rome assures the Court that it does not represent any
interest adverse to the Debtors or their estates.
Headquartered in Paulsboro, New Jersey, Showtime Enterprises, Inc.
-- http://www.showtimeinc.com/-- provides creative design and
high quality fabrication. The Debtor's full-service portfolio
includes trade show and museum exhibits, corporate interiors,
event management, retail merchandising displays and environments
as well as corporate gifts & incentives. The Company and its
debtor-affiliates filed for chapter 11 protection on Jan. 12, 2005
(Bankr. D. N.J. Case No. 05-11089). When the Debtors filed for
protection from their creditors, they listed total assets of
$3,695,364.85 and total debts of $9,616,355.77.
SHOWTIME ENTERPRISES: U.S. Trustee Names 6-Member Committee
-----------------------------------------------------------
The United States Trustee for Region 3 appointed six creditors
to serve on the Official Committee of Unsecured Creditors of
Showtime Enterprises, Inc., and its debtor-affiliate's chapter 11
cases:
1. WillWork, Inc.
Attn: William F. Nixon, Sr.
23 Norfolk Avenue
So. Easton, Massachusetts 02375
Phone: 508-230-0397, Fax: 508-230-3710
2. Jevic Transportation, Inc.
Attn: Jerry Boyer
700 Creek Road
Delanco, New Jersey 08075
Phone: 856-461-7111, Fax: 856-764-6743
3. Zenith Labornet
Attn: Perry D. Shupe
2535 Royal Place
Tucker, Georgia 30084
Phone: 770-270-8250, Fax: 770-270-8255
4. Penn Hudson Financial Group, Inc.
Attn: Marc R. Friedant
1515 Market St., Ste. 1360
Philadelphia, Pennsylvania 19102
Phone: 215-568-4556, Fax: 215-568-4844
5. Bruck3D
Attn: James T. Bruck
16 Dunhill Road
Jackson, New Jersey 08527
Phone: 732-833-8442, Fax: 732-833-8492
6. Bekins Van Lines, LLC
Margaret Ann Whiting
330 S. Mannheim
Hillside, Illinois 60162
Phone: 708-547-2078, Fax: 708-649-7262
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 Paulsboro, New Jersey, Showtime Enterprises, Inc.
-- http://www.showtimeinc.com/-- provides creative design and
high quality fabrication. The Debtor's full-service portfolio
includes trade show and museum exhibits, corporate interiors,
event management, retail merchandising displays and environments
as well as corporate gifts & incentives. The Company and its
debtor- affiliates filed for chapter 11 protection on Jan. 12,
2005 (Bankr. D. N.J. Case No. 05-11089). Rocco A. Cavaliere,
Esq., at Blank Rome Comisky and McCauley LLP, represents the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed total assets of
$3,695,364.85 and total debts of $9,616,355.77.
SHOWTIME ENTERPRISES: Section 341 Meeting Scheduled for March 16
----------------------------------------------------------------
The United States Trustee for Region 3 will convene a meeting of
Showtime Enterprises, Inc. and its debtor-affiliate's creditors on
March 16, 2005 at 10:00 a.m. in the Bridge View Building, Suite
102, 800 Cooper Street in Camden, New Jersey. This is the first
meeting of creditors required under 11 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 Paulsboro, New Jersey, Showtime Enterprises, Inc.
-- http://www.showtimeinc.com/-- provides creative design and
high quality fabrication. The Debtor's full-service portfolio
includes trade show and museum exhibits, corporate interiors,
event management, retail merchandising displays and environments
as well as corporate gifts & incentives. The Company and its
debtor-affiliates filed for chapter 11 protection on Jan. 12, 2005
(Bankr. D. N.J. Case No. 05-11089). Rocco A. Cavaliere, Esq., at
Blank Rome LLP, represents the Debtors in their restructuring
efforts. When the Debtors filed for protection from their
creditors, they each estimated between $1 million to $10 million
in total assets and debts.
SPECIAL VALUE: Moody's Withdraws Ba2 Rating on $9MM Jr. Sub. Notes
------------------------------------------------------------------
Moody's Investors Service has withdrawn the ratings of all
tranches issued by Special Value Bond Fund, LLC. According to
Moody's, the ratings were withdrawn because all tranches were
redeemed in full on March 2, 2005. Special Value Bond Fund, LLC,
closed in August of 1999.
The ratings of the tranches withdrawn are:
-- Issuer: Special Value Bond Fund, LLC
-- Tranche Descriptions:
* US $81,000,000 Senior Revolving Credit Facility
due March 2005
* Prior rating: Aa2
* Current rating: Withdrawn
* US $18,000,000 Senior Subordinated Secured Notes
due September 2006
* Prior rating: A2
* Current rating: Withdrawn
* US $18,000,000 Second Senior Subordinated Secured Notes
due September 2006
* Prior rating: Baa2
* Current rating: Withdrawn
* US $9,000,000 Junior Subordinated Secured Notes
due September 2006
* Prior rating: Ba2
* Current rating: Withdrawn
STANDARD COMMERCIAL: Soliciting Consents to Amend Indenture
-----------------------------------------------------------
Standard Commercial Corporation (NYSE: STW) disclosed the
commencement of a cash tender offer to purchase any and all of its
outstanding $150.0 million aggregate principal amount of 8% Senior
Notes due 2012, Series B. The tender offer is scheduled to expire
at 5:00 p.m., New York City time, on April 5, 2005, unless
extended or earlier terminated.
In conjunction with the tender offer, Standard is soliciting
consents to proposed amendments to the indenture governing the
Notes. Among other things, the proposed amendments would
eliminate substantially all of the restrictive covenants in the
indenture as well as certain events of default.
Tenders of Notes may be validly withdrawn and consents may be
validly revoked at any time prior to 5:00 p.m., New York City
time, on March 21, 2005, unless extended or earlier terminated.
The consideration offered for each $1,000 principal amount of
Notes validly tendered and accepted for payment under the tender
offer and the consent solicitation shall be the price equal to:
(i) the present value on the Payment Date of:
(a) the earliest redemption price for the Notes as set
forth in the Securities Table below on the earliest
optional redemption date provided in the Indenture
as set forth in the Securities Table below, and
(b) the interest that would accrue on the Notes from
the last interest payment date preceding the
Payment Date to the applicable Earliest Redemption
Date, determined in accordance with standard market
practice on the basis of a yield to the Earliest
Redemption Date equal to the sum of:
(x) the yield to maturity on the U.S. Treasury
Note specified in the Securities Table below,
as calculated by the dealer managers and
solicitation agents in accordance with
standard market practice, based on the bid
price for the Reference Security as of 10:00
a.m., New York City time, on April 1, 2005,
the second business day immediately preceding
the scheduled expiration time for the tender
offer for the Notes, as displayed on the
applicable page of the Bloomberg Government
Pricing Monitor or any recognized quotation
source selected by the dealer managers and
solicitation agents in their sole discretion
if the Bloomberg Government Pricing Monitor
is not available or is manifestly erroneous,
and
(y) the fixed spread for the Notes as specified
in the Securities Table below (that price
being rounded to the nearest cent per $1,000
principal amount of Notes), minus accrued and
unpaid interest, from the last interest
payment date, up to, but not including, the
Payment Date, minus
(ii) $30.00 per $1,000 principal amount of Notes, which is
equal to the Consent Payment referred to below. A
consent payment of $30.00 per $1,000 principal amount of
Notes will be paid only to holders of Notes who tender
their Notes and validly deliver their consents, and who
do not validly withdraw their Notes or revoke their
consents, on or prior to the consent payment deadline.
In addition to the Total Consideration or Tender Offer
Consideration, as applicable, with respect to each $1,000
principal amount of Notes purchased pursuant to the
tender offer, Standard will pay accrued and unpaid
interest on the Notes from the most recent payment of
semi- annual interest preceding the Payment Date up to,
but not including, the Payment Date.
Securities Table
Outstanding Earliest Earliest
CUSIP Principal Title of Redemption Redemption
No. Amount Security Date Price (1)
--------- ------------ --------- ---------- ----------
853258AF8 $150,000,000 8% Senior April 15, $1,040.00
Notes due 2008
2012,
Series B
Reference Reference Fixed Consent
Security Page Spread Payment (1)
3.375% U.S. PX5 50 basis $30.00
Treasury Note points
due February 15,
2008
(1) Per $1,000.00 principal amount of Notes
The "Payment Date" in respect of any Notes validly tendered (and
not previously validly withdrawn) is expected to be promptly
following the expiration of the tender offer and the consent
solicitation, which may be extended.
The terms and conditions of the tender offer and the consent
solicitation are specified in, and qualified in their entirety by,
the Offer to Purchase for Cash and Consent Solicitation Statement
and related materials that are being distributed to holders of the
Notes, copies of which may be obtained from MacKenzie Partners,
Inc., the information agent for the tender offer and the consent
solicitation, at (800) 322-2885 (U.S. toll free) or (212) 929-5500
(collect).
Standard has engaged Wachovia Securities and Deutsche Bank
Securities Inc. to act as the dealer managers and solicitation
agents in connection with the tender offer and consent
solicitation. Questions regarding the tender offer and the
consent solicitation may be directed to Wachovia Securities at
(866) 309-6316 (U.S. toll free) or (704) 715-8341 (collect) and
Deutsche Bank Securities Inc. at (212) 250-7466 (collect).
The tender offer and the consent solicitation are being conducted
in connection with, and are subject to, simultaneous completion of
the proposed merger of Standard with and into DIMON Incorporated.
DIMON will be the surviving corporation, and simultaneously with
the closing of the merger, DIMON will change its name to Alliance
One International, Inc.
The tender offer and the consent solicitation are subject to the
satisfaction of certain conditions, including DIMON having entered
into arrangements satisfactory to it with respect to financing
necessary to complete the tender offer, the consent solicitation
and the merger, the receipt by Standard of consents to the
proposed amendments by holders of at least a majority in aggregate
principal amount outstanding of the Notes, the simultaneous
closing of the merger and other customary conditions.
DIMON also commenced a tender offer and consent solicitation to
purchase any and all of its outstanding 9-5/8% Senior Notes due
2011 and 7-3/4% Senior Notes due 2013 and to amend each of the
indentures under which such notes were issued. Standard's tender
offer and consent solicitation are also conditioned upon DIMON
receiving the requisite consents to amend such indentures.
This announcement is for informational purposes only and is not an
offer to purchase, a solicitation of an offer to purchase or a
solicitation of consents with respect to any securities. The
tender offer is being made solely pursuant to the terms of the
Offer to Purchase for Cash and Consent Solicitation Statement,
dated March 8, 2005, and the related Letter of Transmittal (as
they may be amended from time to time), and those documents should
be consulted for additional information regarding delivery
procedures and the terms and conditions of the tender offer and
the consent solicitation.
About the Company
Standard Commercial Corporation is the world's third largest
dealer of leaf tobacco with operations in more than 30 countries.
For more information on Standard, visit Standard's website at
http://www.sccgroup.com/
* * *
As reported in the Troubled Company Reporter on Nov. 15, 2004,
Moody's Investors Service placed the ratings of Standard
Commercial Corporation and Dimon Incorporated under review with
direction uncertain, following the announcement by the two
companies of a definitive merger agreement. The transaction
remains subject to shareholders and regulatory approvals.
Ratings placed under review with direction uncertain:
* Standard Commercial Corporation
-- Senior implied, at Ba3
-- Senior unsecured, at Ba3
-- Issuer rating, at B1
* Standard Commercial Tobacco Company
-- Bank Credit facility, at Ba3
* Dimon Incorporated
-- Senior guaranteed unsecured, at B1
-- Issuer rating, at B2
Dimon and Standard Commercial have announced their intent to
merge. Under the terms of the agreement, Standard Commercial
common shareholders would receive three shares of Dimon common
stock per each share of Standard Commercial common stock, making
Dimon the surviving entity. The merged company should have
proforma annual revenue of approximately $1.9 billion, based on
combined results for the twelve months ended June 30, 2004.
The direction of the review reflects uncertainty on the final
level of the senior implied rating of the new entity at conclusion
of the review. Moody's does not believe that it has sufficient
information at this stage to determine a higher likelihood for a
Ba3 senior implied rating than for a B1. The direction of the
review also reflects uncertainty about the ultimate structure of
the new company, whether this new structure will create structural
subordination of some debt, and whether -- as Dimon has indicated
it might be a possibility -- Dimon's debt will be tendered.
TOWER AUTOMOTIVE: Keller Rohrback Starts Probe on 401(K) Plans
--------------------------------------------------------------
Keller Rohrback L.L.P. is investigating Tower Automotive Inc.
(NYSE:TWR) for violations of the Employee Retirement Income
Security Act of 1974. The investigation is regarding the
investments in Company stock by the Tower Automotive Retirement
Plan, the Tower Automotive Union 401(k) Plan, the Tower Automotive
Products Savings Investment Plan, and the Tower Automotive
Products Employee 401(k) Savings Plan from Feb. 14, 2003, to the
present.
Keller Rohrback's investigation focuses on concerns that Tower
Automotive and other fiduciaries for the Plan may have breached
their ERISA-mandated fiduciary duties of loyalty and prudence by
among other things, continuing to offer their own company stock as
a Plan investment option, and investing and holding employee and
matching contributions in the stock at a time when they knew or
should have known because of the precarious financial condition of
the company that the stock was not a suitable and appropriate
investment option. A breach also may have occurred if the
fiduciaries failed to disclose complete and accurate information
to employees regarding the Company's business, and financial
results and operations, such that they could make informed
decisions regarding investment in Tower stock.
As reported in the Troubled Company Reporter on Feb. 9, 2005,
Stull, Stull & Brody has commenced an investigation relating to
the 401(k) defined contribution plans of Tower Automotive, Inc.
(NYSE: TWR). Among other things, Stull, Stull & Brody is
investigating whether fiduciaries of the 401(k) plans of the
Company may have violated the Employee Retirement Income Security
Act of 1974 by failing to disclose the Company's true financial
and operating condition to participants and beneficiaries of the
plans and by offering Tower Automotive stock as an investment
option under the plans when it was not prudent to do so.
Keller Rohrback is one of America's leading law firms handling
ERISA retirement plan litigation. Our attorneys helped pioneer
this field in the Lucent and IKON ERISA breach of fiduciary duty
cases--the first large-scale ERISA 401(k) cases filed. Keller
Rohrback serves as lead and co-lead counsel in numerous ERISA
breach of fiduciary duty cases, including the Enron, WorldCom,
Inc. and HealthSouth ERISA cases. Keller Rohrback has
successfully provided class action representation a decade. Its
trial lawyers have obtained judgments and settlements on behalf of
clients in excess of $7 billion.
Headquartered in Grand Rapids, Michigan, Tower Automotive, Inc.
-- http://www.towerautomotive.com/-- is a global designer and
producer of vehicle structural components and assemblies used by
every major automotive original equipment manufacturer, including
BMW, DaimlerChrysler, Fiat, Ford, GM, Honda, Hyundai/Kia, Nissan,
Toyota, Volkswagen and Volvo. Products include body structures
and assemblies, lower vehicle frames and structures, chassis
modules and systems, and suspension components. The Company and
25 of its debtor-affiliates filed voluntary chapter 11 petitions
on Feb. 2, 2005 (Bankr. S.D.N.Y. Case No. 05-10576 through
05-10601). James H.M. Sprayregen, Esq., Ryan B. Bennett, Esq.,
Anup Sathy, Esq., Jason D. Horwitz, Esq., and Ross M. Kwasteniet,
Esq., at Kirkland & Ellis, LLP, represent the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors, they listed $787,948,000 in total assets and
$1,306,949,000 in total debts.
UAL CORPORATION: Can Walk Away from 8 Boeing 737 Aircraft Leases
----------------------------------------------------------------
The United States Bankruptcy Court for the Northern District of
Illinois gave UAL Corporation and its debtor-affiliates authority
to reject the leases for eight Boeing 737-322 Aircraft.
As reported in the Troubled Company Reporter on Feb. 24, 2005, the
Debtors want to reject the leases for Aircraft bearing Tail
Nos. N321UA, N362UA, N389UA, N390UA, N391UA, N392UA and N363UA,
effective as of February 28, 2005. The Debtors want to reject
the lease for Tail No. N320UA effective as of Feb. 18, 2005.
Headquartered in Chicago, Illinois, UAL Corporation --
http://www.united.com/-- through United Air Lines, Inc., is the
holding company for United Airlines -- the world's second largest
air carrier. The Company filed for chapter 11 protection on
December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M.
Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq.,
and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $24,190,000,000
in assets and $22,787,000,000 in debts. (United Airlines
Bankruptcy News, Issue No. 77; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
UAL CORP: Court Okays Fishman Engagement as Local Counsel
---------------------------------------------------------
The United States Bankruptcy Court for the Northern District of
Illinois gave UAL Corporation and its debtor-affiliates permission
to employ Jack B. Fishman & Associates of Crystal Lake, Illinois,
as local counsel, nunc pro tunc to Dec. 1, 2004.
James H.M. Sprayregen, Esq., at Kirkland & Ellis, reminds the
Court that it approved the retention of Pachulski, Stang, Ziehl,
Young, Jones & Weintraub, for the limited purpose of pursuing
avoidance actions. Pachulski does not have a local office in
Chicago and requires the assistance of local counsel to appear
before the Court and coordinate local filings. Therefore,
Fishman will provide local counsel services to Pachulski.
Fishman currently serves as Trustee for potentially pursuing over
10,000 potential preference actions aggregating $400,000,000 in
potential preference payments for the GenTek Preference Claims
Litigation Trust. Mr. Fishman is also Managing Director for
Bankruptcy Administration for the Beloit Corporation.
Fishman will not seek fees for its services. Instead, Fishman
will only seek reimbursement from the Debtors' estates for actual
costs incurred in connection with retention as local counsel.
The costs to date do not exceed $1,500.
Fishman will prepare, coordinate, document and pursue various
adversary complaints as local counsel for Pachulski.
Fishman is qualified and able to represent the Debtors in a cost-
effective, efficient and timely manner. Fishman has experience
in handling avoidance actions and adversary complaints. Fishman
does not hold or represent an interest adverse to the Debtors'
estates and Fishman is a "disinterested person" as that term is
defined in Section 101(14) of the Bankruptcy Code.
Headquartered in Chicago, Illinois, UAL Corporation --
http://www.united.com/-- through United Air Lines, Inc., is the
holding company for United Airlines -- the world's second largest
air carrier. The Company filed for chapter 11 protection on
December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M.
Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq.,
and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $24,190,000,000
in assets and $22,787,000,000 in debts. (United Airlines
Bankruptcy News, Issue No. 77; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
VALOR COMMS: Earns $11.1 Million Net Income in Fourth Quarter
-------------------------------------------------------------
Valor Communications Group, Inc. (NYSE: VCG) reported fourth-
quarter and year-end 2004 consolidated operating results.
The highlights include:
* Revenues were $128 million, a 2.5% increase over the same
quarter for the prior year
* Adjusted EBITDA was $68.6 million for the quarter and
$275.1 million for the year
* DSL subscribers increased to 22,884, an increase of 38% over
the third quarter
"We were extremely pleased with the continued positive results of
Valor's focused strategy during the fourth quarter," said Jack
Mueller, president and chief executive officer. "We also
continued to be successful in selling our DSL, long distance and
vertical services products, which is fundamental to our strategy
of focusing on free cash flow," Mr. Mueller added.
"The full year results represent our continued commitment to
increasing revenue, managing expenses, effectively deploying our
capital and growing free cash flow," said Mr. Mueller. "The
fourth quarter increase of 1.1% in Adjusted EBITDA helped
contribute to the full year increase of 4.7%. Our capital
expenditures for the quarter were $14.0 million and for the full
year totaled $65.5 million," Mr. Mueller added. "Additionally, we
increased our DSL subscribers by 161% in 2004 and increased our
average revenue per line to $77 per month."
"As we look to 2005, we plan to continue executing on our focused
strategy. Valor's strategy is to increase penetration of higher
margin services, leverage cross-selling and bundling, improve
operating efficiency and provide superior service and customer
care," said Mr. Mueller. "By growing revenue, controlling
expenses and effectively deploying our capital, we can continue to
produce strong and stable cash flows."
Financial Results
For the fourth quarter of 2004, revenues were $128.0 million, an
increase of 2.5% from $124.9 million generated in the fourth
quarter of 2003. Consolidated operating income for the fourth
quarter of 2004 was $40.6 million a decline of 11.6% from
operating income of $46.0 million in the fourth quarter of 2003.
Operating margin for the fourth quarter of 2004 was 31.7%, down
from 36.8% in the fourth quarter of 2003. Valor reported a
consolidated net loss of $52.9 million for the quarter as compared
to net income of $21.3 million for the fourth quarter of 2003.
Fourth quarter 2004 net loss includes $64.0 million of non-
recurring items.
Excluding the non-recurring items, net income for the fourth
quarter of 2004 would have been $11.1 million compared to
$21.3 million in the fourth quarter of 2003, a decrease of 47.9%.
For the full year, ended December 31, 2004, operating revenues
were $507.3 million compared to $497.3 million the previous year,
an increase of 2.0%. Operating income for 2004 was $177.1 million
compared to $182.3 million for 2003, a decline of 2.8%. Net loss
for 2004 was $27.8 million compared to net income of $58.2 million
for 2003. Full year net loss includes $100.5 million of non-
recurring items.
Excluding the non-recurring items, net income for the year 2004
would have been $72.7 million compared to $58.2 million in 2003,
an increase of 24.9%.
"We are pleased with our results for 2004, our first earnings
report as a publicly traded company," said Mr. Mueller. "In 2004,
we increased our DSL subscribers by 161% and increased our average
revenue per line by 5%."
On Nov. 10, 2004, Valor entered into a $1.3 billion senior secured
credit facility consisting of a $100 million senior secured
revolving facility and a $1.2 billion term loan. As of Dec. 31,
2004, there was no balance outstanding on the senior secured
revolving facility. Concurrently, Valor secured a $265.0 million
second lien loan and a $135.0 million subordinated loan. Proceeds
from the new credit facility, second lien loan and subordinated
loan were used to repay existing indebtedness, redeem certain
preferred, common and minority interests and pay associated
transaction costs. In February 2005, Valor completed its initial
public offering issuing shares of its common stock for net
proceeds of approximately $409.6 million. In connection with the
initial public offering Valor also issued senior notes for net
proceeds of approximately $386.8 million. Valor used the proceeds
from the initial public offering and the issuance of the senior
notes to repay existing indebtedness.
Fourth quarter non-recurring items:
* Fourth quarter 2004 includes:
-- $63.0 million charge related to write-off of deferred
financing costs, prepayment fees and other transaction
costs associated with Valor's debt recapitalization that
occurred on November 10, 2004;
-- $5.1 million of compensation expense related to debt
recapitalization bonuses paid to our senior management
team; and
-- $4.1 million of revenue ($1.6 million represents services
performed in 2003) from the favorable resolution of a
regulatory proceeding Valor had pending before the Texas
Public Utility Commission related to expanded local
calling.
Full year non-recurring items:
* In addition to the above mentioned 2004 fourth quarter
items, Valor's 2004 results were impacted by:
-- $18.0 million charge related to the repurchase of
minority interests from a group of individual investors
in April 2004;
-- $5.0 million charge related to a transition bonus paid to
the former Chief Executive Officer;
-- $6.8 million of offering costs expensed in connection
with the proposed offering of income deposit securities
that was withdrawn; and
-- $6.7 million charge related to our impairment of our
unconsolidated cellular partnerships.
Fourth-Quarter and 2004 Operational Highlights
Access Lines
Access lines declined by 7,588 in the fourth quarter of 2004 to
540,337 access lines, as compared to a decrease of 2,941 access
lines in the fourth quarter of 2003 to 556,745 access lines. For
the full year 2004, access lines declined 16,408 or 2.9% from
2003. Access line losses in both the fourth quarter and full year
were caused primarily by:
-- Reductions in second lines as more customers migrated to the
company's DSL products;
-- Increased competitive activity in Valor's largest market
from the local cable operator, which began offering a
competitive local phone service in the fourth quarter; and
-- Competitive activity from wireless carriers.
Valor's DSL subscribers for the full year 2004 increased 14,105 to
22,884 in 2004 from 8,779 in 2003, an increase of 161%.
The company's average revenue per access line per month for the
fourth quarter of 2004 was $78.43 compared to $74.57 for the
comparable period of 2003, an increase of 5.2%. Average revenue
per access line per month for full year 2004 was $77.07 compared
to $73.48 for the comparable period of 2003, an increase of 4.9%.
Excluding the non-recurring out-of-period revenue recorded in the
fourth quarter 2004 from the favorable resolution of a regulatory
proceeding Valor had pending before the Texas Public Utility
Commission related to expanded local calling, the company's
average revenue per access line per month for the fourth quarter
of 2004 would have been $76.31 compared to $74.57 for the
comparable period of 2003, an increase of 2.3%, and average
revenue per access line per month for full year 2004 would have
been $76.83 compared to $73.48 for the comparable period of 2003,
an increase of 4.6%.
Local Services
Local service revenue increased $3.4 million, or 8.8%, in the
fourth quarter of 2004 to $42.1 million from $38.7 million in the
comparable period of 2003. Local service revenue for the full
year 2004 increased $2.0 million, or 1.3%, to $158.4 million from
$156.4 million in 2003. The increase for both the fourth quarter
and the full year is largely due to Valor recognizing $4.1 million
in revenue ($1.6 million represents services performed in 2003) in
the fourth quarter of 2004 resulting from approval by the Texas
Public Utility Commission of a settlement regarding compensation
of Valor for the costs associated with previously billed amounts
for expanded local calling. This revenue increase was partially
offset by declines in revenue due to access line losses.
Data Services
Data services revenues grew $1.1 million, or 19.5%, to $6.6
million in the fourth quarter, from $5.6 million in the comparable
period in 2003. For the 2004 full year, Valor's data services
revenues totaled $25.2 million representing an increase of $4.2
million, or 20.2%, from $21.0 million in 2003. The increase in
both periods was largely due to increases in DSL subscribers.
Valor's DSL subscribers increased 6,363 in the fourth quarter of
2004 compared to an increase of 976 in the comparable period of
2003. Valor's DSL subscribers for the full year 2004 increased
14,105 to 22,884 in 2004 from 8,779 in 2003, an increase of 161%.
Valor's penetration rate for its DSL services, defined as the
total number of DSL subscribers divided by Valor's total access
lines, was 4.2% and 1.6% at December 31, 2004 and 2003,
respectively.
Long Distance Services
Valor's total long distance services revenue increased $1.7
million, or 19.6%, to $10.2 million in the fourth quarter of 2004
from $8.5 million in the comparable period of 2003. For the full
year, long distance services revenue increased $7.6 million, or
24.4%, to $38.4 million in 2004 from $30.8 million in 2003.
Valor's long distance subscribers increased 2,389 in the fourth
quarter of 2004 compared to an increase of 1,878 in the comparable
period of 2003. Valor's long distance subscribers for the full
year 2004 increased 27,911 to 216,437 in 2004 from 188,526 in
2003, an increase of 14.8%. Valor's penetration rate for its long
distance services, defined as the total number of long-distance
subscribers divided by Valor's total access lines, was 40.1% and
33.9% at December 31, 2004 and 2003, respectively.
Access Services
Access services revenues deceased 6.7% to $30.5 million in the
fourth quarter of 2004 compared to $32.7 million in the fourth
quarter of 2003. Access services revenues decreased 3.9% to
$126.8 million in 2004 compared to $132.0 million in 2003. The
decrease is primarily attributable to lower interstate access
rates that went into effect on July 1, 2003 and lower access line
counts.
Other Highlights
For the full year 2004 the company reported net cash provided by
continuing operating activities of $143.7 million, net cash used
in investing activities of $34.9 million and net cash used in
financing activities of $93.2 million.
Capital expenditures were $14.0 million for the fourth quarter of
2004, compared to $16.6 million in the fourth-quarter of 2003.
For the full year 2004, capital expenditures were $65.5 million
compared to $69.9 million in 2003.
In November 2004, the Company acquired certain high speed and
dial-up internet assets along with the related customers and
revenues. The assets are generally located in West Texas and
Southeastern New Mexico. The purchase price consisted of $1.5
million in cash and the assumption of approximately $0.4 million
of debt.
About Valor Communications Group
Valor Communications Group (NYSE: VCG) --
http://www.valortelecom.com/-- is one of the largest providers of
telecommunications services in rural communities in the
southwestern United States. The company offers a wide range of
telecommunications services to residential, business and
government customers, including: local exchange telephone
services, which covers basic dial-tone service as well as enhanced
services, such as caller identification, voicemail and call
waiting; long distance services; and data services, such as
providing digital subscriber lines. Valor Communications Group is
headquartered in Irving, Texas.
* * *
As reported in the Troubled Company Reporter on Jan. 21, 2005,
Standard & Poor's Ratings Services assigned its 'BB-' corporate
credit rating to Valor Communications Group, Inc., which will
become the new parent company of Valor Telecommunications LLC upon
the successful completion its initial public offering. The
outlook is negative.
Simultaneously, Standard & Poor's assigned its 'BB-' rating to
Valor Telecommunications Enterprises LLC's -- VTE -- proposed
$965 million senior secured bank facility. A recovery rating of
'3' also was assigned to the bank loan, indicating the expectation
for a meaningful recovery of principal (50%-80%) in the event of a
default or bankruptcy. VTE is an indirect subsidiary of Valor.
Closing of the IPO is contingent upon completion of the new credit
facility.
In addition, Standard & Poor's assigned its 'B' rating to the
$280 million senior unsecured notes due 2015, to be issued under
Rule 144A with registration rights by VTE and Valor
Telecommunications Enterprises Finance Corp. -- co-issuers. The
IPO is not contingent upon the issuance of these notes.
Cash proceeds of about $500 million from the IPO will be used to
pay down the company's second-lien loan and senior subordinated
loan. Proceeds from the new bank facility and senior unsecured
notes will be used to repay the existing term loan. Ratings on
the existing second-lien loan, senior subordinated loan, and
senior secured term loan will be withdrawn upon completion of the
proposed transactions. In addition, the corporate credit rating
on Valor Telecommunications Enterprises LLC and Valor
Telecommunications Enterprises LLC II will be withdrawn due to the
guarantees provided by the new parent company of these
subsidiaries' debt. If the proposed transactions are not
completed, existing ratings will remain at their current levels;
therefore, these ratings were removed from CreditWatch.
"The new ratings reflect the deleveraging impact of the proposed
IPO," said Standard & Poor's credit analyst Rosemarie Kalinowski.
"However, the negative outlook assigned to Valor addresses the
potential longer-term impact of cable telephony on the company's
competitive position." Pro forma for the transactions, total debt
outstanding was about $1.2 billion as of Sept. 30, 2004. Valor
plans to pay a significant annual dividend of about 75% of free
cash flow.
VALOR COMMS: Board Approves $0.18 Per Share Dividend
----------------------------------------------------
The Board of Valor Communications Group, Inc. (NYSE: VCG) approved
an $0.18 per share dividend for shareholders of record at
March 31, 2005, and payable on April 15, 2005. This dividend
represents a partial, prorated quarterly dividend for the first
quarter of 2005, and thereafter, we intend to continue to pay
quarterly dividends at an annual rate of $1.44 per share, as was
outlined in our prospectus.
About Valor Communications Group
Valor Communications Group (NYSE: VCG) --
http://www.valortelecom.com/-- is one of the largest providers of
telecommunications services in rural communities in the
southwestern United States. The company offers a wide range of
telecommunications services to residential, business and
government customers, including: local exchange telephone
services, which covers basic dial-tone service as well as enhanced
services, such as caller identification, voicemail and call
waiting; long distance services; and data services, such as
providing digital subscriber lines. Valor Communications Group is
headquartered in Irving, Texas.
* * *
As reported in the Troubled Company Reporter on Jan. 21, 2005,
Standard & Poor's Ratings Services assigned its 'BB-' corporate
credit rating to Valor Communications Group, Inc., which will
become the new parent company of Valor Telecommunications LLC upon
the successful completion its initial public offering. The
outlook is negative.
Simultaneously, Standard & Poor's assigned its 'BB-' rating to
Valor Telecommunications Enterprises LLC's -- VTE -- proposed
$965 million senior secured bank facility. A recovery rating of
'3' also was assigned to the bank loan, indicating the expectation
for a meaningful recovery of principal (50%-80%) in the event of a
default or bankruptcy. VTE is an indirect subsidiary of Valor.
Closing of the IPO is contingent upon completion of the new credit
facility.
In addition, Standard & Poor's assigned its 'B' rating to the
$280 million senior unsecured notes due 2015, to be issued under
Rule 144A with registration rights by VTE and Valor
Telecommunications Enterprises Finance Corp. -- co-issuers. The
IPO is not contingent upon the issuance of these notes.
Cash proceeds of about $500 million from the IPO will be used to
pay down the company's second-lien loan and senior subordinated
loan. Proceeds from the new bank facility and senior unsecured
notes will be used to repay the existing term loan. Ratings on
the existing second-lien loan, senior subordinated loan, and
senior secured term loan will be withdrawn upon completion of the
proposed transactions. In addition, the corporate credit rating
on Valor Telecommunications Enterprises LLC and Valor
Telecommunications Enterprises LLC II will be withdrawn due to the
guarantees provided by the new parent company of these
subsidiaries' debt. If the proposed transactions are not
completed, existing ratings will remain at their current levels;
therefore, these ratings were removed from CreditWatch.
"The new ratings reflect the deleveraging impact of the proposed
IPO," said Standard & Poor's credit analyst Rosemarie Kalinowski.
"However, the negative outlook assigned to Valor addresses the
potential longer-term impact of cable telephony on the company's
competitive position." Pro forma for the transactions, total debt
outstanding was about $1.2 billion as of Sept. 30, 2004. Valor
plans to pay a significant annual dividend of about 75% of free
cash flow.
WHX CORP: Section 341(a) Meeting Slated for March 16
----------------------------------------------------
The U.S. Trustee for Region 2 will convene a meeting of WHX
Corporation's creditors at 12:00 p.m., on March 16, 2005, at the
Office of the U.S. Trustee, 80 Broad Street, Second Floor, New
York City, New York. 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 New York City, New York, WHX Corporation --
http://www.whxcorp.com/-- is a holding company structured to
acquire and operate a diverse group of businesses on a
decentralized basis. WHX's primary business is Handy & Harman, a
diversified industrial manufacturing company servicing the
electronic materials, specialty wire and tubing, specialty
fasteners and fittings, and precious metals fabrication markets.
The Company filed for chapter 11 protection on March 7, 2005
(Bankr. S.D.N.Y. Case No. 05-11444). Richard Engman, Esq., at
Jones Day, represents the Debtor in its restructuring efforts.
When the Debtor filed for protection from its creditors, it
reported total assets of $406,875,000 and total debts of
$352,852,000.
WINN-DIXIE: Final Hearing on Reclamation Procedures on Mar. 15
--------------------------------------------------------------
In the ordinary course of their businesses, Winn-Dixie Stores,
Inc., and its debtor-affiliates purchase materials, supplies,
goods, products, and other related items from various suppliers
and vendors for use and sale in their stores. The Debtors seek
the permission of the U.S. Bankruptcy Court for the Southern
District of New York to return certain Goods to the Vendors for
credit against those Vendors' prepetition claims against the
Debtors in accordance with Section 546(g) of the Bankruptcy Code.
Section 546(g) authorizes a debtor, with the consent of a
creditor, to return goods shipped pre-petition to the debtor, for
credit against the creditor's prepetition claim, provided that
the Court determines that the return is in the best interests of
the debtor's estate.
The purpose of Section 546(g) is to "relieve the bankruptcy
estate of the burden of keeping unwanted or unsalable goods, and
relieve the estate of unnecessary liabilities."
By allowing the Debtors to return the Goods, the Debtors will be
able to:
(a) obtain proper credit for otherwise unusable goods, cost-
effectively and without undue financial risk, and
(b) effectively manage their inventory in this critical stage
of the Debtors' Chapter 11 cases.
The Debtors have received demands from several Vendors asserting
a right of reclamation pursuant to Section 2-702(2) of the
Uniform Commercial Code. The Debtors expect to receive more
reclamation claims pursuant to Section 546(c) of the Bankruptcy
Code. In their Reclamation Claims, the Vendors ask the Debtors
to either return certain goods purportedly delivered to the
Debtors on or prior to the Petition Date or provide the Vendors
with an allowed administrative expense priority claim pursuant to
Section 503(b) of the Bankruptcy Code.
Sally McDonald Henry, Esq., at Skadden, Arps, Slate, Meagher &
Flom LLP, in New York, notes that is it very important for the
Debtors to maintain normal business operations and avoid costly
and distracting litigation relating to Reclamation Claims. "If
the Debtors are unable to establish a global set of reclamation
procedures to resolve the Reclamation Claims, they will be faced
with the prospect of simultaneously defending multiple
reclamation adversary proceedings at a time when the Debtors need
to focus on critical aspects of the reorganization process."
Although the Debtors have not completed their review of the
Reclamation Claims, they believe that many may be valid, subject
to certain defenses. In addition, while the Debtors do not
concede that any of the elements necessary to prove a right of
reclamation have been shown by any of the Vendors, the Debtors
seek to adopt a uniform procedure for determining and settling
all valid Reclamation Claims so that litigation regarding
Reclamation Claims does not interfere with the Debtors'
reorganization efforts.
Treatment of Reclamation Claims
The Debtors ask the Court to grant administrative treatment to
the claim of any Vendor:
(a) who timely demands in writing reclamation of Goods
pursuant to Section 546(c)(1) of the Bankruptcy Code and
Section 2-702 of the UCC,
(b) whose Goods the Debtors have accepted for delivery,
(c) who properly identifies the Goods to be reclaimed and thus
proves the validity and amount of its reclamation claim,
(d) whose Goods the Debtors do not agree to make available for
pick-up by the Vendor, and
(e) whose claim is otherwise valid under state or other
applicable law.
The Debtors also seek the Court's permission to make available
Goods for pick-up by any reclaiming seller:
(a) who timely demands in writing reclamation of Goods,
(b) whose Goods the Debtors have accepted for delivery, and
(c) who properly identifies the Goods to be reclaimed,
provided that the Debtors agree to a return of the Goods as
opposed to granting to the Vendor an administrative claim or
other form of consideration as permitted under the Bankruptcy
Code.
Proposed Reclamation Procedures
The Debtors seek the Court's authority to implement these
procedures for reconciling Reclamation Claims:
(a) Reclamation Demands
All Vendors seeking to reclaim Goods from the Debtors
will be required to submit a demand. That Reclamation Demand
must specify the goods for which reclamation is sought and
the basis for the Reclamation Claim. Failure to timely
submit a Reclamation Demand will result in a waiver of its
right to payment on any purported Reclamation Claim.
(b) The Statement of Reclamation
The Debtors will provide the Vendor with a copy of the order
approving the proposed Reclamation Procedures and a statement
of reclamation. The Debtors will explain their reasons why
they believe a Reclamation Claim is not valid and will
identify any defenses reserved in the Statement . Vendors
are required to respond whether they agree or disagree with
the Reconciled Reclamation Claims listed in the Statement.
(c) Fixing the Reclamation Claim
The Reclamation Claim of any Vendor who agrees with the
Debtors' Statement of Reclamation or who fails to return the
Statement, will be deemed an Allowed Reclamation Claim in the
amount of the Reconciled Reclamation Claim.
The Debtors are authorized to negotiate with all Dissenting
Vendors and to adjust the Reconciled Reclamation Claim either
upward or downward to reach an agreement regarding the
Dissenting Vendor's Reclamation Claim.
Upon settlement, the Reclamation Claim will be deemed an
Allowed Reclamation Claim in the settled amount.
If no settlement is reached, the Debtors will file a motion
for determination of the Dissenting Vendor's Reclamation
Claim. The Court will fix the amount of the Allowed
Reclamation Claim.
(d) Treatment of Allowed Reclamation Claims
The Debtors may satisfy in full any Reclamation Claim or
Allowed Reclamation Claim by making the Goods at issue
available for pick-up by the Vendor or Dissenting Vendor.
All Allowed Reclamation Claims for which the Debtors choose
not to make the Goods available for pick-up will be paid in
full as an administrative expense.
The Debtors do not in any way waive any claims they may have
against any Vendor relating to preferential or fraudulent
transfers, or other potential claims, counterclaims or offsets.
The Debtors further ask the Court to confirm that a Vendor or any
other third party is prohibited from seeking to reclaim Goods
that have already been delivered, or interfering with the
delivery of Goods presently in transit to the Debtors, absent the
Court's permission.
* * *
The Court grants the Debtors' request on an interim basis.
Objections
(1) American Food
According to the Interim Order, the Debtors have 120 days to
provide reclaiming creditors with a statement of reclamation
and a determination of the validity or objection to the
reclamation demand.
American Food Distributors, Inc., wants the Court to limit
the time within which the reclaiming creditors will be
notified of the status of their claims. In the event the
Debtors do not return the goods, American Food asks the Court
to fix a date within which reclaiming creditors will be paid.
American Food believes that the Debtors seek the benefits of
the goods received by it during the reclamation period
without any foreseeable timeframe for payment.
(2) Mount Olive
The Debtors' proposed Reclamation Procedures contemplate that
they may satisfy any reclamation claim "at any point" by
simply making the Goods available for pick up by a vendor so
long as the goods "are not out of date."
Mount Olive Pickle Company, Inc., wants the Reclamation
Procedures modified to provide that should the Debtors elect
to return any Goods in satisfaction of a reclamation claim,
the return must be done at a point when the Goods still have
marketable value to the reclaiming Vendor.
Furthermore, the Reclamation Motion proposes that to the
extent the Debtors will satisfy an Allowed Reclamation Claim,
the satisfaction will constitute "a waiver, release,
discharge and satisfaction of any and all rights . . .
against the Debtors . . . arising from or in connection with
the Goods constituting the basis for the Allowed Reclamation
Claim."
It is unclear what the Debtors are trying to accomplish by
requiring the Vendor to provide a broad release of all claims
arising from or in connection with the Goods. Clearly, the
Debtors will only have to pay for the Goods once, thus making
a broad and rather ambiguous release unnecessary.
(3) Bottling Group
The Debtors seek to reserve the right to assert "any defense
to the value of a Reclamation Claim based upon the existence
of a prior perfected lien on the Goods."
Bottling Group LLC d/b/a The Pepsi Bottling Group believes
that if the Court accepts this approach, the Reclamation
Claimants and the Debtors' estates will incur the substantial
cost of participating in the reclamation procedures to
liquidate their reclamation claims even though the Debtors or
some other party may later ask the Court to determine that
those liquidated claims have no value because the reclaimed
goods were subject to other creditors' liens. The Pepsi
Bottlers want to avoid this.
(4) Southeast Provisions and New York Value Club
In separate filings with the Court, Southeast Provisions LLC
and New York Value Club Ltd. observe that many of the
provisions of the proposed Final Order submitted by the
Debtors affect substantive rights of the Reclamation
Claimants with little or no knowledge of the proposed Order.
The Reclamation Motion seeking to modify procedural and
substantive provisions should be made upon proper notice to
all Reclamation Claimants. There is no reason why the
Debtors should not be required to file the appropriate motion
with the appropriate notice provided to all similarly
situated claimants.
* * *
The Final Hearing on the Debtors' Reclamation Motion is continued
to March 15, 2005.
As of March 7, 2005, at least 22 parties have sent the Debtors
notices of reclamation demand:
* Southeast Provisions LLC,
* Northpoint Trading, Inc.,
* Tree of Life, Inc.,
* Community Coffee Company LLC,
* Carthage Cup LP,
* Buffalo Rock Company,
* Coca-Cola Bottling Company United, Inc.,
* New York Value Club, Ltd.,
* Southern Wine & Spirits of Florida,
* American Food Distributors, Inc.,
* Metro-Goldwyn-Mayer Home Entertainment LLC,
* Krispy Kreme Doughnut Corporation,
* Mount Olive Pickle Company, Inc.,
* Cole's Quality Foods, Inc.,
* The Pepsi Bottling Group, et al.,
* Southeast Provisions LLC,
* Menu Foods, Inc.,
* Laura's Lean Beef,
* Dell Marketing LP,
* Bay City Produce,
* D.L. Lee & Sons, Inc., and
* Front End Services Corporation.
Certain of the Reclamation Creditors have asked the Court to
allow their reclamation claims.
Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. --
http://www.winn-dixie.com/-- is one of the nation's largest food
retailers. The Company operates stores across the Southeastern
United States and in the Bahamas and employs approximately 90,000
people. The Company, along with 23 of its U.S. subsidiaries,
filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y.
Case No. 05-11063). David J. Baker, Esq., at Skadden Arps Slate
Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and Brian
C. Walsh, Esq., at King & Spalding LLP, represent the Debtors
in their restructuring efforts. When the Debtors filed for
protection from their creditors, they listed $2,235,557,000 in
total assets and $1,870,785,000 in total debts. (Winn-Dixie
Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
WINN-DIXIE: Four Utilities Object to Adequate Assurance Proposal
----------------------------------------------------------------
Utility services are essential to Winn-Dixie Stores, Inc., and its
debtor-affiliates' ability to sustain operations while their
Chapter 11 cases are pending. D. J. Baker, Esq., at Skadden,
Arps, Meagher & Flom, LLP, in New York, tells the U.S. Bankruptcy
Court for the Southern District of New York that the Debtors'
businesses include the operation of hundreds of grocery stores
that carry perishable and other consumer goods. As a result, it
is essential that the utility services continue uninterrupted.
Section 366(a) of the Bankruptcy Code prohibits utilities from
altering, refusing, or discontinuing service to a debtor for the
first 20 days of a bankruptcy case. However, Section 366(b) of
the Bankruptcy Code also provides that a utility company may
terminate services if a debtor has not furnished adequate
assurance of future payment, upon expiration of the Stay Period.
The Stay Period in the Debtors' Chapter 11 cases expires on
March 13, 2005.
Accordingly, the Debtors ask the Court to:
(i) deem utilities adequately assured of payment for
postpetition services;
(ii) prohibit utilities from altering, refusing, or
discontinuing services to the Debtors on account of the
commencement of the bankruptcy cases or on account of
the non-payment of invoices for prepetition services;
and
(iii) establish certain procedures for resolving disputes
regarding the adequate assurance of payment provided by
the Debtors.
Mr. Baker relates that the Debtors have a satisfactory payment
history with respect to prepetition utility invoices. The
Debtors believe that there are no defaults or arrearages with
respect to undisputed utility service invoices, other than
payment interruptions that may have been inadvertently caused by
the commencement of their Chapter 11 cases.
Moreover, the Debtors have posted bonds and deposits with several
of the Utility Companies to ensure the Debtors' payment
obligations.
The Debtors believe that they will be able to continue paying for
all postpetition utility services from the proceeds of their
operations, available cash on hand, and funds provided by the
Debtors' proposed DIP credit facility.
A list of the companies providing utility services to the Debtors
is available at no charge at:
http://bankrupt.com/misc/winn-dixie_utilities.pdf
Procedures for Handling Adequate Assurance Requests
The Debtors propose these procedures to determine any requests by
the Utility Companies for additional adequate protection:
(a) Any Utility Company seeking adequate assurance from the
Debtors in the form of a deposit or other security must
make a request in writing, setting forth the location(s)
for which utility services are provided, the account
number(s) for those location(s), the outstanding balance
for each account, and a summary of the Debtors' payment
history on each account;
(b) A Request must be actually received by the Debtors'
counsel, King & Spalding LLP, 191 Peachtree Street,
Atlanta, Georgia 30303, Attn: Brian C. Walsh, within 30
days of the date of the order granting the Adequate
Assurance Motion;
(c) Upon timely receipt of a Request, the Debtors will have 60
days to reach consensual resolution of the Request or to
file a Motion for Determination of Adequate Assurance of
Payment. If a Determination Motion is filed, the Debtors
will seek a hearing on it on the next available hearing
date on or after 20 days after the filing of the
Determination Motion, unless another hearing date is
agreed to by the parties or ordered by the Court;
(d) Any Request received by the Debtors from a Utility Company
after the Request Deadline or that is otherwise defective
will be deemed an untimely and invalid assurance Request,
and the Utility Company will be deemed to be adequately
assured of payment under Section 366 of the Bankruptcy
Code; and
(e) If a Determination Hearing is scheduled in accordance with
the procedures, the Utility Company will be deemed to be
adequately assured of payment under Section 366 of the
Bankruptcy Code until a Court order is entered in
connection with the Determination Hearing.
Objections
(1) Alabama Power Company
Eric T. Ray, Esq., at Balch & Bingham LLP, in Birmingham,
Alabama, argues that the Debtors' Utility Motion seeks to
evade the requirements of Section 366 of the Bankruptcy Code
while compelling utilities to engage in extraordinary
proceedings and incur inappropriate expenses. These
practices deprive utilities of their statutory rights and
create a procedure in which the Debtors are allowed, for all
practical purposes, to unilaterally decide if a utility's
request for assurance of postpetition payment is reasonable.
The proposed procedure will result in delays and expenses to
the utilities.
Alabama Power, the Debtors' provider of electric services in
Alabama, believes that it is inherently at risk since it is
statutorily compelled by Section 366 to continue postpetition
service to the Debtors for a minimum period of 20 days on an
around-the-clock basis and its invoices are payable only
after the service has been delivered and irreversibly
consumed by the Debtors. No creditors in the Debtors'
bankruptcy case, other than the utilities, are required to
take that risk. Due to the manner in which the Debtors
utilize and pay for utility services, only through a cash
deposit, surety bond or advance payment can Alabama Power be
adequately assured of payment.
Accordingly, Alabama Power asks the Court to deny the
Utilities Motion and compel the Debtors to provide it a
$2,184,000 deposit as adequate assurance of payment under
Section 366.
(2) JEA
JEA provides electric service to the Debtors' facilities
throughout Northeast Florida. The Debtors maintain 40
electric service accounts with JEA that generate, on average,
$650,000 per month in utility services.
The Utility Motion does not provide JEA with the "deposit or
other security" expressly required by Section 366 of the
Bankruptcy Code, Nina M. LaFleur, Esq., at Stutsman & Thames,
PA, in Jacksonville, Florida, asserts. No provision is made
in the Utility Motion that remotely equates to "security" for
the payment of future obligations by the Debtors. In the
context of a utility-customer relationship, the ordinary or
common meaning of "other security" means prepayment of bills,
shortened payment deadlines, letters of credit or surety bond
or, in any event, something more than the mere promise of a
debtor to pay an administrative expense claim.
Thus, JEA wants a $1,300,000 cash deposit as adequate
assurance of future payment by the Debtors. The deposit is
equal to about two times the average monthly billings by JEA
to the Debtors during the 12-month period prior to the
Petition Date and is in an amount that is consistent with the
anticipated electricity consumption by the Debtors and the
minimum period of time that the Debtors could continue to
receive electricity from JEA before service could be
terminated for non-payment of postpetition bills.
(3) BellSouth
Reginald A. Greene, Esq., in Atlanta, Georgia, contends that
the Utilities Motion would impermissibly limit and circumvent
rights of BellSouth Telecommunications, Inc., BellSouth
Business Systems, Inc., and BellSouth Long Distance, Inc.,
under Section 366 of the Bankruptcy Code. BellSouth
believes, and case law confirms, that past payment history
coupled with the granting of an administrative priority claim
do not constitute adequate assurance in all cases. Thus, the
adequate assurance proposed by the Debtors is inadequate.
BellSouth proposes a carefully crafted set of provisions that
will provide it with adequate assurance until the facts and
circumstances of the Debtors' Chapter 11 cases change. In
that regard, BellSouth asks the Court to require the Debtors
to provide BellSouth with adequate assurance that will
include:
a. a deposit covering two months' estimated billing for
certain accounts;
b. prepayment of certain other accounts;
c. weekly flash reports showing the Debtors' available,
restricted and unrestricted cash, as the case may be;
d. requiring the Debtors to pay invoices prior to raising
disputes;
e. accelerated 14-day payment terms for the Debtors and
expedited payment default rights for BellSouth; and
f. wire transfer of payments to BellSouth for postpetition
services.
(4) Florida Power and Light Company
Florida Power asks the Court deny the Utilities Motion and
determine that it is entitled to a deposit equal to two
months of service totaling $6,900,000 as adequate assurance
of payment pursuant to Section 366(b) of the Bankruptcy Code.
Thomas R. Slome, Esq., at Scarcella Rosen & Slome LLP, in
Uniondale, New York, argues that Florida Power's request
should be granted for at least three reasons:
-- The Utilities Motion is procedurally flawed because it was
not properly served on Florida Power;
-- The Debtors have not furnished Florida Power with adequate
assurance; and
-- The Debtors' DIP Financing offers little comfort to
administrative creditors like Florida Power.
Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. --
http://www.winn-dixie.com/-- is one of the nation's largest food
retailers. The Company operates stores across the Southeastern
United States and in the Bahamas and employs approximately 90,000
people. The Company, along with 23 of its U.S. subsidiaries,
filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y.
Case No. 05-11063). David J. Baker, Esq., at Skadden Arps Slate
Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and Brian
C. Walsh, Esq., at King & Spalding LLP, represent the Debtors
in their restructuring efforts. When the Debtors filed for
protection from their creditors, they listed $2,235,557,000 in
total assets and $1,870,785,000 in total debts. (Winn-Dixie
Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
WOLVERINE TUBE: S&P Affirms Low-B Ratings After Review
------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B' corporate
credit and senior unsecured debt ratings on Wolverine Tube, Inc.,
and removed them from CreditWatch, where they had been placed with
negative implications on Feb. 2, 2005, due to concerns about the
company's limited liquidity in the first half of 2005. The
outlook is stable.
"Wolverine's ratings were removed from CreditWatch because of
additional liquidity obtained by the company and our expectations
that it will monetize excess inventory carried at the end of 2004
during the first half of 2005," said Standard & Poor's credit
analyst Lisa Wright. The company successfully repatriated
$10 million of cash from its Chinese subsidiary, subsequently
repaid $8 million of revolving credit facility borrowings, and
increased this borrowing-based facility to $40 million from
$37.5 million. These actions gave the company about $21 million
of availability under this facility as of Feb. 28, 2005. In
addition, Wolverine is working to secure another source of
liquidity that we believe will strengthen its ability to withstand
any additional surges in copper prices or other unforeseen events.
The ratings on Huntsville, Alabama-based Wolverine reflect the
company's narrow product line, cyclical end markets, significant
customer concentration, volatile raw-material costs, and very
aggressive financial policy and leverage measures. These risks
overshadow the benefits of established positions in niche business
segments and a slight decline in debt leverage following a private
placement of common equity in mid-2004.
Wolverine, with 2004 sales of $798 million, is a major
manufacturer of custom-engineered, value-added copper and copper
alloy tubing. Its largest end market is the heating, ventilation,
and air conditioning industry.
WORLDCOM INC: BofA Settles Shareholder Suit For $460.5 Million
--------------------------------------------------------------
Bank of America Corporation has agreed to pay $460.5 million to
settle its part of the massive WorldCom Inc. class-action
shareholder lawsuit, thus putting additional pressure on the
14 remaining banking defendants to settle as well, the Washington
Post reports.
Court documents indicate that the plaintiffs in the case, led by
the New York State Common Retirement Fund, are alleging that Bank
of America and other banks helped sell billions in WorldCom stock
and bonds to investors in 2000 and 2001 even though they knew the
telecommunications firm was falsifying its books.
In agreeing to the settlement, which comes on the heels of
Citigroup Inc.'s $2.6 billion settlement in its portion of the
case back in 2004, Bank of America denied breaking any laws and in
a press statement said, "Bank of America believes it is in the
best interests of the company to resolve these claims and put this
litigation behind it and focus efforts on creating greater value
for the shareholder."
WorldCom plaintiffs told the Washington Post that if a federal
judge approves the Bank of America settlement, total recovery in
the case would rise to over $3 billion, the second largest amount
in history, which is trailing hotel franchiser Cendant Corp.'s
$3.2 billion payment to settle accounting fraud claims in 1999.
Further settlements in the WorldCom case could push the number
well beyond $3.2 billion, the plaintiffs said.
New York State Comptroller Alan G. Hevesi, sole trustee of New
York's $120 billion public pension fund and the court-appointed
lead plaintiff in the case, told the Post the amount Bank of
America paid was significant because it was determined using the
same formula applied to Citigroup even though some argued that
Citigroup was paying far too much to settle the case.
In a press statement, A.G. Hevesi further explains, "The fact that
we have achieved a settlement of this magnitude, and at the same
rate as Citigroup paid earlier, sends a strong message to
investment banks that investors expect and will require them to
conduct meaningful due diligence, and not merely rely on others to
perform their obligations. The public is entitled to disclosure of
all relevant information relating to a stock or bond issuance."
The class-action suit was filed by shareholders and bondholders
who lost billions of dollars when the telecommunications giant
filed for Chapter 11 bankruptcy protection in 2002 after revealing
it had falsified its books to appear profitable in three years
when it was actually losing money. WorldCom emerged from
bankruptcy and now operates as Ashburn-based MCI Inc., which is
currently examining takeover offers from Verizon Communications
Inc. and Qwest Communications International Inc.
Another attorney for the plaintiffs, Leonard Barrack, told the
Washington Post that aside from the monetary benefits the Bank
of America deal would also put added pressure on the remaining
banks since each time a defendant settles it increases the
potential liability of those remaining in the case, which in
their (the plaintiffs) case is a good thing. Experts have said
they expect all of the banks to settle before the case goes to
trial, scheduled to begin March 17.
The Bank of America deal also follows the collapse of a
settlement with 10 former WorldCom directors who had agreed to
pay $54 million, including $18 million of their own money, to
close their portion of the case. The settlement dissolved after
the judge overseeing the case rejected a key portion of the
deal. Sources close to the case say a new settlement with the
directors is unlikely but not impossible. (Class Action Reporter,
March 7, 2005)
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 INC: Four Banks Settle Securities Suit for $428.4 Mil.
---------------------------------------------------------------
Four additional investment banking firms that participated as
underwriters in WorldCom's May 2001 bond offering have agreed to
pay a total of $428.4 million to settle the claims asserted
against them in the WorldCom Securities Litigation, Alan G.
Hevesi, New York State Comptroller and sole Trustee of the New
York State Common Retirement Fund and Court-appointed
Lead Plaintiff, disclosed on March 9.
The four investment banks are:
Bank Settlement Amount
---- -----------------
ABN AMRO Incorporated $278,365,600
Mitsubishi Securities International plc $75,000,000
BNP Paribas Securities Corp. $37,500,000
Mizuho International $37,500,000
Together, they underwrote 12% of the bonds issued in WorldCom's
May 2001 offering. They did not participate in the May 2000 bond
offering and, thus, there were no claims asserted against these
firms based on that offering. These amounts, on a percentage
basis, are higher than the rates established by the amount the
Citigroup Defendants agreed in May 2004 to pay to settle the bond
portions of the claims against them. None of these entities was a
lead underwriter for the May 2001 offering.
"We are very pleased to have been able to obtain these additional
excellent recoveries for the Class from these firms, which we
commend for putting this issue behind them. While we remain
willing to talk with other defendants about potential settlements,
we are looking forward to the start of trial against any remaining
defendants next week," Mr. Hevesi said.
This settlement follows the $460.5 million settlement with Bank of
America announced on March 3, and the $100.3 million settlement
with Lehman Brothers, Goldman Sachs, Credit Suisse First Boston,
and UBS Warburg announced on March 4, for which the parties to
those settlements are seeking preliminary approval on March 10,
and the $2.575 billion settlement with the Citigroup Defendants,
which was approved by United States District Court Judge Denise
Cote on November 12, 2004.
If these settlements and the other settlements are approved by the
Court, this will bring the total recovery to date to
$3.56 billion, which surpasses the largest recovery previously
achieved in a securities class action, $3.18 billion, in the
Cendant Corporation litigation, in which Mr. Hevesi served as one
of three lead plaintiffs in his capacity as Comptroller of the
City of New York.
Mr. Hevesi is the Court-appointed Lead Plaintiff in the
consolidated securities class action, In re WorldCom, Inc.
Securities Litigation, which is pending before Judge Cote.
The NYSCRF and investor class are represented by the law firms of
Barrack, Rodos & Bacine and Bernstein Litowitz Berger & Grossmann
LLP, who were appointed as Lead Counsel by Judge Cote in August
2002. The two firms served as Lead Counsel in the Cendant class
action.
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 INC: Four More Banks Settle Class Suit for $100.3 Mil.
---------------------------------------------------------------
Lehman Brothers Holdings Inc., UBS AG, Goldman Sachs Group Inc.
and Credit Suisse First Boston agreed to pay $100.3 million to
settle their part of the massive WorldCom Inc. class action
shareholder lawsuit.
Citigroup, Inc., the world's largest bank, reached a $2.6 billion
settlement with investors in May to resolve its liability for
helping WorldCom issue $15.4 billion in bonds in 2000 and
2001.
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.
W.R. GRACE: Acquires Some Midland Dexter Venezuela, S.A., Assets
----------------------------------------------------------------
W.R. Grace & Co. (NYSE:GRA) has acquired certain assets of Midland
Dexter Venezuela, S.A. (Midevensa). Terms of the acquisition were
not disclosed. Midevensa is a supplier of coatings and sealants
for rigid packaging in the local and export markets of Latin
America.
"This acquisition underscores our commitment to grow the Darex
coatings and sealants business," said Fred Festa, Grace's
President and Chief Operating Officer. "We are dedicated to
providing our customers with innovative technologies and superior
product performance. The products and technologies acquired are
an excellent complementary addition to Grace's leading line of
Darex coating and sealant products."
"We continue to invest in new technology," said Robert Sorrentino,
Vice President and General Manager of Darex. "Darex remains a
market leader because of our on-going commitment to provide
innovative solutions to the rigid packing marketplace. This
acquisition is an important part of our growth strategy."
Headquartered in Columbia, Maryland, W.R. Grace & Co. --
http://www.grace.com/-- supplies catalysts and silica products,
especially construction chemicals and building materials, and
container products globally. The Company and its debtor-
affiliates filed for chapter 11 protection on April 2, 2001
(Bankr. Del. Case No. 01-01139). James H.M. Sprayregen, Esq., at
Kirkland & Ellis, and Laura Davis Jones, Esq., at Pachulski,
Stang, Ziehl, Young, Jones & Weintraub, P.C. represent the Debtors
in their restructuring efforts. (W.R. Grace Bankruptcy News,
Issue No. 81; Bankruptcy Creditors' Service, Inc., 215/945-7000)
W.R. GRACE: Appoints Greg Poling to Lead Davison Chemicals
----------------------------------------------------------
W.R. Grace & Co. (NYSE:GRA) reported that Gregory E. Poling has
been named president of Davison Chemicals. He also was elected a
corporate vice president by the Board of Directors of Grace.
Poling has been with Davison since 1999 and has most recently been
president of the Davison Chemicals specialty materials business.
As a result of this appointment, he will add the Davison Chemicals
refining technologies business to his responsibilities. Joseph A.
Rightmyer, who led the refining technologies business for the last
decade, will be retiring.
"We are excited about the opportunity presented by bringing the
Davison businesses together under Greg's leadership," said Fred
Festa, President and Chief Operating Officer. "Combining these
two successful businesses will give us greater opportunities to
leverage our technology resources and provide more and better
products and services to our customers."
"I have tremendous confidence in Greg's entrepreneurial skills.
He has a strong customer focus and excellent knowledge of our
technology platforms. We look forward to continued strong
performance of all our Davison businesses."
Davison Chemicals products include:
-- fluid cracking catalysts and additives used by petroleum
refineries;
-- hydroprocessing catalysts that upgrade heavy oils and
remove certain impurities;
-- silica-based engineered materials used in a variety of
industrial, consumer, biotechnology and pharmaceutical
applications;
-- specialty catalysts, including polyolefin catalysts and
catalyst supports that are essential components in the
manufacture of polyethylene and polypropylene resins; and
-- silica-based materials and chromatography columns and
equipment for bioseparations, pharmaceutical and other
life sciences applications.
Davison Chemicals accounted for 53% of Grace's 2004 sales,
approximately $1.2 billion.
Headquartered in Columbia, Maryland, W.R. Grace & Co. --
http://www.grace.com/-- supplies catalysts and silica products,
especially construction chemicals and building materials, and
container products globally. The Company and its debtor-
affiliates filed for chapter 11 protection on April 2, 2001
(Bankr. Del. Case No. 01-01139). James H.M. Sprayregen, Esq., at
Kirkland & Ellis, and Laura Davis Jones, Esq., at Pachulski,
Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the
Debtors in their restructuring efforts. (W.R. Grace Bankruptcy
News, Issue No. 81; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
W.R. GRACE: Settling Tax Issues with Internal Revenue Service
-------------------------------------------------------------
Since 1997, the Internal Revenue Service has been conducting an
examination of the consolidated federal tax returns that included
W. R. Grace & Co and its debtor-affiliates for the 1993-1996 tax
periods. Pursuant first to pre-bankruptcy tax sharing agreements,
and more recently pursuant to a Court order implementing the
settlement of the Fresenius Medical Care Holdings, Inc.,
fraudulent conveyance litigation, the Debtors have had sole
authority to act for the consolidated groups of taxpayers with
respect to the IRS examination as well as comparable state taxes.
Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones
& Weintraub, P.C., in Wilmington, Delaware, relates that under
the Fresenius Agreement, the Debtors are obligated to pay
indemnified taxes as those taxes become due and payable.
Similarly, under the Fresenius Agreement Order, to the extent
they have agreed to settle any tax liability for the 1993-1996
tax periods, the Debtors are authorized to pay any taxes promptly
and in full.
The Debtors and the IRS are concluding the examination of the
1993-1996 tax periods. The Debtors have determined that it is in
the best interests of their estates and their creditors to settle
numerous issues that are part of the examination.
Because they are required to pay the related taxes when due, and
because they can avoid incurring additional obligations if they
pay those taxes, the Debtors seek the authority of the U.S.
Bankruptcy Court for the District of Delaware to enter into a
settlement agreement with the IRS with respect to those issues
relating to their taxable years ending December 31, 1993, through
December 31, 1996.
Furthermore, the Debtors seek permission to pay the IRS no later
than April 15, 2005, and to pay to applicable state tax
authorities no later than six months after they have received
revised revenue agent reports from the IRS:
(i) all indemnified taxes owing under the 1993-1996 Settlement
Agreement; and
(ii) all indemnified taxes relating to state adjustments
reflecting the resolution of the federal audit for the
January 1, 1990, through December 31, 1992.
Corporate-Owned Life Insurance Policies
On January 10, 2005, the Debtors received the Corrected Revenue
Agent's Reports from the IRS for their taxable years ending
December 31, 1993, through December 31, 1996. The most
significant contested issue in the CRARs concerns Corporate-Owned
Life Insurance Policies. Specifically, COLI represents
approximately $31 million of the approximately $73 million of
estimated Federal taxes plus interest payable for the 1993-1996
tax period and approximately $8.5 million out of the
approximately $18.5 million of the estimated state taxes payable
for the 1990-1996 tax periods.
On October 13, 2004, the Court authorized the Debtors to enter
into a settlement agreement with the IRS in connection with the
interest deductions claimed with respect to COLI policies and to
pay any related taxes when due in accordance with the Fresenius
Agreement. Accordingly, on January 20, 2005, the Debtors,
Fresenius Medical Care, Sealed Air Corporation and the IRS
entered into a COLI Closing Agreement in final determination
consistent with the COLI Settlement. The Debtors believe that
the COLI Closing Agreement is a favorable resolution of a complex
tax issue.
The CRARs were issued prior to the execution of the COLI Closing
Agreement and, therefore, propose 100% disallowance of COLI
related interest deductions. The COLI Closing Agreement is a
final determination of tax liabilities with respect to the COLI
interest deductions and superceded the CRARs. The IRS will amend
the CRARs to reflect the terms of the COLI Closing Agreement,
which are incorporated into the Debtors' estimate of 1993-1996
Settlement Agreement Indemnified Taxes.
At present, the IRS has not assessed the Debtors for any taxes
due as a consequence of the COLI Closing Agreement or other
issues that are included in the CRARs. However, the Debtors ask
the Court to direct them to pay all 1993-1996 Settlement
Agreement Taxes and all 1990-1992 State Indemnified Taxes.
Other Issues
The Debtors have come to agreement with the IRS on many issues
raised in the Tax Audit. As is common in large corporate IRS
audits, the Debtors agreed to numerous proposed tax adjustments
that reflected conformity with agreed IRS adjustments for tax
years prior to the Tax Audit. The Debtors also agreed to certain
IRS proposed adjustments based on inadvertent errors made by the
Debtors in the preparation of the tax returns subject to the Tax
Audit. As previously stated, the COLI tax liability constitutes
approximately $31 million of the approximately $73 million in
total estimated Federal taxes due assuming the settlement of all
but one issue relating to the 1993-1996 Federal audit.
Subject to the Court's approval, the Debtors are in agreement
with the remaining $42 million of proposed tax assessments,
which, for the most part, represent:
(i) Rollover Adjustments from the 1990-1992 taxable years
totaling approximately $28 million in Federal tax, plus
interest, and
(ii) inadvertent errors totaling approximately $12 million in
tax, plus interest.
Ms. Jones notes that the remaining $2 million in tax, plus
interest, constitutes miscellaneous negotiated issues with
respect to which the Debtors believe they have obtained the best
settlement attainable.
There is one substantive audit issue that the Debtors and the IRS
could not reach an agreement on and with respect to which the
Debtors filed a protest with the IRS on February 9, 2005. The
matter under contest concerns the IRS' proposed disallowance of
certain research credits and research and experimentation
expenditures claimed by the Debtors on their tax returns for the
1993 through 1996 taxable years representing an amount in
controversy of approximately $7 million in Federal tax plus
interest. The Debtors previously filed a Protest with respect to
the issue on September 3, 2002. The 2005 Protest incorporated
the 2002 Protest and constitutes a protest to the proposed
disallowance of these items. The Debtors have requested that the
matter be referred for review for IRS Appeals and have requested
a conference with the Appeals Office.
With the exception of the matter with respect to the 2005
Protest, the Debtors need the Court's approval to enter into the
1993-1996 Settlement Agreement to settle all Federal tax issues
for the 1993-1996 tax years.
1990-1992 State Taxes
The COLI Closing Agreement resolved the only remaining Federal
tax issue in controversy with respect to the Debtors' 1990-1992
Federal tax audit. With the resolution of the 1990-1992 Federal
tax audit, the Debtors have determined that approximately $13
million of state taxes and interest due constitute Indemnified
Taxes. Thus, the Debtors seek the Court's approval to pay the
approximately $13 million in 1990-1992 State Indemnified Taxes.
Direction to Pay the 1993-1996 Settlement Agreement Taxes
A. Fresenius and Sealed Air Several Liability
Treasury regulations permit the IRS to seek payment of Federal
income tax and interest owed by a consolidated group from any
entity that joined in the filing of a consolidated return for the
taxable year at issue. Accordingly, Ms. Jones notes, the IRS may
seek payment of a substantial portion of those taxes from
Fresenius and Sealed Air which are currently unrelated entities,
but were members of the Debtors' consolidated group for Federal
income tax purposes during the taxable years at issue.
Fresenius was a member for the 1993 taxable year through
September 28, 1996. Sealed Air was a member for the 1993 taxable
year through December 31, 1996.
As a result of a corporate reorganization, the Debtors and
Fresenius entered into a Tax Sharing and Indemnification
Agreement on September 27, 1996, pursuant to which, among other
things, the Debtors are obligated to indemnify Fresenius for
certain Debtor-related Federal and state tax claims relating to
the tax years ending on or before September 28, 1996.
B. Fresenius Agreement and Indemnified Taxes
On February 6, 2003, the Debtors entered into a Settlement
Agreement and Release of Claims. For the most part, the
Fresenius Agreement supercedes the Tax Sharing Agreement.
Under the Fresenius Agreement and subject to certain
preconditions, Fresenius agreed to pay, within five business days
after the Settlement Effective Date, $115 million as directed by
the Court for the benefit of the Debtors' Estates. The
Settlement Effective Date is the later of the effective date of
the Debtors' plan of reorganization, or the satisfaction or
waiver of all preconditions to the Fresenius Payment. One
precondition to the Fresenius Payment is that the Fresenius Group
be released from all Grace-related Claims, including all
Indemnified Taxes. "Indemnified Taxes" include all taxes of the
Debtors with respect to any tax period ending on or before
December 31, 1996.
All of the Federal and state taxes owing pursuant to the 1993-
1996 Settlement Agreement qualify as Indemnified Taxes under the
Fresenius Agreement. Because the taxes owing under the 1993-1996
Settlement Agreement include taxes relating to the carry-back of
certain tax attributes arising in the short period beginning
September 29, 1996, through December 31, 1996, and carried back
to the 1993 through September 28, 1996, taxable periods, the
taxes attributable to the 1996 Short Year are also 1993-1996
Settlement Agreement Indemnified Taxes. In addition,
approximately $13 million of estimated state taxes for the 1990-
1992 tax period would be included in Indemnified Taxes.
The Fresenius Agreement gives W.R. Grace & Co..-Conn. the sole
authority to act with respect to Indemnified Taxes. However,
under the Fresenius Agreement, none of the Debtors may
voluntarily agree to the payment, assessment or other resolution
of any Indemnified Taxes prior to the Settlement Effective Date,
unless (a) the Debtors have obtained the Court's authority to pay
in full any Indemnified Taxes pursuant to a final determination
or (b) Fresenius has consented in writing to that agreement by
the Debtors. Furthermore, pursuant to the order by then District
Court Judge Alfred Wolin approving the Fresenius Agreement, the
Debtors are authorized to make any payment of Indemnified Taxes
in connection with any settlement of taxes.
IRS Settlement is Warranted
Ms. Jones tells Judge Fitzgerald that entering into the 1993-1996
Settlement Agreement and paying the resulting tax liability
conforms to the requirements of the Fresenius Agreement.
Moreover, the Settlement and Payment will also cut off the
running of interest at the IRS' high interest rates and thus save
the Debtors between $3.68 million and $6.25 million annually.
The Agreement also resolve all IRS audit issues for the 1993-1996
Tax Audit except for a single issue with respect to which the
Debtors have filed a protest requesting IRS administrative
review.
Currently, interest is accruing at the Federal penalty large
corporate underpayment rate of 7%. Whereas the interest rate
charged under the Debtors' DIP Facility is 2% over the London
Interbank Offered Rate or approximately 4% from July 1, 2004,
through December 31, 2004. In addition, the Debtors earned
approximately 1.9% on cash deposits during that same period.
Non-payment of the Indemnified Taxes results in approximately a
3% point increase in interest expense comparing the Hot Interest
Rate with the DIP rate and approximately a 5.1% increase in
expense when comparing the Hot Interest Rate to the percentage
earned on cash deposits. Eliminating the Hot Interest Rate
would, therefore, save the Debtors' Estates at least $3.68
million annually and as much as $6.25 million annually in
interest expense.
If the Debtors are not directed to pay the Indemnified Taxes and
the Federal government seeks payment from Fresenius resulting in
Fresenius' payment of the Indemnified Taxes, the Debtors become
unconditionally obligated to repay that amount to Fresenius, with
interest calculated from the date of payment at the Hot Interest
Rate. If not repaid prior to the Settlement Effective Date, the
Indemnified Taxes, plus accrued interest, will either be an
Allowed Administrative Claim or subject to set-off against the
Fresenius Payment.
Headquartered in Columbia, Maryland, W.R. Grace & Co., --
http://www.grace.com/-- supplies catalysts and silica products,
especially construction chemicals and building materials, and
container products globally. The Company and its debtor-
affiliates filed for chapter 11 protection on April 2, 2001
(Bankr. Del. Case No. 01-01139). James H.M. Sprayregen, Esq., at
Kirkland & Ellis, and Laura Davis Jones, Esq., at Pachulski,
Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the
Debtors in their restructuring efforts. (W.R. Grace Bankruptcy
News, Issue No. 81; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
XTREME COS: Inks Distribution Pact with Challenge Offshore
----------------------------------------------------------
Xtreme Companies, Inc. (OTC Bulletin Board: XTME) has acquired the
exclusive marketing and distribution rights from Marine Holdings,
Inc. d/b/a Challenger Offshore, for their semi-custom "CHALLENGER"
line of fiberglass boats. MHI offers a model range of 19' to 97'
in length, which includes leisure, performance and fishing boats
as well as motor yachts. In exchange for the exclusive rights,
Xtreme paid MHI shareholders 557,275 restricted shares of Xtreme
common stock. Furthermore, Xtreme retains the right to acquire
100% of the outstanding shares of MHI in 12 months in exchange for
an additional 20% of the outstanding shares of Xtreme at that
time. MHI generated un-audited revenue in 2004 of approximately
$2 million. Together with MHI's primary bank lender, Xtreme will
assist in financing the production of Challenger boat sales and
MHI's operations.
Xtreme Chairman Michael Novielli stated, "This agreement with MHI
is a tremendous milestone for Xtreme. With the "CHALLENGER" line,
we have added a potent and diverse product offering to our current
lines of Fire Rescue and Patrol marine vehicles. We believe that
this transaction dramatically changes the scope of our Company."
Xtreme CEO Kevin Ryan stated, "The "CHALLENGER" line of boats
enjoys a stellar reputation within the industry. We are genuinely
excited about the opportunities now available to Xtreme as a
result of this deal. We have acquired the marketing and
distribution rights to a valuable franchise which I believe will
yield a significant return to our shareholders and investors."
MHI President Ron DiBartolo commented, "I am truly delighted about
this partnership. Our plan is to continue with our core
competencies in our vertical markets, but we also plan a
horizontal push to develop other considerable opportunities. We
are aggressively pursuing the establishment of a significant
dealer network domestically as well as internationally." He
added, "I believe we are a perfect complement to Xtreme and look
forward to marked achievements resulting from the convergence of
resources from both our organizations."
Xtreme Companies also disclosed the relocation of its operations
from Stanton, CA to MHI's 65,000 square foot, 12 acre
manufacturing facility located in Washington, Mo., approximately
50 miles west of St. Louis.
About Marine Holdings, Inc.
Marine Holdings, Inc., d/b/a Challenger Offshore --
http://www.challengeroffshore.com/-- manufactures semi-custom
fiberglass boats of 19' to 97' in length, which include family,
performance, fishing and motor yachts. Buyers of the "CHALLENGER"
product line are generally 3rd, 4th and 5th time buyers who are
knowledgeable purchasers of quality marine products. The Company
is best known for their products that compete directly with the
industry's largest boat producers. Internationally known race
driver and designer Don Aronow, credited as being the architect of
the performance boat industry, designed and created some of the
hull technologies today used by Challenger Offshore. Mr. Aronow
has also been credited with creating companies such as Cigarette,
Donzi, Formula, Apache and Magnum.
About Xtreme Companies, Inc.
Xtreme Companies, Inc. -- http://www.xtremecos.com/-- is engaged
in manufacturing and marketing of mission-specific fire and rescue
boats used in emergency, surveillance and defense deployments.
The boats have been marketed and sold directly to fire and police
departments, the U.S. Military and coastal port authorities
throughout the United States.
At Sept. 30, 2004, Xtreme Companies' balance sheet showed a
$1,201,029 stockholders' deficit, compared to a $739,249 deficit
at Dec. 31, 2003.
YUKOS OIL: Asks District Court to Stay Dismissal Order
------------------------------------------------------
Yukos Oil Company asks the U.S. District Court for the Southern
District of Texas to stay Judge Letitia Z. Clark's order
dismissing its Chapter 11 case pending resolution of its appeal.
Zack A. Clement, Esq., at Fulbright & Jaworski L.L.P., tells
District Court Judge Nancy F. Atlas that the request could be
Yukos' last chance to survive as a going concern. Mr. Clement
explains that efforts to dismember the company have accelerated
since the Bankruptcy Court issued its dismissal order on February
24, 2005.
According to Mr. Clement, Yukos has already suffered the effects
of lack of bankruptcy protection. Mr. Clement proceeded to
apprise the District Court of the events that occurred since the
Dismissal Order was issued:
-- Ingosstrakh Insurance Company and AIG Russia Insurance
Company cancelled Yukos' directors' and officers'
liability policies;
-- Additional criminal charges were filed against management
in Russia;
-- Yukos' appeal of the reassessment of its 2002 taxes was
denied by the Moscow Arbitrazh Court of Appeals;
-- Gazprom merged with Rosneft;
-- Rosneft threatened suit unless pays the $3.8 billion in
receivables that were payable by Yukos to Yuganskneftegas;
-- According to published reports, the Russian Government is
planning to take more assets.
"Without a stay pending appeal, essentially reinstating the
automatic stay in Yukos' Chapter 11 case, Yukos may well be
completely destroyed before this appeal can be completed," Mr.
Clement says.
Mr. Clement reminds Judge Atlas that the Bankruptcy Court did not
make the finding required under Section 1112(b) of the Bankruptcy
Code that dismissal would be in the best interests of creditors
and the estate. Mr. Clement contends that there is no evidence
that dismissal would best serve Yukos' creditors or its estate.
Hulley Enterprises, Ltd., Yukos Universal, Ltd., and Moravel
Investments, Ltd., agree that the stay should be imposed pending
the appeal of the Dismissal Order. William L. Medford, Esq., at
Greenberg Traurig, LLP, in Dallas, Texas, explains that absent a
stay, it is likely that one or more creditors or third parties
would take actions prior to the orderly resolution of the appeal
that will continue to eliminate any possibility for Yukos to
restructure and continue as a viable commercial entity.
Hulley and Universal together own 51% shares of Yukos stock.
Hulley owns 1,090,043,968 shares and Universal owns 50,340,995
shares.
Moravel is an affiliate of Hulley and a creditor of Yukos. Based
on Yukos' schedules of assets and liabilities, Moravel is owed
$804,875,408 in prepetition debts. The amount constitutes 54.4%
of the Debtor's general unsecured bank and trade debt.
Deutsche Bank Objects
Deutsche Bank AG wants the request denied.
J. Gregory St. Clair, Esq., at Skadden, Arps, Slate, Meagher &
Flom LLP, in New York, tells Judge Atlas that Yukos cannot
demonstrate that the Bankruptcy Court abused its discretion in
dismissing Yukos' case. Yukos failed to offer a single reason --
legal or factual -- for the District Court to grant the stay.
Yukos failed to establish any post-dismissal factual developments
that would require reversal of the Bankruptcy Court's Dismissal
Opinion or would render the Bankruptcy Court's findings clearly
erroneous.
Mr. St. Clair also points out that Yukos identified no untested
legal questions or divergence of authority in the Fifth Circuit
that would cast doubt on Judge Clark's ruling. Yukos also failed
to demonstrate any chance for success on the merits of its appeal.
Mr. St. Clair asserts that Yukos' bankruptcy petition was a last-
gasp attempt to avoid tax consequences in Russia. The petition,
Mr. St. Clair says, was filed on behalf of "a foreign holding
company with essentially no customers, suppliers, employees or
actual operations in Russia or elsewhere."
Mr. St. Clair also notes that Judge Clark was compelled to issue a
temporary restraining order to halt the December 2004 auction of
Yuganskneftegas as the bankruptcy petition was filed on the eve of
the auction and she had no time, information or opportunity to
effectively cross-examine witnesses. Nonetheless, the Russia
Government ignored the TRO and went on with the auction.
In determining whether dismissal of Yukos' case was appropriate
under Section 1112(b), Mr. St. Clair informs Judge Atlas that the
Bankruptcy Court listened to numerous witnesses and examined
records. Accordingly, the Bankruptcy Court's decision is
substantially based on critical findings of fact.
In determining what constitutes "cause" under Section 1112(b), Mr.
St. Clair contends that a court has judicial discretion to
evaluate the totality of the circumstances and use its equitable
powers to reach an appropriate result in individual cases.
According to Mr. St. Clair, Yukos is misstating the standard of
dismissal under Section 1112(b). Yukos insists that Section
1112(b) permits dismissal for cause only when it is in the best
interest of creditors and the estate.
In essence, Mr. St. Clair says Yukos is attempting to collapse a
two-step analysis --
(i) whether "cause" exists for dismissal or conversion of a
case; and
(ii) if "cause exists, whether it better serves the interests
of the estate to dismiss or convert the case
-- into a single gravamen, namely the best interests of the
estate.
However, before considering the best interests of creditors, Mr.
St. Clair contends, a court must first determine whether cause
exists to convert or dismiss the case (In re Mech. Maint., Inc.,
128 B.R., 382, 386 (E.D. Pa. 1991)). Only if a court finds that
cause exists will the court then consider which option --
conversion or dismissal -- is in the best interests of creditors
(In re Original IFPC S'holders, Inc., 317 B.R. 738, 753 (Bankr.
N.D. Ill. 2004)).
Yukos' assertion that it will be irreparably harmed does not
justify granting a stay. Mr. St. Clair points out that courts
routinely hold that the potential for an appeal to become moot
does not constitute irreparable harm (In re Convenience USA, Inc.,
290 B.R. 558, 563 (Bankr. M.D.N.C. 2003)). Moreover, the mere
potential for harm is never irreparable. Mr. St. Clair notes that
the court in Nuclear Regulatory Comm'n, 812 F.2d at 290, held that
"the harm alleged must be both certain and great, rather than
speculative or theoretical.
Mr. St. Clair also argues that each attempt by Yukos to press its
case in a U.S. court interferes with judicial proceedings in
Russia and the Russian Federation's administration of its own tax
laws, and thus directly contravenes public interest.
Yukos Should Post Bond
Deutsche Bank asserts that any stay should be conditioned on Yukos
posting an appeal bond in an amount sufficient to protect all
parties-in-interest from potential losses they might suffer as a
result of the appeal. Deutsche Bank believes that a $40,000,000
bond will provide adequate security to interested parties in the
case.
Mr. St. Clair tells the District Court that the amount is a mere
fraction of Yukos' own valuation of its assets. Based on filings
with the Bankruptcy Court, Mr. St. Clair says Yukos appears to
have sufficient liquid assets in accounts in Texas, including a
$35,000,000 in the registry of the Bankruptcy Court, to be able to
post the bond.
District Court Will Review Case
Judge Atlas said at a hearing March 9, 2005, that she will review
whether U.S. courts have jurisdiction over Yukos' case, Bloomberg
News reports. Judge Atlas said Yukos' case deserves careful
consideration and analysis in writing. Judge Atlas says she will
issue a written opinion by Mar. 18, 2005.
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. 15; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
* Cadwalader Names S. Sunshine, J. Biggio & D. Wales as Partners
----------------------------------------------------------------
Steven C. Sunshine, former head of Shearman & Sterling LLP's
worldwide Antitrust Practice and Antitrust Litigation Affinity
Group, and Jess Biggio and David P. Wales, Jr., former partners in
Shearman & Sterling LLP's Antitrust Practice Group, have joined
Cadwalader, Wickersham & Taft LLP as partners in the Litigation
Department.
Mr. Sunshine will lead the Antitrust Practice Area within the
Litigation Department. He will reside in the firm's Washington
office, as will Mr. Wales; Ms. Biggio will be resident in the
firm's New York office. Mr. Sunshine, Ms. Biggio and Mr. Wales
represent domestic and foreign clients in connection with
antitrust aspects of mergers and acquisitions, litigation,
counseling, joint ventures, distribution arrangements, and grand
jury investigations and regularly appear before the U.S.
Department of Justice, the Federal Trade Commission, state
antitrust enforcement authorities, foreign authorities, and
federal courts. They have worked on numerous high-profile
antitrust litigations and criminal matters for clients including
De Beers Centenary AG and Syngenta and transactions including
SmithKline Beecham's merger with Glaxo-Wellcome, Bell Atlantic's
merger with NYNEX, and the Rhone-Poulenc/Hoechst merger forming
Aventis.
"I am delighted to welcome Steve, Jess and Dave to the firm and to
announce the creation of our Antitrust Practice Area, an
integrated full service antitrust practice," stated Robert O.
Link, Jr., Cadwalader's Chairman and Managing Partner. "By
allowing us to identify potential antitrust needs, the Antitrust
Practice Area will add value and bolster the client services
offered to our client base by our Litigation and Corporate
Departments."
"Steve, Jess and Dave are leading practitioners who collectively
bring high profile experience in each substantive area of
antitrust work to the firm -- mergers, litigation and criminal
antitrust. Their expertise bolsters our litigation practice while
also providing needed anti-trust and regulatory support to our
mergers and acquisitions team," stated Greg Markel, Chair of
Cadwalader's Litigation Department.
"We are looking forward to teaming with Cadwalader's already
strong securities, business fraud/white collar crime, and
insurance and reinsurance litigators in both the Washington and
New York offices and with its premier M&A lawyers. With the
creation of an integrated full service antitrust practice, fully
linked to the litigation as well as the corporate practice, we
will be able to provide an integrated platform to Cadwalader
clients -- resulting in a full, one-stop shopping 'legal'
experience," stated Mr. Sunshine.
Prior to joining Shearman & Sterling, Mr. Sunshine served as the
Deputy Assistant Attorney General for the Antitrust Division of
the U.S. Department of Justice, where he supervised the Division's
merger enforcement program. He received his B.A. from Brown
University in 1981 and his J.D., magna cum laude, from Boston
College Law School in 1984, where he was a member of the Boston
College Law Review and Order of the Coif. He is admitted to
practice in New York, the District of Columbia, and before the
Untied States District Courts for the Southern District of New
York and the District of Columbia.
Ms. Biggio joined Shearman & Sterling in 1993 and became a partner
in 2001. She received her B.A. from Carleton College in 1990 and
her J.D., cum laude, from the University of Minnesota Law School
in 1993, where she was a member of the International Moot Court.
She is admitted to practice in New York and the District of
Columbia.
Mr. Wales joined Shearman & Sterling as an associate in 1995.
From 2001 to 2003, he served as Counsel to the Assistant Attorney
General for the Antitrust Division at the U.S. Department of
Justice, where he supervised the review of pending cases and
handled policy matters. He returned to Shearman & Sterling as a
partner in 2004. Mr. Wales received his B.A. from Pennsylvania
State University in 1992 and his J.D., magna cum laude, from
Syracuse University College of Law in 1995. He was a member of
the Syracuse Law Review and Order of the Coif. He is admitted to
practice in New York and the District of Columbia.
Cadwalader, Wickersham & Taft -- http://www.cadwalader.com/--
established in 1792, is one of the world's leading international
law firms, with offices in New York, London, Charlotte, and
Washington. Cadwalader serves a diverse client base, including
many of the world's top financial institutions, undertaking
business in more than 50 countries in six continents. The firm
offers legal expertise in securitization, structured finance,
mergers and acquisitions, corporate finance, real estate,
environmental, insolvency, litigation, health care, banking,
project finance, insurance and reinsurance, tax, and private
client matters.
* Marshack Shulman Changes Firm Name to Shulman Hodges & Bastian
----------------------------------------------------------------
The law firm formerly known as Marshack Shulman Hodges & Bastian
LLP has changed its name to Shulman Hodges & Bastian LLP.
The firm's name change is the product of the firm's buyout of its
founding partner, Richard Marshack, and is in furtherance of the
firm's evolution into a full-service law firm. Mr. Marshack will
remain as Of Counsel to the firm under a new 5-year agreement
executed last week. "Richard Marshack has been a bankruptcy
trustee in Orange County for nearly 20 years and his name is
practically synonymous with bankruptcy here. The problem has
been, however, that many people may have viewed us as a one trick
pony - which is hardly the case, especially now. For the past
several years, we have expanded our practice areas to include all
types of litigation matters, business formation, estate planning,
real estate, mergers and acquisitions, finance and most recently,
intellectual property," said the firm's managing partner, Leonard
Shulman. "By changing the name we are able to shake the
bankruptcy stereotype and increase our client base. We needed to
show our diversity and depth of talent as a full-service firm,"
added Ronald Hodges, who heads the firm's litigation department.
For the last few years, Mr. Marshack has assumed a smaller role
within the firm reflecting his desire to focus on his trustee
practice and clients and spend more time with his family. He is
very pleased with his current situation, "I am very proud of the
firm and what we have been able to accomplish. Len, Ron and Jim
(Bastian) have done a remarkable job with this place and I am
thrilled to be a part of it. I understand the need for the name
change and think it makes sense for the firm."
The firm is hardly abandoning its bankruptcy roots. James
Bastian, who heads the firm's bankruptcy practice, said, "We are
every bit the bankruptcy firm we always have been. We have
several attorneys and paralegals who work on bankruptcy and
insolvency matters full time and they are very busy. I intend to
work closely with Richard to keep our department busy, which is
very possible - even in this economy. Ironically, our diversity
has actually contributed to the growth of our bankruptcy
practice."
According to Mr. Shulman, the recent changes at Shulman Hodges &
Bastian LLP reflect the true growth of the firm, both in quality
and quantity. The firm opened its Riverside office in early 2004
and has recently added new partners, associates and staff to
address its growing practice. "We have to be flexible to meet our
client's needs. Our practice grew in the Inland Empire, so we
opened our office in Riverside. Our clients have increasingly
wanted us to become a 'one stop shop' for all their legal needs,
so we have added the talent to meet this objective. We have been
fortunate to be able to tap some very talented people in the last
few years and our clients have benefited."
About Shulman Hodges & Bastian LLP
The firm was founded in the early 1990s by Richard Marshack, a
bankruptcy trustee in Orange County since 1985. By the mid to
late 1990s, the firm had evolved into a full-service bankruptcy
law firm whose growth rate outpaced that of the local economy.
Leonard M. Shulman joined the firm in the mid '90s to expand the
firm's bankruptcy trustee and litigation practice. Ronald S.
Hodges joined the firm in 1995 and immediately contributed a depth
and breadth to the firm's then emerging litigation department,
which continues to expand today.
As the firm matured through the 1990s, new clients and partners
were added, including James C. Bastian, who was named partner in
1999. Mr. Bastian specializes in a variety of insolvency and
bankruptcy related matters, and with Mr. Marshack, successfully
led trade vendors through the unprecedented County of Orange
bankruptcy proceedings, in fact, recovering 100 cents on the
dollar for this constituency.
Throughout the firm's expansion, Shulman Hodges & Bastian LLP has
earned its reputation as one of the finest law firms of its kind,
not only in Southern California, but throughout the region. The
business community has recognized that the firm's team is bright,
vibrant, quick thinking and able to devise solutions to severe and
complex problems. Practice areas handled by the firm include:
general and business litigation, real estate, business
reorganization, bankruptcy litigation, employment law, business
organizations and transactions, estate planning, and intellectual
property.
* Sheppard Mullin Names Robert Beall as Administrative Partner
--------------------------------------------------------------
Sheppard, Mullin, Richter & Hampton LLP disclosed that Business
Trial Practice Group leader Robert Beall has been appointed
administrative partner of the firm. Mr. Beall, based in the
Orange County office, will work closely with the firm's chair, Guy
Halgren, in this newly created position.
"We are delighted to appoint Robert as the firm's administrative
partner. He has endless enthusiasm and has done a superior job of
managing the firm's very large and diverse Business Trial Practice
Group, which he will continue to lead," said Mr. Halgren. "Since
I became chairman four years ago, the firm has grown from four to
nine offices and from 292 to 440 attorneys, and we now have
offices on both coasts. As we continue this level of growth, it's
clear that we need additional strength at the management level."
Mr. Beall stated, "I am looking forward to this increased
responsibility and working closely with Guy on firmwide management
issues. I will be spending significant time working with the
firm's Practice Groups to make them more effective and to increase
coordination among them. Other immediate responsibilities which
will be a priority for me are working on the firm's client service
initiative, helping to integrate laterals, and working with the
associate development and recruiting partners."
Mr. Beall specializes in complex civil litigation and intellectual
property disputes, with emphasis in unfair competition,
securities, trade secret, patent and professional liability
litigation. He has extensive experience handling large class
action lawsuits, including class and representative actions filed
under Business and Professions Code Section 17200 and 17500 and
general business litigation matters in a wide range of areas. Mr.
Beall also has significant expertise in handling accountant
malpractice actions.
About Sheppard, Mullin, Richter & Hampton LLP
Sheppard, Mullin, Richter & Hampton LLP --
http://www.sheppardmullin.com/-- is a full service AmLaw 100 firm
with 430 attorneys in nine offices located throughout California
and in New York and Washington, D.C. The firm's California
offices are located in Los Angeles, San Francisco, Santa Barbara,
Century City, Orange County, Del Mar Heights and San Diego.
Sheppard Mullin provides legal expertise and counsel to U.S. and
international clients in a wide range of practice areas, including
Antitrust, Corporate and Securities; Entertainment and Media;
Finance and Bankruptcy; Government Contracts; Intellectual
Property; Labor and Employment; Litigation; Real Estate/Land Use;
Tax, Employee Benefits, Trusts and Estate Planning; and White
Collar Defense. The firm was founded in 1927.
* BOOK REVIEW: Entrepreneurship - Back to Basics
------------------------------------------------
Authors: Gordon B. Baty and Michael S. Blake
Publisher: Beard Books
Paperback: 308 pages
List Price: $34.95
Order your personal copy at
http://amazon.com/exec/obidos/ASIN/1587981408/internetbankrupt
Entrepreneurs have to wear many hats - CEO, CFO, marketing
manager, copywriter, bookkeeper, secretary, and at times
delivery boy or girl. Baty and Blake cover all of these. In
one section, they divide the many different positions and
tasks the entrepreneur has to fulfill, especially in the
early stages of a business, into the general categories of
entrepreneurs and custodians. "Entrepreneurial tasks involve
the setting up, planning, and motivational activities of the
firm." This uniquely entrepreneurial activity includes such
business matters as initiating market research, setting
budgets, and finding the right banker. Custodial tasks, on
the other hand, include tracking budget expenditures, buying
materials and supplies, supervising production or services,
and the like.
"As a rule, entrepreneurial tasks are much less delegable
than are custodial tasks." The authors make this fundamental
distinction so that the entrepreneur will understand the
different work necessary during the start-up or early phases
of a business, and not become so absorbed by custodial tasks
that the business suffers from losing the spark most
important to it. This distinction is important for the
entrepreneur to keep in mind in order to understand what
kinds of work to delegate if the business is to remain on a
sound footing and to grow properly. If the reader derives
nothing else from reading this book than this important
fundamental distinction between entrepreneurial and custodial
tasks, Baty and Blake's book will have proved valuable. The
distinction is useful in organizing the entrepreneur's frame
of mind, planning, leadership, and management.
But the authors offer much more than this. Both authors are
steeped in entrepreneurial enterprises. Baty has been
involved in founding, running, and financing entrepreneurial
businesses, including three high-tech firms, and has taught
entrepreneurship at MIT and Northeastern University. Blake
has worked with budding entrepreneurs in Russia, and has
other international experience in the field. Their treatment
of every conceivable topic of interest to the entrepreneur is
imbued with the right amount of overview, concrete
information, tips, and intangible considerations such as
having the right attitude even for routine but necessary
tasks, or establishing quality personal relationships with
key players such as employees, bankers and lawyers.
The authors' understanding of the personality of the
entrepreneur comes through in their treatment of each topic.
While recognizing that entrepreneurs may vary from doctors,
lawyers, and others who may work alone to inventors and
engineers who may build large companies from their ideas,
Baty and Blake understand that what ties them all together is
the desire for independence, control of their own destiny,
and a good income. The authors understand, too, the
enthusiasm of the entrepreneur for his work, and the
commitment and hopes entailed in entrepreneurship. This
understanding informs the subjects of the book. But the
authors also understand the limitations of the nature of the
entrepreneur, and they deal with these at appropriate points.
The very qualities contributing to an entrepreneur's creation
of a successful business usually work against him when it
comes to day-to-day management and the routine of sustaining
an established business. Thus, the authors also cover how
entrepreneurs can optimally leave their businesses if and
when it becomes necessary.
Baty and Blake note that there is really no apprenticeship
for being an entrepreneur. Working for other companies, even
small, entrepreneurial ones, cannot prepare an individual for
the unforeseen challenges and variety of demands, from
finance, to customer service, to balance between work and
personal life, and the responsibilities for employees and the
reputation of the business. Yet the authors manage to provide
the next best thing to an apprenticeship - namely, this
comprehensive, down-to-earth, readable book, as useful in its
guidance today as when it was first published in 1990.
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania,
USA, and Beard Group, Inc., Frederick, Maryland USA. Yvonne L.
Metzler, Emi Rose S.R. Parcon, Rizande B. Delos Santos, Jazel P.
Laureno, Cherry Soriano-Baaclo, Marjorie Sabijon, Terence Patrick
F. Casquejo and Peter A. Chapman, Editors.
Copyright 2004. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers. Information contained
herein is obtained from sources believed to be reliable, but is
not guaranteed.
The TCR subscription rate is $675 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same firm
for the term of the initial subscription or balance thereof are
$25 each. For subscription information, contact Christopher Beard
at 240/629-3300.
*** End of Transmission ***