/raid1/www/Hosts/bankrupt/TCR_Public/050812.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, August 12, 2005, Vol. 9, No. 190
Headlines
AAIPHARMA INC: Taps McGladrey & Pullen as Auditors & Accountants
ACLC BUSINESS: Lower Recovery Expectations Cues Fitch's Downgrade
ADELPHIA COMMS: Court Okays Arahova-ACC Dispute Resolution Process
ALL COUNTY: List of 20 Largest Unsecured Creditors
ALLIED HOLDINGS: Maintains Workers' Compensation Programs
ALLIED HOLDINGS: Wants Claim Trading Notice Procedure Established
ALLIED HOLDINGS: Wants to Pay $5.8MM Prepetition Cargo Claims
AMERICAN BUSINESS: SN Servicing Wants to Commence Foreclosure
AMERICAN BUSINESS: Trustee Can Continue Using Cash Collateral
AMERICAN TOWER: Fitch Lifts Unsecured Debt Rating 1 Notch to BB-
AMERICAN WATER: Laurus Master Waives Covenant Defaults
AMERIGAS PARTNERS: Names Jerry E. Sheridan CFO & Finance VP
ANCHOR GLASS: Asks to Pay $6.7 Million in Critical Vendor Claims
ANCHOR GLASS: Wants Access to $115 Million DIP Financing Facility
ASARCO LLC: Steelworkers Condemn Grupo Mexico for Bankrupting Unit
ASSET BACKED: Fitch Places BB+ Rating on $18.76 Million Certs.
BALLY TOTAL: Waiver Consent Solicitation Expires Today
BEHAVIORAL HOSPITAL: List of 20 Largest Unsecured Creditors
BLOCKBUSTER INC: S&P Lowers Subordinated Debt Rating to CCC+
BROADBAND OFFICE: Court Approves Amended Disclosure Statement
BROADBAND OFFICE: U.S. Trustee Names Revised 4-Member Committee
BROCKWAY PRESSED: Files Schedules of Assets and Liabilities
BULL RUN: Inks Pact to Merge with Triple Crown Unit After Spin-Off
CARRIE SHOPPELL: Case Summary & 12 Largest Unsecured Creditors
CATHOLIC CHURCH: Tort Committee Balks at Portland's KPMG Retention
CINCINNATI BELL: Inks Pact to Buy Back Senior Sub. Discount Notes
CINCINNATI BELL: Equity Deficit Widens to $659 Mil. at June 30
COEUR D'ALENE: Incurs $1.5 Million Net Loss in Second Quarter
COLUMBUS MCKINNON: Moody's Lifts $115 Million Notes Rating to B2
COLUMBUS MCKINNON: S&P Junks Proposed $136 Million Sr. Sub. Notes
CONSECO INC: Moody's Rates $300 Mil. Convertible Debentures at B3
CONSECO INC: Fitch Rates Proposed $300MM Senior Note Issue at BB-
COTT CORP: S&P Revises Outlook to Negative from Stable
COWBOY-UP ADVENTURES: Voluntary Chapter 11 Case Summary
CURATIVE HEALTH: S&P Junks Corporate Credit & Sr. Unsec. Ratings
DEEP RIVER: Files Schedules of Assets and Liabilities
EASTMAN KODAK: SEC Conducting Informal Inquiry on Restatements
EASTMAN KODAK: Discloses Second Quarter Financial Results
ENRON CORP: Statkraft Markets Holds $2.5M Allowed Unsecured Claim
ENRON: ENA Wants Court Nod on $1.4 Million Settlement with UBS AG
FLYI INC: S&P Revises CreditWatch Review Implication to Negative
FRONTIER INSURANCE: Selling Property to Vanguard for $1 Million
FRONTIER INSURANCE: Taps Belgard Realty as Real Estate Broker
GARDEN STATE: Taps JMR Marketing as Business Management Consultant
GARDEN STATE: Wants Fesnak and Associates as Accountants
GLOBAL CROSSING: District Court Okays $75M Citigroup Settlement
GREAT ATLANTIC: Launches Tender Offer for 7-3/4% & 9-1/8% Notes
GT BRANDS: Wants Milbank Tweed as Special Counsel
HAWK CORP: Earns $1.7 Million of Net Income in Second Quarter
HIRSH INDUSTRIES: Committee Wants Elliott D. Levin as Counsel
HIRSH INDUSTRIES: Court Grants Interim Access to DIP Financing
HIRSH INDUSTRIES: Taps Silverman Consulting as Crisis Manager
HOA HOANG: Case Summary & 20 Largest Unsecured Creditors
HUSMANN-PEREZ: Judge Paskay Dismisses Chapter 11 Case
HUSMANN-PEREZ: Wants Court to Reconsider Order Dismissing Case
INTEGRATED HEALTH: Wants Removal Period Stretched to December 5
INTERSTATE BAKERIES: Personal Injury Claimants Ask for Stay Relief
KEY3MEDIA GROUP: Wants Until Sept. 30 to Object to Proofs of Claim
KMART CORP: Court Disallows 112 Workers' Compensation Claim
KRISPY KREME: Special Committee Completes 10-Month Probe
LAC D'AMIANTE: Wants ASARCO's Proceeds Used to Pay Professionals
LB COMMERCIAL: Fitch Junks Rating on $7.7 Million Class F Certs.
LEHMAN FINANCIAL: Case Summary & 13 Largest Unsecured Creditors
LIBERTY MEDIA: Robert Bennett to Leave CEO Post by April 2006
LIONEL LLC: Inks Trade-Secret Settlement with K-Line Electric
MAXXAM INC: June 30 Balance Sheet Upside-Down by $681.2 Million
MAYTAG CORP: Whirlpool Hikes Takeover Bid to $21 Per Share
METROPOLITAN MORTGAGE: Wants Class M5 & S5 Claims Set at $1
MID-STATE RACEWAY: Court Okays Supplemental DIP Financing
MILLENNIUM AMERICA: Fitch Assigns BB+ Rating on $250 Mil. Facility
MIRANT CORP: Creditors Committee Sues Arthur Andersen in Georgia
MIRANT CORP: Wants to Enter into FERC Settlement Agreement
MCI INC: Girard Gibbs Law Firm Files Class Action Suit
MCI INC: Will Close Iowa Outbound Call Center on September 30
MURPHY MARINE: Chapter 7 Trustee Hires McElroy Deutsch as Counsel
NATURADE INC: Completes Acquisitions of Symco & Ageless
NEWSTAR TRUST: Fitch Puts BB Rating on $24.4MM Class E Notes
NRG ENERGY: To Repurchase $250MM Common Stock From CSFB Affiliate
NVE INC: Case Summary & 20 Largest Unsecured Creditors
NVE INC: Brings-In Wasserman Jurista as Bankruptcy Counsel
OHIO CASUALTY: S&P Raises Senior Debt Rating to BB+ from BB
OMEGA HEALTHCARE: Earns $2.3 Million GAAP Net Income in 2nd Qtr.
PLASTECH ENGINEERED: S&P Places Debt Ratings on Negative Watch
PLYMOUTH RUBBER: Committee Taps Holland & Knight as Counsel
PLYMOUTH RUBBER: Files Schedules of Assets & Liabilities
POLTECH TRUST: Section 304 Petition Summary
POLYMER GROUP: Earns $4.1 Million of Net Income in Second Quarter
PRIMARY ENERGY: Moody's Rates Planned $150 Million Facility at Ba2
ROETZEL ENTERPRISES: Case Summary & 40 Largest Unsecured Creditors
SAINT VINCENTS: Committee Questions Critical Vendor Payments
SHOPKO STORES: Extends Offer for 9-1/4% Senior Notes to Aug. 24
SHURGARD STORAGE: Posts $693,000 Net Loss in Second Quarter
SPORTS CLUB: Has Until Sept. 30 to Cure Reporting Default
TOBI COMPANY: Case Summary & 13 Largest Unsecured Creditors
TRESTLE HOLDINGS: Adds Two Experts to Scientific Advisory Board
TUPPERWARE CORP: Buys Sara Lee's Direct Selling Group for $557MM
TUPPERWARE CORP: S&P Places Ratings on Negative Watch
UNUMPROVIDENT CORP: Earns $171 Million of Net Income in 2nd Qtr.
USEC INC: S&P Lowers Corporate Credit Rating to B+ from BB-
V&L GLOBAL HEALTH: Case Summary & 2 Largest Unsecured Creditors
VERIDIANHEALTH LLC: Involuntary Chapter 11 Case Summary
WESTERN WATER: Taps Stutman Treister as Special Bankruptcy Counsel
WESTPOINT STEVENS: Disclosure Statement Hearing Adjourned Sine Die
WESTPOINT STEVENS: Repays $92.5-Mil. Owed to DIP Lenders
WET SEAL: Douglas Felderman Resigns as Chief Financial Officer
WINN-DIXIE: Wachovia Wants a Fee Examiner Appointed
WINN-DIXIE: Wants to Reject Panasonic & IRI Contracts
WINN-DIXIE: Wants to Sell or Reject Unsold Store Leases
* Chris Moye Joins Alvarez & Marsal as Managing Director
* BOOK REVIEW: Competitive Strategy for Health Care
Organizations: Techniques for Strategic Action
*********
AAIPHARMA INC: Taps McGladrey & Pullen as Auditors & Accountants
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aaiPharma Inc. and its debtor-affiliates ask the U.S. Bankruptcy
Court for the District of Delaware for permission to employ
McGladrey & Pullen LLP as their independent auditors and
accountants, nunc pro tunc to Aug. 9, 2005.
Ernst & Young LLP resigned as the Debtors' independent registered
public accountants after in May 2005. Prior to its resignation,
E&Y expressed substantial doubt about aaiPharma's ability to
continue as a going concern after auditing the Company's 2004
financials. The auditors pointed to the Company's significant
working capital deficit and recurring losses from operations.
McGladrey will:
-- perform an audit of, and report on the Debtors' consolidated
financial statements as of and for the year ended Dec. 31,
2005;
-- perform an audit of, and report on the effectiveness of, the
Debtors' internal control over financial reporting as of
Dec. 31, 2005;
-- review the Debtors' unaudited interim financial information
before the Debtors file their quarterly reports for the
period ended June 30, 2005, and Sept. 30, 2005;
-- confer with the Debtors on the preparation of submissions to
the Court;
-- consult with the Debtors in the preparation of testimony
required of McGladrey, as may be required; and
-- assist with other matters as management or counsel to the
Debtors may request from time to time.
In addition, McGladrey will consult with the Debtors' management
and counsel in connection with operating, financial and other
business matters relating to the Debtors' ongoing activities.
The Firm's professionals bill based at these hourly rates:
Designation U.S. (in $) Germany (in EUR)
----------- ----------- ----------------
A&A Partners 550 ---
Partners 450 300
Directors 325 ---
Managers 225 220
Seniors 180 180
Staff 135 130
Kenneth Wallace at McGladrey assures the Court that his Firm does
not hold any interest adverse to the Debtors or their estates.
McGladrey & Pullen LLP is a leading national CPA firm focused on
serving middle market companies with over 100 offices across the
country and with an affiliation that links it to leading
accounting firms in over 75 countries. The Firm focuses in the
areas of manufacturing and wholesale, healthcare, financial
services, real estate and construction, governmental entities,
not-for-profit, and auto dealerships.
Headquartered in Wilmington, North Carolina, aaiPharma Inc. --
http://aaipharma.com/-- provides product development services to
the pharmaceutical industry and sells pharmaceutical products
which primarily target pain management. AAI operates two
divisions: AAI Development Services and Pharmaceuticals Division.
The Company and eight of its debtor-affiliates filed for chapter
11 protection on May 10, 2005 (Bankr. D. Del. Case No. 05-11341).
Karen McKinley, Esq., and Mark D. Collins, Esq., at Richards,
Layton & Finger, P.A.; Jenn Hanson, Esq., and Gary L. Kaplan,
Esq., at Fried, Frank, Harris, Shriver & Jacobson LLP; and the
firm of Robinson, Bradshaw & Hinson, P.A., represent the Debtors
in their restructuring efforts. When the Debtors filed for
bankruptcy, they reported consolidated assets amounting to
$323,323,000 and consolidated debts totaling $446,693,000.
ACLC BUSINESS: Lower Recovery Expectations Cues Fitch's Downgrade
-----------------------------------------------------------------
Fitch Ratings has taken ratings actions on ACLC Business Loan
Receivables Trust 1999-1:
ACLC Business Loan Receivables Trust 1999-1:
-- Class A-2 downgraded to 'A' from 'AA-';
-- Class A-3 downgraded to 'BB+' from 'A';
-- Class B downgraded to 'CC' from 'CCC';
-- Class C remains at 'C'.
The negative rating actions reflect additional reductions in the
credit enhancement Fitch expects will be available to support each
class in these transactions. As many loans in default have
remained unresolved, recovery expectations have decreased. These
lowered expectations in conjunction with incurred losses on
existing defaults have reduced subordination and credit
enhancement available to outstanding bonds.
Anticipated credit enhancement is based on the servicer's and
Fitch's expected recoveries on defaulted collateral. Fitch's
recovery expectations are based on historical collateral-specific
recoveries experienced in the franchise ABS sector.
Fitch will continue to closely monitor performance of the
transactions and may raise, lower, or withdraw ratings as
appropriate.
ADELPHIA COMMS: Court Okays Arahova-ACC Dispute Resolution Process
------------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
approved the process that will lead to the resolution of the
disputes between noteholders of Arahova Communications Corporation
and the noteholders of Adelphia Communications Corporation.
As reported in the Troubled Company Reporter on July 8, 2005, the
principal inter-creditor issues between Arahova-ACC includes:
1. Consolidation Structure
2. Treatment of Intercompany Claims
3. Asset Ownership and Potential Fraudulent Conveyance Claims
4. Allocation of Sale Proceeds
5. Allocation of Tax Cost and Other Tax Issues
6. Allocation of Costs and Benefits of the Settlements
7. Allocation of the Economic Cost of Plan Reserves
Judge Gerber approved the proposed Resolution Procedures for the
Arahova-ACC Dispute with modifications.
Revisions to the Resolution Process, include:
A. Participation
Those who want to participate in the Resolution Process must
also include in their Participation Request a preliminary
statement specifying the legal determination that the party is
requesting from the Court in connection with the Dispute
Issues and their grounds. The ACOM Debtors will post each
Participant's Preliminary Issues Statement at
http://www.adelphia.com/
These parties will also be deemed "Participants" in the
Resolution Process:
* Calyon New York Branch, Calyon Securities (USA), Inc.,
and LCM I Limited Partnership;
* Societe Generale and SG Cowen;
* Barclays Bank PLC and Barclays Capital;
* Wilmington Trust Company, as Indenture Trustee for the
Olympus Bonds;
* indenture trustee of any other public debt security
issued by any Debtor; and
* the Ft. Meyers Noteholders.
Participants will be deemed to have standing to appear and be
heard on all matters relating to the Dispute Issues.
B. Discovery
a. Documentary Discovery Cutoff
No later than 130 calendar days prior to the First Hearing
Date, which is scheduled on January 31, 2006, all requests
for documentary discovery, including Third Party Discovery,
must be served, although the Data Room will remain open and
available to all Participants throughout the entire
Resolution Process.
The Resolution Process will not prohibit any Participant
from seeking discovery from other Participants or third
parties in accordance with the Bankruptcy Rules, provided
any requests for document discovery are served within the
Documentary Discovery Cut-off.
b. Depositions
No later than 140 calendar days prior to the First Hearing
Date, the Debtors will provide each Participant with a list
of persons employed by or on behalf of the Debtors likely
to have material personal knowledge of any of the Dispute
Issues.
No later than 130 calendar days prior to the First Hearing
Date, Participants will exchange lists of all persons whom
each Participant intends to depose. After the exchange of
the lists of Deponents, Participants will meet and confer
to establish a schedule for the taking of depositions. The
depositions taken is without prejudice to the rights of the
parties to the adversary proceeding entitled ACOM, et al.
and the Official Committee of Unsecured Creditors of ACOM
v. Royal Bank of Scotland, PLC, et al., to depose the
Deponent in connection with that adversary proceeding or
any other proceeding.
c. Non-Expert Discovery Cutoff
All non-expert depositions will be complete no later than
70 calendar days prior to the First Hearing Date.
d. Expert Disclosures
No later than 65 calendar days prior to the First Hearing
Date, all disclosures required by Rule 26(a)(2) of the
Federal Rules of Civil Procedure, as incorporated by
Bankruptcy Rule 7026, including the exchange of expert
reports, will be made.
e. Rebuttal Experts
No later than 40 calendar days prior to the First Hearing
Date, all disclosures regarding rebuttal expert witnesses,
including rebuttal expert reports, will be exchanged.
f. Expert Discovery Cutoff
Without the (i) consent of the Debtors and those
Participants involved in a particular Dispute Issue, or
(ii) direction from or an order of the Court, on good cause
shown, all expert depositions will be complete no later
than 21 calendar days prior to the First Hearing Date.
g. Witness Lists
No later than 21 calendar days prior to the First Hearing
Date, Participants will serve on all other Participants a
list of witnesses that they expect to call at each of the
Hearings.
C. Briefing
No later than 30 calendar days prior to the First Hearing
Date, Participants will file and serve on each other and on
the ACOM Debtors a final list of salient issues, outlining
with reasonable specificity the legal determination that the
Participant is requesting from the Court in connection with
the Dispute Issues and their grounds.
D. Hearing Dates and Sequencing of Issues
The Dispute Issues will be categorized as and addressed in
separate hearings:
a. Hearing 1: The avoidability under Chapter 5 of the
Bankruptcy Code of any inter-estate transactions between
and among the Debtors -- the Intercompany Claims --
exclusive of those Intercompany Claims included in Asset
Ownership and Potential Fraudulent Conveyance Claims in
Hearing 3.
The first Hearing will be scheduled on January 31, 2006.
b. Hearing 2: The validity, priority, characterization or
allowance of the Intercompany Claims.
The second hearing will be scheduled for February 7, 2006.
c. Hearing 3: Asset Ownership and Potential Fraudulent
Conveyance Claims.
The third hearing will be scheduled for February 14, 2006.
d. Hearing 4: Allocation among the Debtors of the (i) Sale
Transaction Value, (ii) Tax Cost of the Sale and Other Tax
Issues, (iii) Cost and Benefits of the Government
Settlement and (iv) Allocation among the Debtors of the
Economic Cost of the Plan Reserves.
The fourth hearing will be scheduled for February 21, 2006.
e. Hearing 5: Substantive Consolidation Structure Under the
Plan provided that with respect to substantive
consolidation the Resolution Process will be used to
address only whether (i) any substantive consolidation is
appropriate and (ii) the substantive consolidation proposed
by the Debtors in the Plan is permissible.
The fifth hearing will be scheduled for February 28, 2006.
f. Hearing 6: To the extent not addressed by Hearings 1 to 5,
any remaining Dispute Issues pertaining to the disputes and
background described in the Motion raised by the Debtors
or by a Participant in a Final Issues Statement.
The sixth hearing will be scheduled for March 7, 2006.
On the conclusion of the hearing of any Dispute Issue, the
Court will render a decision with respect to each particular
Dispute Issue that was addressed at that Hearing. Upon entry
of the Dispute Issue Ruling, all parties-in-interest in the
ACOM Debtors' Chapter 11 cases will be bound by the ruling to
the fullest extent permitted by law, and the Dispute Issue
Ruling will have the preclusive effect as is available to the
fullest extent permitted by law, subject only to any
Participant's appellate rights.
E. Status Conferences
Subject to the Court's calendar, after August 4, 2005, and
until the First Hearing Date, the Court will schedule monthly
status conferences to monitor the progress of the Resolution
Process. The Debtors will provide prompt notice of each
status conference to all Participants and, to the extent
feasible, all parties who have served a notice of appearance
in accordance with Bankruptcy Rule 2002.
Judge Gerber makes it clear that all dates and deadlines
specified in the Amended Resolution Process that are keyed to the
First Hearing Date will be operative from the first scheduled
First Hearing Date and will not be extended or modified in the
event the First Hearing Date is adjourned.
Headquartered in Coudersport, Pennsylvania, Adelphia
Communications Corporation (OTC: ADELQ) is the fifth-largest cable
television company in the country. Adelphia serves customers in
30 states and Puerto Rico, and offers analog and digital video
services, high-speed Internet access and other advanced services
over its broadband networks. The Company and its more than 200
affiliates filed for Chapter 11 protection in the Southern
District of New York on June 25, 2002. Those cases are jointly
administered under case number 02-41729. Willkie Farr & Gallagher
represents the ACOM Debtors. (Adelphia Bankruptcy News, Issue No.
102; Bankruptcy Creditors' Service, Inc., 215/945-7000)
ALL COUNTY: List of 20 Largest Unsecured Creditors
--------------------------------------------------
All County Electrical Company released a list of its 20 Largest
Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Crescent Electric Supply Bill $599,686
P.O. Box 500
East Dubuque, IL 61025
Regions Bank $250,000
C/o Jeff Rathjen
P.O. Box 90
Waterloo, IA 50904-0090
Electrical Engineering & Bill $71,732
Equipment
953 73rd Street
Windham Heights, IA 50312
Dave Schumacher Business purchase $41,626
balance
Springfield Electric Supply Bill $12,426
Wiring by Design Bill $10,133
Communications Supply Corp. Bill $5,339
ADI Bill $4,744
Primex Wireless, Inc. Bill $3,194
Rental Service Corp. Bill $3,184
Campbell Supply Co. Bill $2,744
Voltmer Electric Inc. Bill $2,350
Matt Parroti & Sons Bill $2,053
Graybar Electric Supply Bill $1,852
River City Cutting & Curing Bill $1,750
MTC of Cedar Rapids Bill $1,616
Coopman Trucking and Bill $1,468
Excavating
Alarm Services Bill $1,457
American Communication Bill $1,280
Supply
White Cap Construction Bill $1,143
Headquartered in Waterloo, Iowa, All County Electrical Company --
http://all-county-electrical.com/-- installs and repairs
residential, commercial and industrial electrical, telephone,
data, fire and burglar alarm systems. The Company filed for
chapter 11 protection on June 8, 2005 (Bankr. N.D. Iowa Case No.
05-02707). John M. Titler, Esq., represents the Debtor in its
restructuring efforts. When the Debtor filed for protection from
its creditors, it listed estimated assets and debts between $1
Million to $10 Million.
ALLIED HOLDINGS: Maintains Workers' Compensation Programs
---------------------------------------------------------
Allied Holdings, Inc., and its debtor-affiliates sought and
obtained permission from the U.S. Bankruptcy Court for the
Northern District of Georgia to maintain their workers'
compensation programs, insurance policies and any related
agreements as of the Petition Date and pay, in their sole
discretion, prepetition amounts accrued.
The Court also authorized applicable banks and other financial
institutions to receive, process, and pay any and all checks and
other transfers related to the claims.
In maintaining various insurance policies and programs, the
Debtors retain losses within specified limits through high
deductibles or self-insured retentions, Jeffrey W. Kelley, Esq.,
at Troutman Sanders, LLP, in Atlanta, Georgia, says.
For certain risks, coverage for losses is provided by primary and
reinsurance companies unrelated to the Debtors. Haul Insurance
Limited, a non-debtor subsidiary, provides reinsurance coverage
to certain of the Debtors' licensed insurance carriers for
particular types of losses under the Insurance Programs,
primarily insured workers' compensation, automobile and general
liability risks.
The Debtors pay premiums to the Insurance Carriers who turn over
a portion of the premiums to Haul. Haul then retains the funds
to secure letters of credit issued by various financial
institutions in favor of the Insurance Carriers to re-insure the
deductibles and self-insured retentions.
The U.S. Insurance Programs
Before the Petition Date, the Debtors entered into insurance
brokerage agreements with USI of Georgia, Inc., to coordinate the
Debtors' U.S. Insurance Programs with the various Insurance
Carriers.
Mr. Kelley discloses that the Debtors pay $100,000 to USI each
month to administer certain of the U.S. insurance policies,
including, but not limited to, workers' compensation, directors'
and officers' liability, fiduciary liability, commercial general
and professional liability, and property policies.
Workers' Compensation Insurance
The Debtors maintain workers' compensation policies in each of
the states in which they operate either through third party
insurance or self-insured programs. The Debtors have contracted
with USI to administer the Workers' Compensation Programs.
Currently, USI has subcontracted with another third party,
Eoscomp, LLC, to administer the programs.
The Debtors pay Eoscomp $120,000 each month for additional
workers' compensation-related services, like telephonic nurse and
medical case management services.
For employees in the states of Florida, Georgia, Missouri and
Ohio, the workers' compensation coverage consists of self-insured
programs, with the Debtors maintaining excess self-insurance that
carries a self-insured retention of $400,000 per occurrence in
Florida, $500,000 per occurrence in Georgia, $500,000 per
occurrence in Missouri and $350,000 per occurrence in Ohio.
Pursuant to the Workers' Compensation Programs for these states,
the Debtors purchase their workers' compensation insurance
directly from the state. Premiums for the current Workers'
Compensation Programs are based on a fixed rate of estimated
payroll and are paid at the inception of the policies. Following
an annual audit of the Debtors' payroll, the Debtors either pay a
retrospective premium owed or are refunded overpayments that were
made.
For the Workers' Compensation Programs that are not self insured,
the Debtors pay $29,000,000 each year to the ACE Group of
Companies for coverage; $4,500,000 of the amount represents ACE's
brokerage and administrative fees and the $24,500,000 remainder
is the cost of premiums for the programs.
Thus, the Debtors pre-fund the workers' compensation claims under
the Workers' Compensation Programs at the beginning of each
calendar year. The Debtors reconcile any difference between the
actuarial estimates pre-funded by the Debtors and the actual
Worker' Compensation Claims paid.
Mr. Kelley relates that Worker' Compensation Claims were pending
against the Debtors arising out of employee accidents on the job.
Thus, payment of the Claims is essential to the continued
operation of the Debtors' businesses because, if the Claims are
not paid, the Insurance Carriers or the applicable state agency
may draw on the letters of credit posted either by the Debtors or
Haul, Mr. Kelley explains.
Moreover, Mr. Kelley points out that under the self-insured
Workers' Compensation Programs, the applicable state agency may
challenge the Debtors' authority to continue to do business for
failing to remain current with the Workers' Compensation Claims.
Liability and Property Insurance
The Debtors also maintain various U.S. general liability and
property insurance policies, which provide the Debtors insurance
coverage for claims relating to, among other things, commercial
general, excess liability, commercial umbrella liability, special
risks, automobile liability, directors' and officers' liability,
fiduciary liability, commercial crime, transit, and property.
The Debtors disclose that they pay ACE $7,000,000 for automobile
liability and $500,000 for general liability insurance programs
each year. The Debtors further disclose that they have already
paid the vast majority of their premiums for prepetition and
postpetition coverage periods. However, payments to renew some
of the Insurance Programs are due beginning on September 30,
2005.
The Debtors pay $51,000,000 annually in premiums for their U.S.
Insurance Programs, including the premiums for workers
compensation, automobile liability and general liability, as well
as premiums for property insurance, directors' and officers'
insurance, flood insurance and various other Insurance Programs.
The Canadian Insurance Programs
Before the Petition Date, the Debtors entered into insurance
brokerage agreements with Marsh Canada Limited to coordinate the
Debtors' Canadian Insurance Programs with the various Insurance
Carriers.
The Debtors pay Marsh $5,000 each month to administer certain of
the Canadian insurance policies, including, but not limited to,
automobile liability, commercial general liability, property
liability, and environmental impairment liability policies.
Workers' Compensation Insurance
Under the laws of Canada, the Debtors are required to pay
Workplace Safety and Insurance Board premiums to insure their
workers in case of injuries or illnesses.
The Debtors participate in the New Experimental Experience Rating
program, which provides for retrospective premium adjustments
based on actual claims losses as compared to expected losses.
These adjustments can be in the form of rebates where the
Debtors' claims experience is favorable.
Conversely, the adjustment could require additional payments via
assessments where the Debtors' actual claims exceed the estimated
amount of claims.
In addition to their current $400,000 monthly premiums, the
Debtors currently owe $220,000 related to a past New Experimental
Experience Rating assessment. The Debtors could also be assessed
additional amounts for retrospective adjustments related to prior
years.
The Debtors state that the total prepetition liability for
premiums, New Experimental Experience Rating assessments and
estimated potential future New Experimental Experience Rating
assessments is $2,800,000.
The Debtors believe their estates and creditors are best
protected by the avoidance of additional liens on the Debtors'
assets.
In addition, the Debtors also believe that the threat of personal
liability could distract their officers and directors from full
focus on the reorganization.
Liability and Property Insurance
The Debtors maintain various Canadian general liability and
property insurance policies, which provide the Debtors insurance
coverage for claims relating to, among other things, commercial
general, excess liability, commercial umbrella liability, special
risks, automobile liability, directors' and officers' liability,
fiduciary liability, commercial crime, transit, and property.
The Debtors pay $3,400,000 to American Home Assurance Company
each year for primary and excess automobile liability and $39,000
for general liability Insurance Programs.
The Debtors owe $292,000 for August 2005 and $292,000 for
September 2005 to complete this year's premium payments for the
Canadian Insurance Programs.
The Debtors pay $8,700,000 annually in premiums for their
Canadian Insurance Programs.
Headquartered in Decatur, Georgia, Allied Holdings, Inc. --
http://www.alliedholdings.com/-- and its affiliates provide
short-haul services for original equipment manufacturers and
provide logistical services. The Company and 22 of its affiliates
filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga.
Case No. 05-12515). Jeffrey W. Kelley, Esq., at Troutman Sanders,
LLP, represents the Debtors in their restructuring efforts. When
the Debtors filed for protection from their creditors, they
estimated more than $100 million in assets and debts. (Allied
Holdings Bankruptcy News, Issue No. 3; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
ALLIED HOLDINGS: Wants Claim Trading Notice Procedure Established
-----------------------------------------------------------------
Allied Holdings, Inc., and its Debtor affiliates ask the U.S.
Bankruptcy Court for the Northern District of Georgia to establish
procedures:
(i) requiring advance notice of certain transactions regarding
claims against and equity interests in the Debtors; and
(ii) for the imposition of sanctions for violating the Notice
Procedures.
Allied Holdings, Inc., issued a series of 8-5/8% senior notes
totaling $150 million pursuant to a September 30, 1997 trust
indenture. Wells Fargo Bank, National Association serves as the
Debtors' indenture trustee.
Allied Holdings, Inc., also issued shares of publicly traded
common stock for which EquiServe Trust Company, National
Association, serves as transfer agent.
Certain of holders of Senior Notes formed an ad hoc committee of
Senior Note holders.
The Debtors inform the Court that the purpose of the Notice
Procedures will be to require holders of all general unsecured
claims, including claims relating to the Senior Notes and of the
Common Shares, to provide the Debtors with advance notice of
their intent to buy claims or shares.
The Debtors will provide a copy of the Notice Procedures to the
Indenture Trustee, the Transfer Agent, and counsel for the Ad Hoc
Committee, among others.
In addition, the Debtors seek the Court's authority to notify all
holders of Unsecured Claims and Common Shares regarding a final
hearing on the request, which will be held on a date to be
determined by the Court.
Jeffrey W. Kelley, Esq., at Troutman Sanders, LLP, in Atlanta,
Georgia, relates that the Notice Procedures will result in an
advance notice to the Debtors of certain transfers that may
jeopardize their net operating losses, and will enable them, if
necessary, to obtain substantive relief from the Court to protect
the net operating losses.
The Notice Procedures provide that:
(1) Any person or any entity that proposes to purchase,
acquire or otherwise obtain ownership of Unsecured Claims
resulting in a person or entity owning an aggregate amount
of Unsecured Claims that equals or exceeds $8.75 million
must, at least 20 days before any transaction, file with
the Court and serve on the Debtors' attorneys a claims
transfer notice.
(2) Any person or any entity:
* who owns less than 4.75% of all of the Common Shares
who proposes to purchase, acquire, or otherwise
obtain ownership of Common Shares which, when added
to that person or entity's total ownership of the
Common Shares, if any, equals or exceeds 4.75% of
all Common Shares; or
* in the case of a person or entity who owns at least
4.75% of the Common Shares who seeks to acquire or
otherwise obtain ownership of any additional Common
Shares,
must, at least 20 days before any transaction, file with
the Court and serve on the Debtors and their attorneys an
Equity Transfer Notice.
(3) Each person or entity that owns at least $8.75 million of
Unsecured Claims, must, within 20 days of the Court's
entry of the Final Order, serve on the Debtors' attorneys
a notice containing the ownership information.
(4) Each person or entity that owns at least 4.75% of the
total amount of Common Shares, must, within 20 days of the
Court's entry of the Final Order, serve on the Debtors'
attorneys a notice containing the ownership information.
(5) The Debtors have 20 days after receipt of a Proposed
Claims Transfer Notice or a Proposed Equity Transfer
Notice to obtain injunctive relief prohibiting the
transaction. If no order enjoining the transfer is
entered within that 20-day period, then the transaction
may proceed as set forth in the notice.
(6) The Debtors may waive, in writing, any and all
restrictions, stays and notification procedures.
The Debtors also propose certain sanctions in the event a person
or entity fails to comply with the Notice Procedures. Mr. Kelley
tells the Court that sanctions are necessary to:
(a) encourage compliance with the Court Order;
(b) provide appropriate remedial relief to the Debtors'
estates in the event of a violation; and
(c) provide an efficient and effective procedure to resolve
any violation.
The Debtors suggest these sanctions procedures:
(a) The Debtors will deliver to the Non-Complying Party a
Notice of Non-Compliance, stating, inter alia, the
sanctions requested by the Debtors against the Non-
Complying Party, which may include monetary sanctions,
or the reversal of the non-compliant transaction;
(b) Within five days after service of the Notice of Non-
Compliance, the Non-Complying Party will file with the
Court and serve upon the Debtors a response to the notice,
and obtain a hearing date so that the Notice of
Non-Compliance and any Response is heard not later than
10 days after service of the Notice of Non-Compliance;
(c) If a Response is timely filed and served, the Court
may hear the matter within 10 days after service of the
Notice of Non-Compliance. If a response is not timely
filed and served as required, then the Court may enter an
order granting the sanctions requested by the Debtors in
the Notice of Non-Compliance.
Headquartered in Decatur, Georgia, Allied Holdings, Inc. --
http://www.alliedholdings.com/-- and its affiliates provide
short-haul services for original equipment manufacturers and
provide logistical services. The Company and 22 of its affiliates
filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga.
Case No. 05-12515). Jeffrey W. Kelley, Esq., at Troutman Sanders,
LLP, represents the Debtors in their restructuring efforts. When
the Debtors filed for protection from their creditors, they
estimated more than $100 million in assets and debts. (Allied
Holdings Bankruptcy News, Issue No. 3; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
ALLIED HOLDINGS: Wants to Pay $5.8MM Prepetition Cargo Claims
-------------------------------------------------------------
Allied Holdings, Inc., and its debtor-affiliates report that
$4,800,000 in claims for damaged cargo in the United States and
$1,000,000 in claims for damaged cargo in Canada will be due and
owing within 18 months after the Petition Date. The amounts
include both claims the Debtors have received, reviewed and
approved for payment as well as unapproved claims.
The Debtors operate in a highly specialized industry with a finite
customer base, Jeffrey W. Kelley, Esq., at Troutman Sanders, LLP,
in Atlanta, Georgia, explains.
"Continued customer loyalty is absolutely essential to the
Debtors' ability to reorganize, particularly in light of the
Debtors' reliance on just three customers -- General Motors
Corporation, Ford Motor Company, and DaimlerChrysler Corporation
-- for almost three-quarters of their revenues," Mr. Kelley says.
Mr. Kelley ascertains that the Debtors will have sufficient funds
available through postpetition financing and their ordinary
business practices to pay all Cargo Claims in full.
Furthermore, Mr. Kelley relates that payment of the Cargo Claims
will not occur at any one time, but will be allocated as payment
comes due over the next approximately 18 months.
Accordingly, the Debtors sought and obtained the Court's authority
to pay customer claims for damaged cargo.
Headquartered in Decatur, Georgia, Allied Holdings, Inc. --
http://www.alliedholdings.com/-- and its affiliates provide
short-haul services for original equipment manufacturers and
provide logistical services. The Company and 22 of its affiliates
filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga.
Case No. 05-12515). Jeffrey W. Kelley, Esq., at Troutman Sanders,
LLP, represents the Debtors in their restructuring efforts. When
the Debtors filed for protection from their creditors, they
estimated more than $100 million in assets and debts. (Allied
Holdings Bankruptcy News, Issue No. 3; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
AMERICAN BUSINESS: SN Servicing Wants to Commence Foreclosure
-------------------------------------------------------------
SN Servicing Corporation is the current payee of a mortgage note
dated January 17, 2001, for $52,800. The Note is secured by a
first mortgage on a property located at 3585 Sulphur Springs
Road, in Owego, New York. SN Servicing was assigned the
beneficial interest in the Mortgage.
Title to the Property is currently vested in the name of Danny A.
Olmstead and Sandra J. Olmstead, who filed a Chapter 13
bankruptcy petition with the court in Phoenix, Arizona, on
March 11, 2004.
Richard D. Becker, Esq., at Becker & Becker, P.A., in Wilmington,
Delaware, relates that SN Servicing has elected to initiate
foreclosure proceedings on the Property with respect to the
Mortgage. Mr. Becker tells Judge Walrath that SN Servicing had
sought and obtained relief from the automatic stay in the
Olmsteads' Chapter 13 Cases.
However, SN Servicing is precluded from proceeding to publish the
necessary notices and commence the foreclosure action during the
pendency of American Business Financial Services, Inc.'s
bankruptcy cases.
Mr. Becker informs the Court that American Business Financial
Services is the current holder of a lien junior to SN Servicing's
on the Property.
These amounts are due and owing with respect to SN Servicing's
Mortgage:
Unpaid Principal Balance $52,379
Arrearages:
Monthly Payments from April 20, 2004,
to April 20, 2005 at $565.57 7,352
Accrued Late Charges 249
Attorneys' Fees 950
Total Delinquencies 8,551
Mr. Becker points out that the commercially reasonable fair
market value of the Property is approximately $60,000, as
evidenced by a certain residential property inspection. Based on
this, Mr. Becker says there appears to be no equity with respect
to the Property. Moreover, the Property is not necessary to
effectuate ABFS' rehabilitation, Mr. Becker notes.
Thus, at SN Servicing's request, the Court lifts the automatic
stay to permit SN Servicing to move ahead with the foreclosure
proceedings and to sell the Property under the terms of the
Mortgage.
Headquartered in Philadelphia, Pennsylvania, American Business
Financial Services, Inc., together with its subsidiaries, is a
financial services organization operating mainly in the eastern
and central portions of the United States and California. The
Company originates, sells and services home mortgage loans through
its principal direct and indirect subsidiaries. The Company,
along with four of its subsidiaries, filed for chapter 11
protection on Jan. 21, 2005 (Bankr. D. Del. Case No. 05-10203).
Bonnie Glantz Fatell, Esq., at Blank Rome LLP represents the
Debtors in their restructuring efforts. When the Company filed
for protection from its creditors, it listed $1,083,396,000 in
total assets and $1,071,537,000 in total debts. (American
Business Bankruptcy News, Issue No. 19; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
AMERICAN BUSINESS: Trustee Can Continue Using Cash Collateral
-------------------------------------------------------------
In light of the proposed extension of American Business Financial
Services, Inc., and its debtor-affiliates' business operations,
Chapter 7 Trustee George L. Miller sought and obtained the Court's
authority to continue using cash collateral, on an interim basis,
until September 2, 2005.
The Trustee determines that the Cash Collateral will enable him
to engage in the Limited Operations to enable the orderly
shutdown of the Debtors' businesses.
A final hearing on the Trustee's request for continued use of the
Cash Collateral will be continued today, August 12, 2005, at 9:30
a.m.
Headquartered in Philadelphia, Pennsylvania, American Business
Financial Services, Inc., together with its subsidiaries, is a
financial services organization operating mainly in the eastern
and central portions of the United States and California. The
Company originates, sells and services home mortgage loans through
its principal direct and indirect subsidiaries. The Company,
along with four of its subsidiaries, filed for chapter 11
protection on Jan. 21, 2005 (Bankr. D. Del. Case No. 05-10203).
Bonnie Glantz Fatell, Esq., at Blank Rome LLP represents the
Debtors in their restructuring efforts. When the Company filed
for protection from its creditors, it listed $1,083,396,000 in
total assets and $1,071,537,000 in total debts. (American
Business Bankruptcy News, Issue No. 19; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
AMERICAN TOWER: Fitch Lifts Unsecured Debt Rating 1 Notch to BB-
----------------------------------------------------------------
Fitch Ratings has upgraded the ratings on American Tower
Corporation:
-- Issuer default rating to 'BB-' from 'B+';
-- American Tower's unsecured debt to 'BB-' from 'B+';
-- American Towers Inc.'s senior secured credit facility to
'BBB-' from 'BB+'.
ATI's senior subordinated debt remains 'BB+'. Additionally, Fitch
initiates a rating on SpectraSite's secured credit facility at
'BBB-'. Approximately $3.8 billion of debt securities are
affected by these actions. The Rating Outlook is Positive.
The rating actions conclude Fitch's rating review that began in
May 2005 following American Tower's announcement of its proposed
merger with SpectraSite. On Aug. 3, 2005, American Tower and
SpectraSite shareholders approved the merger with the scheduled
closing on Aug. 8, 2005. American Tower will be the largest tower
operator in the U.S. with over 22,000 towers, which is
significantly larger than its nearest competitor.
The rating upgrade reflects the deleveraging aspects of the
transaction, the growing free cash flow of the combined company,
the strong operating performance of American Tower/SpectraSite,
and the continued debt reduction at American Tower.
Despite the potential for a material share repurchase and/or
dividend program, Fitch expects that American Tower will continue
to meaningfully improve its credit profile during 2006 due to the
scale benefits associated with the largest tower assets in the
industry, the increased cash flows of the combined company, and
the expectations for continued wireless industry demand driven by
footprint expansion, improved coverage, minute growth, and
increasing demand for wireless data services as operators focus
recent infrastructure upgrades on high-speed wireless data.
Furthermore, American Tower's cash flows derive support from the
predictable long-term contracts associated with its leasing
business and the expected sustainability of low capital investment
as American Tower leverages the considerable scale advantages
inherent within the tower business model.
American Tower's liquidity position is solid, owing to its free
cash flow, cash on hand, $600 million of undrawn revolver
capacity, and flexibility under its credit facility covenants.
American Tower's pro forma cash balance at the end of the second-
quarter 2005 after giving effect to SpectraSite's recent high
yield tender offer was $108 million. American Tower maintains a
$1.1 billion credit facility that expires in 2011 with a $400
million undrawn capacity. SpectraSite has a $900 million secured
credit facility that expires in 2011 ($200 million revolver and
$300 million multiple draw term loan) and 2012 ($398 million term
loan). SpectraSite has drawn $698 million on the credit facility.
The 'BBB-' rating of ATI and SpectraSite's credit facilities,
which are two notches above American Tower's unsecured debt,
reflects the superior position in the capital structure and the
excellent recovery prospects.
On July 11, 2005, SpectraSite announced a cash tender for all of
its $200 million outstanding senior notes due 2010 and a
solicitation of consents to eliminate certain restrictive
covenants from the indentures governing the notes. By tendering
for the high yield debt, SpectraSite eliminated the restrictive
covenants, which would have constrained American Tower from stock
repurchases and dividends. In addition, SpectraSite recently
amended its bank facility to increase leverage to 5.5 times (x)
from 4.5x. Given the above steps, Fitch anticipates that American
Tower will initiate a stock repurchase program over the next
couple of quarters in part funded by SpectraSite's FCF and undrawn
revolver capacity.
Pro forma for the transaction, Fitch expects adjusted debt to
EBITDAR (excluding integration expenses) to be approximately 6.0x
at the end of 2005. Free cash flow generation is expected to be
in excess of $300 million in 2005 and, after consideration for
merger synergies, is expected to reach at least $425 million on an
annualized basis by the end of 2006. Absent the merger
announcement, Fitch had expected material improvement in free cash
flow at American Tower, driven by organic revenue growth relating
to healthy wireless industry demand and reduced interest expense
through debt reduction/refinancing. EBITDA margins, reflecting
the strong operating leverage, should approximate 65% for 2005.
The current Outlook is based on a certain level of equity-based
shareholder initiatives, as well as the expected operating
performance for the new company. If American Tower pursues
equity-based initiatives beyond our original expectations, these
actions would likely lead to a review of the Outlook.
AMERICAN WATER: Laurus Master Waives Covenant Defaults
------------------------------------------------------
American Water Star Inc. (AMEX: AMW) reached an agreement with
Laurus Master Funds Inc. The company said it is now in full
compliance on its terms with Laurus, and is no longer in default
on its debt covenants with Laurus.
"We are pleased to have completed this significant milestone in
our turnaround at American Water Star," Roger Mohlman, CEO of
American Water Star, said. "The co-operation from Laurus was
unprecedented, and is clearly a reflection of their support of our
business."
Credit Agreement
On Oct. 26, 2004, American Water entered into a secured
credit facility with Laurus Master Fund, Ltd., a Cayman Islands
corporation, pursuant to which Laurus loaned the Company
$5,000,000. The October 2004 Credit Facility provided for
periodic payments of principal and interest thereunder.
On Oct. 26, 2004, the Company had issued to Laurus a Secured
Convertible Term Note in the original principal amount of
$5,000,000 (the "First Note"). The First Note, which is
convertible into common stock of the Company, was issued pursuant
to a Securities Purchase Agreement dated as of the same date. In
connection with the First Note and the Purchase Agreement, the
Company and Laurus entered into various other agreements
providing for security and guaranty of the Company's performance
under the First Note and for registration rights upon conversion
of the First Note into common stock.
On July 22, 2005, the Company and Laurus entered into five
agreements relating to, supplementing, and amending the Prior
Credit Facility:
(i) a Forbearance Agreement, dated July 22, 2005, between the
Company and Laurus;
(ii) a $1.2 million Secured Convertible Term Note, dated
July 22, 2005, issued by the Company to Laurus;
(iii) a Master Security Agreement, dated July 22, 2005, among
various subsidiaries of the Company and Laurus;
(iv) a Subsidiary Guarantee, dated July 22, 2005, issued by
the Company's various subsidiaries and Laurus; and
(v) a Deed of Trust, Assignment of Rents, Security Agreement
and Fixture Filing, dated July 22, 2005, made by the
Company for the benefit of Laurus.
Forbearance Agreement
Prior to entry into the Forbearance Agreement, the Company
had defaulted under various provisions of the transaction
documents. Pursuant to the Forbearance Agreement, however,
Laurus has agreed that it will forbear from taking action on
existing defaults under the Transaction Documents until Oct. 26,
2007, provided that it does not default under its obligations
under the Forbearance Agreement. In consideration of Laurus'
forbearance, the Company issued a Secured Convertible Term
Note in the principal amount of $1,286,098.61 to Laurus. The
amount represents the aggregate accrued interest and fees owed by
the Company to Laurus as of July 31, 2005 (the "Second Note"),
which shall be payable in addition to the First Note in accordance
with its terms.
In connection with the Forbearance Agreement and the Second Note,
the Company, various of its subsidiaries, and Laurus entered into
various other agreements providing for additional security and
guaranty of the Company's performance under the Transaction
Documents, the Forbearance Agreement and the Second Note.
Full-text copies of the parties' agreements are available at no
charge at http://ResearchArchives.com/t/s?c0
American Water Star Inc. is a publicly traded company and is
engaged in the beverage bottling industry. Its product brands are
licensed and developed in-house, and bottled in strategic
locations throughout the United States. AMW's beverage products
are sold by the truckload, principally to distributors, who sell
to retail stores, corner grocery stores, convenience stores,
schools and other outlets.
* * *
Going Concern Doubt
As reported in the Troubled Company Reporter on June 13, 2005,
Weaver & Martin, LLC, expressed substantial doubt about American
Water Star Inc.'s ability to continue as a going concern after it
audited the Company's financial statements for the fiscal year
2004 ended Dec. 31, 2004. The auditors point to the Company's
accumulated deficit at the need to obtain additional financing to
fund payment obligations and to provide working capital for
operations. AMW management is seeking additional financing, which
if successful, should mitigate the factors that have raised doubt
about AMW's ability to continue as a going concern.
AMERIGAS PARTNERS: Names Jerry E. Sheridan CFO & Finance VP
-----------------------------------------------------------
AmeriGas Propane, Inc., the general partner of AmeriGas Partners,
L.P., has agreed to pay an annual salary and is providing certain
other benefits to Jerry E. Sheridan in connection with his service
as Vice President-Finance and Chief Financial Officer of the
Company.
Effective August 15, 2005, Mr. Sheridan, age 40, will become the
Vice President-Finance and the Chief Financial Officer of the
Company. On the same date, Michael J. Cuzzolina will resign as
Vice President-Finance and Chief Financial Officer of the Company.
Mr. Cuzzolina will continue his role as Vice President-Accounting
and Financial Control of parent company UGI Corporation. In
addition to the full range of responsibilities generally
associated with the chief financial officer position, Mr. Sheridan
will be responsible for AmeriGas Partners' corporate development
program and for operation of its two West Coast customer service
centers.
Previously, Mr. Sheridan served as President and Chief Executive
Officer of Potters Industries, Inc., a global manufacturer of
engineered glass materials and a wholly owned subsidiary of PQ
Corporation (2003 to 2005). In addition, Mr. Sheridan served as
Executive Vice President (2003 to 2005) and as Vice President and
Chief Financial Officer (1999 to 2003) of PQ Corporation, a global
producer of inorganic specialty chemicals. On February 11, 2005,
PQ Corporation was acquired by Niagara Holdings, Inc., a newly
formed corporation associated with J.P. Morgan Partners, L.P.
None of the following entities are affiliates of AmeriGas
Partners, or any of its subsidiaries or affiliates: PQ
Corporation, Potters Industries, Inc., Niagara Holdings, Inc. or
J.P. Morgan Partners.
The Company has agreed to pay Mr. Sheridan an annual base salary
of $260,000. In addition, Mr. Sheridan shall be eligible to
participate in the Company's annual bonus plan. His target and
maximum annual bonus plan opportunities, as a percentage of annual
base salary, are 45% and 90%, respectively, prorated for fiscal
year 2005 based on his date of hire. The annual bonus for fiscal
year 2005 is payable based on achievement of a financial goal
based on earnings per AmeriGas Partners' common unit. Mr.
Sheridan will also receive a hiring bonus of $50,000.
Mr. Sheridan will participate in the Company's long-term
compensation plan, the 2000 Long-Term Incentive Plan, and UGI
Corporation's 2004 Omnibus Equity Compensation Plan. The
Compensation/Pension Committee of the Board of Directors of the
Company approved awards to Mr. Sheridan under the 2000 Plan as
follows: a transition award of 3,000 phantom performance-
contingent restricted Common Units.
The Compensation and Management Development Committee of the Board
of Directors of UGI Corporation approved awards to Mr. Sheridan
under the 2004 Plan as follows: a transition award of 15,000 UGI
Corporation stock options, vesting in three equal annual
installments beginning on August 15, 2006.
The Company will provide Mr. Sheridan with cash benefits if there
is a termination of his employment without cause at any time
within three years following a change of control of AmeriGas
Partners or UGI Corporation. In addition, following a change of
control, he may elect to terminate his employment without loss of
Benefits in certain situations, including:
* termination of officer status;
* a significant adverse change in authority, duties,
responsibilities or compensation; or
* excessive travel requirements.
Benefits under this arrangement will be equal to 1.0 times his
average annual remuneration from the Company for the preceding
five calendar years (or such number of actual full calendar years
of employment, if less than five) and are in addition to any
severance benefits under the Company's Executive Employee
Severance Pay Plan. If Benefits payable under the change of
control arrangement, either alone or together with other payments,
would constitute "excess parachute payments," as defined in
Section 280G of the Internal Revenue Code, Mr. Sheridan will also
receive an amount to satisfy his additional tax burden.
Mr. Sheridan will participate in the Company's benefit plans,
including the Supplemental Executive Retirement Plan -- SERP. The
SERP provides that the Company will establish an account for Mr.
Sheridan to which shall be credited annually an amount equal to 5%
of his maximum recognizable compensation under Section 401(a)(17)
of the Internal Revenue Code and 10% of his compensation, if any,
in excess of such maximum recognizable compensation. In addition,
effective for amounts forfeited in 2005 and subsequent years, in
the event that any portion of the employer matching contribution
allocated to Mr. Sheridan under the Company's 401(k) Plan with
respect to a prior plan year is forfeited to satisfy the
nondiscrimination requirements of section 401(k), 401(m) or
401(a)(4) of the Internal Revenue Code, the Company shall credit
to his account under the Company's SERP, in the year in which the
forfeiture occurs, an amount that is equal to the forfeited
employer matching contributions, adjusted for earnings and losses
as provided under the Company's 401(k) Plan to the date forfeited.
Mr. Sheridan is eligible for executive perquisites including
financial planning/tax preparation services, participation in the
executive health maintenance program and airline club membership.
As a condition of his employment, Mr. Sheridan will be required to
sign a Confidentiality and Post-Employment Activities Agreement
which will restrict Mr. Sheridan from competing with AmeriGas
Partners and its affiliates following the termination of his
employment.
Through its subsidiaries, AmeriGas Partners, L.P. (NYSE:APU) is
the largest retail propane distributor in the United States. The
Partnership serves residential, commercial, industrial,
agricultural and motor fuel customers from over 650 retail
locations in 46 states.
* * *
As reported in the Troubled Company Reporter on Apr. 15, 2005,
AmeriGas Partners, L.P.'s -- APU -- $400 million senior notes due
2015, issued jointly and severally with its special purpose
financing subsidiary Amerigas Finance Corp., are rated 'BB+' by
Fitch Ratings. The Rating Outlook is Stable. An indirect
subsidiary of UGI Corp. is the general partner and 44% limited
partner for APU, which, in turn, is a master limited partnership -
- MLP -- for AmeriGas Propane, L.P. -- AGP, an operating limited
partnership. Proceeds from the new senior notes will be utilized
to repurchase outstanding 8.875% APU senior notes pursuant to an
ongoing tender offer.
ANCHOR GLASS: Asks to Pay $6.7 Million in Critical Vendor Claims
----------------------------------------------------------------
The continued availability of trade credit in amounts and on terms
consistent with those Anchor Glass Container Corporation enjoyed
is clearly of benefit to the Debtor in that it will permit it to
maintain liquidity for its business operations, Robert A. Soriano,
Esq., at Carlton Fields, P.A., in Tampa, Florida, tells Judge
Paskay of the U.S. Bankruptcy Court for the Middle District of
Florida. Preserving working capital through the retention or
reinstatement of traditional trade credit terms will enable it to
maintain its competitiveness and maximize the value of its
business for the benefit of the Debtor, its estate and creditors.
A deterioration of trade credit and a disruption or cancellation
in the delivery of goods -- many of which are not readily
replaceable -- may cripple the Debtor's business operations,
increase the amount of funding needed by the Debtor postpetition,
and ultimately hamper Anchor's ability to service its customers.
In this regard, the Debtor seeks the Court's authority to pay, in
its discretion, uncontested prepetition claims of its essential
vendors.
Anchor Glass wants to pay these 23 Critical Vendors' Claims:
Critical Vendor Prepetition Claim
--------------- -----------------
Acme Packaging $166,398
Arkema Chemicals 137,521
Arkhola Sand & Gravel Company 86,478
Bostik 89,413
Buske 1,505,799
The Calumite Company 85,279
Carthage Crushed Limestone 44,435
Cornerstone Environmental 34,462
FMC Corporation 283,574
Franklin Industrial Minerals 22,812
Heye International 380,669
Modern Transportation Inc 409,213
Nutmeg (Hudson Baylor Corporation) 166,750
OCI Chemical Corporation 954,939
O-N Minerals (Chemstone) 113,285
Prior Chemical Corporation 45,605
Rogers Group 7,386
Shamokin Filler Company 6,782
Strategic Materials Inc 124,287
TC Transport Inc 60,756
Ultra Logistics 945,213
Unimin Corporation 974,162
Walpole Inc 32,867
----------
TOTAL $6,678,085
==========
Mr. Soriano says these Critical Vendor Claims represent less
than 2% of the Debtor's total liabilities as of the Petition
Date.
Mr. Soriano notes that the payment of Critical Vendor Claims will
likely avert the filing of many reclamation claims, suits, liens
and motions by claimants seeking payment of or priority for their
claims on a variety of goods.
"Avoiding the time, distraction, and considerable expense of
litigating the merits of such claims will benefit Anchor, its
estate and creditors while facilitating the administration of
this case," Mr. Soriano says.
Mr. Soriano also points out that the Critical Vendors would
themselves be significantly damaged by Anchor's failure to pay
prepetition claims, resulting in Anchor being forced to obtain
goods and services elsewhere that would be at a higher price or
not of the quality required by the Debtor.
Numerous other courts have used their powers under Section 105(a)
of the Bankruptcy Code to authorize payment of a debtor's
prepetition obligation where the payment is an essential element
of the preservation of the debtor's potential for rehabilitation,
Mr. Soriano reminds Judge Paskay. Section 105(a) grants broad
authority to bankruptcy courts to enforce the provisions of the
Bankruptcy Code under equitable common law doctrines.
The U.S. Bankruptcy Court for the Middle District of Florida
considered and granted a critical vendor motion in In re Tropical
Sportswear Int'l. Corp., 320 B.R. 15 (Bankr. M.D. Fla. 2005),
citing that the payments were necessary to the reorganization
process, sound business justification existed in that the
critical vendors refused to continue to do business with the
debtor absent being afforded critical vendor status, and that
disfavored creditors are at least as well off as they would have
been had the critical vendor order not been entered.
Other cases addressing the payment of prepetition debts owed to
critical vendors include:
-- In re Gulf Air, Inc., 112 B.R. 152 (Bankr. W.D. La. 1989),
which cited the Middle District of Florida Bankruptcy
Court's decision in In re Braniff Airways and its decision
to allow payment of prepetition wage and employee claims;
-- In re COSERV, LLC, 273 B.R. 487, 497 (Bankr. N.D. Tex.
2002), which cited the debtor's obligation as a fiduciary
to protect and preserve the going concern value of the
debtor's estate as a justification for allowing the payment
of $8,000,000 of prepetition vendor claims;
-- In re Lehierh & New England Rv. Co., 657 F.2d 570.581
(3d Cir. 1981), which cited the doctrine of necessity which
permits "immediate payment of claims of creditors where
those creditors will not supply services or materials
essential to the conduct of the business until their
pre-reorganization claims shall have been paid";
-- In re Ionosphere Clubs, Inc., 98 B.R. 174, 175 (Bankr.
S.D.N.Y. 1989 ), where the court used equitable powers to
"authorize payment of prepetition debt when such payment is
needed to facilitate the rehabilitation of the debtor";
-- In re Just for Feet, Inc., 242 B.R. 821, 825 (D. Del.
1999); and
-- In re Kmart Corporation, 359 F.3d 866 (7th Cir. 2004).
This is Anchor's second bankruptcy filing in three years. It is
imperative that Anchor make a strong statement to its critical
vendors and customers by paying those trade vendors and supplying
products on time as usual, Mr. Soriano asserts. This will also
ensure that Anchor will be able to sustain operational levels
necessary to fund its reorganization plan, he adds.
Headquartered in Tampa, Florida, Anchor Glass Container
Corporation is the third-largest manufacturer of glass containers
in the United States. Anchor manufactures a diverse line of flint
(clear), amber, green and other colored glass containers for the
beer, beverage, food, liquor and flavored alcoholic beverage
markets. The Company filed for chapter 11 protection on Aug. 8,
2005 (Bankr. M.D. Fla. Case No. 05-15606). Robert A. Soriano,
Esq., at Carlton Fields PA, represents the Debtor in its
restructuring efforts. When the Debtor filed for protection from
its creditors, it listed $661.5 million in assets and $666.6
million in debts. (Anchor Glass Bankruptcy News, Issue No. 1;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
ANCHOR GLASS: Wants Access to $115 Million DIP Financing Facility
-----------------------------------------------------------------
Robert A. Soriano, Esq., at Carlton Fields PA, in Tampa, Florida,
relates that Anchor Glass Container Corporation does not have
sufficient available sources of working capital to operate its
businesses in the ordinary course of its business. "The Debtor's
ability to maintain business relationships with its vendors,
suppliers, and customers, to pay its employees, and to otherwise
fund its operations is essential to the Debtor's continued
viability."
Accordingly, Mr. Soriano says, the Debtor needs to obtain
postpetition financing immediately to continue operating its
businesses, to minimize the disruption of its business
operations, and to manage and preserve the assets of its estate
in order to maximize the recovery to all estate creditors.
Prepetition Debt Structure
Prior to the Petition Date, Anchor Glass entered into a Loan and
Security Agreement dated August 30, 2002, and all related other
agreements, documents and instruments, with Wachovia Capital
Finance Corporation (Central) as agent for certain lenders. Bank
of America, N.A., acted as documentation agent while General
Electric Capital Corporation acted as lead bookrunner and
syndication agent. The total availability under that facility is
$115,000,000, subject to borrowing base criteria.
The Debtor also obtained loans, advances and other financial
accommodations from Madeleine L.L.C., as agent pursuant to a Loan
and Security Agreement dated February 14, 2005. The total
availability under that loan is $20,000,000. The Debtor's
obligations under the Madeleine Facility are secured by certain
of the Debtor's assets and other property interests, including
junior liens on the Debtor's accounts and inventory.
Anchor issued 11% Senior Secured Notes due 2013 in the original
aggregate principal amount of $300,000,000 pursuant to an
Indenture dated February 7, 2003, by and between The Bank of New
York, as collateral agent and trustee for the holders of the
Senior Secured Notes, and Anchor, as issuer. The Senior Secured
Notes are secured by certain of the Debtor's real property,
equipment, fixed assets and other property interests.
Wachovia and Madeleine entered into an Intercreditor Agreement
dated February 14, 2005, which sets forth their rights,
obligations, and priorities of their claims and interests with
respect to the Collateral. Wachovia (or its predecessor) and The
Bank of New York entered into a Collateral Access and
Intercreditor Agreement dated February 7, 2003, which sets forth:
(1) their rights, obligations and priorities with respect to
the Note Collateral and the Revolving Loan Collateral; and
(2) Wachovia's right to use the Debtor's real property and
equipment in connection with the exercise of Wachovia's
rights and remedies with respect to the Revolving Loan
Collateral.
As of the Petition Date, the Debtor owes Wachovia $63,500,000,
plus all interest, fees, costs and expenses under the Wachovia
Facility.
The Debtor owes Madeleine $15,370,000.
The Wachovia Prepetition Obligations were fully secured by prior
priority security interests and liens granted by the Debtor to
Wachovia, for the benefit of itself and the other Lenders, upon
all of the Collateral existing as of the Petition Date.
Postpetition Financing
According to Mr. Soriano, the Debtor is unable to procure
financing in the form of unsecured credit allowable under Section
503(b)(1) of the Bankruptcy Code, as an administrative expense
under Section 364(a) or (b) of the Bankruptcy Code, or in
exchange for the grant of an administrative expense priority
pursuant to Section 364(c)(1) without the grant of liens on
assets.
The Debtor has requested from Wachovia, and Wachovia is willing
to extend, certain loans, advances and other financial
accommodations, on the terms and conditions set forth in the
Wachovia Loan Documents, as amended and ratified by a
Ratification and Amendment Agreement.
Mr. Soriano tells Judge Paskay that the Debtor has been unable to
procure the necessary financing on terms more favorable than the
financing offered by Wachovia and the Lenders.
In addition, the Debtor has negotiated additional financing in
the amount of $15,000,000 to be provided by certain parties to
the Noteholder Agreements.
Under the Ratification and Amendment Agreement, the Debtor
ratifies, assumes, adopts and agrees to be bound by the Existing
Financing Agreements, as modified, and agrees to pay all of the
Prepetition Obligations.
Anchor Glass acknowledges that it is indebted to Wachovia and the
Lenders for the Prepetition Obligations, as of August 8, 2005, in
the aggregate principal amount of not less than $81,467,463,
consisting of:
(a) Loans made pursuant to the Existing Financing Agreements
in the principal amount of not less than $67,267,346,
together with all interest accrued and accruing; and
(b) Letter of Credit Accommodations not less than $14,200,117,
together with interest accrued and accruing,
plus costs, expenses, fees and all other charges.
As collateral security for the prompt performance, observance and
payment in full of all of the Obligations, the Debtor grants,
pledges and assigns to Wachovia, for itself and the ratable
benefit of Lenders, and also confirms, reaffirms and restates the
prior grant of continuing security interests in and liens upon,
and rights of setoff against, all of the Collateral.
The Debtor will pay to Wachovia a $575,000 facility fee for
arranging the financing. The Debtor will also pay to Wachovia
for the account of Lenders a $575,000 fee to be shared based on
the pro rata share of commitments of Lenders for providing the
financing arrangements.
The Debtors will pay 350 basis points over the Prime Rate for all
domestic loans and 325 basis points over an Adjusted Eurodollar
Rate for all Eurodollar Loans.
Any Loans available to Anchor Glass will be subject to a special
Reserve, in an amount equal to all claims for all outstanding and
unpaid administrative expenses, which are or may be senior or
pari passu to Agent's and Lenders' liens in the property of the
Borrower or Agent's and Lenders' super priority claims.
In addition to any charges, fees or expenses charged by any bank
or issuer in connection with the Letter of Credit Accommodations,
Borrower will pay to Agent, for the benefit of Lenders, a letter
of credit fee at a rate equal to 2.50% per annum, payable in
arrears; except that Agent may, and upon the written direction of
Required Lenders, require Borrower to pay 4.50% per annum on the
daily outstanding balance in case of termination or default.
All limits and sublimits will be determined on an aggregate basis
considering together both the Prepetition Obligations and the
Postpetition Obligations.
The Loan Agreement will continue in full force and effect for a
term ending on August 7, 2006, unless terminated earlier.
Mr. Soriano assures the Court that the terms of the Wachovia Loan
Documents, the Ratification Agreement and Debtor's DIP Financing
Motion:
-- are fair, just and reasonable under the circumstances,
-- are ordinary and appropriate for secured financing to
debtors-in-possession,
-- reflect the Debtor's exercise of its prudent business
judgment consistent with its fiduciary duties, and
-- are supported by reasonably equivalent value and fair
consideration.
"The terms of the Wachovia Loan Documents and the Ratification
Agreement have been negotiated in good faith and at arms' length
by and among the Debtor, Agent and the Lenders, with all parties
represented by counsel," Mr. Soriano continues.
Interim Approval
On an interim basis at yesterday's First Day Hearing, Judge
Paskay authorized the Debtor to immediately borrow and obtain
Loans and Letter of Credit Accommodations, and to incur
indebtedness and obligations owing to Agent and Lenders, in
amounts as may be made available; provided that pending final
approval, the aggregate outstanding amount of those Loans and
Letter of Credit Accommodations will not exceed $95,000,000,
which amount is inclusive of all Prepetition Obligations.
Judge Paskay permits the Debtor to execute, deliver, perform and
comply with all of the terms, conditions and covenants of the
Loan Agreement and other related Financing Agreements.
The Debtor is authorized and directed to pay its Prepetition
Obligations.
To secure the prompt payment and performance of any and all
Debtor's obligations, Wachovia, for itself and for the benefit of
the other Lenders, will have and is granted, effective as of the
Petition Date, valid and perfected first priority security
interests and liens, superior to all other liens, claims and
security interests that any creditor of the Debtor's estate may
have in and upon all of the Prepetition Collateral and
Postpetition Collateral.
For all Obligations, Wachovia is also granted an allowed
superpriority administrative claim.
Wachovia's and Lenders' liens, claims and security interests in
the Collateral and its Superpriority Claim will be subject to the
right of payment of fees payable to the U.S. Trustee and the
Clerk of the Bankruptcy Court.
In Wachovia's sole discretion, it may establish an Availability
Reserve against the amount of Loans and other credit
accommodations that would otherwise be made available to Anchor
Glass in respect of the Carve Out Expenses.
The automatic stay is modified to:
-- implement the postpetition financing arrangements,
-- take any act to create, validate, evidence, attach or
perfect any lien, security interest, right or claim in the
Collateral, and
-- assess, charge, collect, advance, deduct, and receive
payments with respect to the Obligations.
Full-text copies of the Interim Order and the Ratification and
Amendment Agreement are available for free at:
http://bankrupt.com/misc/anchorinterimorder.pdf
Final Hearing on August 30
The Court will convene the Final Hearing on the DIP Financing
Motion on August 30, 2005, at 1:30 p.m.
Objections must be filed and served by August 22, 2005.
Wachovia is represented by Jonathan N. Helfat, Esq., at
Otterbourg, Steindler, Houston & Rosen, P.C., in New York.
Madeleine L.L.C. is represented by Jesse H. Austin, III, Esq., at
Paul, Hastings, Janofsky & Walker LLP, in Atlanta, Georgia.
David H. Botter, Esq., and Ira Dizengoff, Esq., at Akin Gump
Strauss Hauer & Feld LLP are counsel to the Ad Hoc Committee of
Noteholders.
Headquartered in Tampa, Florida, Anchor Glass Container
Corporation is the third-largest manufacturer of glass containers
in the United States. Anchor manufactures a diverse line of flint
(clear), amber, green and other colored glass containers for the
beer, beverage, food, liquor and flavored alcoholic beverage
markets. The Company filed for chapter 11 protection on Aug. 8,
2005 (Bankr. M.D. Fla. Case No. 05-15606). Robert A. Soriano,
Esq., at Carlton Fields PA, represents the Debtor in its
restructuring efforts. When the Debtor filed for protection from
its creditors, it listed $661.5 million in assets and $666.6
million in debts. (Anchor Glass Bankruptcy News, Issue No. 1;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
ASARCO LLC: Steelworkers Condemn Grupo Mexico for Bankrupting Unit
------------------------------------------------------------------
The United Steelworkers accused Grupo Mexico of deliberately
bankrupting its U.S. copper unit ASARCO LLC in an attempt to
escape its obligations to workers and communities. The Union
stated that Grupo Mexico's asset stripping and poor management of
Asarco set the stage for the bankruptcy filing. The Union also
said that it will continue its campaign for justice at Grupo
Mexico.
"It's no secret what's happening here," said USW District 12
Director Terry Bonds. "The robber barons running Grupo Mexico set
the stage for this by stripping Asarco of its profitable Peruvian
assets in 2003. They believe that it will be cheaper to bankrupt
Asarco than it would be to meet Asarco's tremendous environmental,
asbestos and retiree obligations."
"Grupo Mexico's failure to invest in maintaining its Asarco
operations while copper prices were low is the sole reason Asarco
is not able to reap the full rewards of the ongoing copper boom,"
said USW Sub-District Director Manuel Armenta. "It's a shame that
Grupo Mexico isn't as good at managing companies as it is at
scheming to harm workers and communities."
USW also blamed Grupo Mexico for deliberately provoking and
prolonging the strike of about 1,500 Steelworkers at its Asarco
operations in Arizona and Texas.
"Grupo Mexico has never taken Asarco negotiations seriously nor
made an honest attempt to reach a fair and equitable labor
agreement," said Bonds. "For over a year they committed unlawful
bargaining violations and presented insulting offers that they
knew would not be accepted by our members."
"Then after claiming that the strike they provoked was crippling
them, Asarco cancelled negotiations scheduled for Aug. 2. It
appears that this was the final stage in Grupo Mexico's drive to
bankrupt Asarco."
"Numerous communities, many of them predominantly Latino, are
suffering the consequences of Asarco's century-long pollution
binge," said Mr. Armenta. "Rather than cleaning up its mess,
Grupo Mexico is attempting to exploit U.S. bankruptcy law in order
to shift the cost of cleanup to U.S. taxpayers."
"Grupo Mexico would be wise to bargain a fair and equitable
agreement so it can concentrate on getting itself out of
bankruptcy," said Bonds. "You can be sure that we will do
anything and everything possible to protect our members during
this difficult time. If Grupo Mexico thinks that filing for
bankruptcy will cause us to back off in our campaign for justice
at Asarco, it's dead wrong."
Headquartered in Tucson, Arizona, ASARCO LLC --
http://www.asarco.com/-- is an integrated copper mining, smelting
and refining company. Americas Mining Corp. is Asarco's direct
parent, and Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent.
The Company filed for chapter 11 protection on Aug. 9, 2005
(Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack
L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts
L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq.,
and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth,
P.C., represent the Debtor in its restructuring efforts. When the
Debtor filed for protection from its creditors, it listed $600
million in total assets and $1 billion in total debts.
The Debtor has five affiliates that filed for chapter 11
protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521
thru 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe
Company, Inc., Cement Asbestos Products Company, Lake Asbestos Of
Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-
driven chapter 11 filings have appeared in the Troubled Company
Reporter since Apr. 18, 2005. ASARCO has asked that the five
subsidiary cases be jointly administered with its chapter 11 case.
ASSET BACKED: Fitch Places BB+ Rating on $18.76 Million Certs.
--------------------------------------------------------------
Asset Backed Securities Home Equity Loan Trust, $1.5 billion
asset-backed pass-through certificates, series 2005-HE6, which
closed on Aug. 4, 2005, are rated by Fitch Ratings:
-- $1.17 billion classes A1, A1A and A2A through A2D 'AAA';
-- $74.29 million class M1 'AA+';
-- $48.78 million class M2 'AA';
-- $29.27 million class M3 'AA-';
-- $26.26 million class M4 'A+';
-- $24.76 million class M5 'A';
-- $22.51 million class M6 'A-';
-- $20.26 million class M7 'BBB+';
-- $15.76 million class M8 'BBB';
-- $12.76 million class M9 'BBB-';
-- $18.76 million non-offered class M10 'BB+';
-- $15 million non-offered class M11 'BB'.
The 'AAA' rating on the senior certificates reflects the 22.20%
total credit enhancement provided by the 4.95% class M1, the 3.25%
class M2, the 1.95% class M3, the 1.75% class M4, the 1.65% class
M5, the 1.50% class M6, the 1.35% class M7, the 1.05% class M8,
the 0.85% class M9, 1.25% non-offered class M10, 1.00% non-offered
class M-11, and the initial and target overcollateralization of
1.65%. All certificates have the benefit of monthly excess cash
flow to absorb losses. In addition, the ratings reflect the
quality of the loans, the integrity of the transaction's legal
structure, as well as the capabilities of Option One Mortgage
Corp. as servicer and Deutsche Bank National Trust Company, as
trustee. In addition, the class A2D certificates will have the
benefit of the certificate insurance policy issued by CIFG
Assurance North America Inc.
The certificates are supported by two collateral groups. Group 1
will consist of mortgage loans that have original principal
balances that conform to Fannie Mae and Freddie Mac guidelines.
The Group 1 mortgage pool consists of first and second lien,
adjustable-rate and fixed-rate mortgage loans that have a cut-off
date pool balance of $597,537,890. Approximately 17.79% of the
mortgage loans are fixed-rate mortgage loans and 82.21% are
adjustable-rate mortgage loans. The weighted average current loan
rate is approximately 7.412%. The weighted average remaining term
to maturity is 355 months. The average principal balance of the
loans equals $176,786. The weighted average original loan-to-
value ratio is 77.70%. The properties are primarily located in
California (16.58%), Florida (10.07%) and Massachusetts (9.69%).
Group 2 will consist of original balances that may or may not
conform to Fannie Mae and Freddie Mac guidelines. The Group 2
mortgage pool consists of first and second lien, adjustable-rate
and fixed-rate mortgage loans that have a cut-off date pool
balance of $903,279,999. Approximately 15.75% of the mortgage
loans are fixed-rate mortgage loans and 84.25% are adjustable-rate
mortgage loans. The weighted average current loan rate is
approximately 7.34%. The weighted average remaining term to
maturity is 356 months. The average principal balance of the
loans equals $188,340. The weighted average OLTV ratio is 78.61%.
The properties are primarily located in California (21.06%), New
York (9.88%) and Florida (9.75%).
For federal income tax purposes, multiple real estate mortgage
investment conduit elections will be made with respect to the
trust estate.
Option One was incorporated in 1992, and began originating and
servicing subprime loans in February 1993. Option One is a
subsidiary of Block Financial, which is in turn a subsidiary of H
& R Block, Inc.
BALLY TOTAL: Waiver Consent Solicitation Expires Today
------------------------------------------------------
Bally Total Fitness Holding Corporation has extended until 5:00
p.m. New York City time, today, Aug. 12, 2005, the deadline for
holders of its 10-1/2% Senior Notes due 2011 and 9-7/8% Senior
Subordinated Notes due 2007 to consent to an extension of waivers
of defaults under the indentures governing those notes.
The Company continues to negotiate with bondholders to secure a
waiver extension and currently has received consent from holders
of 96.33% of the Senior Notes and 42.82% of the Senior
Subordinated Notes outstanding.
The record date for determining noteholders eligible to submit
consents remains July 12, 2005. Noteholders who have previously
submitted Letters of Consent are not required to take any further
action in order to receive payment of the Initial Consent Fee in
the event the Requisite Consents are received and the Initial
Consent Fee becomes payable in accordance with the terms of
Bally's Consent Solicitation Statements. Noteholders who have not
yet consented are asked to submit the previously distributed
Letters of Consent in order to consent and receive any consent
fees that may be paid by the Company.
Covenant Default
As reported in the Troubled Company Reporter on Aug. 9, 2005, the
Company received notices of default under the senior note
indentures following the expiration of the waiver of the financial
reporting covenant default on July 31, 2005.
The notices did not declare the aggregate unpaid principal under
each of the indentures to be due and payable. However, the
notices commenced a 30-day cure period during which Bally must
either secure an extension to the waiver or remedy the default.
The Company continues to negotiate with bondholders to secure a
waiver extension and currently has received consent from holders
of 96.31% of the Senior Notes and 42.88% of Senior Subordinated
Notes outstanding.
In addition, the delivery of the notices commences the 10-day
period after which time an event of default occurs under Bally's
$275 million secured credit agreement's cross-default provision.
As a result, delivery of these notices could result in
acceleration of Bally's obligations on or after Aug. 14, 2005,
under the credit agreement and the indentures, causing over
$700 million of Bally's debt obligations to become immediately due
and payable.
As previously announced, Bally has retained Deutsche Bank
Securities Inc. to serve as its solicitation agent and MacKenzie
Partners, Inc., to serve as the information agent and tabulation
agent for the consent solicitation. Questions concerning the
terms of the consent solicitation should be directed to:
Deutsche Bank Securities Inc.
60 Wall Street, 2nd Floor
New York, New York 10005
Attn: Christopher White
Tel. No. (212) 250-6008
Requests for documents may be directed to MacKenzie Partners,
Inc., 105 Madison Avenue, New York, New York 10016, Attention:
Jeanne Carr or Simon Coope. The information agent and tabulation
agent may be reached by telephone at (212) 929-5500 (call collect)
or (800) 322-2885 (toll-free).
Bally Total Fitness is the largest and only nationwide commercial
operator of fitness centers, with approximately four million
members and 440 facilities located in 29 states, Mexico, Canada,
Korea, China and the Caribbean under the Bally Total Fitness(R),
Crunch Fitness(SM), Gorilla Sports(SM), Pinnacle Fitness(R) ,
Bally Sports Clubs(R) and Sports Clubs of Canada(R) brands. With
an estimated 150 million annual visits to its clubs, Bally offers
a unique platform for distribution of a wide range of products and
services targeted to active, fitness-conscious adult consumers.
* * *
As reported in the Troubled Company Reporter on Aug. 11, 2005,
Moody's Investors Service affirmed the Caa1 corporate family
(formerly senior implied) rating and debt ratings of Bally Total
Fitness Holding Corporation. The affirmation reflects continued
high risk of default and Moody's estimate of recovery values of
the various classes of debt in a default scenario. The ratings
outlook remains negative.
Moody's affirmed these ratings:
* $175 million senior secured term loan B facility due 2009,
rated B3
* $100 million senior secured revolving credit facility
due 2008, rated B3
* $235 million 10.5% senior unsecured notes (guaranteed)
due 2011, rated Caa1
* $300 million 9.875% senior subordinated notes due 2007,
rated Ca
* Corporate family rating, rated Caa1
BEHAVIORAL HOSPITAL: List of 20 Largest Unsecured Creditors
-----------------------------------------------------------
Behavioral Hospital of Baton Rouge, LLC released a list of its 20
Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
First Bank & Trust $2,740,055
P.O. Box 60007
New Orleans, LA 70160-0007
First Bank & Trust Accounts receivable $1,714,297
P.O. Box 60007
New Orleans, LA 70160-0007
First Bank & Trust $504,404
909 Poydras Street
New Orleans, LA 70112
CMS-Mutual of Omaha $272,894
Medicare Area
P.O. Box 1604
Omaha, NE 68101
Continuum Heathcare Mgmt. $230,200
Interlink Pharmacy $86,323
Gem Drugs $23,138
Our Lady of the Lake $15,853
American Nursing Services $7,544
Maxim Healthcare Svcs. $7,238
The Oaks Nursing Center $5,342
Professional Staffing $4,120
National Lien Service $4,040
United Healthcare $2,614
Credeurs $2,123
General Paper Co. $1,711
Arcadian Ambulance $1,612
Delta Transportation Svc. $1,546
Kentwood $1,529
Advanced Medical Concepts $1,155
Headquartered in Baton Rouge, Louisiana, Behavioral Hospital of
Baton Rouge, LLC, operates a hospital. The Company filed for
chapter 11 protection on June 16, 2005 (Bank. M.D. La. Case No.
05-12036). John Hass Weinstein, Esq., represents the Debtor in
its restructuring efforts. When the Debtor filed for protection
from its creditors, it listed estimated assets of less than
$50,000 and estimated debts between $1 Million to $10 Million.
BLOCKBUSTER INC: S&P Lowers Subordinated Debt Rating to CCC+
------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
and bank loan ratings on Blockbuster Inc. to 'B' from 'BB-' and
the subordinated note rating to 'CCC+' from 'B'. Ratings on the
Dallas-based company remain on CreditWatch with negative
implications, where they were placed on Aug. 3, 2005.
"The downgrade is a result of Standard & Poor's preliminary rating
review following the release of Blockbuster's second-quarter
results yesterday and reflects the continuation of extremely weak
operating performance due to poor industry fundamentals, the
company's decision not to charge late fees, and the high cost
related to the rollout of its in-store and online subscription
programs," said Standard & Poor's credit analyst Diane Shand.
Industry fundamentals for the video rental market are weak, and
Blockbuster's profitability is heavily dependent on that market.
The company generated 65% of its total revenues from its movie
rental business in 2004, and its domestic rental same-store sales
have been weak since 2001. The rental industry declined slightly
from 2002 to 2004 and has declined at a mid-single-digit rate thus
far this year. The contraction is attributable to the elimination
of the exclusive movie release rental time window as a result
of the format change to DVD from VHS. In addition, studios are
pricing DVDs to stimulate retail sales. It is likely that the
rental industry will contract at a low single-digit annual rate
over the next two years, as there is no new technology emerging to
stimulate demand.
In response to weak rental industry dynamics, Blockbuster is
trying to increase customer traffic by eliminating late fees.
This affects revenues by an estimated $400 million to $450 million
and operating income by $250 million to $300 million. In
addition, the company is attempting to transform itself into a
home entertainment store. It has launched a national in-store
rental and online subscription program and has a store-in-store
game concept.
Blockbuster also plans to introduce a movie trading business.
Standard & Poor's has concerns about whether these initiatives
will revive the company's flagging rental business. The "No Late
Fees" policy, along with the online subscription plan rollout,
significantly affected first-half results. Operating margin
dropped to 9.5% in the first half of 2005, from 20.5% a year
earlier. Cash flow protection measures deteriorated as a result
of the company's new initiatives, and are weak for the rating
category. EBITDA coverage of interest declined to 1.5x in the 12
months ended June 30, 2005, from 4.4x a year earlier, and total
debt to EBITDA increased to 8.9x from 2.5x, respectively.
The company amended its credit facility on August 8, 2005, as a
result of its low level of profitability. Blockbuster would not
have been in compliance with covenants within the credit facility,
if it had not obtained a waiver. This is the second waiver the
company obtained this year.
Ratings remain on CreditWatch pending a final rating review due to
concerns that continued poor cash flow, if not improved, could
diminish liquidity. The amended facility requires significant
improvement in the fourth quarter, which is uncertain. Liquidity
is adequate for the short term, given cash needs for operations
and capital spending. The company had $138 million in cash and
$121 million available under the bank facility as of June 30,
2005.
The amended credit facility waives the minimum consolidated EBITDA
and maximum capital expenditure covenants through Dec. 31, 2005.
Standard & Poor's will meet with management to discuss the
company's business strategy and its access to capital, and will
then determine the appropriate rating.
BROADBAND OFFICE: Court Approves Amended Disclosure Statement
----------------------------------------------------------------
The Honorable Gregory M. Sleet of the U.S. Bankruptcy Court for
the District of Delaware approved the adequacy of the First
Amended Disclosure Statement explaining the First Amended Joint
Liquidating Plan of Reorganization filed by Broadband Office, Inc.
Judge Sleet put his stamp of approval on the Disclosure Statement
on Aug. 2, 2005.
The Debtor is now authorized to send copies of the Amended
Disclosure Statement and Amended Joint Plan to creditors and
solicit their votes in favor of the Plan.
Under the Amended Plan, cash from asset sales and proceeds from
the liquidation of the Debtor's remaining assets will be used to
pay Allowed Administrative Claims and Priority Claims and to pay a
small distribution to the holders of Allowed General Unsecured
Claims.
Subject to the payment in full of Allowed Administrative Claims
and reserves for Disputed Administrative Claims as required by 11
U.S.C. Section 1129, the Plan provides for a distribution to
holders of unpaid Allowed Priority Claims, including the Debtor's
former employees pursuant to 11 U.S.C. sections 507(a)(3) and
(a)(4), and to other holders of Allowed Priority Claims, within a
reasonable time after the Effective Date.
Under the Plan, unless and until all Allowed Administrative Claims
are paid in full and reserves established with respect to Disputed
Administrative Claims, no distributions will be made to holders of
Allowed Claims junior in priority to holders of Administrative
Claims.
Likewise, unless and until all Allowed Priority Claims are paid in
full and reserves established with respect to Disputed Priority
Claims, no distributions shall be made to holders of Claims
junior in priority to holders of Priority Claims. Partial
distributions within Classes will be made Pro Rata, subject to
certain reserves in connection with Disputed Claims.
Treatment of Claims and Interests
The Amended Plan groups claims and interests into five classes.
Unimpaired Claims consist of:
1) Allowed Secured Claims will receive the Debtor's interest in
property securing those Claims or will receive cash equal to
Allowed Secured Claims after the Effective Date and the date
those Claim becomes an Allowed Secured Claim, or within 10
days thereafter; and
2) Allowed Priority Claims will receive a Pro Rata portion of a
cash distribution reasonably determined based on the amount
of available Assets after payment in full of all Allowed
Administrative Claims and after the establishment of
appropriate reserves under the Plan.
Impaired Claims consist of:
1) Allowed Unsecured Claims will receive a Pro Rata portion of
the funds available for distribution to Holders of those
Claims, and when additional funds are available to pay some
or all of those Claims, the Reorganized Debtor will make
additional periodic cash distributions to the Holders of
Allowed Unsecured Claims on a Pro Rata basis;
2) BBO Preferred Stock Interests will be cancelled on the
Effective Date and distribution of any kind will be made on
account of those Interests under the Plan; and
3) BBO Common Stock Interests will be cancelled on the
Effective Date and no distribution of any kind will be made
on account of those Interests under the Plan.
A full-text copy of the Amended Disclosure Statement is available
for a charge at:
http://www.researcharchives.com/bin/download?id=050811024334
A full-text copy of the Amended Plan is available for a charge at:
http://www.researcharchives.com/bin/download?id=050811024727
Objections to the Plan, in any, must be filed and served by
Aug. 31, 2005.
All ballots must be returned by Aug. 31, 2005, to the Debtor's
balloting agent:
BroadBand Office, Inc.
c/o Bankruptcy Services, LLC
P.O. Box 5014, FDR Station
New York, New York 10150-5014 (by mail),
Or
757 Third Avenue, 3rd Floor
New York, New York 10017
(by hand or overnight delivery).
Judge Sleet will convene a confirmation hearing to consider the
merits of the Amended Plan at 9:00 a.m., on Sept. 8, 2005.
Headquartered in San Mateo, California, Broadband Office, Inc.,
filed for chapter 11 protection on May 9, 2001 (Bankr. D. Del.
Case No. 01-1720). BBO is now a non-operating company in the
process of liquidating its assets. Adam Hiller, Esq., and David
M. Fournier, Esq., at Pepper Hamilton LLP represent the company.
When the Company filed for protection from its creditors, it
listed $100 million in assets and debts.
BROADBAND OFFICE: U.S. Trustee Names Revised 4-Member Committee
---------------------------------------------------------------
The United States Trustee for Region 3 appointed four creditors
to serve on the revised Official Committee of Unsecured Creditors
in Broadband Office, Inc.'s chapter 11 case. HQ Global Workplace,
Inc., resigned from the Committee effective July 26, 2005.
The four Committee Members are:
1. Fisk Electric Company, a/k/a Fisk Technologies
Attn: Gregory C. Thomas
111 T.C. Jester Boulevard
Houston, Texas 77007
Phone: 713- 865-9493, Fax: 713-880-2918
2. Braun Consulting, Inc.
Attn: Gregory A. Ostendorf
251 N. Illinois, Suite 1210
Indianapolis, Indiana 46204
Phone: 317-822-4528, Fax: 317-822-4533
3. Halloran Robertson & Associates
Attn: Cher Callway
One Almaden Boulevard, # 501
San Jose, Califonia 95113
Phone 408-287-4700 ext. 200, Fax: 408-286-3600
4. Tiara Networks, Inc.
Attn: Ernest P. Quinones
525 Race Street, Suite 100
San Jose, California 95126
Phone: 408-216-4700, Fax: 408-924-0678
Official creditors' committees have the right to employ legal and
accounting professionals and financial advisors, at the Debtors'
expense. They may investigate the Debtors' business and financial
affairs. Importantly, official committees serve as fiduciaries to
the general population of creditors they represent. Those
committees will also attempt to negotiate the terms of a
consensual chapter 11 plan -- almost always subject to the terms
of strict confidentiality agreements with the Debtors and other
core parties-in-interest. If negotiations break down, the
Committee may ask the Bankruptcy Court to replace management with
an independent trustee. If the Committee concludes reorganization
of the Debtors is impossible, the Committee will urge the
Bankruptcy Court to convert the Chapter 11 cases to a liquidation
proceeding.
Headquartered in San Mateo, California, Broadband Office, Inc.,
filed for chapter 11 protection on May 9, 2001 (Bankr. D. Del.
Case No. 01-1720). BBO is now a non-operating company in the
process of liquidating its assets. Adam Hiller, Esq., and David
M. Fournier, Esq., at Pepper Hamilton LLP represent the company.
When the Company filed for protection from its creditors, it
listed $100 million in assets and debts.
BROCKWAY PRESSED: Files Schedules of Assets and Liabilities
-----------------------------------------------------------
Brockway Pressed Metals, Inc., delivered its Schedules of Assets
and Liabilities to the U.S. Bankruptcy Court for the Western
District of Pennsylvania, disclosing:
Name of Schedule Assets Liabilities
---------------- ------ -----------
A. Real Property $1,500,000
B. Personal Property $5,719,971
C. Property Claimed
as Exempt
D. Creditors Holding $7,243,407
Secured Claims
E. Creditors Holding $1,373,687
Unsecured Priority Claims
F. Creditors Holding $5,178,432
Unsecured Nonpriority
Claims
---------- -----------
Total $7,219,971 $13,795,526
Headquartered in Brockway, Pennsylvania, Brockway Pressed Metals,
Inc. -- http://www.brockwaypm.com/-- manufactures a wide range of
highly engineered metal parts and sub-assemblies. The Company
specializes in automotive applications, including engine and
transmission components, electronic actuators, steering
components, cruise control devices, assembled camshafts, and gas
springs. The Company filed for chapter 11 protection on June 8,
2005 (Bankr. W.D. Pa. Case No. 05-11891). Robert S. Bernstein,
Esq., at Bernstein Law Firm, P.C., and Daniel A. Zazove, Esq., at
Perkins Coie LLP represents the Debtor in its restructuring
efforts. When the Debtor filed for protection from its creditors,
it listed $7,219,971 in assets and $13,795,526 in debts.
BULL RUN: Inks Pact to Merge with Triple Crown Unit After Spin-Off
------------------------------------------------------------------
Bull Run Corporation, Triple Crown Media, Inc., and TCM's wholly
owned subsidiary, BR Acquisition Corp., executed an Agreement and
Plan of Merger on August 2, 2005, whereby Bull Run would merge
into BR immediately following the planned spin-off of TCM from
Gray Television, Inc.
TCM is currently a wholly owned subsidiary of Gray and has no
other assets except its ownership of BR. BR currently has no
assets. Pursuant to the terms of a Separation and Distribution
Agreement entered into between Gray and TCM, Gray expects to
contribute its newspaper publishing business and its Graylink
Wireless business to TCM for $40 million and then distribute all
shares of TCM to Gray's common stockholders. The Merger of Bull
Run into BR will occur upon completion of the spin-off.
In connection with the Merger, Gray entered into a letter
agreement addressed to Bull Run in which Gray made certain
representations and warranties with respect to the due
authorization of the Separation and Distribution Agreement by Gray
and with respect to the assets of the newspaper publishing
business and the Graylink Wireless business.
In the Merger,
(1) Bull Run common stockholders would receive 0.0289 shares of
TCM common stock in exchange for each share of Bull Run
common stock;
(2) Bull Run preferred stock held by non-affiliated holders
would be redeemed for its current redemption value and
payment will be made of all accrued and unpaid dividends
thereon;
(3) holders of Bull Run preferred stock who are affiliates of
Bull Run would receive shares of TCM series A preferred
stock in exchange for shares of Bull Run series D and
series E preferred stocks and accrued and unpaid dividends
thereon;
(4) J. Mack Robinson, the current Chairman and Chief Executive
Officer of Gray and Chairman of Bull Run, would receive
shares of TCM series B preferred stock in exchange for
$6.05 million of cash previously advanced to Bull Run; and
(5) holders of Bull Run series F preferred stock, currently
consisting solely of Mr. Robinson, would receive shares of
TCM common stock for shares of Bull Run series F preferred
stock and accrued and unpaid dividends thereon.
TCM has received a long-term financing commitment from bank
lenders that would accommodate the payment of the $40 million to
Gray and refinance all of Bull Run's bank and subordinated
indebtedness, in addition to providing TCM available borrowing
capacity.
The Merger is subject to certain closing conditions, including the
rendering of fairness opinions by independent parties engaged by
independent special committees of each of Bull Run's and Gray's
board of directors, regulatory approvals and an affirmative vote
of Bull Run's shareholders.
Mr. J. Mack Robinson, Mr. Robert S. Prather, Jr., and Mr. Hilton
H. Howell, Jr., are executive officers and directors of each of
Bull Run and Gray. Through a rights-sharing agreement with Gray,
Bull Run participates jointly with Gray in the marketing, selling
and broadcasting of certain collegiate sporting events and in
related programming, production and other associated activities on
behalf of a university.
Bull Run Corporation, based in Atlanta, is a sports and affinity
marketing, printing and publishing, and association management
company through its wholly owned operating business, Host
Communications, Inc. HOST's "Collegiate Marketing and Production
Services" business segment provides sports marketing and
production services, including printing and publishing,
broadcasting and advertising and sponsorship sales, to a number of
collegiate conferences and universities, and on behalf of the
National Collegiate Athletic Association -- NCAA. HOST's
"Association Management Services" business segment provides
associations with services ranging from member communication,
recruitment and retention, to conference planning, Internet web
site management, marketing and administration.
Bull Run also holds an investment in iHigh, Inc., a high school
media and marketing company.
As of May 31, 2005, Bull Run's equity deficit narrowed to
$55,386,000 from a $56,551,000 deficit at August 31, 2004.
CARRIE SHOPPELL: Case Summary & 12 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Carrie L. Shoppell Inc.
dba Kentucky Fried Chicken
13 Beatrice Court
East Alton, Illinois 62024
Bankruptcy Case No.: 05-33609
Type of Business: The Debtor is a Kentucky Fried Chicken
franchisee.
Chapter 11 Petition Date: August 11, 2005
Court: Southern District of Illinois (East St. Louis)
Debtor's Counsel: Donald M. Samson, Esq.
226 West Main Street, Suite 102
Belleville, Illinois 62220
Estimated Assets: Less than $50,000
Estimated Debts: $1 Million to $10 Million
Debtor's 12 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Ernest Flotow $765,004
5030 Warren Road
Imperial, MO 63052
Clint Homan $765,004
3727 Sunset Chase Drive
Saint Louis, MO 63127
Wanda Homan $765,004
3727 Sunset Chase Drive
Saint Louis, MO 63127
Jill Karst $765,004
525 Twin Fawns Drive
Saint Louis, MO 63131
Ronald Karst $765,004
525 Twin Fawns Drive
Saint Louis, MO 63131
Haag Foods $73,000
Madison County Treasurer $29,610
KFC National Advertising Co-op $21,288
Farrel, Hunter, Hamilton & Julian $7,155
SBC $1,027
Alton Memorial Hospital $550
AT&T $96
CATHOLIC CHURCH: Tort Committee Balks at Portland's KPMG Retention
------------------------------------------------------------------
To the extent the Archdiocese of Portland in Oregon seeks
authorization to retain KPMG LLP for the purpose of completing a
2004 audit and performing a 2005 audit, the Tort Claimants
Committee wants the U.S. Bankruptcy Court for the District of
Oregon to deny the request.
"Audited financial statements are not necessary for the
preservation of the estate, and costs incurred in completing or
performing audits are not necessary costs or expenses of
preserving the estate," Albert N. Kennedy, Esq., at Tonkon Torp
LLP, in Portland, Oregon, asserts.
Portland has suggested that audited financial statements will be
required to obtain future financing for confirmation of a plan.
However, Mr. Kennedy contends that audited financial statements
will be of little or no assistance in obtaining financing for a
plan because Portland will dispute the application of the audited
financial statements, which statements are also limited in scope.
The GAAP presentation of Portland's assets contradicts Portland's
position with respect to the assets, Mr. Kennedy says. Portland
has previously and will most likely take the position that the
accounting treatment contained in the financial statements
contradicts both civil and canon law.
"It is difficult to understand how audited financial statements
will assist the [Archdiocese] in obtaining financing while
Portland argues that the accounting presentation does not apply to
[it]," Mr. Kennedy says.
David A. Foraker, the Future Claimants Representative, supports
the Tort Committee's objection.
The Archdiocese of Portland in Oregon filed for chapter 11
protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004.
Thomas W. Stilley, Esq., and William N. Stiles, Esq., at Sussman
Shank LLP, represent the Portland Archdiocese in its restructuring
efforts. In its Schedules of Assets and Liabilities filed with
the Court on July 30, 2004, the Portland Archdiocese reports
$19,251,558 in assets and $373,015,566 in liabilities. (Catholic
Church Bankruptcy News, Issue No. 37; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
CINCINNATI BELL: Inks Pact to Buy Back Senior Sub. Discount Notes
-----------------------------------------------------------------
Cincinnati Bell Inc. entered into a Note Repurchase Agreement with
the holders of its Senior Subordinated Discount Notes due 2009 on
August 5, 2005. Under the Repurchase Agreement, the Company will
repurchase all of the outstanding Notes and amend certain
provisions of the Purchase Agreement dated as of December 9, 2002.
Under the terms of the Repurchase Agreement, the Company's
obligation to repurchase the Notes is conditioned upon, among
other things, the receipt by the Company of net proceeds from new
borrowings under its senior credit facilities in an amount
sufficient to provide all of the funds necessary to finance the
Repurchase on terms and conditions satisfactory in all respects to
the Company. The aggregate purchase price for all of the
outstanding Notes will be determined based upon the closing date
of the Repurchase and is expected to range from $446,828,526 if
the Repurchase closes on August 15, 2005 and to $447,871,782 if
the Repurchase closes on September 2, 2005. If the Repurchase
does not close on or before September 2, 2005, the parties have
agreed to use their reasonable efforts to agree on a purchase
price for the Notes.
The Note Repurchase Agreement was inked by:
-- GS Mezzanine Partners II, L.P.,
-- GS Mezzanine Partners II Offshore, L.P.,
-- Goldman Sachs Direct Investment Fund 2000, L.P.,
-- Goldman, Sachs & Co.,
-- GS Capital Partners 2000, L.P.,
-- GS Capital Partners 2000 Offshore, L.P.,
-- GS Capital Partners 2000 GmbH & Co. Beteiligungs KG,
-- GS Capital Partners 2000 Employee Fund, L.P.,
-- Dover Capital Management 2 LLC,
-- TCW/Crescent Mezzanine Partners III, L.P.,
-- TCW/Crescent Mezzanine Trust III,
-- TCW/Crescent Mezzanine Partners III Netherlands, L.P.,
-- C-Squared CDO Ltd.,
-- Western and Southern Life Insurance Company,
-- Oak Hill Securities Fund, L.P.,
-- Oak Hill Securities Fund II, L.P.,
-- Oak Hill Credit Partners I, Limited,
-- Oak Hill Credit Partners II, Limited,
-- Lerner Enterprises, L.P.,
-- P&PK Family Limited Partnership,
-- Cardinal Investment Partners I, L.P.,
-- Hare & Co., as nominee for Goldman, Sachs & Co., and
-- Hare & Co., as nominee for Oakhill Securities Fund II, L.P.
A copy of the Note Repurchase Agreement is available for free at:
http://ResearchArchives.com/t/s?bb
Cincinnati Bell, Inc. (NYSE: CBB) -- http://cincinnatibell.com/--
is parent to one of the nation's most respected and best
performing local exchange and wireless providers with a legacy of
unparalleled customer service excellence. Cincinnati Bell
provides a wide range of telecommunications products and services
to residential and business customers in Ohio, Kentucky and
Indiana. Cincinnati Bell is headquartered in Cincinnati, Ohio.
As of June 30, 2005, Cincinnati Bell's equity deficit widened to
$659.3 million from a $624.5 million deficit at Dec. 31, 2004.
* * *
As reported in the Troubled Company Reporter on Apr. 7, 2005,
Standard & Poor's Ratings Services raised its rating on Cincinnati
Bell Inc.'s -- CBI -- $50 million of senior secured debt to 'BB-'
from 'B+'.
The recovery rating was revised to '1' (indicating a high
expectation for full recovery in the event of a payment default)
from '2'. These ratings were removed from CreditWatch, where they
were placed with positive implications in anticipation of a
refinancing by CBI.
The upgrade of this debt reflects the completion of the
refinancing of Cincinnati Bell's previous $450 million secured
bank facility with new debt financings, including borrowings from
a new $250 million secured revolving credit. The $50 million
secured notes are pari passu with the revolver. With this
recapitalization, there is less secured debt at CBI and, given the
over-collateralization, the rating on the $50 million notes has
been raised to the same level as the rating on the revolver.
At the same time, Standard & Poor's affirmed its other existing
ratings on CBI (B+/Negative/--) and subsidiary Cincinnati Bell
Telephone Co. S&P says the outlook is negative.
CINCINNATI BELL: Equity Deficit Widens to $659 Mil. at June 30
--------------------------------------------------------------
Cincinnati Bell Inc. (NYSE:CBB) reported its financial results for
the second quarter of 2005 including revenue of $315 million,
operating income of $76 million and a net loss of $30 million, or
13 cents per share. Reported results include the impact of a
$44 million deferred tax asset write-down related to a change in
state tax laws. Excluding this non-cash charge, net income for
the quarter was $14 million, or 5 cents per diluted share.
"Cincinnati Bell's solid second quarter financial performance was
a direct result of our 'de-lever, defend and grow' strategy," said
Jack Cassidy, president and chief executive officer. "We also
posted steady improvement in wireless postpaid churn as a result
of much higher network quality. This quality, combined with our
presence as the premier wireless and wireline carrier in the
region, forms the foundation of the unique new rate plans we
announced on August 1."
Second Quarter Highlights
-- The company reported revenue of $315 million, a 6 percent
increase over the second quarter of 2004, and a 9 percent
increase versus the first quarter of 2005, due primarily to
strong equipment sales related to recent data center
investments and solid growth in long distance revenue.
-- EBITDA1 (earnings before interest, taxes, depreciation and
amortization) of $124 million represents an increase of 2
percent versus the second quarter of 2004 after adjusting
for a $5 million increase in non-cash post-retirement
medical expenses. Lower long distance costs and operating
taxes as well as higher contribution from equipment sales
and managed services revenue contributed to the increase.
EBITDA also increased 2 percent versus the first quarter of
2005, due primarily to higher contribution from equipment
sales and managed services revenue.
-- Free cash flow2 of $42 million increased 13 percent versus
the second quarter of 2004, due to the timing of interest
payments related to the company's refinancing plan.
-- Wireless churn continued to improve, reflecting higher GSM
network quality. Postpaid churn in the second quarter was
2.2 percent, compared with 2.6 percent in the first quarter
of 2005 and 2.8 percent in the fourth quarter of 2004.
-- Cincinnati Bell now has 144,000 "super bundle" subscribers,
up 41 percent from a year ago and representing a 24 percent
penetration of in-territory households. Bundling success
resulted in Revenue per Household served of $78, a 3 percent
increase from a year ago.
-- The company also reported 145,000 DSL subscribers, a 23
percent increase versus the second quarter of 2004. As a
result, DSL penetration of in-territory primary consumer
access lines was 22 percent at quarter-end, up from 17
percent at the same time a year ago.
-- On August 8, Cincinnati Bell announced the refinancing of
its 16% Notes, which is expected to increase free cash flow
by $20 million to $25 million on an annualized basis.
-- The company reported net debt3 of $2.1 billion at quarter-
end, a 5 percent reduction from the same time a year ago.
Capital expenditures were $43 million, or 14 percent of
revenue, for the quarter. Year-to-date, capital
expenditures were $71 million, or 12 percent of revenue.
"This quarter's results benefited from investments we have made in
data centers and in our long distance business," said Brian Ross,
chief financial officer. "As a result of these investments and
our continued focus on cost structure improvements, we are on
track to deliver on our financial goals for the year."
Cincinnati Bell, Inc. (NYSE: CBB) -- http://cincinnatibell.com/--
is parent to one of the nation's most respected and best
performing local exchange and wireless providers with a legacy of
unparalleled customer service excellence. Cincinnati Bell
provides a wide range of telecommunications products and services
to residential and business customers in Ohio, Kentucky and
Indiana. Cincinnati Bell is headquartered in Cincinnati, Ohio.
As of June 30, 2005, Cincinnati Bell's equity deficit widened to
$659.3 million from a $624.5 million deficit at Dec. 31, 2004.
* * *
As reported in the Troubled Company Reporter on Apr. 7, 2005,
Standard & Poor's Ratings Services raised its rating on Cincinnati
Bell Inc.'s -- CBI -- $50 million of senior secured debt to 'BB-'
from 'B+'.
The recovery rating was revised to '1' (indicating a high
expectation for full recovery in the event of a payment default)
from '2'. These ratings were removed from CreditWatch, where they
were placed with positive implications in anticipation of a
refinancing by CBI.
The upgrade of this debt reflects the completion of the
refinancing of Cincinnati Bell's previous $450 million secured
bank facility with new debt financings, including borrowings from
a new $250 million secured revolving credit. The $50 million
secured notes are pari passu with the revolver. With this
recapitalization, there is less secured debt at CBI and, given the
over-collateralization, the rating on the $50 million notes has
been raised to the same level as the rating on the revolver.
At the same time, Standard & Poor's affirmed its other existing
ratings on CBI (B+/Negative/--) and subsidiary Cincinnati Bell
Telephone Co. S&P says the outlook is negative.
COEUR D'ALENE: Incurs $1.5 Million Net Loss in Second Quarter
-------------------------------------------------------------
Coeur d'Alene Mines Corporation (NYSE:CDE, TSX:CDM) reported a net
loss of $1.5 million in the second quarter of 2005, compared to a
net loss of $5.4 million for the year-ago period. Results for the
current-year quarter included $3.3 million of exploration expense
associated with the successful ore reserve expansion program and
$3.7 million resulting from pre-development activities at the
Kensington gold project.
Revenue for the second quarter of 2005 was $38.3 million, compared
to $27.1 million in the year-ago period.
For the first six months of 2005, the Company reported a net loss
of $3.3 million, or $0.01 per share, compared to a net loss of
$7.1 million, or $0.03 per share, for the same period of 2004.
Revenues were $76.4 million for the first six months of 2005,
compared to $56.1 million in the year-ago period.
In commenting on the second-quarter operating results relative to
the year-ago period, Dennis E. Wheeler, Chairman, President and
Chief Executive Officer, said "The Company reported a 76 percent
increase in earnings before interest, taxes, depreciation and pre-
development activities. The improvement was the result of
increased shipments of silver and gold at prices well above year-
ago levels. These favorable results included $3.3 million of
exploration expenses."
Mr. Wheeler added, "With our continued robust cash position, we
are pleased by the accelerating progress the Company is making on
a number of key initiatives. In particular, we have completed the
Endeavor silver acquisition in Australia and have begun to see the
positive results of that transaction. In addition, as previously
reported, we have obtained final permits for the Kensington gold
project and have commenced construction activities. We expect that
project to start production in early 2007. Although we have made
an upward revision to the estimated capital cost and cash
operating costs at Kensington, we are more confident than ever in
the economic and environmental soundness of the project - and in
the prospects for further conversion of existing resources to
reserves."
The Company currently expects full-year silver production to be
approximately 13.5 million ounces at a consolidated cash cost of
between $4.30 and $4.40 per ounce. The Company currently expects
full-year gold production to be approximately 130,000 ounces.
Separately, Coeur has signed a one-year memorandum of
understanding with Shanghai Kuntai Non-Ferrous Metals Company,
Ltd., to establish a strategic alliance to identify silver market
investment, exploration, mining, and acquisition opportunities
primarily in China. Under the agreement, Kuntai will identify a
minimum of two specific opportunities for consideration and would
act as liaison for Coeur within the Chinese business community and
with various governmental bodies - and Coeur would agree to
provide mining and exploration expertise to evaluate such
opportunities. If any commercially viable opportunities are
identified, the companies would expect to participate as partners
in developments costs, eventual operating costs, and silver
production.
Coeur d'Alene Mines Corporation is the world's largest primary
silver producer, as well as a significant, low-cost producer of
gold. The Company has mining interests in Nevada, Idaho, Alaska,
Argentina, Chile, Bolivia and Australia.
* * *
As reported in the Troubled Company Reporter on Oct. 4, 2004,
Standard & Poor's Ratings Services affirmed its 'B-' corporate
credit and senior unsecured debt ratings on Coeur D'Alene Mines
Corporation and removed the ratings from CreditWatch, where they
were placed on June 1, 2004, with positive implications. S&P said
the outlook is stable. Coeur D'Alene, an Idaho-based silver and
gold mining company, currently has about $180 million in debt.
COLUMBUS MCKINNON: Moody's Lifts $115 Million Notes Rating to B2
----------------------------------------------------------------
Moody's Investors Services has upgraded Columbus McKinnon
Corporation's ratings. At the same time, Moody's has assigned a
B3 rating to the company's proposed $136 million senior
subordinated notes, due 2013. After the upgrade, the rating
outlook has been changed to stable from positive.
Ratings upgraded:
* Corporate family rating, to B1 from B2
* $115 million senior secured (2nd lien) notes due 2010, to B2
from B3.
Rating assigned:
* B3 for the proposed $136 million senior subordinated notes,
due 2013
The Caa1 rating on the existing 8.5% senior subordinated notes
will be withdrawn once refinanced. Moody's does not rate Columbus
McKinnon's $65 million senior secured revolving credit facility
due 2007. Proceeds from the new notes, together with
approximately $10 million drawing under the revolving credit
facility, will be used to refinance the company's 8.5% senior
subordinated notes due March 2008.
The rating upgrade reflects considerable improvement in the
company's financial and operating performance over the past year
as the cyclical upturn in the industrial and manufacturing
industries have led to solid demand and revenue growth. The
upgrade also reflects Columbus McKinnon's leading market position,
which was maintained through the last economic downturn, as well
as its extensive restructuring efforts that have lowered its cost
structure and improved efficiency.
On the other hand, the ratings continue to be constrained by the
cyclicality of its business and the resultant volatility in its
revenue base, as well as its still substantial (albeit declining)
debt leverage. Over the long run, the gradual shift of US-based
manufacturing facilities to lower-cost foreign locales presents a
challenge, although it's partially mitigated by the company's
diverse end-markets and product applications, as well as by its
efforts to expand international sales.
Moody's notes that as a manufacturer of hoists and other material
handling products to mostly industrial and commercial end-markets,
Columbus McKinnon's performance exhibits a strong cyclical
pattern. In the last industrial recession, low capacity
utilization, plant shutdowns and idling throughout the industrial
sector resulted in significant reductions in capital spending and
lengthened the replacement cycle for the company's products.
However, in addition to economic cyclicality, the downturn was
exacerbated by the substantial underperformance of a large debt-
financed acquisition, Automatic Systems, Inc., which was sold in
May 2002 at a significant loss. The ASI episode highlighted the
importance of acquisition execution and a balanced capital
structure to the credit profile of a cyclical industrial company.
Pro forma for the refinancing, Columbus McKinnon's debt to
capitalization ratio would be approximately 78%. It is Moody's
understanding that the company is committed to maintaining a more
conservative capital structure going forward by bringing the ratio
down to around 50%.
The stable rating outlook reflects Moody's expectation of possible
further improvement in Columbus McKinnon's financial and operating
performance through the current up cycle, balanced by the inherent
cyclicality of the business and the eventual economic downturn
that is expected to follow. Since this upgrade has already built
in expectations of further performance improvement, a further
rating upgrade is therefore less likely barring a major
improvement in the credit profile and evidence that such
improvement can be sustained through an economic cycle.
Pro forma for the refinancing, the company will have total debt of
approximately $270.6 million, or 4.8 times pro forma adjusted LTM
(July 3, 2005) EBITDA of $56.3 million. Pro forma adjusted EBITDA
will cover interest expense of $25.5 million 2.2 times. The
company generated free cash flow of approximately $20 million in
the LTM (July 3, 2005). Looking forward, Moody's expects free
cash flow to represent mid-to-high single digit percentage of
total debt over the next couple of years.
The B3 rating on the $136 million senior subordinated notes
reflects their contractual and effective subordination to senior
debt. The notes will be guaranteed on a senior subordinated basis
by certain existing and future domestic restricted subsidiaries as
well as by one European subsidiary. The notes will rank pari
passu to all existing and future senior subordinated indebtedness
and junior to the senior secured credit facility and the senior
secured notes.
The B2 rating on the $115 million senior secured notes, secured by
a second lien on all assets of the company and guarantor
subsidiaries, reflects their effective subordination to the senior
secured credit facility but higher priority of claims than the new
senior subordinated notes. The senior secured notes are
guaranteed on a senior secured basis by the company's domestic
restricted subsidiaries and one European subsidiary.
Columbus McKinnon Corporation, headquartered in Amherst, New York,
is a manufacturer of material handling products. The company
reported revenues of approximately $534 million and EBITDA of
$54 million, respectively, in the LTM ended July 3, 2005.
COLUMBUS MCKINNON: S&P Junks Proposed $136 Million Sr. Sub. Notes
-----------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B' corporate
credit rating on material handling company Columbus McKinnon Corp.
and assigned its 'CCC+' rating to the company's proposed issue of
$136 million in senior subordinated notes due 2013. The outlook
is positive. The notes will be used to refinance existing senior
subordinated notes due 2008.
"The ratings on publicly-held Columbus McKinnon reflect its highly
leveraged financial profile, including its weak (albeit improving)
credit protection measures and weak overall business profile,"
said Standard & Poor's credit analyst Natalia Bruslanova.
Columbus McKinnon is a diverse material-handling company that
manufactures:
* hoists (which represent roughly one-third of product
revenues),
* chain and forged attachments,
* industrial cranes, and
* industrial components.
Material handling is a cyclical and fragmented industry. However,
the company has leading positions in several niche markets: It
holds either the No. 1 or No. 2 position in the material-handling,
lifting, and positioning-products industries, and 75% of sales
come from markets where it is the leading supplier.
As a result of improving end-market conditions and a focus on cost
reductions, Columbus McKinnon has been able to improve its
operating margins (now at 11%) and cash generation. In addition,
the company has been focusing on selling off noncore business
segments, mainly within its solutions group.
Still, it is being challenged by escalating steel prices and by
increased health insurance, workers' compensation insurance, and
pension expenses, though it has been successful in offsetting some
of the additional costs through the implementation of product
price increases. Management is committed to a continued focus on
lean manufacturing initiatives and the divestiture of noncore
assets. As a result, operating margins (before D&A) are expected
to continue to show further modest improvement.
CONSECO INC: Moody's Rates $300 Mil. Convertible Debentures at B3
-----------------------------------------------------------------
Moody's Investors Service assigned a B3 rating to Conseco Inc.'s
$300 million convertible debentures and a B2 rating to the
company's $80 million revolving credit facility. Consistent with
the rest of the ratings on Conseco (except for Conseco Senior
Health Insurance Company, the ratings were placed on review for
possible upgrade.
Conseco is a specialized financial services holding company that
operates primarily in the life and health insurance sectors
through its subsidiaries. As of June 30, 2005, the company
reported total GAAP assets of approximately $31.1 billion and
shareholders' equity of $4.2 billion.
CONSECO INC: Fitch Rates Proposed $300MM Senior Note Issue at BB-
-----------------------------------------------------------------
Fitch Ratings assigned a 'BB-' rating to Conseco, Inc.'s proposed
issuance of $300 million of senior unsecured convertible notes due
2035. At the same time, Fitch has assigned a 'BB+' rating to
Conseco's senior secured bank debt, and affirmed the company's
'BB' long-term (issuer) rating and 'B+' preferred stock rating.
The Rating Outlook for all ratings is Stable.
Fitch believes that the new convertible debt issuance, which will
be used to reduce the company's outstanding senior secured debt
and provide relief of certain financial covenants and
restrictions, will improve the company's debt capital structure
and lower overall funding costs. The new convertible debt issue
receives zero equity credit based on Fitch's criteria. On a pro
forma basis, Fitch calculates Conseco's debt to total capital at
18%, debt plus preferred to total capital at 33%, and equity
adjusted debt to total capital at 21%.
Conseco relies on insurance company dividends, surplus note
interest payments, fees for services, tax-sharing payments, and
non-insurance subsidiary dividends to fund holding company cash
needs. Fitch projects Conseco's GAAP earnings-based interest
coverage to be in the 10-11 times range in 2005.
Conseco's ratings reflect the company's improved statutory
capitalization, good market position in the Medicare supplement
and long-term care market, strong asset quality, and improved
earnings profile. Offsetting these positives are the continued
challenges following bankruptcy related to the organization's
ability to successfully rebuild long-term operating fundamentals
in its independent distribution channel, thin annuity margins, and
the profitability drag on statutory earnings of the LTC business.
Fitch views the Bankers Life segment, which continues to generate
favorable operating margins and stable revenues, to have solid
franchise value. In contrast, Fitch views the other insurance
operations of Conseco as having less inherent stability and
sustainable profitability.
Statutory capitalization of Conseco's insurance companies has
improved significantly over the past two years, with a combined
risk-based capital ratio of 318% at March 31, 2005. Conseco's
exposure to below-investment-grade fixed-maturity securities has
been reduced to under 4% of the company's combined fixed-maturity
security portfolio at June 30, 2005.
Before Conseco, Inc., or its subsidiaries can be considered for
further upgrades of its long-term (issuer) rating, or subsidiary
Insurer Financial Strength ratings, the company must demonstrate
improved operating fundamentals, statutory and GAAP profitability,
and successful execution of its strategic plan.
The level of notching between the ratings of Conseco's secured
bank debt and unsecured senior debt reflects Fitch's view on the
relative recoveries available to the two classes of creditors in a
default scenario. The bank debt is secured by essentially all of
Conseco's assets, which Fitch believes would result in above-
average recoveries for the secured debt, and below-average
recoveries for unsecured creditors, under the current capital
structure. Should Conseco continue to reduce secured bank debt
with proceeds from new unsecured debt issuance, Fitch would
ultimately expect the unsecured senior debt ratings to be notched
up to align with the long-term (issuer) rating, and the secured
bank debt rating to be further notched up from the long-term
rating to reflect improved collateralization levels, and higher
expected recoveries.
Conseco, Inc.
New ratings assigned with a Stable Outlook
-- $300 million senior unsecured convertible debt due August
2035 'BB-';
-- Secured bank credit facility 'BB+'.
Ratings affirmed, with a Stable Rating Outlook
-- Long-term issuer at 'BB';
-- Preferred stock at 'B+'.
COTT CORP: S&P Revises Outlook to Negative from Stable
------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook
on the leading supplier of retailer-branded soft drinks
Cott Corp., to negative from stable. At the same time,
Standard & Poor's affirmed its 'BB' long-term corporate
credit and 'B+' subordinated debt ratings on
the company.
"The outlook revision follows Cott's recent announcement of its
acquisition of 100% of the shares of U.K.-based Macaw (Holdings)
Ltd., the parent company of Macaw (Soft Drinks) Ltd. for about
US$135 million," said Standard & Poor's credit analyst Lori
Harris. "The negative outlook also reflects Cott's weaker-than-
expected financial performance in first-half 2005 as evidenced by
the 23% drop in reported operating income during this time,"
Ms. Harris added.
Although first-half 2005 sales increased 6%, gross margin declined
to 15.4% from 18.7% for the same period in 2004, because of higher
plant costs resulting from lower U.S. manufacturing efficiencies
and higher packaging costs.
The debt-financed acquisition expands Cott's presence in the U.K.,
resulting in the addition of US$100 million in revenue and an
increased market share of the private label carbonated soft drink
(CSD) market to the low 60% area from about 40% previously. The
U.K. CSD market, however, is challenging given that:
* it is mature,
* intensely competitive,
* has customer concentration, and
* faces ongoing pricing pressures.
Management will need to integrate the Macaw business successfully
and improve operating efficiencies to strengthen margins given the
industry's aggressive pricing and higher raw material costs.
The ratings on Cott reflect its below-average business profile
stemming from a narrow product portfolio, customer concentration,
and small size in a sector dominated by companies with
substantially greater financial resources and market presence.
Furthermore, the company has experienced weaker-than-expected
operating performance due to challenges with the company's U.S.
business, which has resulted in a decline in operating margin.
These factors are partially offset by Cott's solid credit
protection measures and good market position as a private label
manufacturer and marketer of take-home CSDs. Cott competes in the
mature and highly competitive soft drink category alongside bigger
players by securing a strong private label share. Despite this
defensive operating strategy, the company is vulnerable to
pricing and market share actions by its primary competitors.
The negative outlook reflects our concerns regarding the
challenges faced by the company given its weak operating
performance and the necessary integration of the Macaw
acquisition. Downward pressure on the ratings could come from the
ongoing deterioration in the company's operations and/or weakness
in credit protection measures or liquidity. In the medium term,
there are limited prospects for the ratings to be raised. The
outlook could be revised back to stable if the company
demonstrates improved operating performance in the medium term and
successfully integrates the Macaw assets.
COWBOY-UP ADVENTURES: Voluntary Chapter 11 Case Summary
-------------------------------------------------------
Debtor: Cowboy-Up Adventures, LLC
2325 Cedar Drive
Eagle Mountain, Utah 84043
Bankruptcy Case No.: 05-32362
Chapter 11 Petition Date: August 10, 2005
Court: District of Utah (Salt Lake City)
Debtor's Counsel: Thomas D. Neeleman, Esq.
#9 Exchange Place, Suite 417
Salt Lake City, Utah 84111
Tel: (801) 359-6800
Fax: (801) 359-6803
Estimated Assets: $0 to $50,000
Estimated Debts: $1 Million to $10 Million
The Debtor did not file a list of its 20 Largest Unsecured
Creditors.
CURATIVE HEALTH: S&P Junks Corporate Credit & Sr. Unsec. Ratings
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on
specialty infusion and wound care management services provider
Curative Health Services Inc. The corporate credit rating was
lowered to 'CCC+' from 'B-', and the senior unsecured debt rating
was lowered to 'CCC' from 'CCC+'. The rating outlook is negative.
"The downgrade reflects our belief that a default is possible
before the end of 2006," said Standard & Poor's credit analyst
Jesse Juliano. "Curative's liquidity profile is increasingly
precarious. The company faces large semiannual interest payments
in May and November and, by comparison, has limited cash flow and
credit facility availability. The downgrade also reflects the
company's adjusted EBITDA of about $9 million for the first half
of 2005, which is well below an appropriate level to maintain the
previous rating; Curative has not provided guidance for the rest
of 2005. Also, we remain concerned about the company's inability
to collect it receivables on a more timely basis during the first
half of 2005. In addition, while Curative has made reference to
the possibility of increasing the size of its revolving credit
facility, the company has not indicated the timing, terms, or
likelihood of obtaining this much-needed flexibility."
The company's financial profile and liquidity were severely
weakened by a large reduction in reimbursement rates for its
blood-clotting factor products by the State of California's Medi-
Cal program in June 2004. (Reimbursement reductions by Medicare
were also a factor in this liquidity crunch, though to a lesser
degree.) The new Medi-Cal rates for these products are based on
an average selling price and are approximately 30%-40% lower than
the previous reimbursement. Curative's 2005 EBITDA could be less
than 50% of its expectations in April 2004, when it issued
$185 million of senior unsecured notes to finance the purchase of
Critical Care Systems Inc.
The ratings on Curative reflect:
* the aforementioned weakness in the company's financial
profile;
* its narrow business focus in specialty infusion services;
* potential margin pressure from drug and products
manufacturers; and
* continued payor concentration.
These concerns are only partially offset by the company's greater
product diversity after the acquisition of Critical Care Systems.
DEEP RIVER: Files Schedules of Assets and Liabilities
-----------------------------------------------------
Deep River Development Group, L.L.C., delivered its Schedules of
Assets and Liabilities to the U.S. Bankruptcy Court for the
District of New Jersey, disclosing:
Name of Schedule Assets Liabilities
---------------- ------ -----------
A. Real Property $10,000,000
B. Personal Property $630,651
C. Property Claimed
as Exempt
D. Creditors Holding $6,195,951
Secured Claims
E. Creditors Holding
Unsecured Priority Claims
F. Creditors Holding $1,063,480
Unsecured Nonpriority
Claims
----------- ----------
Total $10,630,651 $7,259,431
Headquartered in Chester, New Jersey, Deep River Development
Group, L.L.C., filed for chapter 11 protection on June 29, 2005
(Bankr. D.N.J. Case No. 05-31279). Morris S. Bauer, Esq., at
Ravin Greenberg PC, represents the Debtor in its restructuring
efforts. When the Debtor filed for protection from its creditors,
it listed $10,630,651 in assets and $7,259,431 in debts.
EASTMAN KODAK: SEC Conducting Informal Inquiry on Restatements
--------------------------------------------------------------
Eastman Kodak Co. disclosed this week that Division of Enforcement
of the Securities and Exchange Commission has been making informal
inquiries into the substance of the Company's restatement of its
financial statement for the full year and quarters of 2003 and the
first three unaudited quarters of 2004.
The Company says it has fully cooperated with this inquiry, and
the staff has indicated that the inquiry should not be construed
as an indication by the SEC or its staff that any violations of
law have occurred.
The Wall Street Journal relates that the restatement corrected
Kodak's mistakes in accounting for income taxes in various
locations and pension and other retirement plans and shaved
$93 million, or 14%, off 2004 earnings. The company attributed
the errors to "material weakness in internal controls."
Based in Rochester, New York, Eastman Kodak Company is a worldwide
vendor of imaging products and services.
* * *
As reported in the Troubled Company Reporter on July 25, 2005,
Moody's Investors Service has downgraded Eastman Kodak Company's
corporate family rating to Ba2 from Ba1 and its senior unsecured
rating to Ba3 from Ba1 and has placed both ratings on review for
further possible downgrade.
Ratings on review for possible downgrade:
* Corporate Family Rating (formerly senior implied rating)
at Ba2
* Senior Unsecured Rating at Ba3
As reported in the Troubled Company Reporter on July 25, 2005,
Standard & Poor's Ratings Services lowered its corporate credit
and senior unsecured debt ratings on Eastman Kodak Co. to 'BB'
from 'BB+', and placed the ratings on CreditWatch with negative
implications.
As reported in the Troubled Company Reporter on July 25, 2005,
Fitch Ratings has downgraded Eastman Kodak Company's senior
unsecured debt to 'BB' from 'BB+'. Fitch says the Rating Outlook
remains Negative.
EASTMAN KODAK: Discloses Second Quarter Financial Results
---------------------------------------------------------
Eastman Kodak Co. disclosed to the Securities and Exchange
Commission its financial and operational results for the quarter
ended June 20, 2005, in a 10-Q filing on Aug. 9, 2005.
Net worldwide sales were $3,686 million for the second quarter of
2005 as compared with $3,464 million for the second quarter of
2004, representing an increase of $222 million or 6%. The
increase in net sales was primarily due to the acquisitions of
NexPress Solutions, Kodak Polychrome Graphics (KPG) and Creo,
which on a combined basis contributed $440 million or
approximately 12.7 percentage points to second quarter sales.
Second quarter sales were also favorably impacted by foreign
exchange, which increased second quarter sales by $54 million or
approximately 1.7 percentage points. These increases were
partially offset by declines in price/mix and declines in volumes,
which decreased second quarter sales by approximately 3.6 and 4.4
percentage points, respectively. The decrease in price/mix was
primarily driven by the film capture Strategic Product Group
(SPG), consumer digital capture SPG and the Health Group digital
capture and digital output SPG. The decrease in volumes was
primarily driven by declines in the film capture SPG, the
wholesale and retail photofinishing portions of the consumer
output SPG, and the Health Group digital output SPG.
Net sales in the U.S. were $1,442 million for the second quarter
of 2005 as compared with $1,424 million for the prior year
quarter, representing an increase of $18 million, or 1%. Net
sales outside the U.S. were $2,244 million for the current quarter
as compared with $2,040 million for the second quarter of 2004,
representing an increase of $204 million, or 10% as reported,
which includes the favorable impact of foreign currency
fluctuations of 3%.
Gross Profit
Gross profit was $1,064 million for the second quarter of 2005 as
compared with $1,101 million for the second quarter of 2004,
representing a decrease of $37 million, or 3%. The gross profit
margin was 28.9% in the current quarter as compared with 31.8% in
the prior year quarter. The 2.9 percentage point decrease was
primarily attributable to declines due to price/mix, driven
primarily by consumer digital cameras, entertainment print film,
traditional consumer and digital health products and services,
which reduced gross profit margins by approximately 2.6 percentage
points. Manufacturing costs arising from unfavorable
manufacturing variances and increased raw material prices also
contributed to the decline, and reduced gross profit margins by
approximately 0.9 percentage points. These decreases were
partially offset by exchange, which favorably impacted gross
profit margins by approximately 0.7 percentage points.
Selling, General and Administrative Expenses
Selling, general and administrative expenses (SG&A) were $654
million for the second quarter of 2005 as compared with $615
million for the prior year quarter, representing an increase of
$39 million, or 6%. SG&A as a percentage of sales remained
constant at 18% for the second quarter of 2005 as compared with
the prior quarter. The increase in SG&A is primarily attributable
to acquisition-related SG&A of $77 million and unfavorable
exchange of $8 million, partially offset by ongoing cost reduction
initiatives.
Research and Development Costs
Research and development costs (R&D) were $276 million for the
second quarter of 2005 as compared with $213 million for the
second quarter of 2004, representing an increase of $63 million,
or 30%. R&D as a percentage of sales increased from 6% in the
prior year quarter to 7% in the current year quarter. The
increase in R&D is primarily attributable to write-offs for
purchased in-process R&D associated with acquisitions made in the
second quarter of 2005 of $64 million.
Loss From Continuing Operations
Before Interest, Other Income (Charges), Net and Income Taxes
The loss from continuing operations before interest, other income
(charges), net and income taxes for the second quarter of 2005 was
$133 million as compared with earnings of $139 million for the
second quarter of 2004, representing a decrease of $272 million,
or 196%.
Interest Expense
Interest expense for the second quarter of 2005 was $49 million as
compared with $43 million for the prior year quarter, representing
an increase of $6 million, or 14%. Higher interest expense is a
result of increased levels of debt associated with acquisitions.
Other Income (Charges), Net
The other income (charges), net component includes principally
investment income, income and losses from equity investments,
foreign exchange, and gains and losses on the sales of assets and
investments. Other charges for the current quarter were $38
million as compared with other income of $8 million for the second
quarter of 2004. The decrease of $46 million is primarily
attributable to a loss on foreign exchange of approximately $25
million due to the unhedged U.S. dollar denominated note payable
issued outside of the U.S. relating to the KPG acquisition versus
a $1 million gain in the second quarter of 2004. As of July 28,
2005, future foreign exchange losses arising from this note
payable would be substantially offset by purchased forward
contract positions.
Also included in other charges is a charge of approximately $19
million in the current quarter for the impairment of the Lucky
Film investment as a result of an other-than-temporary decline in
the market value of Lucky's stock. As of June 30, 2005, the
remaining amount of this investment is $11 million. In addition,
contributing to the decline in other income was a year-over-year
decline of approximately $15 million driven by the classification
of KPG and NexPress. In the prior year period, the Company's
investments in KPG and NexPress were accounted for under the
equity method, and resulted in net equity income included in other
income (charges), net. Both NexPress and KPG are now consolidated
in the Company's Statement of Earnings and included in the Graphic
Communications segment. These items were partially offset by a
gain in the current quarter of approximately $13 million on the
sale of property.
Income Tax Provision (Benefit)
The Company's estimated annual effective tax rate from continuing
operations decreased from 20.0% for the prior year second quarter
to 15.5% for the second quarter of 2005. This decrease is
primarily attributable to interest and other miscellaneous items,
including the estimated full-year earnings impact of the Medicare
Prescription Drug, Improvement and Modernization Act of 2003,
which is not taxable.
During the second quarter of 2005, the Company recorded a tax
benefit of $65 million, representing an income tax rate from
continuing operations of 30.0%. The income tax rate of 30.0% for
the quarter differs from the estimated annual effective tax rate
of 15.5% due to discrete period tax benefits of $97 million. The
net discrete period tax benefits resulted from the following
discrete period charges and credits: tax benefits of $101 million
associated with the net focused cost reduction of $353 million;
tax benefits of $24 million associated with the charges for in-
process research and development of $64 million; tax charges of $2
million associated with gains on $13 million property sale related
to focused cost reductions; tax charges of $6 million due to a
change in estimate with respect to a tax benefit recorded in
connection with a land donation in a prior period; no tax
associated with the Lucky Film investment impairment charge of $19
million as a result of the Company's tax holiday in China; tax
charges of $5 million associated with changes in state laws in New
York and Ohio; a tax charge of $9 million related to the recording
of a valuation allowance against deferred tax assets in Brazil;
and a tax charge of $6 million associated with the planned
remittance of earnings from subsidiary companies outside the U.S.
The audit for tax years 1993-1998 has progressed to the final
level of review by the IRS and the Company anticipates that it
will be formally settled during the third quarter of 2005. The
finalization of this settlement could have a significant impact
upon the Company's 2005 effective tax rate and operating results
because the settlement covers six years and also includes
significant transactional activity associated with the disposition
of various businesses.
(Loss) Earnings From Continuing Operations
The loss from continuing operations for the second quarter of 2005
was $154 million, or $.54 per basic and diluted share, as compared
with earnings from continuing operations for the second quarter of
2004 of $119 million, or $.42 per basic and $.40 per diluted
share, representing a decrease of $273 million.
A full-text copy of Kodak's Form 10-Q is available for free at:
http://ResearchArchives.com/t/s?c1
Based in Rochester, New York, Eastman Kodak Company is a worldwide
vendor of imaging products and services.
* * *
As reported in the Troubled Company Reporter on July 25, 2005,
Moody's Investors Service has downgraded Eastman Kodak Company's
corporate family rating to Ba2 from Ba1 and its senior unsecured
rating to Ba3 from Ba1 and has placed both ratings on review for
further possible downgrade.
Ratings on review for possible downgrade:
* Corporate Family Rating (formerly senior implied rating)
at Ba2
* Senior Unsecured Rating at Ba3
As reported in the Troubled Company Reporter on July 25, 2005,
Standard & Poor's Ratings Services lowered its corporate credit
and senior unsecured debt ratings on Eastman Kodak Co. to 'BB'
from 'BB+', and placed the ratings on CreditWatch with negative
implications.
As reported in the Troubled Company Reporter on July 25, 2005,
Fitch Ratings has downgraded Eastman Kodak Company's senior
unsecured debt to 'BB' from 'BB+'. Fitch says the Rating Outlook
remains Negative.
ENRON CORP: Statkraft Markets Holds $2.5M Allowed Unsecured Claim
-----------------------------------------------------------------
Statkraft Markets GmbH filed Claim No. 6610 for $3,020,769
against Enron Corp. based on a Guaranty, dated July 13, 2001.
Enron guaranteed Enron Capital & Trade Resources Limited's
obligations under a general agreement with Statkraft concerning
the mutual delivery of electricity.
The Reorganized Debtors objected to the Claim.
To resolve their dispute, the parties agree that:
1. the Claim will be allowed as a Class 4 general unsecured
claim against Enron for $2,500,000, in resolution of all
claims between the parties under the Guaranty; and
2. all Scheduled Liabilities related to Statkraft are
disallowed in their entirety in favor of the Allowed
Claim.
Judge Gonzalez approves the Stipulation.
Headquartered in Houston, Texas, Enron Corporation --
http://www.enron.com/-- is in the midst of restructuring various
businesses for distribution as ongoing companies to its creditors
and liquidating its remaining operations. Before the company
agreed to be acquired, controversy over accounting procedures had
caused Enron's stock price and credit rating to drop sharply.
Enron filed for chapter 11 protection on December 2, 2001 (Bankr.
S.D.N.Y. Case No. 01-16033). Judge Gonzalez confirmed the
Company's Modified Fifth Amended Plan on July 15, 2004, and
numerous appeals followed. The Confirmed Plan took effect on
Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen,
Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in
their restructuring efforts. (Enron Bankruptcy News, Issue No.
152; Bankruptcy Creditors' Service, Inc., 15/945-7000)
ENRON: ENA Wants Court Nod on $1.4 Million Settlement with UBS AG
-----------------------------------------------------------------
Enron North America Corp. asks the U.S. Bankruptcy Court for the
Southern District of New York to approve its compromise and
settlement with UBS AG.
Melanie Gray, Esq., at Weil, Gotshal & Manges LLP, in New York,
recounts that, on May 31, 1993, the parties entered into entered
into an ISDA Master Agreement.
On October 9, 2002, UBS filed an adversary proceeding against ENA
seeking a constructive trust in favor of UBS in the amount of
$7,083,000. UBS claims that it had mistakenly transferred a
duplicate payment of $7,083,000 to ENA.
ENA denied that UBS was entitled to a constructive trust.
UBS filed Claim No. 15333 against ENA for $10,906,038 for amounts
owed under the Contract and on account of the Duplicate Payment.
The Reorganized Debtors objected to the Claim on grounds that it
was overstated.
Pursuant to the Settlement between the parties:
(1) ENA will pay UBS $1,350,000;
(ii) Claim No. 15333 will be allowed as a Class 5
general unsecured claim against ENA for $7,750,000;
(iii) The Adversary Proceeding will be dismissed with prejudice;
and
(iv) The parties will exchange mutual releases of claims.
Headquartered in Houston, Texas, Enron Corporation --
http://www.enron.com/-- is in the midst of restructuring various
businesses for distribution as ongoing companies to its creditors
and liquidating its remaining operations. Before the company
agreed to be acquired, controversy over accounting procedures had
caused Enron's stock price and credit rating to drop sharply.
Enron filed for chapter 11 protection on December 2, 2001 (Bankr.
S.D.N.Y. Case No. 01-16033). Judge Gonzalez confirmed the
Company's Modified Fifth Amended Plan on July 15, 2004, and
numerous appeals followed. The Confirmed Plan took effect on
Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen,
Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in
their restructuring efforts. (Enron Bankruptcy News, Issue No.
153; Bankruptcy Creditors' Service, Inc., 15/945-7000)
FLYI INC: S&P Revises CreditWatch Review Implication to Negative
----------------------------------------------------------------
Standard & Poor's Ratings Services revised the implications of its
CreditWatch review on FLYi Inc. (CC/Watch Neg/--) to negative from
developing.
"The revision in CreditWatch status follows FLYi's second-quarter
10-Q filing, which continued to indicate substantial doubt about
the airline's ability to continue as a going concern," said
Standard & Poor's credit analyst Betsy Snyder.
The company disclosed it has engaged advisers and is making
contingency plans for a potential Chapter 11 bankruptcy filing.
Dulles, Virginia-based FLYi is the parent of Independence Air, a
small airline based at Washington Dulles International Airport.
Since its conversion to a low-cost airline in mid-2004, the
company's losses have been substantial after several profitable
years when it served as a feeder partner to United Air Lines Inc.
and Delta Air Lines Inc. In the first half of 2005, the company
lost $202 million after a $192 million loss in 2004. Its
previously healthy unrestricted cash position has eroded to only
$66 million at June 30, 2005.
FLYi's Feb. 23, 2005, financial restructuring provided near-term
relief through deferral of aircraft lease and debt obligations.
However, the company has indicated it is now seeking other
initiatives to aid its liquidity. Like other U.S. airlines,
FLYi's earnings have been negatively affected by the ongoing weak
fare environment and high fuel costs.
FRONTIER INSURANCE: Selling Property to Vanguard for $1 Million
---------------------------------------------------------------
Frontier Insurance Group, Inc., asks the U.S. Bankruptcy Court for
the Southern District of New York for authority to enter into an
asset purchase agreement with Vanguard Investors, Ltd.
Frontier Insurance Group, Inc., owns a non-residential real
property located at 217 Broadway in Monticello, New York. The
Debtor doesn't believes the property is necessary to its
operations or its reorganization. In June 2003, the Debtor
engaged Belgard Realty to market and sell the property. Belgard's
marketing efforts produced only one offer -- Vanguard's.
The Debtor's property is a non-income producing commercial
building and requires some renovations, limiting the pool of
interested buyers.
Vanguard offers to buy the property for $1 million free and clear
of all liens, encumbrances and interests.
Securities Litigation
Prior to its bankruptcy filing, a securities litigation class
action lawsuit was commenced against the Debtor in the U.S.
District Court for the Eastern District of New York [Master File
No. 94, Civ. 5213]. The Debtor discloses that it agreed to remit
the proceeds from the sale of the property to the plaintiffs of
the securities litigation as part of a settlement approved by the
District Court. However, the securities litigation plaintiffs,
whose claims are subject to subordination under section 510(b) of
the Bankruptcy Code, didn't file a lien against the property. For
this reason, the Debtor contends the property is free of any liens
and encumbrances.
APA
Under the sale agreement, Vanguard deposited $50,000 in escrow
with Hartman & Craven L.L.P, the Debtor's ordinary course real
estate counsel. If Vanguard's offer will be topped by another
bidder, the Debtor is obliged to return its deposit.
Also, Vanguard has until August 21, 2005, to complete a due
diligence inspection of the property. The sale is expected to
close by October 21.
Chapter 11 Plan
According to Frontier Insurance, the sale of the property is a
critical element of its reorganization. A fraction of the sale
proceeds will be used to fund the Debtor's chapter 11
administrative expenses and a chapter 11 plan. Also, part of the
proceeds from the sale will be distributed to Frontier's
creditors.
The Debtor asks the Court to exempt the sale from applicable
transfer taxes pursuant to Section 1146(c) of the Bankruptcy Code.
Headquartered in Rock Hill, New York, Frontier Insurance Group,
Inc., is an insurance holding company, which through its
subsidiaries, is a national underwriter and creator of specialty
insurance products serving the needs of insureds in niche markets.
The Company filed for chapter 11 protection on July 5, 2005
(Bankr. S.D.N.Y. Case No. 05-36877). Matthew H. Charity, Esq., at
Baker & Hostetler, LLP, represents the Debtor in its restructuring
efforts. When the Debtor filed for protection from its creditors,
it listed total assets of $13,670,000 and total debts of
$250,210,000.
FRONTIER INSURANCE: Taps Belgard Realty as Real Estate Broker
-------------------------------------------------------------
Frontier Insurance Group, Inc., asks the U.S. Bankruptcy Court for
the Southern District of New York for permission to employ and
retain Belgard Realty as its real estate broker.
The Debtor owns a non-residential real property located at 217
Broadway, in Monticello, New York. The Debtor believes that the
property is unnecessary to its business operations. Accordingly,
the Debtor wants to sell the property to maximize value to its
estate and creditors.
The Debtor retained Belgard to market the property before filing
for chapter 11 protection. Belgard found a potential buyer,
Vanguard Investors, Ltd., who has entered into a purchase
agreement with the Debtor to acquire the property. However, the
Debtor was unable to complete the sale prior to the petition date
and therefore requires Belgard's services to complete the sale
during the case.
Belgard will:
1) assist the Debtor with the sale process;
2) take any acts necessary to prepare for, conduct and
effectuate the sale, and
3) insure that the Debtor receives the highest possible price
or best offer for the property.
Belgard will receive a commission equal to 6% of the gross
purchase price of the property plus 10% of any proceeds over $1
million. The purchase price offered by Vanguard is $1 million.
To the best to the Debtor's knowledge, Belgard does not hold any
interest adverse to the Debtor or its estate.
Headquartered in Rock Hill, New York, Frontier Insurance Group,
Inc., is an insurance holding company, which through its
subsidiaries, is a national underwriter and creator of specialty
insurance products serving the needs of insureds in niche markets.
The Company filed for chapter 11 protection on July 5, 2005
(Bankr. S.D.N.Y. Case No. 05-36877). Matthew H. Charity, Esq., at
Baker & Hostetler, LLP, represents the Debtor in its restructuring
efforts. When the Debtor filed for protection from its creditors,
it listed total assets of $13,670,000 and total debts of
$250,210,000.
GARDEN STATE: Taps JMR Marketing as Business Management Consultant
------------------------------------------------------------------
Garden State MRI Corporation, dba Eastlantic Diagnostic Institute,
sought and obtained authority from the U.S. Bankruptcy Court for
the District of New Jersey to employ JMR Marketing Corporation as
its business management consultant.
JMR Marketing will:
a) manage the Debtor's day-to-day operations, including, but
not limited to, management of employees, ordering of
inventory, marketing, and in-house preparation and review
of accounting documents;
b) assist the Debtor in formulating and amending business,
marketing and technology plans during this case and as part
of an exit strategy;
c) assist the Debtor and its counsel in preparing and
litigating issues that arise during this case;
d) assist the Debtor in drafting, confirming and consummating
a plan of reorganization; and
e) perform such other services as may be necessary or
appropriate.
The Debtor told the Court that as agreed with JMR Marketing, the
fee structure is:
Service Rendered Hourly rate
---------------- -----------
Executive Consulting Services $200
Marketing and bookkeeping $135
Administrative support $90
The Debtor disclosed that JMR Marketing currently provides
bookkeeping services to Ralph Dauito, Garden State's CEO.
However, there are no outstanding loans between Debtor and Mr.
Dauito.
To the best of the Debtor's knowledge, JMR Marketing is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
Headquartered in Vineland, New Jersey, Garden State MRI
Corporation, dba Eastlantic Diagnostic Institute, --
http://www.eastlanticdiagnostic.com/-- operates an out-patient
imaging and radiology facility. The Company filed for chapter 11
protection on June 9, 2005 (Bankr. D. N.J. Case No. 05-29214).
Arthur Abramowitz, Esq. and Jerrold N. Poslusny, Jr., Esq., at
Cozen O'Connor, represent the Debtor in its restructuring efforts.
When the Debtor filed for protection from its creditors, it listed
estimated assets of less than $50,000 and estimated debts between
$10 Million to $50 Million.
GARDEN STATE: Wants Fesnak and Associates as Accountants
--------------------------------------------------------
Garden State MRI Corporation, dba Eastlantic Diagnostic Institute,
asks the U.S. Bankruptcy Court for the District of New Jersey for
permission to employ Fesnak and Associates as its accountants.
Fesnak will:
(a) assist in the preparation of financial information for
distribution to creditors and others, including, but not
limited to, cash flow projections and budgets, cash
receipts and disbursement analysis, analysis of various
asset and liability accounts, and analysis of proposed
transactions for which Court approval is sought;
(b) assist in the development of business plans and a plan of
reorganization, including evaluation of the capital
structure;
(c) attend meetings and assist in the negotiations with banks
and other lenders, noteholders, the creditors' committee,
the U.S. Trustee, other parties in interest and
professionals hired by the same, as required;
(d) assist in the preparation of the Debtor's Monthly
Operating Reports, and all other financial reports as
required by the Court or the U.S. Trustee;
(e) assist with the identification of executory contracts and
leases and performance of cost/benefit evaluation with
respect to the assumption or rejections of each;
(f) provide valuation services as requested by Debtor or
Debtor's counsel;
(g) assist Debtor in the discharge of debtor-in-possession
duties and functions, as requested by Debtor or Debtor's
counsel;
(h) consult with Debtor's management and counsel in connection
with operation, financial, and other business matters
relating to Debtor's ongoing activities;
(i) assist Debtor in the preparation of liquidation and
feasibility analyses;
(j) assist with the analysis of alternative restructuring
scenarios and the evaluation of various tax matters
affecting Debtor's reorganization, including cancellation
of debt, net operating loss carry forwards and other
factors, if applicable;
(k) provide analysis of creditor claims by type, entity and
individual claim, including assistance with a database to
track such claims;
(l) assist in the evaluation and analysis of avoidance
actions, including fraudulent conveyances and preferential
transfers;
(m) assist the Debtor's counsel in the preparation and
evaluation of any potential litigation or claim
objections;
(n) provide expert testimony as required;
(o) interface with accountants and other financial consultants
for committees and other creditors' groups;
(p) analyze potential sales of the Debtor's assets;
(q) assist, coordinate, and advise on the sale of the Debtor's
assets as requested by Debtor;
(r) render tax advice; and
(s) assist with such other matters as Debtor's management or
counsel may request from time to time.
Fesnak tells the Court that its professionals bill:
Designation Hourly Rate
----------- -----------
Partner $300
Manager $225 - $250
Senior $125 - $175
Staff $100 - $120
Para/Clerical $50
To the best of the Debtor's knowledge, Fesnak is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
Headquartered in Vineland, New Jersey, Garden State MRI
Corporation, dba Eastlantic Diagnostic Institute, --
http://www.eastlanticdiagnostic.com/-- operates an out-patient
imaging and radiology facility. The Company filed for chapter 11
protection on June 9, 2005 (Bankr. D. N.J. Case No. 05-29214).
Arthur Abramowitz, Esq. and Jerrold N. Poslusny, Jr., Esq., at
Cozen O'Connor, represent the Debtor in its restructuring efforts.
When the Debtor filed for protection from its creditors, it listed
estimated assets of less than $50,000 and estimated debts between
$10 Million to $50 Million.
GLOBAL CROSSING: District Court Okays $75M Citigroup Settlement
---------------------------------------------------------------
The United States District Court for the Southern District of New
York approves the settlement agreement allowing Citigroup, Inc.,
to pay $75 million pre-tax to the lead plaintiffs of pending
class action litigation brought on behalf of purchasers of Global
Crossing Ltd.'s securities.
As reported in the Troubled Company Reporter on March 10, 2005,
Citigroup has settled a class action litigation brought on behalf
of purchasers of Global Crossing securities which was pending in
the United States District Court for the Southern District of New
York as In re Global Crossing Ltd. Securities Litigation, No. 02
Civ. 910 (GEL).
Under the terms of the settlement, Citigroup will make a payment
of $75 million pre-tax, approximately $46 million after tax, to
the settlement class, which consists of all investors in publicly
traded securities of Global Crossing or Asia Global Crossing
during the period from February 1, 1999, through and including
December 8, 2003.
The plaintiffs currently contemplate allocating two-thirds of the
settlement amount to investors in underwritten public offerings of
Global Crossing securities and one third to other investors in
Global Crossing securities; the terms of the settlement and the
final plan of allocation will be subject to review by the Court.
Plaintiffs' attorneys' fees will be determined by the Court and
paid out of the settlement amount.
In the settlement agreement, Citigroup specifically denied any
violation of law and stated that it was entering into the
settlement "solely to eliminate the uncertainties, burden and
expense of further protracted litigation." The settlement payment
is covered by existing reserves and is part of Citigroup's effort
to resolve open litigation issues promptly and fairly whenever
possible.
Citigroup, the leading global financial services company, has some
200 million customer accounts and does business in more than 100
countries, providing consumers, corporations, governments and
institutions with a broad range of financial products and
services, including consumer banking and credit, corporate and
investment banking, insurance, securities brokerage, and asset
management. Major brand names under Citigroup's trademark red
umbrella include Citibank, CitiFinancial, Primerica, Smith Barney,
Banamex, and Travelers Life and Annuity. Additional information
may be found at http://www.citigroup.com/
Headquartered in Florham Park, New Jersey, Global Crossing Ltd. --
http://www.globalcrossing.com/-- provides telecommunications
solutions over the world's first integrated global IP-based
network, which reaches 27 countries and more than 200 major cities
around the globe. Global Crossing serves many of the world's
largest corporations, providing a full range of managed data and
voice products and services. The Company filed for chapter 11
protection on January 28, 2002 (Bankr. S.D.N.Y. Case No.
02-40188). When the Debtors filed for protection from their
creditors, they listed $25,511,000,000 in total assets and
$15,467,000,000 in total debts. Global Crossing emerged from
chapter 11 on December 9, 2003.
At March 31, 2005, Global Crossing's total liabilities exceed its
total assets by $30 million.
GREAT ATLANTIC: Launches Tender Offer for 7-3/4% & 9-1/8% Notes
---------------------------------------------------------------
The Great Atlantic & Pacific Tea Company, Inc. (NYSE:GAP)
commenced tender offers for any and all of its outstanding 7 3/4%
Notes due 2007 and 9 1/8% Senior Notes due 2011. In conjunction
with the tender offers, A&P also commenced consent solicitations
to eliminate certain covenants and certain events of default in
the indenture as it relates to these notes. The tender offers and
consent solicitations are being made pursuant to the Offer to
Purchase and Consent Solicitation Statement dated August 10, 2005.
Holders who tender and deliver their tenders and consents to the
proposed amendments to the indenture governing the 7 3/4% Notes
and 9 1/8% Notes by 5:00 p.m. New York City time on August 23,
2005, unless extended, will be eligible to receive the total
consideration with respect to the applicable series of notes,
which includes a consent payment equal to $30 per $1,000 principal
amount of the tendered notes.
The total consideration will be determined using standard market
practice of pricing to the maturity date, in the case of the 7
3/4% Notes, and earliest redemption date, in the case of the 9
1/8% Notes, at a fixed spread of 75 basis points over the bid side
yield on the 3.75% Treasury Notes due 3/31/07 in the case of the 7
3/4% Notes, and 50 basis points over the bid side yield on the
3.00% Treasury Notes due 12/31/06 in the case of the 9 1/8% Notes,
determined at 2:00 p.m. New York City time on the business day
immediately following the Consent Date as reported by the
Bloomberg Government Pricing Monitor.
Using the August 5, 2005 reference rates, the total consideration
was approximately $1,044.33 for the 7 3/4% Notes and $1,098.65 for
the 9 1/8% Notes for each $1,000 principal amount of notes
tendered. Holders who tender after the Consent Date but prior to
the Expiration Date will be eligible to receive the tender offer
consideration, which equals the total consideration less the
consent payment.
The tender offers will expire at 11:59 p.m., New York City time,
on September 7, 2005, unless extended, with respect to either
series of notes. Payment for the tendered notes will be made
promptly after the expiration of the tender offers if the notes
are accepted for purchase. Consummation of the tender offers, and
payment for the tendered notes, is subject to the satisfaction or
waiver of certain conditions, including the consummation of the
sale of A&P Canada and, as it relates to the 9 1/8% Notes, the
condition that there be validly tendered and not validly withdrawn
at least a majority of the outstanding aggregate principal amount
of the notes.
Lehman Brothers Inc. is acting as the sole Dealer Manager and
Solicitation Agent for the tender offers and the consent
solicitations. The Tender Agent and Information Agent is D.F. King
& Co., Inc.
This press release is neither an offer to purchase nor a
solicitation of an offer to sell securities. The tender offers
and the consent solicitations are being made only by reference to
the Offer to Purchase and Consent Solicitation Statement dated
August 10, 2005.
Requests for documentation should be directed to D.F. King & Co.,
Inc. at (800) 949-2583 or (212) 269-5550 in the case of banks and
brokerage firms. Questions regarding the tender offers and the
consent solicitations should be directed to Lehman Brothers at
(212) 528-7581 or toll free at (800) 438-3242.
Headquartered in Montvale, New Jersey, The Great Atlantic &
Pacific Tea Company, Inc. operates 637 supermarkets in 10 states,
the District of Columbia and Ontario, Canada. Sales for the
fiscal year ended February 26, 2005 were approximately $10.8
billion.
* * *
As reported in the Troubled Company Reporter on Jul. 22, 2005,
Moody's Investors Service placed the ratings of The Great Atlantic
& Pacific Tea Company, Inc. on review for possible upgrade
following the announcement that its subsidiary, A&P Luxembourg
S.a.r.l., had entered into an agreement to sell A&P Canada for
total consideration of the Canadian dollar equivalent of $1.475
billion. The review for possible upgrade reflects the anticipated
significant increase in cash and material reduction in debt when
the transaction is completed around mid-August.
Ratings placed under review for possible upgrade:
The Great Atlantic & Pacific Tea Company, Inc.:
* Corporate Family rating at B3
* Senior secured and guaranteed bank agreement at B2
* Senior unsecured notes at Caa1
* Multi-seniority shelf at (P)Caa1 for senior, (P)Caa2 for
subordinated, (P)Caa2 for junior subordinated, and (P)Caa3
for preferred stock.
* Speculative Grade Liquidity Rating of SGL-3
A&P Finance I, A&P Finance II and A&P Finance III:
* Trust preferred securities shelf at (P)Caa2
GT BRANDS: Wants Milbank Tweed as Special Counsel
-------------------------------------------------
GT Brands Holdings, LLC, and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Southern District of New York for
authority to employ Milbank, Tweed, Hadley & McCloy LLP as their
special corporate counsel, nunc pro tunc to July 11, 2005.
Milbank did prepetition work for the Debtors. In particular,
Milbank represented the Debtors in negotiating and documenting the
asset purchase agreement of GT's REPS, LLC.
During their chapter 11 cases, the Debtors want Milbank to
represent them in the proposed sale of their other lines of
business.
Court documents don't disclose which Milbank professionals will
render services to GT Brands or their proposed fees.
To the best of the Debtors' knowledge, Milbank Tweed is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
Headquartered in New York, New York, GT Brands Holdings LLC,
supplies home video titles to mass retailers. The Debtors also
develop and market branded consumer, lifestyle and entertainment
products. The Company and its affiliates filed for chapter 11
protection on July 11, 2005 (Bankr. S.D.N.Y. Case No. 05-15167).
Brian W. Harvey, Esq., at Goodwin Procter LLP, represents the
Debtors in their chapter 11 proceedings. When the Debtors filed
for protection from their creditors, they estimated between
$50 million to $100 million in assets and more than $100 million
in debts.
HAWK CORP: Earns $1.7 Million of Net Income in Second Quarter
-------------------------------------------------------------
Hawk Corporation (Amex: HWK) reported that net sales for the
second quarter of 2005 increased by 11.8% to $70.9 million from
$63.4 million in the comparable prior year period. The Company's
net sales benefited during the quarter from improved economic
conditions and new product introductions in a majority of
the Company's end markets, including heavy truck, aerospace,
construction, specialty friction, fluid power and automotive. The
effect of foreign currency exchange rates accounted for only 0.8%
of the net sales increase during the quarter.
Income from operations in the second quarter of 2005 increased
1.6% to $6.2 million compared to $6.1 million in the prior year
period. As a percentage of net sales, the Company's operating
margin decreased to 8.7% in the second quarter of 2005 from 9.6%
in the comparable quarter of 2004. This unfavorable operating
leverage was primarily the result of previously announced
restructuring costs relating to relocation of one of the Company's
friction manufacturing facilities from Ohio to Oklahoma and
operating inefficiencies due to the relocation, including
increased labor, benefit, freight and outsourcing costs, as a
result of operating both the Ohio and Oklahoma facilities during
the production transition period.
Income from operations in the second quarter of 2005 included $1.3
million ($0.2 million of which was included in cost of sales), or
$.09 per diluted share, of the restructuring costs. In the second
quarter of 2004, income from operations included restructuring
costs of $0.2 million or $.02 per diluted share. Operating income
before these charges was $7.6 million, or 10.7% of net sales, in
the second quarter of 2005, an increase of 20.6%, or $1.3 million,
from $6.3 million, or 9.9% of net sales, in the comparable prior
year period.
Ronald E. Weinberg, Hawk's Chairman and CEO, said, "We are pleased
with the second quarter results particularly because of our
continued sales growth despite the disruptions created by moving a
facility to Oklahoma." Mr. Weinberg continued, "The majority our
markets continued to show positive momentum during the quarter and
we continued to benefit from new product introductions to our
customer base."
For the six month period ended June 30, 2005, net sales were
$142.9 million, an increase of $19.2 million, or 15.5%, from
$123.7 million in the comparable prior year period. Income from
operations for the same six month period increased $1.0 million,
or 8.5%, to $12.8 million from $11.8 million in the comparable
prior period. Included in the Company's income from operations
for the six months ended June 30, 2005 was $2.1 million of
restructuring costs related to the move to Oklahoma and $1.1
million of loan forgiveness costs, which combined accounted for
$.22 per diluted share. In the same six month period of 2004,
income from operations included restructuring costs of $0.2
million and loan forgiveness costs of $0.7 million, which combined
accounted for $.07 per diluted share. Operating income before
these charges was $16.0 million, or 11.2% of net sales, in the
first six months of 2005, an increase of 26.0%, or $3.3 million,
from $12.7 million, or 10.3% of net sales, in the comparable prior
year period.
The Company reported net income of $1.7 million, an increase of
13.3%, or $.17 per diluted share, on 9.4 million diluted shares in
the second quarter of 2005 compared to net income of $1.5 million,
or $.16 per diluted share, on 8.8 million diluted shares in the
comparable prior year period. The increase in the number of shares
outstanding from 2004 to 2005 was the result of 0.2 million shares
issued from treasury for the exercise of employee stock options
and the dilutive result of 0.4 million unexercised option shares
which are "in the money" as of June 30, 2005. The Company
reported a worldwide effective tax rate of 52.4% in the second
quarter of 2005 compared to 55.8% in the comparable quarter of
2004 primarily resulting from the effect of the restructuring
costs on the Company's domestic tax losses. The Company expects
that its full year 2005 effective tax rate will be consistent with
its prior guidance of 48.0% to 53.0%. For the six months ended
June 30, 2005 net income was $3.6 million, an increase of 12.5%,
compared to $3.2 million in the comparable prior year period.
Business Segment Results
Net sales in the friction products segment for the second quarter
ended June 30, 2005 increased $6.1 million, or 15.4%, to $45.6
million from $39.5 million in the comparable prior year period.
Primary drivers of this increase were from sales arising from new
product introductions in the construction and heavy truck markets,
strong world-wide economic growth in the Company's construction,
heavy truck and aerospace markets and increased sales to the
aftermarket. The effect of foreign currency exchange rates on the
friction products segment's net sales accounted for 1.3% of the
15.4% increase during the quarter. For the six months ended June
30, 2005 net sales in this segment were $90.0 million, up 20.0%,
from $75.0 million in the comparable prior year period.
Net sales at the Company's Italian facility, on a local currency
basis, increased 8.3% in the second quarter of 2005 compared to
the same period in 2004 as a result of market share gains and new
product introductions in the period. Total shipments at the
Company's Chinese friction products facility increased 73.8% in
the second quarter of 2005 compared to the same period in
2004.
For the second quarter ended June 30, 2005, income from operations
in the friction products segment increased $0.1 million, or 2.1%,
to $4.8 million from $4.7 million in the comparable prior year
period. The increase was the primarily the result of improved
sales volumes in most of the markets served by the segment which
provided a higher absorption of fixed manufacturing costs. These
gains were partially offset by increased operating costs to
support the higher sales activity, restructuring costs of $1.3
million ($0.2 million of which was included in cost of sales)
related to the plant relocation and manufacturing and overhead
cost inefficiencies from having both the Ohio and Oklahoma
facilities in production during the transition period. For the
six months ended June 30, 2005 income from operations in this
segment was $9.9 million, an increase of $1.3 million, or 15.1%,
from $8.6 million in the comparable prior year period.
In the Company's precision components segment, net sales for the
three months ended June 30, 2005 were up $1.4 million, or 7.1%, to
$21.2 million from $19.8 million in the comparable prior period.
The segment's net sales increases were driven by market
improvements and new product introductions primarily in the fluid
power and automotive markets during the quarter. For the six
months ended June 30, 2005 net sales in this segment were $44.0
million, an increase of $3.5 million, or 8.6%, from $40.5 million
in the comparable prior year period.
Income from operations in the precision components segment in the
second quarter of 2005 and 2004 was flat at $1.2 million. During
the second quarter of 2005 the segment benefited from product mix
and overall sales volume increases which was offset by phase-in
costs associated with the segment's new powder metal technologies,
sales volume declines at one of its plants, the continued support
of its new facility in China and outsourcing and freight
expediting costs. For the six months ended June 30, 2005 income
from operations in this segment was $2.2 million, a decrease of
$0.2 million from $2.4 million in the comparable prior year
period.
In the Company's performance racing segment, net sales in the
second quarter were the same as in the prior year quarter at $4.0
million. For the six months ended June 30, 2005, net sales were
$8.9 million, an increase of $0.7 million, or 8.5%, from $8.2
million in the comparable prior year period.
For the quarter ended June 30, 2005, income from operations in the
performance racing segment was also flat at $0.2 million compared
to the prior year period. For the six months ended June 30, 2005
income from operations in this segment was $0.7 million, a
decrease of $0.1 million from $0.8 million in the comparable prior
year period.
Working Capital and Liquidity
As of June 30, 2005, working capital increased by $1.3 million
from December 31, 2004 levels. However, the Company reduced its
working capital by $3.8 million compared to March 31, 2005 levels.
The decrease in working capital during the second quarter of 2005
was largely the result of increased accounts receivable
collections partially offset by increased inventory requirements
to support the move to the Company's new facility in Oklahoma.
The cash generated by the reduction in working capital during the
quarter was used to pay down the Company's outstanding loans. As
of June 30, 2005, the Company had no outstanding loans under its
revolving credit facility.
"The move of our friction products facility to Oklahoma is well
underway. Notwithstanding this transition, the group has achieved
20.0% revenue growth for the first half of 2005," stated Mr.
Weinberg. "The challenges that this segment has successfully met
in the first six months of 2005 in dealing with increased
production demands while at the same time migrating out of an
existing facility, is truly a credit to our management team."
Mr. Weinberg continued, "The challenges and costs associated with
the move of our facilities are expected to peak in the third
quarter of 2005. Operating two facilities at less than full
capacity, with the attended fixed overhead of each and the ramping
up of the new facility will negatively impact the third quarter
and to a lesser extent, the fourth quarter of 2005. In addition,
our previously announced restructuring costs, such as severance
and other direct costs associated with the plant relocation will
be approximately $1.5 million for the quarter ended September 30,
2005 and approximately $0.9 million in the quarter ended December
31, 2005."
"Considering these factors, as well as initiatives being
undertaken within our performance racing segment to improve their
operational efficiency and increase their focus on new product
development, the Company anticipates second half 2005 income from
operations will be flat compared to income from operations of
$5.5 million for the six month period ended December 31, 2004,"
stated Mr. Weinberg.
Excluding the effect of approximately $2.4 million in
restructuring costs, the Company currently anticipates income from
operations for the second half of 2005 to improve approximately
23.0% to approximately $7.9 million when compared to income from
operations for the six month period ended December 31, 2004 of
$6.4 million, after adjusting for $0.9 million of restructuring
costs.
The Company is also reaffirming its full year net income guidance
of $.35 to $.40 per diluted share, after taking into account
restructuring charges of approximately $.30 per diluted share for
the year ended December 31, 2005.
Hawk Corporation is a worldwide supplier of highly engineered
products. Its friction products group is a leading supplier of
friction materials for brakes, clutches and transmissions used in
airplanes, trucks, construction equipment, farm equipment,
recreational and performance automotive vehicles. Through its
precision components group, the Company is a leading supplier of
powder metal and metal injected molded components used in
industrial, consumer and other applications, such as pumps, motors
and transmissions, lawn and garden equipment, appliances, small
hand tools, trucks and telecommunications equipment. The
Company's performance racing group manufactures clutches and
gearboxes for motorsport applications and performance automotive
markets. Headquartered in Cleveland, Ohio, Hawk has approximately
1,700 employees at 17 manufacturing, research, sales and
administrative sites in 6 countries.
* * *
Moody's Investors Service and Standard & Poor's assigned single-B
ratings to Hawk Corporation's 8-3/4% senior notes due Nov. 1,
2014.
HIRSH INDUSTRIES: Committee Wants Elliott D. Levin as Counsel
-------------------------------------------------------------
The Official Creditors' Committee of Hirsh Industries, Inc., and
its debtor-affiliates ask the U.S. Bankruptcy Court for the
Southern District of Indiana in Indianapolis for permission to
employ Elliott D. Levin, Esq., at the law firm of Rubin & Levin,
PC, as its counsel, nunc pro tunc to July 15, 2005.
Mr. Levin will:
a) give the Committee legal advice with respect to its duties
and powers in connection with the continued operation of
the business and management of the property of the debtor;
b) examine the conduct of the debtor's affairs and the causes
of its inability to pay its debts as they mature;
c) conduct an examination of officers and employees of the
debtor, and of other witnesses in order to determine
whether debtor has made preferential transfers of its
property;
d) assist the Committee in negotiating with the debtor
concerning the terms of a proposed Plan; and
e) perform all other legal services for the Committee that may
be necessary in this bankruptcy case.
To the best of the Committee's knowledge, Mr. Levin does not hold
any interest adverse to the Debtors or their estates. The
Committee did not disclose the how much Mr. Levin charges for his
services.
Mr. Levin is a senior partner at Rubin & Levin and manages the
Firm's Creditors Rights, Bankruptcy and Corporate Reorganization
practice. He graduated from Indiana University and its School of
Law, receiving his Juris Doctor degree Magna Cum Laude in 1966.
Mr. Levin practices before the U.S. District Court, the Southern
and Northern Districts of Indiana, the U.S. Court of Appeals for
the Seventh Circuit and the U.S. Supreme Court.
Headquartered in Des Moines, Iowa, Hirsh Industries, Inc.,
manufactures storage and organizational products. Hirsh
Industries' products include metal filing cabinets, metal
shelving, wooden ready-to-assemble organizers and workshop
accessories and retail store fixtures. The Company and two
affiliates filed for chapter 11 protection on July 6, 2005 (Bankr.
S.D. Ind. Case Nos. 05-12743 through 05-12745). Paul V.
Possinger, Esq., at Jenner & Block LLP represents the Debtors in
their restructuring efforts. When the Debtors filed for
protection from their creditors, they estimated between $1 million
to $10 million in assets and between $50 million to $100 million
in debts.
HIRSH INDUSTRIES: Court Grants Interim Access to DIP Financing
--------------------------------------------------------------
The Honorable Anthony J. Metz III of the U.S. Bankruptcy Court for
the Southern District of Indiana in Indianapolis allowed Hirsh
Industries, Inc., and its debtor affiliates, on an interim basis,
to obtain post-petition financing from Fleet Capital, LaSalle Bank
and Doug Smith.
As previously reported in the Troubled Company Reporter on July 7,
2005, Fleet Capital, LaSalle Bank and Douglas Smith committed to
provide Hirsch up to $28.4 million in senior and subordinated
debtor-in-possession financing, enough to provide adequate
liquidity during the chapter 11 process and ensure that the
administration and conclusion of their bankruptcy cases will have
minimal impact on their operations.
The Court allows the Debtors to draw secured post-petition
financing from Fleet Capital and LaSalle Bank up to a maximum
amount of $15.21 million until a final order authorizing the
proposed post-petition financing is granted. Mr. Smith, chairman
of Hirsh Industries' board, will provide an additional $3 million
to the Debtors' post-petition credit facility.
As security for the post-petition indebtedness, Fleet Capital and
LaSalle Bank are allowed valid and perfected security interests
in, and liens on, all of the Debtor's assets. Mr. Smith's $3
million post-petition loan is junior and subordinate in all
respects to the any of the Debtors' post-petition and pre-petition
debt to Fleet Capital and LaSalle Bank.
The Debtors owe Fleet Capital and LaSalle Bank approximately
$29.48 million in pre-petition debt. Mr. Smith has a $13,415,100
pre-petition claim against the Debtors.
Judge Metz will discuss the Debtor's DIP financing request at a
Final Hearing at 10:00 a.m. on August 15, 2005. During the Final
Hearing, the Court will rule on the continued effectiveness of the
interim DIP financing order.
Headquartered in Des Moines, Iowa, Hirsh Industries, Inc.,
manufactures storage and organizational products. Hirsh
Industries' products include metal filing cabinets, metal
shelving, wooden ready-to-assemble organizers and workshop
accessories and retail store fixtures. The Company and two
affiliates filed for chapter 11 protection on July 6, 2005 (Bankr.
S.D. Ind. Case Nos. 05-12743 through 05-12745). Paul V.
Possinger, Esq., at Jenner & Block LLP represents the Debtors in
their restructuring efforts. When the Debtors filed for
protection from their creditors, they estimated between $1 million
to $10 million in assets and between $50 million to $100 million
in debts.
HIRSH INDUSTRIES: Taps Silverman Consulting as Crisis Manager
-------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Indiana in
Indianapolis gave Hirsh Industries, Inc., and its debtor-
affiliates authority to employ Silverman Consulting as their
crisis manager.
The Debtors tell the Court that Silverman Consulting's employment
is crucial to their restructuring efforts. The Debtors say that
the Firm has been intimately involved in their restructuring
efforts, and has assisted in formulating their business plan.
Before filing for bankruptcy, Hirsch retained Michael Silverman of
Silverman Consulting as its chief restructuring officer, along
with other crisis management personnel from Silverman Consulting.
Silverman Consulting will:
a) assign on site personnel, as required, to provide regular
cash management and operating decision support;
b) prepare rolling cash flow forecasts, budgets and associated
financial analyses;
c) identify and implement liquidity enhancement initiatives;
d) provide active support for customer and vendor
communications;
e) prepare necessary financial projections, liquidation
analysis and other financial reports and analyses in
support of the Debtors' disclosure statement and plan of
reorganization; and
f) provide management and support with respect to all
transactions necessary to confirm and effectuate the
Debtors' plan of reorganization.
Silverman Consulting's principal professionals presently
designated to represent the Debtors, and their hourly rates, are:
Professional Hourly Rate
------------ -----------
Michael Silverman $550
Craig Graff $340
Michael Compton $290
Constadinos D. Tsitsis $240
Partners at Silverman Consulting charge $290 to $550 per hour for
their services, while associates charge $160 to $240 per hour.
Silverman Consulting is a Chicago-based firm that specializes in
providing operating and financial restructuring services, and
merger, acquisition and divestiture advisory services, to
companies in distressed operating environments. Over the last 21
years, the Firm has helped engineer the turnaround of more than
450 manufacturing, distribution and service companies.
Headquartered in Des Moines, Iowa, Hirsh Industries, Inc.,
manufactures storage and organizational products. Hirsh
Industries' products include metal filing cabinets, metal
shelving, wooden ready-to-assemble organizers and workshop
accessories and retail store fixtures. The Company and two
affiliates filed for chapter 11 protection on July 6, 2005 (Bankr.
S.D. Ind. Case Nos. 05-12743 through 05-12745). Paul V.
Possinger, Esq., at Jenner & Block LLP represents the Debtors in
their restructuring efforts. When the Debtors filed for
protection from their creditors, they estimated between $1 million
to $10 million in assets and between $50 million to $100 million
in debts.
HOA HOANG: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------
Debtor: Hoa Thi & Loan Hoang
dba Joan Maria IV
611 South 17th Street
Nederland, Texas 77627
Bankruptcy Case No.: 05-11256
Type of Business: The Debtor harvests and sells shrimp.
Chapter 11 Petition Date: August 10, 2005
Court: Eastern District of Texas (Beaumont)
Debtor's Counsel: Frank J. Maida, Esq.
Maida Law Firm
4320 Calder Avenue
Beaumont, Texas 77706-4631
Tel: (409) 898-8200
Fax: (409) 898-8400
Total Assets: $209,976
Total Debts: $1,155,202
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Caterpillar Financial Services Loan $759,446
2120 West End Avenue Value of security:
Nashville, TN 37203 $180,000
Zions First National Bank, N.A. Ship Mortgage $200,000
c/o Jeffrey D. Coulter
1400 Post Oak Boulevard,
Suite 400
Houston, TX 77056
Tam Thanh Phan Loan $55,000
1995 Broadway Street
Beaumont, TX 77702
Thuy Nguyen Loan $40,000
Sabine Offshore Industry Purchase of Goods $29,200
MBNA America Credit Card $12,848
Chase Credit Card $9,355
Sabine Offshore Industry Purchase of Goods $8,000
Chase Credit Card $5,090
Citibank South Dakota, N.A. Credit Card $5,044
Maida Law Firm P.C. Attorney Fees $5,000
Wells Fargo Card Services Credit Card $4,427
GM Card Credit Card $4,333
Citi Cards Credit Card $4,318
HSBC Card Services Credit Card $3,959
Capital One Credit Card $3,457
Chase Credit Card $3,453
Chase Credit Card $3,234
HFC Credit Card $2,715
Citicard Credit Card $1,315
HUSMANN-PEREZ: Judge Paskay Dismisses Chapter 11 Case
-----------------------------------------------------
The Honorable Alexander L. Paskay of the U.S. Bankruptcy Court for
the Middle District of Florida dismissed, with prejudice, the
chapter 11 case filed by Husmann-Perez Family Ltd. Partnership.
Judge Pasky dismissed the Debtor's bankruptcy case on July 29,
2005.
Felicia S. Turner, the U.S. Trustee for Region 21, asked the Court
to dismiss, convert or appoint a chapter 11 Trustee in the
Debtor's chapter 11 case on July 20, 2005. MJ Squared, LLC, a
primary secured creditor, also filed a separate request with the
Court to dismiss the Debtor's chapter 11 case or grant alternative
relief on the same day.
Ms. Turner and MJ Squared charged that:
1) the Debtor failed to make stipulated utility payments to
Florida Power & Light, resulting in the disconnection of the
Debtor's electrical service after July 25, 2005;
2) the Debtor's current property and liability insurance
coverage expired on July 26, 2005, and it has been unable to
find a replacement carrier since then;
3) even after the Court entered an order on May 16, 2005,
directing the Debtor to file all of its outstanding monthly
operating reports and timely file all future monthly
operating reports, the Debtor still did not file its monthly
operating reports for April, May and June 2005; and
4) because MJ Squared had obtained relief from the automatic
stay regarding the real estate that the Debtor uses to
conduct business, the U.S. Trustee believes that the Debtor
will be unable to effectuate a plan of reorganization.
Judge Paskay concludes that these four facts demonstrate cause to
dismiss the Debtor's chapter 11 case.
Judge Paskay further orders that he will consider an appropriate
award of sanctions if the Debtor attempts to file another
bankruptcy petition.
Headquartered in Dallas, Texas, Husmann-Perez Family Ltd.
Partnership owns a skating facility located in Ellenton, Florida.
The Company filed for chapter 11 protection on March 29, 2005
(Bankr. M.D. Fla. Case No. 05-05774). Frederick T. Lowe, Esq., at
Florida Law Group, L.L.C., represents the Debtor. When the
Company filed for chapter 11 protection, it listed $10 million to
$50 million in assets and $1 million to $10 million in debts.
HUSMANN-PEREZ: Wants Court to Reconsider Order Dismissing Case
--------------------------------------------------------------
Husmann-Perez Family Ltd. Partnership, by and through its counsel,
Frederick T. Lowe, Esq., at Florida Law Group, L.L.C., asks the
U.S. Bankruptcy Court for the Middle District of Florida to rehear
and reconsider its order dismissing its chapter 11 case.
The Court dismissed the Debtor's chapter 11 case on July 29, 2005,
with prejudice, after an emergency hearing on motions to dismiss
filed by secured creditor MJ Squared and the U.S. Trustee.
Mr. Lowe says that in contrast to the allegations mentioned by the
U.S. Trustee and MJ Squared in their separate requests, the truth
is that the Debtor's insurance coverage is still in force, its
electric bills have been paid and the monthly operating reports
have been filed with the Court. The Debtor argues that it allayed
and debunked all of these charges at the emergency hearing. The
Debtor is mystified why the Court chose to dismiss its chapter 11
case.
Mr. Lowe gives the Court three reasons why it should reconsider
its dismissal order:
1) by dismissing the Debtor's case early and without cause,
the Court did not follow the basic tenets of a bankruptcy
reorganization, which is to give a Debtor every opportunity
to reorganize;
2) when it was already clear that all of the allegations raised
by MJ Squared and the U.S. Trustee via motions labeled
as emergency in nature had been rectified, the Court should
have allowed the Debtor the remaining time under its
numerous stay agreements, and time to complete its plan or
out of Court agreements; and
3) Judge Paskay's statements in open Court regarding the
Debtor's counsel, Mr. Lowe, that he is not present at all
Court hearings, basically disparages and casts aspersions to
him without the Court knowing the totality of the
circumstances of why he is not present at all hearings.
Bankruptcy Court records show that the Court has not yet scheduled
a hearing to consider the Debtor's request.
Headquartered in Dallas, Texas, Husmann-Perez Family Ltd.
Partnership owns a skating facility located in Ellenton, Florida.
The Company filed for chapter 11 protection on March 29, 2005
(Bankr. M.D. Fla. Case No. 05-05774). Frederick T. Lowe, Esq., at
Florida Law Group, L.L.C., represents the Debtor. When the
Company filed for chapter 11 protection, it listed $10 million to
$50 million in assets and $1 million to $10 million in debts.
INTEGRATED HEALTH: Wants Removal Period Stretched to December 5
---------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware granted the
IHS Liquidating LLC's request to extend the period within which it
may file notices of removal with respect to civil actions pending
on the Petition Date, through and including August 5, 2005.
By this motion, IHS Liquidating seeks another extension of the
Removal Period, through and including December 5, 2005.
Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor, LLP, in
Wilmington, Delaware, says IHS Liquidating has already resolved
many of the disputed claims against the IHS Debtors through the
claims reconciliation process. However, IHS Liquidating
anticipates that removal may be appropriate with respect to
certain unresolved Prepetition Actions. Thus, IHS Liquidating
wants to preserve its right to seek removal until it complete its
analysis of the Prepetition Actions.
"The extension sought will afford [IHS Liquidating] an opportunity
to make more fully informed decisions concerning the removal of
each [Prepetition] Action and will assure that [IHS Liquidating]
does not forfeit the valuable rights afforded to it under 28
U.S.C. Section 1452," Mr. Brady asserts.
The Court will convene a hearing at 2:00 p.m., prevailing Eastern
Time, on August 30, 2005, to consider IHS Liquidating's request.
IHS Liquidating's Removal Period is automatically extended through
the conclusion of that hearing by application of Del.Bankr.LR
9006-2.
Integrated Health Services, Inc. -- http://www.ihs-inc.com/--
operated local and regional networks that provide post-acute care
from 1,500 locations in 47 states. The Company and its
437 debtor-affiliates filed for chapter 11 protection on
February 2, 2000 (Bankr. Del. Case No. 00-00389). Rotech Medical
Corporation and its direct and indirect debtor-subsidiaries broke
away from IHS and emerged under their own plan of reorganization
on March 26, 2002. Abe Briarwood Corp. bought substantially all
of IHS' assets in 2003. The Court confirmed IHS' Chapter 11 Plan
on May 12, 2003, and that plan took effect September 9, 2003.
Michael J. Crames, Esq., Arthur Steinberg, Esq., and Mark D.
Rosenberg, Esq., at Kaye, Scholer, Fierman, Hays & Handler, LLP,
represent the IHS Debtors. On September 30, 1999, the Debtors
listed $3,595,614,000 in consolidated assets and $4,123,876,000 in
consolidated debts. (Integrated Health Bankruptcy News, Issue
No. 94; Bankruptcy Creditors' Service, Inc., 215/945-7000)
INTERSTATE BAKERIES: Personal Injury Claimants Ask for Stay Relief
------------------------------------------------------------------
Joshua Tucker and Davita Wagner ask Judge Venters of the U.S.
Bankruptcy Court for the Western District of Missouri to:
(1) terminate or modify the automatic stay to allow them to:
(a) proceed with their negligence cases against Interstate
Brands West Corporation in the District Court of Clark
County, Nevada, to judgment; and
(b) collect any judgments in their favor, to the extent
they are covered and payable by insurance; and
(2) allow them to amend their claims, if appropriate, to the
extent that they are awarded judgments in excess of the
insurance coverage; or which are not otherwise covered by
insurance, to participate in any distributions made to
similarly situated creditors in the Debtors' Chapter 11
cases.
Eric C. Rajala, Esq., in Overland Park, Kansas, relates that the
Movants suffered personal injuries after their motor vehicle
collided with a truck owned by Interstate Brands West and
operated by Interstate employee Cory C. Jones at the intersection
of Eastern Avenue and Viking Road in Clark County, Nevada, on
December 12, 2002.
The Movants have filed personal injury lawsuits against
Interstate Brands West and others to recover damages resulting
from their injuries. However, as of the Petition Date, the
prosecution of the Movants' tort suits has been stayed.
Mr. Tucker is the plaintiff in the personal injury case entitled
Joshua Tucker v. Cory C. Jones, et. al., in Clark County, Nevada,
District Court No. A469940. Mr. Tucker alleges that he suffered
injuries as a result of Mr. Jones' negligence. He seeks damages
totaling $10.5 million.
Ms. Wagner's personal injury case is entitled Davita Wagner v.
Kimberly L. Ferguson, et al., Clark County, Nevada, District
Court No. A475700. Ms. Wagner seeks damages totaling $511,951,
as restitution for the injuries she suffered as a result of Mr.
Jones' negligence.
Interstate Brands West is named as a co-defendant in both
complaints.
Headquartered in Kansas City, Missouri, Interstate Bakeries
Corporation is a wholesale baker and distributor of fresh baked
bread and sweet goods, under various national brand names,
including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R),
Merita(R) and Drake's(R). The Company employs approximately
32,000 in 54 bakeries, more than 1,000 distribution centers and
1,200 thrift stores throughout the U.S.
The Company and seven of its debtor-affiliates filed for chapter
11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No.
04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at
Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in
their restructuring efforts. When the Debtors filed for
protection from their creditors, they listed $1,626,425,000 in
total assets and $1,321,713,000 (excluding the $100,000,000 issue
of 6.0% senior subordinated convertible notes due August 15, 2014,
on August 12, 2004) in total debts. (Interstate Bakeries
Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
KEY3MEDIA GROUP: Wants Until Sept. 30 to Object to Proofs of Claim
------------------------------------------------------------------
Key3Media Group, Inc., and its debtor-affiliates ask the U.S.
Bankruptcy Court for the District of Delaware to further extend
the deadline by which they or the Creditor Representative
appointed under their confirmed chapter 11 plan can file
objections to proofs of claims.
The Reorganized Debtors want until Sept. 30, 2005, to object to
proofs of claim filed against their estates.
The Court confirmed the Debtors' First Amended Joint Plan of
Reorganization on June 4, 2003, and the Plan took effect on
June 20, 2003.
The Reorganized Debtors have substantially completed the review
and reconciliation of approximately 380 claims filed against their
estates. But there are still remaining claims that need to be
reviewed and reconciled.
The Reorganized Debtors give the Court three reasons militating in
favor of the extension:
1) they and the Creditor Representative have identified several
remaining claims that are potentially objectionable, but
there has been a recent turnover of personnel working on the
claims, resulting in a delay of the timetable in completing
the claims reconciliation and objection process;
2) the requested extension is necessary to ensure the accurate
and efficient completion of the claims reconciliation and
objection process; and
3) the requested extension is not being sought for purposes of
delaying the claims resolution process and it will not
prejudice any claimants.
Headquartered in Los Angeles, California, Key3Media Group, Inc.,
produces, manages and promotes a portfolio of trade shows,
conferences and other events for the information technology
industry. The Company and its debtor-affiliates filed for chapter
11 protection on Feb. 3, 2003 (Bankr. D. Del. Case No. 03-10323).
Christina M. Houston, Esq., at Richards, Layton & Finger, P.A.,
and David M. Friedman, Esq., at Kasowitz, Benson, Torres &
Friedman, LLP, represent the Debtor. When the Debtors filed for
protection from their creditors, they listed $241,202,000 in total
assets and $441,033,000 in total liabilities.
KMART CORP: Court Disallows 112 Workers' Compensation Claim
-----------------------------------------------------------
As reported in the Troubled Company Reporter on June 20, 2005,
Kmart Corporation asked the U.S. Bankruptcy Court for the Northern
District of Illinois to enter judgment in its favor with respect
to the 112 Workers' Compensation Claims.
Kmart has objected to the Claims in its Eighth Omnibus Objection
for the reason that "pursuant to the [Plan of Reorganization],
Kmart is obligated to continue the Workers' Compensation programs
in accordance with applicable state law and is responsible for all
valid claims for benefits and liabilities under the Workers'
Compensation programs regardless of when the applicable injuries
were incurred."
After due deliberations, Judge Sonderby:
(1) disallows 112 paid Workers' Compensation Claims;
(2) adjourns the Objection with respect to the Claims asserted
by:
* Dorothy Frizzell,
* Donald Shockley,
* Judi Bishop,
* Myra Holland,
* Kathleen L. Genoff,
* Wanda L. Robertson,
* Gary W. Whaley,
* Elissa Owens,
* Connie Agee,
* Fran Abrusci,
* Andrea Sullivan, and
* State Insurance Fund Corporation.
A complete list of the disallowed claims is available for free at:
http://bankrupt.com/misc/kmart_allowed_workers_compensation_claims.pdf
Headquartered in Troy, Michigan, Kmart Corporation (n/k/a KMART
Holding Corporation) -- http://www.bluelight.com/-- operates
approximately 2,114 stores, primarily under the Big Kmart or Kmart
Supercenter format, in all 50 United States, Puerto Rico, the U.S.
Virgin Islands and Guam. The Company filed for chapter 11
protection on January 22, 2002 (Bankr. N.D. Ill. Case No.
02-02474). Kmart emerged from chapter 11 protection on May 6,
2003. John Wm. "Jack" Butler, Jr., Esq., at Skadden, Arps, Slate,
Meagher & Flom, LLP, represented the retailer in its restructuring
efforts. The Company's balance sheet showed $16,287,000,000 in
assets and $10,348,000,000 in debts when it sought chapter 11
protection. Kmart bought Sears, Roebuck & Co., for $11 billion to
create the third-largest U.S. retailer, behind Wal-Mart and
Target, and generate $55 billion in annual revenues. The
waiting period under the Hart-Scott-Rodino Antitrust Improvements
Act expired on Jan. 27, without complaint by the Department of
Justice. (Kmart Bankruptcy News, Issue No. 99; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
KRISPY KREME: Special Committee Completes 10-Month Probe
--------------------------------------------------------
The Special Committee of the Board of Directors for Krispy Kreme
Doughnuts, Inc. (NYSE: KKD) has completed its independent
investigation ten months after it conducted the probe. The
Special Committee has prepared a comprehensive report, which has
been presented to the Board.
The Special Committee is co-chaired by Michael H. Sutton, formerly
Chief Accountant of the Securities and Exchange Commission, and
Lizanne Thomas, a senior corporate partner in the Atlanta office
of Jones Day, a global law firm. Weil, Gotshal & Manges LLP and
Smith Moore LLP represented the co-chairs with assistance by a
forensic accounting team from Navigant Consulting, Inc. The
Special Committee was established by Krispy Kreme's Board of
Directors in October 2004 to conduct an independent investigation
of various matters, and its report is the result of an extensive
review conducted over approximately ten months.
"The completion of the Special Committee report represents an
important step forward for Krispy Kreme, both in understanding
what occurred and in providing the framework for our upcoming
restatement of our financial statements," said James H. Morgan,
Chairman of the Board of Krispy Kreme. "The Company and its Board
of Directors embrace the directives of the Special Committee and
are committed to ensuring that the highest standards of business
conduct, financial reporting and internal controls are maintained.
Krispy Kreme is a powerful brand, and we believe we are making
progress every day in getting the Company back on track to
realizing its full potential."
"We believe the remedial actions that we are directing the Company
to take, which include significant changes in corporate culture
and governance, provide a foundation on which the Company can
rebuild public confidence and trust," said Michael Sutton and
Lizanne Thomas, co-chairs of the Special Committee.
Since January 2005, the Special Committee, the Board of Directors
and the new management team have taken, and as a result of the
report of the Special Committee will take, numerous steps to
strengthen Krispy Kreme's corporate governance, compliance and
internal controls.
Special Committee Report
In its report, the Special Committee said:
"The Krispy Kreme story is one of a newly-public company,
experiencing rapid growth, that failed to meet its accounting
and financial reporting obligations to its shareholders and the
public. While some may see the accounting errors discussed in
our Summary as relatively small in magnitude, they were
critical in a corporate culture driven by a narrowly focused
goal of exceeding projected earnings by a penny each quarter.
"In our view, Scott A. Livengood, former Chairman of the Board
and Chief Executive Officer, and John W. Tate, former Chief
Operating Officer, bear primary responsibility for the failure
to establish the management tone, environment and controls
essential for meeting the Company's responsibilities as a
public company. Krispy Kreme and its shareholders have paid
dearly for those failures, as measured by the loss in market
value of the Company's shares, a loss in confidence in the
credibility and integrity of the Company's management and the
considerable costs required to address those failures.
"The number, nature and timing of the accounting errors
strongly suggest that they resulted from an intent to manage
earnings. All those we interviewed have repeatedly and firmly
denied having any intent to manage earnings or having given or
received any instruction (explicit or otherwise) to do so. But
we never received credible explanations for transactions that
appear to have been structured or timed to allow for the
improper recognition of revenue or improper reduction of
expense. While we believe that our investigation was thorough
and more than sufficient to support our conclusions, we
recognize that government investigators, who have a broader
array of investigatory tools than are available in a private
investigation such as ours, may uncover additional facts that
will better illuminate the intent behind various individuals'
actions and the underlying events.
"All officers or employees who we believe had any substantial
involvement in or responsibility for the accounting errors have
left the Company.
"The Special Committee reserves the right to oversee the
Company's restatement process to ensure that the restatement
adjusting entries comport with our understanding of the facts
and generally accepted accounting principles. The Special
Committee also reserves the right to conduct any additional
investigation it deems appropriate with respect to new facts or
issues that may arise in the restatement process.
"As discussed in the Summary, after considering the Company's
history and culture, and the critical importance of preventing
future lapses of oversight and re-establishing the Company's
credibility with shareholders, regulators, lenders and other
constituencies, the Special Committee has directed the Board of
Directors to act promptly to implement a broad range of changes
in corporate governance. Among these required changes are the
reconstitution of the Board of Directors so that a substantial
majority of the Board consists of individuals who were not
directors at the time of the events the Special Committee
investigated, all of the directors other than the CEO are
independent directors and the position of Emeritus Director is
eliminated. Other required changes include enhancing the
processes to ensure that the Board receives, on a timely basis,
accurate, candid and balanced information about all material
issues, substantially bolstering the Company's resources in the
areas of accounting, financial reporting and internal audit and
changes in the areas of controls, compliance, public disclosure
and compensation.
"Also as discussed in the Summary, the Special Committee has
concluded that it is in the best interests of the Company:
(i) to reject the demands by shareholders that the Company
commence litigation against present and former directors
and officers of the Company and the sellers of certain
franchises to the Company;
(ii) to seek dismissal of shareholder derivative litigation
against the outside directors, the sellers of certain
franchises and current and former officers other than
Scott Livengood, John Tate and Randy S. Casstevens, the
Company's former Chief Financial Officer; and
(iii) not to seek dismissal of shareholder derivative
litigation against Messrs. Livengood, Tate and
Casstevens, although the Company will not assist or
participate in such litigation."
A full-text copy of the Special Committee's Summary of Independent
Investigation is available for free at:
http://ResearchArchives.com/t/s?bd
Financial Restatements
As previously announced, management and the Board of Directors
have concluded that certain previously issued financial statements
should no longer be relied upon and should be restated. The
Company is working diligently to complete this restatement, as
well as the preparation of its annual financial statements for the
fiscal year ended Jan. 31, 2005.
The adjustments are currently expected to have the effect of
decreasing pre-tax income for periods through the third quarter of
fiscal 2005 by an estimated cumulative $25.6 million. The
adjustments are currently estimated to decrease pre-tax income by
$1.1 million, $1.9 million, $2.1 million, $13.9 million and
$3.2 million for fiscal 2001, 2002, 2003 and 2004 and the first
nine months of fiscal 2005, respectively, as well as by
$3.4 million for periods prior to fiscal 2001. The estimates
remain subject to revision and the results of the audit of the
Company's annual financial statements.
KremeKo Financial Consolidation
As previously announced on April 19, 2005, the Company also has
concluded that under the provisions of FIN46(R), it should have
consolidated the financial statements of KremeKo Inc., its area
developer for Central and Eastern Canada, effective as of the end
of the first quarter of fiscal 2005 rather than as of the end of
the third quarter of fiscal 2005. The Company currently expects
that restatement adjustments to previously issued interim
financial information for fiscal 2005 to correct this error will
not have a material effect on pre-tax earnings for such interim
periods.
As previously disclosed on Apr. 19, 2005, the Company currently is
conducting impairment testing of reported amounts of goodwill and
anticipates that a significant, non-cash impairment charge will be
reflected in fiscal 2005 earnings; however, the Company has not
concluded in which interim period or periods of fiscal 2005 such
anticipated charge should be recorded. The interim financial
information previously published by the Company for fiscal 2005
does not reflect any such impairment charge. Moreover, the
$25.6 million of estimated cumulative pre-tax adjustments
described herein do not include any such impairment charge.
As previously announced on November 22, 2004, the Company is
continuing to monitor receivables from its franchisees. The
Company anticipates that its results of operations for both fiscal
2005 and 2006 will be adversely affected by adjustments to
recognize the financial difficulties faced by certain franchisees.
In addition to lower average weekly sales per factory store, the
Company noted that recent quarters have also been adversely
affected by lower sales to franchisees from the Company's
Manufacturing and Distribution segment, and that the Company has
incurred a net loss in each of the last three fiscal quarters.
The Company's financial results are also being adversely affected
by the substantial costs associated with the legal and regulatory
matters previously disclosed by the Company.
Kroll Retention
On Jan. 18, 2005, the Company retained Kroll Zolfo Cooper LLC to
provide management services to the Company. Since such date,
under KZC's leadership, the Company has:
* obtained a new $225 million secured credit facility
* closed certain unprofitable factory stores and is working to
fix Company store operations through the implementation of
production efficiency and margin improvement programs
* restructured and is continuing to restructure complex
franchisee relationships and obligations
* hired a new Chief Accounting Officer and is working to
assess and develop improvements to internal financial
controls
* reduced the number of employees in its corporate, mix plant,
equipment manufacturing and distribution facilities by
approximately 25%
In addition, KZC is working with the Company on assessing and
developing:
* new product offerings for both retail and wholesale channels
* traffic building marketing and promotion programs
* wholesale volume and margin improvement programs and
conducting testing and route profitability analyses
* ongoing cost reduction initiatives
* new store concepts and formats
"Our plan is simple. We are focusing on excellence in Company and
franchise operations and on what makes Krispy Kreme a great brand:
delivering the highest quality doughnuts and coffee and other
beverages to our retail and wholesale customers. While the Company
still faces serious challenges, we believe we are addressing the
critical issues," said Stephen F. Cooper, CEO of Krispy Kreme and
Chairman of KZC.
The Company noted that it has been incurring monthly fees from KZC
on an hourly basis in accordance with their management agreement.
KZC's fees have been averaging approximately $800,000 per month as
a result of the substantial resources required to address the
Company's operations and restructure complex franchisee
relationships and obligations.
Liquidity and Capital Resources
On April 1, 2005, the Company entered into senior secured credit
facilities aggregating $225 million, comprised of:
-- a $75 million first lien senior secured revolving credit
facility;
-- a $120 million second lien senior secured term loan; and
-- a $30 million second lien prefunded revolving credit and
letter of credit facility.
"With a solid cash position and sufficient borrowing availability,
we believe Krispy Kreme has the financial flexibility needed to
implement our plan," said Steven G. Panagos, President and COO of
Krispy Kreme and Managing Director of KZC.
Material Weaknesses
Although the Company has not yet completed its assessment of
internal control over financial reporting, management has
concluded that material weaknesses existed as of Jan. 30, 2005.
A material weakness is a control deficiency, or combination of
control deficiencies, that results in more than a remote
likelihood that a material misstatement of the annual or interim
financial statements will not be prevented or detected. The
material weaknesses identified to date relate to four broad
internal control issues:
* The Company failed to maintain an effective control
environment, including failure of former senior management
to set the appropriate tone at the top of the organization
and to ensure adequate controls were designed and operating
effectively
* The Company failed to maintain a sufficient complement of
personnel with a level of accounting knowledge, experience
and training in the application of generally accepted
accounting principles commensurate with the Company's
financial reporting requirements and the complexity of the
Company's operations and transactions
* The Company failed to maintain effective controls over the
documentation and analysis of acquisitions to ensure they
were accounted for in accordance with GAAP
* The Company failed to maintain effective controls over the
selection and application of accounting policies related to
leases and leasehold improvements to ensure they were
accounted for in accordance with GAAP
Because management has not completed its testing and evaluation of
the Company's internal control over financial reporting and its
evaluation of the control deficiencies identified to date, the
Company may identify additional material weaknesses. Based on the
material weaknesses identified to date, management believes it
will conclude in "Management's Report on Internal Control over
Financial Reporting" in its fiscal 2005 Form 10-K that the
Company's internal control over financial reporting was not
effective as of January 30, 2005. Also, as a result of these
material weaknesses, management believes that the report of the
Company's independent registered public accounting firm will
contain an adverse opinion with respect to the effectiveness of
the Company's internal control over financial reporting as of
January 30, 2005. The Company plans to provide a more detailed
description of material weaknesses, including its plan for
remediating such weaknesses, in its annual report on Form 10-K for
fiscal 2005.
New Chief Accounting Officer
As reported in the Troubled Company Reporter on June 11, 2005,
Krispy Kreme appointed Douglas R. Muir as the Company's Chief
Accounting Officer.
Mr. Muir has been a consultant to the Company since December 2004.
From 1993 to 2004, he held various senior financial management
positions with Oakwood Homes Corporation, including Executive Vice
President and Chief Financial Officer. Prior to joining Oakwood
Homes, he had a 17-year career at Price Waterhouse, including as
an audit partner in the Charlotte office from 1988 to 1993.
KremeKo, Inc., a Krispy Kreme Doughnuts, Inc. franchisee,
filed an application with the Ontario Superior Court of Justice
to restructure under the Companies' Creditors Arrangement Act, on
Apr. 15, 2005. Pursuant to the Court's Initial Order, Ernst &
Young Inc. was appointed as Monitor in KremeKo's CCAA proceedings.
The Monitor is attempting to sell the KremeKo business.
Founded in 1937 in Winston-Salem, North Carolina, Krispy Kreme is
a leading branded specialty retailer of premium quality doughnuts,
including the Company's signature Hot Original Glazed. Krispy
Kreme currently operates approximately 400 stores in 45 U.S.
states, Australia, Canada, Mexico, the Republic of South Korea and
the United Kingdom. Krispy Kreme can be found on the World Wide
Web at http://www.krispykreme.com/
LAC D'AMIANTE: Wants ASARCO's Proceeds Used to Pay Professionals
----------------------------------------------------------------
Lac d'Amiante Du Quebec Ltee, fka Lake Asbestos of Quebec, Ltd.,
and its affiliates, ASARCO LLC, the Official Unsecured Creditors'
Committee, and the Future Claims Representative, entered into an
agreement regarding insurance proceeds.
These proceeds include $1,944,172 on June 1, 2005 and $278,362
received on or about June 27, 2005, both received by ASARCO.
The parties agreed that ASARCO should use the proceeds to pay all
amounts outstanding for professional services through May 31 or
the most recent invoice period, to the Debtors', the Committee's
and ASARCO's professionals and legal advisors of their
reorganization-related services.
The following professionals will receive these amounts:
Initial
Professional Disbursement Amount
------------ -------------------
Anderson Kill & Olick, P.C. $124,100
Baker Botts L.L.P. $387,276
Hamilton, Rabinovitz & Alschuler, Inc. $19,744
Jordan, Hyden, Womble & Culbreth, P.C. $137,085
L. Tersigni Consulting P.C. $401,073
Law Office of Robert C. Pate $2,383
LECG, LLC $63,224
Mesirow Financial Consulting, LLC $190,722
Oppenheimer, Blend, Harrison & Tate, Inc. $30,776
Risk International Services, Inc. $10,274
Stutzman, Bromberg, Esserman & Plifkam P.C. $100,851
Any other professional to be retained in the
Debtors' chapter 11 proceedings to be determined
-------------------
Total Initial Disbursement: $1,467,508
After the disbursements, ASARCO will deposit all the remnants of
the proceeds into an escrow account to be maintained at Wells
Fargo or another financial institution.
Accordingly, the Parties ask the U.S. Bankruptcy Court for the
Southern District of Texas to approve the stipulation.
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. S.D. Tex. 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.
LB COMMERCIAL: Fitch Junks Rating on $7.7 Million Class F Certs.
----------------------------------------------------------------
LB Commercial Conduit Mortgage Trust's multiclass pass-through
certificates, series 1995-C2, are downgraded by Fitch Ratings:
-- $7.7 million class F to 'CCC' from 'B-'.
Fitch also affirms the following:
-- $19 million class E 'AA'.
The downgrade to class F reflects increased concentrations by
property and loan size as well as the increased number of loans of
concern. The top five loans represent 83% of the pool and hotels
represent 99%. Also, two real estate owned assets have been
disposed, resulting in higher than anticipated losses.
LEHMAN FINANCIAL: Case Summary & 13 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Lehman Financial Group LLC
168 North Michigan Avenue
Chicago, Illinois 60601-7509
Bankruptcy Case No.: 05-31460
Chapter 11 Petition Date: August 10, 2005
Court: Northern District of Illinois (Chicago)
Judge: Jacqueline P. Cox
Debtor's Counsel: Daniel A. Zazove, Esq.
Perkins Coie LLP
131 South Dearborn, Suite 1700
Chicago, Illinois 60603-5559
Tel: (312) 324-8605
Fax: (312) 324-9400
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 13 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Romel Esmail $300,000
47 West Division Street #121
Chicago, IL 60610
Antunovice and Associates $45,255
224 West Huron Street, Suite 7
Chicago, IL 60610
Real Estate Consultants Inc. $23,192
19 South LaSalle Street, Suite 602
Chicago, IL 60603
Very Cheap, Inc. $9,000
47 West Division Street #357
Chicago, IL 60610
Gonzales Hasbrook $9,438
180 North Wabash
Chicago, IL 60601
168 North Michigan Finance, LLC Unknown
1808 North Halsted
Chicago, IL 60014
City of Chicago Unknown
333 South State Street
Chicago, IL 60604
Cook County Treasurer Unknown
P.O. Box 803358
Chicago, IL 60680
Don Kindwald Unknown
19 South LaSalle Street #802
Chicago, IL 60601
North Star Trust Unknown
500 West Madison Street, Suite 3800
Chicago, IL 60661
Otis Elevator Company Unknown
1 Farm Springs Road
Farmington, CT 06032
Ronald Gertzman Unknown
205 West Randolph Street, Suite 401
Chicago, IL 60603
W.E. O'Neil Unknown
2751 North Clybourn Avenue
Chicago, IL 60614
LIBERTY MEDIA: Robert Bennett to Leave CEO Post by April 2006
-------------------------------------------------------------
Liberty Media Corporation (NYSE: L, LMCB) disclosed that its
President and Chief Executive Officer, Robert R. Bennett, has
informed the Board of Directors of his intention to retire as of
April 1, 2006. Mr. Bennett will remain a director of Liberty and
will continue to work with the company on special projects. In
addition, he will continue in his position as President and a
director of Discovery Holding Company, the former Liberty
subsidiary that was distributed to shareholders on July 21, 2005.
Liberty's Chairman, John Malone, has been elected to serve as CEO
until a successor has been identified.
Liberty Media Corporation (NYSE: L, LMC.B) is a holding company
owning interests in a broad range of electronic retailing, media,
communications and entertainment businesses classified in three
groups; Interactive, Networks and Tech/Ventures. Our businesses
include some of the world's most recognized and respected brands
and companies, including QVC, Encore, Starz, Discovery,
IAC/InterActiveCorp, and News Corporation.
* * *
As reported in the Troubled Company Reporter on March 17, 2005,
Standard & Poor's Ratings Services lowered its rating on Liberty
Media Corporation's senior unsecured debt to 'BB+' from 'BBB-',
based on the company's plan to spin off to shareholders its 50%
stake in Discovery Communications Inc. and its 100% ownership of
Ascent Media Group Inc., without a commensurate reduction in
debt.
Ratings have been removed from CreditWatch, where they were placed
with negative implications on Jan. 21, 2005. At the same time,
Standard & Poor's lowered its other ratings on the company,
including its corporate credit rating, to 'BB+' from 'BBB-'. The
outlook is stable. Total principal value debt as of Dec. 31, 2004,
was $10.9 billion.
"With this transaction, Liberty and creditors lose a stable,
high-quality, high-growth asset, on the heels of the spin-off in
2004 of the company's international cable TV and related assets,
into which Liberty had transferred significant cash and other
investments," said Standard & Poor's credit analyst Heather M.
Goodchild.
LIONEL LLC: Inks Trade-Secret Settlement with K-Line Electric
-------------------------------------------------------------
The Associated Press reports that Lionel LLC has reached a
settlement in a copyright infringement and disclosure of trade-
secrets lawsuit it filed against K-Line Electric Trains Inc.
K-Line, its owner Mary Klein, and Robert Grubba, a former Lionel
employee, admitted that they paid former Lionel chief engineer to
develop advanced versions of the company's operating systems and
features used in several of K-Line's engines and electrical
transformers, the AP relates. K-Line also admitted that some of
its products contain technology developed by Lionel.
Under the settlement agreement, K-Line:
* agrees to stop selling products which use Lionel's
technology by the end of its 2005 fiscal year;
* will pay Lionel royalties on all those sold products using
Lionel's technology; and
* agrees to reimburse Lionel up to $700,000, for legal and
related costs.
Celeste M. Butera, Esq., at Rivkin Radler LLP represents K-Line.
Headquartered in Hillsborough, North Carolina, K-Line Electric
Trains Inc. -- http://www.k-linetrains.com/-- claims to produce
well-crafted, accurately detailed electric trains of the highest
quality.
Headquartered in Chesterfield, Michigan, Lionel LLC --
http://www.lionel.com/-- is a marketer of model train products,
including steam and die engines, rolling stock, operating and non-
operating accessories, track, transformers and electronic control
devices. The Company filed for chapter 11 protection on Nov. 15,
2004 (Bankr. S.D.N.Y. Case No. 04-17324). Abbey Walsh Ehrlich,
Esq., at O'Melveny & Myers, LLP, represents the Debtors on their
restructuring efforts. When the Company filed for protection from
its creditors, it estimated assets between $10 million and $50
million and estimated debts more than $50 million.
MAXXAM INC: June 30 Balance Sheet Upside-Down by $681.2 Million
---------------------------------------------------------------
MAXXAM Inc. (AMEX:MXM) reported a net loss of $9.6 million for the
second quarter of 2005, compared to a net loss of $5.3 million for
the same period a year ago. Net sales for the second quarter of
2005 totaled $87.2 million, compared to $92.5 million in the
second quarter of 2004.
For the first six months of 2005, MAXXAM reported a net loss of
$23.8 million, compared to a net loss of $25.6 million for the
same period of 2004. Net sales for the first six months of 2005
were $170.2 million, compared to $161.4 million for the first six
months of 2004.
MAXXAM reported operating income of $6.5 million for the second
quarter of 2005 and $9.3 million for the first six months of 2005,
compared to operating income of $9.1 million and $2.5 million for
the comparable periods in 2004.
Forest Products Operations
Net sales for forest products operations decreased to
$46.9 million for the second quarter of 2005, as compared to
$56.2 million for the second quarter of 2004. The $9.3 million
decrease in net sales was due to a decline in lumber shipments
during the quarter, compounded by an unfavorable shift in lumber
sold from redwood lumber to lower-priced, common grade Douglas-fir
lumber. Additionally, there was an approximate 24% decline in the
average sales price of common grade Douglas-fir during the second
quarter, as compared to the same period in 2004.
Operating results declined by $5.6 million for the second quarter
of 2005, compared to the same period in 2004, primarily due to
decreased net sales, higher harvesting, hauling, and production
costs, and a significant increase in legal and other professional
fees principally relating to the efforts of Scotia Pacific Company
LLC (Scotia LLC) to pursue a negotiated restructuring of the
Timber Collateralized Notes (Timber Notes).
Real Estate Operations
Net sales and operating income for the real estate operations for
the second quarter of 2005 increased by $6.3 million and
$2.1 million, respectively, as compared to the same period in
2004, primarily due to increased lot sales at the Company's
Fountain Hills development.
Racing Operations
Net sales and operating income for the Company's racing operations
declined $2.3 million and $0.1 million, respectively, for the
second quarter of 2005, as compared to the same period in 2004,
principally due to a reduction in the number of live racing days
at Sam Houston Race Park.
Corporate
The Corporate segment's results improved from a loss of
$1.5 million in the second quarter of 2004 to a loss of $500,000
in the second quarter of 2005, primarily due to a $2.2 million
benefit recognized in the second quarter of 2005 related to
changes in stock-based compensation expense, which is adjusted as
the market value of the Company's common stock changes, partially
offset by increased legal and professional fees.
Palco -- Scotia Llc Liquidity Update
On Apr. 19, 2005, Palco and Britt Lumber Co., Inc. (a wholly owned
subsidiary of Palco) closed a five-year $30 million secured,
asset-based revolving credit facility (Revolving Credit Facility)
and a five-year $35 million secured term loan (Term Loan). The
Term Loan was fully funded at closing and approximately
$10.8 million of the funds from the Term Loan were used to pay off
amounts outstanding under the previous credit agreement. Palco
estimates that its cash flow from operations will not provide
sufficient liquidity to fund its operations until the fourth
quarter of 2006. Accordingly, Palco expects to be dependent on
the funds available under the Revolving Credit Facility and
existing unrestricted cash and marketable securities
($35.4 million as of June 30, 2005) to fund its working capital
requirements in 2005 and 2006. As a result of credit rating
actions related to Palco, in July 2005, Palco was required to post
a $9.9 million letter of credit to secure its workers compensation
liabilities, reducing Palco's availability under the Revolving
Credit Facility to $5.3 million.
The estimates of Scotia LLC had indicated that its cash flows from
operations, together with its Line of Credit and other available
funds, would likely be inadequate to pay all of the interest due
on the July 20, 2005, payment date for the Timber Notes. When it
became apparent that Scotia LLC's estimates would prove correct,
Scotia LLC requested that Palco make an early payment, equal to
the shortfall of $2.2 million, in respect of certain logs that had
already been delivered to and purchased by Palco from Scotia LLC.
Palco approved and delivered the early log payment, which allowed
Scotia LLC to fund the July 20, 2005, cash shortfall and pay all
of the $27.9 million of interest due ($25.9 million net of
interest due in respect of Timber Notes held by Scotia LLC).
Scotia's Bankruptcy Warning
In March 2005, UBS Securities LLC agreed to assist Scotia LLC in
seeking to restructure its obligations with respect to the
outstanding Timber Notes. Scotia LLC has advised the Company that
it intends to pursue a negotiated restructuring of the Timber
Notes and the Company believes that Scotia LLC, and as necessary,
Palco, will be required to file under Chapter 11 of the Bankruptcy
Code in order to accomplish a negotiated restructuring consistent
with management's expectations as to future harvest levels and
cash flows.
On Aug. 1, 2005, Scotia LLC announced the broad outlines of a
potential restructuring plan proposal made to the Noteholder
Committee, to be accomplished through confirmation of a plan of
reorganization under Chapter 11 of the Bankruptcy Code.
The principal terms of the proposal include, among other things,
the issuance of new senior secured notes in an aggregate principal
amount of $300 million and transfer of 90% of the ownership of the
reorganized Scotia LLC to holders of the Timber Notes. Neither
these, nor any other proposed restructuring terms, have been
agreed to by Palco, or any Noteholders, nor can there be any
assurance that any of these terms will be agreed upon, that there
will be an agreement, or, if there is an agreement, what the terms
will be of any such agreement. There can be no assurance that
Scotia LLC will be successful in its efforts to restructure its
Timber Notes.
Scotia LLC and UBS have conducted extensive reviews and analyses
of Scotia LLC's assets, operations and prospects. As a result of
these extensive reviews and analyses, Scotia LLC's management has
concluded that, in the absence of significant regulatory relief
and accommodations, Scotia LLC's timber harvest levels and cash
flows from operations will in future years be substantially below
both historical levels and the minimum levels necessary in order
to allow Scotia LLC to satisfy its debt service obligations in
respect of the Timber Notes. Scotia LLC's management has also
concluded that its cost structure will have to be reduced in line
with these anticipated reductions in harvest levels and cash
flows. To the extent that Scotia LLC is unable to achieve a
negotiated restructuring of its Timber Notes consistent with
management's expectations as to future harvest levels and cash
flows, the Company expects that Scotia LLC, and as may be
required, Palco, will be forced to take extraordinary actions,
which may include:
-- reducing expenditures by laying off employees and shutting
down various operations;
-- seeking other sources of liquidity, such as from asset
sales; and
-- seeking protection by filing under the Bankruptcy Code.
MAXXAM Inc. (AMEX:MXM) is engaged in a wide range of businesses
from aluminum and timber products to real estate and horse racing.
The Company's timber subsidiary, Pacific Lumber, owns about
205,000 acres of old-growth redwood and Douglas fir timberlands in
Humboldt County, California. MAXXAM's real estate interests
include commercial and residential properties in Arizona,
California, and Texas, and Puerto Rico. The company also owns the
Sam Houston Race Park, a horseracing track near Houston.
At June 30, 2005, MAXXAM Inc.'s consolidated balance sheet showed
a $681.2 million stockholders' deficit, compared to a
$657.1 million deficit at Dec. 31, 2004.
MAYTAG CORP: Whirlpool Hikes Takeover Bid to $21 Per Share
----------------------------------------------------------
Whirlpool Corporation has raised its acquisition offer for Maytag
Corp. to $21 per share. The value of Whirlpool's bid has now
increased to $1.68 billion.
This is just one of the latest moves between Whirlpool and
Ripplewood Holdings LLC in the battle for the takeover of Maytag,
which could reach a critical stage when Maytag's shareholders vote
on Aug. 19, 2005, to decide on Ripplewood's offer.
Whirlpool Corporation is the world's leading manufacturer and
marketer of major home appliances, with annual sales of over $13
billion, 68,000 employees, and nearly 50 manufacturing and
technology research centers around the globe. The company markets
Whirlpool, KitchenAid, Brastemp, Bauknecht, Consul and other major
brand names to consumers in more than 170 countries.
Maytag Corporation is a leading producer of home and commercial
appliances. Its products are sold to customers throughout North
America and in international markets. The corporation's principal
brands include Maytag(R), Hoover(R), Jenn-Air(R), Amana(R), Dixie-
Narco(R) and Jade(R).
At July 2, 2005, Maytag Corp.'s balance sheet showed a
$77.4 million of stockholders' deficit, compared to a $75 million
deficit at Jan. 1, 2005.
* * *
As reported in the Troubled Company Reporter on July 21, 2005,
Fitch Ratings placed Maytag Corporation's approximately
$969 million of 'BB' rated senior unsecured notes on Rating Watch
Evolving.
This action followed the July 17, 2005 announcement that Whirpool
Corporation has made a proposal to acquire Maytag for $2.3 billion
in cash and stock and reflects the potential for either an upgrade
or downgrade given the various competing offers for Maytag and the
credit profile that could result. Whirlpool Corporation has made
a proposal to acquire Maytag for $17 per share plus the assumption
of $969 million of Maytag's debt for a total transaction valued at
$2.3 billion.
This bid follows two other bids: Initially, on May 19, 2005,
Maytag entered into a definitive agreement to be acquired by a
private investor group led by Ripplewood Holdings LLC for $14 per
share cash. Subsequently, on June 21, 2005, Maytag announced that
it had received a preliminary non-binding proposal from Bain
Capital Partners LLC, Blackstone Capital Partners IV L.P., and
Haier America Trading, L.L.C. to acquire all outstanding shares of
Maytag for $16 per share cash.
As reported in the Troubled Company Reporter on July 20, 2005,
Standard & Poor's Ratings Services placed its 'BBB+' long-term and
'A-2' short-term corporate credit and other ratings on home
appliance manufacturer Whirlpool Corp. on CreditWatch with
negative implications.
At the same time, Standard & Poor's revised its CreditWatch status
of home and commercial appliance manufacturer Maytag Corp. to
developing from CreditWatch negative.
As reported in the Troubled Company Reporter on Apr. 29, 2005,
Moody's Investors Service downgraded Maytag Corporation's senior
unsecured ratings to Ba2 from Baa3 and the short-term rating to
Not Prime from Prime-3. At the same time the Ba2 senior unsecured
note rating was placed on review for possible further downgrade.
Moody's also assigned a new senior implied rating of Ba2. Moody's
says the outlook for the ratings remains negative.
The ratings downgraded are:
* Senior unsecured rating to Ba2 from Baa3; the rating is
placed on review for possible further downgrade
* Issuer rating to Ba2 from Baa3,
* Short term rating to Not Prime from P-3.
The rating assigned:
* Senior implied rating of Ba2.
METROPOLITAN MORTGAGE: Wants Class M5 & S5 Claims Set at $1
-----------------------------------------------------------
Metropolitan Mortgage & Securities Co., Inc., and Summit
Securities, Inc., ask the U.S. Bankruptcy Court for the Eastern
District of Washington for an order estimating contingent and
unliquidated Classe M5 and S5 Intercompany claims for voting on
the companies' plan of reorganization. Absent a fixed amount for
unliquidated and contingent claims, it will not be possible for
the Debtors' to tally votes.
The Debtors delivered to the Court a Second Amended Joint
Disclosure Statement and Second Amended Joint Plan of
Reorganization on June 22, 2005. The Plan provides for the
establishment of Class M5 and S5.
Class M5
Three insurers filed claims against Metropolitan which are
contingent or unliquidated:
* Old West Annuity & Life Insurance Company, filed two
contingent claims;
* Old Standard Life Insurance Company, filed one unliquidated
claim; and
* Western United Life Assurance Company, filed on unliquidated
claim.
Class S5
Old West Annuity & Life Insurance Co. filed two claims against
Summit Securities:
* a $2,972,555 liquidated claim and
* a second claim which is contingent.
Western United filed a single unliquidated claim against Summit.
The Debtors want the insurers contingent and unliquidated claims
estimated at $1 to avoid delay in the administration of their
chapter 11 cases.
The Court will continue the Disclosure Statement telephonic
hearing on September 1, 2005, at 10:00 a.m.
Headquartered in Spokane, Washington, Metropolitan Mortgage &
Securities Co., Inc., owns insurance businesses. Metropolitan
filed for Chapter 11 protection (Bankr. E.D. Wash. Case No. 04-
00757), along with Summit Securities Inc., on Feb. 4, 2004. Bruce
W. Leaverton, Esq., at Lane Powell Spears Lubersky LLP and Doug B.
Marks, Esq., at Elsaesser, Jarzabek, Anderson, Marks, Elliot &
McHugh represent the Debtors in their restructuring efforts. When
Metropolitan Mortgage filed for chapter 11 protection, it listed
total assets of $420,815,186 and total debts of $415,252,120.
MID-STATE RACEWAY: Court Okays Supplemental DIP Financing
---------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of New York
approved Mid-State Raceway, Inc., and its debtor affiliate's
request obtain supplemental debtor in possession financing
pursuant to section 364(c) of the Bankruptcy Code. This gives the
Debtors access to $675,265 of fresh financing from Jeffrey Gural
under the terms of a Revised Loan Agreement dated June 13, 2005.
Headquartered in Vernon, New York, Mid-State Raceway, Inc., dba
Vernon Downs -- http://www.vernondowns.com/-- operates a
racetrack, restaurant and gaming resort. The Company and its
debtor-affiliate filed for chapter 11 protection on August 11,
2004 (Bankr. N.D.N.Y. Case No. 04-65746). Lee E. Woodard, Esq.,
at Harris Beach LLP, represents the Debtors in their restructuring
efforts. When the Debtors filed for protection, they listed
estimated debts of $10 million to $50 million but did not disclose
its assets.
MILLENNIUM AMERICA: Fitch Assigns BB+ Rating on $250 Mil. Facility
------------------------------------------------------------------
Fitch Ratings has assigned a 'BB+' to the new US$250 million five-
year guaranteed secured bank facility of Millennium America with
Millennium Inorganic Chemicals, a co-borrower under the facility.
This facility replaces an existing secured credit facility that
was due to mature in June 2006 that was also rated 'BB+'. Both
Millennium America Inc. and MICL are subsidiaries of Millennium
Chemicals, Inc., which is a subsidiary of Lyondell Chemical.
In addition, Fitch affirms Millennium America's senior unsecured
notes at 'BB' as well as Millennium Chemical's convertible senior
unsecured debentures rating at 'BB'. Millennium's Issuer Default
Rating is 'B+'. The Rating Outlook remains Stable.
The new senior secured credit facility consists of a US$100
million Australian term facility and a US$150 million revolving
credit facility divided into two parts: a US$125 million U.S.
tranche and a US$25 million Australian tranche.
The US$125 million U.S. tranche is secured by a lien on domestic
accounts receivable and inventory, which should provide more than
adequate coverage even on a distressed basis. In addition, this
facility has a lien on 65% of the capital stock of Millennium's
international subsidiaries and a first priority lien on dividends
from Equistar. Furthermore, this tranche is guaranteed by
Millennium Chemical, and Millennium US Op Co. LLC, the primary
operating subsidiary of Millennium America.
The US$25 million Australian tranche and US$100 million Australian
term facility are secured by substantially all of Millennium's
tangible and intangible assets in Australia.
The rating affirmation for Millennium is supported by its business
portfolio, market positions in North America and Europe, 29.5%
equity interest in Equistar, and earnings leverage during the peak
of the chemical cycle. The ratings also consider the cyclical
nature of its commodity products and Lyondell's ownership of the
company. Concerns include temporary margin pressure as the
company realizes price increases for its products and future cash
outflows for distributions to Lyondell. Currently, Millennium
cannot declare dividends to Lyondell due to certain restrictions
in its existing bond indentures. Fitch expects Millennium will be
able to declare material dividends to Lyondell in 2006 as a result
of improvement in net earnings and increased distributions from
Equistar over the next nine to 18 months.
The Stable Rating Outlook for Millennium reflects the improvement
in Millennium's acetyls and specialty chemicals businesses and the
strengthening of supply demand fundamentals for TiO2. The
petrochemical and titanium dioxide industries are realizing higher
operating rates and tightening of supply/demand fundamentals,
which have enabled producers to increase prices. Margin expansion
occurred in 2004 and is expected to continue in 2005 as market
fundamentals strengthen.
MIRANT CORP: Creditors Committee Sues Arthur Andersen in Georgia
----------------------------------------------------------------
The Atlanta Journal-Constitution reported that the Official
Committee of Unsecured Creditors of Mirant Corp. filed a lawsuit
in Fulton County, Georgia, alleging that Arthur Andersen is to
blame for Mirant's bankruptcy.
The Mirant Committee alleged that the Debtors' former auditor
helped mislead both the public and Mirant's management about the
company's finances, according to the newspaper.
Arthur Andersen audited the financial statements of Mirant and
its predecessor Southern Energy, Inc., for at least 1998 through
2001. In May 2002, KPMG LLP replaced Andersen as Mirant's
auditor. KPMG discovered material weaknesses in Mirant's
internal accounting controls, which exposed errors in Mirant's
previously issued financial statements.
Headquartered in Atlanta, Georgia, Mirant Corporation --
http://www.mirant.com/-- is a competitive energy company that
produces and sells electricity in North America, the Caribbean,
and the Philippines. Mirant owns or leases more than 18,000
megawatts of electric generating capacity globally. Mirant
Corporation filed for chapter 11 protection on July 14, 2003
(Bankr. N.D. Tex. 03-46590). Thomas E. Lauria, Esq., at White &
Case LLP, represents the Debtors in their restructuring efforts.
When the Debtors filed for protection from their creditors, they
listed $20,574,000,000 in assets and $11,401,000,000 in debts.
(Mirant Bankruptcy News, Issue No. 73; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
MIRANT CORP: Wants to Enter into FERC Settlement Agreement
----------------------------------------------------------
In 2000 and 2001, various California and western wholesale energy
markets experienced historically high prices. As a result,
several California utilities and governmental units commenced
proceedings at the Federal Energy Regulatory Commission,
asserting that energy wholesalers operating in the markets,
including Mirant Americas Energy Marketing, LP, had charged
unjust and unreasonable prices for energy.
The FERC is considering the matter in the "FERC Refund
Proceedings." The FERC has also initiated other related
proceedings.
On June 25, 2003, the FERC issued a show cause order to more than
50 parties, including, MAEM, which have been identified by an
FERC Trial Staff report as having potentially engaged in improper
energy trading strategies.
The proceedings arising from the Trading Practices Order are
referred to as the "Gaming Proceedings."
The Trading Practices Order requires:
-- the California Independent System Operator Corporation to
identify transactions between January 1, 2000, and
June 20, 2001, that may involve certain identified trading
strategies; and
-- the applicable sellers involved in those transactions to
show cause why the transactions were not violations of the
CAISO and CalPX Tariffs.
Ian T. Peck, Esq., at Haynes and Boone, LLP, in Dallas, Texas,
relates that on September 30, 2003, the Debtors, without
admission of any wrongdoing, submitted to the FERC, for its
approval, a settlement agreement with the FERC Trial Staff.
Under the Trading Settlement Agreement, MAEM agreed to settle the
Gaming Proceedings for $332,411.
In a different proceeding, the FERC ruled that the trading
practice that involved allegations of improper trading conduct
with respect to ancillary services should be resolved in the
Gaming Proceedings.
On December 19, 2003, the Debtors asked the FERC to approve an
amendment to the Trading Settlement Agreement with respect to the
sale of the ancillary services. Under the proposed amendment,
the FERC would be awarded an allowed non-priority unsecured claim
against MAEM in the Debtors' Chapter 11 cases for $3,665,812, to
settle the allegations in respect of ancillary services.
Mr. Peck reports that certain "California Parties" opposed the
Trading Settlement Agreement with the FERC. Among other things,
the California Parties objected to the amount and priority of the
ancillary amount asserting that:
-- the Debtors owed over $20 million; and
-- the Ancillary Amount should be paid in full and in cash,
not as a general non-priority unsecured claim against
Mirant Americas.
On April 13, 2005, the FERC approved a global settlement among
the California Parties, the FERC Trial Staff and certain "Mirant
Parties." The California Settlement resolved all of the Debtors'
liability to the California Parties in connection with the sale
of energy by the Debtors into the California and western energy
markets from January 1, 1998, through July 14, 2003.
Mr. Peck notes that the California Settlement required the
California Parties that had objected to the Trading Settlement
Agreement to:
-- withdraw their objections; and
-- affirmatively request that the FERC approve the Trading
Settlement Agreement as filed by the Debtors and the FERC
Trial Staff, without modification.
Consistent with their obligations under the California
Settlement, the California Parties withdrew their objections to
the Trading Settlement Agreement, and requested the FERC to
approve the Trading Settlement Agreement.
Accordingly, the FERC approved the Trading Settlement Agreement
on its original terms on June 27, 2005. The approval was
conditioned on the Debtors:
-- requesting the Court to approve the Trading Settlement
Agreement; and
-- obtaining authorization from the Court to promptly pay the
Trading Proceeding Amount.
Thus, MAEM, Mirant California, LLC, Mirant Delta, LLC, and Mirant
Potrero, LLC, ask the Court to authorize them to enter into and
perform under the Trading Settlement Agreement with the FERC.
Headquartered in Atlanta, Georgia, Mirant Corporation --
http://www.mirant.com/-- is a competitive energy company that
produces and sells electricity in North America, the Caribbean,
and the Philippines. Mirant owns or leases more than 18,000
megawatts of electric generating capacity globally. Mirant
Corporation filed for chapter 11 protection on July 14, 2003
(Bankr. N.D. Tex. 03-46590). Thomas E. Lauria, Esq., at White &
Case LLP, represents the Debtors in their restructuring efforts.
When the Debtors filed for protection from their creditors, they
listed $20,574,000,000 in assets and $11,401,000,000 in debts.
(Mirant Bankruptcy News, Issue No. 72; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
MCI INC: Girard Gibbs Law Firm Files Class Action Suit
------------------------------------------------------
The law firm Girard Gibbs & De Bartolomeo LLP has filed a class
action complaint on behalf of telephone customers nationwide who
were unlawfully billed by MCI, Inc. (NASDAQ:MCIP) for monthly
service charges despite the fact they were not MCI customers. The
complaint alleges that MCI assesses the monthly fees directly or
through consumers' local phone bills.
"MCI has been charging non-customers minimum usage fees and other
monthly service fees without authorization even though MCI
provided no service to these persons," said Daniel Girard, one of
the attorneys for the plaintiff. "Consumers who mistakenly paid
MCI or paid in response to a threatening collections notice should
get their money back."
The case was brought by Shary Everett, a Goodyear, Arizona
resident who repeatedly was assessed monthly service charges by
MCI even though she had a different long distance carrier and had
terminated MCI service at a former address several years earlier.
MCI refused to reverse the unauthorized charges and threatened
Ms. Everett with a collections notice for failing to pay. To stop
MCI from continuing to bill her without authorization, she was
forced to restrict all long-distance service on her telephone
line.
The complaint alleges that MCI enrolled non-customers and former
MCI long-distance subscribers without their knowledge or consent
in the "Basic Dial-1 Plan" or another MCI calling plan that
carries a monthly service fee. In 2002, MCI began charging a
$3.00 or $5.00 minimum usage fee (MUF) and a $3.95 monthly
recurring fee to consumers who did not have active billing
accounts with MCI and whom MCI has no reasonable basis to believe
are current MCI customers.
The class action lawsuit against MCI was filed in federal district
court in Phoenix on July 18, 2005 and asserts claims against MCI
for violations of the federal Communications Act and for unjust
enrichment.
The complaint alleges that MCI's policy and practice is to
reverse, refund, or credit back unauthorized charges only to
consumers who threaten to bring legal action, lodge complaints
with regulatory authorities, or take other action. According to
the complaint, consumers who do not pay the unauthorized charges
are turned over to collections agencies.
Girard Gibbs & De Bartolomeo LLP -- http://www.girardgibbs.com--
is one of the nation's leading firms representing individuals in
consumer fraud class actions and investors in securities fraud
litigation.
Headquartered in Clinton, Mississippi, WorldCom, Inc., now known
as MCI -- http://www.worldcom.com/-- is a pre-eminent global
communications provider, operating in more than 65 countries and
maintaining one of the most expansive IP networks in the world.
The Company filed for chapter 11 protection on July 21, 2002
(Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the
Debtors listed $103,803,000,000 in assets and $45,897,000,000 in
debts. The Bankruptcy Court confirmed WorldCom's Plan on
October 31, 2003, and on April 20, 2004, the company formally
emerged from U.S. Chapter 11 protection as MCI, Inc. (WorldCom
Bankruptcy News, Issue No. 96; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
* * *
As reported in the Troubled Company Reporter on March 1, 2005,
Standard & Poor's Ratings Services placed its ratings on Denver,
Co.-based diversified telecommunications carrier Qwest
Communications International, Inc., and subsidiaries, including
the 'BB-' corporate credit rating, on CreditWatch with negative
implications. This follows the company's counter bid to Verizon
Communications, Inc., for long-distance carrier MCI, Inc., for
$3 billion in cash and $5 billion in stock. MCI also has about
$6 billion of debt outstanding.
The ratings on MCI, including the 'B+' corporate credit rating,
remain on CreditWatch with positive implications, where they were
placed Feb. 14, 2005 following Verizon's announced agreement to
acquire the company. The positive CreditWatch listing for the MCI
ratings reflects the company's potential acquisition by either
Verizon or Qwest, both of which are more creditworthy entities.
However, the positive CreditWatch listing of the 'B+' rating on
MCI's senior unsecured debt assumes no change to the current MCI
corporate and capital structure under an assumed acquisition by
Qwest, such that this debt would become structurally junior to
other material obligations.
"The negative CreditWatch listing of the Qwest ratings reflects
the higher business risk at MCI if its bid is ultimately
successful," explained Standard & Poor's credit analyst Catherine
Cosentino. As a long-distance carrier, MCI is facing ongoing
stiff competition from other carriers, especially AT&T Corp.
Moreover, MCI is considered to be competitively disadvantaged
relative to AT&T in terms of its materially smaller presence in
the enterprise segment and fewer local points of presence -- POPs.
The latter, in particular, results in higher access costs relative
to AT&T. Qwest also faces the challenge of integrating and
strengthening MCI's operations while improving its own
underperforming, net free cash flow negative long-distance
business. These issues overshadow the positive aspects of Qwest's
incumbent local exchange carrier business that were encompassed in
the former developing outlook.
As reported in the Troubled Company Reporter on Feb. 22, 2005,
Moody's Investors Service has placed the long-term ratings of MCI,
Inc., on review for possible upgrade based on Verizon's plan to
acquire MCI for about $8.9 billion in cash, stock and assumed
debt.
These MCI ratings were placed on review for possible upgrade:
* B2 Senior Implied
* B2 Senior Unsecured Rating
* B3 Issuer rating
Moody's also affirmed MCI's speculative grade liquidity rating at
SGL-1, as near term, MCI's liquidity profile is unchanged.
As reported in the Troubled Company Reporter on Feb. 22, 2005,
Standard & Poor's Ratings Services placed its ratings of Ashburn,
Virginia-based MCI Corp., including the 'B+' corporate credit
rating, on CreditWatch with positive implications. The action
affects approximately $6 billion of MCI debt.
As reported in the Troubled Company Reporter on Feb. 16, 2005,
Fitch Ratings has placed the 'A+' rating on Verizon Global
Funding's outstanding long-term debt securities on Rating Watch
Negative, and the 'B' senior unsecured debt rating of MCI, Inc.,
on Rating Watch Positive following the announcement that Verizon
Communications will acquire MCI for approximately $4.8 billion in
common stock and $488 million in cash.
MCI INC: Will Close Iowa Outbound Call Center on September 30
-------------------------------------------------------------
The Associated Press reports that MCI, Inc., intends to close its
outbound call center in Iowa City on September 30, 2005.
About 200 workers will lose their jobs due to the planned call
center closure. Only 60 of the workers will be offered jobs at
MCI's Cedar Rapids call center.
Adverse market conditions and MCI's need to continue reducing
operating costs are the reasons for closing the call center, MCI
spokeswoman Carolyn Tyler told the Associated Press.
Headquartered in Clinton, Mississippi, WorldCom, Inc., now known
as MCI -- http://www.worldcom.com/-- is a pre-eminent global
communications provider, operating in more than 65 countries and
maintaining one of the most expansive IP networks in the world.
The Company filed for chapter 11 protection on July 21, 2002
(Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the
Debtors listed $103,803,000,000 in assets and $45,897,000,000 in
debts. The Bankruptcy Court confirmed WorldCom's Plan on
October 31, 2003, and on April 20, 2004, the company formally
emerged from U.S. Chapter 11 protection as MCI, Inc. (WorldCom
Bankruptcy News, Issue No. 97; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
* * *
As reported in the Troubled Company Reporter on March 1, 2005,
Standard & Poor's Ratings Services placed its ratings on Denver,
Co.-based diversified telecommunications carrier Qwest
Communications International, Inc., and subsidiaries, including
the 'BB-' corporate credit rating, on CreditWatch with negative
implications. This follows the company's counter bid to Verizon
Communications, Inc., for long-distance carrier MCI, Inc., for
$3 billion in cash and $5 billion in stock. MCI also has about
$6 billion of debt outstanding.
The ratings on MCI, including the 'B+' corporate credit rating,
remain on CreditWatch with positive implications, where they were
placed Feb. 14, 2005 following Verizon's announced agreement to
acquire the company. The positive CreditWatch listing for the MCI
ratings reflects the company's potential acquisition by either
Verizon or Qwest, both of which are more creditworthy entities.
However, the positive CreditWatch listing of the 'B+' rating on
MCI's senior unsecured debt assumes no change to the current MCI
corporate and capital structure under an assumed acquisition by
Qwest, such that this debt would become structurally junior to
other material obligations.
"The negative CreditWatch listing of the Qwest ratings reflects
the higher business risk at MCI if its bid is ultimately
successful," explained Standard & Poor's credit analyst Catherine
Cosentino. As a long-distance carrier, MCI is facing ongoing
stiff competition from other carriers, especially AT&T Corp.
Moreover, MCI is considered to be competitively disadvantaged
relative to AT&T in terms of its materially smaller presence in
the enterprise segment and fewer local points of presence -- POPs.
The latter, in particular, results in higher access costs relative
to AT&T. Qwest also faces the challenge of integrating and
strengthening MCI's operations while improving its own
underperforming, net free cash flow negative long-distance
business. These issues overshadow the positive aspects of Qwest's
incumbent local exchange carrier business that were encompassed in
the former developing outlook.
As reported in the Troubled Company Reporter on Feb. 22, 2005,
Moody's Investors Service has placed the long-term ratings of MCI,
Inc., on review for possible upgrade based on Verizon's plan to
acquire MCI for about $8.9 billion in cash, stock and assumed
debt.
These MCI ratings were placed on review for possible upgrade:
* B2 Senior Implied
* B2 Senior Unsecured Rating
* B3 Issuer rating
Moody's also affirmed MCI's speculative grade liquidity rating at
SGL-1, as near term, MCI's liquidity profile is unchanged.
As reported in the Troubled Company Reporter on Feb. 22, 2005,
Standard & Poor's Ratings Services placed its ratings of Ashburn,
Virginia-based MCI Corp., including the 'B+' corporate credit
rating, on CreditWatch with positive implications. The action
affects approximately $6 billion of MCI debt.
As reported in the Troubled Company Reporter on Feb. 16, 2005,
Fitch Ratings has placed the 'A+' rating on Verizon Global
Funding's outstanding long-term debt securities on Rating Watch
Negative, and the 'B' senior unsecured debt rating of MCI, Inc.,
on Rating Watch Positive following the announcement that Verizon
Communications will acquire MCI for approximately $4.8 billion in
common stock and $488 million in cash.
MURPHY MARINE: Chapter 7 Trustee Hires McElroy Deutsch as Counsel
-----------------------------------------------------------------
Charles A. Stanziale, Esq., the Chapter 7 Trustee overseeing the
liquidation of Murphy Marine Services, Inc., n/k/a MUMA Services,
Inc., and its debtor-affiliates obtained permission from the U.S.
Bankruptcy Court for the District of Delaware to replace Schwartz,
Tobia & Stanziale with McElroy, Deutsch, Mulvaney & Carpenter,
LLP, as his counsel, nunc pro tunc to June 1, 2005.
Mr. Stanziale tells the Court that the firm of Schwartz Tobia is
dissolving and that he and his associates, Donald J. Crecca, Esq.,
Jeffrey T. Testa, Esq., Kim M. Diddio, Esq., and Roger C. Ward,
Esq., have joined McElroy Deutsch. Schwartz Tobia has served as
the Debtors' bankruptcy counsel since July 25, 2002.
In this engagement, McElroy Deutsch will:
a) advice the chapter 7 Trustee regarding his powers and
duties under the Local Rules for the Bankruptcy Court for
the District of Delaware;
b) participate, when requested, in the investigation of the
debtors' acts, conduct, assets, liabilities and financial
condition, the operation of the Debtors' business and any
other matter relevant to the case;
c) prepare and file, on behalf of the chapter 7 Trustee,
necessary applications, motions, complaints, answers,
orders, agreements and other legal papers pursuant to the
Local Rules for the Bankruptcy Court for the District of
Delaware;
d) review, analyze and respond to certain pleadings filed in
this chapter 7 case and appear in court to participate in
motions, applications, depositions and pleadings and to
otherwise protect the interest of the chapter 7 trustee and
the Debtor's estate; and
e) perform other legal services as requested by the chapter 7
trustee.
The hourly rates for McElroy Deutsch's professionals are:
Designation Hourly Rate
----------- -----------
Partners $350 to $495
Associates $180 to $400
Paralegals $80 to $150
The chapter 7 Trustee assures the Court that McElroy Deutsch does
not hold any interest adverse to the Debtors or their estates.
McElroy, Deutsch, Mulvaney & Carpenter, LLP, --
http://www.mdmlaw.com/-- is the third largest law firm in New
Jersey. With 180 lawyers in five offices in three states, the
firm offers a full range of legal services including a wide
variety of insurance services emphasizing coverage and defense,
labor and employment, corporate, construction, commercial
litigation, tax, and private client services.
Murphy Marine Services, Inc., and its affiliated debtors filed
for chapter 11 protection on March 21, 2001 (Bankr. Del. Case
No. 01-00926). On July 25, 2002, the majority of the Debtors'
chapter 11 cases (excluding Dockside Refrigerated, Inc., and
Emerald Leading, Inc.) were converted to chapter 7 liquidation
proceedings. Donald J. Crecca, Esq., and Jeffrey T. Testa,
Esq., at Schwartz, Tobia, Stanziale, Sedita & Campisano, in
Montclair, New Jersey, represent the Chapter 7 Trustee.
NATURADE INC: Completes Acquisitions of Symco & Ageless
-------------------------------------------------------
Naturade Inc. completed the acquisition of Symco, Incorporated and
Symbiotics Incorporated on August 3, 2005.
Pursuant to an Asset Purchase Agreement dated July 22, 2005,
between Quincy Investments Corp., Symco Inc. and Symbiotics, Inc.,
Quincy has the right to acquire certain assets relating to Symco
and Symbiotics' health-related products retail business.
As consideration for the assets, Quincy would
(a) assume current accounts payable and the obligations under
certain contracts,
(b) pay all outstanding amounts owed under certain credit
facilities,
(c) issue a promissory note payable to Symco and Symbiotics in
the principal amount of $2,000,000,
-- less the amount necessary to repay the credit
facilities, and
-- subject to a working capital adjustment,
(d) pay an additional $60,000 in cash 15 days after the closing
date and an additional $60,000 every 30 days thereafter
until the note is paid in full, and
(e) for a three year period following the closing date, pay to
Symco and Symbiotics 10% of the amount of the increase in
contribution profit over a baseline amount of $2,000,000
based on the sale of products for each 12 month period
during the three year period.
On August 5, 2005, the Company completed the acquisition of The
Ageless Foundation, Inc. Pursuant to an Asset Purchase Agreement
dated July 27, 2005, between Quincy and The Ageless Foundation,
Inc., Quincy has the right to acquire certain assets relating to
Ageless' health-related products retail business. As consideration
for the assets, Quincy would:
(a) assume current accounts payable,
(b) assume an obligation to an employee of the company in an
amount equal to $600,000, and
(c) issue a promissory note payable to Ageless in the principal
amount of $700,000, subject to a working capital
adjustment.
Copies of documents concerning the acquisitions are available for
free at http://ResearchArchives.com/t/s?bc
Naturade Inc. -- http://www.naturade.com/-- is a branded natural
products marketing company focused on growth through innovative,
scientifically supported products designed to nourish the health
and well being of consumers. The Company primarily competes in
the overall market for natural, nutritional supplements.
Going Concern Doubt
At December 31, 2004, Naturade Inc. had a $22,023,470 accumulated
deficit, a $1,859,320 net working capital deficit and a $3,031,547
stockholders' capital deficiency. The Company anticipates that it
will incur net losses for the foreseeable future and will need
access to additional financing for working capital and to expand
its business. If unsuccessful in those efforts, Naturade could be
forced to cease operations and investors in Naturade's common
Stock could lose their entire investment. Based on this
situation, the Company's independent registered public accounting
firm qualified their opinion on the Company's December 31, 2004,
financial statements by including an explanatory paragraph in
which they expressed substantial doubt about the Company's ability
to continue as a going concern.
At Mar. 31, 2005, Naturade Inc.'s balance sheet showed a
$3,486,739 stockholders' deficit, compared to a $3,031,548 deficit
at Dec. 31, 2004.
NEWSTAR TRUST: Fitch Puts BB Rating on $24.4MM Class E Notes
------------------------------------------------------------
Fitch Ratings assigns the following ratings to NewStar Trust
2005-1:
-- $156,000,000 class A-1 floating-rate notes due 2018 'AAA';
-- $80,476,777 class A-2 revolving floating-rate notes due
2018 'AAA';
-- $18,750,000 class B floating-rate deferrable interest
notes due 2018 'AA';
-- $39,375,000 class C floating-rate deferrable interest
notes due 2018 'A';
-- $24,375,000 class D floating-rate deferrable interest
notes due 2018 'BBB';
-- $24,375,000 class E floating-rate deferrable interest
notes due 2018 'BB'.
The ratings are based upon the credit quality of the underlying
assets, the credit enhancement provided to the capital structure
through subordination and excess spread, and the strength of
NewStar Financial, Inc. (rated 'CAM2' by Fitch) as servicer to the
portfolio assets.
The rating of the class A-1 and A-2 notes addresses the likelihood
investors will receive full and timely payments of interest, as
well as the stated balance of principal by the legal final
maturity date, as per the governing documents.
The ratings of the class B, C, D, and E notes address the
likelihood investors will receive ultimate and compensating
interest payments, as well as the stated balance of principal by
the legal final maturity date, as per the governing documents.
The notes are supported by the cash flows of an asset portfolio
consisting of high yield loans to middle market U.S. businesses,
the majority of which are privately owned, real estate loans,
large middle-market loans, structured finance loans, and broadly
syndicated loans. The loans were made for the purpose of working
capital, growth, acquisitions, and recapitalizations. The loan
obligors primarily operate in the real estate, business services,
broadcasting/media/cable, computers/electronics, and health care
sectors. The majority of the loans will be senior secured with a
maximum of 20.0% of aggregate outstanding loan balance secured by
a second lien on assets.
By asset type, the portfolio will be invested in corporate loans
(76.8%), real estate loans (19.5%), and structured finance loans
(3.6%). The overall portfolio will have a covenanted weighted-
average rating of approximately 'B/B-'. The fully ramped
portfolio will represent the loan obligations of approximately 48
different obligors.
There is some concentration with respect to industry exposure
specifically in media, health care, and real estate, which was
addressed in the Fitch Vector Model. The largest single obligor
exposure is 5.0%. It is important to note that this transaction
will feature a three-year reinvestment period, whereby principal
proceeds will be used to fund additional loans. Interest on the
notes will be paid sequentially to all of the note classes and pro
rata between the class A-1 and class A-2 notes, with principal
paid on a pro rata basis among all classes prior to the occurrence
of a sequential distribution date.
Upon the occurrence of a sequential distribution date, an event of
default or servicer default, principal will be paid on a
sequential basis to all of the note classes, and pro rata between
the class A-1 and class A-2 notes. The class F principal-only
notes will receive pro rata principal payments, as long as the
outstanding collateral balance remains above 75% of the original
collateral balance.
As part of the rating process for this transaction, Fitch stressed
the underlying asset portfolio with a variety of default and
interest rate scenarios, designed to simulate varying economic
conditions. For further details on the stress tests Fitch
employed while rating NewStar Trust 2005-1, see the presale report
dated June 30, 2005 at http://www.fitchratings.com/
NRG ENERGY: To Repurchase $250MM Common Stock From CSFB Affiliate
-----------------------------------------------------------------
NRG Energy, Inc., committed to repurchase $250 million of the
Company's outstanding common stock from an affiliate of Credit
Suisse First Boston LLC on Aug. 11, 2005. NRG will fund
the planned repurchase with existing cash balances. To enable
this share repurchase under its high yield debt indenture, NRG
will issue simultaneously in a private transaction, $250 million
of perpetual preferred stock. The cash proceeds from the
preferred issuance will be used to repurchase approximately
$229 million of our 8% high yield notes at 108% of par which will
bring the total amount of our 8% notes redeemed during 2005 to
$645 million.
The preferred stock may be settled at the option of CSFB or NRG
during a 90-day period commencing Aug. 11, 2015. Upon settlement,
NRG will pay CSFB $250 million in cash to redeem the preferred
stock. If the market value of the underlying NRG common shares is
in excess of 150% of the Aug. 10, 2005, issuance price, NRG will
pay CSFB the net difference in cash or shares at settlement. If
the Company's common share price is lower at settlement than the
issuance price, CSFB will pay NRG the net difference in cash or
shares. Only common shares equal to the value of the security in
excess of 150% of the issuance price will be included in the
earnings per share dilution calculation.
Under the terms of the accelerated share repurchase agreement, NRG
will have fixed its price risk under the program at 97% - 103% of
the common share price at execution. The Company's outstanding
shares will decrease by the full amount repurchased on August 11,
2005 based on its Aug. 10, 2005, closing price.
"This accelerated share repurchase and the partial redemption of
our 8% notes are both part of our continuing capital allocation
program and underscore our commitment to the efficient deployment
of capital," said David Crane, NRG's president and chief executive
officer. "While we expect over time to reinvest the lion's share
of our capital in enhancing our asset portfolio, NRG's exceptional
balance sheet strength and liquidity combined with our projected
free cash flow generation has caused us to conclude that, at this
time, using a portion of our retained cash to repurchase our
shares and bonds is a prudent and efficient use of capital."
NRG Energy, Inc., owns and operates a diverse portfolio of power-
generating facilities, primarily in the United States. Its
operations include baseload, intermediate, peaking, and
cogeneration facilities, thermal energy production and energy
resource recovery facilities. The company, along with its
affiliates, filed for chapter 11 protection (Bankr. S.D.N.Y. Case
No. 03-13024) on May 14, 2003. The Company emerged from chapter
11 on December 5, 2003, under the terms of its confirmed Second
Amended Plan. James H.M. Sprayregen, Esq., Matthew A. Cantor,
Esq., and Robbin L. Itkin, Esq., at Kirkland & Ellis, represented
NRG Energy in its $10 billion restructuring.
* * *
Moody's Investor Services and Standard & Poor's assigned single-B
ratings to NRG Energy's 8% secured notes due 2013.
NVE INC: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------
Debtor: N.V.E., Inc.
dba NVE Pharmaceuticals
dba NVE, Inc.
dba NVE Pharmaceuticals, Inc.
dba NVE Enterprises
dba NVE Enterprises, Inc.
152 Whitehall Road
Andover, New Jersey 07821
Bankruptcy Case No.: 05-35692
Type of Business: The Debtor manufactures dietary supplements.
The Debtor is facing lawsuits about its
weight-loss products that contained the
now-banned herbal stimulant ephedra.
Chapter 11 Petition Date: August 10, 2005
Court: District of New Jersey (Newark)
Judge: Novalyn L. Winfield
Debtor's Counsel: Daniel Stolz, Esq.
Wasserman, Jurista & Stolz, P.C.
225 Millburn Avenue, Suite 207
P.O. Box 1029
Millburn, New Jersey 07041-1712
Tel: (973) 467-2700
Financial Condition as of June 30, 2005:
Total Assets: $10,966,522
Total Debts: $14,745,605
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
World Wrestling Enterprises Trade debt $2,520,262
1241 East Main Street
Stamford, CT 06902
Tel: (203) 353-2874
NBC Trade debt $856,120
30 Rockefeller Plaza, Room 5131
New York, NY 10112
Tel: (212) 664-6768
Weather Channel Trade debt $735,195
P.O. Box 101634
Atlanta, GA 30392
Tel: (770) 226-2871
PPC Trade debt $562,850
177 Knob Hill Road
Mooresville, NC 28117
Attn: Andy O'Hara, Esq.
Tel: (704) 799-7453
Telemundo Trade debt $476,286
30 Rockefeller Plaza, Room 5131
New York, NY 10112
Tel: (212) 492-5500
Sobel Affiliates, Inc. Trade debt $341,860
595 Stewart Avenue
Garden City, NY 11530-4735
Tel: (516) 745-0000
Keystone Marketing Trade debt $185,300
155 Commerce Drive
Advance, NC 27006
Tel: (336) 998-2500
Turner Network Television, LLP Trade debt $174,590
One CNN Center
Atlanta, GA 30303
Tel: (404) 827-4523
WKTU 103.5 Trade debt $139,692
5488 Collections Center Drive
Chicago, IL 60693
Tel: (201) 420-3713
WHTZ Z100 Trade debt $133,230
5518 Collection Center Drive
Chicago, IL 60693
Tel: (201) 209-6200
WWPR Trade debt $44,697
Clearn Channel Broadcasting
5486 Collection Center Drive
Chicago, IL 60693
Tel: (212) 704-1051
Spain Hastings & Ward Trade debt $44,202
909 Fannin
3900 Two Houston Center
Houston, TX 77010
Tel: (713) 650-9700
McElroy Deutsch Mulvaney Trade debt $41,386
1300 Mount Kemble Avenue
P.O. Box 2075
Morristown, NJ 07962-2075
Tel: (973) 993-8100
McDonnell & Associates Trade debt $40,265
601 S. Henderson Road, Suite 152
King of Prussia, PA 19406
Tel: (610) 337-2087
Shea, Stokes & Carter Trade debt $31,976
510 Market Street, 3rd Floor
San Diego, CA 92101-7025
Tel: (619) 232-4261
Westhead Associates Trade debt $23,441
7 Wellington Court
Mount Laurel, NJ 08054
Tel: (856) 727-0510
Miles & Stockbridge, PC Trade debt $19,374
10 Light Street
Baltimore, MD 21202-1487
Bullivant Houser Trade debt $17,539
300 Pioneer Tower
888 SW Fifth Avenue
Portland, OR 97204-2089
Kenneth Brait, MD Trade debt $11,421
P.O. Box 5568
Ketchum, ID 83340-5568
Ledbetter Cogbill Trade debt $9,926
Arnold & Harrison, LLP
622 Parker Avenue
P.O. Box 185
Fort Smith, AR 72902
NVE INC: Brings-In Wasserman Jurista as Bankruptcy Counsel
----------------------------------------------------------
NVE Inc. asks the U.S. Bankruptcy Court for the District of New
Jersey for permission to employ Wasserman, Jurista & Stolz, P.C.,
as its bankruptcy counsel.
The Debtor expects Wasserman Jurista to perform all legal services
necessary and appropriate in its chapter 11 case.
Wasserman's professionals and their current hourly billing rates
are:
Professional Designation Rate
------------ ----------- ----
Robert B. Wasserman, Esq. Partner $425
Steven Z. Jurista, Esq. Partner $400
Daniel M. Stolz, Esq., Partner $400
Leonard C. Walczyk, Esq. Partner $325
Michael McLaughlin, Esq. Partner $325
Scott S. Rever, Esq. Associate $290
Katherin Gregory Paralegal $135
Mr. Stolz assures the Court that his Firm holds no interest
materially adverse to the Debtor and its estates.
Headquartered in Andover, New Jersey, NVE Inc. dba NVE
Pharmaceuticals, NVE Pharmaceuticals, Inc., NVE Enterprises, NVE
Enterprises, Inc., manufactures dietary supplements. The Debtor
is facing lawsuits about its weight-loss products which contain
the now-banned herbal stimulant, ephedra. The Debtor filed for
chapter 7 liquidation proceeding on August 10, 2005 (Bankr. D.
N.J. Case No. 05-35692). When the Debtor filed for chapter 7, it
listed $10,966,522 in total assets and $14,745,605 in total debts.
OHIO CASUALTY: S&P Raises Senior Debt Rating to BB+ from BB
-----------------------------------------------------------
Standard & Poor's Rating Services raised its counterparty credit
and financial strength ratings on the members of the Ohio Casualty
Insurance Co. Intercompany Pool to 'BBB+' from 'BBB'.
Standard & Poor's also said that it raised its counterparty credit
and senior debt ratings on Ohio Casualty Corp. (NASDAQ:OCAS),
OCIP's parent holding company, to 'BB+' from 'BB'.
The outlook on all these companies is stable.
"The upgrade reflects the group's significantly improved operating
performance," said Standard & Poor's credit analyst Donovan
Fraser. "This improvement stemmed from expense-reduction
initiatives and continued loss control as well as improving
capitalization."
Offsetting the improvements in operating results and
capitalization are an expense ratio that is higher than industry
peers and a lack of a track record of consistent underwriting and
bottom-line profitability.
Standard & Poor's expects that management will continue to focus
on underwriting profitability. A return to the company's prior
history of material reserve strengthening or underwriting losses
would likely place negative pressure on the rating, whereas
continued profitability--coupled with measured growth--could lead
to further positive rating actions.
OCIP ranks among the 50 largest property/casualty writers in the
U.S., with particular strength in middle-market commercial and
specialty lines of business. Net writings were relatively flat,
with a small 0.9% increase in 2004, primarily reflecting the
effects of reunderwriting a previously unprofitable book of
business.
Following several years of restructuring, OCIP's competitive
position is largely out of transition mode and should improve in
the next 12-24 months as the group reaps the benefits of
information technology and expense initiatives. Despite the
significant changes implemented by the management team, the group
has continued to retain its targeted independent agents.
However, it will redouble its efforts to grow the business
profitably with its distribution base, which had seen aggregate
declines in writings, particularly in personal lines.
OMEGA HEALTHCARE: Earns $2.3 Million GAAP Net Income in 2nd Qtr.
----------------------------------------------------------------
Omega Healthcare Investors, Inc. (NYSE:OHI) reported its results
of operations for the quarter ended June 30, 2005. The Company
also reported Funds From Operations available to common
stockholders for the three months ended June 30, 2005 of
$8.1 million.
The $8.1 million of FFO available to common stockholders for the
quarter includes the impact of a $3.4 million non-cash provision
for impairment on an equity security investment, $2 million non-
cash preferred stock redemption charge, $0.8 million lease
expiration accrual and $0.3 million of non-cash restricted stock
amortization expense offset by one-time revenue of $1.0 million.
FFO is presented in accordance with the guidelines for the
calculation and reporting of FFO issued by the National
Association of Real Estate Investment Trusts. Adjusted FFO, which
excludes the impact of the non-cash provision for impairment, non-
cash redemption charge, the lease expiration accrual and the one-
time revenue, was $0.26 per common share for the three months
ended June 30, 2005.
GAAP Net Income
The Company reported net income of $2.3 million and $11.6 million
for the three and six month periods ending June 30, 2005,
respectively. The Company also reported a net loss available to
common stockholders of $2.6 million, and operating revenues of
$25.8 million for the three months ended June 30, 2005. This
compares to a net loss available to common stockholders of
$400,000, and operating revenues of $21.3 million for the same
period in 2004.
Second Quarter 2005 Results
Operating Revenues and Expenses - Operating revenues for the three
months ended June 30, 2005 were $25.8 million. Operating expenses
for the three months ended June 30, 2005 totaled $9.2 million,
comprised of $6.2 million of depreciation and amortization
expense, $1.8 million of general, administrative and legal
expenses, $800,000 lease expiration accrual, a provision for
uncollectible accounts receivable of $100,000 and $300,000 of
restricted stock amortization. The $800,000 lease expiration
accrual relates to disputed capital improvement requirements
associated with a lease that expired June 30, 2005.
Other Expenses
Other expenses for the three months ended June 30, 2005 were
$10.8 million and were comprised of a $3.4 million provision for
impairment on an equity security investment, $6.9 million of
interest expense and $0.5 million of non-cash interest expense.
In accordance with FASB Statement No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," the Company has
recorded a $3.4 million provision for impairment to write-down its
760,000 share investment in Sun Healthcare Group, Inc., common
stock to its current fair market value. "Sun Healthcare's
financial performance has been consistently strong with respect to
Omega's assets and on a consolidated basis. We are confident in
Sun as an operator and we look forward to the combined financial
results after Sun closes on their recently announced Peak Medical
Corporation acquisition," said C. Taylor Pickett, President and
CEO of Omega.
Funds From Operations
For the three months ended June 30, 2005, reportable FFO available
to common stockholders was $8.1 million, or $0.16 per common
share, compared to $5.1 million, or $0.11 per common share, for
the same period in 2004. The $8.1 million of FFO for the quarter
includes the impact of:
(i) $3.4 million provision for impairment on an equity
security investment;
(ii) $2.0 million of non-cash preferred stock redemption
charges;
(iii) $0.8 million lease expiration accrual;
(iv) $0.1 million provision for uncollectible notes
receivable;
(v) $0.3 million of non-cash restricted stock amortization
associated with the Company's issuance of restricted
stock grants to executive officers during 2004; and
(vi) $1.0 million of one-time revenue associated with the
finalization of a mortgage payoff that occurred during
the first quarter of 2005.
However, when excluding the provision for impairment, redemption
charge, lease expiration accrual, provision for uncollectible
notes receivable, restricted stock amortization expense and one-
time revenue described above in 2005, as well as, certain other
non-recurring expense items in 2004, adjusted FFO was $13.6
million, or $0.26 per common share, compared to $10.5 million, or
$0.22 per common share, for the same period in 2004.
Asset Sales
On June 30, 2005, the Company sold four SNFs to subsidiaries of
Alden Management Services, Inc., who previously leased the
facilities from the Company. All four facilities are located in
Illinois. The sales price totaled approximately $17 million. The
Company received net cash proceeds of approximately $12 million
plus a secured promissory note of approximately $5.4 million. The
sale resulted in a non-cash accounting loss of approximately
$4.2 million.
On June 23, 2005, a $1.0 million deposit related to an agreement
to sell a SNF in Florida was received into escrow on the Company's
behalf. On July 26, 2005, an additional $0.5 million deposit was
received into escrow. The purchase price of the facility is
$14.5 million. The closing is scheduled on or before Sept. 30,
2005. The due diligence period has expired and the deposits are
not refundable unless the Company breaches its obligations under
the purchase agreement. At June 30, 2005, the net book value of
the facility was approximately $8.2 million.
Investment Activity
Senior Management Services, Inc.
Effective June 1, 2005, the Company purchased two SNFs for a total
investment of approximately $9.5 million. Both facilities,
totaling 440 beds, are located in Texas. The facilities were
consolidated into a master lease with subsidiaries of an existing
operator, Senior Management Services, Inc., with annualized rent
increasing by approximately $1.1 million, with annual escalators.
The term of the existing master lease was extended to ten years
and runs through May 31, 2015, followed by two renewal options of
ten years each.
CommuniCare Health Services, Inc.
On June 28, 2005, the Company purchased five SNFs located in Ohio
(3) and Pennsylvania (2), totaling 911 beds. The investment,
excluding working capital, totaled approximately $50 million. The
SNFs were purchased from an unrelated third party and are now
operated by subsidiaries of CommuniCare Health Services, Inc., a
current Company lessee, with the five facilities being
consolidated into an existing master lease. The term of the
master lease was extended to ten years to June 30, 2015, with two
nine year renewal options. The annualized increase in rent under
the master lease totals $5.1 million and contains annual
escalators.
Financing Activity
Series B Preferred Stock Redemption - On May 2, 2005, the Company
fully redeemed its 8.625% Series B Cumulative Preferred Stock
(NYSE:OHI PrB). The Company redeemed the 2.0 million shares of
Series B at a price of $25.55104, comprising the $25 liquidation
value and accrued dividend. Under FASB-EITF Issue D-42, "The
Effect on the Calculation of Earnings per Share for the Redemption
or Induced Conversion of Preferred Stock," the repurchase of the
Series B resulted in a non-cash charge to net income available to
common shareholders of approximately $2.0 million reflecting the
write-off of the original issuance costs of the Series B.
Dividends
Common Dividends
On July 19, 2005, the Company's Board of Directors declared a
common stock dividend of $0.22 per share to be paid Aug. 15, 2005
to common stockholders of record on July 29, 2005. At the date of
this release, the Company had approximately 51 million outstanding
common shares.
Series D Preferred Dividends
On July 19, 2005, the Company's Board of Directors declared the
regular quarterly dividends for its 8.375% Series D Cumulative
Redeemable Preferred Stock to stockholders of record on July 29,
2005. The stockholders of record of the Series D Preferred Stock
on July 29, 2005, will be paid dividends in the amount of $0.52344
per preferred share on Aug. 15, 2005. The liquidation preference
for the Company's Series D Preferred Stock is $25.00 per share.
Regular quarterly preferred dividends for the Series D Preferred
Stock represent dividends for the period May 1, 2005 through
July 30, 2005.
2005 Adjusted FFO Guidance Increased
The Company increased its guidance for 2005 adjusted FFO available
to common stockholders to a range of $1.03 to $1.04 per common
share. The previous guidance was a range of $1.00 to $1.02 per
common share.
The Company's adjusted FFO guidance (and related GAAP earnings
projections) for 2005 excludes the future impacts of gains and
losses on the sales of assets, additional divestitures, certain
one-time revenue and expense items, capital transactions, and
restricted stock amortization expense.
Omega Healthcare Investors, Inc. (NYSE:OHI) is a Real Estate
Investment Trust investing in and providing financing to the long-
term care industry. At March 31, 2005, the Company owned or held
mortgages on 213 skilled nursing and assisted living facilities
with approximately 21,921 beds located in 28 states and operated
by 39 third-party healthcare operating companies.
* * *
Omega Healthcare's 6.95% notes due 2007 and 7% notes due 2014
carry Moody's Investors Service's B1 rating, Standard & Poor's BB-
rating and Fitch's BB- rating.
PLASTECH ENGINEERED: S&P Places Debt Ratings on Negative Watch
--------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on
Plastech Engineered Products Inc., including the company's 'B+'
corporate credit rating and its other debt ratings, on CreditWatch
with negative implications. The senior secured credit facility
recovery ratings were affirmed.
The CreditWatch listing follows news reports that Plastech, a
privately held producer of plastic interior and exterior trim
components for the automotive industry, is considering a cash bid
of around $1 billion for Collins & Aikman Corp. (C&A), which filed
for Chapter 11 bankruptcy protection on May 17. Plastech had
total balance sheet debt of $451 million at July 3, 2005.
"No financing details have emerged, but Plastech has little debt
capacity at its current rating for such a transaction," said
Standard & Poor's credit analyst Nancy C. Messer. "Unless the
purchase price is very attractive and/or there is a substantial
equity component in the offering, the acquisition could harm
Plastech's financial profile and lead to a downgrade of
the company."
Still, S&P views the offer as tenuous. Plastech could require
extensive and lengthy negotiations with the various constituents
in the deal, including the bankruptcy court, creditors, and the
original equipment manufacturers (OEMs) who are C&A's customers.
Unprofitable C&A contracts could require renegotiation.
Furthermore, Plastech's need to arrange a very large financing
could be a challenge. Though the acquisition of certain C&A
assets could ultimately enhance Plastech's business portfolio, the
timing and structure of an offer requiring financing remains
highly uncertain.
C&A's products are critical to certain OEMs, and one likely reason
for the Plastech offer is that customers are eager for a
resolution of the bankruptcy proceedings, including the
establishment of a credible management team to properly operate
the assets and reduce uncertainty. C&A intends to complete an
internal business reorganization plan, which must be presented to
the bankruptcy court by Aug. 31. A firm offer from Plastech is
contingent on thorough due diligence, which cannot proceed until
the company gains access to C&A's internal financial and operating
information. This will require court approval. In addition, C&A
is undergoing an independent investigation of controls over
financial reporting and a review of certain accounting issues.
Before the offer, S&P had indicated that the company could be
downgraded, given its already high leverage and its limited cash
flow protection amid ongoing industry pressures. Plastech could
still be downgraded, regardless of the C&A outcome if market
conditions worsen or if the company's liquidity position
deteriorates.
The ratings on Plastech reflect the company's:
* weak operating results,
* high debt leverage, and
* constrained liquidity resulting from disappointing revenues
and EBITDA.
These challenges will continue because automotive industry
fundamentals remain difficult.
In Standard & Poor's assessment, Plastech's business profile is
weak. The company's exposure to the three Detroit-based OEMs and
to sport utility vehicle (SUV) platforms represents both near- and
long-term risks: More than 60% of Plastech's 2004 sales were
derived from General Motors Corp. and Ford Motor Co. platforms,
and light trucks and SUVs accounted for about 60% of sales. For
most OEMs, sales of large SUVs have declined from previously
robust levels, notwithstanding recent discount programs to reduce
dealer inventories of 2005 models.
PLYMOUTH RUBBER: Committee Taps Holland & Knight as Counsel
-----------------------------------------------------------
The Official Committee of Unsecured Creditors of Plymouth Rubber
Company, Inc., and Brite-Line Technologies, Inc., asks the U.S.
Bankruptcy Court for the District of Massachusetts, Eastern
Division, for authority to employ Holland & Knight LLP as its
bankruptcy counsel, nunc pro tunc to July 12, 2005.
Holland & Knight is expected to:
a) investigate the Debtors' assets;
b) investigate intercompany transfers;
c) if appropriate, pursuit of one or more contested matters
and adversary proceedings;
d) negotiate, advice, and represent the Committee in the
formulation and proposal of a plan of reorganization;
e) review applications and motions filed by the Debtors and
other parties-in-interest in connection with this case and
filing objections on behalf of the Committee:
f) take all necessary action to ensure that the Debtors
protect and preserve the value of their estates;
g) advise the Committee in connection with any potential sale
of assets or business; and
h) provide additional services as may be reasonable and
appropriate or otherwise necessary to assist the Committee
in carrying out its duties and responsibilities under 11
U.S.C. Section 1103.
Holland & Knight's professionals who will provide services to the
Debtors and their current hourly rates are:
Professional Position Rate
------------ -------- ----
John J. Monaghan, Esq. Partner $390
Kerry S. Kehoe, Esq. Partner $375
Lynne B. Xerras, Esq. Associate $325
Mathew Sobolewski, Esq. Associate $250
Shannan Whalen, Esq. Paralegal $135
John J. Monaghan, Esq., at Holland & Knight, assures the Court of
his Firm's "disinterestedness" as that term is defined in Sectin
101(14) of the Bankruptcy Code.
Headquartered in Canton, Massachusetts, Plymouth Rubber, Inc.,
manufactures and distributes plastic and rubber products,
including automotive tapes, insulating tapes, and other industrial
tapes, mastics and films. Through its Brite-Line Technologies
subsidiary, Plymouth manufactures and supplies highway marking
products. The Company and its subsidiary filed for chapter 11
protection on July 5, 2005 (Bankr. D. Mass. Case Nos. 05-16088
through 05-16089). Victor Bass, Esq., at Burns & Levinson LLP,
represents the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they estimated
$1 million to $50 million in assets and debts.
PLYMOUTH RUBBER: Files Schedules of Assets & Liabilities
--------------------------------------------------------
Plymouth Rubber Company, Inc., delivered its Schedules of Assets
and Liabilities to the U.S. Bankruptcy Court for the District of
Massachusetts, disclosing:
Name of Schedule Assets Liabilities
---------------- ------ -----------
A. Real Property $ 8,900,000
B. Personal Property $34,381,011
C. Property Claimed
As Exempt
D. Creditors Holding $31,478,282
Secured Claims
E. Creditors Holding
Unsecured Priority $ 719,152
Claim
F. Creditors Holding $ 7,744,815
Unsecured Non priority
Claim
----------- -----------
Total $43,281,011 $39,942,249
Headquartered in Canton, Massachusetts, Plymouth Rubber, Inc.,
manufactures and distributes plastic and rubber products,
including automotive tapes, insulating tapes, and other industrial
tapes, mastics and films. Through its Brite-Line Technologies
subsidiary, Plymouth manufactures and supplies highway marking
products. The Company and its subsidiary filed for chapter 11
protection on July 5, 2005 (Bankr. D. Mass. Case Nos. 05-16088
through 05-16089). Victor Bass, Esq., at Burns & Levinson LLP,
represents the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they estimated
$1 million to $50 million in assets and debts.
POLTECH TRUST: Section 304 Petition Summary
-------------------------------------------
Petitioner: George Georges and
John Lindholm
Trustees and Foreign Representatives
Debtor: The Poltech Trust
Successor to Poltech International, Ltd.
Level 29, 600 Bourke Street
Melbourne, Victoria 3000
AUSTRALIA
Case No.: 05-39020
Type of Business: The Debtor developed, manufactured, and marketed
digital imaging systems used primarily for law
enforcement purposes.
In September 2001, Poltech and ACS State & Local
Solutions, Inc., signed a contract for the
supply and installation of speed and red light
camera systems for the State of Hawaii. In
April 2002, the contract was terminated. Under
the Deeds of Company Arrangement of Poltech, all
assets were assigned to the Administrators and
are held in trust for the benefit of the
creditors of Poltech.
On May 4, 2005, ACS received money from the
State of Hawaii, $143,125 of which ACS
acknowledges was owed to Poltech. Because of
the competing demands on the money, ACS filed
Cause No. DV-03-13077-H, in the 160th District
Court, Dallas County, Texas, styled American
Plastics & Chemicals, Inc., Plaintiff v.
Affiliated Computer Services, Inc. v. Poltech
International, Ltd.
The Trustees want the monies owed to Poltech,
which have been deposited with the State Court
Clerk in the Northern District of Texas, to be
distributed to Poltech's creditors.
Section 304 Petition Date: August 10, 2005
Court: Northern District of Texas (Dallas)
Judge: Barbara J. Houser
Petitioners' Counsel: Omar J. Alaniz, Esq.
Patrick J. Neligan, Jr., Esq.
Neligan Tarpley Andrews & Foley LLP
1700 Pacific Avenue, Suite 2600
Dallas, Texas 75201
Tel: (214) 840-5300
Fax: (214) 840-5301
POLYMER GROUP: Earns $4.1 Million of Net Income in Second Quarter
-----------------------------------------------------------------
Polymer Group, Inc. (PGI) (OTC Bulletin Board: POLGA; POLGB)
reported results from operations for the second quarter and six-
month period ended July 2, 2005.
Net sales for the second quarter of 2005 were $235.9 million, up
$25.5 million or 12.1% compared to $210.4 million in the second
quarter of 2004. Sales growth was driven primarily by higher
volumes in the nonwovens segments, improved mix, and the effects
of higher selling prices due to increased raw material costs.
Gross profit increased $5.2 million to $41.9 million for the
second quarter, an increase of 14.0%. Gross profit margin for the
quarter also improved over the prior year to 17.8% of sales
compared to a gross profit margin for the second quarter of 2004
of 17.5%. A significant contributor to the company's ability to
improve profitability was through increased efficiencies and lower
start-up costs compared to the same period in 2004 when the
company initiated many new customer programs. As a result, the
company's overall cost to manufacture improved in addition to an
improved mix of products. These improvements were partially
offset by higher raw material costs compared to the prior year.
Operating income for the second quarter of 2005 was $16.0 million
compared to $24.6 million in the second quarter of 2004. Included
in operating income in the second quarter of 2004 was a $13.4
million gain from an arbitration settlement. The company
continued to control costs, keeping SG&A expense growth to 5.8%
over the prior year versus a 12.1% growth in sales. SG&A expense
as a percent of sales was 11.0% in the quarter compared to 11.6%
in the second quarter of 2004. Additionally, non-cash restricted
stock and stock option compensation expense represented $0.8
million of the $2.2 million increase in SG&A expense.
Polymer Group reported net income for the second quarter of $4.1
million and net income applicable to common shareholders of $1.7
million.
For the six months ended July 2, 2005, sales were $480.2 million,
up $63.6 million, or 15.3%, from the same period in 2004. The
company's year-to-date gross profit was up $11.1 million to $85.9
million compared to the prior year, representing an increase of
14.9% and a gross profit margin of 17.9% compared to 17.9% the
prior year.
Operating income in the first six months of 2005 was $32.4 million
compared to $34.8 million for the first six months of the previous
year. For the first six months of 2004, the company recorded
plant realignment costs of $1.2 million and recognized a $13.4
million gain from an arbitration settlement.
Net income for the first six months of 2005 amounted to $9.2
million, with a loss applicable to common shareholders of $4.0
million.
Polymer Group's chief executive officer, James L. Schaeffer,
stated, "I am extremely pleased with our performance and the
progress we are making on our strategic growth initiatives. The
second quarter was another installment of continued growth and
profitability improvement. Additionally, much progress has been
made to secure our position in key markets around the world with
advanced technology installations to meet customer demand.
We have been working to combat rising raw material prices with
efficiency improvements to minimize the impact of required price
increases to our customers. Volatility caused by global market
influences on petroleum makes managing the raw material
environment challenging. Regardless, we remain committed to a
continued focus on streamlining manufacturing and providing world-
class quality and innovation to ensure we are providing top value
to our customers," Mr. Schaeffer said.
Willis (Billy) C. Moore, III, PGI's chief financial officer,
added, "In addition to profitability growth and cost containment,
we remain focused on balance sheet efficiency. Working capital as
a percent of annualized sales for the quarter was below our
strategic target. Additionally, our revolving credit facility was
undrawn at the end of the quarter even as we were funding our
capital expansion programs with internally generated funds. I am
pleased with the strong level of operating cash flows we have been
able to generate to support our capital expansion programs while
maintaining a prudent level of indebtedness."
Global Expansion Progress
Additionally, the company reported that its previously announced
global expansion initiatives are progressing as planned. The
equipment installations of the state-of-the-art spunbond line in
Cali, Colombia are near completion and the company expects the
line to be fully installed early in the fourth quarter. Polymer
Group has broken ground and begun site construction for its
Mooresville, North Carolina project. In Suzhou, China, the
company has received all necessary governmental approvals to
establish the wholly owned subsidiary, executed the land purchase
agreement and commenced construction on the new site.
Redemption Of PIK Preferred Shares
On July 28, 2005, PGI's Board of Directors unanimously approved a
resolution to redeem all of the company's 16% Series A Convertible
Pay-in-Kind Preferred Stock outstanding on or before September 30,
2005. Additional information regarding the redemption will be
communicated separately to holders in accordance with the terms of
the PIK Preferred Shares.
Restatement Of First Quarter Results
On January 14, 2005, pursuant to the terms of the company's 16%
Series A Convertible Pay-in-Kind Preferred Stock, PGI's Board of
Directors declared a dividend payable in the form of 5,540 PIK
Preferred Shares. The dividends were paid on January 21, 2005 to
holders of record as of May 15, 2004 and December 15, 2004, for
accrued and unpaid dividends from the dates of issuance of the PIK
Preferred Shares through December 31, 2004. The company accrued
the 16% per annum stated amount of the dividend (or $5.6 million)
during 2004.
The company, acting through the Audit Committee of the Board of
Directors, and based on the advice of management and the company's
independent registered public accounting firm, has concluded that
its consolidated statement of operations for the three months
ended April 2, 2005 should be restated to reflect the dividend
paid-in-kind through the issuance of 5,540 PIK Preferred Shares at
the estimated fair value of the shares issued, which was higher
than the stated amount of the dividend that was previously
accrued.
The PIK Preferred Shares allow holders to convert each share into
137.14286 of the company's Class A common shares, equivalent to a
conversion price of approximately $7.29 per share (calculated by
dividing the $1,000 liquidation preference by 137.14286 shares).
As the 5,540 PIK Preferred Shares were convertible into Class A
common stock with an estimated value of $14.1 million (based on
the closing stock price of $18.50 per share on the date the
dividends were declared), the results for the first quarter will
be restated to reflect an additional dividend charge equal to the
difference between the $14.1 million estimated fair value and the
$5.6 million of dividends previously accrued and charged to
retained earnings.
The effect of the restatement on the consolidated statement of
operations increases the charge for dividends on PIK Preferred
Shares and reduces income applicable to common shareholders by
approximately $8.5 million. Accordingly, income (loss) applicable
to common shareholders for the three months ended April 2, 2005
has been restated to reflect a loss applicable to common
shareholders of approximately $5.7 million, or $.55 per share,
versus the previously reported income of approximately $2.8
million, or $.27 per share. However, the restatement does not
affect amounts previously reported for net income, total
shareholders' equity or cash flows, given that the adjustment
reflects the payment-in-kind of a non-cash dividend.
The effects of such adjustment have been included in the Company's
consolidated financial statements presented below as of, and for,
the six- month period ended July 2, 2005.
Polymer Group, Inc., one of the world's leading producers of
nonwovens, is a global, technology-driven developer, producer and
marketer of engineered materials. With the broadest range of
process technologies in the nonwovens industry, PGI is a global
supplier to leading consumer and industrial product manufacturers.
The company operates 21 manufacturing facilities in 10 countries
throughout the world.
* * *
As reported in the Troubled Company Reporter on May 19, 2005,
Standard & Poor's Ratings Services placed its ratings for Polymer
Group Inc. on CreditWatch with developing implications following
the announcement that the company has retained J.P. Morgan
Securities Inc. as its financial advisor to explore strategic
alternatives to maximize shareholder value, including the
potential sale of the company. Developing implications mean that
the 'B+' corporate credit rating and other ratings may be raised,
lowered or affirmed.
PRIMARY ENERGY: Moody's Rates Planned $150 Million Facility at Ba2
------------------------------------------------------------------
Moody's Investors Service has assigned a Ba2 rating to Primary
Energy Finance, LLC's proposed $150 million senior secured term
loan B facility due in 2012.
Proceeds from the proposed financing will be used to fund a series
of transactions, including:
* the retirement of project finance debt;
* the buy-out of a facility lease; and
* repayment of a bridge loan that was used to fund the
acquisition of certain assets from Cogentrix Energy Inc.
Proceeds will also be used:
* to prefund a six month debt service reserve for the
term loan;
* to pay related fees and expenses; and
* to provide an equity distribution to parent
Primary Energy Ventures (PEV).
PEV's controlling shareholder is American Securities Capital
Partners, LLC, which owns 98% of the company. The rating outlook
is stable.
Concurrent with the transaction, Primary Energy Holdings, an
intermediate holding company between PEV and PEF, will divide its
portfolio of assets into two separate entities. PEF will own five
Qualified Facilities ("QFs"; Naval Station, North Island, Naval
Training Center, Oxnard, Kenilworth), as well as the two Cogentrix
assets (Roxboro and Southport, both QF qualified) it purchased in
July 2005.
The remainder of PEH's 6 projects are located at some of the
highest quality and most efficient steel mills in the U.S. Five
of these projects will be contributed to Primary Energy Recycling
Corp., a Canadian income trust vehicle, from Primary Energy Steel
(PES). Additionally, as part of the separation, PES will
contribute Lakeside (an "inside the fence" power cogeneration
asset located in US Steel's Gary Works steel mill) to PEF. When
all of these transactions are completed, PEF will be comprised of
8 individual project assets: the five original QF facilities,
Lakeside and the two Cogentrix assets.
The Ba2 rating reflects the relatively predictable and stable cash
flow derived from energy, steam and capacity payments from a
diversified portfolio of 8 power projects, totaling approximately
532 megawatts, which provide electricity and thermal energy to
largely investment-grade counterparties. The fully contracted
nature of the cash flow is supported by long-term power purchase
agreements/tolling agreements (PPAs) whose tenor ranges from 4 to
15 years.
While three PPA's related to the Kenilworth, Roxboro and Southport
projects expire prior to the maturity of the term loan in 2012,
contract extensions are anticipated by the issuer. These PPA's
contribute less than 15% of PEF's total projected cash flow. The
8 projects receive approximately 23% of their revenues in capacity
payments irrespective of whether or not the projects are
dispatched to produce power.
However, receipt of capacity payments is subject to the projects'
achieving certain capacity factors, which Moody's believes are
achievable under normal operating conditions. Additionally, each
of the projects either has access to free fuel or has a contract
that provides for a fuel pass through to mitigate against
commodity price exposure.
In assigning the rating, Moody's also considered structural
features in the term loan agreement, including:
a) a cash sweep of 100% of available cash flow after scheduled
debt service until all debt is fully repaid beginning in
2007 on a twice a year basis;
b) a pre-funded 6 month debt service reserve covering forward
interest and scheduled debt service; and
c) a set of financial and other covenants that restrict the
business and financial activities of the borrower.
The transaction provides for only a 1% required amortization, with
additional amortization to be based upon the cash flow sweep
mechanism.
The rating also incorporates the consolidated leverage at PEF,
reflecting approximately $68 million of the present value of
project level operating leases. Moody's notes that repayment of
the term loan is structurally subordinated to project level
operating lease service and operating costs.
The rating considers the terms of existing debt and liens at the
underlying projects and as part of the portfolio separation of
PEH, the structural improvement resulting from the elimination of
various cash traps and cross default provisions under existing
agreements at the six projects owned by PES. The $150 million
term loan will be secured by a first priority lien on the assets
and equity in the Cogentrix, Lakeside, and Oxnard assets, the
equity of Primary Energy CHP (an intermediate holding company for
the gas-fired QF facilities) and a first lien on 49% of the equity
in Kenilworth.
Liquidity is supported by a six month cash-funded debt service
reserve which will be entirely funded in cash at closing.
Moody's also considered the credit profiles of the offtakers of
the eight underlying projects. While there is cash flow stability
at the projects, there is a degree of cash flow concentration in
which approximately 25% of cash flow upstreamed to PEF is derived
from the Lakeside project whose offtaker US Steel is rated Ba2
senior unsecured. However, that risk is somewhat mitigated
because Moody's views Lakeside to be an integral asset to US
Steel's Gary Works facility where it is contractually first
dispatched.
The rating also factors in the uncertainty associated with the
future determination of short-run avoided costs (SRAC) pricing for
the four California-based QF Projects. These four projects
include the Naval Station, North Island, the Naval Training Center
(together, the Navy Projects), and Oxnard. The Navy Projects are
largely insulated from this risk through September 2006, as these
projects receive a fixed SRAC pricing of $53.7/MWh and have hedged
approximately 74% of their fuel supply through a fixed priced gas
supply contract with Sempra Energy.
After September 2006, SRAC pricing is expected to move with gas
prices. However, legislative decisions could potentially produce
a mismatch between SRAC pricing and the projects' actual natural
gas costs. The steam contracts help to mitigate this risk because
the Navy partially compensates the projects for negative spark
spreads between the projects' electric revenues and natural gas
costs. In addition, fixed capacity payments represent about 23%
of QF project cash flows to CHP.
Due to low level of required loan amortization, debt service
coverage ratios are not the most meaningful credit measure for
comparing this transaction to other power project finance issuers.
Under the issuer's base case projections, average DSCR and minimum
DSCR prior to the cash sweep are 3.00 and 2.12 times,
respectively.
However, the reliance upon the cash sweep for the bulk of expected
amortization provides a degree of protection against unexpected
short-term variability in cash flows upstreamed from the
underlying projects. Under the issuer's base case projections,
the ratio of consolidated funds from operations to consolidated
debt (including debt at underlying operating projects), is in the
range of 15-20%. Cash flow appears to be resilient under several
sensitivity scenarios, including:
* a 30% change in natural gas prices;
* no contract renewals for the Cogentrix plants;
* no buy-out of the Oxnard lease; and
* the exercise of a buy-out option at Lakeside in 2006.
The stable outlook reflects:
* the contractual nature of PEF's underlying cash flows;
* a degree of diversity in the sources of cash flows; and
* contracts and covenants that limit PEF's activities.
Positive trends that could lead Moody's to consider an upgrade
would include:
* credit improvement by key contractual counter-parties;
* extension of contracts on favorable terms;
* advantageous SRAC pricing; and
* better than projected financial performance such as FFO to
consolidated debt in excess of 20%.
Negative trends that could lead Moody's to consider a downgrade
would include:
* credit deterioration by key contractual off-takers;
* substantial operating performance difficulties that result in
meaningful loss of capacity payments;
* poor market conditions in combination with disadvantageous
SRAC pricing and expiry of power sale contracts; and
* financial performance that is below expectations such as FFO
to consolidated debt under 15%.
The rating is predicated upon final documentation being consistent
with Moody's current understanding of the transaction structure.
A pre-sale report with additional details will be posted on
www.moodys.com.
Primary Energy Finance, LLC is a developer, owner and operator of
on-site combined heat and power and recycling energy projects. It
is headquartered in Oak Brook, Illinois.
ROETZEL ENTERPRISES: Case Summary & 40 Largest Unsecured Creditors
------------------------------------------------------------------
Lead Debtor: Roetzel Enterprises, Inc.
555 Highway 385 North
Judsonia, Arkansas 72081
Bankruptcy Case No.: 05-20373
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
Wade & Carol Lynn Roetzel 05-20369
Chapter 11 Petition Date: August 11, 2005
Court: Eastern District of Arkansas (Little Rock)
Debtor's Counsel: James F. Dowden, Esq.
James F. Dowden, P.A.
212 Center Street, 10th Floor
Little Rock, Arkansas 72201
Tel: (501) 324-4700
Fax: (501) 374-5463
-- and --
Frederick S. Wetzel, Esq.
Frederick S. Wetzel, P.A.
1500 Riverfront Drive, Suite 104
Little Rock, Arkansas 72202-1749
Tel: (501) 663-0535
Estimated Assets Estimated Debts
---------------- ---------------
Roetzel Enterprises, Less than $50,000 $1 Million to
Inc. $10 Million
Wade & Carol Lynn Less than $50,000 $500,000 to
Roetzel $1 Million
A. Roetzel Enterprises, Inc.'s 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Community Bank $900,000
P.O. Box 1028
Cabot, AR 72023
Same Deutz-Fahr N. America Inc. $354,065
4801 Lewis Road
Stone Mountain, GA 30083
Gehl Co. $315,123
143 Water Street
West Bend, WI 53095
Textron Financial $158,450
Textron Financial Corp. $110,000
Gehl Finance $83,015
Koyker $61,800
Carswell/OEI $60,000
Fred Cain, Inc. $58,122
Vermeer Manufacturing Co. $47,500
Farm Bureau Visa $37,530
Wells Fargo Payment Remmitence $36,655
Textron Financial Corp. $33,002
MBNA $22,050
Advanta Credit Card $21,700
Grand Ol Opry $20,300
CNH Capitol $18,480
American Jawa, Ltd. $16,445
MBNA America $16,300
Sentry Select Insurance $16,040
B. Wade & Carol Lynn Roetzel's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Community Bank Guaranty $594,738
c/o Stuart Hankins, Esq.
P.O. Box 5151
North Little Rock, AR 72119
MBNA $22,047
P.O. Box 15102
Wilmington, DE 19886-5102
Grand Ol Opry $20,293
P.O. Box 94014
Palatine, IL 60094-4014
MBNA American Quarterhorse $13,191
Mastercard
Progressive Farmer $11,247
Discover $9,853
AT&T Universal Card $8,164
Citibusiness $6,706
White County Medical Center Medical $4,728
MBNA Regions MAstercard $4,248
Discover $3,108
Sears $2,732
Staples $2,184
Dell $1,935
JC Penney $1,288
American Express $1,191
Lowes $1,000
US Bank $1,000
Victoria's Secrets $767
Q Card QVC $715
SAINT VINCENTS: Committee Questions Critical Vendor Payments
------------------------------------------------------------
As previously reported in the Troubled Company Reporter, The U.S.
Bankruptcy Court for the Southern District of New York allowed
Saint Vincents Catholic Medical Centers of New York and its
debtor-affiliates request to pay approximately $16.2 million in
Critical Vendor Claims.
Timothy Weis, Chief Financial Officer of Saint Vincents Catholic
Medical Centers of New York, relates that the Debtors' viability
as healthcare providers is dependant on their uninterrupted access
to the goods and services provided by their Critical Vendors, as
is the health and safety of their patients and residents.
Creditors Committee Seeks Reconsideration
The Official Committee of Unsecured Creditors asks the Court to
reconsider its order dated July 11, 2005, granting the Debtors
authority to provisionally pay in the ordinary course of business
certain prepetition claims of critical vendors.
The Creditors Committee filed the request under Rule 9023 of the
Federal Rules of Bankruptcy Procedure to preserve its rights with
respect to the Critical Vendor Order pending due diligence.
Under Rule 9023, the Creditors Committee was prohibited from
filing a motion to alter or amend a judgment from being filed
after 10 days after the entry of the judgment.
Martin G. Bunin, Esq., at Thelen Reid & Priest LLP, in New York,
tells the Court that the Creditors Committee has requested --
with the Debtors' assurance to provide -- the list of the
purported critical vendors. This list has not been made public
and was provided only to the Office of the United States Trustee
and to the Court. After receiving the list, the Committee will
need time to review and evaluate it.
The Court commented at the hearing on the Critical Vendor Motion
that the $16.2 million maximum amount authorized to be paid to
the purported critical vendors was not that significant in light
of the Debtors' revenue. However, it is not clear whether the
Court considered the amount in comparison to the current proposed
$100 million postpetition financing facility, Mr. Bunin avers.
>From the proposed DIP financing, $35 million has been or will be
used to pay the prepetition debt of the lenders. Thus, the
authorized $16.2 million maximum amount to be paid to the
purported critical vendors constitutes 25% of what is, in
essence, a $65 million postpetition financing facility.
When placed in this context, the Creditors Committee believes
that the payment of $16.2 million to purported critical vendors
is very significant.
Moreover, the Committee further understands that the estimates of
availability under the proposed postpetition financing facility
are significantly less than $65 million.
In evaluating a critical vendor order, the United States Court of
Appeals for Seventh Circuit in In re Kmart Corp., 359 F. 3d. 866,
874 (7th Cir.2004), looked to whether:
(a) any firm would have ceased doing business with the debtor;
(b) discrimination among unsecured creditors was the only way
to facilitate a reorganization; and
(c) the disfavored creditors were at least as well off as they
would have been had the critical vendors order not been
entered.
The Debtors did not make a sufficient evidentiary showing in this
regard to support the entry of the Critical Vendor Order,
Mr. Bunin asserts.
Headquartered in New York, New York, Saint Vincents Catholic
Medical Centers of New York -- http://www.svcmc.org/-- the
largest Catholic healthcare providers in New York State, operate
hospitals, health centers, nursing homes and a home health agency.
The hospital group consists of seven hospitals located throughout
Brooklyn, Queens, Manhattan, and Staten Island, along with four
nursing homes and a home health care agency. The Company and six
of its affiliates filed for chapter 11 protection on July 5, 2005
(Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary
Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will &
Emery, LLP, represent the Debtors in their restructuring efforts.
As of Apr. 30, 2005, the Debtors listed $972 million in total
assets and $1 billion in total debts. (Saint Vincent Bankruptcy
News, Issue No. 7; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
SHOPKO STORES: Extends Offer for 9-1/4% Senior Notes to Aug. 24
---------------------------------------------------------------
ShopKo Stores, Inc. (NYSE: SKO) said that it has amended and
extended its offer to purchase any and all of its outstanding $100
million principal amount of 9-1/4% Senior Notes due 2022 in
connection with the previously announced definitive merger
agreement that provides for the acquisition of ShopKo by Badger
Retail Holding, Inc. and Badger Acquisition Corp., which are
affiliates of Minneapolis-based private equity firm Goldner Hawn
Johnson & Morrison Incorporated.
The Offer, scheduled to expire last Wednesday, August 10, 2005 at
5:00 P.M., New York City time, will now expire at 5:00 P.M., New
York City time, on Wednesday, August 24, 2005, unless further
extended by ShopKo or earlier terminated. Holders will now be
able to receive the $50.00 consent payment if they tender their
bonds before 5:00 P.M., New York City time, on Monday, August 15,
2005, unless further extended by ShopKo or earlier terminated.
As amended, Holders of Notes validly tendered prior to the Consent
Deadline will now receive $1,195.00 per $1,000.00 principal amount
of Notes, including the consent payment of $50.00 per $1,000.00
principal amount of Notes, if such Notes are accepted for
purchase. Holders who validly tender their Notes after the
Consent Deadline will receive $1,145.00 per $1,000.00 principal
amount of Notes, if such Notes are accepted for purchase.
Tendered Notes may no longer be withdrawn. Holders who have
previously tendered Notes do not need to take any action to
receive the increased consideration.
Accrued interest up to, but not including, the settlement date
will be paid in cash on all validly tendered and accepted Notes.
Except as described above, all other terms, provisions and
conditions of the Offer will remain in full force and effect. The
terms of the Offer and Solicitation, including the proposed
amendments to the indenture governing the Notes, are described in
the Offer to Purchase and Consent Solicitation Statement dated
June 30, 2005, as amended, copies of which may be obtained from
Global Bondholder Services Corporation, the information agent for
the Offer, at (866) 736-2200 (US toll free) or (212) 430-3774
(collect).
ShopKo said it has been informed by the information agent that, as
of 5:00 P.M., New York City time, on August 10, 2005,
approximately $9.3 million in aggregate principal amount of Notes
had been tendered in the Offer. This amount represents
approximately 9.3% of the outstanding Notes.
Banc of America Securities LLC and Morgan Stanley & Co.
Incorporated are acting as the dealer managers for the Offer.
Questions regarding the Offer may be directed to Banc of America
Securities LLC, the lead dealer manager, at (212) 847-5834 or
(888) 292-0070.
This announcement is not an offer to purchase, a solicitation of
an offer to purchase or sell or a solicitation of consents with
respect to any securities. The offer and consent solicitation are
being made solely by the offer to purchase and consent
solicitation statement dated June 30, 2005.
ShopKo Stores, Inc. -- http://www.shopko.com/-- is a retailer of
quality goods and services headquartered in Green Bay, Wisconsin,
with stores located throughout the Midwest, Mountain and Pacific
Northwest regions. Retail formats include 140 ShopKo stores,
providing quality name-brand merchandise, great values, pharmacy
and optical services in mid-sized to larger cities; 223 Pamida
stores, 116 of which contain pharmacies, bringing value and
convenience close to home in small, rural communities; and three
ShopKo Express Rx stores, a new and convenient neighborhood
drugstore concept. With more than $3 billion in annual sales,
ShopKo Stores, Inc., is listed on the New York Stock Exchange
under the symbol SKO.
* * *
As reported in the Troubled Company Reporter on April 18, 2005,
Moody's Investors Service placed the long-term debt ratings of
Shopko Stores, Inc., on review for possible downgrade following
the company's announcement that it had signed a definitive merger
agreement to be acquired by an affiliate of Goldner Hawn Johnson &
Morrison. The downgrade reflects the anticipated significant
increase in leverage as a result of the proposed transaction.
The transaction is valued at slightly more than $1 billion and is
expected to be funded predominantly from debt with only $30
million of the purchase price to be funded by equity. The company
has received a commitment from Bank of America to provide $700
million in real estate financing and additional commitments from
Bank of America and Back Bay Capital Funding LLC to provide $415
million in senior debt financing.
The proceeds from these financings along with the $30 million of
equity will be used to pay the merger consideration, refinance the
borrowings under the existing revolving credit facility, fund the
amounts due under the expected tender offer for the $100 million
senior unsecured notes due 2022, plus all fees and expenses.
In addition, the financing will be used to cover all future
working capital needs. If substantially all of the senior notes
are tendered the rating on those notes will be withdrawn. The
review will focus on the debt protection measures of Shopko post
acquisition as well as the company's business strategy going
forward.
These ratings are placed on review for possible downgrade:
* Senior implied of B1;
* Issuer rating of B2; and
* Senior unsecured notes due 2022 of B2.
SHURGARD STORAGE: Posts $693,000 Net Loss in Second Quarter
-----------------------------------------------------------
Shurgard Storage Centers, Inc. (NYSE:SHU) released results for the
quarter and six months ended June 30, 2005. The Company announced
continued strong performance from its store operations, but
reported a net loss for the second quarter of 2005 of $693,000
compared with net income of $20.8 million in the second quarter of
2004. The loss reported this period was due primarily to $5.2
million of non-cash expenses relating to foreign currency exchange
and derivative losses. The comparable quarter in 2004 included a
$12 million gain on the sale of properties.
Funds from Operations attributable to common shareholders for the
second quarter of 2005 was $15.4 million (after $5.2 million of
foreign currency exchange and derivative losses, net of minority
interest), compared to $24.5 million (after $300,000 of foreign
currency exchange and derivative gains, net of minority interest)
in the second quarter of 2004.
Store Operating Results
Store operating results in both the United States and Europe
continued on an upward trend during the quarter. At constant
exchange rates, total Same Store revenue increased 7.1%, and net
operating income after indirect and leasehold expenses increased
6.2%, compared to the same quarter in 2004. The revenue growth
was driven primarily by occupancy gains in Europe and a
combination of both occupancy and rate gains in the United States.
The European Same Store portfolio achieved a combined occupancy of
80% at the end of the second quarter, a 5% gain from the end of
the first quarter. Same Store occupancy gains were realized in
each country in Europe.
David K. Grant, president and chief operating officer stated,
"During the quarter, we increased our entire European tenant base
by almost 5,000 customers, reaching a total count in excess of
64,000. Clearly, we are seeing the benefits of more focused rate
management and our strategic decision to slow the pace of
development in some of our European markets, such as the
Netherlands." Mr. Grant added, "This trend has continued into the
third quarter with occupancy of the same store pool surpassing 81%
as of the end of July. The Company's 40 U.S. and 43 European New
Stores also showed strong occupancy growth during the quarter."
The Company's strong store performance was offset by higher
borrowing costs ($4.8 million, equivalent to $0.10 per share),
increased general and administrative expenses relating primarily
to the Sarbanes-Oxley Section 404 internal control assessment and
related process improvements ($1.7 million, equivalent to $0.04
per share), increased real estate costs charged to income due to
the change in volume and mix of real estate investment activities
from the prior year ($2 million, equivalent to $0.04 per share)
and restructuring charges related to the company's previously
announced integration plan between the United States and Europe
($1.3 million, equivalent to $0.03 per share).
Portfolio
As of June 30, 2005, Shurgard operated an international network of
643 properties containing approximately 40.5 million net rentable
square feet. The total includes 484 owned, partially owned or
leased storage centers in operation in the United States, 20
stores in the United States managed for third parties and 139
owned or partially owned stores in Europe. Of the 623 owned,
partially owned or leased stores in the United States and Europe,
540 are classified as Same Store and 83 are classified as New
Store.
Shurgard's Domestic and European New Store group represents 17% of
the Company's total investment in storage centers. The New Store
group is in various stages of lease-up and currently produces
approximately 3% of Shurgard's total NOI after leasehold and
indirect expenses. Mr. Grant stated, "There is significant
embedded future growth in our New Store portfolio. Lease-up of our
New Store group, which represents an investment of approximately
$530 million, is expected to be a key driver of Shurgard's FFO
growth for the next several years."
As of the end of the quarter, the Company had 16 new stores under
construction or pending construction (seven in the United States
and nine in Europe) for an estimated total cost of $114 million
and seven re-development projects underway for an estimated cost
of $11.4 million. The Company also completed the acquisition of
nine stores in the United States (six in North Carolina, two in
Florida and one in California) for a total cost of $41 million,
adding 698,000 net rentable square feet.
Same Store Operating Results
During the second quarter of 2005, the Domestic Same Store segment
generated growth in revenue of 5.9% and in NOI before leasehold
and indirect expenses of 5.5% over the second quarter of 2004.
Growth in NOI after leasehold and indirect expenses in the quarter
was 3.5% over the same quarter in 2004. The growth in indirect
operating expenses reflects the increase in field management and
marketing positions in the past year. Management believes the
current quarterly run-rate of indirect expenses is at a stabilized
level.
At constant exchange rates, the Europe Same Store segment in the
second quarter of 2005 generated increases in revenue of 11.3% and
in NOI before leasehold and indirect expenses of 19.8% over the
second quarter of 2004. NOI after leasehold and indirect expenses
in the quarter grew 21.6% for Same Stores, compared to the same
quarter in 2004. Strong revenue growth was due mainly to the
substantial improvement in average occupancy during the quarter in
the Same Store portfolio, which increased to 78% from 68% in the
comparable quarter in 2004. Occupancy improved in all countries,
but occupancy growth was particularly strong in the Netherlands,
Sweden and Denmark.
Long-term Cost Reductions
The Company believes there are significant synergies possible with
the integration of Shurgard Europe. In particular, Europe's rate
of indirect expenses as a percentage of revenue is currently
running at 13% for the Same Store group. Management believes this
can be reduced to a stabilized level of approximately 6% of
revenue by the fourth quarter of 2007.
Consolidated general and administrative expenses are currently
running at a rate of approximately 8% of revenue. Management
forecasts that these will be cut to approximately 4% of revenue by
the fourth quarter of 2007. Of the $34 million in general and
administrative expenses expected for the full year 2005,
approximately $11 million relates to audit, tax, and Sarbanes-
Oxley Section 404 compliance and consulting expenses. These
expenses are projected to decline to an annual run-rate of closer
to $3 million by the fourth quarter of 2007. Additionally,
benefits from the full integration of Europe will generate further
savings in general and administrative expenses.
Shurgard Storage Centers, Inc. [NYSE: SHU] is a self-storage real
estate investment trust (REIT) headquartered in Seattle,
Washington, USA. At March 31, 2005, Shurgard had interests in
over 634 properties in the USA and Europe totaling 40 million net
rentable square feet, assets of $2.9 billion and equity of $879
million.
* * *
As reported in the Troubled Company Reporter on Aug. 05, 2005,
Moody's Investors Service placed Shurgard Storage Centers, Inc.'s
senior unsecured debt rating of Baa3 and preferred stock rating of
Ba1 (previously on negative outlook) under review with direction
uncertain. According to Moody's, these rating actions reflect
Public Storage's announcement today that it had made a proposal
for the combination of Public Storage and Shurgard through a
merger.
SPORTS CLUB: Has Until Sept. 30 to Cure Reporting Default
---------------------------------------------------------
The Sports Club Company, Inc., amended the indenture covering its
11-3/8% Senior Secured Notes due in March 2006, to cure its
default under the Indenture.
On June 2, 2005, the Company was notified by U.S. Bank, Trustee
for the holders of the, that the Company was in default under
Section 4.3 of the Indenture dated April 1, 1999, since the
Company had not yet filed its Form 10-K for the year ended
December 31, 2004.
The material changes to the Indenture are:
(1) the extension of the date for the negotiation and delivery
of definitive transaction documents in connection with the
previously announced sale of certain of the Company's
assets to a principal shareholder without triggering the
change of control provisions of the Indenture from June 30
to December 31, 2005;
(2) waiver of Defaults under Sections 4.3 and 4.4 of the
Indenture and Section 314 of the Trust Indenture Act,
provided that the Company complete and file the 2004 Form
10-K, the First Quarter 2005 10-Q and the Second Quarter
2005 10-Q on or before September 30, 2005, and deliver to
the Trustee the requisite Officers' Certificate, CPA
Statement and Annual Opinion on or before September 30,
2005. Failure to meet the September 30, 2005, deadline
will constitute an Event Of Default as of
October 1, 2005; and
(3) in consideration of the Noteholders consent to the Fifth
Supplemental Indenture and waiver of the Default the
Company agreed to pay the Noteholders the aggregate sum of
$250,000.
The Sports Club Company, based in Los Angeles, California, owns
and operates luxury sports and fitness complexes nationwide under
the brand name "The Sports Club/LA."
Going Concern Doubt
In its Form 10-Q for the quarterly period ended Sept. 30, 2004,
filed with the Securities and Exchange Commission, The Sports Club
Company said it has experienced net losses of $22.7 million and
$18.4 million during the years ended December 31, 2002 and 2003,
respectively.
The Company has also experienced net cash flows used in operating
activities of $4.4 million and $3.5 million during the years ended
December 31, 2002 and 2003, respectively.
Additionally, the Company is expected to incur a significant loss
and net cash flows used in operating activities during the year
ending December 31, 2004. The Company has had to raise funds
through the offering of equity securities in order to make
interest payments due on its Senior Secured Notes. These factors
raise doubt about the Company's ability to continue as a going
concern.
TOBI COMPANY: Case Summary & 13 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: The Tobi Company, Inc.
P.O. Box 11705
Tampa, Florida 33680-1705
Bankruptcy Case No.: 05-15971
Chapter 11 Petition Date: August 11, 2005
Court: Middle District of Florida (Tampa)
Debtor's Counsel: Herbert R. Donica, Esq.
Donica Law Firm PA
106 South Tampania Avenue #250
Tampa, Florida 33609
Tel: (813) 878-9790
Fax: (813) 878-9746
Total Assets: $584,416
Total Debts: $2,710,413
Debtor's 13 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Alta Enterprises, Inc. $1,230,000
P.O. Box 11705
Tampa, FL 33680-1705
The Bank of Tampa 2908 E. McBerry St. $500,000
4400 North Armenia Avenue Tampa, FL 33610-6445
Tampa, FL 33603-2707 Lot 3,4, and 5 and
that part of closed
Simms Ave. abutting
said Lots on the
North,
Value of security:
$500,000
Senior lien:
$424,555
St. Paul Properties, Inc. $238,640
c/o Summit Advisors
5401 West Kennedy Boulevard
Suite 525
Tampa, FL 33609
The Tobi Co. Pension Plan $118,500
Antonio Munoz Y Compania, SA $51,120
FCCI Insurance Company $47,537
The CIT Group Norstar Phone $43,568
System & Computer
Equipment under
Lease Agreement
No. 776-01
Madama Oliva SRL $26,287
Hewlett Packard Financial $13,929
Xerox Corporation Copier $8,607
Dell Financial Services $7,670
Board of City Commissioners Unknown
Broward County, Florida
Florida Dept. of Revenue Unknown
TRESTLE HOLDINGS: Adds Two Experts to Scientific Advisory Board
---------------------------------------------------------------
Trestle Holdings Inc. (OTC BB: TLHO), a supplier of digital
imaging systems and services for pathology, drug safety and
discovery, has appointed two experts to its Scientific Advisory
Board, adding two new positions to the Board. Dr. Colin McKerlie
brings extensive experience in the area of applied gene research,
while Dr. Charles A. Montgomery is an expert in the field of
comparative pathology and the development of animal models for
human disease.
Dr. McKerlie is an associate professor in the Department of
Laboratory Medicine and Pathobiology at the University of Toronto,
and a scientist at The Hospital for Sick Children and the Samuel
Lunenfeld Research Institute at Mount Sinai Hospital. He is also
vice president and a director of the Toronto Centre for
Phenogenomics, a research centre that is shared by The Hospital
for Sick Children, Mount Sinai Hospital, the University Health
Network, and St. Michael's Hospital. His research focuses on the
development and application of pathology techniques and pathology
data visualization to characterize the function of human genes and
genetic pathways in mouse models of human disease.
Dr. Montgomery's broad experience in comparative and veterinary
pathology includes 21 years as a leading pathologist in the U.S.
Army and United States Public Health Service, the role of head of
pathology for the Tennessee-based firm Biotherapeutics, and ten
years as director of comparative medicine at Baylor College of
Medicine in Houston, Texas. Dr. Montgomery has almost four
decades of expertise in a wide range of pathology disciplines, and
extensive experience in the computerization of pathological data
and images. He is presently president of ComPath, a consulting
firm in toxicology and toxicologic pathology.
"As Trestle continues to develop its digital pathology workflow
business and its biopharmaceutical services, we are focused on
providing products that not only allow for rapid and high-quality
digital imaging, but also are designed to deliver efficiencies and
improved workflow using digital imaging. Our customers are
applying these products to drug discovery and safety, and
quantitative histopathology," said Maurizio Vecchione, CEO of
Trestle Holdings, Inc. "The track records of Drs. McKerlie and
Montgomery in these areas will assist Trestle in bringing to
market new products and expand the products around our new
workflow and imaging services platforms."
"I am looking forward to applying my experience gained in the
academic, biomedical research, contract research, and drug
discovery sectors to assist Trestle in identifying potentially key
technologies. I'm convinced that large-scale research initiatives
occurring in the industry across these sectors could positively
impact Trestle's strategic roadmap," said Dr. Colin McKerlie.
"Trestle has concentrated on selling its solutions for diagnostic
and anatomic pathology uses," said Dr. Montgomery. "I've spent my
career in such fields as toxicology, toxicologic pathology,
veterinary medicine, comparative medicine, infectious-disease
research, biological- and chemical-warfare research, cancer
research, and studying the pathology of medical devices. In these
and several other pathology disciplines, I believe that there are
real needs for the solutions Trestle offers. I look forward to
helping the company make a mark in these fields."
With these two new appointments, Trestle's Scientific Advisory
Board comprises five experts. The three other members are:
-- Allan C. Halpern, M.D. (service chief, Dermatology Service,
Memorial Sloan Kettering Cancer Center, New York, NY);
-- Stephen Hochschuler, M.D., M.S. (co-founder of the Texas
Back Institute, founding member of the Spine Arthoplasty
Society and the American Board of Spinal Surgery, Plano,
TX); and
-- William Christopher Steinmann, M.D., M.Sc. (director, Tulane
Center for Clinical Effectiveness and Prevention; professor,
Department of Medicine, Tulane University School of
Medicine).
Trestle Holdings Inc. is a supplier of digital imaging systems and
services for pathology, drug safety and discovery. The company's
products link dispersed users with each other, information
databases, and analytical tools. This improved integration drives
cost savings and process efficiencies, enables improved pre-
clinical and clinical phases of research and development for new
drugs, and enhances patient care.
* * *
Going Concern Opinion
The company's independent Certified Public accountants have
included a going concern qualification in its report covering the
company's financial statements. The qualification was based on
the cash balances of the company and its history of losses. The
company believes it has sufficient cash to fund operations through
December 31, 2005. In May 2003, as part of a corporate
reorganization, the company acquired the assets of Trestle
Corporation, a supplier of digital imaging and telemedicine
products. During the third quarter of 2003, completing its
reorganization, the company sold its remaining film library assets
and changed its name to Trestle Holdings, Inc. As a result of the
foregoing transactions comparisons to prior years are not
representative of Trestle's ongoing business.
TUPPERWARE CORP: Buys Sara Lee's Direct Selling Group for $557MM
----------------------------------------------------------------
Tupperware Corporation (NYSE: TUP) has entered into a definitive
agreement with Sara Lee Corporation to acquire its direct selling
business for $557 million in cash. The Sara Lee business sells
beauty and personal care products, primarily in Latin America and
Asia, through a sales force of over 900,000 independent
consultants.
Exceptional Strategic Fit
"We see substantial growth opportunities for the direct selling
channel in Latin America and Asia Pacific, and strongly feel that
beauty and personal care products will be the major driver of that
growth," said Rick Goings, Chairman and CEO of Tupperware.
"With this exciting step, we have moved aggressively forward with
our strategy to grow our consumable beauty and personal care
products business that began with our successful acquisition of
BeautiControl in North America," Mr. Goings added.
Including Tupperware's existing BeautiControl business, this
acquisition will increase beauty and personal care products to
approximately 35% of the company's total sales, compared with 12%
previously. Importantly, the acquired businesses are not
operating in North America and will complement the fast-growing
BeautiControl North America business, as well as the flagship
Tupperware business around the world.
The employees of the acquired businesses, led by Simon Hemus, will
join the Tupperware team. Mr. Hemus, currently Group President of
Sara Lee direct selling with 30 years of industry experience, will
assume the position of Group President, International Beauty and
Personal Care at Tupperware.
"We are delighted to be joining Tupperware, a leader in the global
direct selling business," said Mr. Hemus. "Having Tupperware as
our partner will allow for incremental growth opportunities for
virtually every market in which we operate. While we will run
these businesses separately, we feel certain that the union of
these two industry leaders will provide a successful framework for
the business and all of the employees in our organization," Mr.
Hemus added.
Tupperware does not anticipate any material changes to the
structure of the operations. Existing business models will remain
in place, and the organization will operate as discrete business
units in most regions. The company will pursue opportunities for
increased efficiency across the organization and will evaluate
opportunities for synergy primarily by leveraging direct selling
expertise and global volume with third-party vendors. "We are
committed to the people of the Sara Lee direct selling business
and look forward to working with them to take the business to new
levels of success," said Mr. Goings.
Some of Sara Lee's Business for Sale
Sara Lee is trying to sell a number of businesses, including its
European apparel business and its U.S. retail coffee operations.
The company also is spinning off its U.S. apparel business into a
publicly traded company.
The restructuring, which was announced in February, will offload
businesses accounting for about 40% of Sara Lee's sales, helping
the company to streamline its vast portfolio of consumer brands.
Among the many well-known consumer brands included in the spin-off
and divestments are Hanes underwear, Champion sportswear and Chock
Full o' Nuts coffee.
Transaction Terms
Tupperware will pay $557 million in cash for the business, which
will be financed through $50 million in existing cash and $540
million in new, committed borrowing facilities. Tupperware will
continue to pay its current dividend of $0.88 per share. The
financial covenants and restrictions in the new borrowing
facilities allow for financial flexibility including maintenance
of the dividend.
The acquisition is expected to be immediately accretive to
Tupperware's pro forma earnings per share by about 20%. Mr.
Goings said, "Adding this business will mean a more balanced
distribution of our earnings and cash flow around the world and
will create substantial value for Tupperware shareholders." The
transaction is expected to close in the fourth quarter of calendar
2005, which is Sara Lee's 2006 second fiscal quarter, subject to
regulatory approvals and other customary closing conditions.
Lazard served as financial advisor to Tupperware in the
transaction, Wachtell, Lipton, Rosen & Katz acted as legal counsel
and Bank of America has provided a financing commitment.
Sara Lee direct selling sells a wide variety of consumable
products, primarily color cosmetics, skin care, fragrances, and
toiletries. Other products include nutriceuticals and apparel.
Products are sold in 18 countries under the trade names House of
Fuller, Nutrimetics, NaturCare, Avroy Shlain, Nuvo Cosmeticos,
Swissgarde, and House of Sara Lee using both single and multi-
level compensation structures depending on the local market. For
the fiscal year ended July 2, 2005, Sara Lee direct selling had
revenues of approximately $470 million. Latin America and Asia
represented roughly 90% of sales.
Headquartered in Orlando, Florida, Tupperware Corporation --
http://tupperware.com-- a $1.2 billion multi-national company, is
one of the world's leading direct sellers, supplying premium food
storage, preparation and serving items to consumers in almost 100
countries through its Tupperware brand. In partnership with one
million independent sales consultants worldwide, Tupperware
reaches consumers through informative and entertaining home
parties; retail access points in malls and other convenient
venues; corporate and sales force Internet websites; and
television shipping. Additionally, premium beauty and skin care
products are brought to customers through its BeautiControl brand
-- http://www.beauticontrol.com-- which it acquired in October
2000, in North America, Latin America and Asia Pacific.
* * *
Standard & Poor's Ratings Services placed its 'BB+' corporate
credit and other ratings on consumer products direct seller
Tupperware Corp. on CreditWatch with negative implications.
TUPPERWARE CORP: S&P Places Ratings on Negative Watch
-----------------------------------------------------
Standard & Poor's Ratings Services placed its 'BB+' corporate
credit and other ratings on consumer products direct seller
Tupperware Corp. on CreditWatch with negative implications.
The Orlando, Florida-based company's total debt outstanding at
July 2, 2005, was about $244 million.
The CreditWatch placement follows the company's announcement that
it has entered into a definitive agreement to acquire the direct
selling business of Sara Lee Corp. (BBB+/Stable/A-2) for $557
million in cash. The Sara Lee direct selling business sells
beauty and personal care products, primarily in Latin America and
Asia, through a sales force of 900,000 independent consultants.
The acquisition is aligned with Tupperware's strategy to not only
expand its consumable and personal care product offerings but also
to expand its presence in growth markets including Latin America
and Asia. The company intends to finance the transaction using
existing cash and new, committed credit facilities.
"We are concerned that the substantial addition to existing
debt levels to finance this acquisition could weaken credit
measures below those appropriate for the current ratings," said
Standard & Poor's credit analyst Jean Stout.
To resolve the CreditWatch listing, Standard & Poor's will meet
with Tupperware management to discuss financing plans, as well as
ongoing business and financial strategies, and will evaluate the
company's new capital structure following the proposed
acquisition.
UNUMPROVIDENT CORP: Earns $171 Million of Net Income in 2nd Qtr.
----------------------------------------------------------------
UnumProvident Corporation (NYSE: UNM) reported its results for the
second quarter of 2005.
The Company reported net income of $171.3 million for the second
quarter of 2005, compared to $7.2 million for the second quarter
of 2004. Included in the results for the second quarter of 2005
are net realized after-tax investment gains of $42.6 million,
compared to net realized after-tax investment losses of
$55.9 million in the second quarter of 2004. Included in net
realized after-tax investment gains and losses are after-tax gains
of $40.6 million in the second quarter of 2005 and after-tax
losses of $48.9 million in the second quarter of 2004 reflecting
the change in the fair value of DIG Issue B36 derivatives.
Also included in the second quarter of 2004 is the impact of the
closing of the sale of the Company's Canadian branch, which
resulted in a net loss from discontinued operations of
$67.8 million after tax.
Income from continuing operations, excluding net realized after-
tax investment gains and losses, was $128.7 million in the second
quarter of 2005, compared to $130.9 million in the second quarter
of 2004. The Company believes operating income or loss, a non-
GAAP financial measure which excludes realized investment gains
and losses, is a better performance measure and a better indicator
of the profitability and underlying trends in the business.
Realized investment gains and losses are dependent on market
conditions and general economic events and are not necessarily
related to decisions regarding the Company's underlying business.
"Our second quarter results reflect continued earnings improvement
for most of our operations and further indications that we are
beginning to restore growth to selected areas of the business,"
said Thomas R. Watjen, president and chief executive officer. "One
of the areas which adversely impacted our results this year is
some disruption to our claims management process as we implemented
changes in that area. I am pleased that we saw steady improvement
in this area throughout the quarter, and I expect that to continue
in the second half of the year. In short, we continued to build
momentum in the second quarter and, although challenges remain,
our confidence in the future is building."
UnumProvident Corp. -- http://www.unumprovident.com/-- is the
largest provider of group and individual disability income
protection insurance in the United States and United Kingdom.
Through its subsidiaries, UnumProvident Corporation insures more
than 25 million people and paid $5.9 billion in total benefits to
customers in 2004. With primary offices in Chattanooga, Tenn., and
Portland, Maine, the company employs more than 12,000 people
worldwide.
* * *
As reported in the Troubled Company Reporter on Apr. 19, 2005,
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. Moody's said 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).
These ratings have been confirmed with a negative outlook:
* UnumProvident Corporation
-- senior unsecured debt of Ba1
-- mandatorily convertible units/preferred stock of Ba1
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
USEC INC: S&P Lowers Corporate Credit Rating to B+ from BB-
-----------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on USEC Inc. to 'B+' from 'BB-'. The outlook is negative.
"The rating action reflects our concern about substantial power
cost increases expected in May 2006 when the company's current
below-market electricity supply contract expires," said Standard &
Poor's credit analyst Dominick D'Ascoli. "We estimate that USEC's
electricity costs could increase by well over $100 million
annually considering current power rates. We are also concerned
about potential delays in achieving full production at USEC's
proposed commercial facility by 2010, given the scope of this
project and commercialization of unproven technology. Delays in
securing financing and construction could give a potential
competitor, Louisiana Energy Services, an advantage in the market,
as LES plans to build its own enrichment facility in the U.S."
Standard & Poor's considers USEC to have a very high cost position
because it uses an older, less-efficient enrichment technology
that requires substantially more energy than most of its
competitors' technology. Indeed, electric power typically
represents 60% of production costs. USEC has been operating under
a favorable fixed-rate power contract from the Tennessee Valley
Authority, which provided approximately 80% of USEC's electrical
power.
However, with market rates currently much higher than USEC's
contracted rate, USEC's power costs are expected to increase
substantially in 2006 when the existing power contract expires.
Ratings could be lowered if LES receives approval from the U.S.
Nuclear Regulatory Committee to build an enrichment facility in
the U.S. or if USEC's new technology proves commercially unviable.
Ratings are unlikely to be raised before substantial certainty
exists regarding the timing, funding, and commercial viability of
the new enrichment facility.
To address its competitive cost disadvantage, USEC plans to build
a highly efficient centrifuge facility, using new technology
developed by the U.S. Department of Energy. If a small-scale test
facility under development proves the technology is commercially
viable, USEC plans to begin construction in 2007 of a large
facility costing about $1.5 billion. It is uncertain how USEC
will fund a project of this magnitude.
V&L GLOBAL HEALTH: Case Summary & 2 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: V&L Global Health Care Products, Inc.
53 West Hills Road
Huntington Station, New York 11746
Bankruptcy Case No.: 05-85425
Type of Business: The Debtor sells medical supplies.
Chapter 11 Petition Date: August 10, 2005
Court: Eastern District of New York (Central Islip)
Debtor's Counsel: Ronald D. Weiss, Esq.
Ronald D. Weiss, P.C.
734 Walt Whitman Road, Suite 203
Melville, New York 11747
Tel: (631) 271-3737
Fax: (631) 271-3784
Total Assets: $1,556,950
Total Debts: $1,243,454
Debtor's 2 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Patrick Troise Legal Services $15,000
2 President Street
Huntington Station, NY 11746
Steve Bloom Accounting Services $13,000
575 Clinton Street
Hempstead, NY 11550
VERIDIANHEALTH LLC: Involuntary Chapter 11 Case Summary
-------------------------------------------------------
Alleged Debtors: VeridianHealth, LLC
1650 Lake Cook Road
Deerfield, Illinois 60015
-- and --
MISU Midwest LLC
1650 Lake Cook Road
Deerfield, Illinois 60015
-- and --
Universal Enterprises Midwest LLC
1650 Lake Cook Road
Deerfield, Illinois 60015
-- and --
Factor LLC
1650 Lake Cook Road
Deerfield, Illinois 60015
Involuntary Petition Date: August 10, 2005
Case Number: 05-31483, 05-31500, 05-31511, & 05-31522
Chapter: 11
Court: Northern District of Illinois (Chicago)
Judge: Carol A. Doyle
Petitioners' Counsel: Chad H. Gettleman, Esq.
Adelman & Gettleman
53 West Jackson Boulevard, Suite 1050
Chicago, Illinois 60604
Tel: (312) 435-1050 extension 215
Fax: (312) 435-1059
A. For VeridianHealth, LLC:
Nature of Amount of
Petitioners Claim Claim
----------- --------- ---------
JP Morgan Chase Bank NA Promissory $8,048,793
120 South Lasalle Street, 6th Floor Note & related
Chicago, Illinois 60603 charges & fees
Attn: Michael E. Hayes
First Vice President
Enterprise Leasing Lease Payments $38,263
Company of Chicago & related
1050 North Lombard Road charges & fees
Lombard, IL 50148
Attn: Loren Ahlgren
Vice President for Fleet Services
Diane T. Nauer, Esq. Payroll & $23,846
2209 Countryside Avenue related items
Lindenhurst, IL 60046
B. For the other Alleged Debtors:
-- MISU Midwest LLC
-- Universal Enterprises Midwest LLC
-- Factor LLC
Nature of Amount of
Petitioners Claim Claim
----------- --------- ---------
JP Morgan Chase Bank NA Promissory $8,048,793
120 South Lasalle Street, 6th Floor Note & related
Chicago, Illinois 60603 charges & fees
Attn: Michael E. Hayes & unconditional
First Vice President guaranty fees
WESTERN WATER: Taps Stutman Treister as Special Bankruptcy Counsel
------------------------------------------------------------------
The Official Committee of Unsecured Creditors of Western Water
Company sought and obtained authority from the U.S. Bankruptcy
Court for the Northern District of California, Oakland Division,
to employ Stutman, Treister & Glatt Professional Corporation as
its special bankruptcy counsel.
Stutman Treister will:
(a) develop, through discussions with the Committee and other
parties in interest, the Committee's legal positions and
strategies with respect to all facets of this case,
including analyzing the Committee's position on
administrative, financial and operational issues;
(b) negotiate and assist in the development, approval and
implementation of the Debtor's financing, assets sales and
plan of reorganization; and
(c) assist in developing and implementing the Committee's
position with respect to all pleadings and court
appearances.
Alan Pedlar, Esq., a member at Stutman Treister, will bill $625
per hour for his services. Other Firm professionals bill:
Professional Designation Hourly Rate
------------ ----------- -----------
Jeffrey C. Krause Principal $610
Gina Najolia Associate $295
Designation Hourly Rate
----------- -----------
Principals $425 - $695
Associates $275 - $380
Law Clerks $135 - $195
Paralegals $170
Mr. Pedlar discloses that Stutman Treister:
(1) represented Empire Insurance Company, an unsecured
debenture holder, in connection with its rights against
the Debtor. A representative of Empire Insurance is now
chairperson of the Committee. The Firm however, no longer
represents Empire Insurance, having resigned such
representation when it undertook representation of the
Committee;
(2) represent Cohanzick Managemnet, whose representative is
serving as chairperson of the Committee on behalf of
Empire Insurance, in other, wholly unrelated matters; and
(3) represented a committee of unsecured creditors in the
chapter 11 case of DDi Corpration (Bankr. S.D.N.Y. Case
No. 03-15261) in 2003-04, in which Cohanzick Management
was also a member of the committee of unsecured creditors.
Mr. Pedlar assures the court that the Firm is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
Headquartered in Point Richmond, California, Western Water Company
manages, develops, sells and leases water and water rights in the
western United States. The Company filed for chapter 11
protection on May 24, 2005 (Bankr. N.D. Calif. Case No. 05-42839).
Adam A. Lewis, Esq., at the Law Offices of Morrison and Foerster ,
represents the Debtor in its restructuring efforts. When the
Debtor filed for protection from its creditors, it listed
estimated assets and debts between $10 Million and $50 Million.
WESTPOINT STEVENS: Disclosure Statement Hearing Adjourned Sine Die
------------------------------------------------------------------
The hearing to consider approval of WestPoint Stevens, Inc. and
its debtor-affiliates' Amended Disclosure Statement, originally
scheduled for August 12, 2005, at 10:00 a.m. (Eastern Time) has
been adjourned to an unspecified date.
Headquartered in West Point, Georgia, WestPoint Stevens, Inc., --
http://www.westpointstevens.com/-- is the #1 US maker of bed
linens and bath towels and also makes comforters, blankets,
pillows, table covers, and window trimmings. It makes the Martex,
Utica, Stevens, Lady Pepperell, Grand Patrician, and Vellux
brands, as well as the Martha Stewart bed and bath lines; other
licensed brands include Ralph Lauren, Disney, and Joe Boxer.
Department stores, mass retailers, and bed and bath stores are its
main customers. (Federated, J.C. Penney, Kmart, Sears, and Target
account for more than half of sales.) It also has nearly 60 outlet
stores. Chairman and CEO Holcombe Green controls 8% of WestPoint
Stevens. The Company filed for chapter 11 protection on
June 1, 2003 (Bankr. S.D.N.Y. Case No. 03-13532). John J.
Rapisardi, Esq., at Weil, Gotshal & Manges, LLP, represents the
Debtors in their restructuring efforts. (WestPoint Bankruptcy
News, Issue No. 53; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
WESTPOINT STEVENS: Repays $92.5-Mil. Owed to DIP Lenders
--------------------------------------------------------
In a regulatory filing with the Securities and Exchange
Commission, WestPoint Stevens, Inc., discloses that, in connection
with the Closing of the sale of the substantially all of the
Debtors' assets, the DIP Credit Facility was terminated on
August 8, 2005.
The lenders under the DIP Credit Facility were repaid $92.5
million which was the total indebtedness owing by the borrowers to
the lenders under the DIP Credit Facility.
The Company is now in the process of winding down its estate, and
will shortly be dissolved and liquidated without any distribution
being made to the Company's stockholders.
Each of WestPoint's directors and officers resigned from their
positions at the Company. However, the officers are continuing in
substantially similar positions with the Purchaser - American Real
Estate Holding Limited Partnership.
Headquartered in West Point, Georgia, WestPoint Stevens, Inc., --
http://www.westpointstevens.com/-- is the #1 US maker of bed
linens and bath towels and also makes comforters, blankets,
pillows, table covers, and window trimmings. It makes the Martex,
Utica, Stevens, Lady Pepperell, Grand Patrician, and Vellux
brands, as well as the Martha Stewart bed and bath lines; other
licensed brands include Ralph Lauren, Disney, and Joe Boxer.
Department stores, mass retailers, and bed and bath stores are its
main customers. (Federated, J.C. Penney, Kmart, Sears, and Target
account for more than half of sales.) It also has nearly 60 outlet
stores. Chairman and CEO Holcombe Green controls 8% of WestPoint
Stevens. The Company filed for chapter 11 protection on
June 1, 2003 (Bankr. S.D.N.Y. Case No. 03-13532). John J.
Rapisardi, Esq., at Weil, Gotshal & Manges, LLP, represents the
Debtors in their restructuring efforts. (WestPoint Bankruptcy
News, Issue No. 53; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
WET SEAL: Douglas Felderman Resigns as Chief Financial Officer
--------------------------------------------------------------
The Wet Seal, Inc. (Nasdaq:WTSLA) disclosed the resignation of
chief financial officer, Douglas C. Felderman, who will be leaving
the Company at the end of August, for personal reasons.
"We want to thank Doug for his tireless efforts and valuable
contributions to the Company," said Joel N. Waller, chief
executive officer. "Doug was instrumental in the refinancing and
restructuring of Wet Seal this past year."
The Company has retained a firm to conduct an executive search for
Mr. Felderman's replacement.
Risks & Warnings
Deloitte & Touche LLP expressed an unqualified opinion on the
management assessment of the effectiveness of the Company's
internal control over financial reporting and an adverse opinion
on the effectiveness of the Company's internal control over
financial reporting because of material weaknesses after reviewing
the company's financial statements for the fiscal year
ending January 29, 2005.
Bankruptcy Warning
In light of its poor operating performance, diminished liquidity
and poor credit standing, the Company initiated a series of steps
to maximize shareholder value. This began with the appointment of
a special committee of its board of directors mandated to engage a
financial advisor and evaluate strategic alternatives, including a
potential reorganization under Chapter 11 of the United States
Bankruptcy Code.
Management Changes
In November 2004, Peter Whitford resigned from his position as the
Company's Chief Executive Officer and Chairman of the board of
directors and Allan Haims resigned as President of the Wet Seal
division. In December 2004, the Company appointed Joel N. Waller,
the former Chief Executive Officer of Wilsons Leather, to the
positions of President and Chief Executive Officer, effective
Feb. 1, 2005. Mr. Waller became a director of the company
effective Dec. 27, 2004. In addition, in March 2005, Joseph
Deckop resigned from his position as Executive Vice President of
Central Planning and Allocation.
As a part of its turn-around strategy, all of the members of the
Company's board of directors, other than its chairman, Henry D.
Winterstern, and Alan Siegel, have either retired or resigned.
Recently the Company appointed Mr. Waller, Sidney M. Horn, Harold
D. Kahn and Kenneth M. Reiss to its board of directors. The board
of directors appointed Mr. Reiss as Chairman of the Audit
Committee. The entire board of directors, with the exception of
Mr. Waller, will act as a Compensation Committee until such time
as the board of directors is expanded.
Headquartered in Foothill Ranch, California, The Wet Seal, Inc. --
http://www.wetsealinc.com/-- is a leading specialty retailer of
fashionable and contemporary apparel and accessory items. The
Company currently operates a total of 396 stores in 46 states, the
District of Columbia and Puerto Rico, including 305 Wet Seal
stores and 91 Arden B. stores.
WINN-DIXIE: Wachovia Wants a Fee Examiner Appointed
---------------------------------------------------
Winn-Dixie Stores, Inc., and its debtor-affiliates' Chapter 11
cases constitute one of the largest bankruptcy filings in the
United States. Recently, the professionals retained by the
Debtors and the Official Committee of Unsecured Creditors filed
their first interim fee applications which generally cover the
period from the Petition Date through May 2005.
More than $15.4 million in professional fees and expenses have
been generated by numerous professionals retained in the Debtors'
Chapter 11 cases thus far.
Wachovia Bank, National Association, as agent for the postpetition
lenders, does not object to the fee, time charge or expenses of
any one professional, based on the fee applications filed with
the U.S. Bankruptcy Court for the Middle District of Florida.
However, due to the extraordinary amount of fees already billed,
and the amounts that will likely be billed in the future, Wachovia
wants the Court to appoint an independent fee examiner or auditor
to review and report on all pending fee applications and all
subsequent fee applications.
Betsy C. Cox, Esq., at Rogers Towers, PA, in Jacksonville,
Florida, explains that the primary focus of an independent fee
examiner would be to review and compare rates charged by the
professionals in light of the nature of the work performed.
Specifically, the fee examiner would investigate overcharges,
arithmetic errors, duplicate billings, billing rates, staff
allocation issues, and the value of the services rendered and
other similar issues. An independent fee examiner would also
prepare recommendations to the Court, based on applicable law,
previous Court orders, and the United States Trustee Guidelines
for Reviewing Applications for Compensation and Reimbursement of
Expenses Filed under Section 330 of the Bankruptcy Code.
Ms. Cox asserts that the appointment of an experience and
independent fee examiner will protect the interest of the
Debtors' estates and their creditors, aid the Court in its
independent review of the fee applications, promote judicial
economy by narrowing and defining the scope of any fee disputes
to be decided by the Court and enable the professionals to
properly focus their time and attention on the Debtors'
restructuring.
The anticipated costs of retaining an independent fee examiner
will be significantly less than other alternatives, and will
ultimately save substantial amounts for the benefit of the
Debtors' estates and their creditors.
It is anticipated that if a fee examiner is appointed, it will be
necessary for the professionals on a going forward basis, to
submit their time detail in an electronic format in accordance
with the requirements of the fee examiner. This will allow the
fee examiner to quickly and efficiently access and review that
information.
Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc.
-- http://www.winn-dixie.com/-- is one of the nation's largest
food retailers. The Company operates stores across the
Southeastern United States and in the Bahamas and employs
approximately 90,000 people. The Company, along with 23 of its
U.S. subsidiaries, filed for chapter 11 protection on Feb. 21,
2005 (Bankr. S.D.N.Y. Case No. 05-11063). The Honorable Judge
Robert D. Drain ordered the transfer of Winn-Dixie's chapter 11
cases from Manhattan to Jacksonville. On April 14, 2005, Winn-
Dixie and its debtor-affiliates filed for chapter 11 protection in
M.D. Florida (Case No. 05-03817 to 05-03840). D.J. Baker, Esq.,
at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson
Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP,
represent the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they listed
$2,235,557,000 in total assets and $1,870,785,000 in total debts.
(Winn-Dixie Bankruptcy News, Issue No. 20; Bankruptcy Creditors'
Service, Inc., 215/945-7000).
WINN-DIXIE: Wants to Reject Panasonic & IRI Contracts
-----------------------------------------------------
Winn-Dixie Stores, Inc., and its debtor-affiliates seek authority
from the U.S. Bankruptcy Court for the Middle District of Florida
to reject two executory contracts as of August 18, 2005:
(1) A master lease and related schedules pursuant to which
the Debtors lease in-store copiers from Panasonic
Communications & Systems Company; and
(2) An agreement with Information Resources, Inc., pursuant
to which IRI was to configure and implement software to
satisfy the Debtors' requirements for retail category
management and assortment planning.
By rejecting the Contracts, the Debtors will avoid unnecessary
expense and burdensome obligations that provide no tangible
benefit to their estates or creditors, D.J. Baker, Esq., at
Skadden, Arps, Slate, Meagher & Flom LLP, in New York, asserts.
The Debtors' monthly lease payments for the Panasonic copiers,
which are in stores that have been targeted for closing or sale,
are about $11,000. Due to the age of the copier equipment, the
master lease with Panasonic is not a source of potential value to
the Debtors' estates.
With respect to the agreement with IRI, the Debtors have
determined that the benefits do not justify the ongoing costs,
and will use existing tools to perform the activity contemplated
to be performed by the software.
Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc.
-- http://www.winn-dixie.com/-- is one of the nation's largest
food retailers. The Company operates stores across the
Southeastern United States and in the Bahamas and employs
approximately 90,000 people. The Company, along with 23 of its
U.S. subsidiaries, filed for chapter 11 protection on Feb. 21,
2005 (Bankr. S.D.N.Y. Case No. 05-11063). The Honorable Judge
Robert D. Drain ordered the transfer of Winn-Dixie's chapter 11
cases from Manhattan to Jacksonville. On April 14, 2005, Winn-
Dixie and its debtor-affiliates filed for chapter 11 protection in
M.D. Florida (Case No. 05-03817 to 05-03840). D.J. Baker, Esq.,
at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson
Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP,
represent the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they listed
$2,235,557,000 in total assets and $1,870,785,000 in total debts.
(Winn-Dixie Bankruptcy News, Issue No. 20; Bankruptcy Creditors'
Service, Inc., 215/945-7000).
WINN-DIXIE: Wants to Sell or Reject Unsold Store Leases
-------------------------------------------------------
Winn-Dixie Stores, Inc., and its debtor-affiliates have identified
additional stores in core market areas that remain unprofitable
and should be sold or closed. The Debtors marketed the Targeted
Stores extensively and received a number of bids for them. The
Debtors held an auction for the Targeted Stores and sold 84 of
them at hearings held on July 27, 28 and 29, 2005.
Since the July Auction, D.J. Baker, Esq., at Skadden, Arps,
Slate, Meagher & Flom LLP, in New York, tells the U.S. Bankruptcy
Court for the Middle District of Florida that the Debtors have
continued to market the remaining 242 Targeted Stores to non-
grocers through DJM Asset Management.
By this motion, the Debtors seek the Court's authority to:
(a) assume and assign the Targeted Leases and sell their
leasehold interests in those stores not sold at the July
Auction, free and clear of liens, claims and interests and
exempt from stamp or similar taxes; and
(b) in their sole discretion, reject any Targeted Leases which
the Debtors are not ultimately able to sell.
The Debtors will consult with the Official Committee of Unsecured
Creditors and representatives of and counsel for Wachovia Bank,
N.A., as agent for itself and the Debtors' secured postpetition
lenders, prior to rejecting a Targeted Lease.
In accordance with the Court-approved bidding procedures, the
Debtors held an auction for the highest or best offers for the
Targeted Leases on August 9, 2005, at the offices at Skadden,
Arps, Slate, Meagher & Flom LLP, in Four Times Square, New York.
The Debtors will advise the Court of the results after consulting
the DIP Lender Agent Representatives and the Committee's
Professionals.
A hearing to approve each Successful Bid will be held on
August 26, 2005.
To the extent the Debtors enter into an Agreement approved by the
Court, the Debtors will pay any undisputed cure amount due under
the Targeted Lease at the sale closing. However, the Debtors
have a right to terminate the Agreement to the extent the cure
amount is excessive. Any disputed cure issues that are not
resolved will be adjudicated at a later hearing after notice to
the landlord of the affected Targeted Lease.
A schedule of the remaining Targeted Stores is available for free
at http://bankrupt.com/misc/2707-A.pdf
Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc.
-- http://www.winn-dixie.com/-- is one of the nation's largest
food retailers. The Company operates stores across the
Southeastern United States and in the Bahamas and employs
approximately 90,000 people. The Company, along with 23 of its
U.S. subsidiaries, filed for chapter 11 protection on Feb. 21,
2005 (Bankr. S.D.N.Y. Case No. 05-11063). The Honorable Judge
Robert D. Drain ordered the transfer of Winn-Dixie's chapter 11
cases from Manhattan to Jacksonville. On April 14, 2005, Winn-
Dixie and its debtor-affiliates filed for chapter 11 protection in
M.D. Florida (Case No. 05-03817 to 05-03840). D.J. Baker, Esq.,
at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson
Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP,
represent the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they listed
$2,235,557,000 in total assets and $1,870,785,000 in total debts.
(Winn-Dixie Bankruptcy News, Issue No. 20; Bankruptcy Creditors'
Service, Inc., 215/945-7000).
* Chris Moye Joins Alvarez & Marsal as Managing Director
--------------------------------------------------------
Alvarez & Marsal, a global professional services firm, announced
that Chris Moye has joined Alvarez & Marsal Business Consulting as
a managing director. Based in Philadelphia, Mr. Moye also will
serve as co-head of its supply chain practice, specializing in
helping companies drive operational improvements to meet market
needs.
With more than two decades of hands-on operational and consulting
experience, Mr. Moye has significant expertise devising and
executing supply chain strategies - across procurement, planning,
manufacturing, warehousing, distribution and customer service -
that have helped drive top-line growth through product and channel
development. Mr. Moye also brings experience in Lean/SixSigma,
competitive assessments, deal structuring, product/marketing
management and international sourcing, particularly in emerging
markets.
Prior to joining Alvarez & Marsal Business Consulting, Mr. Moye
was a corporate vice president at Campbell Soup Company in both
the global supply chain and corporate strategy areas. Over the
course of his career, he has worked for respected companies such
as General Motors, Fanuc Robotics, LucasVarity and AT Kearney,
holding senior management positions in supply chain, general
management, marketing, and management consulting. In addition, he
has significant experience working with private equity firms and
has previously played key roles in leveraged buyouts both within
portfolio companies and as a principal at an LBO company.
Mr. Moye earned a bachelor's degree in mechanical engineering from
General Motors Institute (now known as Kettering University) and
an M.B.A. from Harvard Business School. He is a member of the
faculty at the Wharton School of Business and is a frequent
speaker on the key trends in supply chain, change management and
technology use.
Alvarez & Marsal Business Consulting LLC is comprised of a
dedicated team of senior consulting specialists who deliver
functional, process and technology skills to corporate management.
Building on Alvarez & Marsal's core operational and problem-
solving heritage, the team helps to improve the business processes
and performance of companies in good market and financial
positions. Alvarez & Marsal Business Consulting services include:
strategy and corporate solutions, finance and accounting
solutions, human resource solutions, information technology
solutions and supply chain solutions.
About Alvarez & Marsal
Alvarez & Marsal - http://www.alvarezandmarsal.com/-- is a
leading global professional services firm with expertise in
guiding companies and public sector entities through complex
financial, operational and organizational challenges. Employing a
unique hands-on approach, the firm works closely with clients to
improve performance, identify and resolve problems and unlock
value for stakeholders.
Founded in 1983, Alvarez & Marsal draws on a strong operational
heritage in providing services including turnaround management
consulting, crisis and interim management, performance
improvement, creditor advisory, financial advisory, dispute
analysis and forensics, tax advisory, real estate advisory and
business consulting. A network of seasoned professionals in
locations across the US, Europe, Asia and Latin America, enables
the firm to deliver on its proven reputation for leadership,
problem solving and value creation.
* BOOK REVIEW: Competitive Strategy for Health Care
Organizations: Techniques for Strategic Action
-------------------------------------------------------------
Author: Alan Sheldon and Susan Windham
Publisher: Beard Books
Softcover: 192 pages
List Price: $34.95
Order your personal copy at
http://amazon.com/exec/obidos/ASIN/1587981351/internetbankrupt
Competitive Strategy for Health Care Organizations: Techniques for
Strategic Action is an informative book that provides practical
guidance for senior health care managers and other health care
professionals on the organizational and competitive strategic
action needed to survive and to be successful in today's
increasingly competitive health care marketplace. An important
premise of the book is that the development and implementation of
good competitive strategy involves a profound understanding of
change. As the authors state at the outset: "What may need to be
done in today's environment may involve great departure from the
past, including major changes in the skills and attitudes of
staff, and great tact and patience in bringing about the necessary
strategic training."
Although understanding change is certainly important in most
fields, the authors demonstrate the particular importance of
change to the health care field in the first and second chapters.
In Chapter 1, the authors review the three eras of medical care
(individual medicine, organizational medicine, and network
medicine) and lay the groundwork for their model for competitive
strategy development. Chapter 2 describes the factors that must
be taken into account for successful strategic decision-making.
These factors include the analysis of the environmental trends and
competitive forces affecting the health care field, past, current,
and future; the analysis of the competitive position of the
organization; the setting of goals, objectives, and a strategy;
the analysis of competitive performance; and the readaptation of
the business, if necessary, through positioning activities,
redirection of strategy, and organizational change.
Chapters 3 through 7 discuss in detail the five positioning
activities that are part of the model and therefore critical to
the development and implementation of a successful strategy:
scanning; product market analysis; collaboration; restructuring;
and managing the physician. The chapter on managing the physician
(Chapter 7) is the only section in the book that appears dated
(the book was first published in 1984). In this day of physician-
owned hospitals and physician-backed joint ventures, it is
difficult to envision the physician in the passive role of "being
managed." However, even the changing role of physicians since the
book's first publication correlates with the authors' premise that
their model for competitive strategic planning is based exactly on
understanding and anticipating change, which is no better
illustrated than in health care where change is measured not in
years but in months. These middle chapters and the other chapters
use a mixture of didactic presentation, graphs and charts,
quotations from famous individuals, and anecdotes to render what
can frequently be dry information in an entertaining and readable
format.
The final chapter of the book presents a case example (using the
"South Clinic") as a summary of many of the issues and strategic
alternatives discussed in the previous chapters. The final
chapter also discusses the competitive issues specific to various
types of health care delivery organizations, including teaching
hospitals, community hospitals, group practices, independent
practice associations, hospital groups, super groups and
alliances, nursing homes, home health agencies, and for-profits.
An interesting quote on for-profits indicates how time and change
are indeed important factors in strategic planning in the health
care field: "Behind many of the competitive concerns.lies the
specter of the for-profits. Their competitive edge has lain until
now in the excellence of their management. But developments in
the past half-decade have shown that the voluntary sector can
match the for-profits in management excellence. Despite
reservations that may not always be untrue, the for-profit sector
has demonstrated that good management can pay off in health care.
But will the voluntary institutions end up making the same
mistakes and having the same accusations leveled at them as the
for-profits have? It is disturbing to talk to the head of a
voluntary hospital group and hear him describe physicians as his
potential competitors."
Alan Sheldon was an independent health management consultant who
consulted, taught, and wrote extensively on many aspects of health
management, with a specialty in competitive strategy, strategic
planning, and physician-management relationships. He was trained
as a physician and psychiatrist in England and in public health at
Harvard University. Dr. Sheldon taught at Harvard University for
over 20 years in the Schools of Medicine, Business, and Public
Health. He was formerly director of executive programs in health
policy and management at Harvard University. Dr. Sheldon is now
retired and lives in England.
Susan Windham-Bannister is the Managing Vice President of the
Business Research and Consulting division of an influential
research corporation. She holds a B.A. degree from Wellesley
College, a Ph.D. degree in health policy and management from
Brandeis University, and was a post-doctoral fellow at Harvard
University's John F. Kennedy School of Government. She is the co-
author of two books, has authored several articles on the
implications of the new health care environment and provider
competition, and is a frequent speaker and panelist at conferences
on strategic marketing and competitive differentiation.
*********
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
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers. Information contained
herein is obtained from sources believed to be reliable, but is
not guaranteed.
The TCR subscription rate is $675 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same firm
for the term of the initial subscription or balance thereof are
$25 each. For subscription information, contact Christopher Beard
at 240/629-3300.
*** End of Transmission ***