/raid1/www/Hosts/bankrupt/TCR_Public/050419.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Tuesday, April 19, 2005, Vol. 9, No. 91
Headlines
AFC ENTERPRISES: Moody's Rates Proposed $250 Mil. Bank Loan at B1
AMERICAN WAGERING: Bankr. Appellate Panel Reverses Court Ruling
AMPEX CORP: Financial Restatements Delay Annual Report Filing
ARDENT HEALTH: Soliciting Consents to Amend Senior Note Indenture
ASSET BACKED: Fitch Puts Low-B Ratings on Classes M-10 & M-11
AVADO BRANDS: To Receive $251,000 from Lease Assignment
B.F. SAUL: Moody's Reviewing Low-B Ratings for Possible Upgrade
BAYTEX ENERGY: Various Concerns Cue S&P to Change Outlook to Neg.
BERKLINE/BENCHCRAFT: IPO Filing Prompts S&P to Watch Ratings
BREUNERS HOME: Trustee Wants to Hire Fox Rothschild as Counsel
BREUNERS HOME: Wants to Use Lender's Cash Collateral
CATHOLIC CHURCH: Stay Extended for St. George Until May 6
CATHOLIC CHURCH: Pachulski Can Represent Spokane Tort Committee
CATHOLIC CHURCH: Spokane Will Give Sealed Files to Tort Committee
CELLNET TECHNOLOGY: Moody's Rates New $380M Sr. Sec. Debts at B3
CHENIERE ENERGY: Moody's Rates New $500M Sr. Unsec. Notes at B3
CHESAPEAKE ENERGY: Offering $600M Sr. Notes via Private Placement
CHESAPEAKE ENERGY: Moody's Rates $600M Senior Unsec. Notes at Ba3
CIRTRAN CORP: Losses & Deficit Trigger Going Concern Doubt
COMBINED PENNY: Board of Directors Votes to Liquidate Fund
COMMERCE ONE: Wants Until May 4 to File a Chapter 11 Plan
COPAMEX: Fitch Affirms Senior Unsecured Currency Rating at BB-
COSINE COMMS: Auditors Express Going Concern Doubt
CRC HEALTH: Moody's Rates Planned $230M Sr. Sec. Facilities at B2
CRC HEALTH: S&P Rates Proposed $230M Senior Loan Facility at B+
CREDIT SUISSE: Moody's Pares Rating on Class J-ALL Certs. to Ba1
CYPRESS COMMS: Deloitte Express Going Concern Doubt in Form 10-K
DELAFIELD 246 CORP: Wants Steven Cohn as Bankruptcy Counsel
DII INDUSTRIES: Asbestos PI Trust Divests Shares in Halliburton
DONOVAN ELECTRIC: Case Summary & 20 Largest Unsecured Creditors
DYNEGY INC: Inks Comprehensive Shareholder Class Action Settlement
DYNEGY INC: Settlement Prompts Fitch to Hold Junk Ratings
EURAMAX INTERNATIONAL: GSCP Merger Cues S&P to Watch Low-B Ratings
FC CBO: Moody's Reviewing B3 Rating on $37.75M Class B Notes
FIRST FRANKLIN: Moody's Puts Ba1 Rating on $12.3M Class B-4 Certs.
GARDNER DENVER: S&P Puts B Rating on Proposed $125M Sr. Sub. Notes
HARBOURVIEW: Fitch Puts $26.3M Notes' B- Rating on Watch Negative
HARTWICK COLLEGE: Moody's Affirms Ba1 Long-Term Rating
HAWAIIAN AIRLINES: Appoints David Arakawa as General Counsel
HAYES LEMMERZ: Amends & Restates Credit Agreement
INTEGRATED BUSINESS: Dec. 31 Balance Sheet Upside-Down by $4.5-Mil
INTERACTIVE BRAND: iBill Pays Clients $41.6M in Cash & Term Notes
KAISER ALUMINUM: Insurers Object to Liquidation Plans
KAISER ALUMINUM: Committee Wants Liverpool's Protest Overruled
KRAMONT REALTY: Completes Merger with Centro Properties
LAC D'AMIANTE: Look for Bankruptcy Schedules on May 31
LAC D'AMIANTE: Jordan Hyden Approved as Bankruptcy Counsel
LEAP WIRELESS: Noteholders Agree to Waive Reporting Delays
LEOMINSTER MATERIALS: Case Summary & Largest Unsecured Creditors
LIFEPOINT HOSPITALS: Completes Province Healthcare Acquisition
LONG BEACH: Losses Prompt S&P to Junk Ratings on M-3 Class Certs.
MARLIN LEASING: Fitch Upgrades Two Low-B Equipment Contract Notes
MRO DIRECT: Case Summary & 19 Largest Unsecured Creditors
MOBIFON HOLDINGS: Strong Performance Prompts S&P to Lift Ratings
MUNAF B. KANCHWALA: Case Summary & 20 Largest Unsecured Creditors
NAPIER ENVIRONMENTAL: Has Until May 2 to File Creditors' Proposal
NATIONAL BENEVOLENT: Wants to Sell Oil & Gas Interests for $1.6MM
NATIONAL BENEVOLENT: Joint Plan of Reorganization Takes Effect
NATIONSRENT COS: Moody's Junks Proposed $150M Senior Unsec. Notes
NATIONSRENT COS: S&P Puts B- on Proposed $150M Sr. Unsec. Notes
NFB FOODWORKS: Case Summary & 20 Largest Unsecured Creditors
NOVA CHEMICALS: Will Release First Quarter Report Tomorrow
PAXSON COMMS: Moody's Revises Outlook on Low-B Ratings to Negative
PC LANDING: Can Continue Using Cash Collateral Until May 31
PEGASUS SATELLITE: Wants to Assume & Assign Contracts to Purchaser
PRESIDENT CASINOS: Completes $82 Million Sale of Biloxi Assets
REAL MEX: Extends 10% Senior Secured Debt Offering Until Friday
RIVERWEST DEV'T: Case Summary & 22 Largest Unsecured Creditors
SECURUS TECHNOLOGIES: Filing Delay Cues S&P to Hold Low-B Ratings
SITELITE HOLDINGS: Case Summary & 20 Largest Unsecured Creditors
SOUNDVIEW HOME: Moody's Assigns Ba2 Rating to Class B-1 Certs.
SYDNEY STREET: Fitch Rates EUR20 Mil. Floating-Rate Notes at BB+
TOWER AUTOMOTIVE: Closes Three Facilities to Reduce Costs
UNUMPROVIDENT CORP: Moody's Revises Rating Outlook to Negative
USGEN NEW ENGLAND: Court Sets Confirmation Hearing for May 12
W.R. GRACE: Asks Court to OK Hatco Settlement & Remediation Deals
WHITING PETROLEUM: Moody's Puts B2 Rating on $220M Sr. Sub. Notes
* Chadbourne & Parke Forms U.S. Hispanic Practice Group
* Randall Lambert & Brent Williams Join Saybrook Capital
* Large Companies with Insolvent Balance Sheets
*********
AFC ENTERPRISES: Moody's Rates Proposed $250 Mil. Bank Loan at B1
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Moody's Investors Service assigned a rating of B1 to the proposed
$250 million bank loan of AFC Enterprises, confirmed all other
ratings at existing levels, and assigned a positive rating
outlook. New bank loan borrowings, together with proceeds from
the recent sale of Church's to Cajun Funding Corp (senior implied
rating of B2), principally will be used to make a sizable
shareholder transaction and to repay the balance of the existing
bank loan. Negatively impacting the company's ratings are the
challenges in monitoring a far-flung franchisee network and the
challenges in competing against several solid quick service
restaurant operators as the company expands its offering beyond
bone-in chicken. In spite of the substantial debt burden, the
steadiness of royalty receipts from the diverse network of
franchisees and Moody's expectation that a meaningful free cash
flow surplus will consistently be generated prompt the belief that
ratings could go up over the medium-term. This concludes the
review for upgrade that commenced on November 5, 2004.
This rating is assigned:
-- $250 million secured bank facility at B1
Ratings confirmed are:
-- $131 million secured bank facility at B1,
-- Senior implied rating at B1, and the
-- Issuer rating at B2.
The rating outlook is positive. Ratings on the existing bank loan
will be withdrawn following completion of the contemplated
transaction.
The ratings recognize the challenges in broadening consumer demand
beyond the mature bone-in chicken category, the need to monitor
the operations and performance of many franchisee stores over a
widespread network, and the exposure to volatile commodity costs
for chicken. Also adversely impacting the company's credit
quality are limited tangible asset coverage for nominally secured
debt, current and potential competition with respected restaurant
operators such as the KFC unit of YUM! Brands (senior unsecured of
Baa3) and McDonald's (senior unsecured of A2), and the relatively
small size of the company's revenue base.
However, the ratings also consider Moody's expectation that the
company will generate meaningful free cash flow surpluses over the
next several years given limited corporate-store development plans
and expected growth in high-margin franchisee royalties, the
stable revenue model derived from a diverse franchisee network
paying royalties, and the removal of menu and geography
restrictions following divestiture of the competing brand
Church's. The domestic and international development potential of
the brand as a differentiated operator of quick-service chicken
restaurants and the medium-term flexibility of most capital
expenditures also support the credit.
The positive outlook reflects Moody's expectation that the
company's pro-forma financial profile will tangibly improve in
2005 and 2006 as:
(1) the strategy to broaden the menu increases average unit
volume,
(2) franchisees open many successful new stores, and
(3) a substantial portion of discretionary cash flow is used
for prudent purposes such as improving the balance sheet.
Factors that could cause ratings to stabilize at current levels
include the inability to grow average unit volume, financial
difficulties at a meaningful proportion of franchisees, or
failure to improve debt protection measures. Over the next 18 to
24 months, ratings could move upward as financial flexibility
strengthens (such as growing the scale of the revenue base,
improving fixed charge coverage to at least 3 1/2 times, and
reducing lease adjusted leverage to near 3 1/2 times), average
unit volume and store operating margin at corporate and franchisee
stores makes progress, and franchisees are prudent in their
operating and financial policies.
The B1 rating on the proposed secured credit facility (to be
comprised of a $75 million Revolving Credit Facility and $175 Term
Loan) considers that these notes are guaranteed by all operating
subsidiaries and are secured by a first-lien on substantially all
of the company's assets. The security does not result in notching
above the senior implied rating because of:
(1) Moody's belief that collateral orderly liquidation value is
modest in relation to the debt balance, and
(2) the lack of a meaningful junior debt class that would
absorb the first loss in a distressed scenario.
In a hypothetical default scenario with the revolving credit
facility fully utilized, Moody's expects that recovery would rely
on ongoing enterprise value given likely liquidation proceeds
relative to book value for significant assets such as restaurant
equipment, leasehold improvements, goodwill, and trade names.
Pro-forma lease adjusted leverage for the year ending December
2004 was solid for the assigned ratings at about 4 times and fixed
charge coverage was about 3 times. Restaurant margin of about 11%
in 2004 was somewhat lower than the historical norm mostly because
of a spike in chicken prices. Comparable store sales have been
fairly flat for the previous several years. As average unit
volume grows from menu diversification and franchisees open
additional stores, the ratings anticipate that revenue, net
income, and free cash flow will grow at a healthy pace over the
next several years.
AFC Enterprises, Inc, headquartered in Atlanta, Georgia, operates
or franchises about 1,825 Popeyes Chicken & Biscuits Restaurants.
The company sold Cinnabon in November 2004 and Church's in
December 2004. For the 12 months ending December 2004, revenue
for Popeyes equaled $147 million.
AMERICAN WAGERING: Bankr. Appellate Panel Reverses Court Ruling
---------------------------------------------------------------
The Bankruptcy Appellate Panel for the 9th Circuit Court of
Appeals ruled in favor American Wagering, Inc. (OTC Bulletin
Board: BETM) regarding the Racusin subordination matter.
On April 14, 2005, the Panel reversed a bankruptcy court order and
ruled that the debt owed to Michael Racusin dba M. Racusin & Co.
is subordinated pursuant to the provisions of Section 510(b) of
the U.S. Bankruptcy Code. As a result, the debt to Racusin will
be paid in the form of 250,000 shares of the Company's common
stock rather than $2.8 million in cash.
Victor Salerno, the Company's CEO and President, said, "We are
very pleased with this affirmation from the Bankruptcy Appellate
Panel; we always believed that Racusin bargained for stock and
should, therefore, receive stock rather than cash. In addition,
we had earmarked funds for the payment of the Racusin claim and
this ruling will allow us to reinvest that money back into the
Company instead. With these funds now at our disposal, we are
more confident than ever that we will be able to implement our
strategies to grow the Company and increase shareholder value in
the long term."
Pursuant to the terms of the settlement agreement between Racusin
and the Company, Racusin retains the right to appeal the Panel's
decision to the 9th Circuit Court of Appeals. In the event of an
appeal, a final decision could be delayed by 12 to 36 months.
Headquartered in Reno, Nevada, American Wagering, Inc. --
http://www.americanwagering.com/main.html-- owns and operates a
number of subsidiaries including, but not limited to, (1) Leroy's
Horse and Sports Place, which operates 47 race and sports books
licensed by the Nevada Gaming Commission, giving it the largest
number of books in the state; (2) Computerized Bookmaking Systems,
the dominant supplier of computerized sports wagering systems in
the state of Nevada; and (3) AWI Manufacturing (formerly AWI Keno)
is licensed by the Nevada Gaming Commission as a manufacturer and
distributor, and has developed a self-service race and sports
wagering kiosk. The Company filed for chapter 11 protection on
July 25, 2003 (Bankr. D. Nev. Case No. 03-52529). Thomas H. Fell,
Esq., at Gordon & Silver, Ltd., represents the Debtor in its
restructuring efforts. When the Debtor filed for bankruptcy, it
listed $13,694,623 in total assets and $13,688,935 in total debts.
As reported in the Troubled Company Reporter on March 15, 2005,
American Wagering and Leroy's Horse & Sports Place, Inc., a wholly
owned subsidiary of AWI, consummated the Restated Amended Joint
Plan of Reorganization and have formally emerged from Chapter 11.
AWI and Leroy's officially concluded the process after completing
all required actions and satisfying all remaining conditions of
the Plan, which was confirmed by the U.S. Bankruptcy Court for the
District of Nevada on February 28, 2005.
AMPEX CORP: Financial Restatements Delay Annual Report Filing
-------------------------------------------------------------
Ampex Corporation (OTCBB:AEXCA) will be late in filing its 2004
Annual Report on Form 10-K with the SEC, which was due Friday,
Apr. 15, 2005. The Company currently expects that the Report will
be filed early this week. The Company stated that the delay in
filing was due to the inability of the Company's former auditors
to complete their audit of the Company's restated financial
statements to be included in its 2003 Form 10-K/A. Once
completed, the Company will then file its 2004 Form 10-K. The
Company expects the audit reports for both 2003 and 2004 to be
unqualified. As previously reported, the Company was required to
restate its 2003 financial statements, as well as its quarterly
financial statements for the interim periods ended March, June and
September 2004, to correct the accounting for the pension
obligations of a former subsidiary that was sold in 1995.
Ampex reported preliminary unaudited 2004 financial results on
March 31, 2005. On April 10, 2005, the Company was notified that
its estimated share of costs to be incurred to remediate
environmental damage at a disposal site used by its former Media
subsidiary had increased by approximately $700,000 from amounts it
had previously recognized. As a result, the Company increased its
Loss from Discontinued Operations by $700,000 to a total of
$2.1 million for the year ended December 31, 2004. While there
has been no change to reported income from continuing operations
of $48.5 million or $12.73 per diluted share for the year ended
December 31, 2004, the Company now reports Undistributed Income
Applicable to Common Stockholders of $46.4 million or $12.17 per
share as a result of the adjustment discussed above. All other
amounts reported in our press release dated March 31, 2005 remain
unchanged.
About the Company
Ampex Corporation -- http://www.ampex.com/-- headquartered in
Redwood City, California, is one of the world's leading innovators
and licensors of technologies for the visual information age.
At September 30, 2004, Ampex Corporation's balance sheet showed a
$139,695,000 stockholders' deficit, compared to a $136,137,000
deficit at December 31, 2003.
ARDENT HEALTH: Soliciting Consents to Amend Senior Note Indenture
-----------------------------------------------------------------
Ardent Health Services LLC's subsidiary, Ardent Health Services,
Inc., has commenced a cash tender offer and consent solicitation
for its $225 million of outstanding 10% Senior Subordinated Notes
due 2013. The terms and conditions of the tender offer and
consent solicitation are set forth in the company's Offer to
Purchase and Consent Solicitation Statement, dated April 15, 2005,
and the related Letter of Transmittal and Consent.
The total consideration per $1,000 principal amount of Notes
validly tendered and not withdrawn prior to 5:00 p.m., New York
City time, on April 28, 2005, will be based on the present value
on the initial payment date (as defined in the offer to purchase)
of $1,050 (the redemption price for the Notes on August 15, 2008,
which is the earliest redemption date at a fixed redemption price
for the Notes) and accrued interest from the redemption date to
but not including the initial payment date, determined based on a
fixed spread of 50 basis points over the yield on the price
determination date of the 3-1/4% U.S. Treasury Note due Aug. 15,
2008.
In connection with the tender offer, the company is soliciting
consents to proposed amendments to the indenture governing the
Notes, which would eliminate substantially all of the restrictive
covenants and certain events of default in the indenture. The
company is offering to make a consent payment (which is included
in the total consideration) of $30 per $1,000 principal amount of
Notes to holders who validly tender their Notes and deliver their
consents on or prior to the consent payment deadline. Holders may
not tender their Notes without delivering consents and may not
deliver consents without tendering their Notes.
The tender offer is scheduled to expire at 5:00 p.m., New York
City time, on May 13, 2005, unless extended or terminated early.
However, holders who tender their Notes after the consent payment
deadline and whose Notes are accepted for payment by the company
will receive the total consideration minus the consent payment.
Except in the limited circumstances described in the offer to
purchase, tendered Notes may not be withdrawn and consents may not
be revoked after the time the company and the trustee for the
Notes execute an amendment to the indenture governing the Notes to
effect the proposed amendments, which is expected to be on or
promptly after the consent payment deadline.
The price determination date will be 2:00 p.m., New York City
time, 10 business days prior to the expiration date. Holders who
validly tender their Notes and which Notes are accepted for
purchase are expected to receive payment on or promptly after the
date on which the company satisfies or waives the conditions of
the offer.
The tender offer and consent solicitation are subject to the
satisfaction of certain conditions, including:
(1) the completion of certain transactions contemplated by
the previously announced definitive agreement entered
into by the company with Psychiatric Solutions, Inc.,
providing for the sale of the company's behavioral health
division, the proceeds of which will be used by the
company to finance the purchase of the Notes in the
tender offer,
(2) the amendment of the company's existing credit facility
to permit the completion of the tender offer and consent
solicitation,
(3) the receipt of consents from holders of a majority in
aggregate principal amount of the outstanding Notes and
(4) other general conditions, all of which are described in
greater detail in the offer to purchase.
The company currently expects all of these conditions to be
satisfied by the end of May 2005.
If any Notes remain outstanding following the completion of the
tender offer and consent solicitation, Psychiatric Solutions has
agreed, under the terms of the sale agreement, to cause the
company to redeem all of such remaining Notes pursuant to the
terms of the indenture. The company currently has the right to
call all of the Notes for redemption under the terms of the
indenture.
The complete terms and conditions of the tender offer and consent
solicitation are described in the offer to purchase, copies of
which may be obtained by contacting Global Bondholder Services
Corporation, the depositary and information agent for the offer,
at (212) 430-3774 (collect) or (866) 389-1500 (U.S. toll-free).
Banc of America Securities LLC is the exclusive dealer manager and
solicitation agent for the tender offer and consent solicitation.
Additional information concerning the tender offer and consent
solicitation may be obtained by contacting Banc of America
Securities LLC, High Yield Special Products, at (704) 388-9217
(collect) or (888) 292-0070 (U.S. toll-free).
This announcement 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 and consent solicitation are
being made solely by the offer to purchase.
About the Company
Ardent Health Services is a provider of health care services to
communities throughout the United States. Ardent currently owns
34 hospitals in 13 states, providing a full range of
medical/surgical, psychiatric and substance abuse services to
patients ranging from children to adults.
* * *
As reported in the Troubled Company Reporter on March 15, 2005,
Moody's Investors Service affirmed the ratings of Ardent Health
Services and changed the outlook to developing. This action
follows Ardent's announcement that it has entered into a
definitive agreement to sell its behavioral health division,
consisting of 20 behavioral hospitals, to Psychiatric Solutions,
Inc., in a transaction valued at $560 million.
These ratings were affirmed:
* $150 Million Senior Secured Revolving Credit Facility due
2008, B1
* $300 Million Term Loan B due 2011, rated B1
* $225 Million Senior Subordinated Notes due 2013, rated B3
* Senior implied rating, rated B1
* Senior Unsecured Issuer Rating, rated, B2
ASSET BACKED: Fitch Puts Low-B Ratings on Classes M-10 & M-11
-------------------------------------------------------------
Fitch has rated the Asset Backed Securities Corporation home
equity loan trust, series 2005-HE3:
-- $620 million classes A1, A2A, A2B, and A3 through A5 'AAA';
-- $30.57 million class M-1 'AA+';
-- $24.30 million class M-2 'AA';
-- $14.89 million class M-3 'AA-';
-- $14.11 million class M-4 'A+';
-- $12.15 million class M-5 'A';
-- $12.15 million class M-6 'A-';
-- $10.97 million class M-7 'BBB+';
-- $9.02 million class M-8 'BBB';
-- $7.06 million class M-9 'BBB-';
-- $5.49 million class M-10 'BB+';
-- $7.84 million class M-11 'BB'.
The 'AAA' rating on the senior certificates reflects the 20.90%
total credit enhancement provided by:
* the 3.90% class M-1,
* the 3.10% class M-2,
* the 1.90% class M-3,
* the 1.80% class M-4,
* the 1.55% class M-5,
* the 1.55% class M-6,
* the 1.40% class M-7,
* the 1.15% class M-8,
* the 0.90% class M-9,
* the 0.70% non-offered class M-10,
* the 1.00% non-offered class M-11, and
* the 1.95% initial and target overcollateralization
-- OC.
All certificates have the benefit of monthly excess cash flow to
absorb losses. In addition, the ratings reflect the integrity of
the transaction's legal structure as well as the primary servicing
capabilities of Countrywide Home Loans Servicing L.P. Deutsche
Bank National Trust Company will act as Trustee.
The certificates are supported by two collateral groups. The
group I mortgage pool consists of adjustable-rate and fixed-rate,
first and second lien mortgage loans that conform to Fannie Mae
and Freddie Mac loan balances, and has a cut-off date pool balance
of $374,886,432. Approximately 12.32% of the mortgage loans are
fixed-rate, 87.68% are adjustable-rate, and 2.00% are second lien
mortgage loans. The weighted average loan rate is approximately
6.736%. The weighted average remaining term to maturity -- WAM --
is 353 months. The average principal balance of the loans is
approximately $192,052. The weighted average combined loan-to-
value ratio -- CLTV -- is 80.6%.
The properties are primarily located in:
* California (44.23%),
* New York (9.68%) and
* Virginia (5.49%).
The group II mortgage pool consists of adjustable-rate and fixed-
rate, first and second lien mortgage loans with a cut-off date
pool balance of $408,990,549. Approximately 23.76% of the
mortgage loans are fixed-rate, 76.24% are adjustable-rate, and
17.33% are second lien mortgage loans. The weighted average loan
rate is approximately 7.235%. The WAM is 326 months. The average
principal balance of the loans is approximately $176,976. The
weighted average CLTV is 84.30%. The properties are primarily
located in:
* California (62.80%),
* New York (6.91%) and
* Texas (3.71%).
All of the mortgage loans were purchased by an affiliate of the
depositor from WMC Mortgage Corporation -- WMC. WMC is a mortgage
banking company incorporated in the state of California. WMC was
owned by a subsidiary of Weyerhaeuser Company until May 1997 when
it was sold to WMC Finance Co., a company owned principally by
affiliates of Apollo Management, L.P., a private investment firm.
On June 14, 2004, GE Consumer Finance acquired WMC Finance Co. As
of March 2000, WMC changed its business model to underwrite and
process 100% of its loans on the internet via 'WMC Direct'.
For federal income tax purposes, multiple real estate mortgage
investment conduit elections will be made with respect to the
trust estate.
AVADO BRANDS: To Receive $251,000 from Lease Assignment
-------------------------------------------------------
Avado Brands, Inc., sought and obtained permission from the U.S.
Bankruptcy Court for the Northern District of Texas, Dallas
Division, to assume the Hops Northeast Florida Joint Venture No. 1
lease and assign that lease to Creek Systems Franchising, LLC.
Creek Systems will pay Avado $251,000 for the leasehold rights to
that property.
Cono D'Alto, the owner of the non-residential real property
located in Jacksonville, Florida, will be paid $9,375.34 to cure
Avado's prepetition default under the lease. The assignment
agreement allows for the transfer of The Hops' rights and
interests in the lease including certain personal property within
the premises.
Headquartered in Madison, Georgia, Avado Brands, Inc., owns and
operates two proprietary brands comprised of 102 Don Pablo's
Mexican Kitchens and 37 Hops Grillhouse & Breweries. The Company
and its debtor-affiliates filed a voluntary chapter 11 petition on
February 4, 2004 (Bankr. N.D. Tex. Case No. 04-1555). Deborah D.
Williamson, Esq., and Thomas Rice, Esq., at Cox & Smith
Incorporated, represent the Debtors in their restructuring
efforts. When the Debtors filed for protection from their
creditors, they listed $228,032,000 in total assets and
$263,497,000 in total debts.
B.F. SAUL: Moody's Reviewing Low-B Ratings for Possible Upgrade
---------------------------------------------------------------
Moody's Investors Service has placed on review for possible
upgrade the ratings of B.F. Saul Real Estate Investment Trust
(Issuer at B3) and those of its principal subsidiary, Chevy Chase
Bank, F.S.B. (Deposits at Ba1).
In placing the ratings on review, Moody's said that Chevy Chase's
risk profile has benefited from the continued development of its
healthy core deposit franchise in the Washington D. C. area. In
addition, asset quality has improved, in part from exiting more
risky asset classes.
Moody's noted, however, that Chevy Chase is heavily exposed to the
mortgage business. Both, mortgage originations and mortgages held
in portfolio are currently concentrated in adjustable rate
mortgages, some of which offer payment options that could result
in negative amortization. In addition, the company has a high
concentration in mortgage servicing rights and 'interest only'
strips.
Moody's said the review will focus on the challenges associated
with Chevy Chase's mortgage business. Specifically, Moody's will
assess the flexibility the company has in managing the cost
structure of its mortgage banking business, the appropriateness of
the assumptions underpinning the valuation of interest-only strips
and mortgage servicing rights, and the sensitivity of mortgage
banking revenues and asset valuations to interest rate
fluctuations and mortgage business volatility.
These ratings are under review for possible upgrade:
* B.F. Saul Real Estate Investment Trust
-- Issuer and senior secured rating at B3
* Chevy Chase Bank F.S.B.
-- Long term deposits at Ba1
-- Short term deposits and OSO at 'Not Prime'
-- Issuer and long term OSO at Ba2
-- Subordinate at Ba3
-- Bank financial strength at D+
* Chevy Chase Preferred Capital Corporation
-- Preferred stock at B2
B.F. Saul Real Estate Investment Trust is a thrift holding
company, headquartered in Bethesda, Maryland with consolidated
assets of $13.8 billion as of December 2004. Chevy Chase Bank,
F.S.B., also headquartered in Bethesda, Maryland is its principal
subsidiary, with assets of $13.4 billion at the end of December
2004.
BAYTEX ENERGY: Various Concerns Cue S&P to Change Outlook to Neg.
-----------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on Calgary,
Alberta-based Baytex Energy Trust to negative from stable. At the
same time, Standard & Poor's affirmed its 'B+' long-term corporate
credit ratings and its 'B-' subordinated debt rating on the
company.
"The outlook revision reflects concerns regarding the possible
further deterioration of the trust's financial metrics and overall
financial profile, given the limited flexibility to adjust
distributions in a rising break-even cost environment," said
Standard & Poor's credit analyst Jamie Koutsoukis. "In addition,
the expectation of near-term acquisitions to replace reserves and
balance the trust's overall product mix could put additional
pressure on Baytex's overall credit profile," Ms. Koutsoukis
added.
The ratings reflect the company's small proven reserves base and
average daily production, its below-average reserve life index
(RLI), its narrow regional focus, and the expectation of a
relatively stable reserves profile as Baytex limits its spending
to maintenance levels. These factors, which hamper the ratings,
are offset by the good development opportunities associated with
Baytex's existing portfolio of assets and the company's
competitive operating cost profile.
Baytex was able to rebuild its reported proven reserve base with
acquisitions of two natural gas and light oil properties in 2004,
which helped to offset the large negative reserve revisions booked
in 2003 as a result of the introduction of Canada's new reserve
reporting standards, National Instrument 51-101. This improvement
in the company's reserve profile and product mix were, however,
tempered by an increase in the company's leverage as it funded a
large portion of its acquisitions and 2004 distribution payments
with debt.
The negative outlook reflects concerns regarding Baytex's
willingness to adjust its distribution policy should internal cash
flows not be sufficient to fund its near- and medium-term capital
expenditures and distributions, rather than relying on debt to
finance any possible deficit. The outlook could be revised to
stable if Baytex is able to demonstrate an ability to generate
positive discretionary cash flow while maintaining a stable
reserves base.
Alternatively, the ratings could be lowered if the company
continues to generate negative free cash flows in deference to
maintaining its distributions at current levels.
BERKLINE/BENCHCRAFT: IPO Filing Prompts S&P to Watch Ratings
------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on furniture
manufacturer Berkline/BenchCraft Holdings LLC on CreditWatch with
positive implications, including its 'B+' corporate credit and
senior secured bank loan ratings. The CreditWatch placement
follows Berkline's recent filing of a registration statement for
an IPO of about $138 million in common stock. The completion of
the IPO is subject to market conditions and approvals. At
Dec. 31, 2004, Berkline had about $165 million in debt
outstanding.
"Although current stockholders of the privately held company may
sell a portion of their shares, for which the company would not
receive proceeds, we expect that a significant amount of the IPO
will be applied to debt reduction," said Standard & Poor's credit
analyst Martin S. Kounitz.
Standard & Poor's will resolve the CreditWatch listing following
the completion of the IPO and a meeting with management to
evaluate the company's business and financial strategies.
Morristown, Tennessee-based Berkline manufactures upholstered
furniture, including recliners, sofas, and other residential
furniture products.
BREUNERS HOME: Trustee Wants to Hire Fox Rothschild as Counsel
--------------------------------------------------------------
Montague S. Claybrook, the Chapter 7 Trustee overseeing the
liquidation of Breuners Home Furnishings Corp. and its debtor-
affiliates' estates, asks the U.S. Bankruptcy Court for the
District of Delaware for authority to employ Fox Rothschild LLP as
his counsel.
Fox Rothschild will:
a. provide legal advice with respect to the powers and duties
as a Trustee;
b. prepare, in behalf of the trustee, necessary applications,
motions, answers, orders, reports and other legal papers;
c. analyze the debtor's financial condition to determine the
best course of action to follow in order to achieve the
best possible outcome for the estates and their creditors;
d. appear in court and protect the interests of the trustee,
the estates and creditors; and
e. perform all other legal services for the trustee that may
be necessary and proper in the proceedings.
The principal attorneys and paralegals designated to represent the
Debtors and their current standard hourly rates are:
Professional Rate
------------ ----
Michael G. Menkowitz $390
Magdalena Schardt $320
Mark G. McCreary $275
Michele M. Padersky $200
Joseph DiStanislao $155
Fox Rothschild does not hold any material interest adverse to the
Debtors and their estates. The firm however discloses that it
represents General Electric Capital Corporation, a creditor of the
Debtors, in matters unrelated to this bankruptcy case.
Headquartered in Lancaster, Pennsylvania, Breuners Home
Furnishings Corp. -- http://www.bhfc.com/-- is one of the
largest national furniture retailers focused on the middle the
upper-end segment of the market. The Company and its debtor-
affiliates, filed for chapter 11 protection on July 14, 2004
(Bankr. Del. Case No. 04-12030). The Court converted the case to
a Chapter 7 proceeding on Feb. 8, 2005. Great American Group,
Gordon Brothers, Hilco Merchant Resources, and Zimmer-Hester were
brought on board within the first 30 days of the bankruptcy filing
to conduct Going-Out-of-Business sales at the furniture retailer's
47 stores. Bruce Grohsgal, Esq., and Laura Davis Jones, Esq., at
Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent
the Debtors. When the Debtors filed for chapter 11 protection,
they reported more than $100 million in estimated assets and
debts.
BREUNERS HOME: Wants to Use Lender's Cash Collateral
----------------------------------------------------
Montague S. Claybrook, the chapter 7 trustee overseeing the
liquidation of the estates of Breuners Home Furnishings Corp. and
its debtor-affiliates, asks the U.S. Bankruptcy Court for the
District of Delaware for permission to use cash collateral
securing repayment of obligations to Deutsche Bank Trust Company
Americas and other prepetition lenders.
The Trustee needs to use the cash collateral to pay expenses he'll
incur while winding-up operation of the Debtors' businesses. Mr.
Claybrook submits that without access to the cash collateral, he
won't be able to preserve the value of the estates as a going
concern.
The Trustee proposes to use cash collateral in accordance with the
winding-down expenses from February to April 2005, projecting:
February March April
-------- -------- --------
Home Office Expenses $ 41,034 $ 58,572
Other Wind-down Expenses $110,000 $110,000 $110,000
-------- -------- --------
Total $110,000 $151,034 $168,572
To protect the interests of the Lenders, the Trustee proposes to
grant them replacement liens and administrative expense priority.
Headquartered in Lancaster, Pennsylvania, Breuners Home
Furnishings Corp. -- http://www.bhfc.com/-- is one of the
largest national furniture retailers focused on the middle the
upper-end segment of the market. The Company and its debtor-
affiliates, filed for chapter 11 protection on July 14, 2004
(Bankr. Del. Case No. 04-12030). Great American Group, Gordon
Brothers, Hilco Merchant Resources, and Zimmer-Hester were brought
on board within the first 30 days of the bankruptcy filing to
conduct Going-Out-of-Business sales at the furniture retailer's 47
stores. The Court converted the case to a Chapter 7 proceeding on
Feb. 8, 2005. Montague S. Claybrook serves as the Chapter 7
Trustee. Mr. Claybrook is represented by Michael G. Menkowitz,
Esq., at Fox Rothschild LLP. Bruce Grohsgal, Esq., and Laura
Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones &
Weintraub, P.C., represent the Debtors. When the Debtors filed
for chapter 11 protection, they reported more than $100 million in
estimated assets and debts.
CATHOLIC CHURCH: Stay Extended for St. George Until May 6
---------------------------------------------------------
The Roman Catholic Episcopal Corporation of St. George's Diocese
sought and obtained a further extension of its time to file a
proposal under the Notice of Intention filed on March 8, 2005,
pursuant to the Bankruptcy and Insolvency Act, which effected a
"stay of proceedings" in civil actions against the Corporation
including those launched since 1991 on behalf of victims of sexual
abuse. The Corporation now has until May 6, 2005, to file its
proposal to creditors.
Since March 8, the Corporation has been assessing the value of its
assets to determine its financial capacity to make a just and fair
proposal to its creditors and has been actively negotiating with
representatives of the victims of sexual abuse.
"Our discussions so far have been positive," said the Most Rev.
Douglas Crosby, Bishop of St. George's Diocese. "I am hopeful
that with this additional time we will be able to prepare a viable
and acceptable proposal. We have a legal, moral and pastoral
obligation to see this through to the end."
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 Center is located
in Corner Brook.
CATHOLIC CHURCH: Pachulski Can Represent Spokane Tort Committee
---------------------------------------------------------------
As previously reported, the U.S. Trustee wants to block the
Committee of Tort Litigants' retention of Pachulski, Stang, Ziehl,
Young, Jones & Weintraub PC in the Diocese of Spokane's chapter 11
restructuring.
At the Debtor's behest, the United States Bankruptcy Court for the
Eastern District of Washington authorizes the Official Tort
Litigants Committee in the Diocese of Spokane's Chapter 11 case to
retain Pachulski, Stang, Ziehl, Young, Jones & Weintraub PC, as
counsel, effective as of February 8, 2005.
Judge Williams rules that the prior admission of Pachulski Stang,
pro hac vice, as counsel to the Unofficial Clergy Sex Abuse
Survivor's Group, is extended to include the firm's services to
the Litigants Committee.
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 Diocese in
its restructuring efforts. When the Debtor filed for protection
from its creditors, it listed $11,162,938 in total assets and
$81,364,055 in total debts. (Catholic Church Bankruptcy News,
Issue No. 22; Bankruptcy Creditors' Service, Inc., 215/945-7000)
CATHOLIC CHURCH: Spokane Will Give Sealed Files to Tort Committee
-----------------------------------------------------------------
As previously reported in the Troubled Company Reporter on
December 15, 2005, the Diocese of Spokane sought and obtained
permission from the U.S. Bankruptcy Court for the Eastern District
of Washington to file portions of Schedule F (Creditors Holding
Unsecured Non-priority Claims), the Master Mailing List, and any
other pleadings, reports or other documents that might be filed
later on, which disclose the names of victims of sexual abuse,
under seal.
The Committee of Tort Litigants in the Diocese of Spokane's
Chapter 11 case seeks access to sealed documents to analyze the
magnitude of potential claims against the Diocese. The Litigants
Committee cannot adequately represent the interest of its
constituency without having access to all of the information
available in the case, including the Sealed Documents.
For this reason, Spokane and the Litigants Committee stipulate and
agree that:
(a) the Diocese will provide the all the Sealed documents to
the Committee;
(b) the Litigants Committee will take all reasonable steps to
limit access to the Sealed Documents to the Committee
members, their state court counsel, and their bankruptcy
counsel; and
(c) in the event the secrecy of the Sealed Documents is
compromised, the Litigants Committee will immediately
inform the Diocese and will assist in taking all
reasonable steps to prevent further dissemination of the
Sealed Documents.
The Litigants Committee understands the need for discretion when
it comes to issues involving the identity of survivors of sexual
abuse by priests, and promises not to disclose or publish the
contents of the Sealed Documents.
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 Diocese in
its restructuring efforts. When the Debtor filed for protection
from its creditors, it listed $11,162,938 in total assets and
$81,364,055 in total debts. (Catholic Church Bankruptcy News,
Issue No. 22; Bankruptcy Creditors' Service, Inc., 215/945-7000)
CELLNET TECHNOLOGY: Moody's Rates New $380M Sr. Sec. Debts at B3
----------------------------------------------------------------
Moody's Investors Service has assigned the following new ratings
to Cellnet Technology, Inc., a leading provider of fixed network
automated meter reading solutions and managed services to the
utility industry. This is the first time Moody's has rated
Cellnet. The ratings are subject to review of the final
documentation of the financing transactions.
New Ratings Assigned:
* B2 for the proposed $30 million senior secured revolving
credit facility, due 2010,
* B2 for the proposed $200 million senior secured term loan B,
due 2012,
* B3 for the proposed $150 million senior secured second lien
term loan, due 2013,
* B2 senior implied rating, and
* Caa1 senior unsecured issuer rating.
Proceeds from the financing transaction will be used to refinance
existing debt of $153.5 million, redeem preferred stock of
$59.7 million (held by the equity sponsor and management), pay a
dividend of $64.4 million, fund capital spending of $38 million,
and provide $25 million of cash for general corporate purposes.
Cellnet was purchased from Atos Origin IT Services Inc. by GTCR
Golder Rauner, LLC, a private equity firm, in July 2004 for
$220 million, which was financed with approximately $60 million of
equity investments (in the form of both preferred stock and common
equity) and approximately $160 million of debt. Prior to being
acquired by Atos in January 2004, Cellnet operated as a unit of
SchlumbergerSema Inc., a subsidiary of Schlumberger Limited.
The ratings reflect Cellnet's significant debt level, highly
aggressive financial policy, and considerable volatility in its
cash flow generation caused by large capital spending to fund some
of its customers' network deployment costs. On the other hand,
the ratings are supported by the company's leading market position
in the fixed AMR market with significant barriers to entry and
high customer switching costs. The ratings also consider
Cellnet's substantial level of recurring service revenue stream,
as well as favorable industry trends and growing demand for the
AMR technology.
The rating outlook is stable. Factors that could have positive
rating implications include a balanced approach towards growth
that generates steadier cash flow and results in lower financial
leverage. Factors that could have negative rating implications
include large capex projects that severely constrain the company's
financial resources, new AMR technology that threatens its market
position, and further de-capitalization by the equity sponsor.
Cellnet is the market leader in the fixed network AMR market where
it holds a 57% market share (measured by number of units deployed
through 2004) and competes against DCSI (26% market share) and
Hunt (17%). In the broader AMR market, Cellnet also competes
against mobile radio AMR technology companies such as Itron,
Badger, Sensus and Neptune, which collectively control roughly 60%
of the AMR market.
Cellnet typically provides the fixed AMR network solution to
utility customers by selling AMR network components and then
entering into long term managed services contracts to manage the
network and collect and provide the meter data to customers for a
monthly read fee. Currently, the company has contracts with 18
utility customers that have remaining terms of 10-15 years with
approximately $1.8 billion in remaining contract value. Moody's
views this recurring service revenue stream a key credit strength
that provides considerable downside protection. Given that the
AMR technology today represents less than 30% of installed meters
in North America, there is also considerable growth potentials for
the AMR market. This is especially true for fixed network AMR
companies whose technology allows for more frequent meter read and
other sophisticated AMR functionality, as increasingly demanded by
utility customers and regulators.
However, compared with mobile radio AMR technology, fixed network
AMR technology requires considerably higher upfront capex spending
to deploy the network. In cases where the utility customers
choose not to own the AMR modules and network, Cellnet has to
spend its own capital to build out the network in order to win
business. This has been the business model through which Cellnet
acquired most of its existing contracts. To the extent that some
of its future businesses require similar arrangements, it would
cause substantial volatility in Cellnet's capex spending and cash
flow generation. However, it should be pointed out that the
company's growth capex, lumpy as they may be, are associated with
specific long-term servicing contracts that provide recurring
revenue streams over a 10-20 year time period.
The other major credit concern is the company's very high debt
load - approximately $350 million pro forma for the financing, or
6.8 time projected 2005 EBITDA or 2.3 times projected 2005 sales.
Such high debt level, in Moody's view, substantially constrains
the company's financial and operating flexibility, particularly in
consideration of potentially large capital spending. The return
of a large amount (approximately $124 million) of capital to
equity investors, while borrowing $38 million to fund its latest
contract deployment, also indicates highly aggressive financial
policy on the part of the company and its equity sponsor.
Cellnet's baseline business -- the servicing revenues -- generates
a good amount of free cash flow due to good profitability and low
on-going capex (about $9-10 million a year). However, as
discussed above, actual free cash flow generation is to a large
extent a function of growth capital spending, which has seen large
swings in recent years. Post closing, Cellnet is expected to have
good liquidity with estimated $63 million of cash on hand,
although much of which is earmarked to fund network deployment
under latest contract wins. Liquidity will also be supported by a
five-year $30 million revolver that will be undrawn at closing.
Moody's also expects the company to comply with all its bank
financial covenants over the next 12 months.
The B2 rating on the $230 million senior secured credit facility
reflects its seniority in the company's debt structure but weak
tangible asset coverage. The facility will be secured by a first
priority lien on the capital stock as well as all assets of the
company and subsidiaries, and will be guaranteed on a senior
secured basis by all of the company's current and future
subsidiaries.
The B3 rating on the $150 million second-lien term loan reflects
its effective subordination to the first-lien debt and lack of
effective tangible asset support. The facility will be secured by
a second priority lien on the same assets that secure the first-
lien loan, and will be guaranteed on by all of the company's
current and future subsidiaries.
Cellnet Technology, Inc., based in Atlanta, Georgia, a leading
provider of fixed network automated meter reading solutions and
managed services to the utility industry. The company reported
pro-forma LTM (February 2005) revenue of $158.5 million.
CHENIERE ENERGY: Moody's Rates New $500M Sr. Unsec. Notes at B3
---------------------------------------------------------------
Moody's assigned a B3 rating to Cheniere Energy, Inc.'s pending
$500 million of ten year senior unsecured notes, a B1 senior
implied rating, and an SGL-2 liquidity rating. The rating outlook
is stable.
Structural and Fundamental Overview
Note proceeds will increase parent company cash. Pro-forma year-
end 2004 cash would then approximate $800 million, though
substantial first quarter 2005 project outlays and overhead have
significantly reduced cash balances by mid-April 2005.
The first six coupon payments will be escrowed. Remaining cash
will principally fund Cheniere's substantial project development
costs and front-end owner equity for up to three wholly owned
leveraged liquefied natural gas import and regasification
projects. For example, front-end equity for Cheniere's Sabine
Pass LNG L.P. project is approximately $216 million. Moody's
expects Cheniere's first material operating cash flow to begin in
second half 2008. Relying on cash flow from tolling contracts
alone, Moody's expects first free cash flow after capital spending
to occur no earlier than 2009, assuming timely successful
completion of at least one LNG project. Any subsidiary project
financing debt would have first claim on that cash flow for debt
reduction.
The note indenture provides minimal restrictions on the use of
note proceeds or other protections for note holders. No
subsidiaries, including the LNG project subsidiaries, are required
to, or are likely to, guarantee the notes. It is likely that
virtually all operating assets and cash flow will be at the
subsidiary level. Any project financing is likely to restrict
each project's ability to upstream cash to the parent due to
project debt covenants.
Partly supported by $286 million of net proceeds from a December
2004 common equity offering, Cheniere is creating a capital
intensive, largely project financed, downstream LNG regasification
business to participate in rapid world and U.S. LNG market growth.
It seeks to build 10 bcf/day to 12 bcf/day of LNG regasification
capacity by 2009 to 2010 at a cost to Cheniere of $2.3 billion to
$2.6 billion excluding interest expense. Moody's believes that
interest expense could push that to $2.5 billion to $2.7 billion
though this figure would be lower to the degree Cheniere issues
common equity or does not pursue three projects.
To put Cheniere's undertaking into perspective, its capacity goal
equates to roughly two-thirds of 2003 world LNG consumption and
LNG liquefaction capacity and roughly one third to one-fourth of
expected world capacity by 2008 to 2010. Notably, the offsetting
world natural gas production, LNG liquefaction, and LNG tanker
investments necessary to deliver a sufficient volume of LNG to a
new regasification plant is at least 11 times the unit capital
cost of a regasification plant's capacity. The evolution of the
LNG market may not proceed in a balanced linear path.
However, while considerable market and market structure risk lies
ahead, Cheniere has successfully developed two world-scale
regasification projects that have attracted major participants,
full project funding, and investment grade offtake counterparties
for the majority of capacity. It just received FERC approval for
a third project and is well into developing a fourth project.
Rating Rationales
In spite of high consolidated leverage and no cash flow until late
2008, the B1 senior implied rating reflects the sensitized
potential long-term earnings power of Cheniere's well-sited and
reasonably structured LNG projects. The projects are supported by
long-term tolling agreements, assuming stipulated construction and
operating performance by Cheniere. The projects will be built
under major engineering, construction, and procurement contracts
with major general contractors (Bechtel and Technip, so far). The
lump sum turnkey contracts cover the majority of project costs (a
$647 million Sabine contract with Bechtel). Regasification
technology is generally well established and eventual cash flow is
substantially supported by attractive tolling agreements with
investment grade counterparties.
However, the B1 consolidated rating is restrained by Cheniere's
very high consolidated and project leverage, its early stage of
formation relative to the management and operating challenges
ahead; no free cash flow for at least 3 and one-half years; and
potential project construction delay, cost overrun, and
performance risk. Furthermore, leveraged Cheniere has notably
wide indenture latitude to invest in a very wide array of capital
intensive business, directly or indirectly through affiliates,
within a very broadly defined energy sector.
Importantly too, Moody's observes significant risks and
uncertainties associated with the pace, scale, and upstream versus
downstream balance by which the world and U.S. LNG market expands
over the next five to ten years. Rising regasification
competition may hamper Cheniere's ability to win attractive
tolling contracts for Corpus Christi and Creole Trail at the same
blended $0.32/mcf capacity and operating fees built into the
Sabine Pass contracts. Moody's also notes that a degree of cost
overrun risk is borne by Cheniere. A partial mitigation may be
recent trends that suggest inflationary pressures in certain
materials markets are abating. Moody's also notes a potential
imbalance in Cheniere's bargaining leverage over very large
Bechtel as Cheniere's front-end equity funding is down-streamed
into Sabine Pass LNG.
Cheniere is exposed to follow-on financing risk, future contract
risk, commodity risk somewhat mitigated by long-term tolling
agreements, the risk of an uneven pace of growth and upstream
versus downstream balance within the world LNG market, and
competition from expected rapid U.S. regasification growth. It is
exposed to major competitors and general contractors far larger
and more experienced than Cheniere.
Moody's favorably notes that the $822 million Sabine Pass LNG
project financing package appears to have been satisfactorily
structured and reviewed by a seasoned third party engineer.
Overall, the Sabine financing is led by experienced project
lenders, it is tightly documented, change orders exceeding
$5 million, or $15 million in aggregate require bank approval, a
third party project documentation and engineering review was
conducted at the behest of the banks by experienced Stone and
Webster, and it was syndicated to 47 banks.
The B3 senior unsecured note rating reflects the note's weak
position within the corporate and financial structure. Indenture
protections are weak and, with no upstream guarantees, the notes
are structurally and effectively subordinated to high levels of
structured project finance debt per project and would be
effectively subordinated to up to $350 million of parent senior
secured debt should that eventually be arranged. It is likely
that virtually all operating assets and cash flow are likely to be
at the subsidiary level and project debt would also restrict the
upstreaming of cash once operations commence. Furthermore,
relative to its leverage and cash flow timing, the note indenture
carveouts permits significant restricted payments latitude.
The SGL-2 rating reflects good liquidity cover of visible
obligations over the next 4 quarters. Cheniere has very high
initial balance sheet liquidity, tempered by outlays over the next
four quarters for project and overhead costs, a highly
opportunistic business investment posture, and note indenture
language permitting cash to be used for virtually any investment
purpose within a notably broadly defined energy sector. Still,
while there are negligible indenture restraints on the use of
liquidity, Cheniere's initial pro-forma liquidity appears to
reside in sound territory over the next four quarters, amply
covering parent company overhead and Cheniere's owner's share of
project costs.
Overview of Cheniere
Lacking a specific operating track record to date, Cheniere is
building an able management team, will now begin building a track
record in project construction management, in running a rapidly
growing highly leveraged business of considerable scale, and
running a world scale LNG business. Cheniere is a small leveraged
business in a sector dominated by major deeply capitalized
international operators. It faces inherent construction and
completion risk and uncertainty over whether world LNG
liquefaction capacity will grow sufficiently fast to keep pace
with LNG regasification capacity and provide a highly liquid spot
market by the time Cheniere's projects come on line.
Overall, Cheniere is well into its project development phase, very
early in the project construction phase, and is staffing up for
its project construction management and eventual operating needs.
It has been developing four potentially very attractive LNG import
and regasification terminals along the U.S. Gulf Coast. It
intends to operate the three currently wholly owned projects.
Sabine Pass LNG (100%), Freeport LNG (30%), Corpus Christy LNG
(100%), and Creole Trail LNG (100%), are well situated along the
U.S. Gulf Coast.
Sabine Pass has arranged its non-recourse secured project
financings and construction of both Freeport and Sabine Pass has
already commenced. Corpus Christy received its pivotal FERC
(Federal Energy Regulatory Commission) approval this week to
proceed and may commence construction in second half 2005.
Cheniere hopes for Creole Trail's FERC approval next year and may
commence construction in first half 2006.
Cheniere is making an important contribution to the major
expansion of U.S. LNG import capacity, hoping to capitalize on
rising U.S. natural gas import requirements and rapid growth in
the world LNG market. There is no assurance that the rapid
expansion of U.S. LNG import facilities will be matched by
expansion of foreign LNG liquefaction capacity and LNG tanker
tonnage sufficient to feed both the rapid U.S. and world
expansions in LNG demand. While the secular demand trends for the
highly competitive world LNG market are strong, LNG supply and the
competition for that supply will be intense on a world scale.
Uncertainties and risks remain along the way to the LNG's market's
full regional and world development that will affect LNG shippers'
willingness to commit to term tolling contracts:
* the pricing of such commitments;
* the eventual scale of the world spot LNG market;
* the ability of regasification terminals to consistently
compete for spot cargoes in that market, given the intense
price shopping on a world scale by holders of spot cargoes;
* the uncertain risks and inexperienced Cheniere's eventual
skill at profiting from a merchant energy role in the spot
market; and
* the rapid U.S. expansion of competing regasification
terminals.
A key concern is whether the pace of U.S. and international growth
in regasification capacity outpaces the growth of extremely
capital intensive LNG liquefaction and LNG tanker capacity needed
to supply LNG to regasification terminals.
Moody's also sees a risk to natural gas economics in the event
that oil prices moderate to levels that, through fuels cross-
competition, reduces natural gas sufficiently to slow the pace of
growth in regasification capacity.
To the degree that LNG market growth and liquefaction capacity is
being driven by major producers that have also sponsored or are
minority investors in downstream regasification capacity, Moody's
believes that Cheniere's ability to compete for those LNG
producers committed and spot volumes would be reduced.
Cheniere Energy, Inc. is headquartered in Houston, Texas.
CHESAPEAKE ENERGY: Offering $600M Sr. Notes via Private Placement
-----------------------------------------------------------------
Chesapeake Energy Corporation (NYSE: CHK) is commencing a private
placement offering to eligible purchasers of $600 million of a new
issue of senior notes due 2016. The notes are expected to be
eligible for resale under Rule 144A. The private offering, which
is subject to market and other conditions, will be made within the
United States only to qualified institutional buyers, and outside
the United States only to non-U.S. investors under regulation S of
the Securities Act of 1933.
Chesapeake intends to use the net proceeds from the offering to
partially fund approximately $686 million of recently announced
acquisitions of oil and gas properties, or in the event the
acquisitions are not consummated, to repay debt under its bank
credit facility.
The new notes have not been registered under the Securities Act of
1933 or applicable state securities laws, and may not be offered
or sold in the United States absent registration or an applicable
exemption from the registration requirements of the Securities Act
and applicable state laws. This announcement shall not constitute
an offer to sell or a solicitation of an offer to buy the new
notes.
About the Company
Chesapeake Energy Corporation is the fourth largest independent
producer of natural gas in the U.S. Headquartered in Oklahoma
City, the company's operations are focused on exploratory and
developmental drilling and producing property acquisitions in the
Mid-Continent, Permian Basin, South Texas, Texas Gulf Coast and
Ark-La-Tex regions of the United States.
* * *
Chesapeake Energy's pending $600 million new issue of senior notes
due 2016 currently holds Moody's Ba3 rating.
CHESAPEAKE ENERGY: Moody's Rates $600M Senior Unsec. Notes at Ba3
-----------------------------------------------------------------
Moody's assigned a Ba3 rating to Chesapeake Energy's pending
$600 million of 10 year 6.625% senior unsecured notes and
confirmed CHK's Ba3 senior implied and existing Ba3 senior
unsecured note ratings. The notes were launched along with a $400
million perpetual, five-year no call, convertible preferred stock
offering. Note and preferred stock proceeds will fund four
acquisitions costing $686 million and refinance part of CHK's
approximately $875 million of bank debt outstanding as of early
April 2005.
The rating outlook is moved back to positive, ending a review for
upgrade due to substantially escalated leverage and preferred
stock-adjusted leverage on proven developed reserves. After
$1 billion of 2005 acquisition activity, CHK continues to adhere
to an equity strategy that displays continued hesitancy to fund
acquisitions with sufficient common equity to definitively reduce
high leverage.
However, in spite of re-escalated leverage, the positive outlook
is justified at this time by the fact that CHK has the capacity to
de-lever if it chooses such a course of action. Its increasing
scale, diversification, durable reserve life, large drilling
inventory, strong price outlook, and strong margins before reserve
replacement costs underwrite that capacity. Nevertheless, the
outlook could move to stable if CHK does not reduce leverage on PD
reserves to well under $6/PD Boe over the next one to two
quarters.
The acquisitions add to CHK's South Texas, East Texas, and Permian
Basin reserves, increasing its diversification away from its
MidContinent core. However, of the 48.2 mmboe in reserves
acquired, only 36% are previously funded, developed, productive,
lower risk PD reserves. The reserves also have a low combined PD
reserve life of 4.6 years. The acquisitions are also expensive,
measured by total price paid per unit of proven reserves acquired,
total price per unit of fully-developed proven reserves, and
especially expensive on total price paid per unit of acquired PD
reserves and by acquired units of daily production.
CHK's acquisition funding and leverage policy continues to
restrain its ratings. During 2004 and 2005 year-to-date, CHK made
$2.5 billion of acquisitions. This was initially funded by
$1.2 billion of senior unsecured notes, $713 million of
convertible preferred stock, and $650 million of common stock. In
that time span, $380 million of convertible preferred did convert
to common equity. However, it has again been noted that, in spite
of company-making acquisition activity of such major scale,
activity of such impact still did not induce, or enable, CHK to
launch a larger proportion of common equity at the time of its
acquisitions at terms acceptable to it.
In Moody's view, CHK's strategy of pursuing such a proportionally
large, historically expensive up-cycle acquisition program
requires both very strong prices and sustained future drilling
success on historically high proportions of undrilled locations to
justify its acquisition economics. This strategy apparently has
not yet yielded sufficiently strong equity response to induce CHK
to issue more common equity to finally definitively reduce
leverage.
Under the circumstances, Moody's believes that front-end reliance
on convertible preferred stock for acquisition funding, in lieu of
sufficient common stock, is an insufficient catalyst to drive
CHK's advance up Moody's rating scale. This reflects:
(1) CHK's already high leverage,
(2) the secular, cyclical, technical, and company-specific
forces at work on an exploration and production company's
share price,
(3) CHK's view that it still cannot offer more common equity
without incurring unacceptable dilution,
(4) its ongoing aggressively acquisitive posture,
(5) the high historic up-cycle costs of the sector's reserve
acquisition market, and
(6) the often high proportions of unfunded, still unproductive,
and
(7) higher risk proven undeveloped and reserves in those
reserve acquisition packages.
Nevertheless, the ratings are supported by a number of factors.
CHK has acquired itself into a large relatively diversified
exploration and production company with a competitive cost
structure and a durable reserve life. CHK's expansion effort
has both intensified its holdings and basin knowledge in the
mid-Continent, it has added other regions of potential growth.
The total PD reserve approximates 8 years.
The price environment also remains historically very supportive
though we expect prices to moderate somewhat this year. CHK also
has a comparative low reinvestment risk profile, with a durable PD
reserve life, a large diversified drilling inventory, sufficiently
competitive reserve replacement costs, and ample internal cash
flow with which to fund its drilling program satisfactorily
mitigates reserve replacement risk.
However, leverage has re-escalated. Given its aggressive business
and financing model, an upgrade during the recent review period
had depended on CHK's willingness, capacity, and/or latitude to
issue sufficient common equity with the next sizable acquisition
to reduce leverage and debt levels relative to PD reserves.
Recent acquisition and funding activity confirm again that CHK's
equity policies, its broader financial strategy, and historically
expensive acquisitions containing low proportions of PD reserves
will likely continue to sustain full leverage, punctuated by
acquisition leverage spikes. However, the higher price
environment has supported full leverage at the existing ratings.
In the newly announced acquisitions, CHK is paying a high
$67,475/boe per daily unit of acquired production, a high
$14.24/boe for proven reserves, and an extremely high $39.53/boe
of PD reserves. CHK's subsequent drilling and completion results
and development costs on the high proportion of acquired proven
undeveloped and probable results will drive whether CHK can
achieve its desired acquisition economics.
Since year-end 2004, CHK has acquired 85.3 mmboe of reserves, of
which 41% is PD reserves, and which generated 14.8 mmboe of
production. CHK has paid a high Year-to-date 2005 acquisition
costs have totaled just over $1 billion. At current production
rates, CHK has paid a full $68,378/Boe for acquired daily
production, $11.90/boe, and a very high $29/Boe of PD reserves.
The low proportion of acquired PD reserves, coupled with largely
debt funding, have pushed pro-forma leverage on pro-forma PD
reserves back to roughly $7/boe of PD reserves, the highest level
since March 2003. Similarly, pro-forma debt plus 50% of pro-forma
convertible preferred stock, divided by pro-forma PD reserves, is
approximately $7.75/Boe. That also is higher than in the recent
past.
Pro-forma for year-to-date 2005 acquisitions, CHK now holds
approximately 902 mmboe of proven reserves, of which approximately
572 mmboe is PD reserves.
CHK's leverage has escalated, acquisition risk remains
significant, its competitive 2004 reserve replacement costs were
partially aided by the volume additions associated with an
expansion of proven undeveloped reserves from 26% of total
reserves to 34% of reserves, and further volume risk may reside in
the 25% of reserves that CHK continues to internally engineer.
Acquisition market prices have been driven by both the relative
scarcity of properties of traditional quality, by prevailing
strong prices, and by a very strong oil and gas price outlook.
Should oil and gas prices moderate, Moody's would expect
acquisition costs to also moderate.
Chesapeake Energy Corporation is headquartered in Oklahoma City,
Oklahoma.
CIRTRAN CORP: Losses & Deficit Trigger Going Concern Doubt
----------------------------------------------------------
CirTran Corp. (OTCBB: CIRT), an international full-service
contract manufacturer of IT, consumer and consumer electronics
products, filed its Form 10-KSB for the year ended Dec. 31, 2004,
reporting a 629% increase in sales and a 77% reduction in losses
as compared with the previous year.
CirTran reported net sales of $8,862,715, an increase of 629% as
compared with sales of $1,215,245 for fiscal 2003. The company
also reported a 77% reduction in losses to $658,322 from
$2,910,978 reported for fiscal 2003.
CirTran also showed a 98% increase in total assets, reporting
corporate assets of $4,293,429 as compared with $2,169,834 a year
ago. In addition, the company reduced total shareholders' deficit
by 54%, reporting $2,242,033 as compared with $4,915,215 in its
fiscal 2003 filing.
"Substantial Growth and Re-emergence"
"By any and all measures, 2004 was a period of substantial growth
and re-emergence for CirTran," said Iehab Hawatmeh, the company's
founder and president. "Everyone at CirTran went about the
business of working hard to increase sales while reducing
liabilities and keeping a watchful eye on operating expenses
according to plan. Those efforts -- and we believe similar
positive results -- have continued into fiscal 2005," he said.
CirTran "won more than $30 million (annualized) in contracts in
the first quarter of 2005, led by the continued acceptance of our
new CirTran-Asia subsidiary as a 'player' in building consumer
electronics and sold-on-TV products in China," said Mr. Hawatmeh.
He also said that CirTran's core business in the United States
"has continued to improve in keeping with the general improvement
in the domestic IT marketplace.
"The early years of the new millennium were very difficult for the
IT industry here at home and around the world," he said. "Many
companies -- some many times larger than CirTran -- were brought
to their financial knees or just disappeared. I believe CirTran
and our Racore Technology have re-emerged from these troubled
times in good position to conduct business in the U.S., along with
our Asian subsidiary."
Mr. Hawatmeh said that the company has continued to make
substantial progress into 2005, including converting $2.5 million
in debt to equity and paying off a negotiated settlement with the
Internal Revenue Service, "improving CirTran's overall financial
position by approximately $4 million.
"CirTran," he said, "also continued to make moves with immediate
and long-term financial benefit" earlier this week when it
purchased its 40,000-square-foot office and manufacturing facility
for $2.05 million, including $1 million in restricted (for two
years) stock at $.05 per share and assumption of a note for
$1.05 million. Mr. Hawatmeh said the building, which has been
CirTran's headquarters since 1996, has been appraised for more
than $2.2 million.
Going Concern Doubt
Hansen, Barnett & Maxwell, CirTran's accountants, raised
substantial doubts about the Company's ability to continue as a
going concern after it audited the Company's financial statements
for the fiscal year ended Dec. 31, 2004.
The Company sustained losses of $658,322 and $2,910,978 for the
years ended December 31, 2004 and 2003, respectively. As of
December 31, 2004, and 2003, the Company had an accumulated
deficit of $18,799,602 and $18,141,280, respectively, and a total
stockholders' deficit of $2,242,033 and $4,915,251, respectively.
The Company also had negative working capital of $3,558,826 and
$5,529,244 as of December 31, 2004 and 2003, respectively. In
addition, the Company used, rather than provided, cash in its
operations in the amounts of $1,680,054 and $1,123,818 for the
years ended December 31, 2004 and 2003, respectively.
About CirTran-Asia
CirTran-Asia -- http://www.CirTran-Asia.com/-- was formed in 2004
as a high-volume manufacturing arm and wholly owned subsidiary of
CirTran Corp. with its principal office in ShenZhen, China.
CirTran-Asia operates in three primary business segments: high-
volume electronics, fitness equipment and household products
manufacturing, focusing on being a leading manufacturer for the
multi-billion dollar Direct Response Industry, which sells through
infomercials, print and Internet advertisements.
About CirTran Corp.
Founded in 1993, CirTran Corp. -- http://www.CirTran.com/-- is a
premier international full-service contract manufacturer of low to
mid-size volume contracts for printed circuit board assemblies,
cables and harnesses to the most exacting specifications.
Headquartered in Salt Lake City, CirTran's modern 40,000-square-
foot non-captive manufacturing facility -- the largest in the
Intermountain Region -- provides "just-in-time" inventory
management techniques designed to minimize an OEM's investment in
component inventories, personnel and related facilities, while
reducing costs and ensuring speedy time-to-market.
COMBINED PENNY: Board of Directors Votes to Liquidate Fund
----------------------------------------------------------
Combined Penny Stock Fund, Inc.'s (OTCBB: PENY) Board of
Directors, in a special meeting held earlier on Friday, Apr. 15,
2005, voted unanimously to liquidate the Fund. The date of record
for payment of shareholders of PENY common stock, par value $.001,
will be April 29, 2005.
The estimated cash distribution will be $.01 per share to
shareholders of record on April 29, 2005.
The cash distribution date will be on or before July 31, 2005.
COMMERCE ONE: Wants Until May 4 to File a Chapter 11 Plan
---------------------------------------------------------
Commerce One Inc. nka CO Liquidation Inc. asks the U.S. Bankruptcy
Court for the Northern District of California, San Francisco
Division, to extend the time within which it alone can file a
chapter 11 plan and solicit acceptances of that plan. Commerce
One asks the Court to extend its Exclusive Plan Proposal Period
until May 4, 2005, and extend its Exclusive Solicitation Period
until July 3, 2005.
The Debtor tells the Court that it needs this brief extension to
finalize the terms a of consensual plan with the Official
Committee of Unsecured Creditors and to discuss the treatment of
the $26 million claim filed by one of Commerce's former employees.
The Debtor is also trying to resolve a prepetition patent
application dispute with Computer Horizons Corporation.
Headquartered in San Francisco, California, Commerce One, Inc.
(n/k/a CO Liquidation, Inc.) -- http://www.commerceone.com/--
provides software services that enable businesses to conduct
commerce over the Internet. Commerce One, Inc., and its wholly
owned subsidiary, Commerce One Operations, Inc., filed for chapter
11 protection on Oct. 6, 2004 (Bankr. N.D. Calif. Case Nos. 04-
32820 and 04-32821). Doris A. Kaelin, Esq., and Lovee Sarenas,
Esq., at Murray and Murray, represent the Debtors in their
restructuring efforts. When the Debtors filed for bankruptcy,
they listed $14,531,000 in total assets and $12,442,000 in total
debts. As of December 2, 2004, Commerce One estimates that its
liabilities owed to creditors total approximately $9.7 million,
including approximately $5.1 million owed to ComVest. The Company
expects that total liabilities will continue to increase over
time.
COPAMEX: Fitch Affirms Senior Unsecured Currency Rating at BB-
--------------------------------------------------------------
Fitch Ratings has affirmed Copamex, S.A. de C.V. senior unsecured
foreign and local currency ratings at 'BB-' and the senior
unsecured national scale rating at 'A-(mex)'. Fitch has also
affirmed Copamex's peso-denominated medium-term notes program for
MXP700 million, including a 15% partial guarantee by Nederlandse
Financierings-Maatschappij voor Ontwikkelingslanden N.V. at
'A(mex)' and Copamex's short-term rating at 'F2(mex)'. The
Outlook on the ratings is Stable.
The ratings reflect the completion during 2004 of the business and
financial restructuring of the company and the divestiture of the
consumer products division. In Fitch's opinion, this event had a
mixed effect for the company. It increased the business risks
because the remaining operations (manufacturing of kraft paper,
corrugated boxes, and bond paper) are more cyclical than the
consumer products business, while it lowered the company's
financial risk because proceeds from the divestiture were used to
pay down debt.
The ratings also reflect Copamex's strong market shares in its
main products. On a pro forma basis, in 2004, 59% of total
revenues were associated to products where Copamex holds leading
market positions in Mexico. The current strategy is oriented
towards organic growth and should not demand significant
investments, allowing the company to use free cash flow for debt
reduction.
Despite a challenging operating environment over the past several
years, Copamex's pro forma EBITDA (excluding divested business
lines) has remained relatively stable at around US$40 million per
year. Total debt at March 8, 2005, was US$129 million and pro
forma 2004 EBITDA (including US$4 million of nonrecurrent charges
related to the divestiture) reached US$38 million, which
translates into a ratio of total debt to EBITDA of 3.4 times and a
ratio of EBITDA to interest expense of 2.4x. The ratings consider
Fitch's expectations that these leverage and interest coverage
ratios will improve by the end of the year to levels close to 3.0x
and 2.8x, respectively. Failure by the company to meet these
financial targets could affect the ratings negatively. The
ratings also consider the extension of the debt maturity profile,
which the company plans to achieve during the year through the
refinancing of the certificados bursatiles due 2005 and 2006.
Copamex was founded in 1928 in Monterrey, N.L. as an industrial
paper business. During 2003 and 2004, the company divested its
multiwall bag business and its consumer division using proceeds
for debt reduction. Copamex is composed of three divisions:
packaging, printing and writing, and diapers. Pro forma sales for
2004 and EBITDA reached US$404 million and US$34 million
(including nonrecurrent charges of US$4 million), respectively.
Packaging accounted for 51% of revenues, printing and writing for
44%, and diapers for 7%.
COSINE COMMS: Auditors Express Going Concern Doubt
--------------------------------------------------
Ernst & Young LLP, raised substantial doubt about CoSine
Communications, Inc.'s (Nasdaq: COSN) ability to continue as a
going concern after it audited the Company's financial statements
for the years ended Dec. 31, 2004. E&Y said the Company's actions
in September 2004, in connection with its ongoing evaluation of
strategic alternatives, to terminate most of its employees and
discontinue production activities in an effort to conserve cash,
triggered them to issue a going concern opinion.
At December 31, 2004, the Company has an accumulated deficit of
$515,759,000 and has sustained a net loss during the year ended
December 31, 2004 of $37,337,000. As of December 31, 2004, the
Company's business consisted primarily of a customer service
capability operated under contract by a third party.
About CoSine Communications
CoSine Communications was founded in 1998 as a global
telecommunications equipment supplier to empower service providers
to deliver a compelling portfolio of managed, network-based IP and
broadband services to consumers and business customers. Currently,
CoSine's business consists primarily of a customer service
capability operated under contract by a third party.
CRC HEALTH: Moody's Rates Planned $230M Sr. Sec. Facilities at B2
-----------------------------------------------------------------
Moody's Investors Service assigned a B2 rating to CRC Health
Corporation's proposed $230 million senior secured credit
facilities. Moody's also assigned a B2 senior implied rating and
a B3 senior unsecured issuer rating to CRC. The rating outlook is
stable.
New ratings assigned:
-- $25 million Senior Secured Revolving Credit Facility, due
2010, rated B2
-- $205 million Senior Secured Term Loan B, due 2011, rated B2
-- Senior Implied Rating, rated B2
-- Senior Unsecured Issuer Rating, rated B3
The B2 rating reflects the operational and financial risk inherent
in the company's acquisition strategy, the execution challenges
and increased leverage associated with the pending Sierra Tucson
transaction, small revenue base (which has just recently grown by
over 50%), and high exposure to government reimbursement in its
Pennsylvania residential facilities, which is approximately 15% of
total revenues.
Factors mitigating these concerns include a strong payer mix with
private pay accounting for approximately two-thirds of total
revenues, a relatively successful track record of integrating and
improving the operations of acquired companies, the long operating
history and strong reputation of its residential treatment
centers, and the large and growing demand for its substance abuse
rehabilitation treatment services. CRC has a significant
competitive advantage compared to other companies that serve this
market because of its scale, financial resources and access to
capital, breadth and depth of services, its marketing expertise,
technology investments, managed care contracts, and professional
management. Additional factors supporting the rating include high
facility margins for its opiate treatment centers and the Sierra
Tucson facility, and a lean corporate support infrastructure.
Despite the listed credit strengths, Moody's is concerned with the
high level of leverage (total debt accounts for almost 70% of
total capital) and the need to access additional external capital
and internal cash to support its aggressive growth strategy. CRC
has only recently increased their free cash flow in 2004,
following a very minimal amount in 2003. Moody's believes that
CRC will only minimally reduce the level of total debt outstanding
over the next few years. Somewhat offsetting this risk is the high
facility contribution margin of existing facilities and the fact
that management has been able to continue to grow revenues and
expand margins at acquired facilities. Further, excluding the
2006 facility expansion at one of CRC's larger residential
facilities, the company will require only minimal discretionary
capital spending going forward to support future growth. As a
result, adjusted free cash flow to adjusted debt should average
between 5% to 6% over the next two years.
The stable outlook anticipates that the company will continue to
increase revenues, expand margins at both existing and acquired
facilities, and generate operating cash flow through higher rates,
improved census and strong cost control. The company will be able
to expand its census through its managed care contracts, increased
marketing to referral sources, and the addition of new programs.
The company will continue to supplement internal growth through
the acquisition of additional residential facilities and opiate
treatment centers.
If greater than anticipated operating improvements translate into
higher free cash flow generation and debt reduction, the rating
could be upgraded.
Conversely, if the integration of acquired facilities is behind
plan or other factors lead to slower revenue growth, increased
margin pressure and a contraction in the level of free cash flow,
the outlook could change to negative. The acquisition of a major
competitor or chain of facilities that would significantly
increase the amount of outstanding debt would likely result in a
ratings downgrade.
CRC intends to issue $230 million in senior secured credit
facilities, consisting of a $205 million Funded Term Loan B, due
2011, and a $25 million Revolver, due 2010. CRC plans to use the
proceeds from the senior secured credit facilities to finance the
$130 million acquisition of Sierra Tucson and repay its existing
credit facility and repurchase a seller note.
Founded in 1983, Sierra Tucson is a leading treatment center for
addiction and behavioral health disorders with 91 beds. Sierra
Tucson has a strong nationwide reputation and excellent strategic
fit with CRC's Residential Treatment division. Sierra Tucson will
positively impact the company's margins and improve its payer mix.
The B2 rating on the senior secured credit facilities reflects a
first lien security interest in all of the tangible and intangible
assets and capital stock of the borrower and the guarantor. CRC
Holding Corporation and the future subsidiaries of the parent and
the borrower, excluding EGetGoing Inc., will guarantee the debt.
The rating on the senior secured facilities are at the same level
as the senior implied rating due to the high proportion of assets
consisting of goodwill and other intangible assets (80% of total
assets). Further supporting the rating is that the total
committed bank facilities account for over 80% of total pro-forma
debt. The B3 senior unsecured issuer rating considers the
subordination to the senior secured facilities as well as the
absence of any guarantee or security supporting this class of
debt.
CRC Health Corporation, based in San Jose, California, is the
largest provider of chemical dependency and substance abuse
treatment services through its Residential and Opioid Divisions.
Founded in 1995, the company has 88 facilities in 20 states with
over 2,500 employees. For the year ended December 31, 2004, CRC
generated $204.1 million in pro-forma revenues.
CRC HEALTH: S&P Rates Proposed $230M Senior Loan Facility at B+
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B+' corporate
credit rating to substance abuse services provider CRC Health
Corp., the operating company of CRC Health Group. (The majority
owner, North Castle Partners, controls 67% of CRC Health Group
stock.)
At the same time, Standard & Poor's assigned its 'B+' senior
secured debt rating to CRC's proposed $230 million senior secured
bank credit facility due in 2011.
The proposed senior secured credit facility comprises:
(1) a new $205 million, six-year term loan, and
(2) a new $25 million, five-year revolving credit facility.
It is rated the same as the corporate credit rating, with a
recovery rating of '3'. This means that asset values provide
lenders with the expectation of meaningful recovery of principal
(50%-80%) in the event of a payment default.
The outlook on CRC Health Corp. is stable.
The company is expected to use the proceeds from the $205 million
senior secured term loan to repay existing debt and finance the
purchase of Sierra Tucson, a private inpatient substance abuse
treatment center located just north of Tucson, Arizona. After the
transaction, CRC will have approximately $255 million of pro forma
total debt outstanding, including $50 million of mezzanine debt.
"The low-speculative-grade ratings reflect CRC Health Corp.'s
narrow business focus, the risks associated with its significant
new investment in Sierra Tucson, the potential for increasing
competition in this fragmented market, and an aggressive capital
structure," said Standard & Poor's credit analyst David Peknay.
San Jose, California-based CRC Health Corp. has a relatively
large, but not dominant, presence in the extremely fragmented
substance abuse treatment industry. The company provides services
in 39 residential and outpatient facilities in 10 states, and it
operates 50 opioid treatment centers in 17 states. Because of its
narrow business focus, the company is more vulnerable than others
to adverse industry developments, including changes in regulations
or treatment modalities.
Furthermore, Sierra Tucson as a single facility will generate 15%
of CRC's total revenues, which represents nearly a quarter of
total company earnings. Accordingly, the inability of Sierra
Tucson to sustain premium pricing could have a disproportionate
effect on CRC's profitability.
Lastly, while the current business profile benefits from CRC's
profitable, largely private pay revenue mix, competition may
increase, given the low barriers to entry.
CRC's financial profile, which will be burdened by debt associated
with the Sierra Tucson acquisition, will nevertheless be
consistent with the rating. Funds from operations to lease-
adjusted debt will approximate 12%, while lease-adjusted debt to
EBITDA is expected to be 4.3x at closing of this transaction.
CREDIT SUISSE: Moody's Pares Rating on Class J-ALL Certs. to Ba1
----------------------------------------------------------------
Moody's Investors Service upgraded the ratings of two classes,
downgraded the ratings of two classes and affirmed the rating of
one class of Credit Suisse First Boston Mortgage Securities Corp.,
Commercial Mortgage Pass-Through Certificates, Series 2001-TFL1 as
follows:
-- Class A-X, Notional, affirmed at Aaa
-- Class E, $21,100,000, Floating, upgraded to Aaa from A2
-- Class F, $43,000,000, Floating, upgraded to A1 from A3
-- Class H-ALL $6,700,000, Floating, downgraded to Ba2 from
Baa3
-- Class J-ALL, $4,500,000, Floating, downgraded to Ba3 from
Ba1
As of the April 12, 2005 distribution date, the transaction's
aggregate certificate balance has decreased by approximately 90.2%
to $125.0 million from $1,273.6 million at securitization as a
result of the payoff of five loans initially in the pool. The
Alliance Multifamily Portfolio Loan is the sole remaining loan.
The Alliance Loan is secured by 21 garden-style multifamily
projects located in Texas and Arizona. The collateral properties
contain a total of 5,389 units. The borrowers are affiliated with
Alliance Holdings Investments II, L.L.C. Property performance is
poor with increased vacancy, lower rents and increased operating
expenses. Moody's current net cash flow for the pool is
$13.3 million, compared to $17.1 million at Moody's last review in
May 2003 and compared to $18.9 million at securitization.
Portfolio occupancy as of September 2004 was 88.0%, compared to
93.0% at Moody's last review and at securitization. The current
loan to value ratio is 86.9%, compared to 76.7% at Moody's last
review and compared to 64.6% at securitization.
Classes E and F have been upgraded to due increased subordination
levels. Classes H-ALL and J-ALL have been downgraded to due to
the poorer performance of the Alliance Loan.
The collateral is encumbered by senior debt in the amount of
$125.0 million and junior debt in the amount of $12.0 million.
The outstanding amount of the junior debt has declined by
$5.0 million since securitization. The ownership interest in the
collateral is encumbered by mezzanine debt totaling $74.5 million,
up from $71.5 million at securitization. The mezzanine debt has
increased due to additional fundings related to loan extension
fees, interest rate cap agreement extension fees and a protective
advance for trade payables. While Moody's understands that the
borrower is working towards a refinance of the total outstanding
debt, progress has been slow. Moody's LTV inclusive of all the
debt is well in excess of 100.0%. Moody's estimates a LTV of
approximately 100.0% based on current market capitalization rates.
CYPRESS COMMS: Deloitte Express Going Concern Doubt in Form 10-K
----------------------------------------------------------------
Cypress Communications Holding Co., Inc. (OTCBB: CYHI) filed its
Form 10-K with the Securities and Exchange Commission reporting
its consolidated operating and financial results for its year
ended December 31, 2004. The announcement of the fourth quarter
and year end results and the filing of the Form 10-K had been
delayed as Cypress had originally anticipated that the pending
acquisition of Cypress by an affiliate of Arcapita Inc. would be
closed prior to the filing due date. Cypress notified the
Securities and Exchange Commission on April 1, 2005, of the delay
with the filing of a Form 12b-25.
"I am very pleased with Cypress Communications' fourth quarter and
fiscal year 2004 results. The year-over-year improvement in
EBITDA performance, gross margin and operating expenses is
directly attributable to the significant efforts of our employee
associates, improved customer satisfaction and the selling
advantages of Cypress EZ Office(sm) product suite of fully managed
voice, data and Internet solutions. This positive momentum has
continued for the past six financial quarters and has been
acknowledged through the pending sale and merger process," said
Gregory P. McGraw, President and Chief Executive Officer of
Cypress Communications Holding Company and its subsidiaries.
Financial Highlights
The Company reported revenues for the fourth quarter ended
December 31, 2004 of $19.4 million, a decrease of 2% from fourth
quarter 2003 revenues of $19.8 million and flat from the third
quarter of 2004 revenues. Revenues for the year ended December
31, 2004 were $79 million, a decrease of 7% from 2003 revenues of
$84.6 million. The decrease in revenues in the fourth quarter and
full year of 2004 primarily reflect the full year impact of
customer base declines that were experienced starting in late 2002
and into 2003 following the Company's acquisition of the assets of
the shared tenant telecommunications services business of
WorldCom, Inc., in July 2002.
The Company reported net income of $87,000, compared to a net loss
of $1.1 million for the fourth quarter of 2004 on 7,810,000 and
5,874,000 weighted average diluted shares of common stock
outstanding, respectively. The improvement in the reported net
income is related primarily to the improved gross margins from EZ
Office bundled services, lower operating expenses and network cost
savings realized from the competitive local exchange carrier
(CLEC) migration begun in late 2003 and completed in early 2004.
Net income for the fourth quarter includes $399,000 in costs
associated with the pending acquisition of the Company mentioned
below. Net income for the year ended December 31, 2004 was
$423,000, compared to a net loss of $4.2 million for the year
ended December 31, 2003 on 5,874,000 weighted average shares of
common stock outstanding for each period respectively. Results
for the 2004 full year include $597,000 of costs incurred related
to the pending acquisition of the Company.
The Company reported fourth quarter 2004 EBITDA (net income (loss)
excluding net interest, income taxes, depreciation and
amortization) of $2.3 million, versus fourth quarter 2003 EBITDA
of $665,000. EBITDA for the year ended December 31, 2004 was
$8.4 million, a 200% increase over the $2.8 million of EBITDA
reported for the year ended December 31, 2004. (2004 and 2003
EBITDA includes extinguishment of certain accrued liabilities of
$545,000 and $2.0 million, respectively, attributable to the
Company's success in renegotiating and eliminating certain prior
accrued liabilities.) When comparing EBITDA for the fourth
quarter and full year 2004 to the corresponding 2003 periods, the
increase in EBITDA can be primarily attributed to network cost
savings and gross margin improvements realized as a result of the
completion of network migration efforts as a CLEC to wholesale
interconnection arrangements with the regional bell operating
companies and incumbent local telephone companies, along with
reductions in other operating expenses.
EBITDA is presented because it is a widely accepted performance
indicator, although it should be noted that it is not a measure of
liquidity or of financial performance under generally accepted
accounting principles. The EBITDA numbers presented may not be
comparable to similarly titled measures reported by other
companies. EBITDA, while providing useful information, should not
be considered in isolation or as an alternative to net income or
cash flows as determined under GAAP. Consistent with Securities
and Exchange Commission Regulation G, the attached table provides
a reconciliation of EBITDA to the most directly comparable GAAP
measure of operating income (in thousands).
During the year ended December 31, 2004, Cypress reduced its
accrued liabilities and debt to unaffiliated parties by over
$5 million and had net borrowing availability of approximately
$3 million under its revolving credit facility at December 31,
2004.
On November 5, 2004, Cypress announced that its Board of Directors
approved a definitive Agreement and Plan of Merger with an
affiliate of Arcapita, Inc., f/k/a Crescent Capital Investments,
Inc., an Atlanta-based private equity investment firm. On
March 15, 2005, a majority of the stockholders of Cypress approved
the Agreement and Plan of Merger. The closing of the transaction
is still subject to certain closing conditions which have, as yet,
not been met. Cypress cannot predict when these conditions will
be met, and therefore, cannot predict a closing date for the
transaction at this time.
Going Concern Doubt
Deloitte & Touche LLP, Cypress Communications' auditors, expressed
substantial doubt about the Company's ability to continue as a
going concern after it audited the Company's financial statements
for the fiscal year ended Dec. 31, 2004. The Company said its
recurring losses and its unfavorable working capital and uncertain
liquidity position triggered Deloitte's going concern opinion.
About the Company
Cypress Communications (OTCBB: CYHI) -- http://www.cypresscom.net/
-- is the preferred communication solution provider in more than
1,300 commercial office buildings in 25 major metropolitan U.S.
markets. Each day, Cypress uses its fiber optic and copper
broadband infrastructure to connect more than 100,000 employees
for over 8,000 small- and medium-sized businesses in commercial
office buildings. As a single-source provider of communication
solutions, Cypress supplies advanced digital and IP phone service,
unlimited local and long distance calling, business-class Internet
connectivity, firewalls, security and VPN solutions, audio/web
conferencing and business television solutions. The Cypress EZ
Office(sm) product suite provides a premium bundled solution with
one number to call for support, one simple bill and the highest
level of service available. Cypress Communications Holding
Company, Inc., is headquartered in Atlanta, Ga.
At Dec. 31, 2004, Cypress Communications' balance sheet showed a
$1,926,000 stockholders' deficit, compared to a $2,427,000 deficit
at Dec. 31, 2003.
DELAFIELD 246 CORP: Wants Steven Cohn as Bankruptcy Counsel
-----------------------------------------------------------
Delafield 246 Corporation asks the U.S. Bankruptcy Court for the
Eastern District of New York for permission to retain Steven Cohn,
P.C. as its bankruptcy counsel.
Steven Cohn is expected to:
a. Assist and advise the Debtor relative to the administration
of this proceeding;
b. Represent the Debtor before the court and advise the Debtor
on litigation, hearings, motions, and decisions of the
court;
c. Assist and analyze all applications, orders and motions
filed with the court by third parties in this proceeding
and advise the Debtor of their propriety;
d. Attend all hearings conducted pursuant to Section 341(a) of
the Bankruptcy Code and otherwise and represent the debtor
at all examinations;
f. Communicate with creditors and their counsel;
g. Assist the debtor in preparing applications, affidavits,
legal memoranda and orders in support of positions taken by
the Debtor, as well as prepare witnesses and review
documents in this regard;
h. Confer with any accountants and consultants retained by the
Debtor and/or any other party-in-interest;
i. Prepare the pan of reorganization and disclosure
statement(s);
j. Assist the Debtor in performing other services as may be in
the interests of the debtor and perform all other legal
services required by the Debtor.
Daniel A. Zimmerman, Esq., at Steven Cohn, discloses he will bill
the Debtor $350 per hour.
To the best of the Debtor's knowledge, Steven Cohn is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
Headquartered in Plainview, New York, Delafield 246 Corporation is
a real estate investor and developer. The Company filed for
chapter 11 protection on November 29, 2004 (Bankr. E.D.N.Y. Case
No. 04-87515). Daniel A Zimmerman, Esq., at the Law Offices of
Steven Cohn PC, represents the Company in its restructuring
efforts. When the Debtor filed for protection from its creditors,
it listed $13,000,000 in assets and $9,001,200 in debts.
DII INDUSTRIES: Asbestos PI Trust Divests Shares in Halliburton
---------------------------------------------------------------
The DII Industries, LLC, Asbestos PI Trust sold all of its
59,500,000 shares of Halliburton Co. common stock pursuant to an
underwritten offering, at $42.50 per share, for a total of
$2,528,750,000.
Minus $46,767,000 for underwriting discounts and commissions, the
Trust expects to recoup $2,481,983,000 from the transaction.
The shares represent all of the shares that Halliburton issued to
the Trust as part of an asbestos settlement in DII Industries and
its debtor-affiliates' Chapter 11 cases. The proceeds of sale is
for the benefit of the asbestos personal injury claimants.
As a result of the transaction, the Asbestos PI Trust no longer
holds any shares of Halliburton common stock.
JPMorgan Securities, Inc., Goldman, Sachs & Co., and Citigroup
Global Markets, Inc., managed the offering.
Headquartered in Houston, Texas, DII Industries, LLC, is the
direct or indirect parent of BPM Minerals, LLC, Kellogg Brown &
Root, Inc., Mid-Valley, Inc., KBR Technical Services, Inc.,
Kellogg Brown & Root Engineering Corporation, Kellogg Brown & Root
International, Inc., (Delaware), and Kellogg Brown & Root
International, Inc., (Panama). KBR and its subsidiaries provide a
wide range of services to energy and industrial customers and
government entities in over 100 countries. DII has no business
operations. DII and its debtor-affiliates filed a prepackaged
chapter 11 petition on December 16, 2003 (Bankr. W.D. Pa. Case No.
02-12152). Jeffrey N. Rich, Esq., Michael G. Zanic, Esq., and
Eric T. Moser, Esq., at Kirkpatrick & Lockhart LLP, represent the
Debtors in their restructuring efforts. On June 30, 2004, the
Debtors listed $6.255 billion in total assets and $5.295 billion
in total liabilities. (DII & KBR Bankruptcy News, Issue No. 27;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
DONOVAN ELECTRIC: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Donovan Electric
P.O. BOX 20310
Santa Barbara, California 93121
Bankruptcy Case No.: 05-10997
Type of Business: The Debtor is an electric contractor.
Chapter 11 Petition Date: April 15, 2005
Court: Central District of California (Northern Division)
Judge: Robin Riblet
Debtor's Counsel: Janet A. Lawson, Esq.
3615 South Victoria Avenue, Suite 7
Oxnard, California 93035
Tel: (805) 985-1147
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $500,000 to $1 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Lawrence J. Donovan Loan $836,239
5206 El Carro Ln
Carpinteria, CA 93013
Bonnie K.Donovan Rent $165,712
5206 El Carro Ln
Carpinteria, CA 93013
Graybar Electric Company Trade debt $114,134
PO Box 57071
Los Angeles, CA 90074
Electrical Industrial Trade debt $110,449
Account
Steven L. Donovan Loan $70,000
Pacificom Trade debt $21,468
One Source Distributors Trade debt $17,004
RJ Carroll And Sons, Inc. Trade debt $5,998
Tegg Corporation Trade debt $5,812
PTS Rentals Trade debt $4,998
Western Hyddro Co. Trade debt $4,325
Verizon Directories Miscellaneous $4,177
Electric Parts Center Trade debt $4,133
IRS Service PR Tax $3,878
Blue Cross Life & Health Insurance $3,765
Insurance Com
Allsale Electric Inc. Trade debt $3,665
Hollister & Brace Legal $3,578
Internal Revenue Service Interest $3,292
Northridge Equipment Rental Trade debt $2,945
Star Power Generators Trade debt $2,875
DYNEGY INC: Inks Comprehensive Shareholder Class Action Settlement
------------------------------------------------------------------
Dynegy Inc. (NYSE:DYN) reached a comprehensive settlement
agreement related to the shareholder litigation brought by the
Regents of the University of California as a class action in the
U.S. District Court in Houston. In its lawsuit, the Regents
alleged violation of securities laws primarily related to "Project
Alpha," a structured natural gas transaction entered into by the
company in 2001. The class action included claims for damages on
behalf of a class of purchasers of Dynegy Class A common stock
during the class period of June 2001 to July 2002.
The settlement agreement, which is subject to federal court
approval, provides for the following:
-- A total settlement payment of $468 million from Dynegy,
which includes $150 million to be covered by Dynegy's
director and officer insurance policies, a $250 million cash
payment, and the issuance of $68 million in Class A common
stock to the class represented by the Regents.
Two payments totaling $250 million will be made in 2005.
An initial payment of $175 million will be made during the
second quarter, followed by a second payment of $75 million
upon federal court approval. The company expects approval
during the second half of the year. Dynegy will also issue
Class A common stock in the value of $68 million following
court approval. The number of shares of Class A common
stock will be determined based on a calculation using a
volume weighted average stock price for Dynegy Class A
common stock for 20 trading days ending today.
-- The election to the Board of Directors of Dynegy Inc. of two
new qualified directors from a list of not less than five
qualified candidates submitted by the Regents, and in
accordance with a time schedule consistent with the approval
of the settlement by the federal court.
Thereafter, the recommendation for election of two new
directors to the Board of Directors of Dynegy Inc. at the
company's 2006 annual shareholders' meeting from a list of
not less than five qualified candidates submitted by the
Regents.
The process for election of the new directors will be
conducted in accordance with the normal processes previously
established by Dynegy's Corporate Governance and Nominating
Committee for the election of new directors.
In addition, in a related court case brought in Texas District
Court, two plaintiffs made similar claims to those in the class
action litigation. Dynegy has agreed to settle the derivative
litigation on the basis of corporate governance changes, many of
which have been implemented since the claim was filed. The
company has also agreed to pay related attorney fees and expenses
in the amount of $5 million. This settlement is not included in
the $468 million payment discussed above.
According to Bruce A. Williamson, Chairman, President and Chief
Executive Officer of Dynegy Inc., "As with other elements of our
self-restructuring, by entering into these settlement agreements
we are taking responsibility for the resolution of issues
associated with a past era for the company in order to put them
behind us. These settlements represent the last significant legal
impediments to the pursuit of growth opportunities for our Natural
Gas Liquids and Power Generation businesses. With these matters
resolved, management and the Board of Directors can concentrate
fully on the future direction of our company to maximize value for
shareholders.
"The financial impact of these settlements, along with liquidity
for our business operations, can be accommodated through our
available cash and bank lines," he said. "These settlements are
fair and equitable for all parties involved, including the
company, our current investors and former investors who are
members of the class."
Mr. Williamson added, "Finally, from a governance perspective, we
look forward to adding two new members to our Board of Directors.
We are confident that the diversity of skills and contributions of
the new directors will enhance our industry-leading corporate
governance practices."
Dynegy and various other parties settling the litigation do not
admit to any liability by the company, its directors or officers.
In addition, there were no findings of any violation of federal
securities laws. The Regents were represented by Lerach Coughlin
Stoia Geller Rudman & Robbins LLP. Dynegy was represented in the
litigation by Haynes & Boone, LLP and in the settlement by
Stonebridge International LLC and Hogan & Hartson L.L.P.
Dynegy will record a first quarter pre-tax charge of approximately
$225 million (approximately $155 million after-tax) related to the
settlements and associated legal expenses. While the settlements
and expenses will impact the company's 2005 GAAP earnings guidance
estimate, they do not affect core business earnings. Management
will provide updated guidance reflecting the impact of the
settlements, as well as differences in current commodity and power
prices from previously issued commodity forecasts, during the
release of the company's first quarter 2005 financial results on
Monday, May 9, 2005.
About the Company
Dynegy Inc. provides electricity, natural gas and natural gas
liquids to markets and customers throughout the United States.
Through its energy businesses, Power Generation and Natural Gas
Liquids, the company owns and operates a diverse portfolio of
assets, including power plants totaling more than 13,000 megawatts
of net generating capacity and gas processing plants that process
approximately 1.6 billion cubic feet of natural gas per day.
* * *
Fitch affirms ratings for Dynegy Inc. and Dynegy Holdings Inc.
after the announcement of a comprehensive settlement related to
shareholder litigation brought by the Regents of the University of
California as a class action against DYN. The senior unsecured
debt at both entities is 'CCC+', and the Rating Outlook remains
Positive.
DYNEGY INC: Settlement Prompts Fitch to Hold Junk Ratings
---------------------------------------------------------
Fitch affirms ratings for Dynegy Inc. and Dynegy Holdings Inc.
after the announcement of a comprehensive settlement related to
shareholder litigation brought by the Regents of the University of
California as a class action against DYN. The senior unsecured
debt at both entities is 'CCC+', and the Rating Outlook remains
Positive. A complete listing of ratings for DYN and affiliated
companies is shown below.
The settlement, which is subject to federal court approval,
provides for a total settlement payment from DYN of $468 million,
which includes a $250 million cash payment, $150 million provided
by insurance, and $68 million of common stock. A primary rating
consideration by Fitch is the potential impact the cash payment
will have on the company's liquidity position. Based on recent
estimates of future operating cash flow, borrowing capacity under
DYNH's current bank facility, and the company's overall funding
requirements, liquidity remains adequate. Furthermore, ratings
for DYN's different classes of debt assume the estimated recovery
by creditors in the event of a bankruptcy.
In its recovery analysis of DYN, Fitch conservatively assumes all
company bank lines are fully drawn and no cash remains available
for creditors, hence, there is no impact on recovery valuations
from the settlement cash payment. While the dilution to equity
and charge to earnings from the settlement could have a negative
effect on DYN's common share price; irrespective of this Fitch
considers a large equity offering by the company resulting in a
material deleveraging as unlikely over the near term.
Fitch's ratings are:
DYN
-- Indicative senior unsecured debt 'CCC+';
-- Convertible debentures 'CCC+'.
DYNH
-- Secured revolving credit facility and term loan 'B+';
-- Second priority secured notes 'B';
-- Senior unsecured debt 'CCC+'.
Dynegy Capital Trust I
-- Trust preferred stock 'CC'.
EURAMAX INTERNATIONAL: GSCP Merger Cues S&P to Watch Low-B Ratings
------------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'BB-' corporate
credit and 'B' subordinated debt ratings on Euramax International
Inc. on CreditWatch with negative implications. The CreditWatch
placement followed the company's announcement that it has agreed
to a merger plan with GSCP EMAX Acquisition LLC. GSCP EMAX is a
newly formed company organized by Goldman Sachs Capital Partners
and management of Euramax, in which, among other things, GSCP EMAX
will acquire all outstanding stock of Euramax. sWe also note that
as part of the transaction Euramax intends to redeem all of its
8.5% senior subordinated notes due 2011.
At Dec. 31, 2004, Norcross, Georgia-based Euramax had $313 million
of lease-adjusted debt outstanding.
"Key drivers of further rating activity include pro forma debt
leverage, the company's near-term business prospects and
strategies, and the liquidity profile," said Standard & Poor's
credit analyst Paul Kurias.
Euramax manufactures various aluminum, steel, vinyl, and glass
fiber products to the building and construction and transportation
markets in the U.S., U.K., The Netherlands, and France.
S&P said it expects to resolve the CreditWatch after discussion
with management.
FC CBO: Moody's Reviewing B3 Rating on $37.75M Class B Notes
------------------------------------------------------------
Moody's Investors Service reported that as part of the rating
monitoring process it has placed these Class of Notes issued by FC
CBO III, Limited, a collateralized debt obligation issuance, on
the Moody's Watchlist for possible downgrade:
-- $37,750,000 Class B Floating Rate Notes Due 2011 rated "B3".
Moody's noted that the transaction, which closed in November of
1999, is currently failing the Class B Par Value Test, the Minimum
Rating Distribution Test and the Diversity Test, each as reported
in the Monthly Report dated March 9, 2005.
Moody's stated that placement on the Watchlist for possible
downgrade reflects Moody's opinion that the credit quality of the
Class B Notes may be deteriorating.
FIRST FRANKLIN: Moody's Puts Ba1 Rating on $12.3M Class B-4 Certs.
------------------------------------------------------------------
Moody's Investors Service has assigned Aaa rating to the senior
certificates and ratings ranging from Aa2 to Ba1 to the
subordinate certificates issued by First Franklin Mortgage Loan
Trust 2005-FF1.
The securitization is backed by First Franklin originated
adjustable-rate (90.14%) and fixed-rate (9.86%) mortgage loans.
The ratings are based primarily on the credit quality of the
loans, and on the protection from subordination,
overcollateralization and excess spread. The fixed rate portion
of this pool is marginally stronger than recent First Franklin
pools and the adjustable rate pool is comparable to some of the
past adjustable rate mortgage pools from First Franklin.
First Franklin Financial Corporation (a subsidiary of National
City Corporation) is a leading wholesale sub-prime lender. The
company originated approximately $29.2 billion in mortgage loans
in 2004.
Saxon Mortgage Services, Inc. will service the loans. Moody's has
assigned Saxon Mortgage Services, Inc. an above average servicer
quality rating as a primary servicer of subprime mortgage loans.
First Franklin Mortgage Loan Trust 2005-FF1
Mortgage Pass-Through Certificates, Series 2005-FF1
Certificates Sizes Ratings
------------ ----- -------
Class A-1A $531,025,000 Aaa
Class A-1B $132,756,000 Aaa
Class A-2A $184,808,000 Aaa
Class A-2B $ 75,900,000 Aaa
Class A-2C $ 71,443,000 Aaa
Class M-1 $ 84,589,000 Aa2
Class M-2 $ 59,274,000 A2
Class M-3 $ 17,288,000 A3
Class B-1 $ 15,436,000 Baa1
Class B-2 $ 12,349,000 Baa2
Class B-3 $ 6,792,000 Baa3
Class B-4 $ 12,349,000 Ba1
GARDNER DENVER: S&P Puts B Rating on Proposed $125M Sr. Sub. Notes
------------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB-' corporate
credit rating to Quincy, Illinois-based Gardner Denver Inc. (GDI).
At the same time, Standard and Poor's assigned its 'B' rating to
the proposed $125 million senior subordinated notes due in 2013,
issued as part of the financing package backing GDI's purchase of
unrated Thomas Industries Inc. These notes will be issued
concurrently with approximately $200 million of equity (with a 15%
over-allotment option). In addition, GDI will be issuing a new
$230 million term loan, layered into an existing syndicated credit
facility that is unrated.
The outlook is stable.
GDI designs, manufactures, and markets compressor and vacuum
products, as well as fluid-transfer products.
On March 9, 2005, GDI announced its intention to buy Thomas
Industries Inc. (TII) for approximately $477 million, net of cash.
TII has a leading position in a niche market segment of precision-
engineered pumps and compressors.
This transaction will:
(1) complement GDI's product offering,
(2) expand its presence in the health-care sector, and
(3) provide further geographical diversity.
GDI has been growing mainly through acquisitions, having made 17
acquisitions in the past 10 years, including two large
acquisitions in 2004.
The rating is predicated on the concurrent issue of senior
subordinated notes and equity. The TII acquisition is not subject
to a financing contingency, as GDI has sufficient committed funds
available to consummate the acquisition.
"However," said Standard & Poor's credit analyst Natalia
Bruslanova, "if the company pursues the acquisition without an
equity issue, the corporate credit rating will be significantly
lower. We expect GDI to continue integration of acquired
businesses and to continue their cost-reduction initiatives.
Upside potential is constrained by the company's heavy debt burden
and a growing debt maturity schedule."
HARBOURVIEW: Fitch Puts $26.3M Notes' B- Rating on Watch Negative
-----------------------------------------------------------------
Fitch Ratings places three classes of notes issued by HarbourView
CDO III, Ltd. on Rating Watch Negative.
These classes have been placed on Rating Watch Negative:
-- $200,501,776 class A notes rated 'AA-';
-- $22,500,000 class B notes rated 'BBB-';
-- $26,250,000 class C notes rated 'B-'.
HarbourView III is a collateralized debt obligation -- CDO --
managed by HarbourView Asset Management which closed April 24,
2001. HarbourView III is composed of 34.2% residential mortgage-
backed securities -- RMBS, 27.9% asset-backed securities -- ABS,
15.3% commercial mortgage-backed securities -- CMBS, 8% real
estate investment trusts, 7.3% collateralized debt obligations and
7.3% corporate debt.
HarbourView III has triggered an event of default whereby several
remedies may occur including but not limited to these:
* a majority of the controlling class of noteholders
may choose to accelerate the maturity of the
transaction or
* a majority of all the noteholders may choose to
liquidate the portfolio.
Fitch is in contact with the asset manager and trustee and will
monitor the progress of a remedy to the event of default.
Since the last rating action on Aug. 30, 2004, the collateral has
deteriorated. The class A/B overcollateralization ratio and class
C OC ratio have decreased from 102.34% and 94.06%, respectively to
94.12% and 83.76% as of the most recent trustee report dated March
31, 2005. Additionally, the deteriorating credit quality of the
portfolio has increased the credit risk of this transaction to the
point the risk may no longer be consistent with the ratings.
Additional deal information and historical data are available on
the Fitch Ratings web site at http://www.fitchratings.com/
HARTWICK COLLEGE: Moody's Affirms Ba1 Long-Term Rating
------------------------------------------------------
Moody's Investors Service has affirmed Hartwick College's Ba1
long-term rating. The outlook for the rating remains negative at
this point, reflecting the continued operational challenges facing
the College, although Moody's believes that the College's finances
are gradually improving. If the College is able to achieve
targeted revenue initiatives and operating performance this fiscal
year and next, the outlook could stabilize. The rating
affirmation affects $24 million of outstanding Series 2002 bonds,
issued through the County of Otsego Industrial Development
Authority.
Credit Strengths/Opportunities are:
* Stabilized enrollment and net tuition revenue, with FTE
enrollment of 1,451 in fall 2004 which represents 1% growth
over the prior year, and 4% growth in net tuition per student
to $13,317. Student demand is also relatively stable, with
selectivity of 88.6% and matriculation of 23%. The College
reports favorable prospects for freshmen entering in fall
2005, with an 11% increase in applications compared to the
same time last year.
* Improved investment performance in FY2004 and year-to-date
FY2005 bolsters liquidity. As of the end of FY2004,
unrestricted resources grew to $12.4 million, up from
$9.3 million in FY2003. Fiscal year 2005 investment
performance through the end of February shows an 8.7% return
on the portfolio, which is managed by the Commonfund.
* Positive operating cash flow in FY2004 of 4.1% by Moody's
measures, although this still does not fully cover debt
service under a 5% endowment spending draw. Actual debt
service coverage stood at 0.8 times. The improved cash flow
margin is due to revenue growth in core net tuition revenue,
as well as an increase in unrestricted giving and continued
expense management.
* Significant increase in private philanthropy in FY2004, with
the College recording $8.7 million in total gift revenue
(including restricted gifts and pledges for capital
projects), compared with a prior three-year average of
$2.9 million.
* Continued strong management and leadership focus on student
niche positioning, building fundraising capacity, and
achieving greater operational balance.
Credit Weaknesses/Challenges are:
* Highly competitive market for students in New York, as
demonstrated by the College's still thin selectivity and low
yield on accepted students.
* Operational recovery plan demands a sustained improvement in
unrestricted giving ($3.5 million per year), as well as
further improvement in student market positioning to garner
growing net tuition revenue, which may prove challenging
given the competitive environment.
* Endowment spending at 6.2% for FY2005 remains above industry
norms, and contributes to Moody's measure of operating
deficits, although the College plans to reduce the draw to 5%
if it is able to achieve revenue growth from private
philanthropy and tuition.
* Highly liquid unrestricted resources still provide only a
thin cushion for debt and operations at 0.5 and 0.3 times,
respectively, particularly in light of the College's ongoing
operational challenges.
* Several consecutive years of expense reductions lead to the
need to invest in faculty and facilities in order to remain
competitive. However, if the College is unable to achieve
targeted revenue growth and enhanced private giving, it may
not achieve the resources necessary for such investment
without further increasing the endowment spending draw.
Outlook
Hartwick's rating outlook remains negative reflecting the
College's still fragile operating position. If the College is
unable to meet targeted revenue growth in the key areas of tuition
and private philanthropy, deficits could worsen. This could place
further pressure on the rating, particularly if accompanied by a
period of negative investment performance, which could further
reduce unrestricted liquidity. However, Moody's believes that the
College's management team, president, and Board are prudently
focused on those areas likely to improve credit quality in the
future. If the College again demonstrates a solid incoming
freshmen class, stable enrollment, healthy annual giving and
positive cash flow in FY2005, the outlook on the rating could
stabilize.
What Could Change the Rating - UP
Further strengthening of student demand and stabilized enrollment,
improvement in unrestricted liquidity relative to debt and
operations, and a consistent trend in positive operating cash flow
providing adequate coverage of debt service.
What Could Change the Rating - DOWN
Deterioration in liquidity, worsening of operating deficits, or
weakening of student market position.
Key Data and Ratios
(Fall 2004 Enrollment, FY 2004 Financial Information)
Total Enrollment: 1,451 full-time equivalent students
Freshman Applicants Accepted: 88.6%
Freshman Accepted Students Enrolled: 22.9%
Expendable Resources to Pro Forma Debt: 0.96 times
Expendable Resources to Operations: 0.59 times
3-Year Average Operating Margin: -14%
Operating Cash Flow Margin: 4.1%
HAWAIIAN AIRLINES: Appoints David Arakawa as General Counsel
------------------------------------------------------------
Hawaiian Airlines appointed David Arakawa, a respected community
leader and attorney with 24 years of broad-based legal experience,
to the position of senior vice president -- general counsel and
corporate secretary.
He started work April 1 and is overseeing all legal issues
regarding Hawaiian's operations.
"David's wealth of experience in government and law here in
Hawaii, coupled with his strong commitment to the local community,
will be a tremendous asset as Hawaiian continues to improve its
services to the travelers of Hawaii," said Joshua Gotbaum,
Hawaiian Airlines Trustee.
Commented Mr. Arakawa, "I'm very excited to work at Hawaiian
Airlines. The company and its employees play a very significant
role in our communities and with the state's economy. I look
forward to the opportunities and challenges of the new job."
Mr. Arakawa most recently served as corporation counsel for the
City and County of Honolulu over the past eight years. As the
chief legal advisor and representative for the mayor, city
council, and all city agencies and employees, Mr. Arakawa directed
more than 40 attorneys and a support staff of 50 employees.
Prior to joining the City and County of Honolulu, Mr. Arakawa
spent 13 years in private practice, including as a partner with
the law firm of Fujiyama Duffy and Fujiyama, serving a wide range
of corporate and government clients. He started his legal career
with the Department of the Prosecuting Attorney, where he
specialized in career criminal and organized crime cases.
Throughout his career, Mr. Arakawa has been involved in numerous
professional, civic and community activities. He is vice
president of the Hawaii United Okinawan Association, and has
served as a board member of several nonprofit organizations
committed to improving Hawaii's quality of life.
He currently serves as a board member of both the Aiea
Neighborhood Board and Aiea Community Association, and is also a
member of the Waipahu and Pearl City Community Associations.
His strong ties to Leeward Oahu come naturally. For 85 years, his
family owned and operated Mr. Arakawa's, the landmark plantation
store in Waipahu.
A Punahou graduate, Mr. Arakawa attended the University of Hawaii
at Manoa where he earned a Bachelor of Arts in History in 1979 and
his law degree from the William S. Richardson School of Law in
1981.
About Hawaiian Airlines
Hawaiian Airlines, the nation's number one on-time carrier, is
recognized as one of the best airlines in America. Readers of two
prominent national travel magazines, Cond‚ Nast Traveler and
Travel + Leisure, have both rated Hawaiian as the top domestic
airline serving Hawaii in their most recent rankings, and the
fifth best domestic airline overall.
Celebrating its 76th year of continuous service, Hawaiian is
Hawaii's biggest and longest-serving airline, and the second
largest provider of passenger air service between Hawaii and the
U.S. mainland. Hawaiian offers nonstop service to Hawaii from
more U.S. gateway cities than any other airline. Hawaiian also
provides approximately 100 daily jet flights among the Hawaiian
Islands, as well as service to Australia, American Samoa and
Tahiti.
Hawaiian Airlines, Inc. -- http://www.HawaiianAir.com/-- is a
subsidiary of Hawaiian Holdings, Inc. (AMEX and PCX: HA). Since
the appointment of a bankruptcy trustee in May 2003, Hawaiian
Holdings has had no responsibility for the management of Hawaiian
Airlines and has had limited access to information concerning the
airline.
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. The Bankruptcy Court confirmed
the Chapter 11 Trustee's Plan of Reorganization on March 10, 2005.
HAYES LEMMERZ: Amends & Restates Credit Agreement
-------------------------------------------------
Hayes Lemmerz International, Inc. (Nasdaq: HAYZ) reported amended
and restated the Credit Agreement, originally dated June 3, 2003,
governing its existing Senior Secured Term Loan and Senior Secured
Revolving Loan. The Amended and Restated Credit Agreement will
provide the Company with additional flexibility under certain
financial covenants and increase the Company's ability to fund
growth opportunities. Among other things, the Amended and
Restated Credit Agreement:
* establishes a new second lien $150 million term loan, from
which approximately 50% of the net proceeds were used to
repay a portion of the existing Senior Secured Term Loan,
with the remainder to be used for general corporate
purposes;
* reduces the Company's interest rate on the existing term
loan by 50 basis points;
* favorably modifies the financial covenants; and
* allows the Company to retain 50% of the net proceeds from
the proposed divestiture of its Commercial Highway Hub and
Drum business for capital expenditures.
James Yost, Vice President of Finance and Chief Financial Officer,
said, "We are extremely pleased with the continued show of support
from our existing lenders and the commitment of our new investors.
The new financing arrangements significantly enhance the Company's
liquidity, provide greater flexibility and enable us to continue
our strategic investments in geographic and product areas that
have greater investment return and cash flow generation
potential."
* * *
HLI Operating Company, Inc.'s Vice President, General Counsel and
Secretary Patrick C. Cauley tells the Securities and Exchange
Commission in a Form 8-K filing that the Restated Credit
Agreement governs the Hayes' senior secured term loan or the
"Term B Loan" and senior secured revolving credit facility. The
lenders and issuers under the Restated Credit Agreement are:
(1) Citicorp North America, Inc., as Administrative Agent and
Collateral Agent;
(2) Lehman Commercial Paper Inc., as Syndication Agent; and
(3) General Electric Capital Corporation, as Documentation
Agent.
A full-text copy of the Amended and Restated Credit Agreement
dated as of April 11, 2005, is available at the Securities and
Exchange Commission, at:
http://www.sec.gov/Archives/edgar/data/1237941/000095017205001188/hayesarca.txt
Mr. Cauley reports that the Restated Credit Agreement establishes
a new non-amortizing secured term loan in an aggregate principal
amount of $150 million or the "Term C Facility", the full amount
of which was drawn on April 11, 2005. "The Term C Facility will
mature and be payable in full on June 3, 2010. No portion of the
amounts drawn under the Term C Facility that are repaid or prepaid
may be reborrowed," Mr. Cauley says.
Loans under the Term C Facility bear interest, at HLI's option, at
a rate of:
(1) 4.50% plus the base rate, payable quarterly in arrears; or
(2) 5.50% plus the eurocurrency rate, payable at the end of
the relevant interest period, but in any event at least
quarterly.
The Base Rate is equal to the higher of:
(a) Citibank's base rate;
(b) the sum of:
(x) 0.5% per annum, plus
(y) a rate obtained by dividing:
(1) the latest three-week moving average of secondary
market morning offering rates in the U.S. for
three-month certificates of deposit as published
by the Federal Reserve Bank of New York by
(2) a percentage equal to 100% minus the average of
the daily percentages specified during the three-
week period by the Federal Reserve Board for
determining the maximum reserve requirement for
Citibank in respect of liabilities consisting of
or including three-month U.S. dollar nonpersonal
time deposits in the U.S., plus
(z) the average during the three week period of the
maximum annual assessment rates estimated by Citibank
for determining the then current annual assessment
payable by Citibank to the Federal Deposit Insurance
Corporation for insuring dollar deposits in the U.S.;
and
(c) 0.5% per annum plus the federal funds rate.
The Eurocurrency Rate is equal to the rate per annum obtained by
dividing:
(1) the rate determined by Citicorp to be the offered rate for
deposits in dollars, euros, sterling or yen, as
applicable, for the applicable interest period appearing
on the Dow Jones Markets Telerate Page 3750, the Dow Jones
Markets Telerate Page 248 or the Reuter Monitor "ZTIBOR,"
as applicable, by
(2) a percentage equal to 100% minus the reserve percentage
applicable two business days before the first day of the
interest period under the maximum reserve requirements
regulations issued by the Federal Reserve Board with
respect to liabilities or assets consisting of or
including eurocurrency liabilities having a term equal to
the interest period.
In addition, the Restated Credit Agreement reduces the applicable
margin with respect to the Term B Loans from a rate of 2.75% to
2.25% per annum for loans bearing interest at the Base Rate and
from 3.75% to 3.25% per annum for loans bearing interest at the
Eurocurrency Rate.
According to Mr. Cauley, provisions in the Restated Credit
Agreement governing the optional and mandatory prepayment of loans
under it are substantially similar to the provisions in the
original Credit Agreement, except that:
(a) for two years after the Effective Date, optional
prepayments of the obligations under the Term C Facility
are subject to a prepayment fee equal to 2% of the
prepayment amount during the first year and 1% of the
prepayment amount during the second year; and
(b) the mandatory prepayment terms contained in the Credit
Agreement were amended to allow the first $25 million in
proceeds from equity issuances to be used for repayment,
redemption or repurchase of HLI's outstanding senior notes
and the next $50 million to be used for general corporate
purposes.
The Restated Credit Agreement contains representations,
warranties, affirmative and negative covenants, default and
acceleration provisions, which are substantially similar to those
contained in the original Credit Agreement.
HLI is obligated to pay certain customary fees including, but not
limited to an unused commitment fee based on the amounts of
unutilized commitments, certain letter of credit fees, facility
increase, repricing and other standard amendment and arrangement
fees.
Approximately 50% of the aggregate proceeds of the Term C
Facility were used by HLI to prepay a portion of the principal
amount outstanding under the Term B Loan, with the remainder to be
used to pay fees, for working capital and for other general
corporate purposes. The Restated Credit Agreement also provides
that the Company may retain 50% of the net proceeds received from
the proposed divestiture it previously announced of its Commercial
Highway Hub and Drum business for capital expenditures.
HLI's obligations under the Restated Credit Agreement are
guaranteed by substantially all of the Company's existing and
future direct and indirect domestic subsidiaries by and among HLI
Operating, HLI Parent Company, Inc., the other Guarantors party
thereto and Citicorp, as Collateral Agent. These obligations are
contained in the Amended and Restated Guaranty dated as of
April 11, 2005, a full-text copy of which is available at the
Securities and Exchange Commission at:
http://www.sec.gov/Archives/edgar/data/1237941/000095017205001188/wil1520743.txt
HLI's obligations and each Guarantor's obligations other than
obligations in respect of the Term C Facility will be secured by a
first-priority perfected security interest in substantially all of
the assets of HLI and the Guarantors. HLI and each Guarantor's
obligations in respect of the Term C Facility will be secured by a
second-priority perfected security interest in the Collateral.
These obligations are provided in an Amended and Restated Pledge
and Security Agreement, a full-text copy of which is available at
the Securities and Exchange Commission at:
http://www.sec.gov/Archives/edgar/data/1237941/000095017205001188/wil35899.txt
The priority of the security interests in the Collateral and
rights of the lenders related thereto are set forth in an
Intercreditor and Collateral Agency Agreement dated as of
April 11, 2005 among:
* Citicorp, as Administrative Agent for the first lien
lenders, and for the term C lenders and as Collateral Agent;
* Hayes Lemmerz International, Inc.;
* HLI Operating Company; and
* certain grantor party.
A full-text copy of the Intercreditor and Collateral Agency
Agreement is available at:
http://www.sec.gov/Archives/edgar/data/1237941/000095017205001188/ny21520132.txt
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. Del. Case No. 01-11490) and emerged in
June 2003. Eric Ivester, Esq., and Mark S. Chehi, Esq., at
Skadden, Arps, Slate, Meager & Flom represent the Debtors. (Hayes
Lemmerz Bankruptcy News, Issue No. 63; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
* * *
As reported in the Troubled Company Reporter on April 11, 2005,
Moody's Investors Service assigned a B2 rating for HLI Operating
Company, Inc.'s proposed $150 million guaranteed senior secured
second-lien term loan facility. HLI Opco is an indirect
subsidiary of Hayes Lemmerz International, Inc. The rating
outlook remains stable.
While the company has reaffirmed its earning guidance and the
senior implied and guaranteed senior secured first-lien facility
ratings remain unchanged at B1, Moody's determined that widening
of the downward notching of HLI Opco's guaranteed senior unsecured
notes was necessary to reflect additional layering of the
company's debt. The senior unsecured notes are effectively
subordinated to the proposed new senior secured second-lien term
facility, and approximately $75 million of higher-priority debt
will be added to the capital structure.
These specific rating actions were taken by Moody's:
* Assignment of a B2 rating for HLI Operating Company, Inc.'s
proposed $150 million guaranteed senior secured second-lien
credit term loan C due June 2010;
* Downgrade to B3, from B2, of the rating for HLI Operating
Company, Inc.'s $162.5 million remaining balance of 10.5%
guaranteed senior unsecured notes maturing June 2010 (the
original issue amount of $250 million was reduced as a result
of an equity clawback executed in conjunction with Hayes
Lemmerz's February 2004 initial public equity offering);
* Affirmation of the B1 ratings for HLI Operating Company,
Inc.'s approximately $527 million of remaining guaranteed
senior secured first-lien credit facilities, consisting of:
* $100 million revolving credit facility due June 2008;
* $450 million ($427.3 million remaining) bank term loan B
facility due June 2009 (which term loan is still expected to
be partially prepaid through application of about half of the
net proceeds of the proposed incremental debt issuance);
* Affirmation of the B1 senior implied rating;
* Downgrade to Caa1, from B3, of the senior unsecured issuer
rating (which rating does not presume the existence of
subsidiary guarantees).
INTEGRATED BUSINESS: Dec. 31 Balance Sheet Upside-Down by $4.5-Mil
------------------------------------------------------------------
Integrated Business Systems and Services, Inc. (OTCBB:IBSS)
reported results for fiscal year ended December 31, 2004.
Total revenues for the year ended December 31, 2004 decreased 39%
to $2,028,055 from $3,310,743 reported for the prior year. Net
loss for 2004 was $1,913,745, compared to a net loss of $847,321
posted for 2003.
According to Michael Bernard, Chief Financial Officer of the
Company, "IBSS has had a very challenging year primarily due to a
decline in project orders from our largest customer without a
corresponding increase in revenues from other sources. Work
orders from existing customers as well as orders from relatively
new and emerging relationships are increasing and we are hopeful
that business overall will improve over the first half of 2005.
While we continue to face many difficult challenges, we are
pleased to have 2004 behind us and are now firmly focused on
executing our growth strategies in the current year and beyond.
However, our most difficult challenge relates to our ability to
finance our activities. Absent a meaningful increase in revenues
as well as additional capital investments, there remains a
significant risk that we will not achieve our objectives."
George Mendenhall, CEO of IBSS, added, "Experience has taught us
that building a company of enduring success never comes easy, and
clearly, IBSS has been sorely challenged over the past several
years. Nonetheless, through the relentless dedication, hard work
and perseverance of the entire IBSS team, our prospects for
turning the corner and emerging as a leading player in the high
growth areas of RFID, wireless networking and mobile computing are
appearing much stronger. By way of example: our proven success
with Prospect Airport Services in the Detroit Metropolitan Airport
last year has given way to the scheduled rollout of PDS (Prospect
Dispatch System) Express, the Synapse(TM)-based wireless system
jointly developed by IBSS and Prospect, at major airports in
Phoenix, Dallas and Las Vegas. Also the initial favorable
response we are receiving from our SynTrack(TM) product validates
the strength of our RFID capabilities. Given these activities, we
remain confident that by capitalizing on our technology,
methodology and expertise, IBSS will win in the marketplace with
this compelling value proposition."
About the Company
Headquartered in Columbia, South Carolina, Integrated Business
Systems and Services, Inc. (OTCBB:IBSS) -- http://www.ibss.net/--
is the creator of Synapse(TM), a groundbreaking software
technology. Synapse(TM) is a complete application development and
deployment environment used to create, implement and manage a wide
variety of real-time applications including RFID and wireless,
quickly and efficiently. IBSS is utilizing its Synapse(TM)
technology to build and distribute a family of application
products that are optimized to provide solutions for specific
industries. SynTrack(TM), a Synapse based asset tracking solution
highly optimized to exploit the power of Linux and Synapse in the
healthcare sector is the initial release from this family of
industry specific products.
At Dec. 31, 2004, Integrated Business' balance sheet showed a
$4,497,585 stockholders' deficit, compared to a $3,399,335 deficit
at Dec. 31, 2003.
INTERACTIVE BRAND: iBill Pays Clients $41.6M in Cash & Term Notes
-----------------------------------------------------------------
Internet Billing Company LLC, a subsidiary of Interactive Brand
Development, Inc. (Pink Sheets:IBDI), is making a payment of
$41.6 million to all former and current clients for transactions
processed up to February 28, 2005. The payment is comprised of
$21.6 million in cash and $20 million in term notes.
On September 16, 2004, the processing contract between iBill and
First Data Merchant Services expired and was not renewed, as part
of First Data's national exit from processing credit card
transactions for adult content. As contractually permitted, First
Data withheld the release of certain funds. iBill and First Data
entered into a settlement agreement that provided for the
scheduled release of these funds.
The iBill Payout is a structured settlement wherein all
participating merchants will receive full payment on funds owed
through a combination of cash and term note payment. The cash
portion will be paid immediately subject to clients entering into
agreements verifying their balances. The cash component being
wire transferred directly from the third party processors to
webmasters.
"iBill is a pioneer in the online payment industry with a 10 year
track record of reliability and innovation," said Gary Spaniak,
Jr. "As part of our January 2005 acquisition of iBill, we clearly
saw a significant opportunity to further the iBill brand for many
years to come and, based on these payments, we see this objective
being fulfilled."
Steve Markley, CEO of Interactive Brand Development commented,
"Since IBDI acquired iBill, deliberate corrective measures have
been implemented in combination with the engagement of Corporate
Revitalization Partners. We are very encouraged by the
developments."
In addition, US domestic transactions using the Gkard have been
current since Interactive Brand Development took over iBill
beginning with the February 15th 2005 payment cycle. iBill
continues to successfully offer the Gkard prepaid solution to
customers that are referred to its Web site and to
http://www.gkbill.com/
About Interactive Brand Development, Inc.
Interactive Brand Development, Inc. (IBDI) is a new media company
that owns interests in online and offline media properties. IBDI
processes online credit card payments and manages consumer
databases through its wholly owned subsidiary; Internet Billing
Company LLC IBDI also owns a 34.7% interest in Penthouse Media
Group (PMG), publisher of Penthouse Magazine, a brand-driven
global entertainment business founded in 1965 by Robert C.
Guccione. PMG's flagship PENTHOUSE(TM) brand is one of the most
recognized consumer brands in the world and is widely identified
with premium entertainment for adult audiences. PMG is operated
by affiliates of Marc Bell Capital Partners, LLC.
* * *
Going Concern Doubt
Jewett, Schwartz, & Associates raised substantial doubts about
Interactive Brand Development, Inc.'s ability to continue as a
going concern after it audited the Company's financial statements
for the fiscal year ended Dec. 31, 2004. The auditors stated that
the Company has incurred recurring operating losses and has a
working capital deficit at Dec. 31, 2004.
For the year ending December 31, 2004, the Company posted a net
loss of $3,458,378 compared to $464,768 for the year ended
December 31, 2003, a change of $2,993,610.
The Company said it has explored, and continues to explore, all
avenues possible to raise funds. Continued market penetration of
the Company's iBill and XTV services is dependent on the Company's
ability to raise sufficient capital.
"Ultimately, the Company must achieve profitable operations if the
Company is to be a viable entity," the Company said in its Annual
Report. "Although the Company believes that there is a reasonable
basis to believe that the Company will successfully raise the
needed funds to continue, the Company cannot assure the reader
that the Company will be able to raise sufficient capital to
continue market penetration."
KAISER ALUMINUM: Insurers Object to Liquidation Plans
-----------------------------------------------------
A group of insurers led by Century Indemnity Company complain that
the Third Amended Joint Plans of Liquidation for Kaiser Alumina
Australia Corporation and Kaiser Finance Corporation and for
Alpart Jamaica, Inc., and Kaiser Jamaica Corporation are
inherently and structurally unfair to insurers and, accordingly,
are not "insurance neutral."
The Insurers issued certain insurance policies that may provide
coverage for certain bodily injury and property damage claims that
have been, or that may be, asserted against the Debtors. The
Insurers inform the Court that they hold certain contingent and
unliquidated Claims arising from the Debtors' continuing
contractual obligations under the Policies. The Insurers also
have certain rights under the Policies, including, without
limitation, the rights to receive monetary and non-monetary
performance, and assert defenses, set-offs or recoupments arising
from, related to, or in connection with, the Policies.
While the Disclosure Statements explaining the Liquidation Plans
acknowledge the possibility of certain Claims being asserted
against the Debtors for which insurance coverage may be sought
under the Policies -- including Claims allegedly arising out of
exposure to asbestos, silica and other potentially harmful or
hazardous substances -- the Insurers point out that the Plans
provide for the liquidation of those Claims in a manner that is
not consistent with the Insurers' Contractual Rights or does not
require the performance of the Debtors' reciprocal Contractual
Obligations.
The Contractual Obligations include, without limitation:
(i) the requirement to obtain the Insurers' consent to any
assignment of the Policies;
(ii) the requirement to permit the Insurers to control or
associate in the defense, investigation and settlement of
covered Claims;
(iii) the duty to cooperate with the Insurers in the defense and
investigation of Disputed Claims;
(iv) the duty to provide timely notice of Claims for which
coverage is sought;
(vi) the duty to refrain from making voluntary payments or
assuming obligations;
(vii) the duty to assist in the enforcement of any rights of
contribution or indemnity; and
(viii) the duty to timely and fully satisfy all continuing
payment obligations such as payment of deductible amounts
or self-insured retentions.
The Insurers tell the Court that they are willing to negotiate
with the Debtors for the inclusion of acceptable "insurance
neutrality" language in the Confirmation Order that would resolve
their objections.
The disgruntled Insurers are:
1. Century Indemnity Company, successor to CIGNA Specialty
Insurance Company, formerly known as California Union
Insurance Company; and successor to CCI Insurance Company,
successor to Insurance Company of North America; and as
administrative agent of former members of AFIA, including
St. Paul Mercury Insurance Company;
2. ACE Property & Casualty Company, formerly known as CIGNA
Property & Casualty Company, formerly known as Aetna
Insurance Company;
3. Industrial Indemnity Company;
4. Industrial Underwriters Insurance Company;
5. Pacific Employers Insurance Company; and
6. Central National Insurance Company of Omaha, by and
through Cravens, Dargen and Company, its Managing General
Agent.
The Insurers are represented in the Debtors' proceedings by Marc
S. Casarino, Esq., and Leonard P. Goldberger, Esq., at White and
Williams LLP.
London Market Insurers Also Object
Certain Underwriters at Lloyd's, London, and Certain London
Market Insurance Companies note that an "insurance neutrality"
language was added to both Liquidation Plans after certain
insurers objected to the Disclosure Statements explaining the
Plans:
"Nothing in the Plan or in the Confirmation Order shall
be deemed to waive any claims, defense (sic), rights
or causes of action that any entity has or may have
under the provisions, terms, conditions, defenses and/or
exclusions contained in such policies or settlements."
In response to those insurers' objections, the Liquidating
Debtors agreed that the new language would not be binding on
insurers as to future plans that may be propounded by any other
Debtors. At the time of the Disclosure Statement hearings, the
Court orally confirmed the lack of any preclusive effect of this
language on any party, although no ruling is reflected in any
Court order.
The London Market Insurers were not among the objecting insurers
with respect to the Disclosure Statements. The London Market
Insurers did not consent to the amended provisions or participated
in any communications with the Liquidating Debtors regarding their
decision to amend the Liquidation Plans. Like those insurers who
objected at the time of the Disclosure Statement hearings,
however, the London Market Insurers contend that the purported
insurance neutrality language is insufficient to protect insurer
rights. Among other things, the language does not affirmatively
provide that all of insurers' rights and obligations will be
adjudicated in any coverage action in accordance with the
applicable non-bankruptcy law and any policy of insurance or
contract between any insurer and any of the debtors. The London
Market Insurers tell the Court that mere statement that insurers'
rights have not been deemed waived is not the same as stating that
those rights are fully preserved and not determined in this forum.
The London Market Insurers are also concerned that, absent entry
of a written order, the purported insurance neutrality language
could be later asserted by the other affiliated Debtors or other
interested parties as "sufficient" or "adequate" to protect
insurers' rights. The London Market Insurers do not concede that
the language is either adequate or sufficient to protect insurers.
The London Market Insurers insist that any order approving the
Liquidation Plans must affirmatively state that the insurance
neutrality language will not operate as any determination,
judgment, adjudication or approval of, or be admissible as
evidence of adequate neutrality language for any other Debtor's
plan in the bankruptcy cases, and all parties, inclusive of
insurers, will have the right to present different insurance
neutrality language for these and any other reorganization plans
that may be proposed in the jointly administered cases.
The London Market Insurers are represented by Robert T. Aulgur,
Jr., Esq., and Kristi J. Doughty, Esq., at Whittington & Aulgur,
in Odessa, Delaware.
St. Paul Surplus Lines Insurance Company supports the London
Market Insurers' position.
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. 66;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
KAISER ALUMINUM: Committee Wants Liverpool's Protest Overruled
--------------------------------------------------------------
The Liverpool Limited Partnership holds some 12-3/4% notes (the
"1993 Notes") and some 9-7/8% notes (the "1994 Notes") issued by
Kaiser Aluminum & Chemical Corporation and guaranteed by, among
others, Alpart Jamaica, Inc., Kaiser Jamaica Corporation, Kaiser
Alumina Australia Corporation, and Kaiser Finance Corporation.
Liverpool believes that the Third Amended Joint Plans of
Liquidation cannot be confirmed unless the Liquidating Debtors'
guarantees of the 1993 Notes generally are not subordinated to
their guarantees of the 1994 Notes and of KACC's 10-7/8% Notes
(the "1996 Notes").
David J. Baldwin, Esq., at Potter Anderson & Corroon, LLP, in
Wilmington, Delaware, explains that the plain language of the
indenture that governs the 1993 Notes expressly provides that the
Liquidating Debtors' guarantees of the 1993 Notes are subordinated
to "downstream guarantees of their own subsidiaries' obligations,
but not to upstream guarantees of [KACC's] obligations." Thus,
the Liquidating Debtors' upstream guarantees of the 1993 Notes
generally are pari passu with their upstream guarantees of the
1994 and 1996 Notes.
Mr. Baldwin also notes that, although the Liquidating Debtors'
guarantees of the 1993, 1994, and 1996 Notes are generally pari
passu, their guarantees of the 1994 Notes are senior to a limited
extent -- specifically, to the extent that the 1994 Notes were
used to refinance the Debtors' then preexisting obligations under
a 1989 bank credit agreement. Mr. Baldwin informs the Court that
the 1993 Indenture expressly provides that the guarantees of the
1993 Notes are subordinated to the refinancing indebtedness, and
"all guarantees thereof." Thus, although the guarantees of the
1993 Notes are not subordinated to other upstream guarantees of
KACC's obligations -- including to the upstream guarantees of the
1994 and 1996 Notes -- there is an express subordination in the
1993 Indenture to upstream guarantees of "refinancing"
indebtedness.
The Plans provide the, if they are rejected by the holders of the
1993 Notes -- as assuredly will be the case -- distributions will
be in accordance with the Court's resolution of the relative
priority dispute. Otherwise, according to Mr. Baldwin, the Plans
cannot be confirmed because they would:
(a) fail the best interest test;
(b) violate the absolute priority rule;
(c) not be fair or equitable for, the unfairly discriminate
against, holders of 1993 and 1994 Notes; and
(d) violate the rule that classes contain "similarly situated"
claims.
Moreover, regardless of how the Court resolves the relative
priority dispute, Liverpool finds that the release and limitation
of liability provisions in the Plan are overly broad and violate
well-established Third Circuit and Delaware Bankruptcy Court
authorities. The Court cannot confirm the Plan unless the release
and limitation of liability provisions are modified to conform to
applicable law.
Creditors Committee Responds
The Official Committee of Unsecured Creditors argues that
Liverpool Limited Partnership's argument that a portion of the
9-7/8% Senior Notes are "Senior" to the other senior note claims
is legally and factually incorrect.
Liverpool asserts that the issuance of the 9-7/8% Senior Notes and
related guarantees occurred simultaneously with a $100 million
reduction in the credit commitment under the Debtors' revolving
credit facility, which converted the 9-7/8% Senior Notes and
related guarantees into "renewals, extensions, refundings,
replacements, amendments and modifications by [KACC and its
guaranteeing subsidiaries] of [the bank credit agreement] Senior
Indebtedness." Liverpool states that under the definition, the
refinancing constitutes "Senior Indebtedness" under the Senior
Subordinated Note Indenture.
William P. Bowden, Esq., at Ashy & Geddes, in Wilmington,
Delaware, tells Judge Fitzgerald that Liverpool's arguments are
unfounded for a multitude of reasons. The amount of the reduction
in the revolving credit line is wholly irrelevant to how much of
the 9-7/8% Senior Notes and related guarantees are within the
definition of "Senior Indebtedness." Furthermore, the definition
of "Senior Indebtedness" does not purport, in any way, to limit
"Senior Indebtedness" only to the dollar amount by which any
"renewals, extensions, refundings, replacements, amendments and
modifications" reduce preexisting "Senior Indebtedness."
If Liverpool wishes to contend that the 9-7/8% Senior Notes and
related guarantees refinanced the "Senior Indebtedness"
represented by the 1989 Credit Agreement, then the entire $225
million in principal amount of the 9-7/8% Senior Notes and related
guarantees, and interest and fees, come within the refinancing
clauses of the definition of "Senior Indebtedness." "Any other
result would be ludicrous," Mr. Bowden says.
Moreover, the $100 million figure espoused by Liverpool is a false
number because very soon after the closing of the 1994 Credit
Agreement with its initial $250 million revolver, the revolver was
increased by $25 million, and only about a year after the closing,
increased again to a total of $325 million. Under Liverpool's
argument then, only $25 million of the $225 million of 9-7/8%
Senior Notes and related guarantees would be senior. This
arbitrary result, which Liverpool completely ignores, further
illustrates the absurdity of Liverpool's position.
At the time of the recapitalization, the amounts owed under the
1989 Credit Agreement did not total $350 million. It is the
Creditors Committee's understanding that, as of February 7, 1994,
the Debtors' borrowings were only $225 million. Accordingly,
Liverpool's focus on the difference between $350 million and
$250 million is meaningless.
Even assuming that Liverpool's argument is factually and
conceptually correct and a portion of the proceeds of the 9-7/8%
Senior Notes was used to "reduce outstanding borrowings" under the
1989 Credit Agreement, Mr. Bowden says this does not constitute a
"renewal, extension, refunding, replacement, restructuring,
refinancing, amendment or modification" of the 1989 Credit
Agreement that is required to constitute "Senior Indebtedness."
For example, it is clear that the payment of $100 million was not
a "renewal," "extension," "restructuring," "amendment," or
"modification" of the 1989 Credit Agreement, for the simple reason
that the 1989 Credit Agreement ceased to exist altogether.
Moreover, it is apparent that the $100 million was not a
"refunding" or "replacement" of the 1989 Credit Agreement, as the
9-7/8% Senior Notes did not "replace" or "retire" the 1989 Credit
Agreement. As is made clear from each of the Debtors' 1993 Annual
Report, the Prospectus dated February 10, 1994, and the Senior
Subordinated Note Indenture, it was the 1994 Credit Agreement that
"replaced" the 1989 Credit Agreement.
Limitation of Liability Provisions Under
the Liquidation Plans Are Appropriate
The Liquidation Plans provide that various parties, including the
Indenture Trustees, the Debtors, the Creditors Committee, and
"their respective directors, officers, employees and
professionals," are immune from liability for:
For any act taken or omitted to be taken in connection
with or related to the formulation, preparation,
dissemination, implementation, confirmation or
consummation of the Liquidation Plans, the Disclosure
Statements or any contract, instrument, release or
other agreement or document created or entered into, or
any other action taken or omitted to be taken, in
connection with the Liquidation Plans.
The only exceptions are for acts or omissions that are "determined
in a Final Order to have constituted negligence or willful
misconduct."
Liverpool contends that the language contained in Limitation of
Liability Provision exceeds the scope permitted by controlling
Third Circuit authority because it improperly bars and releases
third-party claims against the Indenture Trustees and other
parties. Based on the allegations in its objection, Mr. Bowden
says Liverpool appears to be alleging that U.S. Bank National
Association, as indenture trustee for both the 10-7/8% Senior
Notes and, until very recently, the 9-7/8% Senior Notes, and its
counsel had a conflict of interest and may have acted improperly
under the Trust Indenture Act or under New York law.
Mr. Bowden argues that Liverpool's concerns surrounding the
releases are unwarranted for two main reasons:
(1) The language contained in the release provision of the
Liquidation Plans is far more limited than Liverpool has
alleged. Specifically, the language merely releases acts
"taken in connection with or related to the formulation,
preparation, dissemination, implementation, confirmation
or consummation of the [Liquidation Plans]." Hence,
nothing contained within the Amended Plans would preclude
commencement of litigation against U.S. Bank by Liverpool.
(2) Even if the releases provided in the Liquidation Plans are
as broad as Liverpool has alleged, Liverpool is not bound
by the releases if they voted against the Liquidation
Plans.
As clearly noted by the Court, any parties that vote against the
Liquidation Plans have preserved their rights to commence
litigation because their claims will not be released. Assuming
that Liverpool voted against the Liquidation Plans -- which the
Creditors Committee believes has occurred based on the preliminary
tabulation results -- its rights to litigation against U.S. Bank
are preserved, regardless of the scope of the releases provided in
the Liquidation Plans.
Mr. Bowden also notes that the Creditors Committee has solicited
votes in favor of the Liquidation Plans in good faith, and is
thereby afforded safe harbor, pursuant to Section 1125(e) of the
Bankruptcy Code. Section 1125(e) provides that a "person" that
solicits acceptances or rejections of a plan of reorganization in
good faith and in compliance with the provisions of the
Bankruptcy Code "is not liable on account of such solicitation or
participation for violation of any applicable law, rule, or
regulation governing solicitation of acceptance or rejection of a
plan. . . ."
Mr. Bowden maintains that the Limitation of Liability Provision
does nothing more than ensure that official committee members
receive the immunity necessary to adequately fulfill their
fiduciary responsibilities as official committee members and is
absolutely necessary and appropriate under the facts and
circumstances of the Debtors' Chapter 11 cases.
Accordingly, the Creditors Committee asks the Court to overrule
Liverpool's Objection to the Release language contained in the
Liquidation Plans, and confirm the Liquidation Plans.
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. 67;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
KRAMONT REALTY: Completes Merger with Centro Properties
-------------------------------------------------------
Kramont Realty Trust (NYSE:KRT) completed its merger into an
affiliate of Melbourne, Australia-based Centro Properties Limited
(ASX:CNP), CWAR OP Merger Sub III Trust. Shareholders will be
contacted by American Stock Transfer & Trust Company and given
instructions on how to surrender their share certificates for
payment.
As reported in the Troubled Company Reporter on Apr. 18, 2005,
Kramont Realty Trust's shareholders approved its previously
announced proposed merger into an affiliate of Melbourne,
Australia-based Centro Properties Limited, CWAR OP Merger Sub III
Trust.
Shareholders overwhelmingly voted in favor of the proposed merger.
With 70% of eligible shares voted, over 98% of the votes received
were in favor of the transaction.
About Centro Watt
CWAR OP Merger Sub III Trust is wholly owned by Centro Watt
America III L.P., a Delaware limited partnership owned by
subsidiaries of Centro Properties Group (comprised of Centro
Property Trust and Centro Properties Limited), an Australian
listed retail property organization specializing in the ownership,
management and development of retail properties throughout
Australia and New Zealand and in the United States, and by a
subsidiary of Watt Family Properties, Inc., a California
corporation, which does business under the name Watt Commercial
Properties of California.
About Kramont
Kramont Realty Trust -- http://www.kramont.com/-- is a self-
administered, self-managed equity real estate investment trust
specializing in neighborhood and community shopping center
acquisitions, leasing, development and management. The company
owns, operates, manages and has under development 93 properties
encompassing nearly 12.5 million square feet of leasable space in
16 states. Nearly 80 percent of Kramont's centers are grocery,
drug or value retail anchored.
* * *
As reported in the Troubled Company Reporter on Dec. 23, 2004,
Moody's Investors Service placed its B3 preferred stock rating of
Kramont Realty Trust under review for upgrade due to the
announcement that Kramont agreed to merge into Centro Watt America
REIT III LLC, an affiliate of Melbourne, Australia-based Centro
Properties Limited (ASX: CNP), a property trust. Simultaneously,
other affiliates of Centro will be merged into Kramont. The
transaction is expected to close during the first quarter of 2005.
During its review, Moody's will review the pro forma financial and
strategic structure of Centro and its US affiliates, and the
disposition of the Kramont preferred stock. The review for
upgrade reflects Centro's status as a larger, more diverse and
seemingly more financially robust company than Kramont. Moody's
does not rate Centro.
LAC D'AMIANTE: Look for Bankruptcy Schedules on May 31
------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas gave
Lac d'Amiante Du Quebec Ltee and its debtor-affiliates more time
to file their Schedules of Assets and Liabilities, Statements of
Financial Affairs, Lists of Equity Security Holders, and Lists of
Executory Contracts and Unexpired Leases. The Debtors have until
May 31, 2005, to file those documents.
The Debtors explain that due to the size and complexity of their
operations and the large number of creditors they have, they need
additional time to compile and verify the accuracy of all the data
needed for the preparation and filing of their Schedules and
Statements.
Headquartered in Tucson, Arizona, Lac d'Amiante Du Quebec Ltee,
fka Lake Asbestos of Quebec, Ltd., and its affiliates, are all
non-operational and dormant subsidiaries of ASARCO Inc., nka
ASARCO LLC. ASARCO mines, smelts and refines copper and
molybdenum in the United States and Peru. The Company and its
debtor-affiliates filed for chapter 11 protection on April 11,
2005 (Bankr. D. Ariz. Case No. 05-20521). Nathaniel Peter Holzer,
Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represents the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they each estimated assets
and debts of more than $100 million.
LAC D'AMIANTE: Jordan Hyden Approved as Bankruptcy Counsel
----------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas gave
Lac d'Amiante Du Quebec Ltee and its debtor-affiliates permission
to employ Jordan, Hyden, Womble & Culbreth, P.C., as its general
bankruptcy counsel.
Jordan Hyden will:
a) provide the Debtors with legal advise regarding the
continued operation of their businesses and management of
their property and advise them on their duties and
responsibilities as debtors-in-possession;
b) assist the Debtors in preparing all schedules and statements
required pursuant to Title 11 of the Bankruptcy Code, and in
preparing on behalf of the Debtors all necessary
applications, notices, answers, adversaries, orders, reports
and other legal papers regarding the Debtors' obligations
and operations under chapter 11;
d) assist the Debtors in the negotiation of a plan of
reorganization satisfactory to parties in interest, and
prepare a disclosure statement to be submitted to parties
in interest; and
e) provide all other legal services that are appropriate and
necessary in the Debtors' chapter 11 cases.
Nathaniel Peter Holzer, Esq., a Member at Jordan Hyden, is the
lead attorney for the Debtors. Mr. Holzer discloses that the Firm
received a $75,000 retainer.
Mr. Holzer reports Jordan Hyden's professionals bill:
Professional Designation Hourly Rate
------------ ----------- -----------
Shelby A. Jordan Counsel $375
Harlin C. Womble, Jr. Counsel $350
Nathaniel Peter Holzer Counsel $300
Michael Urbis Counsel $250
James Evans Counsel $165
Barbara Smith Legal Assistant $125
Grace Duplessis, C.L.A. Legal Assistant $125
Shaun Claybourn Legal Assistant $95
Brandi Barrier Legal Assistant $70
Jordan Hyden assures the Court that it does not represent any
interest materially adverse to the Debtors or their estates.
Headquartered in Tucson, Arizona, Lac d'Amiante Du Quebec Ltee,
fka Lake Asbestos of Quebec, Ltd., and its affiliates, are all
non-operational and dormant subsidiaries of ASARCO Inc., nka
ASARCO LLC. ASARCO mines, smelts and refines copper and
molybdenum in the United States and Peru. The Company and its
debtor-affiliates filed for chapter 11 protection on April 11,
2005 (Bankr. D. Ariz. Case No. 05-20521). When the Debtors filed
for protection from their creditors, they each estimated assets
and debts of more than $100 million.
LEAP WIRELESS: Noteholders Agree to Waive Reporting Delays
----------------------------------------------------------
Leap Wireless International, Inc. (OTCBB:LEAP), a leading provider
of innovative and value-driven wireless communications services,
received consents from holders of a majority of its $610 million
senior secured credit facilities to a limited waiver of compliance
related to delays that have resulted from the Company's review of
its lease-related accounting practices. No fees or penalties were
paid in connection with obtaining this limited waiver.
Following the submission of a request to its lenders (a copy of
which has been filed with the Securities and Exchange Commission
on April 13, 2005), the Company was granted its requested waiver
on April 15, 2005. Under the waiver:
-- the deadline for providing the Company's audited financial
statements and the compliance certificate for the fiscal
year ended December 31, 2004 to its lenders has been
extended until May 16, 2005;
-- the deadline for providing the Company's financial
statements and the compliance certificate for the fiscal
quarter ended March 31, 2005 to its lenders has been
extended until June 15, 2005; and,
-- any default under the credit agreement that may occur if the
Company amends any of its prior period financial statements
has been waived, provided that:
(i) the Company's EBITDA as defined under the credit
agreement, is at least $217 million for the four
quarters ended September 30, 2004 compared to the
$219 million of EBITDA previously reported to the
Company's lenders, and
(ii) neither the Company's indebtedness, as defined in the
credit agreement, nor total liabilities, each as of
September 30, 2004, shall be more than $10 million
greater than the corresponding amounts previously
reported to the Company's lenders under the credit
agreement.
The Company continues to work diligently to complete the review of
its lease-related accounting practices and other issues that
remain open as a result of delays caused by lease-related issues.
Leap expects to file its Annual Report on Form 10-K for the 2004
fiscal year prior to the May 16, 2005, deadline set forth in the
waiver.
About the Company
Leap Wireless International, Inc. (OTCBB:LEAP) --
http://www.leapwireless.com/-- headquartered in San Diego,
Calif., is a customer-focused company providing innovative mobile
wireless services that are targeted to meet the needs of customers
who are under-served by traditional communications companies.
With a commitment to predictability, simplicity and value as the
foundation of our business, Leap pioneered Cricket(R) service, a
simple and affordable wireless alternative to traditional landline
service. Cricket(R) service offers customers unlimited anytime
minutes within the Cricket(R) calling area over a high-quality,
all-digital CDMA network. Operating in 39 markets in 20 states
stretching from New York to California, Cricket(R) service is
available to customers in more than 840 different municipalities.
* * *
As reported in the Troubled Company Reporter on Apr. 7, 2005,
Standard & Poor's Ratings Services placed its ratings for San
Diego, California-based wireless carrier Leap Wireless
International Inc., including the 'B-' corporate credit rating, on
CreditWatch with negative implications. This follows the
company's failure to file its 2004 10-K by its March 31 deadline.
Leap indicated in an SEC filing on April 1 that it has been
delayed in filing its 10-K due to its review of its lease
accounting practices. This review was prompted by the SEC staff
guidelines to the American Institute of Certified Public
Accountants in a Feb. 7 letter, which have caused many public
companies to restate prior-period financials and accelerate
certain lease Failure to file its annual statements by March 31
constitutes a breach of the terms of Leap's secured bank facility.
If the company does not file its annual financial statements by
April 15, this would constitute an event of default under the bank
facility. Leap has indicated that it expects to file with the SEC
by April 15. If the company does not file its financial
statements by then, or is unable to obtain bank facility waivers,
the ratings could be lowered.
LEOMINSTER MATERIALS: Case Summary & Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Leominster Materials Corporation
PO Box 843
Leominster, Massachusetts 01453
Bankruptcy Case No.: 05-42488
Chapter 11 Petition Date: April 18, 2005
Court: District of Massachusetts (Worcester)
Debtor's Counsel: Peter J. Haley, Esq.
Gordon Haley LLP
101 Federal Street
Boston, Massachusetts 02110
Tel: (617) 261-0100
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 17 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Dionne & Gass $300,000
Attn: Richard Dionne, Esq.
131 Dartmount St., Ste 501
Boston, MA 02116
Commonwealth Corporation Deficiency guarantee $200,477
Attn: Chris Perkins
The Schrafft Center
529 Main Street, Ste 110
Boston, MA 02129
McEvilly & Curley $150,000
Attn: John Curley
48 West Street
Leominster, MA 01453
Murphy Law Group $109,232
Lawrence Savings Bank $95,000
CB/GFI Littleton, LLC Rent $66,169
Ronald Messinger $37,000
P. Jeffrey Keating $30,000
Margaret Pothier $25,000
Bowditch & Dewey, LLP $21,416
City of Leominster Taxes $12,600
Roger Brunelle, Esq. $12,000
MCM Dental Group $6,500
Barbara Dolan $5,000
Toby L. Messinger $3,500
Labor Ready $3,111
Littleton Light & Power Utilities $2,647
LIFEPOINT HOSPITALS: Completes Province Healthcare Acquisition
--------------------------------------------------------------
LifePoint Hospitals, Inc. (Nasdaq: LPNT) said that Historic
LifePoint Hospitals, Inc., formerly known as LifePoint Hospitals,
Inc., and Province Healthcare Company have completed their merger
to form a new public company, LifePoint Hospitals, Inc. f/k/a
Lakers Holding Corp.
Historic LifePoint stockholders and Province Healthcare
stockholders approved the merger at special meetings of each
company's respective stockholders, each held on Monday, March 28,
2005. Headquartered in Brentwood, Tennessee, the new company,
LifePoint Hospitals, will begin trading Monday, April 18, 2005, on
the NASDAQ National Market under the ticker symbol "LPNT."
Historic LifePoint will no longer be listed and traded on the
NASDAQ National Market.
In accordance with the terms of their merger agreement, Historic
LifePoint and Province Healthcare each became wholly owned
subsidiaries of LifePoint Hospitals. All outstanding shares of
both companies were exchanged for shares of LifePoint Hospitals.
In addition, Province Healthcare stockholders are entitled to
receive $11.375 in cash and 0.2917 of a share of LifePoint
Hospitals common stock for each share of Province Healthcare
common stock they held at the close of business on April 15, 2005.
No fractional shares of LifePoint Hospitals common stock will be
issued in the merger, and Province Healthcare stockholders who
otherwise would be entitled to receive fractional shares are
entitled to receive a cash payment in lieu of those fractional
shares equal to the fractional share interest multiplied by
$44.53, the last sale price of one share of LifePoint Hospitals
common stock on the NASDAQ National Market on April 14, 2005,
which is the last trading day preceding April 15, 2005, the
closing date of the merger. Each Historic LifePoint stockholder
received one share of LifePoint Hospitals common stock for each
share of Historic LifePoint common stock held by such Historic
LifePoint stockholder on a one-for-one basis.
"We are pleased to announce the completion of our acquisition of
Province Healthcare," said Kenneth C. Donahey, LifePoint
Hospitals' chairman, president and chief executive officer. "With
50 hospitals in 20 states, LifePoint Hospitals is well positioned
as a leader in the industry. Through this acquisition, we will
achieve geographic diversification of revenues and assets with
reduced reliance on certain key states such as Kentucky and
Tennessee. We are confident that the shared values of LifePoint
Hospitals and Province Healthcare will form the basis for our
success in the future."
In connection with the merger, LifePoint Hospitals also announced
that it has purchased all of the approximately $172 million
aggregate principal amount of Province Healthcare's 4-1/4%
Convertible Subordinated Notes due 2008 that were tendered prior
to the expiration at 12:00 midnight on April 14, 2005 of its
previously announced tender offer for the 4-1/4% notes. In
addition, LifePoint Hospitals announced that, in connection with a
previously announced tender offer and consent solicitation,
Province Healthcare has repurchased approximately $194 million of
the $200 million outstanding principal amount of Province
Healthcare's 7-1/2% Senior Subordinated Notes due 2013. The
supplemental indenture incorporating the proposed amendments to
the indenture governing the 7-1/2% notes became operative on
Apr. 15, 2005, and is binding upon the holders of any 7-1/2% notes
that are not tendered into the tender offer. The tender offer for
the 7-1/2% notes will expire at 12:00 midnight on April 15, 2005.
In connection with the merger, Province Healthcare has also called
for redemption all of the $75,970,000 outstanding principal amount
of its 4-1/2% Convertible Subordinated Notes due 2005, at a
redemption price of 100.9% of the principal amount, plus accrued
and unpaid interest to, but excluding, the redemption date, which
is May 16, 2005.
LifePoint Hospitals, Inc., is a leading hospital company focused
on providing healthcare services in non-urban communities, with 50
hospitals, approximately 5,285 licensed beds and combined revenues
of approximately $1.9 billion in 2004. Of the combined 50
hospitals, 46 are in markets where LifePoint Hospitals is the sole
community hospital provider. LifePoint Hospitals' non-urban
operating strategy offers continued operational improvement by
focusing on its five core values: delivering high quality patient
care, supporting physicians, creating excellent workplaces for its
employees, providing community value and ensuring fiscal
responsibility. Headquartered in Brentwood, Tennessee, LifePoint
Hospitals is affiliated with approximately 18,000 employees.
* * *
As reported in the Troubled Company Reporter on Apr. 8, 2005,
Moody's Investors Service affirmed the ratings of LifePoint
Hospitals, Inc.'s proposed offering of a $1.550 million senior
secured credit facility in connection with its proposed
acquisition of Province Healthcare Company. The ratings follow an
announcement by the company that the originally proposed senior
secured Term Loan B of $1,100 million would be increased to
$1,250 million. The originally proposed $300 million revolving
credit facility will remain in place and undrawn. Moody's also
affirmed the company's other ratings; the outlook remains stable.
Moody's had anticipated that LifePoint Hospitals, Inc., would
complete a second phase of financing in order to fund the
acquisition of Province. Moody's now expects the financing of the
acquisition to be completed the through the increased credit
facility and cash on hand.
Below is a summary of Moody's actions:
LifePoint Hospitals, Inc. (parent):
Affirmed Ba3 rating to proposed $1,250 million senior secured
Term Loan B (originally proposed at $1,100 million)
Affirmed Ba3 rating on proposed $300 million senior secured
revolving credit facility
Affirmed Ba3 senior implied rating
Affirmed B2 senior unsecured issuer rating
LifePoint (former parent):
Affirmed B3 rating on $221 million ($250 million prior to the
repurchase of $29 million of notes during 2004) 4.50%
convertible subordinated notes due 2009, rated B3
Moody's said the ratings outlook is stable.
LONG BEACH: Losses Prompt S&P to Junk Ratings on M-3 Class Certs.
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on the M-3
classes from the Long Beach Mortgage Loan Trust 2000-1 and 2001-1
transactions to 'CCC' from 'B'. At the same time, the ratings on
the other classes from these transactions are affirmed.
The lowered ratings are based on pool performance that has led to
losses that have outpaced excess interest for the past 10 months.
Cumulative losses are 4.61% and 4.73% of the original pool balance
for series 2000-1 and 2001-1, respectively. Ninety-plus day
delinquencies (including foreclosures and REOs) are 34.90% and
33.42% of the current pool balance for series 2000-1 and 2001-1,
respectively.
In addition, despite the poor performance, the lack of cumulative
loss triggers on these transactions allowed both
overcollateralization and subordination to step down and further
erode credit enhancement.
The rating affirmations are based on credit support percentages
that are sufficient to maintain the current ratings.
The pools in these transactions use a combination of
subordination, excess interest, and overcollateralization as
credit support.
Long Beach Mortgage Co. either originated or acquired all of the
mortgage loans used as collateral in these pools in accordance
with its underwriting standards. The underlying collateral for
these transactions is mostly fixed- and adjustable-rate, first
lien, 30-year mortgage loans on single-family homes.
Ratings Lowered
Long Beach Mortgage Loan Trust
Rating
------
Series Class To From
------ ----- -- ----
2000-1 M-3 CCC B
2001-1 M-3 CCC B
Ratings Affirmed
Long Beach Mortgage Loan Trust
Series Class Rating
------ ----- ------
2000-1 AF-3, AF-4, AV-1 AAA
2000-1 M-1 AAA
2000-1 M-2 A
2001-1 A-1, S AAA
2001-1 M-1 AA+
2001-1 M-2 A
MARLIN LEASING: Fitch Upgrades Two Low-B Equipment Contract Notes
-----------------------------------------------------------------
Fitch Ratings upgrades classes of securities for Marlin Leasing
Receivables VI, LLC, series 2002-1 and Marlin Leasing Receivables
VII, LLC, Series 2003-1.
Marlin Leasing Receivables VI, LLC,
series 2002-1 (Marlin 2002-1)
-- Class A equipment contract backed notes are upgraded
to 'AA-' from 'A';
-- Class B equipment contract backed notes are upgraded
to 'A' from 'BBB';
-- Class C equipment contract backed notes are upgraded
to 'BBB' from 'BB'.
Marlin Leasing Receivables VII, LLC,
Series 2003-1(Marlin 2003-1)
-- Class A equipment contract backed notes are upgraded
to 'A+' from 'A';
-- Class B equipment contract backed notes are upgraded
to 'BBB+' from 'BBB';
-- Class C equipment contract backed notes are upgraded
to 'BB+' from 'BB'.
In its review of the Marlin 2002-1 transaction, Fitch noted
increasing levels of credit enhancement available to the class A,
B, and C notes. The continued increase in credit enhancement is a
result of better than expected portfolio performance. As of the
March 2005 reporting, 30 plus day delinquencies equal 2.20%,
cumulative net losses are 2.38%, and the recovery rate on
previously defaulted contracts is 36.45%. In addition, the
transaction also benefits from a reserve account ($2,006,250),
overcollateralization ($1,782,421), and expected residual
realizations.
Similarly, in its review of the Marlin 2003-1 transaction, Fitch
noted increasing levels of credit enhancement available to the
class A, B, and C notes. The continued increase in credit
enhancement is a result of better than expected portfolio
performance. As of March 2005 reporting, 30 plus day
delinquencies equal 2.29%, cumulative net losses are 1.85%, and
the recovery rate on previously defaulted contracts is 33.93%. In
addition, the transaction also benefits from a reserve account
($2,371,050), overcollateralization ($5,330,923), and expected
residual realizations.
In addition to the aforementioned transactions, Fitch also rated
the Marlin 1999-2, 2000-1, and 2001-1 transactions, which matured
in December 2002, March 2004, and July 2004, respectively. All
three transactions outperformed original base case expectations,
with consistently low delinquency and default rates, resulting in
steadily increasing levels of credit enhancement available to all
classes.
Fitch will continue to closely monitor these transactions and may
take additional rating action in the event of changes in
performance and credit enhancement measures.
MRO DIRECT: Case Summary & 19 Largest Unsecured Creditors
---------------------------------------------------------
Debtor: MRO Direct, Inc.
33 Terminal Way 4th Floor
Pittsburgh, Pennsylvania 15219
Bankruptcy Case No.: 05-23522
Type of Business: The Debtor provides customized sourcing and
procurement programs for Maintenance, Repair,
and Operating supplies, services and materials.
See http://www.mrodirectnet.com/
Chapter 11 Petition Date: March 24, 2005
Court: Western District of Pennsylvania (Pittsburgh)
Judge: M. Bruce McCullough
Debtor's Counsel: Robert W. Koehler, Esq.
Manor Complex, Penthouse
564 Forbes Avenue
Pittsburgh, Pennsylvania 15219
Tel: (412) 281-5336
Fax: (412) 281-3537
Total Assets: $5,723,218
Total Debts: $1,713,901
Debtor's 19 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
PA Dept of Comm & Loan $100,000
Econ Development
400 North St.
Cmmwlth/Keystone Bldg.
4th Floor,
Harrisburg, PA 17120
Continental Paper/ Business supplies $91,000
HP Products
6400 E. 8 Mile Road
Detroit, MI 48234
Krystil Clear Filtration Business products $38,000
9449 S. 550 W.
Winamac, IN 46996
American Express Business credit $30,000
Kelly Services, Inc. Employment services $26,000
BDI Business expense $25,000
Lagasse Supplies $22,000
Setech, Inc. Supplies $14,000
Tri Dim Filter Mfg. Supplies $14,000
All-Pak Business supplies $13,000
E&R Industrial Sales Sales commissions $12,000
J F Good Co. Business goods $12,000
Pittsburgh Terminal Lease $11,000
Properties
Summa Technologies Inc. Loan $10,000
ORS Nasco Supplies $9,000
Broner Glove & Safety Co. Supplies $8,000
Labelmaster Supplies $8,000
VWR International Services $8,000
Prophet 21 Services $7,000
MOBIFON HOLDINGS: Strong Performance Prompts S&P to Lift Ratings
----------------------------------------------------------------
Standard & Poor's Ratings Services raised its ratings on MobiFon
Holdings B.V. and parent Telesystem International Wireless Inc.
(TIW) to 'BB-' from 'B+' due to debt reduction and strong
operating performance at subsidiary MobiFon S.A. (MobiFon
Holdings and MobiFon S.A. are collectively referred to as
MobiFon).
At the same time, Standard & Poor's raised the ratings on the
MobiFon Holdings senior unsecured notes due 2010 to 'B' from 'B-'.
The ratings on the companies remain on CreditWatch with positive
implications where they were placed March 15, 2005, pending the
conclusion of the acquisition of MobiFon by U.K.'s Vodafone Group
PLC (A/Stable/A-1).
"The degree of implied or actual credit support for MobiFon
Holdings from Vodafone has yet to be established, however, we view
the pending ownership change as credit enhancing for MobiFon,"
said Standard & Poor's credit analyst Joe Morin. Vodafone's
purchase of MobiFon is based on strategic and financial
considerations as it expands the company's wireless footprint in
Eastern Europe. Vodafone's intentions regarding the financing
arrangements that are currently in place at MobiFon are unclear
presently.
If Vodafone were to keep some or all of the debt in place, the
effect on the credit ratings would be dependent on a number of
items, but principally the amount of remaining debt, as well as
the actual or implied support provided by Vodafone. Should
MobiFon continue to be financed on a stand-alone basis with the
existing debt remaining in place, the maximum support Standard &
Poor's will factor into the rating for the Vodafone ownership will
be one notch.
The ratings affect on MobiFon will be determined by Standard &
Poor's after the debt amount and structure is evident and the
transaction closes. Irrespective of debt levels the ratings on
MobiFon would be capped at 'BB+', which is equivalent to the
foreign currency rating on Romania (BB+/Positive/B).
The ratings on TIW will be withdrawn once the transaction is
concluded, as the company will be wound-up through a court-
supervised plan of arrangement.
The ratings on TIW and MobiFon also reflect the level of foreign-
currency-denominated debt at MobiFon, which is considered high for
an emerging market operator, as well as the below average
demographics and risk associated with operating in a developing
market.
These risks are partially mitigated by:
(1) an improving macroeconomic environment in Romania;
(2) MobiFon's growing subscriber base; and
(3) increasing revenues, EBITDA, and cash flow.
MUNAF B. KANCHWALA: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------------
Debtor: Munaf B. Kanchwala
3751 Queen Anne Court
Saint Charles, Illinois 60174
Bankruptcy Case No.: 05-14620
Chapter 11 Petition Date: April 15, 2005
Court: Northern District of Illinois (Chicago)
Debtor's Counsel: Joseph E. Cohen, Esq.
Cohen & Krol
105 West Madison, Suite 1100
Chicago, Illinois 60602
Tel: (312) 368-0300
Estimated Assets: $500,000 to $1 Million
Estimated Debts: $1 Million to $10 Million
The Debtor did not file a list of its 20 Largest Unsecured
Creditors.
NAPIER ENVIRONMENTAL: Has Until May 2 to File Creditors' Proposal
-----------------------------------------------------------------
The Supreme Court of British Columbia extended the period for
Napier Environmental Technologies Inc.(TSX:NIR) to file a proposal
to creditors until May 2, 2005.
Napier wants more time to conclude its negotiations with its
landlord. Napier assured the Court that it will file a proposal
by May 2, 2005.
Napier is currently operating under the protection of the
Bankruptcy and Insolvency Act. Napier develops and manufactures
highly effective, safe and environmentally advantaged surface
preparation products for stripping paints and coatings, as well as
a complete line of wood restoration products. Napier's products
are protected by a portfolio of patents and trademarks, including
'Bio-wash and RemovALL'.
NATIONAL BENEVOLENT: Wants to Sell Oil & Gas Interests for $1.6MM
-----------------------------------------------------------------
The National Benevolent Association of the Christian Church
(Disciples of Christ) and its debtor-affiliates own a number of
oil and gas royalty interests that currently produce $330,000 in
gross annual royalties. The Debtors decided that the oil and gas
interests aren't necessary for their reorganization.
After negotiations with potential purchasers, National Benevolent
closed a deal with Cook Resources, LLC, to buy the oil & gas
interests for $1.6 million.
Accordingly, the Debtors ask the U.S. Bankruptcy Court for the
Western District of Texas, San Antonio Division, to approve the
sale of their oil and gas interests free and clear of any liens,
claims and encumbrances to Cook Resources.
Headquartered in Saint Louis, Missouri, The National Benevolent
Association of the Christian Church (Disciples of Christ) --
http://www.nbacares.org/-- manages more than 70 facilities
financed by the Department of Housing and Urban Development and
owns and operates 18 other facilities, including 11 multi-level
older adult communities, four children's facilities and three
special-care facilities for people with disabilities. The
non-profit organization filed for chapter 11 protection on
February 16, 2004 (Bankr. W.D. Tex. Case No. 04-50948). Alfredo
R. Perez, Esq., at Weil, Gotshal & Manges, LLP, represents the
Debtors in their restructuring efforts. When the Debtor filed for
protection from its creditors, it listed more than $200 million in
debts and assets at that time.
NATIONAL BENEVOLENT: Joint Plan of Reorganization Takes Effect
--------------------------------------------------------------
The Joint Plan of Reorganization for the National Benevolent
Association became effective on April 15, 2005, setting the stage
for the distribution to creditors of their entire outstanding
principal and accrued interest at the accrual rate set forth in
the plan.
The effective date triggers the distribution of the amounts
necessary to fund the creditors' recoveries. UMB Bank will
coordinate distributions to the fixed rate bondholders. The agent
for the bank lenders and/or the NBA will disburse payments to bank
debt holders and individual trade creditors. Frank Bramwell with
UMB Bank (who was also the Chair of the Unsecured Creditors
Committee) confirmed that UMB Bank has received the proceeds and
will begin the distribution process to bondholders. As Mr.
Bramwell stated: "This was an extremely successful case. I can't
remember a similar situation where creditors were paid in full,
with interest (not to mention fees and expenses)."
According to the Creditors Committee's counsel, Bob Albergotti, a
partner with Haynes and Boone in Dallas, "The turning point in the
NBA case was when the Court denied the debtors' attempts to
further leverage the assets through an unnecessary DIP loan and
the creditors, attorneys general and residents prevailed upon the
debtors to divest the senior care assets to preserve the charity."
The Court denied the debtors' motion to secure $50 million in DIP
financing early in the case based primarily on the fact that the
Debtors had over $100 million in cash and investments, some part
of which they could use for working capital purposes, without
putting more debt ahead of the unsecured creditors.
The unsecured creditors were owed roughly $230 million and there
was essentially no secured debt. "The debt consisted primarily of
tax exempt bonds that were issued to finance the charity's
expansion of its mission into the senior care business," said Paul
Ricotta, a partner with Mintz, Levin, Cohn, Ferris, Glovsky and
Popeo in Boston who represented UMB Bank and served as M&A counsel
on the sale of the assets. "Unfortunately, managing senior care
assets was not among NBA's core competencies and the resulting
cash drain from the senior care assets and other operations,
coupled with a stock market decline and a precipitous erosion in
the charity's investment returns, put the charity in technical
default on the bonds. NBA filed for bankruptcy seeking to
restructure or reduce the debt, but the creditors were able to
demonstrate that through asset sales and available cash, it was
feasible for the creditors to be repaid in full," according to Mr.
Ricotta.
NBA was in Chapter 11 for roughly fourteen months. The first
several months of the case were contentious and included full-
scale litigation on the debtors' DIP loan request and on the
debtors' proposed modifications to their entrance fee programs at
their senior care facilities. Bankruptcy Judge Ronald King, who
presided over the Chapter 11 proceedings, appointed his colleague,
Bankruptcy Judge Leif Clark, as a mediator to attempt to create a
consensus among the debtors, their creditors, the residents at the
debtors' facilities and attorneys general representing the
interests of the charitable entities located in their states.
Ultimately, the debtors were persuaded that a sale of the senior
living facilities and certain other assets was appropriate to
resolve the case.
In addition to the Creditors Committee and the attorneys general
of the States of Texas and Missouri (who were both very active in
the case as advocates for the charity), the Court appointed a
Residents Committee to represent the interests of the residents at
the facilities, many of whom had not only invested a substantial
portion of their life savings into the entrance fees for the
senior care facilities, but were also contributors to the NBA
charity. According to the chair of the Residents Committee, AJ
Barr (who is a resident of the Cypress Village facility), "The
bankruptcy was daunting to the residents, but thanks to the
efforts of all the constituents and their professionals, we were
able to weather the storm and now the facilities where we live
have new management and new owners who will make our communities
better places to live."
The plan was funded from two primary sources:
-- a $210 million sale of the senior care facilities to
Fortress Investment Funds pursuant to Section 363 of the
Bankruptcy Code; and
-- a portion of the debtors' cash and investments.
"The senior care assets were very attractive assets in which we
received significant interest, on both a piecemeal and portfolio
basis. Ultimately, Fortress submitted the most compelling bid and
provided the residents the best solution from an ownership and
management perspective," according to Matt Niemann, a managing
director with Houlihan Lokey Howard & Zukin in Chicago, who ran
the M&A process and served as the Creditors Committee's advisor.
"You can't do any better than par plus accrued -- the creditors
got paid in full and the charity retained substantial assets to
continue their charitable mission," according to Mr. Niemann.
"This case is a real testament to the collaborative efforts of the
interested parties, as well as Judge King and Judge Clark, who
forced the parties to stay the course" according to Mr.
Albergotti.
Headquartered in Saint Louis, Missouri, The National Benevolent
Association of the Christian Church (Disciples of Christ) --
http://www.nbacares.org/-- manages more than 70 facilities
financed by the Department of Housing and Urban Development and
owns and operates 18 other facilities, including 11 multi-level
older adult communities, four children's facilities and three
special-care facilities for people with disabilities. The
non-profit organization filed for chapter 11 protection on
February 16, 2004 (Bankr. W.D. Tex. Case No. 04-50948). Alfredo
R. Perez, Esq., at Weil, Gotshal & Manges, LLP, represents the
Debtors in their restructuring efforts. When the Debtor filed for
protection from its creditors, it listed more than $200 million in
debts and assets at that time.
NATIONSRENT COS: Moody's Junks Proposed $150M Senior Unsec. Notes
-----------------------------------------------------------------
Moody's Investors Service has assigned a Caa1 long-term debt
rating to NationsRent Companies, Inc. proposed $150 million,
senior unsecured notes. The rating agency also affirmed the B2
senior secured notes and B2 senior implied rating. The rating
outlook remains stable.
The B2 senior implied rating reflects Moody's expectation that
NationsRent's credit metrics and operational performance will be
challenged by:
1) the ongoing cyclicality of the equipment rental sector;
2) profit margins that are below expectations due to high
operating expenses;
3) the need to fund the expansion of its rental fleet as the
market recovers;
4) the moderate increase of balance sheet debt; and
5) potential competition from larger and better capitalized
enterprises.
However, Moody's believes that NationsRent has some important
strengths that help mitigate these challenges including:
1) participation by NationsRent in the recovery of the non-
residential construction market;
2) NationsRent's large branch network; and
3) the broad diversification of the company's geographic
footprint and customer base.
NationsRent's $250 million of first lien notes and the asset-based
facility, which is being increased from $75 million to $100
million, have a security interest on substantially all of
NationsRent's property and equipment. Moody's has not assigned a
rating to the asset-based transaction, which we expect to be
largely unutilized. The proceeds of the unsecured notes will be
used to:
1) redeem approximately $51.6 million in Convertible
Subordinated Notes due 2008;
2) purchase $93.9 million in additional rental equipment; and
3) pay $4.5 million in associated fees and expenses.
The additional rental equipment will become part of the security
package benefiting the first lien notes. Notwithstanding this
improved asset coverage, the company employs a preponderance of
secured debt with the secured notes representing about 43% of the
company's projected capital structure. Consequently, the rating
of the secured notes is maintained as the senior implied rating
level of B2. The Caa1 rating of the senior unsecured notes
reflect their junior position relative to the security interest of
the first lien debt.
The ratings incorporate a number of key expectations including:
1) NationsRent will strengthen its debt protection measures as
the US construction rental market continues to recover;
2) excess cash will be used for capital investments; and
3) the completion of the new $150 million unsecured notes, in
combination with the $100 million asset-based transaction,
will afford NationsRent with a more simplified capital
structure by redeeming the convertible notes.
Moody's believes at this time that NationsRent's asset-based
facility provides adequate liquidity to absorb growth and seasonal
working capital needs.
NationsRent will continue to face important operational and
financial challenges. Operationally, the construction equipment
rental market remains both highly competitive and cyclical.
Additionally, NationsRent continues to deal with the effects of
its 2002/2003 bankruptcy by right sizing its work force,
implementing internal operating procedures and determining its
fleet mix. The company significantly scaled back its capital
expenditures during its bankruptcy proceedings as it sold off its
excess fleet, mitigating the impact of the bankruptcy. With the
economic recovery underway, NationsRent will require major
investment in its fleet, which will strain the company's cash
flow. The additional debt will result in higher leverage, with
proforma debt/EBITDA at December 31, 2004, rising from 1.90x to
2.33x. This represents a moderately aggressive financial
strategy, especially as the company continues to transform itself
since emerging from bankruptcy. Finally, the priority of claim of
the unsecured notes will remain junior to that of the first lien
notes and asset-based facility.
The non-residential construction market, which is the main driver
for equipment rental industry, is experiencing a solid recovery
with spending growth projected to be in the mid to high-single
digits over the next two years versus the negative growth
experienced in mid-2001 through 2003. This more favorable
industry outlook should support continued improvement in
NationsRent's utilization rates, operating margins, and cash
generation. As a result, we anticipate that NationsRent will be
able to fund much of its rental fleet expansion from internally
generated cash. Moody's believes that NationsRent will also
benefit from the continuation of the US economic recovery. This
recovery should support stronger construction spending levels and
consequently more robust fundamentals for the equipment rental
sector. As a result, NationsRent's credit metrics are expected to
show steady improvement during the next two years. Upon closing
of the unsecured notes NationsRent will have extended its debt
maturity profile until mid-2010 when the asset-based facility
matures.
Notwithstanding favorable industry outlook and the potential
benefits to NationsRent, the company faces considerable
challenges. The equipment rental industry is highly competitive
with over 15,000 participants. Additionally, large OEMs with
significant financial resources are entering the equipment rental
business to create another outlet for their products and to
benefit from projected growth in the rental market. However,
Moody's believes that NationsRent's national presence coupled with
its Lowe's relationship and providing a distribution channel for
some moderately large manufacturers mitigates the threat from
OEM's. The industry will also remain highly cyclical.
To remain competitive NationsRent must continue with significant
capital purchases with projected outlays of approximately
$265 million in 2005 compared to $186 million in 2004. Partially
offsetting the capital disbursement requirement is an active
secondary market for used construction equipment, which is
projected to be $75 million in 2005.
NationsRent's emergence from bankruptcy eliminated approximately
$1.15 billion of debt coupled with a moderately recovery. Despite
the reduced debt level coupled and a moderate recovery in the
non-construction industry NationsRent's debt protection measures
remain weak for the current rating. For 2004 the ratio of EBIT to
interest expense was 0.90x and the ratio of debt to EBITDA was
1.90x. Free cash flow (cash from operations less CAPEX plus
proceeds from equipment sales) to total debt was a very weak -2%
in 2004, but reflects the beginning of NationsRent's intense CAPEX
program relative to the expenditures in previous years. Moody's
remains concerned with NationsRent's 40% increase in balance sheet
debt and an aggressive CAPEX program. As a result, all debt
protection measures will be strained. However, improving industry
fundamentals should support steady improvement through 2006 and
should become more solidly supportive of the rating.
The B2 rating on the $250 million senior secured notes reflects
the benefits of the collateral package consisting of a first-lien
on rental equipment and its seniority in the company's capital
structure. The rating also reflects the large amount of secured
debt employed by NationsRent in its capital structure.
The Caa1 rating on the new $150 million senior unsecured notes due
2015 reflects the junior position relative to the security
interest of the $250 million first lien notes and the proposed
$100 million asset-based facility.
The asset-backed facility is not expected to be drawn, but will
provide initially for about $25 million in letters of credit while
utilization may occur during the year for seasonal needs.
NationsRent Companies, Inc., based in Ft. Lauderdale, Florida, is
one of the largest equipment rental companies in the US.
NATIONSRENT COS: S&P Puts B- on Proposed $150M Sr. Unsec. Notes
---------------------------------------------------------------
Standard & Poor's Ratings Services revised the outlook on its
ratings for NationsRent Cos. Inc. to positive from stable and
affirmed its 'B+' corporate credit and all other ratings on the
company. At the same time Standard & Poor's assigned its 'B-'
senior unsecured debt rating to the company's proposed offering of
$150 million senior unsecured notes due in 2015 under Rule 144A
with registration rights.
"The outlook change is due to the better-than-expected credit
measures, which, if sustainable, could lead to a modestly higher
rating," said Standard & Poor's credit analyst John Sico. "The
ratings may be raised over the next two years if better-than-
expected credit measures can be sustained despite the inevitable
industry downturn."
Pro forma for the new transaction, privately held NationsRent,
based in Fort Lauderdale, Florida, will have about $400 million in
debt outstanding.
NationsRent operates in six regional markets with a focus on an
integrated equipment-rental operating model. The company rents a
well-recognized brand of construction equipment to a diverse range
of construction, industrial, homeowner, and other enterprises
enterprises, through a network of 267 locations in 26 states.
NFB FOODWORKS: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: NFB Foodworks, LLC
140 Commercial Avenue
Moonachie, New Jersey 07074
Bankruptcy Case No.: 05-22657
Type of Business: The Debtor is a refrigerated & frozen food
retailer.
Chapter 11 Petition Date: April 18, 2005
Court: District of New Jersey (Newark)
Debtor's Counsel: Bruce Gordon, Esq.
Bruce D. Gordon LLC
Polygon Plaza
2050 Center Avenue, Suite 560
Fort Lee, New Jersey 07024
Tel: (201) 585-2600
Fax: (201) 461-2633
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Pathmark Stores, Inc. $262,511
P.O. Box 33374
Hartford, CT 06150-3374
C&S Wholesale Grocers, Inc. $239,217
301 Blair Road
Avenel, NJ 07001
Standard Folding Cartons $188,893
85th Street and 24th Avenue
Jackson Heights, NY 11370
Aladdin Bakers Inc. $150,194
237 26th Street
Brooklyn, NY 11232
Leprino Foods $62,935
5735 Collection Center Drive
Chicago, IL 60693
Halls Warehouse Corporation $49,962
501 Kentile Road
P.O. Box 378
South Plainfield, NJ 07080-0378
Pede Brothers Inc. $49,571
582 Duanesburg Road
Schenectady, NY 12306
Graphic Packaging Corporation $46,041
JD Edwards Lock Box
P.O. Box 404161
Atlanta, GA 30384-4161
Eastern Sales & Marketing $42,739
2 Van Riper Road
Montvale, NJ 07650
Ellva, Inc. $34,399
17 Westwood Avenue
P.O. Box 917
Westwood, NJ 07675
Big Y Foods, Inc. $34,252
2145 Roosevelt Avenue
P.O. Box 7840
Springfield, MA 01102
Fidelity Paper & Supply Corporation $21,124
P.O. Box 376
901 Murray J Road
East Hanover, NJ 07936
Food Lion LLC $20,721
P.O. Box 75607
Charlotte, NC 28275
Air Liquide $15,509
P.O. Box 8500-S-4385
Philadelphia, PA 19178-4385
DeMoulas Super Markets, Inc. $13,199
875 East Street
Attn: Cash Management Department
Tewksbury, MA 01876
National Food Trading Corporation $12,659
12-A Industrial Avenue
Saddle River, NJ 07458
The Travelers $11,516
CL Remittance Center
Hartford, CT 06183
The Fillo Factory $11,088
74 Cortland Avenue
P.O. Box 155
Dumont, NJ 07628-0155
Patrick Cudahy Inc. $9,653
3500 East Barnard
Cudahy, WI 53110
Rochdale Insurance Company $9,646
P.O. Box 22219
Beachwood, OH 44122
NOVA CHEMICALS: Will Release First Quarter Report Tomorrow
----------------------------------------------------------
NOVA Chemicals (NYSE:NCX)(TSX:NCX) will release its first quarter
financials tomorrow, April 20, 2005.
Earnings Release: Wednesday, April 20, 2005
7:30 a.m. EDT
6:30 a.m. CDT
5:30 a.m. MDT
4:30 a.m. PDT
Conference Call: Wednesday, April 20, 2005
1:00 p.m. EDT
12:00 p.m. CDT
11:00 a.m. MDT
10:00 a.m. PDT
Dial-In Number: 416.405.9328
Live Web Cast: The web cast link will be available at:
http://www.novachemicals.com/
Investor Relations - Events/Presentations -
2005 First Quarter Earnings Report Conference
Call
-- or --
The web cast can be accessed live at:
http://www.vcall.com/
(ticker symbol NCX)
Audio Replay: A replay of the conference call will be
available at 416.695.5800 (passcode #3099748)
through Wednesday, April 27, 2005.
Upcoming Earnings Release Dates:
-- 2nd Quarter 2005 - July 20, 2005
-- 3rd Quarter 2005 - October 19, 2005
Please note that dates are subject to change. Conference calls
and live internet webcasts to discuss quarterly earnings are held
at 1:00 p.m Eastern Time on the day of the earnings release.
Earnings are released at 7:30 a.m. on the day indicated. The news
release will contain the necessary instructions for accessing the
call.
NOVA Chemicals -- http://www.novachemicals.com/-- produces
ethylene, polyethylene, styrene monomer and styrenic polymers,
which are used in a wide range of consumer and industrial goods.
NOVA Chemicals manufactures its products at 18 operating
facilities located in the United States, Canada, France, the
Netherlands and the United Kingdom. The company also has five
technology centers that support research and development
initiatives. NOVA Chemicals Corporation shares trade on the
Toronto and New York stock exchanges under the trading symbol NCX.
* * *
As reported in the Troubled Company Reporter on Jan. 27, 2005,
Moody's Investors Service affirmed the Ba2 senior unsecured
ratings of NOVA Chemicals Corporation, and revised its ratings
outlook to stable from negative.
Moody's also changed the company's speculative grade liquidity
rating to SGL-1 from SGL-2. The outlook revision was prompted by
NOVA's announcement that it expects to receive a cash payment of
approximately $110 million stemming from its resolution of a tax
dispute with U.S. Internal Revenue Service. This is in addition
to the $80 million received in the fourth quarter of 2004 from the
sale of its ethane gathering system. The ratings affirmations
reflects Moody's view that the combination of the cyclical upturn
in petrochemicals, and these one-time cash inflows, will enable
the company to maintain a robust cash balance despite anticipated
share repurchases and the pending maturity of $100 million of
debentures in September 2005.
As reported in the Troubled Company Reporter on Dec. 23, 2004,
Standard & Poor's Ratings Services revised its outlook on
petrochemicals producer Nova Chemicals Corp. to stable from
negative. At the same time, Standard & Poor's affirmed the 'BB+'
long-term corporate credit and senior unsecured debt ratings on
Nova.
PAXSON COMMS: Moody's Revises Outlook on Low-B Ratings to Negative
------------------------------------------------------------------
Moody's Investors Service affirmed the ratings of Paxson
Communications Corporation, including the B2 senior implied and
SGL-3 rating, and changed the outlook to negative.
The ratings continue to reflect the risks posed by Paxson's
unsustainable capital structure, the company's inability to create
compelling programming to distribute over its valuable portfolio
of station assets, and the resulting continued deterioration in
operating performance. The change in the outlook to negative
incorporates the execution risk of the company's recently
announced change in operating strategy from one dependent on
cash-consumptive ratings based programming to one based on non-
rated spot advertisements. The negative outlook also reflects
Moody's expectation that while Paxson's operating performance is
likely to improve in the intermediate term as cost reductions are
realized (primarily JSA terminations, cash programming costs, and
commissions), Moody's believes that the company will continue to
burn cash in the near term.
Moody's affirmed these ratings:
(i) B1 rating on the $365 million Senior Secured Floating
Rate Notes due January 2010,
(ii) Caa1 rating on the $639 million of senior subordinated
notes,
(iii) Caa2 rating on the $471 million of cumulative
exchangeable junior preferred stock,
(iv) B2 senior implied rating, and
(v) B3 senior unsecured issuer rating.
In addition, Moody's affirmed Paxson's speculative grade liquidity
rating of SGL-3.
The rating outlook is now negative.
The ratings remain constrained by Paxson's significant debt burden
($2.2 billion including preferred securities as of YE 2004),
leverage that will increase as the company's preferred securities
claims accrete in value (50% of the company's debt lies in
preferred securities), a cash interest burden that will
increasingly pressure liquidity over the ratings horizon (12.25%
sr. sub notes become cash pay in July 2006), our belief that
Paxson will be unable to redeem the 14.25% and 9.75% preferred
securities at their maturity in 2006, the worsening of its
relationship with NBC, television station assets that continue to
underperform relative to peers in the broadcasting sector, the
abandonment of its plan to search for a potential buyer or
strategic alternatives, management's inability to execute on its
former business plans and the risk that it will be unable to
successfully implement the new non-ratings reliant operating
strategy.
The ratings are supported by the significant asset value
represented by its portfolio of large market television stations,
including stations in all of the top 20 markets and 40 of the top
50, which can provide coverage of all of the company's debt in a
distress scenario (recent BIA appraisal of $2.65 billion).
Moody's believes that Paxson will experience improvement in EBITDA
margins given the new focus on more stable infomercial revenues
coupled with a much-reduced cost structure. Additionally, the
rating also benefits from liquidity on the balance sheet (cash
balances of over $80 million and short-term investments that are
easily converted to cash of $6 million at YE 2004) that provide a
reasonable cushion to support any operating cash shortfalls in the
near term.
The negative outlook reflects Moody's belief that Paxson will not
benefit from the reductions in its cost structure until the 2006
time horizon. The rating may face negative pressure if Paxson
fails to execute upon the cost reductions of its new operating
strategy.
Moody's does not believe Paxson will experience any positive
ratings momentum in the near-term. The outlook may be revised
back to stable if cost reductions more than offset potential
future declines in top line performance.
The SGL-3 rating reflects Paxson's adequate liquidity profile as
projected over the next twelve months. The SGL-3 rating reflects
the increasing uncertainty regarding the company's capital
structure, the lack of a bank revolving credit facility, and a
weak cash flow profile, offset by the lack of any restrictive
financial maintenance covenants and the absence of any near-term
debt amortization (debt matures begin in the fourth quarter of
2006.) The affirmation continues to incorporate Paxson's weakened
operating performance, as well as our belief, that Paxson will not
be able to fund its debt service and capital expenditure
requirements through internally generated funds over the liquidity
rating horizon. Moody's expects Paxson's change to a non-ratings
reliant operating strategy will strengthen performance. However,
Moody's believes that the company is unlikely to fully benefit
from these cost savings until the 2006 time frame. The company
continues to have programming commitments of approximately
$46 million through 2005, and its JSA arrangements do not
terminate until mid-2005. Thus, Moody's expects Paxson will
continue to burn through its existing cash balances (about
$80 million as of 4Q'04) for the remainder of 2005. Also
influencing the rating, Moody notes that cash provides only modest
coverage relative to the Paxson's total debt burden (about 2% of
total debt including preferreds).
The B1 rating for the senior secured floating rate notes reflects
their position in the capital structure and a security interest in
most of the assets. Notably, the Indenture requires that 2.5
times asset coverage of the Floating Rate Notes be maintained.
Further, the company is required to make a mandatory offer to
repurchase the floating rate notes upon the sale of its New York,
LA or Chicago stations. In addition, the level of collateral
coverage and the proportion of junior capital that sits below the
Floating Rate Notes support notching them up from the senior
implied rating of B2. The Caa1 rating on the senior subordinated
notes reflects their contractual subordination to the Floating
Rate Notes. Both the Floating Rate Notes and the senior
subordinated notes benefit from subsidiary guarantees. The Caa2
rating on the preferred stock reflects its deep subordination and
first loss position in the overall debt structure.
Paxson Communications Corporation operates the largest U.S.
television station group reaching approximately 87% of U.S.
television households via nationwide broadcast television, cable
and satellite distribution systems. It is headquartered in West
Palm Beach, Florida.
PC LANDING: Can Continue Using Cash Collateral Until May 31
-----------------------------------------------------------
The U.S. Bankruptcy for the District of Delaware gave PC Landing
Corp. and its debtor-affiliates, permission, on an interim basis:
a) to continue using Cash Collateral securing repayment of pre-
petition obligations to Deutsche Bank AG, New York Branch,
CIBC Inc., and Goldman Sachs Credit Partners L.P.; and
b) grant adequate protection to the Bank Group for continued
use of the Cash Collateral.
Under a Credit Agreement dated July 30, 1998, the Debtors' owe
approximately $716 million to the Bank Group.
The Debtors need access to Cash Collateral securing repayment of
that loan to fund the continued operation and uninterrupted
service of their PC-1 fiber optic cable systems -- their main
business operations -- and to administer their chapter 11 cases.
The Debtors' use of the Cash Collateral will be governed by the
terms of a consensual Court-approved Third Amended and Restated
Cash Collateral Stipulation with the Bank Group.
The Court granted the Debtors permission to use the Cash
Collateral on an interim basis for a two-month period, from
April 1, 2005, through May 31, 2005, in strict compliance with a
Budget agreeable to the Bank Group and the Court:
April 2005 May 2005
---------- ----------
Total Cash OA&M Expense $1,574,346 $866,334
Total G&A Expense - Cash $1,573,848 $1,067,576
Total Restructuring Expenses $75,000 $58,000
Contingency Expenses $161,000 $99,596
Expenses for Bank Professionals &
U.S. Trustee Fees $15,000 $25,000
---------- ----------
Total Expenses $3,399,194 $2,116,506
To adequately protect their interests, the Bank Group is granted
Post-Petition Liens and an Administrative Priority Claim in
substantially all of the Debtors' assets coming into existence
after the bankruptcy Petition Date, to the extent of any Cash
Collateral diminution.
Headquartered in Dallas, Texas, PC Landing Corporation and its
debtor-affiliates, own and operate one of only two major trans-
Pacific fiber optic cable systems with available capacity linking
Japan and the United States. The Debtor filed for chapter 11
protection on July 19, 2002 (Bankr. Del. Case No. 02-12086).
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 of over $10 million and estimated
debts of more than $100 million.
PEGASUS SATELLITE: Wants to Assume & Assign Contracts to Purchaser
------------------------------------------------------------------
The assets related to the Pegasus Satellite Communications, Inc.
and its debtor-affiliates' broadcast television business include,
but are not limited to, certain Federal Communications Commission
authorizations and licenses, real property, agreements to operate
television stations, rights to purchase television stations, time
brokerage agreements, lease agreements with respect to studio
facilities and other contract rights and working capital.
The Broadcast Assets also include Pegasus Satellite
Communications, Inc.'s rights under an option agreement with KB
Prime Media LLC to acquire, inter alia, the licenses of the
television stations currently owned by KB Prime but programmed by
the Broadcast Debtors, and to acquire rights with respect to a
construction permit and construction applications for additional
television stations. Pegasus Satellite has exercised its option
rights with respect to certain of those assets, resulting in asset
purchase agreements that are included in the Broadcast
Assets.
The Broadcast Debtors, which own and operate six broadcast
television stations, are:
-- Pegasus Satellite Communications, Inc.,
-- Bride Communications, Inc.,
-- BT Satellite Inc.,
-- HMW, Inc.,
-- Pegasus Broadcast Associates, L.P.,
-- Pegasus Broadcast Television, Inc.,
-- Pegasus Broadcast Towers, Inc.,
-- Portland Broadcasting, Inc.,
-- Telecast of Florida, Inc.,
-- WDSI License Corp.,
-- WILF, Inc.,
-- WOLF License Corp., and
-- WTLH License Corp.
The stations owned or programmed by the Broadcast Debtors are
affiliated with the CBS, FOX, UPN and WB networks, and reach
approximately 2% of the U.S. television households in five
designated market areas:
-- Wilkes Barre-Scranton, Pennsylvania;
-- Portland, Maine;
-- Chattanooga, Tennessee;
-- Tallahassee, Florida; and
-- Gainesville, Florida.
The Broadcast Debtors operate multiple television stations in all
of these DMAs except Chattanooga, Tennessee. By combining the
operation of two or more television stations in a single DMA, the
Debtors believe they realize substantial revenue and cost
synergies, especially with respect to consolidating advertising
sales forces, backroom operations and facilities engineers.
Sale of the Broadcast Assets
The Plan, as amended, provides that during the period from the
Confirmation Date through the sale or other disposition of the
Broadcast Assets, but subject to the occurrence of the Effective
Date, the Liquidating Trustee will make all operating decisions
and will exercise all control over the Broadcast Assets including
the Debtors' broadcast television stations, subject to the
jurisdiction of the United States Bankruptcy Court for the
District of Maine.
According to Larry J. Nyhan, Esq., at Sidley Austin Brown & Wood
LLP, in Chicago, Illinois, FCC approval is required for the
transfer of control over the Broadcast Assets to the Liquidating
Trust. On April 8, 2005, the Debtors sought FCC approval by
filing "pro forma" applications on FCC form 316.
Prior to filing the 316 Applications, Mr. Nyhan relates, the
Debtors were advised by the FCC that the Bankruptcy Court's
continued supervision over the Liquidating Trustee's disposition
of the Broadcast Assets is an express condition to FCC approval of
the 316 Applications.
The Bankruptcy Court will retain jurisdiction over the actions of
the Liquidating Trust and Trustee. The Liquidating Trust will
identify a buyer for the Broadcast Assets, seek the required
approvals of the Bankruptcy Court, seek the required approvals of
the FCC, and take actions that are necessary to consummate the
transfer of the Broadcast Assets to the ultimate buyer. The
proposed sale of the Broadcast Assets will be the subject of a
subsequent motion to be filed with the Court. The Debtors
anticipate that the marketing process leading to the Broadcast
Sale will either produce a purchaser for the Broadcast Assets,
including the Debtors' rights under those executory contracts or
unexpired leases as the Purchaser may wish to acquire, or will
have clarified which Broadcast Assets, including executory
contracts and unexpired leases, have marketable value.
Assumption and Rejection Provisions of the Plan
Section 8.1 of the Plan, captioned "Rejection," provides that on
the Effective Date, the Debtors will reject all their executory
contracts and unexpired leases except those that:
(i) are the subject of motions to assume, assume and assign or
reject filed with the Bankruptcy Court and pending on the
Confirmation Date for which the Bankruptcy Court will
retain exclusive jurisdiction to determine;
(ii) were assumed or rejected before the Confirmation Date; or
(iii) are listed on Schedule 8.2(a) of the Plan Supplement.
Section 8.2 of the Plan, captioned "Assumption," provides, in
part, that on the Effective Date, the Debtors will assume the
executory contracts and unexpired leases listed on Schedule
8.2(a) and that "the Debtors may also assume, assume and assign or
reject certain executory contracts and unexpired leases that are
the subject of motions filed with the Bankruptcy Court and pending
on the Confirmation Date for which the Bankruptcy Court shall
retain exclusive jurisdiction to determine such motions."
The Debtors seek to maximize the value of the Broadcast Assets by
maintaining the ability to assume or reject contracts to meet the
needs of any buyer that may emerge from the marketing thereof.
By this motion, the Debtors seek the Court's permission to assume
or assume and assign to a Purchaser approved by the Bankruptcy
Court, certain executory contracts and unexpired leases.
A complete list of the executory contracts and unexpired leases,
and the proposed cure amounts is available for free at:
http://bankrupt.com/misc/pegasuscontracts.pdf
The Court will convene a hearing on June 29, 2005, at 10:30 a.m.
(EST) to consider the Debtors' request. Objections must be filed
and served by June 22, 2005.
If a proposed Purchaser has been identified prior to the hearing,
Mr. Nyhan says, the Assumed Contracts and Assumed Leases will be
assumed and assigned to the Purchaser effective as of the closing
of the Broadcast Sale. If there is no proposed Purchaser as of
the Hearing, the Assumed Contracts and Assumed Leases will be
assumed effective as of the date the order approving the Debtors'
request becomes a Final Order.
Mr. Nyhan relates that the Liquidating Trustee will pay the Cure
Amounts (a) in Cash within forty-five days after the Closing
Assumption Date or the Order Assumption Date, as applicable, or
(b) on such other terms as may be agreed to by a counterparty to
an Assumed Contract or Assumed Lease.
If a dispute occurs regarding: (x) the cure amount; (y) the
ability of the Reorganized Debtors or the Purchaser to provide
adequate assurance of future performance under the Assumed
Contract or Assumed Lease; or (z) any other matter pertaining to
assumption, then the Cure Amounts will be paid following entry of
a Final Order resolving the dispute and approving assumption.
The Reorganized Debtors will retain the right to reject any
executory contract or unexpired lease that is subject to a dispute
concerning a Cure Amount until 30 days following entry of a Final
Order resolving that dispute.
The Debtors reserve the right, on behalf of the Reorganized
Debtors and the Liquidating Trustee, to modify the List of
Contracts and Leases to be assumed, upon notice to the parties to
any Assumed Contract or Assumed Lease affected by the amendment,
no later than the date that is ten days prior to the Hearing.
Any Assumed Contract or Assumed Lease that is removed from the
List pursuant to an amendment will be deemed rejected upon the
occurrence of the Closing Assumption Date or the Order Assumption
Date.
The Debtors also reserve the right, on behalf of the Reorganized
Debtors and the Liquidating Trustee, to seek authorization to
assume or to assume and assign any Assumed Contract or Assumed
Lease prior to the Hearing.
Headquartered in Bala Cynwyd, Pennsylvania, Pegasus Satellite
Communications, Inc. -- http://www.pgtv.com/-- is a leading
independent provider of direct broadcast satellite (DBS)
television. The Company, along with its affiliates, filed for
chapter 11 protection (Bankr. D. Me. Case No. 04-20889) on
June 2, 2004. Larry J. Nyhan, Esq., James F. Conlan, Esq., and
Paul S. Caruso, Esq., at Sidley Austin Brown & Wood, LLP, and
Leonard M. Gulino, Esq., and Robert J. Keach, Esq., at Bernstein,
Shur, Sawyer & Nelson, represent the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors, they listed $1,762,883,000 in assets and
$1,878,195,000 in liabilities. (Pegasus Bankruptcy News, Issue
No. 23; Bankruptcy Creditors' Service, Inc., 215/945-7000)
PRESIDENT CASINOS: Completes $82 Million Sale of Biloxi Assets
--------------------------------------------------------------
President Casinos, Inc. (OTC:PREZQ.OB) completed a Sale and
Purchase Agreement in connection with the sale and purchase of the
owned and leased real property and businesses commonly known as
the President Casino Broadwater Resort in Biloxi, Mississippi.
The agreement with Broadwater Development, LLP, is for a purchase
price of approximately $82.0 million, subject to certain post-
closing adjustments. Approximately $6.8 million of the purchase
price was paid by Silver Slipper Casino Venture LLC, which
acquired the right to purchase the gaming casino assets under a
separate transaction with the Purchaser. President Casinos, Inc.
intends to use the proceeds to pay down debt as part of its
restructuring plan.
President Casinos, Inc., owns and operates a dockside gaming
facility in downtown St. Louis, Missouri, north of the Gateway
Arch.
At Nov. 30, 2004, President Casinos' balance sheet showed a
$54,412,000 stockholders' deficit, compared to a $52,349,000
deficit at Feb. 29, 2004.
REAL MEX: Extends 10% Senior Secured Debt Offering Until Friday
---------------------------------------------------------------
Real Mex Restaurants, Inc., extended the expiration date for its
previously announced exchange offer relating to its outstanding
10% Senior Secured Notes Due 2010 which commenced on Sept. 28,
2004.
The exchange offer, which was initially scheduled to expire on
October 27, 2004, has been extended until 5:00 p.m., E.S.T. on
April 22, 2005. Holders of Notes previously tendered for exchange
shall have the right to withdraw tenders of Notes at any time
prior to the expiration of the exchange offer. As of this date,
holders of $104,374,000, or approximately 99%, of the outstanding
principal amount of Notes have tendered their Notes for exchange.
As previously announced, the Company has temporarily suspended the
use of its exchange offer prospectus. Such suspension shall
continue to be in effect until further notice from the Company.
About the Company
Headquartered in Long Beach, California, Real Mex Restaurants is
the largest full-service, casual dining Mexican restaurant chain
operator in the United States, with 164 restaurants in California
and an additional 35 company-owned restaurants in twelve other
states. These include 70 El Torito Restaurants, 69 company-owned
Chevys Fresh Mex Restaurants, 38 Acapulco Mexican Restaurants, 6
El Torito Grill Restaurants, 5 company-owned Fuzios Universal
Pasta Restaurants, the Las Brisas Restaurant in Laguna Beach, and
several regional restaurant concepts such as Who-Song & Larry's,
Casa Gallardo, El Paso Cantina, Keystone Grill and GuadalaHARRY's.
Real Mex Restaurants is committed to the highest standards and is
dedicated to serving the freshest Mexican food with excellent
service in a clean, comfortable, and friendly environment. For
more information, visit the company's websites at
http://www.eltorito.com/or http://www.chevys.com/or
http://www.acapulcorestaurants.com/
* * *
As reported in the Troubled Company Reporter on Jan. 14, 2005,
Standard & Poor's Ratings Services affirmed its ratings, including
the 'B' corporate credit rating, on casual-dining restaurant
operator Real Mex Restaurants, Inc. All ratings were removed from
CreditWatch. The outlook is stable.
The ratings affirmation follows Real Mex's acquisition of Chevys
Inc., for $77.9 million, to be funded through a $70 million senior
unsecured term loan and cash balances. The acquisition of Chevys,
the second-largest casual-dining Mexican restaurant in California,
improves the company's market position in California, where its El
Torito and Acapulco concepts are the largest and third-largest
casual-dining Mexican restaurant chains, respectively.
Standard & Poor's believes the acquisition risk is limited because
Real Mex is already adept at operating casual-dining Mexican
restaurants in California. Moreover, the company could realize
cost savings from the consolidation of general and administrative
expenses, as well as lower food distribution costs. Pro forma
leverage will be high, but will remain about the same as previous
levels, with total lease-adjusted debt to EBITDA at about 5.0x.
"The ratings reflect Real Mex's participation in the highly
competitive restaurant industry, its small size and regional
concentration, weak cash flow protection measures, and a highly
leveraged capital structure," said Standard & Poor's credit
analyst Robert Lichtenstein. The company is a small player in the
highly competitive casual-dining sector of the restaurant
industry.
Although Real Mex has a leading position in California as a
casual-dining Mexican restaurant operator, the company maintains a
relatively small market share among overall casual-dining chains.
Many of its competitors have substantially greater financial and
marketing resources, and continue to expand rapidly. Moreover,
Real Mex is regionally concentrated, with about 90% of its
restaurants in California.
RIVERWEST DEV'T: Case Summary & 22 Largest Unsecured Creditors
--------------------------------------------------------------
Lead Debtor: Riverwest Development Group, Inc.
725 Edward Street
Sycamore, Illinois 60178
Bankruptcy Case No.: 05-71794
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
Larry Thomas 05-71795
Type of Business: Real Estate
Chapter 11 Petition Date: April 14, 2005
Court: Northern District of Illinois (Rockford)
Judge: Manuel Barbosa
Debtors' Counsel: John S Biallas, Esq.
3N918 Sunrise Lane
Saint Charles, Illinois 60174
Tel: (630) 513-7878
Fax: (630) 513-7880
Total Assets Total Debts
------------ -----------
Riverwest Development Group, Inc. $1,044,579 $1,526,829
Larry Thomas $2,195,520 $527,983
A. Riverwest Development Group, Inc.'s 20 Largest Unsecured
Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
McCanse Builders Trade Debt $81,234
105 Edward Street
Sycamore, IL 60178
Blackhawk Lumber Trade Debt $33,480
800 East Washington Street
Oregon, IL 61061
German American State Bank Business Loan $25,000
100 Church Street
German Valley, IL 61039
Thomas Plumbing & Heating Trade Debt $11,750
South 2973 Rocky Hollow Road
Chana, IL 61015
Brothers Flooring Trade Debt $7,843
c/o William R. Shirk, Esq.
301 East Main Street
Morrison, IL 61270
Brothers Flooring Trade Debt $6,982
c/o William R. Shirk, Esq.
301 East Main Street
Morrison, IL 61270
Ehmer Industries, Inc. Trade Debt $5,990
704 East Washington Street
Oregon, IL 61061
American Flooring, Inc. Trade Debt $5,470
216 West State Street
Sycamore, IL 60178
Anderson Plumbing & Heating Trade Debt $5,145
c/o Dennis R. Hewitt, Esq.
1124 Lincoln Highway
Rochelle, IL 61068
Wheaton Associates Trade Debt $4,750
P.O. Box 884
Wheaton, IL 60189
Hardwood Floors & More Trade Debt $3,590
711 North Brinton Avenue
Dixon, IL 61021
NiCor Gas Trade Debt $2,210
P.O. Box 200
Aurora, IL 60507-2020
Kessen Excavating, Inc. Trade Debt $1,883
8th Avenue & 20th Street
Rochelle, IL 61068
Stockbridge Architects Trade Debt $1,835
295 South Main Street
Burlington, IL 60109
Richardson Electric Trade Debt $1,376
P.O. Box 45
Genoa, IL 60135
ServiceMaster Disaster Services Trade Debt $1,324
25 West North Avenue
Villa Park, IL 60181
Pella Products, Inc. Trade Debt $1,281
4301 11th Street
Rockford, IL 61109
Bocker Door Trade Debt $948
2920 Honeycreek Road
Chana, IL 61015
Farley's Appliance Trade Debt $850
1245 North Galena Avenue
Dixon, IL 61021
Travis Landscaping Trade Debt $832
513 South Daysville Road
Oregon, IL 61061
B. Larry Thomas' 2 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Discover Financial Services Credit Card $15,327
P.O. Box 3008
New Albany, OH 43054
USAA Savings Bank Credit Card $8,821
P.O. BOX 14050
Las Vegas, NV 89114
SECURUS TECHNOLOGIES: Filing Delay Cues S&P to Hold Low-B Ratings
-----------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on Dallas,
Texas-based Securus Technologies Inc. to stable from positive. At
the same time, Standard & Poor's affirmed its 'B+' corporate
credit rating and 'B+' rating on the company's $154 million
second-lien senior secured notes.
"The outlook revision reflects Securus' delayed filing of its 2004
audited financial statements, largely because of the complexity of
integrating the acquisition of Evercom," said Standard & Poor's
credit analyst Ben Bubeck. The ratings and stable outlook reflect
the expectation that Securus will submit audited annual financial
statements in the near term, while maintaining access to its
credit facility.
Standard & Poor's ratings on Securus reflect its narrow focus
within a competitive niche marketplace, aggressive financial
profile, and potential challenges with the integration of Evercom.
These partially are offset by a largely recurring revenue base
supported by long-term customer contracts and a diverse customer
base, as well as expectations for relatively stable operating
margins and continued modest free operating cash flow generation.
Securus is the largest independent provider of inmate
telecommunications services in the U.S. The company provides
services to correctional facilities operated by city, county,
state and federal authorities in the U.S. and Canada. Pro forma
for the refinancing and acquisition of Evercom last September, the
company had approximately $195 million in operating lease-adjusted
debt.
Despite challenges associated with an evolving competitive
marketplace, a fairly stable and visible cash flow base, supported
by intermediate-term customer contracts, limits Securus' downside
credit risk.
SITELITE HOLDINGS: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Sitelite Holdings Inc.
111 Theory, Suite 200
Irvine, California 92617-3045
Bankruptcy Case No.: 05-12457
Type of Business: The Debtor provides selective outsourcing
options for management of IT infrastructure and
applications. See http://www.sitelite.com/
Chapter 11 Petition Date: April 15, 2005
Court: Central District of California (Santa Ana)
Judge: John E. Ryan
Debtor's Counsel: Marc J. Winthrop, Esq.
Winthrop Couchot, P.C.
660 Newport Center Drive, Fourth Floor
Newport Beach, California 92660
Tel: (949) 720-4100
Fax: (949) 720-4111
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Bryan Cave LLP Legal Fees $145,082
David G. Anderson, Esq.
120 Broadway, #300
Santa Monica, CA 90401-2305
Kling & Pathak Consulting & audit $85,700
17785 Center Court Drive fees
Suite 250
Cerritos, CA 90703
The Irvine Company Rent $84,959
Department #0266
Los Angeles, CA 90084
Savvis Portal Receivables Collocation $72,685
13339
PacifiCare Dental & Health Insurance $66,826
Vision Admin
Nextel Communications Cell phone charges $35,154
BMC Software Distribution Software licenses $33,682
Inc, Co.
Premium Credit Corp. Collection agent for $26,255
HealthNet
Tech Data Corporation Computer hardware $22,110
NetIQ Software licenses $20,000
Hunter Wheeler Legal Settlement $20,000
Urchin Software license $19,600
Law Office of Aron Hasson Legal fees for H1B $16,761
visa processing
Adams, Harkness & Hill Investment banking $11,412
fees
AT&T Internet $11,164
Bonne Bridges, etc. Legal fees- $10,632
Corbin matter
Lori Niese Promissory note $10,083
Qwest Business Services Voice and internet $10,081
connection
Verizon Cell phone charges $8,493
Active Credit Services, Inc. Settlement of AT&T $7,846
obligation
SOUNDVIEW HOME: Moody's Assigns Ba2 Rating to Class B-1 Certs.
--------------------------------------------------------------
Moody's Investors Service has assigned an Aaa rating to the senior
certificates issued by Soundview Home Loan Trust, Asset-Backed
Certificates, Series 2005-1 and ratings ranging from Aa1 to Ba2 to
the mezzanine and subordinate certificates in the deal. Moody's
did not rate all of the certificates in the deal.
The securitization is backed by:
* Residential Mortgage Assistance Enterprise, LLC (33%),
* Accredited Home Lenders Inc. (25%),
* Argent Mortgage Company L.L.C. (23%),
* The CIT Group/Consumer Finance, Inc. (9%), and
* WMC Mortgage Corp. (9%)
originated one- to four-family, adjustable-rate (86%) and fixed-
rate (14%) subprime mortgage loans secured by first liens (94%)
and second liens (6%) on residential real properties.
The ratings are based primarily on the credit quality of the
loans, and on the protection from subordination,
overcollateralization, excess spread, and an interest rate cap
agreement intended partially to mitigate interest rate risk.
Moody's expected loss on the deal is approximately 5.3% to 5.8%.
Select Portfolio Servicing, Inc., will service the loans.
The complete rating actions are:
* Class I-A1, rated Aaa
* Class I-A2, rated Aaa
* Class II-A1, rated Aaa
* Class II-A2, rated Aaa
* Class II-A3, rated Aaa
* Class M-1, rated Aa1
* Class M-2, rated Aa2
* Class M-3, rated Aa3
* Class M-4, rated A2
* Class M-5, rated A3
* Class M-6, rated Baa1
* Class M-7, rated Baa2
* Class M-8, rated Baa2
* Class M-9, rated Baa3
* Class B-1, rated Ba2
SYDNEY STREET: Fitch Rates EUR20 Mil. Floating-Rate Notes at BB+
----------------------------------------------------------------
Fitch Ratings has assigned these ratings to Sydney Street Finance
Limited floating-rate credit-linked notes:
-- EUR70,000,000 class A1 'AAA';
-- EUR66,700,000 class A2 'AAA';
-- EUR60,000,000 class B 'AA+';
-- EUR46,700,000 class C 'AA';
-- EUR44,000,000 class D 'AA-';
-- EUR26,700,000 class E 'A';
-- EUR21,350,000 Class F 'A-';
-- EUR21,350,000 class G 'BBB';
-- EUR20,000,000 class H 'BB+'.
Sydney Street Finance Limited is a synthetic securitization
referencing a portfolio of corporate obligations, directly and
indirectly, via tranched portfolio credit default swaps and asset-
backed securities. Sydney Street gains access to the credit risk
of the portfolio via a credit default swap -- CDS -- between the
issuer and KBC Investments Cayman Islands V, Ltd., as swap
counterparty. The legal maturity date of the CDS is July 2043,
but it is scheduled to amortize on or after the payment date in
July 2015. The ratings assigned to the notes address the
likelihood that investors will receive full and timely payments of
interest and ultimate receipt of principal by the legal maturity
date.
Sydney Street provides protection to the swap counterparty via a
CSD that is collateralized with the issuance proceeds of the
notes. Proceeds of the issuance of the notes will be invested in
a pool of euro-denominated eligible investments, consisting of
high-quality obligations maturing in less than 10 years. Prior to
maturity, the value of the principal of the notes is assured
through a daily mark-to-market process which ensures the value of
collateral amounts to at least the product of the outstanding
repurchase price and the repo margin. At maturity, the value of
the principal of the notes is protected through the repurchasing
agreement, under which the repo counterparty agrees to purchase
the eligible investments at their purchase price at maturity.
Sydney Street pays the swap counterparty for any losses due to
credit events experienced in the portfolio above the first loss
amount for each class up to the balance on the notes by
liquidating collateral. Any reference obligations in the
portfolio can be traded at the discretion of the portfolio
manager, KBC FP, subject to trading guidelines and portfolio
criteria restrictions. While KBC FP bears no fiduciary
responsibility to noteholders, the capital structure of the
transaction aligns interests of the portfolio manager with those
of the investors through exclusively subordinate management fee
and equity holdings, among other features.
The ratings are based upon the structure of the issuer, the
financial strength of KBC Investments Cayman Islands V, Ltd., as
the portfolio swap counterparty and the portfolio manager, and KBC
Bank NV, as the repo counterparty.
Fitch will monitor the performance of this transaction. Deal
information and historical data on Sydney Street are available on
the Fitch Ratings web site at http://www.fitchratings.com/
TOWER AUTOMOTIVE: Closes Three Facilities to Reduce Costs
---------------------------------------------------------
Tower Automotive (OTCBB: TWRAQ) has undertaken operational
restructuring initiatives designed to reduce excess capacity and
costs, and improve overall efficiency.
The company will close its facilities in Belcamp, Md., Bowling
Green, Ky., and Corydon, Ind. The facility closures are expected
to be complete by June 30, 2005. Additionally, as a result of the
changes in Corydon, Tower will reduce headcount at its Granite
City, Ill. facility. In total, these actions will affect
approximately 800 employees.
Bill Pumphrey, Tower's President of North American Operations,
said, "Closing facilities and reducing headcount are always very
difficult decisions to make. However, as we go through our
restructuring process, we must take all necessary actions to make
Tower the most efficient and competitive company possible. We
believe that the actions announced today will have a positive
impact on our business going forward."
Tower said that it will continue to examine its operations and may
make additional changes if they are determined necessary.
Mr. Pumphrey continued, "We are pleased that our financial
restructuring process is proceeding very much as expected. Tower
has a fundamentally solid business, and we continue to expect that
Tower will emerge from this process as a stronger competitor."
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.
UNUMPROVIDENT CORP: Moody's Revises Rating Outlook to Negative
--------------------------------------------------------------
Moody's Investors Service confirmed the credit ratings of
UnumProvident Corporation (UnumProvident - senior debt at Ba1) and
the insurance financial strength ratings of UNUM Life Insurance
Company of America and the company's other operating life
insurance subsidiaries. The outlook for the ratings is now
negative. This rating action concludes a review for possible
downgrade on UnumProvident's ratings that began on Nov. 22, 2004.
The rating agency also assigned ratings to the company's new
$1 billion multi-security shelf (senior debt at (P)Ba1).
Moody's said that when UnumProvident's ratings were placed on
review last November, the primary driver was the heightened event
risk associated with issues concerning broker compensation
arrangements in the employee benefit market. Commenting on the
rating confirmation, the rating agency said that significant
uncertainty and potential risk remained relating to the broker
compensation issues and the associated regulatory reviews and
litigation. However, the severity of the outcomes for these
issues is quite difficult to predict and the timeframe to resolve
them could be protracted. Moody's added that it remained
concerned about the effect that the broker compensation and
related issues could have on the company's ability to place and
retain business in the employee benefits market, citing the sharp
drop in 2004 sales which the rating agency believes were driven by
a combination of increased pricing, customer concern with
financial strength, reputation issues, and upheaval in the broker
market.
The rating agency said that the confirmation also reflected
financial progress that UnumProvident has made in several areas
including improved statutory operating earnings which have
resulted in stronger dividend capacity for the operating life
insurance companies and higher cash coverage of interest expense
and shareholder dividends. Moody's noted that UnumProvident's
life companies had increased statutory capital and improved the
consolidated NAIC risk-based capital ratio at year-end 2004.
According to the rating agency, UnumProvident has also begun to
reduce financial leverage and Moody's said that it expected
financial leverage to further improve with the repayment of
$227 million of UnumProvident bonds maturing in 2005.
However, the rating agency commented that, in addition to the
concerns about sales and retention mentioned above, the negative
outlook incorporated concerns about profitability of the old block
of long term care business, and uncertainty regarding a possible
settlement for disability claims handling practices with
regulators in California, who did not participate in the multi-
state market conduct settlement in 2004.
Moody's said that its rating expectations for UnumProvident
included consolidated adjusted financial leverage (adjusted debt /
total adjusted GAAP capital) to move to less than 30% by year-end
2005, NAIC RBC for the consolidated life insurance operations of
at least 275%, GAAP after-tax net income of at least $500 million
in 2005, pre-tax statutory operating earnings of at least
$575 million for 2005, an absence of significant one-time charges,
cash flow available to the holding company to cover holding
company interest and common dividends by at least 1.5 times, and
liquidity at the holding company on an ongoing basis of at least
$150 million.
According to the rating agency, these factors could create
positive rating momentum for UnumProvident:
* a reduction in financial leverage to less than 25%,
* sustained NAIC RBC level of at least 300%,
* current year GAAP and statutory income 20% higher than the
company's 2005 plans,
* cash coverage of interest expense and shareholder dividends
of the holding company of at least 2 times, and
* return on revenues of at least 5%.
Moody's indicated that factors that could move the rating downward
include financial leverage above 30% after year-end 2005, NAIC RBC
of less than 275%, annual statutory pre-tax income of less than
$450 million, significant adverse consequences from litigation or
regulatory examinations, one-time charges in 2005 of over $150
million, sales and persistency levels 15-20% worse than the
company's 2005 projections.
These ratings have been confirmed with a negative outlook:
* UnumProvident Corporation
-- senior unsecured debt of Ba1
-- mandatorily convertible units/preferred stock of Ba1
* UNUM Corporation
-- senior unsecured debt of Ba1
-- junior subordinate debt of Ba2
* Provident Companies, Inc.
-- senior unsecured debt of Ba1
* Provident Financing Trust I
-- preferred stock of Ba2
* UNUM Life Insurance Company of America
-- insurance financial strength of Baa1
* First UNUM Life Insurance Company
-- insurance financial strength of Baa1
* Colonial Life & Accident Insurance Company
-- insurance financial strength of Baa1
* Provident Life and Accident Insurance Company
-- insurance financial strength of Baa1
* Paul Revere Life Insurance Company
-- insurance financial strength of Baa1
* Paul Revere Variable Annuity Insurance Company
-- insurance financial strength of Baa1
These ratings have been assigned, with a negative outlook, to the
$1 billion multi-security shelf:
* UnumProvident Corporation
-- senior unsecured debt of (P)Ba1
-- subordinate debt of (P)Ba2
-- preferred stock of (P)Ba3
* UnumProvident Financing Trust II
-- preferred stock of (P)Ba2
* UnumProvident Financing Trust III
-- preferred stock of (P)Ba2
UnumProvident Corporation, headquartered in Chattanooga, Tennessee
and Portland, Maine, is the industry's leading provider of group
and individual disability insurance. As of December 31, 2004,
the company reported consolidated assets of approximately
$50.8 billion and shareholders' equity of $7.2 billion.
USGEN NEW ENGLAND: Court Sets Confirmation Hearing for May 12
-------------------------------------------------------------
The Hon. Paul Mannes of the U.S. Bankruptcy Court for the District
of Maryland will hold a hearing to consider confirmation of the
Second Amended Plan of Liquidation for USGen New England, Inc.,
on May 12, 2005, at 10:30 a.m. (prevailing Eastern Time).
Any objections to confirmation of the Plan must be filed with
the Court and served to parties-in-interest by May 2, 2005. The
Court will consider only timely filed written objections. All
objections that are not timely filed and served are deemed
overruled.
Any party supporting the Plan may file a response to any
Confirmation Objection by May 5, 2005.
The Confirmation Hearing may be adjourned from time to time on at
least 48 hours' written notice to parties.
As reported in the Troubled Company Reporter on Apr. 15, 2005,
Judge Mannes found that the Second Amended Disclosure Statement
filed by USGen New England, Inc., contains adequate information as
defined in Section 1125 of the Bankruptcy Code to enable a
hypothetical reasonable investor to make an informed judgment
about the Plan. Accordingly, the Court approves the Amended
Disclosure Statement and authorizes USGen to solicit acceptances
of the Plan.
Headquartered in Bethesda, Maryland, USGen New England, Inc., an
affiliate of PG&E Generating Energy Group, LLC, owns and operates
several electric generating facilities in New England and
purchases and sells electricity and other energy-related products
at wholesale. The Debtor filed for Chapter 11 protection on
July 8, 2003 (Bankr. D. Md. Case No. 03-30465). John E. Lucian,
Esq., Marc E. Richards, Esq., Edward J. LoBello, Esq., and Craig
A. Damast, Esq., at Blank Rome, LLP, represent the Debtor in its
restructuring efforts. When it sought chapter 11 protection, the
Debtor reported assets amounting to $2,337,446,332 and debts
amounting to $1,249,960,731. (PG&E National Bankruptcy News,
Issue No. 36; Bankruptcy Creditors' Service, Inc., 215/945-7000)
W.R. GRACE: Asks Court to OK Hatco Settlement & Remediation Deals
-----------------------------------------------------------------
From 1959 through 1978, W.R. Grace & Co.-Conn. owned and operated
a specialty chemicals manufacturing facility located at 1020 King
Georges Post Road in Fords, New Jersey, then known as the Hatco
Chemical Division of Grace. Hatco Corporation purchased the real
property and operations of the Hatco Chemical Division on
August 21, 1978. Hatco continues to own and operate the Hatco
Facility.
Site Remediation and the 1996 Settlement
On July 22, 1992, the State of New Jersey, through the New Jersey
Department of Environmental Protection, issued a Directive and
Notice to the Insurers of Grace and Hatco asserting that the
parties are responsible for the discharge of hazardous substances
at the Hatco Facility pursuant to the Spill Compensation and
Control Act, and demanding that Grace and Hatco conduct a
remedial investigation and remedial action of hazardous
substances.
Hatco entered into an administrative consent order with the NJDEP
in September 1992 for the investigation and remediation of
hazardous substances on or emanating from the Hatco Facility.
Hatco then initiated litigation against Grace.
After extensive litigation in the federal and state courts, Grace
and Hatco entered into a settlement agreement dated July 1, 1996.
The 1996 Settlement Agreement provided for Grace and Hatco to
remediate the Site cooperatively and to participate jointly in
the resolution of future costs and expenses in connection with
the remediation. Grace and Hatco have worked cooperatively to
address contamination at the Site since entering into the 1996
Settlement, and, until the Debtors' Petition Date, resolved
remediation costs and expenses. Grace has not sought to reject
the 1996 Settlement under the Bankruptcy Code.
By letter dated September 12, 2001, Grace, W.R. Grace & Co., and
Remedium Group, Inc., advised the State of New Jersey and Hatco
of their bankruptcy filing and informed that they would be unable
to further participate in the environmental remedial activities
at the Site due to their Chapter 11 cases. By letter dated
September 21, 2001, Hatco disputed the position of the Settling
Debtors and asserted that Grace has a continuing obligation to
perform the remediation of the Site pursuant to the 1996
Settlement.
The State believes that it has a non-dischargeable claim against
Grace for the remediation of the Site.
On March 28, 2003, Hatco filed Claim No. 9569 against Grace,
which claim asserts $34 million relating to Grace's obligations
and liabilities that arose from environmental contamination at
the Site.
The Liability Transfer Program
Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones
& Weintraub P.C., in Wilmington, Delaware, informs Judge
Fitzgerald that to avoid protracted litigation and resolve their
liability in connection with the Site, the Settling Debtors and
Hatco have developed a liability transfer program to achieve
remediation of the Site at minimum risk and cost to the Settling
Debtors. The transfer is structured so that, in exchange for a
one-time payment, a third-party environmental contractor will
assume, in perpetuity, the Settling Debtors' and Hatco's
environmental remediation and environmental legal liability in
connection with the Site. In short, under agreements with the
State and with the Settling Debtors and Hatco, the third-party
will be responsible in completing the environmental remediation
of the Site and maintain the remedy in perpetuity, and will
defend and pay other claims related to environmental conditions
at the Site. The third-party's obligations will be backed by an
environmental insurance policy providing remediation cost cap
insurance in addition to pollution legal liability insurance.
To develop and implement the liability transfer structure, the
Settling Debtors entered into a professional services agreement
with Marsh USA Inc. for advice and assistance with regard to the
structure and details of the liability buy-out. According to Ms.
Jones, Marsh has specialized knowledge with respect to
environmental insurance programs and risk transfer. Among other
things, Marsh evaluated the environmental clean-up risks at the
Site, structured a program to address the risks, identified
potential liability buy-out candidates and insurance providers,
assisted to interview and negotiate with the candidates and
providers, and supported the evaluation of bids received.
With Marsh's assistance, the Settling Debtors and Hatco solicited
competitive bids from experienced environmental contractors.
After a rigorous selection process, the Settling Debtors and
Hatco selected Weston Solutions, Inc., as third party liability
buy-out contractor. Weston has chosen ACE American Insurance
Company as its insurer. ACE will issue a Remediation Expense
Containment and Premises Pollution Liability Insurance Policy to
insure Weston's obligations under the liability transfer.
The Liability Transfer Documents
To formalize the liability transfer, a set of five documents have
been developed:
(a) a Settlement Agreement among the Settling Debtors,
NJDEP, Hatco, Weston and ACE;
(b) a Remediation Agreement among the Settling Debtors,
Hatco and Weston;
(c) a Policy to be issued by ACE;
(d) an Administrative Consent Order agreed to among NJDEP,
Weston and ACE; and
(e) a Natural Resource Damages Settlement Agreement agreed
among the Settling Debtors, NJDEP, Hatco and Weston.
The Settlement Agreement
Grace, Remedium, NJDEP, Hatco, Weston and ACE have executed a
Settlement Agreement, under which:
1. Grace and Remedium will pay $21,353,794 in settlement of
all liabilities with respect to the environmental
conditions at the Site;
2. Hatco will pay $3,768,316 in settlement of all liabilities
with respect to the environmental conditions at the Site
related to releases from the Site commencing prior to
November 4, 2002;
3. Grace and Remedium will exchange mutual releases of claims
and covenants not to sue with Hatco;
4. NJDEP will grant Grace and Remedium a covenant not to sue
relating to environmental contamination resulting from
discharges from the Site;
5. NJDEP will grant Hatco a conditional promise not to sue
relating to environmental contamination resulting from
discharges from the Site commencing prior to November 4,
2002;
6. Hatco and NJDEP will be precluded from seeking other relief
against Grace and Remedium related to the Site;
7. Hatco's Claim and claims under the 1996 Settlement will be
extinguished; and
8. Weston will be responsible for its commitments under the
Settlement Agreement, Remediation Agreement, the Policy,
and the Administrative Consent Order, and ACE will be
required to issue the Policy and provide financial
assurance on Weston's behalf for the remediation to the
limits of, and for so long as, the Policy is effective.
The Remediation Agreement
Grace, Remedium, Hatco and Weston have executed a Remediation
Agreement, under which Weston will accept responsibility for
historical environmental liabilities in connection with the Site
and the Debtors and Hatco will fund the remediation of the Site
and the purchase of insurance and annuity, for a total of
$25,122,110. In particular, Weston will become responsible:
* for all activities necessary to investigate and remediate
pollution conditions caused by operations or conditions
existing prior to November 4, 2002, whether at, under, or
migrated or migrating from the Site;
* to sign as the generator for all remediation waste disposed
from the Site; and
* for the legal obligations of Grace, Remedium, or Hatco for
risks resulting from the pollution conditions, including
third-party bodily injury, property damage and natural
resource damage claims.
Weston's activities will be funded and insured through the Policy
for the first 30 years. Any long-term operation and maintenance
of the remedy after that will be financed through a pre-funded
annuity.
The ACE Policy
The Policy has been negotiated among Grace, Remedium, Hatco,
Weston and ACE. The Policy will fund the remedial action, cover
any cost overruns associated with implementing the remedial plan
or resulting from unknown pre-existing conditions or regulatory
re-openers, satisfy natural resource damages claims to a maximum
of $5 million, and provide defense and coverage of third-party
claims for clean-up costs, property damage, and bodily injury
associated with conditions related to the Site whether on-site,
off-site, associated with transportation of Site-related waste,
or disposal of wastes at non-owned disposal sites.
The New Administrative Consent Order
Under the Settlement Agreement and the Remediation Agreement,
Weston will become liable to the State for cleanup pursuant to a
new Administrative Consent Order that has been fully negotiated,
executed by Weston and ACE, and, pursuant to the terms of the
Settlement Agreement, will be executed by NJDEP within 14 days of
receipt of the Court's order approving the Settlement and
Remediation Agreements. ACE has executed the Administrative
Consent Order for the limited purpose of providing financial
assurance of the remedy through a self-guarantee to the State.
The Natural Resource Damages Settlement Agreement
Under the Settlement Agreement and Remediation Agreement, natural
resource damage claims related to environmental conditions at the
Site existing as of the date of the Natural Resource Damages
Settlement Agreement will be fully settled. The Natural Resource
Damages Settlement Agreement has been executed by the Settling
Debtors, NJDEP, Hatco and Weston. The actions required by the
Natural Resource Damages Settlement Agreement will be funded
through the Policy. The Settling Debtors will receive a full
release and covenant not to sue and contribution protection for
natural resource damages existing prior to the date of the
Natural Resource Damages Settlement Agreement.
Settlement & Remediation Pacts Should be Approved
By this motion, the Settling Debtors seek the Court's authority
to:
-- execute and consummate the transactions contemplated under
the Settlement Agreement;
-- execute and consummate the transactions contemplated under
the Remediation Agreement;
-- execute the Letter Agreement with Marsh; and
-- remit to Marsh a $330,000 Success Fee as required by the
Letter Agreement.
Ms. Jones believes that through the Settlement Agreement and
Remediation Agreement, the Settling Debtors will:
-- avoid certain, protracted and expensive litigation,
-- cost-effectively resolve a considerable environmental
liability,
-- receive covenants not to sue from NJDEP and Hatco
concerning the Site,
-- receive a covenant not to sue from Hatco for obligations
and liabilities under the 1996 Settlement, and
-- be indemnified from all potential future liability.
Furthermore, Ms. Jones says, significant environmental
contamination will be promptly remediated.
Moreover, Ms. Jones relates, the approval of the Settlement
Agreement will extinguish Hatco's contract and environmental
contribution claims without forcing litigation. "Allowing the
settlement to proceed will eliminate Hatco's claims for
approximately $34 million against the Settling Debtors' estates
for the payment of only $21,353,794." Furthermore, Ms. Jones
continues, the Settlement Agreement allows the Settling Debtors
to avoid additional obligations arising from the 1996 Settlement,
like payment for costs associated with facility expansion
projects and certain aspects of Hatco's wastewater discharge.
The Settlement Agreement requires Grace to pay costs for facility
expansion projects up to $3 million and for wastewater discharge
projects with no limit, Ms. Jones notes. Therefore, Ms. Jones
says, allowing the settlement to proceed will eliminate assured
transaction costs, address risk of increased costs, and expedite
resolution of significant liability.
In addition, Ms. Jones remarks, approval of the Settlement will
result in the remediation of the Site and satisfaction of the
State's environmental statutes and regulations. Ms. Jones
contends that while the State has not filed a proof of claim
against the Settling Debtors, NJDEP may still assert that an
order to conduct remediation issued pursuant to federal or state
environmental law is not a claim dischargeable in bankruptcy, but
rather is the State's exercise of its regulatory and police
powers.
Ms. Jones tells Judge Fitzgerald that if the settlement is not
approved, the Settling Debtors may face repercussions from the
United States Environmental Protection Agency in connection with
its regulatory and enforcement role pursuant to the Toxic
Substances Control Act.
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. 83; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
WHITING PETROLEUM: Moody's Puts B2 Rating on $220M Sr. Sub. Notes
-----------------------------------------------------------------
Moody's Investors Service assigned a B2 rating to Whiting
Petroleum's $220 million of eight year senior subordinated notes.
Moody's also affirmed Whiting's Ba3 senior implied rating and
existing B2 senior subordinated note rating. Whiting's liquidity
rating is SGL-2. The rating outlook is stable. Note proceeds
will be used to term out Whiting's existing $215 million of
secured bank debt.
The ratings are supported by:
(1) substantially reduced debt after Whiting's fourth quarter
2004 $240 million common equity offering;
(2) resulting relatively conservative leverage of on proven
developed (PD) reserves;
(3) a strong 9 year PD reserve life;
(4) a supportive price outlook;
(5) adequately competitive, though escalating, total full-cycle
costs;
(6) adequately competitive 2004 and 2004 three-year average
all-sources reserve replacement costs;
(7) resulting strong cash-on-cash returns (leveraged unit cash
margin divided by replacement costs;
(8) a substantially larger and more diversified funded PD
reserve base after a series of 2004 and 2005 acquisitions;
and
(9) a view that Whiting will satisfactorily fund acquisitions
with internal cash flow and common equity.
Whiting's ratings are restrained by:
(1) a sequential decline in first quarter production in the
range of 1.5%;
(2) still modest reserve scale;
(3) escalating total full-cycle costs due to higher unit
production costs due to acquisitions of higher cost Permian
Basin properties and higher all-sources reserve replacement
costs;
(4) a surge in drillbit finding and development costs to over
$11/boe after negative reserve revisions ($8.40/boe without
revisions);
(5) continuing acquisition event and funding risk;
(6) Moody's view that it remains premature to discern how much
up-side Whiting will tend to derive from acquired
properties; and
(7) a related concern that Whiting's comparatively attractive
acquisition prices could partially be due to perceived
modest upside potential in acquired properties.
Whiting incurred a negative 2.5 mmboe reserve revision at year-end
2004.
Whiting now operates on a much larger scale and diversification
after its 2004 and 2005 acquisitions. Moody's estimates that
first quarter 2005 average daily production will be in the range
of 29,250 mmboe/day to 29,750 mmboe/day. Pro forma for Whiting's
2005 acquisitions, total reserves approximate 152.6 mmboe, 106.7
mmboe (69%) of which are PD reserves. Year-end 2004 proven
reserves totaled 144.2 mmboe and PD reserves totaled 100.9 mmboe.
At year-end 2003, reserves totaled a far smaller 73.1 mmboe, of
which 54.8 mmboe was PD reserves.
Moody's estimates pro-forma debt to currently be in the range of
$370 million. Giving credit for reserves acquired thus far in
2005, pro forma leverage on PD reserves approximates $3.44/boe
versus year-end 2004 leverage on PD reserves of $3.22/boe.
Leverage is sound relative to Whiting's ratings and reserve scale
and is modestly supportive of its expected continuing acquisitive
nature. Pro-forma outstanding bank debt will be nil, down from a
peak of almost $400 million before the equity and bond offerings.
Moody's estimates pro-forma total full-cycle costs to be in the
range of $22/boe, including just over $10/boe of unit production
costs, roughly $2.50/boe of G&A expense, interest expense of
somewhat under $2.50/boe, and pro-forma three-year reserve
replacement costs of just over $7.50/boe. In 2004, Whiting
incurred $9.06/boe of production expense, an average of $2.67/boe
in G&A expenses and roughly $2.02/boe of unit interest expense.
Whiting's 2004 three-year average all-sources unit reserve
replacement costs were $7.49/boe.
At recent high realized prices, and after deducing all expenses
except reserve replacement costs, unit cash flow, after interest
expense, was $21.49/boe in 2004 and an estimated $23.50/boe in
first quarter 2005. This covers $7.50/boe of three-year average
all-sources reserve replacement costs by over 300%. Moody's does
expect this very strong coverage to diminish significantly when
prices moderate and, as Moody's anticipates, 2005 reserve
replacement costs rise.
Whiting appears to face the future from an adequately competitive
base of cash-on-cash returns (leveraged unit cash flow divided by
unit reserve replacement costs). Though not a precise measure of
Whiting's internal funding of sustaining reserve replacement
costs, it does indicate strong interest expense coverage and a
strong propensity for pre-capex unit margins to comfortably cover
Whiting's pattern of sustaining reserve replacement spending,
leaving good internal funding for growth spending and debt
reduction.
During 2004, Whiting completed $535 million of acquisitions and
approximately $79 million of capital spending. This was
reasonably 28% funded by debt (approximately $150 million
year-to-year debt increase), $240 million of new common equity,
$42 million of equity issued in exchange for Equity Oil common
stock, and the remainder from free cash flow. This follows a
historically conservative financial strategy long employed by
Whiting's management team.
Future financing strategy will be a factor impacting the degree to
which the current ratings and outlook strengthen or weaken.
Whiting's ratings are:
i) B2 senior subordinated note rating.
ii) Ba3 Senior Implied Rating.
iii) SGL-2 liquidity Rating.
iv) B1 Senior Unsecured Issuer rating.
Whiting Petroleum Corporation is headquartered in Denver,
Colorado.
* Chadbourne & Parke Forms U.S. Hispanic Practice Group
-------------------------------------------------------
The international law firm of Chadbourne & Parke LLP disclosed the
formation of its U.S. Hispanic Practice Group, an expansion of its
Corporate, Private Equity and Latin America Practices.
The group, headed by partners Talbert I. Navia and Alejandro San
Miguel, will provide legal representation to U.S. companies
deriving substantial revenues from the Hispanic market and/or U.S.
companies which are controlled by Hispanics. With the dynamic
growth of these companies and of the Hispanic population
throughout the United States, Chadbourne is well positioned to
meet the needs of this client base.
The launch of the practice coincided with the first conference
examining investment opportunities in the U.S. Hispanic market.
The April 12 conference, held at Chadbourne's New York offices,
was co-sponsored by Chadbourne, investment bank Samuel A. Ramirez
& Co., Zemi Communications and AMLA Consulting.
"I can't imagine a better time for investors and entrepreneurs to
look at the U.S. Hispanic market," Mr. Navia told an audience of
140 people at the conference. Other speakers included SEC
Commissioner Roel Campos and Guy Garcia, author of "The New
Mainstream."
Chadbourne's practice is aimed at serving a rapidly growing area:
the number of companies that serve the U.S. Hispanic market has
grown four-fold, which now exceeds the average growth rate of
other companies. Moreover, Hispanic-owned businesses are expected
to increase at a robust rate of 7.6% annually through at least
2010. The number of Hispanic-owned businesses in the U.S. is
expected to grow 55% in the next six years to 3.2 million, with
total revenues surging 70% to more than $465 billion, according to
recent estimates by HispanTelligence.
"The formation of our U.S. Hispanic Practice Group, demonstrates
to our clients that we recognize the growing importance to them of
the U.S. Hispanic market and our commitment to serve their needs
with highly skilled attorneys led by two partners who are fluent
in Spanish, culturally aware, and who also can draw on the
strengths from our interdisciplinary network of practice groups,"
said Charles K. O'Neill, Chadbourne's managing partner. "In
addition, Talbert, formerly a founding partner of a middle market
private equity firm, brings a unique perspective to clients in
this market, as well as entrepreneurs, investors and operators of
portfolio companies."
"Our familiarity with this high growth market from a company and
investor perspective gives us a unique ability to provide the
companies, investors and individuals we represent with exceptional
legal services as they expand into this market," he added.
Mr. San Miguel stated that with such growth, Latin American-based
companies have accelerated their expansion into the U.S. to tap
the Hispanic market, and Chadbourne's knowledge of those companies
and familiarity in this region gives Chadbourne an added advantage
in representing them in U.S. transactions.
Chadbourne has been one of the major international law firms
active in Latin America, and has seen several of its clients
penetrate the U.S. Hispanic market. The Firm has represented
clients in many of the highest profile transactions in the region,
in such areas as mergers and acquisitions, capital markets,
project finance, banking and restructurings, and will continue to
do so when those clients move into the U.S. Hispanic market and
other arenas.
According to Goldman Sachs Research, U.S. businesses across all
industries have begun to focus on the rapidly growing Hispanic
market, and it is expected that this trend will continue. "We
especially will see businesses that serve the U.S. Hispanic market
increasingly target private equity as a source for capital, and
Chadbourne has experience in handling such transactions," Mr.
Navia said.
Chadbourne's recent experience in the U.S. Hispanic market has
included working with Core Value Partners, LLC, a Miami-based
private equity group, in representing one of its companies,
Hispanic-owned Heartland Food Corp. The Firm assisted in the
acquisition of more than 200 Burger King(R) restaurants mainly
located in heavily Hispanic areas, which makes it the largest
fast-food franchise in this market. These include:
* 127 Burger King(R) restaurants in the Chicago, Illinois,
Indiana and Wisconsin markets and the subsequent add-on
acquisition of an additional 38 Burger King restaurants in
the North Carolina market from AmeriKing, which filed for
bankruptcy in December 2002; and
* 39 additional Burger King restaurants in a deal where they
were purchased from three separate franchisees.
The Firm also has represented Core Value Partners in the formation
of CV Tel Corp. to acquire from bankruptcy the assets of Orion
Telecommunications Corp., a prepaid calling card company with 97%
of its revenues being derived from the U.S. Hispanic market.
On the investment side, the Firm is currently representing several
new private equity and other financial funds being formed to reach
different aspects of the U.S. Hispanic market and possible cross-
border synergies with Latin America.
About Chadbourne & Parke LLP
Chadbourne & Parke LLP, an international law firm headquartered in
New York City, provides a full range of legal services, including
mergers and acquisitions, securities, project finance, corporate
finance, energy, telecommunications, commercial and products
liability litigation, securities litigation and regulatory
enforcement, white collar defense, intellectual property,
antitrust, domestic and international tax, reinsurance and
insurance, environmental, real estate, bankruptcy and financial
restructuring, employment law and ERISA, trusts and estates and
government contract matters. The Firm has offices in New York,
Washington, D.C., Los Angeles, Houston, Moscow, Kyiv, Warsaw
(through a Polish partnership), Beijing and a multinational
partnership, Chadbourne & Parke, in London. For additional
information, visit http://www.chadbourne.com/
* Randall Lambert & Brent Williams Join Saybrook Capital
--------------------------------------------------------
Randall Lambert and Brent Williams have joined Saybrook Capital,
LLC, as Managing Directors in the Firm's Corporate Restructuring
Group. Both professionals join Saybrook's New York office from
Chanin Capital Partners.
Mr. Lambert has experience advising constituencies in corporate
restructurings across a variety of industries. He has led more
than 35 engagements and has successfully restructured in excess of
$40 billion of debt in North America and Europe. He has acted as
trustee in bankruptcy in several large corporate wind-downs, and
has extensive experience as an expert witness in contested
valuations and other bankruptcy related litigation.
Brent Williams also brings to Saybrook a breadth of corporate
restructuring experience. Mr. Williams has led dozens of
assignments, including Cable & Wireless USA, Touch America Inc.,
Citation Corp., Stelco Inc., Washington Group International,
Comdisco Inc., Philips Services Corp., and Song Networks.
Mr. Williams also has extensive experience as an expert witness
in bankruptcy matters and is an experienced crisis manager.
Mr. Williams has extensive Canadian insolvency experience.
"We are pleased to be joining Saybrook. This is a firm with
intellectual talent, capital and a proven track record of success.
As a team, we will be well positioned in the marketplace as
corporate restructuring activity increases," states Mr. Lambert.
Jonathan Rosenthal, a Managing Partner of Saybrook and head of the
Corporate Restructuring Group, said "We are extremely pleased that
Randall and Brent have joined the firm. They are highly regarded
investment banking professionals, well known for their experience
and integrity. We expect to see a resurgence of corporate
distress in 2006, and Randall and Brent will play an integral role
in the future growth of our firm's restructuring advisory
practice."
Saybrook is an investment bank engaged in financial advisory
services and capital management. To its advisory practice
Saybrook brings an unusual blend of knowledge and experience in
areas that include corporate restructurings, public and private
real estate finance and municipal finance. Saybrook's
restructuring professionals have advised constituencies in dozens
of high profile reorganizations, including several of the largest
bankruptcies in U.S. history including United Airlines, Kmart,
Pacific Gas & Electric and Orange County. To find out more about
Saybrook, please visit http://www.saybrook.net/
* Large Companies with Insolvent Balance Sheets
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Total
Shareholders Total Working
Equity Assets Capital
Company Ticker ($MM) ($MM) ($MM)
------- ------ ------------ ------- --------
Airgate PCS Inc. PCSA (94) 299 86
Akamai Tech. AKAM (126) 183 62
Alaska Comm. Syst. ALSK (12) 650 84
Alliance Imaging AIQ (41) 654 36
Amazon.com AMZN (227) 3,248 919
American Repro ARP (35) 377 22
AMR Corp. AMR (581) 28,773 (2,047)
Amylin Pharm. Inc. AMLN (87) 358 282
Arbinet-Thexchan. ARBX (1) 70 11
Armstrong Holdings ACKHQ (1,291) 4,730 1,044
Atherogenics Inc. AGIX (36) 74 60
Blount International BLT (256) 425 98
CableVision System CVC (1,944) 11,393 248
CCC Information CCCG (131) 80 (8)
Cell Therapeutic CTIC (71) 185 94
Centennial Comm CYCL (516) 1,608 168
Choice Hotels CHH (203) 262 (32)
Cincinnati Bell CBB (585) 1,959 (38)
Clorox Co. CLX (457) 3,710 (422)
Compass Minerals CMP (109) 642 99
Conjuchem Inc. CJC (35) 19 13
Delta Air Lines DAL (5,519) 21,801 (2,335)
Deluxe Corp DLX (178) 1,499 (331)
Denny's Corporation DNYY (246) 730 (80)
Dollar Financial DLLR (51) 319 81
Domino's Pizza DPZ (550) 477 0
Eagle Hospitality EHP (26) 177 N.A.
Echostar Comm-A DISH (2,078) 6,029 (41)
Fairpoint Comm. FRP (173) 819 (9)
Foster Wheeler FWHLF (441) 2,268 (212)
Graftech International GTI (44) 1,036 284
IMAX Corp IMAX (42) 231 17
Investools Inc. IED (7) 50 (19)
Isis Pharm. ISIS (72) 208 82
Life Sciences LSRI (2) 200 2
Lodgenet Entertainment LNET (68) 301 20
Majesco Entert COOL (41) 26 8
Maxxam Inc. MXM (649) 1,017 72
Maytag Corp. MYG (75) 3,020 535
McDermott Int'l MDR (261) 1,387 (58)
McMoran Exploration MMR (85) 156 29
Neff Corp. NFFCA (42) 270 6
New York & Co. NWY (14) 280 43
Northwest Airline NWAC (2,824) 14,042 (919)
Northwestern Corp. NWEC (603) 2,445 (692)
NPS Pharm Inc. NPSP (13) 397 306
ON Semiconductor ONNN (381) 1,110 212
Owens Corning OWENQ (4,132) 7,567 1,118
Per-se Tech. Inc. PSTI (25) 169 31
Phosphate Res. PLP (280) 484 6
Pinnacle Airline PNCL (8) 166 31
Primedia Inc. PRM (1,145) 1,559 (152)
Protection One PONN (178) 461 (372)
Quality Distribution QLTY (26) 377 9
Qwest Communication Q (2,612) 24,324 (68)
Revlon Inc-A REV (1,020) 1,001 120
Riviera Holdings RIV (29) 218 1
SBA Comm. Corp. A SBAC (27) 915 11
Sepracor Inc. SEPR (331) 1,039 636
St. John Knits Inc. SJKI (52) 213 80
Syntroleum Corp. SYNM (8) 48 11
US Unwired Inc. UNWR (263) 640 (335)
Vector Group Ltd. VGR (48) 528 110
Vertrue Inc. VTRU (32) 486 31
Worldgate Comm WGAT (2) 14 (4)
WR Grace & Co. GRA (118) 3,086 774
Young Broadcasting YBTVA (12) 798 85
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania,
USA, and Beard Group, Inc., Frederick, Maryland USA. Yvonne L.
Metzler, Emi Rose S.R. Parcon, Rizande B. Delos Santos, Jazel P.
Laureno, Cherry Soriano-Baaclo, Marjorie Sabijon, Terence Patrick
F. Casquejo, Christian Q. Salta, Jason A. Nieva, Lucilo Junior M.
Pinili and Peter A. Chapman, Editors.
Copyright 2005. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
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re-mailing and photocopying) is strictly prohibited without prior
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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-
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at 240/629-3300.
*** End of Transmission ***