/raid1/www/Hosts/bankrupt/TCR_Public/060216.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, February 16, 2006, Vol. 10, No. 40
Headlines
ACCO BRANDS: Earns $26.2 Million in Fourth Quarter Ended Dec. 31
ACTIVANT SOLUTIONS: Earns $4.2MM of Net Income in First Quarter
ADELPHIA COMMS: Caps Disputed Comcast Partnership Claims at $30MM
ADELPHIA COMMS: Equity Panel Gets Court Nod to Tap MJB as Counsel
AFFILIATED COMPUTER: Moody's Rates Proposed $5 Bil. Loans at Ba2
AFFILIATED COMPUTER: S&P Expects to Lower Corporate Credit Rating
ALGOMA STEEL: Earns $55 Million of Net Income in Fourth Quarter
ALGOMA STEEL: Boards Sets March 22 Special Shareholder Meeting
ALLIANCE ONE: Posts $22.9 Mil. Net Loss in Quarter Ended Dec. 31
ALLIED HOLDINGS: Court Okays Rejection of Volkswagen Leases
ALLIED HOLDINGS: Responds to Calls for Equity Panel Appointment
AMCAST INDUSTRIAL: Committee Hires Ice Miller as Bankr. Counsel
AMCAST INDUSTRIAL: Hires Berkeley Square as Financial Advisor
AMERICAN COMMERCIAL: Earns $8.6 Million of Net Income in 4th Qtr.
AMERICAN ECO: Chapter 7 Trustee Hires Ver Ploeg to Sue PwC
AMERICAN ITALIAN: Outlines Asset Sale Plans & Strategic Decisions
AOL LATIN: Wants Open-Ended Decision to File Notices of Removal
AOL LATIN: Wants Open-Ended Time to Make Lease-Related Decisions
ARMSTRONG WORLD: Sells Penn. Property to S-J Realty for $20.22MM
AVANEX CORP: Posts $13.4 Mil. Net Loss in Fiscal 2006 Second Qtr.
AVETA INC: S&P Upgrades Counterparty Credit Rating to B from B-
BALL CORP: Agrees to Buy U.S. Can Corp's U.S. and Argentine Assets
BENCHMARK ELECTRONICS: Reports $625MM of 4th Quarter 2005 Sales
BIRCH TELECOM: Judge Walsh Approves & Second Amended Plan
BLUE RIDGE: Moody's Confirms B3 Corporate Family Rating
BRICE ROAD: Files Amended Joint Plan of Reorganization in Ohio
BRIGHTPOINT INC: Discloses Fourth Quarter Financial Results
CATHOLIC CHURCH: Portland Tort Committee Files Chapter 11 Plan
CATHOLIC CHURCH: Portland Disclosure Doc. Will Provide More Facts
CCC INFORMATION: Loans Repaid & Moody's Withdraws Ratings
CENTRAL ASSOCIATED: Case Summary & 20 Largest Unsecured Creditors
CENTURY PACIFIC: Asher & Company Raises Going Concern Doubt
CLEARSTORY SYSTEMS: Losses Continue in Quarter Ended December 31
COLLINS & AIKMAN: Names Tim Trenary as Chief Financial Officer
COMPUTERIZED THERMAL: Equity Deficit Tops $2 Mil. at December 31
CONMED CORP: Earns $2.8 Million of Net Income in Fourth Quarter
CROWN HOLDINGS: Exchanging Existing Sr. Notes for Registered Bonds
DAVCRANE INC: Files Plan and Disclosure Statement in Texas
DC PROPERTIES: Fights Proposed Putnam County Property Foreclosure
DELTA AIR: Posts $1.2 Billion Net Loss in 2005 Fourth Quarter
DOANE PET: Launches Exchange Offer for 10-5/8% Senior Sub. Notes
DURATEK INC: Shares Acquired by EnergySolutions for $396 Million
ENVIRONMENTAL TRUST: Judge Adler Confirms Plan of Liquidation
ENERSYS: Posts $7.8MM Net Earnings for 3rd Fiscal Quarter 2006
FOOTSTAR INC: Registers 458,044 Common Shares for Resale
FORD CREDIT: S&P Assigns Preliminary BB Rating to Class D Notes
FORD CREDIT: Fitch Expects to Rate Class D Securities at BB+
GRANT PRIDECO: Earns $78.4 Million for Fiscal 2005 Fourth Quarter
INEX PHARMA: Supreme Court of B.C. Dismisses Bankruptcy Petition
INEX PHARMA: Hearing on Noteholders' Appeal Completed
INFOUSA INC: Refinances $250 Million Bank Credit Facility
INTEGRATED ELECTRICAL: S&P Lowers Corporate Credit Rating to D
INTELSAT LTD: Exchanging Senior Notes for New Registered Bonds
IPSCO INC: Debt Reduction Prompts Moody's to Upgrade Ratings
ISLE OF CAPRI: Moody's Confirms B2 Rating on $700MM Sr. Sub. Debt
K&F INDUSTRIES: Earns $17 Million of Net Income in Fourth Quarter
LENSING EARTHWORKS: Case Summary & 20 Largest Unsecured Creditors
LEVITZ HOME: Wants to Reject Eletto Delivery Services Agreement
LEVITZ HOME: Unitary Landlord Wants Debtors to Pay Rental Dues
LINK PLUS: Balance Sheet Upside-Down by $2.6 Mil. at December 31
LONG BEACH: Moody's Assigns Ba2 Rating to Class M-11 Certificates
LUSCAR COAL: Moody's Withdraws Ba3 Ratings on Redeemed Debentures
MAIDENFORM BRANDS: Expects to Report $381 Million in 2005 Sales
MBA HOLDINGS: Semple & Cooper Raises Going Concern Doubt
MED GEN: Issues $10 Million Shares to Paul Kravitz as Inducement
MED GEN: Posts $779,899 Net Loss in Quarter Ended December 31
MERRILL CORP: S&P Places B+ Corporate Credit Rating on Watch
MILLIPORE CORP: Expanded Cash Flow Cues Moody's to Lift Ratings
MIRANT CORP: TransCanada & GTN Want Settlement Pacts Enforced
MOOG INC: Commences Class A Common Stock Offering at $31 Per Share
MOTHERS WORK: Earns $400,000 of Net Income in First Fiscal Quarter
MTI TECHNOLOGY: Balance Sheet Upside-Down by $2.6MM in 3rd Quarter
MUSICLAND HOLDINGS: FTI Consulting Taking Bids for 400-Store Chain
MUSICLAND HOLDING: Wants to Set Up Reclamation Claim Procedures
MUSICLAND HOLDING: Court OKs Injunction Against Utility Companies
NAVISTAR INT'L: Ad Hoc Noteholders' Committee Forms & Begins Talks
NEWFIELD EXPLORATION: Earns $184 Mil. in Fourth Qtr. Ended Dec. 31
NORTHWESTERN CORP: Harbinger Challenges Sale Process & Poison Pill
NTELOS HOLDINGS: S&P Affirms Corporate Credit Rating at B
O'SULLIVAN IND: Court Approves Uniform Balloting Procedures
O'SULLIVAN IND: Court Extends Exclusive Periods Until July 11
OUTBOARD MARINE: Ch. 7 Trustee Recognizes New Trust Claimants
OWENS CORNING: Exclusivity Periods Stretched to June 31
OWENS CORNING: Implements Retention Program for Some Participants
PACIFIC BIOMETRICS: Balance Sheet Upside-Down by $180K at Dec. 31
PARMALAT: Dr. Bondi Has RICO Claims vs. BofA, District Court Rules
PENN NATIONAL: Calls for Redemption of 8-7/8% Senior Sub. Notes
PERFORMANCE TRANSPORTATION: Wants to Maintain AFCO Credit PFAs
PERFORMANCE TRANSPORTATION: Proposes Contract Rejection Protocol
PLYMOUTH RUBBER: Files Amended Plan and Disclosure Statement
PLYMOUTH RUBBER: Wants to Pay 220 Employees under Retention Plan
QWEST COMMS: Posts $528 Million Net Loss in Fourth Quarter 2005
RADIATION THERAPY: Earns $6.7 Million of Net Income in 4th Quarter
REFCO INC: Cancels Auction for Foreign-Exchange Assets of FX Unit
REFCO INC: Asks Court to Expand Scope of Adam Brooks' Employment
REGIONAL DIAGNOSTICS: Files Second Amended Disclosure Statement
REYNOLDS AMERICAN: Earns $297 Mil. in Fourth Quarter Ended Dec. 31
RITE AID: Fitch Downgrades Sr. Unsecured Notes' Ratings to CCC+
SAINT VINCENTS: Insurer Wants Adversary Proceeding Dismissed
SAINT VINCENTS: Sandra Lindsay Withdraws State Court Action
SALON MEDIA: Posts $900,000 Net Loss in Quarter Ended December 31
SENSIENT TECHS: S&P Places BB+ Corporate Credit Rating on Watch
SINCLAIR BROADCAST: Incurs $700,000 Net Loss in Fourth Quarter
SOLECTRON CORP: Moody's Rates Proposed $150 Mil. Sr. Notes at B3
SOLECTRON CORP: Fitch Rates Proposed $150 Million Sr. Notes at B+
SOLECTRON GLOBAL: Fitch Rates Proposed $150 Million Notes at B-
SOLUTIA INC: Monsanto Supports Debtor's Chapter 11 Plan
STELCO INC: Court Approves Reorganization of Corporate Structure
STONE ENERGY: Reports $360 Million Capital Budget for 2006
TEC FOODS: Wants Exclusive Plan-Filing Period Extended to May 2
U.S. CAN: Sells U.S. and Argentine Operations to Ball Corp.
UAL CORP: Gets Court Nod on Settlement with DaimlerChrysler et al.
US AIRWAYS: Files Prospectus for Securitization Exchange Offer
VER-TRANS ELEVATOR: Case Summary & 22 Largest Unsecured Creditors
VERITAS DGC: Poor Investor Interest Cues Fitch to Withdraw Ratings
VISHAY INTERTECH: Posts $62.3MM Net Earnings in 4th Quarter 2005
WAMU MORTGAGE: Moody's Rates Class B-4 Certificates at Ba2
WILLIAM MARTIN: Case Summary & 20 Largest Unsecured Creditors
WOODWORKERS WAREHOUSE: Judge Carey Okays Closing of Chap. 11 Case
* Cadwalader Wickersham Hires Three Lawyers as Special Counsel
* Jennifer O'Connell Joins Cohen & Grigsby as Litigation Associate
* Power, Rogers & Smith Partners Voted Top Lawyers in Illinois
*********
ACCO BRANDS: Earns $26.2 Million in Fourth Quarter Ended Dec. 31
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ACCO Brands Corporation (NYSE:ABD), a world leader in branded
office products, reported its fourth quarter and fiscal 2005
results. Reported results include the operations of General
Binding Corporation beginning from the date of the merger of ACCO
Brands and GBC on Aug. 17, 2005.
"The 2005 year was of great significance to ACCO Brands," David D.
Campbell, chairman and chief executive officer said. "The spin-
off of ACCO World from Fortune Brands and subsequent merger with
GBC to create the only publicly traded pure-play office products
company, affords an opportunity for investors to participate in
the upside potential offered by the new ACCO Brands Corporation.
"We now have compelling leadership positions in our key
categories, significant cost-savings opportunities which will
allow us to reinvest in innovation and brand-building, and
initiatives that will further strengthen our asset management --
the combination of which should yield long-term revenue and profit
growth for our company.
"In the fourth quarter we have substantially completed all
integration planning relating to 2006 for the Office Products
Group of ACCO and GBC, and made significant progress relocating
our people and upgrading our information technology systems. We
took action to strengthen our management team, adding new
leadership within our European Office Products Group and other key
functions. We also shared our vision with our major customers,
who are responding favorably to our strategy of creating a branded
office products powerhouse with fewer, stronger brands, supported
by innovative products that provide a pricing umbrella for their
private label lines," he continued.
"We are now setting the stage for sales and operational
integration actions in the first quarter of 2006. In addition, we
are beginning a more formal review of the GBC commercial
businesses, which we expect to complete in the second half of the
year. We anticipate this review could yield additional cost
saving opportunities beyond the savings identified for the Office
Products Group."
The company continues to believe that the integration and
repositioning of its Office Products Group will yield annual
ongoing net cost synergies of $40 million over the next three
years, a portion of which it plans to reinvest in the business.
Summary
-- Fourth quarter net sales increased 54%, to $513.0 million,
and fiscal 2005 net sales increased 27%, to $1.49 billion.
Results include the operations of GBC from Aug. 17, 2005.
On a pro forma basis, net sales decreased 2% for the
quarter, but increased 3% for the year.
-- Net income declined for the fourth quarter and the year, by
6% and 13%, respectively, including unusual items. Adjusted
pro forma net income declined 16% for the quarter and 30%
for the year.
"We finished our first partial year as a public company on a
relatively strong note, given the challenging macroeconomic
environment that affected many companies in the second half of
2005," Campbell said. "Our cash flow was strong all year,
enabling us to pre-pay $24 million of debt in January 2006.
However, we saw reduced earnings in our U.S. Office Products Group
throughout the year, primarily because of higher raw materials
costs and double-digit increases in distribution and freight
costs.
"The 2006 year will be a transition period for ACCO Brands as we
continue to take actions in the first half of the year necessary
to offset the effects of unfavorable pricing and higher costs --
which may include reducing our exposure to low-margin business. In
addition, we have made up-front investments to enable the
integration of our two businesses. These combined efforts should
start producing benefits in the second half of 2006, as
integration synergies begin to drop to the bottom line and our
overall cost position improves. Our longer-term expectations for
this business have not changed. Through sound strategies linked
to innovation, lost-cost operations and strong asset management,
and with the cost synergies we've identified, we're confident that
we'll meet our previously stated long-term financial targets."
Financial and Operating Review
Reported results for the fourth quarter of 2005 and for the
portion of 2005 after the spin-off of the former ACCO World
business from Fortune Brands and subsequent merger with GBC on
Aug. 17, 2005, reflect the status of the newly created public
company. In order to provide a more meaningful comparison to
prior-year numbers, the company has also presented pro forma
results for the periods prior to Dec. 31, 2005. In accordance
with SEC regulations for the determination of pro forma results,
the prior-period results have been prepared assuming that the
merger with GBC had occurred on Jan. 1, 2004.
Certain pro forma results are presented based on generally
accepted accounting principles, as well as on a non-GAAP basis.
The non-GAAP measures, referred to as "adjusted" results, exclude
all restructuring and restructuring-related non-recurring items
for the combined pro forma company. Adjusted pro forma
information is provided to assist in the comparability with
current-period results.
Fourth Quarter Highlights
Net sales increased 54%, to $513.0 million, compared to $332.3
million in the prior-year quarter. On a pro forma basis,
including the results of GBC in the comparable prior-year period,
net sales decreased 2%, from $523.2 million in the prior-year
quarter. Excluding the impacts of foreign currency, underlying
pro forma sales declined 1%. The decline was due to lower volume
in Office Products and Commercial -- IPFG, offsetting strong
double-digit volume growth in Computer Products.
Net income decreased to $26.2 million compared to $27.9 million,
in the prior-year quarter. Net income includes transaction-
related expenses, restructuring and non-recurring after-tax costs,
totaling a charge of $4.9 million in the current year, and
$2.1 million in the prior year.
Adjusted pro forma net income for the combined pro forma company
decreased 16%, to $24.3 million compared to $29.0 million in the
prior-year quarter. The decline was due to higher raw material,
distribution and freight costs, which compressed gross margin.
Full Year 2005 Highlights
Net sales increased 27%, to $1.49 billion, compared to $1.18
billion in 2004. On a pro forma basis, net sales increased 3%, to
$1.94 billion, compared to $1.89 billion. Excluding the impacts
of foreign currency, underlying pro forma sales increased 2%. The
increase was attributable primarily to strong double-digit growth
in Computer Products.
Net income was $59.5 million compared to $68.5 million in the
prior year. Net income included transaction-related expenses and
restructuring and non-recurring after-tax costs of $12.2 million,
in the current year, and $26.7 million in the prior year. The
company's effective tax rate was significantly higher in 2005, a
result of the one-time tax restructuring charge booked during the
2005 third quarter and a tax charge on foreign earnings
repatriated earlier in the year. This compared to an abnormally
low effective tax rate in the prior year, the result of a one-time
income tax benefit in the third quarter of 2004.
Adjusted pro forma net income was $54.8 million compared to
$78.4 million in the prior year. Unfavorable pricing in certain
office products categories where the former ACCO World and GBC
businesses overlapped, higher raw material costs and double-digit
increases in distribution and freight costs offset growth in
Computer Products.
The company generated a significant amount of cash -- $80 million
-- since Mar. 15, 2005, the date of the merger announcement. The
company pre-paid $24 million of debt in January 2006, satisfying
all of its principal debt payment requirements for 2006.
Restated Financials
On Feb. 14, 2006, the company filed restated audited financial
statements with the Securities and Exchange Commission to reflect
a technical accounting adjustment related to deferred taxes. The
restatement is for the years 2002 through 2004, and for the first
three quarters of 2005.
The adjustments are limited to income tax accounting adjustments
affecting the balance sheet for all years and reported tax expense
in 2002 only. Importantly, the adjustments are all non-cash items
and the restatement does not affect previously reported revenue,
pre-tax earnings or cash flow for the respective periods, nor did
it result in additional income tax payments.
The restatement does not affect the company's business prospects,
earnings outlook or future cash flow. The company has entered
into an amendment to its senior secured credit agreement pursuant
to which its lenders have waived any default that may have arisen
as a result of restating these financial statements for the
technical accounting adjustments.
Results of Business Segments
1. Office Products Group
Fourth Quarter
Office Products net sales increased 36%, to $340.7 million,
compared to $250.8 million in the prior-year quarter. On a pro
forma basis net sales declined 4%, and excluding the impacts of
currency declined 3%. Fourth quarter volume declined 3%, despite
volume growth in the previous three months. The decline was the
result of the loss of a customer contract for ring binders and
storage boxes, customer de-stocking and lower volume in Europe in
the month of December. These factors offset growth in other
categories.
Office Products reported operating income declined from
$31.7 million, to $26.2 million, including restructuring and
restructuring-related non-recurring charges in the current-year
period. Adjusted pro forma operating income declined 28%, to
$31.5 million, compared to $43.9 million in the prior-year
quarter. The decline was the result of the lower volume in Europe
in the month of December, unfavorable pricing in certain
categories, as well as higher raw material, distribution and
freight costs.
Full Year 2005
Office Products net sales increased 15%, to $1.07 billion,
compared to $928.1 million in the prior year. On a pro forma
basis the increase was modest, and excluding the impacts of
currency was a decline of 1%. The 1% decline was the result of
unfavorable pricing established prior to the merger from price
competition between ACCO World and GBC. Volume was flat as share
loss in ring binders and storage boxes were offset by growth in
other categories.
Office Products operating income increased 31%, to $84.3 million,
compared to $64.6 million in the prior-year quarter, including
restructuring and restructuring-related non-recurring charges in
the current and prior years of $5.5 million and $36.9 million,
respectively. Adjusted pro forma operating income declined 20%,
to $97.4 million, compared to $122.1 million in the prior year.
The decline was the result of higher raw material, distribution
and freight costs -- particularly in the second half of the year,
as well as the unfavorable pricing throughout the year that was
established prior to the merger and unfavorable mix shift.
2. Computer Products Group
Fourth Quarter
Computer Products again delivered double-digit sales growth, 13%,
with sales of $56.0 million, compared to $49.7 million in the
prior-year quarter. Excluding the impacts of currency, underlying
growth was 14%. The strong sales growth was driven by new product
launches, favorable industry dynamics driving increased sales of
laptops and iPods(R), share gains in certain product categories
and favorable holiday volumes.
Computer Products operating income decreased 6%, to $10.7 million,
compared to $11.4 million in the prior-year quarter. Operating
margins declined to 19.1% from 22.9% as the sales growth came from
lower gross margin mobile accessories and as a result of increased
investments in research and development and promotional and
marketing activities.
Full Year 2005
Computer Products delivered robust sales growth all year--
increasing 23%, to $208.7 million, versus $169.6 million in the
prior year. Excluding the impacts of currency, underlying growth
was 22%. The strong sales growth was driven by sales of mobile
computing accessories and the company's new line of Apple(R)
iPod(R) accessories.
Computer Products operating income increased 34%, to $43.3
million, compared to $32.3 million in the prior year. Operating
margins improved more than 100 basis points, benefiting from sales
leverage, which more than offset changing product mix, higher
freight costs to import product and increased spending in research
and development and promotional and marketing activities.
3. Commercial-Industrial Print Finishing Group
Commercial-Industrial Print Finishing business was contributed as
part of the merger with GBC and has not been merged into an
existing ACCO Brands segment; therefore, it is presented on a
standalone pro-forma basis.
Fourth Quarter
IPFG pro forma net sales declined 8%, to $43.7 million, compared
to $47.3 million in the comparable prior-year quarter. Adjusting
for currency, the decline was 5%, a result of lost volume
following its third raw material-related price increase during
2005, and robust prior-year results.
IPFG adjusted pro forma operating income declined, to
$3.1 million, from $5.1 million in the prior-year quarter, due
primarily to volume declines and unprecedented increases in raw
material costs, which were only partially offset by raw material-
related price increases.
Full Year 2005
IPFG pro forma net sales increased 4%, to $182.0 million, compared
to $175.1 million. Adjusting for currency, pro forma net sales
increased 3%, benefiting from favorable pricing and volume gains.
IPFG adjusted pro forma operating income declined, to
$13.1 million, from $14.8 million in the prior year. The decline
was due to lower fourth-quarter volume and unprecedented increases
in raw material costs, which were only partially offset by raw
material-related price increases.
4. Other Commercial
Fourth Quarter
Other Commercial net sales increased 128%, to $72.6 million,
compared to $31.8 million in the prior-year quarter. On a pro
forma basis the increase was 3%, with minimal currency effect.
The underlying sales growth was driven by volume gains in document
finishing equipment and supplies, while Day-Timers continued to
maintain sales and share.
Other Commercial operating income increased 30%, to $11.2 million,
compared to $8.6 million in the prior-year quarter. Adjusted pro
forma operating income declined modestly, to $11.7 million, from
$12.0 million in the prior-year quarter.
Full Year 2005
Other Commercial net sales increased 82%, to $142.3 million,
compared to $78.0 million in the prior year. On a pro forma basis
the increase was 1%, and excluding the impacts of currency was up
modestly.
Other Commercial reported operating income increased 58%, to
$17.2 million, compared to $10.9 million in the prior year.
Adjusted pro forma operating income declined to $22.6 million,
from $23.9 million in the prior year. The decrease resulted from
higher raw material costs within the Document Finishing business.
Business Outlook
ACCO Brands believes that current macroeconomic growth factors
should enable the company to exhibit longer-term growth rates
comprising revenue growth in the low- to mid-single-digits,
operating income growth in the mid- to high-single-digits and
diluted earnings-per-share growth in the low-double-digits.
Through de-leveraging and continued low capital intensity, the
company expects to generate strong free cash flow.
The 2006 year will be one of transition for the company as it
continues to integrate the ACCO World and GBC operations, adjust
pricing and its cost basis to offset negative pressures from
higher raw material, distribution and freight costs, and reduce
its exposure to low-margin businesses.
The company anticipates that these conditions will adversely
impact results as a whole in the first half of 2006, with year-
over-year declines, but the company expects to see the positive
effects of synergies and an improved cost position in the second
half of 2006.
For 2006, excluding the affects of possibly reducing exposure to
low-margin businesses and the impact of expensing stock-based
compensation, the company expects low single-digit growth in net
sales and adjusted EBITDA comparable to 2005 levels.
The company will begin expensing costs of stock-based compensation
in 2006, and anticipates that net of tax costs to be approximately
$7 million for 2006. In addition, the company continues to
anticipate incurring approximately $50 million of restructuring
and restructuring-related non-recurring costs and a higher-level
of capital expenditures related to the integration in 2006. The
company still anticipates achieving a run-rate adjusted operating
income margin, excluding restructuring and amortization of
intangible assets, of 12% by the end of 2008.
ACCO Brands Corporation is a world leader in branded office
products, with annual revenues of nearly $2 billion. Its
industry-leading brands include Day-Timer(R), Swingline(R),
Kensington(R), Quartet(R), GBC(R), Rexel(R), and Wilson Jones(R),
among others. Under the GBC brand, the company is also a leader
in the professional print finishing market.
* * *
ACCO Brands Corporation's 7-5/8% Senior Subordinated Notes due
2015 carry Moody's Investor Services' B2 rating (assigned on
July 5, 2005) and Standard and Poor's Ratings Services' B rating
(assigned on November 9, 2005).
ACTIVANT SOLUTIONS: Earns $4.2MM of Net Income in First Quarter
---------------------------------------------------------------
Activant Solutions Inc., fka Cooperative Computing Inc., delivered
its financial statements for the quarter ended Dec. 31, 2005, to
the Securities and Exchange Commission on Feb. 10, 2006.
For the three months ended Dec. 31, 2005, Activant earned
$4,298,000 of net income on $98,131,000 of revenue, as compared to
$5,044,000 of net income on $60,939,000 of revenue for the same
period in 2004.
Total revenues for the three months ended Dec. 31, 2005 increased
by approximately 61%, or $37.2 million, compared to the three
months ended Dec. 31, 2004. This increase was comprised primarily
of $35.8 million attributable to the Company's acquisition of
Speedware and Prophet 21 for the three months ending Dec. 31,
2005. The remaining increase of $1.4 million was primarily a
result of increased system sales, mostly in the hardlines and
lumber vertical market, offset by revenue decreases in Auto.
As of Dec. 31, 2005, Activant's balance sheet showed $579,706,000
in total assets and liabilities of $546,042,000.
A copy of the regulatory filing is available for free at
http://researcharchives.com/t/s?569
About Activant
Activant Solutions Inc. -- http://www.activant.com/-- is a
technology provider of vertical ERP solutions servicing the
automotive aftermarket, hardware and home center, wholesale trade,
and lumber and building materials industry segments. Over 20,000
wholesale, retail and manufacturing customer locations use
Activant to help drive new levels of business performance. With
proven experience and success, Activant is fast becoming an
industry standard for companies seeking competitive advantage
through stronger customer integration.
* * *
As reported in the Troubled Company Reporter on Sept. 29, 2005,
Moody's Investors Service downgraded the corporate family rating
of Activant Solutions Inc. to B2 from B1 while confirming ratings
of B2 on existing outstanding debt. Concurrently, Moody's
confirmed a B2 rating to Activant's incremental debt of
$140 million senior unsecured notes due 2010, issued to finance
its acquisition of Prophet 21, Inc., and assigned Caa1 rating to a
$40 million PIK notes issued by Activant Solutions Holdings Inc.
This rating has been assigned to the new issue:
* Caa1 to $40 million senior unsecured notes due 2011 (new
issue) issued by Holdings
This rating has been revised down:
* Corporate Family Rating to B2 from B1
These ratings have been confirmed:
* B2 to $157 million (face value) senior unsecured notes
due 2011
* B2 to $140 million incremental senior unsecured notes (total
260 million) due 2010
Moody's said the ratings outlook is Stable.
As reported in the Troubled Company Reporter on Sept. 28, 2005,
Standard & Poor's Ratings Services announced affirmed its 'B+'
corporate credit and senior unsecured debt ratings on Austin,
Texas-based Activant Solutions Inc.
At the same time, Standard & Poor's assigned its 'B+' debt rating
to the proposed $140 million senior unsecured floating rate notes,
which will have essentially the same terms as the existing
floating rate notes, and its 'B-' debt rating to the proposed
$40 million senior PIK notes, which will be an obligation of
Activant Solutions Holdings Inc., and will be structurally
subordinated to all indebtedness of Activant Solutions Inc.
S&P said the outlook is now negative.
ADELPHIA COMMS: Caps Disputed Comcast Partnership Claims at $30MM
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Adelphia Communications Corporation and its debtor-affiliates ask
the U.S. Bankruptcy Court for the Southern District of New York to
approve, pursuant to Rule 9019(a) of the Federal Rules of
Bankruptcy Procedure, their stipulation with Philadelphia Sports
Media, LP, Home Team Sports Limited Partnership, Comcast
Corporation and its affiliates, including The Golf Channel, Inc.
The Comcast Related Entities filed 98 proofs of claim against
various Debtors. The Debtors have reviewed these claims and
negotiated with the Comcast Related Entities over the proper
allowed amount of the claims and the proper amount to reserve for
distributions on these claims under the Debtors' Plan. Based on
that review, the Debtors and the Comcast Related Entities have
agreed to the settlement of the allowed amount of the Comcast
Related Entities' claims.
Allowed Claims
The parties agree that 19 claims, aggregating at least
$35,000,000, will be allowed:
Claim Creditor Allowed
Number Name Amount
------ -------- -------
35300 Comcast Business Communications $753.88
86000 E! Entertainment Television, Inc. $4,073,613.87
349700 Greater Boston Cable Advertising $33,054.84
462400 Philadelphia Sports Media, LP $432,896.10
462500 Home Team Sports Limited Partnership $2,463,421.30
799900 Outdoor Life Network, L.L.C. $429,188.86
799900 Outdoor Life Network, L.L.C. $379,963.21
799900 Outdoor Life Network, L.L.C. $229,703.22
799900 Outdoor Life Network, L.L.C. $183,347.07
799900 Outdoor Life Network, L.L.C. $135,174.68
799900 Outdoor Life Network, L.L.C. $93,301.71
799900 Outdoor Life Network, L.L.C. $16,877.54
799900 Outdoor Life Network, L.L.C. $134.30
1389100 Comcast Mass./New Hampshire/Ohio $110,902.61
1436400 Satellite Services, Inc. $16,951,144.22
1436500 Satellite Services, Inc. $731,294.26
1436600 Satellite Services, Inc. $4,962,585.55
1437400 Satellite Services, Inc. $2,460,236.12
1634700 National Digital Television Center $2,212,774.82
Disallowed Claims
The parties further agree that 80 claims, aggregating
$39,887,231, including:
-- claims asserted under their Asset Exchange Closing
Agreement dated January 1, 2001, and
-- claims related to their Asset Purchase Agreement dated
April 9, 2001,
will be disallowed and expunged.
A. Swap Claims
The Comcast Related Entities assert five distinct claims under
the Swap Agreement aggregating $2,495,367. The Comcast
Related Entities assert that all 15 Debtor parties to the Swap
Agreement are jointly and severally liable for the five
claims, resulting in the Comcast Related Entities filing 15
proofs of claim for each of its five claims for a total of 75
Swap Claims. The Debtors' books and records reflect that the
Comcast Related Entities owe the Debtors $2,228,062 for
transition services under the Swap Agreement.
As part of the settlement of the Swap Claims that are
disallowed, the Debtors and the Comcast Related Entities are
released from any obligation, claim, or cause of action that
either may have or be able to assert against the other under
the Swap Agreement. However, the release does not prevent the
Comcast-Related Entities from pursuing and asserting:
(i) a right of subrogation to Claim Nos. 18043 and 18044 --
the Santa Ana Lease Claims -- or
(ii) in the event those claims (x) are in an amount less
than the cap set forth in Section 502(b)(6) of the
Bankruptcy Code, or (y) are reduced, disallowed, or
withdrawn, in whole or in part, a claim by the Comcast
Related Entities under the Swap Agreement for
indemnification with respect to any liability of the
Comcast Related Entities under the lease agreement to
which the Santa Ana Lease Claims relate, which claim
will not be allowed in an amount in excess of the limit
provided under Section 502(b)(6), less the allowed
amount of the Santa Ana Lease Claims.
B. 2001 Asset Purchase Agreement Claims
The Comcast Related Entities assert a single claim under the
2001 Asset Purchase Agreement for $145,241. The Comcast
Related Entities assert that three Debtors are jointly and
severally liable for this claim under the 2001 Asset Purchase
Agreement, resulting in the Comcast Related Entities filing
three 2001 Asset Purchase Agreement Claims. The Debtors'
books and records reflect that the Comcast Related Entities
owe the Debtors $3,733,262 for various purchase price
adjustments under the 2001 Asset Purchase Agreement.
The Comcast Related Entities, however, dispute the amount of
the Debtors' 2001 Asset Purchase Agreement Claim, asserting
that it should be reduced by at least $993,707 based on the
Comcast Related Entities' own calculation of purchase price
adjustments under the 2001 Asset Purchase Agreement.
The Comcast Related Entities also filed four Claims by
Satellite Services, Inc., for programming services totaling
$28,838,522. The Debtors asserted that their books and
records indicated that these claims should be reduced to
$1,169,915. The Comcast Related Entities dispute that the SSI
Claims should be reduced in any amount.
As part of the settlement of the 2001 Asset Purchase Agreement
Claims that are disallowed and expunged:
(i) The Comcast Related Entities agree to a liability to
the Debtors totaling $3,733,262 for purchase price
adjustments under the 2001 Asset Purchase Agreement;
(ii) The Comcast Related Entities will satisfy their
liability to the Debtors for agreed liability in full
by way of setoff against SSI Claim No. 1436600;
(iii) SSI Claim No. 1436600 will be allowed for all purposes
in the reduced amount of $4,962,585 against the
Parnassos Debtor Group;
(iv) The Debtors' 2001 Asset Purchase Agreement Claim is
extinguished and the parties are released from any
obligation, claim, or cause of action, that either may
have or be able to assert against the other under the
2001 Asset Purchase Agreement;
(v) SSI Claim No. 1436400 is allowed for $16,951,144
against the Century-TCI Debtor Group;
(vi) SSI Claim No. 1436500 is allowed for $731,294 against
the UCA Debtor Group; and
(vii) SSI Claim No. 1437400 is allowed for $2,460,236 against
the UCA Debtor Group.
Other Claims Allowed, Reduced or Disallowed
1. Philadelphia Claim and Home Team Claim
Philadelphia Sports Media, LP, filed a claim for $437,750 and
Home Team Sports Limited Partnership filed a claim for
$2,565,176 -- both arise out of prepetition programming
services rendered to the Debtors by PSM and HTS.
Under the agreements with each of PSM and HTS, the Debtors
remit payment for the programming based on their calculation
of subscribers under various cable service packages. The
amounts calculated by the Debtors were subject to audit by HTS
and PSM or a third party auditor selected by HTS and PSM, as
the case may be. The Debtors sought to reduce the
Philadelphia Claim by $4,854 based on their review of actual
subscribers and bad debt for the period covered by the PSM
Claim. The Debtors also sought to reduce the Home Team Claim
by $311,472, which was the portion of the Home Team's Claim
for claimed payment deficiencies based on the results of an
audit performed by a third party on HTS' behalf.
During a series of negotiations between counsel for the
Debtors, on the one hand, and HTS and PSM, on the other hand,
and a conference between the parties' representatives, the
parties reached a settlement. PSM and HTS have agreed with
the Debtors that the Philadelphia Claim will be allowed for
all purposes against the Holding Company Debtor Group in the
reduced amount of $432,896 (the amount sought by the Debtors)
and the Home Team Claim will be allowed for all purposes
against the Holding Company Debtor Group in the reduced amount
of $2,463,421 (a reduction of $101,755).
As part of the settlement of the Philadelphia Claim and the
Home Team Claim, the Debtors and their estates will fully and
finally release PSM and HTS from any and all claims, whether
known or unknown, now existing or in the future, under
Section 547.
In the spring of 2005, Philadelphia Sports Media, LP changed
its name to Comcast SportsNet Philadelphia L.P. and Home Team
Sports Limited Partnership changed its name to Comcast
SportsNet Mid-Atlantic, L.P.
2. Golf Channel Claim
The Golf Channel, Inc., filed a claim for $1,783,291 for
programming services rendered to the Debtors prepetition. The
Debtors' books and records reflect that the liability on the
Golf Channel Claim should be no more than $1,780,144 (a
reduction of $3,146) and that the Debtors have a claim against
The Golf Channel, Inc., for $1,782,725 for launch fees
incurred by the Debtors related to offering The Golf Channel's
programming.
Following negotiations, the parties have reached a settlement.
As part of the settlement of the Golf Channel Claim that is
disallowed and expunged:
(i) The Debtors admit that they are liable to The Golf
Channel for $1,782,725;
(ii) The Golf Channel admits that it is liable to the
Debtors for $1,782,725;
(iii) The Debtors and The Golf Channel will satisfy their
claims in full by way of setoff against their debts;
and
(iv) The Debtors' prepetition claim for $1,782,725 against
The Golf Channel is extinguished.
3. Outdoor Life Claim
Outdoor Life Network, LLC, filed a claim for $4,262,944 for
programming services rendered to the Debtors prepetition. The
Debtors' books and records reflect that the liability on the
Outdoor Life Claim should be no more than $3,965,877 (a
reduction of $297,066) and that the Debtors have a claim
against Outdoor Life Network, LLC, for $2,498,186 for launch
fees incurred by the Debtors related to offering Outdoor Life
Network's programming.
Following negotiations, the parties have reached a settlement.
As part of the settlement of the Outdoor Life Claim:
(i) The Debtors agree that they are liable to Outdoor Life
Network LLC for $3,965,877;
(ii) Outdoor Life Network LLC agrees that it is liable to
the Debtors for $2,498,186;
(iii) The Debtors will satisfy their claim in full by way of
setoff against the Outdoor Life Claim;
(iv) The Outdoor Life Claim is allowed for $1,467,691, and
(v) The Debtors' prepetition claim for $2,498,186.89
against Outdoor Life Network LLC is extinguished.
Reserves for Partnership Claims
The Comcast Related Entities filed six claims related to three
joint ventures with the Debtors.
The names of the three partnerships between the Debtors and the
Comcast Related Entities are Century-TCI California
Communications LP, Western NY Cablevision, LP, and Parnassos
Communications LP.
All six Partnership Claims assert liability in an unknown and
unliquidated amount for misallocating costs to the Joint
Ventures, for breaching the Joint Venture partnership or
management agreements, and for breaching fiduciary duties owed to
the Joint Ventures or to the Comcast Related Entities' partners
in the Joint Ventures.
Under the terms of the Asset Purchase Agreement between ACOM and
Comcast Corporation dated as of April 20, 2005, Comcast will
acquire 100% ownership of the Joint Ventures. The Sale 2001
Asset Purchase Agreement also defines "Retained Claims" as claims
of the Comcast Related Entities' partner in the Joint Ventures or
of the Joint Ventures against the Debtors, which will be retained
by those entities, but caps claims related to prepetition conduct
at an aggregate recovery amount of $30,000,000. Accordingly, the
Comcast Related Entities are entitled to no more than an
aggregate recovery of $30,000,000 on its Partnership Claims.
The Debtors and the Comcast Related Entities have not resolved
the merits of the Partnership Claims, but in a series of
negotiations, have agreed to estimate the Partnership Claims to
set reserves for distributions under the Debtors' Plan:
Claim
Number Creditor Name Reserve Amount
------ ------------- --------------
1633600 TCI CALIFORNIA HOLDINGS, LLC $0.00
1633700 TCI ADELPHIA HOLDINGS, LLC $12,000,000.00
1634200 TCI ADELPHIA HOLDINGS, LLC $0.00
1634300 TCI ADELPHIA HOLDINGS, LLC $0.00
1634400 TCI ADELPHIA HOLDINGS, LLC $0.00
1634500 TCI CALIFORNIA HOLDINGS, LLC $18,000,000.00
The Debtors reserve their rights to object on any basis to the
allowance of these claims for any purpose other than setting
reserves under the Debtors' Plan.
The Court grants the Debtors' request. The Debtors' stipulation
with the Comcast Related Entities is approved.
Headquartered in Coudersport, Pa., 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. 121;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
ADELPHIA COMMS: Equity Panel Gets Court Nod to Tap MJB as Counsel
-----------------------------------------------------------------
The Honorable Robert Gerber permits the Official Committee of
Equity Security Holders of Adelphia Communications Corporation to
retain Morgenstern Jacobs & Blue, LLC as its counsel in the ACOM
Debtors' Chapter 11 cases, nunc pro tunc to January 1, 2006.
The compensation to be paid to Morgenstern Jacobs for
professional services rendered and reimbursement for expenses
incurred will be as determined by the Court on proper application
pursuant to Sections 328, 330 and 331 of the Bankruptcy Code.
MJB replaced Bragar Wexler Eagel & Morgenstern, P.C.
The attorneys at Bragar Wexler who have had primary
responsibility for representation of the Equity Committee, as
well as almost all of the other professionals and
paraprofessionals who have represented the Equity Committee while
affiliated with Bragar Wexler, will continue to represent the
Equity Committee after the proposed substitution.
Since the time of Bragar Wexler's retention as the Equity
Committee's sole general counsel, Peter Morgenstern, Esq., Mark
Jacobs, Esq., and Gregory Blue, Esq., have led the legal team
that has devised and implemented the Equity Committee's
strategies in ACOM's proceedings.
Effective as of January 1, 2006, Bragar Wexler is splitting into
two law firms, Bragar Wexler & Eagel, P.C., and MJB. Each of the
Principal Attorneys, together with almost all of the other Bragar
Wexler attorneys who have been involved in the representation of
the Equity Committee, will be practicing law as members or
associates of MJB.
Faisal Syed, a representative of the Equity Committee, relates
that over the past three years, each of the Principal Attorneys
have obtained a deep and broad working knowledge of many of the
complex facts and dynamics of the Debtors' cases. In
particularly complex chapter 11 cases like ACOM, the ability to
continue to utilize that knowledge will have the effect of
reducing the costs of the Equity Committee's legal
representation.
Although the firm representing the Equity Committee will change,
effectively, the Equity Committee will continue to be represented
by the same attorneys who have represented the Committee for the
past three years, Mr. Syed said.
Headquartered in Coudersport, Pa., 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. 120;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
AFFILIATED COMPUTER: Moody's Rates Proposed $5 Bil. Loans at Ba2
----------------------------------------------------------------
Moody's Investors Service downgraded Affiliated Computer Services
existing notes rating to Ba2 from Baa3 and assigned a Ba2
corporate family rating and Ba2 ratings to the company's proposed
$5 billion bank credit facilities. In addition, Moody's confirmed
the Baa3 senior unsecured bank credit facility rating and will
withdraw the rating upon the consummation of the proposed
financing package.
The rating action concludes a review for possible downgrade
initiated on Jan. 26, 2006, following the company's announced plan
to purchase 55.5 million shares of Class A common stock for
approximately $3.5 billion through a Dutch Auction tender offer,
expected to proceed through Mar. 10, 2006. Proceeds of the
proposed term loan will be used to fund the tender offer, and to
refinance approximately $322 million drawn under the company's
existing credit facility.
The downgrade of the senior notes reflects the proposed share
repurchase plan which would increase the company's financial
leverage significantly. The rating takes into consideration the
equal and ratable security to be granted the notes upon the
incurrence of any secured debt, as per the terms of the bond
indenture. The Ba2 ratings for the senior credit facilities and
senior notes consider the preponderance of secured debt in the
company's capital structure which, in Moody's opinion, provides
minimal expected loss distinction from that of the CFR. The
credit facilities and existing notes will receive subsidiary
guarantees from an identical set of subsidiaries, excluding wholly
owned international subsidiaries. The guarantor group generated
in excess of 85% of the company's EBITDA. The domicile of the
vast majority of the company's intellectual property, including
key intellectual property related to workflow software, resides
with the guarantors.
The Ba2 corporate family rating reflects the company's sizable
6.0x pro forma debt leverage ratio adjusted for operating leases
and 6% pro forma ratio of free cash flow to debt adjusted for
operating leases. The ratings also consider the company's
diversified contract portfolio, variable and recently improving
client retention and organic revenue growth rates, strong
operating margins approximating 13%, modest capital expenditures
and working capital requirements, and growth prospects from
acquisitions and relatively modest sized contract awards. In
Moody's view, the company's strategy of supplementing organic
growth with acquisitions is likely to contribute to moderate debt
leverage going forward.
The rating outlook is stable, reflecting expectations for
de-leveraging as well as stable operating performance as measured
by growth to its internal revenue and new business signings. The
ratings could experience upward pressure if the company is able to
exhibit continuing internal revenue growth, consistent client
retention rates, growth to new business signings, operating margin
stability, and de-leveraging such that the ratio of free cash flow
to debt adjusted for operating leases were to increase to 15% or
more. Conversely, a decline in these operating metrics such that
free cash flow to adjusted debt could decline to 5% or less for an
extended period would likely result in downward ratings pressure.
Rating Downgraded:
* Existing Notes Rating to Ba2 from Baa3
Rating Confirmed:
* Senior Unsecured Bank Credit Facility at Baa3
Ratings Assigned:
* Senior Secured Bank Facilities Ba2
* Corporate Family Rating Ba2
Affiliated Computer Services, Inc., located in Dallas, Texas, is
an IT and business process outsourcing company.
AFFILIATED COMPUTER: S&P Expects to Lower Corporate Credit Rating
-----------------------------------------------------------------
Standard & Poor's Ratings Services held its ratings for Dallas,
Texas-based Affiliated Computer Services Inc. on CreditWatch,
where they were placed with negative implications, on Jan. 27,
2006.
Standard & Poor's said it would lower its corporate credit rating
on the company to 'BB-' from 'BB+', should ACS materially complete
the repurchase of $3.5 billion of the company's shares as
contemplated. The outlook will be stable. Should significantly
fewer shares be tendered, Standard & Poor's would review with
management its plan for revising the tender offer and for
additional future share repurchases.
"The proposed rating actions and CreditWatch followed ACS's
commencement of a modified Dutch Auction tender offer to purchase
up to 55.5 million shares of its Class A common stock at a price
per share not less than $56 and not greater than $63," said
Standard & Poor's credit analyst Philip Schrank.
The tender offer is expected to expire on or about March 10, 2006,
unless extended. The number of shares proposed to be purchased in
the tender offer represents approximately 45% of ACS's currently
outstanding common stock. ACS intends to finance the proposed
repurchase with $5 billion of senior secured bank facilities
consisting of a $4 billion dollar term loan B due 2013, and a
$1 billion revolving credit facility due 2012. The existing
senior notes will likely be rated the same as the bank loans,
because they will share the same collateral, and are expected to
have the same guarantees from the subsidiaries.
The proposed rating downgrade reflects ACS' aggressive financial
profile following the announced $3.5 billion debt-financed Dutch
tender offer. Pro forma total debt to EBITDA will rise to about
the 5x range from under 1x currently if successfully completed.
As a result of ACS' solid business profile, it can support higher-
than-typical leverage for the rating. Ratings support is provided
by:
* ACS growing, annuity-like revenue streams;
* solid historic profitability; and
* stable cash flow generation.
With revenues of about $5 billion, ACS has performed better than
most of its peers in the currently challenging IT spending
environment and has achieved higher margins, while many
competitors have experienced revenue deceleration and margin
contraction. While ACS faces competitive threats from larger,
more globally positioned IT providers, the company's very strong
position in state and local government outsourcing services
provides a measure of ratings stability. Also, its commercial
segment adds diversity and now accounts for more than half of
revenues. Operating margins have approached the mid-teens
percentage level because of the company's focus on higher margin
business process outsourcing (greater than 70% of total revenues)
and its growing offshore services capability. ACS has moderate
capital requirements, in the area of 5% of revenues. Free
operating cash flow has averaged about $250 million over the past
three fiscal years.
The company is expected to have minimal mandatory amortization
requirements over the near term, but also has the capacity to add
significantly more debt within its credit facilities, through both
a $1 billion debt revolver, a $750 million accordion loan, and
very flexible loan covenants. Incorporated into Standard & Poor's
proposed stable outlook is the expectation that debt-to-EBITDA
levels will not materially peak above the 5x level over the
intermediate term, although acquisitions will continue to be an
ongoing part of ACS' strategy, and further share repurchases are
possible. However, if ACS applies its free cash flow toward debt
reduction, a positive outlook could be considered within the next
one to two years. The company's defensible market positions,
coupled with high recurring revenues lessen the potential for
credit deterioration.
The ratings will remain on CreditWatch with negative implications,
until the tender offer has completed.
ALGOMA STEEL: Earns $55 Million of Net Income in Fourth Quarter
---------------------------------------------------------------
Algoma Steel Inc. released its fourth quarter results for 2005.
Fourth Quarter Highlights:
-- EBITDA of $77.6 million;
-- Net income of $55.0 million;
-- Pension prepayment reduces tax liability;
-- Cash and short-term investments of $434.8 million;
-- 11% Notes redeemed in January 2006;
Algoma Steel reported net income of $55.0 million for the three
months ended December 31, 2005. This compares to net income of
$30.8 million in the third quarter and $122.2 million in the
fourth quarter of 2004. EBITDA for the fourth quarter was
$77.6 million compared to $62.8 million in the third quarter and
$191.2 million in the fourth quarter of 2004. The increase from
the third quarter was due mainly to higher steel prices, while the
decline from the fourth quarter of 2004 was due mainly to lower
steel prices and higher raw material and energy costs. In the
fourth quarter, cash and short-term investments decreased by $18.3
million primarily due to an additional $50.0 million of pension
funding in the quarter.
Denis Turcotte, President and Chief Executive Officer, commented,
"Our employees have remained focused on the core business
objectives which contributed to a strong quarter, including a
significant production record on the Direct Strip Production
Complex. Our cash and securities balance decreased by a relatively
small amount despite the prepayment of a significant portion of
our 2006 pension funding obligation and several other working
capital payments. The Company is now debt-free following the
redemption of the 11% Notes on January 3, 2006. We continue to
actively explore a number of opportunities, including possible
mergers, a sale of the Company, and other business combinations."
Financial Resources and Liquidity
Cash provided by operating activities was $6.6 million for the
three months ended December 31, 2005, compared to $220.1 million
for the three months ended December 31, 2004. Included in the
fourth quarter of 2005 is a pension contribution of $50.0 million
representing a prepayment of $44.0 million towards 2006 funding
and a $6.0 million adjustment to 2005 funding. The quarter also
included an advance on the 2005 profit sharing of $16.8 million.
Non-cash operating working capital increased by $22.4 million in
the quarter as compared to a decrease of $28.4 million for the
fourth quarter of 2004. Accounts payable and accrued liabilities
decreased $42.6 million in the fourth quarter of 2005. The
decrease was mainly attributable to a reduction in the profit
sharing liability primarily because of the advance payment, a
reduction in the accrual for natural gas purchases, and the
payment of the remainder of the liability for higher iron ore
prices. Accounts receivable decreased $12.7 million in the
quarter mainly due to lower sales in the month of December 2005
compared to September 2005. The decrease in non-cash working
capital of $28.4 million in the fourth quarter of 2004 was mainly
due to a decrease in accounts receivable of $41.2 million because
of lower sales volumes and prices and an increase in accounts
payable and accrued liabilities of $26.6 million mainly due to an
increase in the profit sharing accrual, offset by an increase in
inventories of $34.3 million due to higher steel inventories.
For the year ended December 31, 2005, cash provided by operating
activities was $313.1 million compared to $430.8 million for the
year ended December 31, 2004. Non-cash operating working capital
increased by $6.8 million in 2005 compared to an increase of
$111.8 million in 2004. The increase in 2005 was mainly the
result of an increase in inventories of $79.6 million, offset
by an increase in accounts payable and accrued liabilities of
$25.9 million and an increase in income and other taxes payable of
$47.2 million. The increase in inventories was mainly
attributable to higher quantities and unit costs of iron ore and
steel inventories. The increase in accounts payable and accrued
liabilities was mainly attributable to the timing of accounts
payable and natural gas purchases, offset by a reduction in the
profit sharing accrual. The increase in 2004 was mainly the
result of an increase in accounts receivable of $123.7 million due
to significant increases in steel prices and an increase in
inventories of $28.8 million mainly due to higher input costs,
offset by an increase in accounts payable and accrued liabilities
of $44.7 million mainly due to an increase in the profit sharing
accrual and the timing of payments.
Investing activities for the three months ended December 31, 2005,
included capital expenditures of $17.2 million, whereas investing
activities in the fourth quarter of 2004 included capital
expenditures of $10.7 million and an increase in short-term
investments of $76.4 million. For the year ended December 31,
2005, capital expenditures were $56.5 million compared to
$42.4 million for the same period in 2004. For the year ended
December 31, 2004, investing activities also included an increase
in short-term investments of $266.8 million and proceeds on the
sale of capital assets of $15.0 million related to the sale of
tube mill assets and surplus land.
Financing activities for the three-month period ended December 31,
2005, included the purchase and cancellation of shares totaling
$8.1 million pursuant to a normal course issuer bid initiated in
the third quarter. The Company has not purchased any common
shares since mid-October and has indefinitely suspended this
purchase program until certain strategic issues are finalized.
There were no significant financing activities in the fourth
quarter of 2004. For the year ended December 31, 2005, financing
activities included the payment of a special dividend totaling
$238.2 million and the purchase and cancellation of shares
totaling $38.0 million. Financing activities for the year ended
December 31, 2004 included proceeds of a common share issue of
$81.6 million, payment of deferred interest on long-term debt
of $9.3 million, and a decrease in bank indebtedness of
$20.4 million.
Unused availability under the revolving credit facility at
December 31, 2005 increased to $178.2 million compared to
$175.4 million at September 30, 2005, due to a decrease in the
outstanding letters of credit.
Redemption of 11% Notes
The Company's U.S. $125 million of outstanding 11% Notes, that
were to mature on December 31, 2009, were redeemed on January 3,
2006 at a premium of 105.5% of the principal balance. The premium
totaled $7.9 million and was charged to expense in January 2006.
The total payment to redeem the Notes approximated $153 million.
Outlook
Although general steel pricing levels have been relatively stable
in recent months, steel pricing realizations may decline slightly
in the first quarter versus the fourth quarter due, in part, to
the effects of a stronger Canadian dollar. The Company does not
expect any major changes to unit costs in the first quarter versus
the fourth quarter. Selling prices and costs are subject to a
high degree of variability and certain factors causing potential
variability are noted in the last paragraph of this Outlook
section. Steel shipments are expected to exceed 600,000 tons in
the first quarter. The Company earned $7.9 million (pre-tax) from
coke sales in the fourth quarter of 2005, but does not expect to
ship any coke in the first quarter of 2006.
The Company expects a price increase on iron ore in 2006 and is
currently making payments to its ore supplier based on their
estimate of an increase of 15%. The actual increase could vary
significantly from this estimate depending on global pricing, but
iron ore inventory from 2005 is expected to minimize the effect of
any increase on production costs during the first quarter.
The Company expects to pay its remaining 2005 income tax liability
of approximately $54 million in late February and distribute the
remaining $14.7 million of the profit sharing liability in March
and April 2006. The Company is obligated to make monthly income
tax installments in 2006 relative to 2006 taxes. The redemption
of the 11% Notes for $153 million and the payment of the 2005
income tax liability will result in a substantial reduction to the
cash and short-term investments balance.
The prepayment of $44 million of the 2006 pension funding
obligations is expected to eliminate pension funding for the first
nine months of 2006. The absence of pension funding during this
period is expected to increase the income tax provision rate due
to the absence of the tax deduction.
Algoma has concluded contractual arrangements respecting
approximately 85% of its coal requirements for 2006. Arrangements
for the remaining 15% are expected to be concluded in the next few
months. Algoma estimates its coal costs per ton in 2006 will be
approximately 10% higher than 2005 costs. The delivered cost per
ton of coal consumed in 2005 was approximately $97 per dry ton,
which includes the effect of purchased coal penalties incurred in
2005. The projected increase over 2005 is moderated by several
factors, which include the effect of lower-cost coal at previous
contract pricing to be consumed in the first half of 2006, and the
assumption that the current higher level of the Canadian dollar is
maintained. Management cautions that actual coal costs are
subject to many variables and could vary significantly from these
estimates. These variables include the value of the Canadian
dollar, shipment reliability against contracts, actual prices for
the remaining 15% of coal purchases, the mix of coal used, and
cokemaking production levels.
In 2005, 100% of coal inventories were carried by Algoma's primary
coal supplier until the point of consumption. In 2006,
approximately 66% of Algoma's coal requirements will be carried by
the primary supplier in this fashion. The balance will be
purchased from other suppliers at the point of delivery of the
coal to Algoma. As a result, coal inventory levels are expected to
increase over 2005 commencing in April 2006, peaking at about
$25 million at year-end due to the normal seasonal build.
The Company holds a 10% revenue royalty on lands near Wawa,
Ontario on which Dianor Resources Inc. is conducting a diamond
exploration program. Dianor has reported the occurrence of
diamonds in the surface sampling and drilling that it has
conducted to date. Algoma also owns lands abutting the Leadbetter
Extension Property. Dianor is a public company listed on the TSX
Venture Exchange (DOR).
The Company plans on shutting down its blast furnace in the second
half of 2006 for a period of 15 days to perform remedial work.
Capital expenditures related to this outage are currently
estimated at $11 million and related expenses are estimated at
$7 million.
Capital expenditures are projected to increase to $80 million in
2006 from $56.5 million in 2005. The increase is due, in part, to
underspending in the previous five years, but also includes the
effect of the blast furnace outage and capital spending on the
Business Systems Renewal Project.
Algoma Steel Inc. produces sheet steel, which is sold to the
automotive, light manufacturing, and service-center industries as
cold-rolled coils, cut-to-length product, first-stage blanks, and
hot-rolled coil products. Its other products are plate steel for
the construction and shipbuilding industries. It has discontinued
seamless tubular and structural product lines at its direct-strip
plant in order to focus on specialty products (sheet and plate
products).
* * *
As reported in the Troubled Company Reporter on Jan. 9, 2006, the
United Steelworkers applied for a court injunction to block a
scheme by hedge fund manager Paulson & Co. that would reportedly
threaten Algoma Steel's economic viability.
The Steelworkers' injunction application was filed in Ontario
Superior Court in Sault Ste. Marie on Jan. 4, 2006.
According to an affidavit from investment banker Leon Potok filed
in support of the Steelworker application, if Algoma enters the
next downturn without substantial cash reserves and borrowing
capacity the company runs a significant risk of its third brush
with insolvency in fifteen years. Mr. Potok says that another
substantial cash distribution is not in the interests of the
company or in the interests of long term Algoma shareholders and
other stakeholders.
Mr. Potok's view is confirmed by a report issued December 8, 2005
by the Dominion Bond Rating Service which goes as far as to
say that the Paulson proposal would "significantly weaken"
Algoma's financial structure and would result in "a significant
reduction in liquidity and increase in net leverage . . . which
would increase the risk profile of the company." The higher risk
profile would mean that stakeholders would face "a reasonably high
level of uncertainty as to [Algoma's] ability to pay [its
obligations] on a continuing basis in the future."
ALGOMA STEEL: Boards Sets March 22 Special Shareholder Meeting
--------------------------------------------------------------
Algoma Steel Inc.' Board of Directors called a shareholders'
meeting for March 22, 2006, in response to a requisition by
Paulson & Co. Inc. to consider several resolutions.
Paulson is seeking to replace the majority of Algoma's Board of
Directors and have a new board consider substantial distributions
of Algoma's capital. The Algoma Board chose that date in order to
allow time for the Company to seek a ruling from the Canada
Revenue Agency clarifying the tax consequences to Algoma and its
shareholders related to the novel structure proposed by Paulson.
Paulson had asked the Ontario Court to rule that the meeting be
held at an earlier date. The Ontario Superior Court of Justice
rejected the application by Paulson to change the date for the
meeting. The Court's ruling helps ensure that Algoma's
shareholders will have the information they reasonably require to
form a reasoned judgment on the business to be considered at the
requisitioned meeting. The Company expects to mail the related
Management Circular in late this month.
Paulson and the investors it represents proposed last fall to
distribute $420 million to themselves and other shareholders.
Earlier in 2005, Algoma's Board of Directors approved a special
dividend and share repurchase plan that distributes more than
$300 million to shareholders. The Board rejected Paulson's
proposals for an additional distribution believing it would weaken
the company and put its future in jeopardy.
Algoma's stockholders have achieved a return of 673% in the
nearly four years since Algoma emerged from protection under the
CCAA (Companies' Creditors Arrangement Act), as compared to a
return of 46% for the S&P/TSX Composite Index and 71% for North
American steel competitors (AK Steel, Dofasco, Nucor, and U.S.
Steel).
The United Steelworkers applied for a court injunction to block
the scheme. The Steelworkers believe that Algoma has already
produced extraordinary returns and taking more cash out of the
company now would leave creditors, retirees and employees in an
"unfairly vulnerable position."
Paulson's scheme reportedly ignores the Board's concern for
Algoma's future and, if it is not blocked by the Court, would
force Algoma to call a special shareholders meeting and replace
the majority of the Algoma Board with hand-picked directors who
will do its bidding. Once elected, those directors would
distribute Algoma's cash through a combination of special
dividends and a share buy-back program.
In its application filed on behalf of employees and pensioners,
the Steelworkers argue that the Paulson scheme threatens Algoma's
economic viability, that it frustrates the "reasonable
expectations" of employees, pensioners and other stakeholders
formed during the 2001-2 restructuring and that this oppressive
scheme meets the legal test for injunctive relief under Ontario
law. The "Oppression Remedy", found in the Business Corporations
Act, empowers Courts to protect minority shareholders, creditors
and other stakeholders where a company is, or might be, managed in
a way that unfairly disregards their interests. It is designed to
prevent the unfairness than can result from shareholders'
untrammeled rule.
According to an affidavit from Steelworker Staff Representative
Doug Olthuis, the Union's chief negotiator during Algoma's 2001-2
financial crisis, there were substantial concessions and
contributions by employees, pensioners and survivors, suppliers,
the City of Sault Ste. Marie, the Government of Ontario and the
Government of Canada. These concessions and contributions were
only made on the basis that they would enable the company to
survive and to meet its future obligations. The concessions also
included the expectation that Algoma itself shared those goals and
would manage its business prudently in order to achieve them.
The union argues that Paulson should be prevented from
implementing its scheme because to do so would reduce materially
the likelihood that Algoma will be able meet its future
obligations, therefore frustrating the legitimate expectations of
employees, pensioners and other stakeholders.
The union is supporting the original decision of the Algoma Board
and seeking a court order preventing Algoma from convening a
special shareholders' meeting. The meeting is Paulson's effort to
do an end-run around the board's decision.
At stake is the remainder of the cash reserve accumulated by
Algoma Steel during the recent North American steel price boom
following its emergence from CCAA protection in January 2002. As
of late October 2005, an estimated $276 million of that
accumulated cash reserve had already been paid out in the form of
special dividends and share buy-backs.
In its application and supporting affidavits, the United
Steelworkers argues that Algoma requires substantial cash reserves
to cover the cost of a major blast furnace reline which is already
overdue, to meet its pension and benefit obligations to current
and former employees, to pay down existing debts, and to enable it
to weather the inevitable downturn in the steel industry.
According to an affidavit from investment banker Leon Potok filed
in support of the Steelworker application, if Algoma enters the
next downturn without substantial cash reserves and borrowing
capacity the company runs a significant risk of its third brush
with insolvency in fifteen years. Mr. Potok says that another
substantial cash distribution is not in the interests of the
company or in the interests of long term Algoma shareholders and
other stakeholders.
Mr. Potok's view is confirmed by a report issued December 8, 2005
by the Dominion Bond Rating Service (DBRS) which goes as far as to
say that the Paulson proposal would "significantly weaken"
Algoma's financial structure and would result in "a significant
reduction in liquidity and increase in net leverage...which would
increase the risk profile of the company." The higher risk
profile would mean that stakeholders would face "a reasonably high
level of uncertainty as to (Algoma's) ability to pay (its
obligations) on a continuing basis in the future."
"Algoma employees and pensioners, the company's suppliers, the
City of Sault Ste. Marie and the Government of Ontario contributed
hundreds of millions of dollars to the effort to making this
company viable," said Steelworkers' Ontario/Atlantic Director
Wayne Fraser. "The Paulson scheme treats those sacrifices with
contempt. That's why it has to be stopped in its tracks, now."
"The fact that Paulson was not a shareholder at the time of the
restructuring - as a short-term speculative investor, the Paulson
group has owned its shares for less than two years - may explain
its lack of understanding of steel industry fundamentals and its
evident lack of respect for the sacrifices made by others to save
the company in 2001 and 2002," Mr. Fraser said. "But it does not
give Paulson the right to ignore Algoma Steel's obligations to
employees, pensioners and survivors and local, provincial and
national governments."
Algoma Steel Inc. produces sheet steel, which is sold to the
automotive, light manufacturing, and service-center industries as
cold-rolled coils, cut-to-length product, first-stage blanks, and
hot-rolled coil products. Its other products are plate steel for
the construction and shipbuilding industries. It has discontinued
seamless tubular and structural product lines at its direct-strip
plant in order to focus on specialty products (sheet and plate
products).
ALLIANCE ONE: Posts $22.9 Mil. Net Loss in Quarter Ended Dec. 31
----------------------------------------------------------------
Alliance One International, Inc., incurred a $22.9 million net
loss during the third quarter ended Dec. 31, 2005, compared to a
$1.9 million net loss for the same period a year earlier.
Sales and other operating revenues increased 44.1% from $366.4
million in 2004 to $528.1 million in 2005 primarily as a result of
the merger of DIMON Incorporated and Standard Commercial
Corporation, which was completed during the first quarter of 2006.
DIMON and Standard Commercial Corporation merged to become
Alliance One International, Inc.
The $161.7 million increase in revenue is the result of a 52.4
million kilo increase in quantities sold offset by a $0.08 per
kilo decrease in average sales prices.
Brian J. Harker, Chairman and Chief Executive Officer stated, "As
previously disclosed, our effective costs in the important
Brazilian market are up significantly in comparison to the prior
year. The inflationary cost effects of the strength of the
Brazilian Reais relative to the U.S. dollar on both 2005 crop
green tobacco procurement and conversion costs, as well as the
absorption of certain local trade taxes could not be fully
recovered through selling price increases. As a result, gross
profit from sales of the 2005 Brazilian crop has been and will
likely continue to be impacted even as we continue to apply our
best efforts to recover expected cost escalation through selling
price increases. We are currently working with our customers with
regard to the appropriate pricing for the 2006 crop to reflect
continued anticipated cost increases."
"Merger integration remains in line with our strategic plan
including over $50 million in cost savings expected to be realized
by our March 2006 year end and a further $115 million in potential
pre-tax cost savings by fiscal year end 2007. One time cash costs
to complete the integration are still estimated at approximately
$55-$57 million. As part of the integration process and to
strengthen our core business overall, we have focused on achieving
appropriate returns that support the strategic rational for our
merger, including undertaking asset sales that will continue to
have an important role in refining our footprint. As announced
earlier in February, an agreement was reached to sell our Spanish
production facilities. The one time cost related to the sale is
expected to be between $13-$15 million, which includes cash
severance cost and other cash costs expected to be between $8-$10
million. We have also entered into a non-binding letter of intent
to sell our interest in the dark air-cured tobacco business,
Compania General de Tabacos de Filipinas, SA.
"Based on results through the third fiscal quarter of 2006 and
excluding any effects of market value adjustments for derivatives,
restructuring and other non-recurring charges, we are affirming
our previously announced expectation that the Company's underlying
net loss will be between $0.26 and $0.31 per basic share for the
fiscal year ending March 31, 2006, and the Company's underlying
net profit to be between $0.30 and $0.40 per basic share for the
fiscal year ending March 31, 2007," Mr. Harker said.
At Dec. 31, 2005, Alliance One's balance sheet showed
approximately $2.1 billion in total assets, liabilities of
approximately $1.5 billion and minority interest in subsidiaries
of $2.8 million, resulting in a stockholders' equity of $534
million.
The Company had seasonally adjusted available lines of credit of
$601.2 million to meet working capital and crop financing
requirements, with $266 million outstanding and a weighted average
interest rate of 5.7%, as of Dec. 31, 2005. After giving effect
to $37.6 million of letters of credit issued and outstanding and
$29.3 million available for additional letters of credit issuance,
total credit lines available were $268.3 million.
A copy of the regulatory filing is available for free at
http://researcharchives.com/t/s?563
Alliance One International, Inc. -- http://www.aointl.com/-- is a
leading independent leaf tobacco merchant.
* * *
As reported in the Troubled Company Reporter on Nov. 25, 2005,
Moody's Investors Service lowered the ratings of Alliance One
International, Inc., reflecting the company's shortfall from
financial expectations primarily caused by the amalgamation of
negative operating issues affecting the tobacco leaf industry.
These include:
* a poor quality crops in Brazil;
* adverse foreign exchange movements;
* stretching of purchases by customers; and
* product pricing pressure.
The cumulative effect of these issues on the company's financials
include:
* protracted working capital;
* incremental bad debts; and
* negative free cash flow (the company recently suspended the
payment of dividends).
Consolidated EBIT is insufficient to cover interest expense.
Moody's lowered these ratings:
* Approximately $650 million senior secured credit facility,
maturing 2008, to B2 from B1, consisting of:
-- a $300 million revolver available to Alliance One and
Intabex Netherlands B.V., subsidiary;
-- an approximately $150 million term A loan; and
-- an approximately $200 million term B loan.
* $315 million 11% guaranteed senior unsecured notes, due 2012,
to B3 from B2
* $100 million 12.75% guaranteed senior subordinated note,
due 2012, to Caa2 from B3
* Corporate family rating to B2 from B1
Moody's said the ratings outlook is negative.
ALLIED HOLDINGS: Court Okays Rejection of Volkswagen Leases
-----------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Georgia
authorized Allied Holdings, Inc., and its debtor-affiliates to
reject:
(a) a port services and vehicle processing agreement among
Debtors Terminal Service Company, Inc., Transport Support,
Inc., and Volkswagen of America, Inc.;
(b) a sublease between Debtor Commercial Carriers, Inc., as
subtenant, and Volkswagen of America, Inc., as sublessor,
for premises located at Port of Wilmington in Wilmington,
Delaware;
(c) a purchase and sale agreement between 782777 Ontario
Limited, as purchaser, and Allied Systems (Canada)
Company, as seller, for real property located in City of
Windsor, County of Essex, Province of Ontario;
(d) an exclusive subleasing listing agreement between CB
Richard Ellis, Inc., as broker, and Axis Group, LLC, as
Sublessor; and
(e) an access agreement between Allied Systems, Ltd. and
Consolidated Rail Corporation, whereby Conrail grants
Allied Systems, Ltd., the right to enter property located
at Selkirk Auto Terminal, Town of Bethlehem in Albany, New
York.
As reported in the Troubled Company Reporter on Jan. 03, 2006,
Alisa H. Aczel, Esq., at Troutman Sanders, LLP, in Atlanta,
Georgia, asserted that the Contracts are no longer necessary to
the Debtors' ongoing business operations and will not contribute
to their reorganization because they provide no value to their
creditors or estates.
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 Nos. 05-12515 through 05-12537). Jeffrey W. Kelley, Esq., at
Troutman Sanders, LLP, represents the Debtors in their
restructuring efforts. Henry S. Miller at Miller Buckfire & Co.,
LLC, serves as the Debtors' financial advisor. Anthony J. Smits,
Esq., at Bingham McCutchen LLP, provides the Official Committee of
Unsecured Creditors with legal advice and Russell A. Belinsky at
Chanin Capital Partners, LLC, provides financial advisory services
to the Committee. 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. 16;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
ALLIED HOLDINGS: Responds to Calls for Equity Panel Appointment
---------------------------------------------------------------
Allied Holdings, Inc., and its debtor-affiliates object to calls
made by Virtus Capital LP, Hawk Opportunity Fund, L.P., Aspen
Advisors LLC and Sopris Capital Advisors, LLC, to form an Official
Committee of Equity Security Holders. The Debtors want the U.S.
Bankruptcy Court for the Northern District of Georgia to deny the
equity holders' request.
Virtus, Hawk, Aspen and Sopris supports Guy W. Rutland III, Guy W.
Rutland IV and Robert J. Rutland's request for the equity panel
appointment.
As reported in the Troubled Company Reporter on Sept. 6, 2005, the
Rutlands claimed that there are a sufficient number of shares and
shareholders to warrant the appointment of an official committee
of equity security holders. The equity security holders in the
Debtors' case have legitimate interests that need to be, and were
intended to be, adequately represented under Section 1102 of the
Bankruptcy Code.
Debtors' Objections
According to Jeffrey W. Kelley, Esq., at Troutman Sanders LLP, in
Atlanta, Georgia, an examination of the number and nature of
shareholders reveals that Virtus Capital LP, Hawk Opportunity
Fund, L.P., Aspen Advisors LLC and Sopris Capital Advisors, LLC's
characterization of the equity security holders allegedly in need
of adequate representation is inaccurate.
Mr. Kelley relates that Virtus, et al., used outdated information
from Allied Holdings Inc.'s Annual Report as of December 31,
2004. More recent data reveals, however, that the number of
shareholders has decreased since 2004.
Virtus, et al., also noted that in the fiscal year ending
December 31, 2004, the Debtors' revenue was almost $900,000,000
and the Debtors had a positive EBITDA.
Mr. Kelley argues that those indicators are of little value in
determining whether the Debtors are hopelessly insolvent.
Mr. Kelley points out that on the Petition Date, the Debtors
couldn't pay debts due and were insolvent on a balance sheet
basis. According to Mr. Kelley, the Debtors will remain
insolvent unless ample business issues are satisfactorily
addressed during the reorganization process.
In addition, Mr. Kelley says, the methodology used by Virtus, et
al., to project annual EBITDA is flawed in that it ignores the
seasonality of the industry. Using EBITDA from one month as a
basis for annual projections yields an inaccurate annual EBITDA
figure.
Virtus, et al.'s contention that the Debtors are "asset rich" is
not accurate either, Mr. Kelley says, and in any case is not
indicative of comparative value. Moreover, Mr. Kelley relates,
the Debtors have historically attempted to use their leverage in
the ordinary course of business to maximize the value of their
contracts with their customers, and the Debtors will continue to
do so to maximize value for all constituencies.
Mr. Kelley clarifies that the Debtors have not experienced and do
not project a significant cash build-up during the pendency of
their bankruptcy cases.
In the absence of the appointment of an Equity Committee funded
by the bankruptcy estates, Mr. Kelley asserts that equity
security holders will not be denied the right and opportunity to
be heard because that right and opportunity is statutorily
provided under Section 1109(b) of the Bankruptcy Code. Mr.
Kelley points out that more than 90% of Allied Holdings'
shareholders have the means to be heard because they are either
board members or institutional investors.
Moreover, Mr. Kelley continues, to the extent that any equity
security holder provides a substantial contribution to the
bankruptcy estates through the exercising of its right to be
heard under Bankruptcy Code Section 1109(b), that equity security
holder may be reimbursed for its legal fees and costs incurred in
providing that substantial contribution.
Creditors Committee
The Official Committee of Unsecured Creditors tells the Court
that the theories advanced by Virtus Capital LP, Hawk Opportunity
Fund, L.P., Aspen Advisors LLC and Sopris Capital Advisors, LLC,
in support of their argument seeking the appointment of an
official committee of equity security holders is based on
speculation, erroneous inference, miscalculation or unsupported
contention. Thus, the Committee asserts, Virtus, et al., failed
to carry their burden of proving the need for an Equity
Committee.
Jonathan B. Alter, Esq., at Bingham McCutchen LLP, in Hartford,
Connecticut, argues that Virtus, et al., have failed to establish
that, given the present financial condition and near-term
financial prospects of the Debtors, equity security holders have
any possibility of receiving a recovery pursuant to the absolute
priority rule of the Bankruptcy Code.
According to Mr. Alter, there appears to be no indication of
regular trading in the Company's stock so as to warrant
appointment of an Equity Committee. Moreover, a review of
postpetition trading activity reveals long stretches of little
trading in the Debtors' common shares, punctuated by limited
discrete periods of increased trading.
Mr. Alter clarifies that the amount of equity value lost in the
past is not a recognized basis for appointing an Equity
Committee.
Mr. Alter points out that the interests of unsecured claimants
in:
(i) additional contract negotiations;
(ii) potential sale or leaseback transactions of transport
equipment and terminals;
(iii) use and protection of the Debtors' net operating losses;
and
(iv) evaluating the current insurance structure,
are at least as strong as those of current equity security
holders, and will be adequately served by the Committee. In
addition, Mr. Alter says, it is highly uncertain that there are
any existing NOLs to be protected.
According to Mr. Alter, the Debtors' capital structure is not
complex. The Debtors' common stock is limited to a single class,
in that no competing stockholder interests are implicated, and
the chances of any present recovery are remote at best.
In addition, Mr. Alter notes, Virtus, et al., neglect to consider
that the Debtors face significant business risks. Allied's past
operating performance increases the difficulty of servicing its
debt and maintaining adequate liquidity. Some of the specific
factors to be considered are:
(a) Significant reduction in OEM production by automobile
manufacturers in North America over the past three years.
Even though the Debtors have secured rate increases as to
some of their OEM contracts, reduction in market share may
well minimize or offset any gains;
(b) Escalating cost structure under the current multi-year
union contract with the Teamsters covering all U.S.
employee drivers and mechanics, and under the union
contracts with the Teamsters covering Canadian employee
drivers and mechanics;
(c) Continued excess capacity in the automotive delivery
market, leading to increased pricing competition;
(d) Increases in diesel fuel costs not fully offset by
customers' fuel surcharge programs;
(e) Significant recurring capital expenditures and maintenance
and insurance costs associated with the Debtors' fleet of
transport equipment or Rigs; and
(f) An increase in collateral required to support workers'
compensation claims.
According to Mr. Alter, Virtus, et al., also failed to provide
reliable and defensible evidence to support their allegations
that the Debtors' 3,000 Rigs are worth $300,000,000.
Because of the reduction in cash flow available to the Debtors,
they have been operating under a reduced capital expenditure plan
with respect to their fleet of Rigs. As a result of the reduced
capital spending and the age of the Debtors' fleet, they
anticipate an increase in capital spending of approximately
$60,000,000 per year over the next five years.
Virtus, et al., also failed to provide an empirical basis to the
claim that the Debtors own 22 of its 81 terminals, with total
real estate portfolio worth $40,000,000 to $90,000,000, Mr. Alter
notes.
With respect to Virtus, et al.'s suggestion that $100,000,000 in
restricted cash could be released from self-insurance when the
Company emerges from bankruptcy, Mr. Alter points out that there
can never be a release of all restricted cash, even post-
emergence, because restricted cash requirements will attach to
the Debtors' ongoing insurance programs and to legacy claims
incurred in prior periods.
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 Nos. 05-12515 through 05-12537). Jeffrey W. Kelley, Esq., at
Troutman Sanders, LLP, represents the Debtors in their
restructuring efforts. Henry S. Miller at Miller Buckfire & Co.,
LLC, serves as the Debtors' financial advisor. Anthony J. Smits,
Esq., at Bingham McCutchen LLP, provides the Official Committee of
Unsecured Creditors with legal advice and Russell A. Belinsky at
Chanin Capital Partners, LLC, provides financial advisory services
to the Committee. 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. 16;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
AMCAST INDUSTRIAL: Committee Hires Ice Miller as Bankr. Counsel
---------------------------------------------------------------
The Official Committee of Unsecured Creditors appointed in Amcast
Industrial Corporation and Amcast Automotive of Indiana, Inc.'s
chapter 11 cases, sought and obtained authority from the U.S.
bankruptcy Court for the Southern District of Indiana to employ
Ice Miller LLP as its bankruptcy counsel.
Ice Miller is expected to:
a. advise the committee with respect to its duties,
responsibilities and powers in the Debtors' chapter 11
cases;
b. attend and participate in meetings and negotiations with
the Debtors, the Debtors' secured lenders and other parties
in interest and advise and consult on the conduct of the
case, including all appropriate legal and administrative
requirements of the chapter 11 process;
c. assist the Committee in investigation and monitoring the
acts, conduct, assets, liabilities, and financial condition
of the Debtors;
d. advise the Committee with respect to any plans of
reorganization or proposed plan which may be filed by the
Debtor, as well as the Debtors' proposals with respect to
the prosecution of claims against third parties, and all
other matters relevant to the case or to the formulation of
a plan;
e. advise the Committee, if appropriate, with respect to the
appointment of a trustee or examiner or any other legal
proceedings involving interests represented by the
Committee;
f. provide expertise with respect to the Debtors' chapter 11
cases and any procedural rules and local rules applicable
to the cases; and
g. perform such other legal services as the Committee may
require.
The Committee tells the Court that the Firm's professionals bill;
Professional Designation Hourly Rate
------------ ----------- -----------
Henry A. Efroymson, Esq. Partner $370
Jeffrey A. Hokanson, Esq. Partner $340
Ben T. Caughey, Esq. Associate $240
Mark. A, Bogdanowicz, Esq. Associate $240
Marie E. Wilson Paralegal $205
Henry A. Efroymson, Esq., partner at Ice Miller LLP, assures the
Court that the Firm is a "disinterested person" as that term is
defined in Section 101(14)of the Bankruptcy Code. Mr. Efroymson
can be reached at:
Henry A. Efroymson, Esq.
Ice Miller LLP
One American Square, Suite 3100
Indianapolis, Indiana 46282-0200
Tel: (317) 236-2100
Fax: (317) 236-2219
http://www.icemiller.com/
Headquartered in Fremont, Indiana, Amcast Industrial Corporation,
manufactures and distributes technology-intensive metal products
to end-users and suppliers in the automotive and plumbing
industry. The Company and four debtor-affiliates filed for
chapter 11 protection on Nov. 30, 2004. The U.S. Bankruptcy
Court for the Southern District of Ohio confirmed the Debtors'
Third Amended Joint Plan of Reorganization on July 29, 2005. The
Debtors emerged from bankruptcy on Aug. 4, 2005.
Amcast Industrial Corporation and Amcast Automotive of Indiana,
Inc., filed for chapter 11 protection a second time on Dec. 1,
2005 (Bankr. S.D. Ind. Case No. 05-33323). David H. Kleiman, Esq.,
and James P. Moloy, Esq., at Dann Pecar Newman & Kleiman, P.C.,
represent the Debtors in their restructuring efforts. When the
Debtor and its affiliate filed for protection from their
creditors, they listed total assets of $97,780,231 and total
liabilities of $100,620,855.
Amcast Industrial's chapter 11 case is jointly administered with
Amcast Automotive of Indiana, Inc.'s chapter 11 proceeding.
AMCAST INDUSTRIAL: Hires Berkeley Square as Financial Advisor
-------------------------------------------------------------
Amcast Industrial Corporation and Amcast Automotive of Indiana,
Inc., sought and obtained authority from the U.S. Bankruptcy for
the Southern District of Indiana to retain Berkeley Square Group
LLC as their financial advisors.
Berkeley Square is expected to render:
(a) General Financial Advisory Services:
(1) to the extent it becomes necessary, appropriate and
feasible, review and analyze the Debtors businesses,
operations, properties, and financial condition and
prospects,
(2) evaluate the Debtors' debt capacity in light of its
projected cash flows,
(3) assist in determining an appropriate capital
structure for the Debtors,
(4) determine a range of values for the Debtors on a
going concern and liquidation basis,
(5) advise and attend meetings of the Debtors' Board of
Directors, and
(6) If necessary, participate in hearings before the Court
with respect to matters upon which Berkeley Square
has provided advice, including, as relevant,
coordinating with the Debtors' counsel with respect
to testimony;
(b) Restructuring Services:
(1) provide financial advice and assistance to the
Debtors in developing and seeking approval of a
Chapter 11 plan of reorganization,
(2) provide financial advice and assistance to the
Debtors in structuring any new securities, other
consideration, or other inducements to be offered or
issued under the Plan,
(3) assist the Debtors or participate in negotiations
with entities or groups affected by the Plan, and
(4) assist the Debtors in preparing documentation
required in connection with the Plan; and
(c) Sale Services
(1) provide financial advice and assistance to the
Debtors in connection with the sale of any of the
Debtors assets deemed necessary in the course of
these Chapter 11 cases,
(2) assist the Debtors in obtaining Court approval for
any such sale of assets,
(3) the Debtors or participate in negotiations with
potential buyers in connection with any such sale of
assets.
Kevin I. Dowd, the managing member of Berkeley Square, discloses
that for this engagement, the Firm's professionals will bill:
Designation Hourly Rate
----------- -----------
Principals $475
Associates $300
To the best of the Debtors' knowledge, Berkeley Square is a
"disinterested person," as that term is defined in Section 101(14)
of the Bankruptcy Code.
Headquartered in Fremont, Indiana, Amcast Industrial Corporation,
manufactures and distributes technology-intensive metal products
to end-users and suppliers in the automotive and plumbing
industry. The Company and four debtor-affiliates filed for
chapter 11 protection on Nov. 30, 2004. The U.S. Bankruptcy
Court for the Southern District of Ohio confirmed the Debtors'
Third Amended Joint Plan of Reorganization on July 29, 2005. The
Debtors emerged from bankruptcy on Aug. 4, 2005.
Amcast Industrial Corporation and Amcast Automotive of Indiana,
Inc., filed for chapter 11 protection a second time on Dec. 1,
2005 (Bankr. S.D. Ind. Case No. 05-33323). David H. Kleiman, Esq.,
and James P. Moloy, Esq., at Dann Pecar Newman & Kleiman, P.C.,
represent the Debtors in their restructuring efforts. When the
Debtor and its affiliate filed for protection from their
creditors, they listed total assets of $97,780,231 and total
liabilities of $100,620,855.
Amcast Industrial's chapter 11 case is jointly administered with
Amcast Automotive of Indiana, Inc.'s chapter 11 proceeding.
AMERICAN COMMERCIAL: Earns $8.6 Million of Net Income in 4th Qtr.
-----------------------------------------------------------------
American Commercial Lines Inc. (Nasdaq: ACLI) reported results for
the fourth quarter and year ended Dec. 31, 2005. Net sales for
the quarter were $236.2 million, a 31% increase compared with
$180.3 million for the fourth quarter of 2004. Net income for the
quarter was $8.6 million, which included charges for the early
retirement of debt of $7.3 million (net of tax) as a result of the
Company's initial public offering during the quarter, compared to
net income of $78.3 million for the fourth quarter last year,
which included an extraordinary gain on the discharge of debt of
$155.4 million and bankruptcy related charges of $88.7 million.
Net income for the fourth quarter of 2004 excluding these two
items (a non-GAAP financial measure), would have been $11.6
million. ACL's predecessor company was not a taxable entity in
2004.
Commenting on the results, Mark R. Holden, President and Chief
Executive Officer, stated: "We are very pleased with our
accomplishments during 2005. ACL is strong financially,
operationally, and perhaps most importantly, talent-wise. Industry
fundamentals continue to strengthen with 2005 representing the
seventh consecutive year of a net decline in barge capacity in the
U.S. Freight demand is stable and improving and we believe is
likely to accelerate as we broaden our markets. While we are
encouraged by our performance during 2005, we are committed to
aggressively improving our performance during 2006 and beyond,
ensuring that we achieve our potential."
ACL also reported net income for the full year of 2005 of $11.8
million, which included charges for the early retirement of debt
of $7.3 million (net of tax), compared to net income of $4.4
million for 2004, which included an extraordinary gain on the
discharge of debt of $155.4 million and bankruptcy related charges
of $140.0 million. Net loss for the year 2004 excluding these two
items (a non-GAAP financial measure), would have been $11.0
million. Revenues for the year 2005 were $741.4 million, a 17%
increase compared with revenues of $632.3 million for the year
2004.
Increased revenues for the fourth quarter were driven within the
transportation segment by average fuel neutral rate increases of
25% on the dry freight business and 16% on the liquid freight
business compared to the fourth quarter of 2004. Fuel neutral
freight rates were up, on average, 24% and 10% respectively on the
dry and liquid business for the full year in 2005 compared to
2004.
Increased revenues for the fourth quarter were also driven by a
101% increase in Jeffboat revenues, which were $52.6 million,
excluding revenue from vessels manufactured for our transportation
segment, in the fourth quarter of 2005 compared to $26.2 million
for the fourth quarter of 2004. For the full year of 2005,
Jeffboat's external revenues increased 23% to $120.7 million for
2005 compared to $98.0 million for 2004.
Earnings before Interest, Taxes and Depreciation and Amortization
for the fourth quarter of 2005 were $42.9 million, a 21% increase
compared to $35.5 million for the fourth quarter last year and
were $110.9 million for the full year 2005, a 35% increase
compared to $82.0 million for the full year 2004. ACL also
reported that it had reduced debt from $406.4 million at the end
of 2004 to $200.0 million at the end of 2005, a reduction of
$206.4 million, or 51%.
Headquartered in Jeffersonville, Indiana, American Commercial
Lines Inc. -- http://www.aclines.com/-- is an integrated marine
transportation and service company operating in the United States
Jones Act trades, with revenues of more than $740 million and
approximately 2,600 employees as of Dec. 31, 2005.
The company filed for chapter 11 protection on Jan. 31, 2003
(Bankr. S.D. Ind. Case No. 03-90305). Suzette E. Bewley,
Esq., at Baker & Daniels represented the company in its successful
restructuring efforts. The Bankruptcy Court approved the
company's Plan of Reorganization on Dec. 30, 2004, which allowed
the company to emerge from bankruptcy on Jan. 11, 2005.
* * *
As reported in the Troubled Company Reporter on Feb. 14, 2006,
Standard & Poor's Ratings Services raised its corporate credit
rating on American Commercial Lines Inc. (ACL) to 'BB-' from 'B'
and removed the rating from CreditWatch, where it was placed with
positive implications on Sept. 27, 2005. The rating on subsidiary
American Commercial Lines LLC's senior unsecured notes was raised
to 'B+' from 'B-' and also removed from CreditWatch. The outlook
is now positive. The Jeffersonville, Indiana-based barge company
has about $330 million of lease-adjusted debt.
The rating actions follow a review of the impact of ACL's October
2005 IPO and subsequent debt paydown on its capital structure and
an assessment of the company's near- to intermediate-term
operating prospects.
AMERICAN ECO: Chapter 7 Trustee Hires Ver Ploeg to Sue PwC
----------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware gave
Montague S. Claybrook, the chapter 7 Trustee overseeing the
liquidation proceedings of American Eco Holding Corporation and
its debtor-affiliates, permission to employ Ver Ploeg & Lumpkin,
P.A., as his special litigation counsel.
Ver Ploeg will advise and assist the Trustee and Anderson Kill in
evaluating and prosecuting claims against PricewaterhouseCoopers
LLP, the Debtors' former auditors.
Mr. Claybrook reminds the Court that on Dec. 16, 2003, he retained
Anderson Kill & Olick, PC as his legal counsel in connection with
evaluating potential claims against former officers and directors
of the Debtors and against PwC.
R. Hugh Lumpkin, Esq., a member at Ver Ploeg discloses that his
Firm will seek compensation in connection with the PwC claims from
the America Eco estate only if a recovery is obtained in the PwC
claims and pursuant only to the Contingency Fee Arrangement
between the Trustee and Ver Ploeg. Mr. Lumpkin reports that Ver
Ploeg will be paid the greater of 5% of the total recovery of
professional fees, or a percentage based on time spent between Ver
Ploeg and Anderson Kill multiplied by Anderson Kill's recovery
percentage.
Ver Ploeg assures the Court that it is a "disinterested person" as
that term is defined under Section 101(14) of the Bankruptcy Code,
and as modified by Section 1107(b).
Headquartered in Houston, Texas, American Eco Holding Corporation
was holding company for various wholly owned direct and indirect
subsidiaries engaged in industrial outsourcing, construction and
environmental services businesses. The Company and its affiliates
filed for chapter 11 protection on Aug. 4, 2000 (Bankr. D. Del.
Case No. 00-03253). Bruce Grohsgal, Esq., at Pachulski, Stang,
Ziehl Young & Jones represents the Debtors. The Bankruptcy Court
converted the Debtors' chapter 11 cases to a chapter 7 liquidation
proceeding on June 8, 2002. Montague S. Claybrook is the chapter
7 Trustee for the Debtors' estate. Ian Connor Bifferato, Esq.,
and Joseph K. Koury, Esq., at Bifferato, Gentilotti, Biden &
Balick represents the chapter 7 Trustee. When the Debtors filed
for chapter 11 protection, they listed total assets of
$233,414,112 and total debts of $195,873,281.
AMERICAN ITALIAN: Outlines Asset Sale Plans & Strategic Decisions
-----------------------------------------------------------------
American Italian Pasta Company (NYSE: PLB) outlined strategic
decisions resulting from its recent business assessment, including
plans to divest certain assets. The Company also disclosed its
liquidity position, as well as reporting that its Form 10-Q was
not filed and that the Company's Annual Meeting of Shareholders
has been postponed.
Asset Divestitures
As previously reported in the Troubled Company Reporter, the
Company retained the management-consulting firm of Alvarez &
Marsal. In conjunction with the Company's management team, A&M
assessed the Company's business and operating strategies,
including an evaluation of the Company's brand, marketing and
sales strategies, capacity utilization, supply chain and
manufacturing initiatives, cost structure and financial
strategies.
"Over the past few months, we have been assessing key business and
operating strategies, and we are now beginning the implementation
of our initiatives," Jim Fogarty, Chief Executive Officer, stated.
I would also note that I am impressed by our dedicated and
talented AIPC team which is committed to delivering outstanding
products and services to our customers."
The strategic decisions reached as a result of the assessment
include:
* Lines of Business: The Company will continue operating in
its historical lines of business within the retail and
institutional markets. The Company's focus will continue on
the branded, private label, food service and industrial
segments.
The Company will also continue new product innovation,
such as the recently announced launch of the Company's new
multi-grain products under the Mueller's, Golden Grain-
Mission and Heartland labels.
* Divestment of Non-Strategic Brands: The Company's Eddie's
and Mrs. Leeper's pasta brands have been identified as
non-strategic brands due to the sales volume and complexity
of the brands as compared to the Company's other lines of
business. Accordingly, the Company has decided to divest
these brands. The Company will continue to produce specialty
products for its private label customers and continue to
support these brands while it undertakes divestiture efforts.
* Manufacturing Footprint Strategy and Plant Divestment: The
Company has completed the evaluation of its manufacturing
footprint and expected future production capacity
requirements. Considering the Company's forecasted capacity
utilization, the Company has determined that its Kenosha,
Wisconsin plant will be permanently closed and divested.
Since August 2004, the Kenosha plant has operated on an as
needed basis to meet ingredient customer demand.
The Company will continue to operate its three other domestic
manufacturing plants (Excelsior Springs, Missouri; Columbia,
South Carolina; and, Tolleson, Arizona), as well as its
Italian plant. As part of the Kenosha divestment plan, the
Company anticipates relocating certain pasta manufacturing
lines from the Kenosha plant to its Columbia plant to expand
the Columbia plant manufacturing capacity for retail and
ingredient products.
* Other Asset Divestments: The Company has identified certain
other assets that will be divested, including manufacturing
equipment that will no longer be used in its operations, the
Company's fractional aircraft interest and a parcel of
undeveloped land. The Company will record non-cash asset
impairment charges in the second quarter of fiscal year
2006 relating to the divestment of these assets totaling
$3.3 million.
Liquidity
As of Feb. 13, 2006, the Company's total debt was approximately
$280.0 million, including $278 million under its bank credit
facility. Total debt, less cash, stood at $256 million. As of
Feb. 13, 2006, the Company had liquidity resources totaling
approximately $34 million, reflecting availability of
approximately $10 million under its revolving credit agreement and
cash of approximately $24 million. In addition, the Company
continues to expect that net cash flow to be generated from
operations will be sufficient to meet its expected operating needs
for the current fiscal year. The Company also noted that amounts
owed to its suppliers and vendors are currently within established
credit terms.
Late Filing of Form 10-Q and
Postponement of Annual Meeting
The Company did not file its Form 10-Q for the first fiscal
quarter ended Dec. 30, 2005 on the due date of Feb. 8, 2006. As
previously disclosed, the Company has also not filed its Form 10-Q
for the third fiscal quarter of fiscal 2005 and its Form 10-K for
the fiscal year ended Sept. 30, 2005. In addition, the Company
announced that its Annual Meeting of Shareholders, normally
scheduled for February, has been postponed indefinitely pending
the Company's completion of its previously announced restatement
of certain historical financial statements.
Based in Kansas City, Missouri, American Italian Pasta Company --
http://wwwaipc.com/-- is the largest producer and marketer of dry
pasta in North America. Founded in 1988, American Italian Pasta
currently has five plants that are located in Excelsior Springs,
Missouri; Columbia, South Carolina; Tolleson, Arizona; Kenosha,
Wisconsin and Verolanuova, Italy. The Company has approximately
600 employees located in the United States and Italy.
* * *
On Sept. 15, 2005, the Company received a waiver from its lenders
under its Credit Agreement dated July 16, 2001, as amended. In
December 2005 the Company received a third waiver from its bank
group for non-compliance with certain covenants contained in its
bank credit agreement. During the waiver period, which expires on
March 16, 2006, the Company is pursuing refinancing alternatives
for its bank credit facility, which expires on Oct. 2, 2006.
AOL LATIN: Wants Open-Ended Decision to File Notices of Removal
---------------------------------------------------------------
America Online Latin America Inc., and its debtor-affiliates ask
the U.S. Bankruptcy Court for the District of Delaware to extend,
until the earlier of the effective date of their Joint Plan of
Reorganization and Liquidation and July 31, 2006, to file notices
of removal with respect to pre-petition civil actions pursuant to
Rules 9027(a)(2)(A), (B) and (C) of the Federal Rules of
Bankruptcy Procedures.
The Debtors filed their Joint Plan and an accompanying Disclosure
Statement on Jan. 17, 2006.
The Debtors give the Court three reasons supporting the extension:
1) it will give the Debtors more time and opportunity to make
fully informed decisions concerning the removal of each
pending pre-petition civil action;
2) it will assure that the Debtors do not forfeit valuable
rights under 28 U.S.C. Section 1452; and
3) the requested extension will not prejudice the rights of the
Debtors' adversaries because any party to a pre-petition
civil action that is removed may seek to have it remanded to
the appropriate state court pursuant to 28 U.S.C. Section
1452(b).
The Court will convene a hearing at 3:00 p.m., on Feb. 23, 2006,
to consider the Debtors' request.
Headquartered in Fort Lauderdale, Florida, America Online Latin
America, Inc. -- http://www.aola.com/-- offers AOL-branded
Internet service in Argentina, Brazil, Mexico, and Puerto Rico,
as well as localized content and online shopping over its
proprietary network. Principal shareholders in AOLA are
Cisneros Group, one of Latin America's largest media firms,
Brazil's Banco Itau, and Time Warner, through America Online.
The Company and its debtor-affiliates filed for Chapter 11
protection on June 24, 2005 (Bankr. D. Del. Case No. 05-11778).
Pauline K. Morgan, Esq., and Edmon L. Morton, Esq., at Young
Conaway Stargatt & Taylor, LLP and Douglas P. Bartner, Esq., at
Shearman & Sterling LLP represent the Debtors in their
restructuring efforts. When the Debtors filed for protection
from their creditors, they listed total assets of $28,500,000
and total debts of $181,774,000.
AOL LATIN: Wants Open-Ended Time to Make Lease-Related Decisions
----------------------------------------------------------------
America Online Latin America Inc., and its debtor-affiliates ask
the U.S. Bankruptcy Court for the District of Delaware to extend,
until the earlier of the effective date of their Joint Plan of
Reorganization and Liquidation and July 31, 2006, their time to
elect to assume, assume and assign, or reject their unexpired
nonresidential real property leases.
The Debtors filed their Joint Plan and an accompanying Disclosure
Statement on Jan. 17, 2006.
The Debtors tell the Court that they are parties to several
nonresidential real property lease agreements. The real property
leases include the Debtors' administration offices and various
premises leased by AOL Puerto Rico in shopping areas in Puerto
Rico in connection with AOL Puerto Rico's marketing activities for
the AOL branded services.
Under the Plan, the Debtors will ultimately assume or reject the
real property leases. However, the Debtors have requested the
Court that upon its approval of the Disclosure Statement, the
confirmation hearing should be held on April 25, 2006, which is
beyond the present lease decision deadline.
The Debtors give the Court three reasons in support of their
request for an extension of the lease decision period:
1) a premature decision to reject the leases will hinder the
Debtors' ability to make the distributions contemplated
under the Plan;
2) the Debtors' decision to assume or reject the leases will
depend, among other things, on their review of the business
and analysis of each lease location, the purpose and manner
in which the business will be sold, wound down or
transferred pursuant to the Plan; and
3) the Debtors are current on all post-petition payments under
the lease and the requested extension will not prejudice the
landlords of those leases.
The Court will convene a hearing at 3:00 p.m., on Feb. 23, 2006,
to consider the Debtors' request.
Headquartered in Fort Lauderdale, Florida, America Online Latin
America, Inc. -- http://www.aola.com/-- offers AOL-branded
Internet service in Argentina, Brazil, Mexico, and Puerto Rico,
as well as localized content and online shopping over its
proprietary network. Principal shareholders in AOLA are
Cisneros Group, one of Latin America's largest media firms,
Brazil's Banco Itau, and Time Warner, through America Online.
The Company and its debtor-affiliates filed for Chapter 11
protection on June 24, 2005 (Bankr. D. Del. Case No. 05-11778).
Pauline K. Morgan, Esq., and Edmon L. Morton, Esq., at Young
Conaway Stargatt & Taylor, LLP and Douglas P. Bartner, Esq., at
Shearman & Sterling LLP represent the Debtors in their
restructuring efforts. When the Debtors filed for protection
from their creditors, they listed total assets of $28,500,000
and total debts of $181,774,000.
ARMSTRONG WORLD: Sells Penn. Property to S-J Realty for $20.22MM
----------------------------------------------------------------
Armstrong World Industries, Inc., owns a 67-acre parcel of land
and a warehouse building consisting of 594,000 square feet located
at 2913 Spooky Nook Road in Lancaster County, Pennsylvania.
On or before June 2005, AWI concluded that it did not anticipate
any future need for the Property and determined to sell it.
Subsequently, on July 2005, AWI employed CB Richard
Ellis/Harrisburg and Armstrong Realty & cup to provide brokerage
services in connection with the sale of the Property.
CB Richard Ellis engaged in extensive marketing efforts to sell
the Property, including:
(i) placing a conspicuous "for sale" sign on the Property;
(ii) listing the Property in several real estate databases;
(iii) mailing brochures to real estate brokerage firms located
in the Lancaster County area; and
(iv) soliciting offers of interest from potential purchasers
of the Property.
After good faith and arm's-length negotiations, AWI and S-J Realty
Management Corporation signed a contract of sale, dated as of
Dec. 5, 2005, pursuant to which S-J Realty will purchase the
Property for $20,217,552, free and clear of any and all claims,
liens, encumbrances, judgments and security interests.
At AWI's request, the U.S. Bankruptcy Court for the District of
Delaware approved the sale.
The salient terms of the Purchase Agreement are:
(1) Payment
S-J Realty has paid a $100,000 deposit to an Escrow
Holder. The Deposit will be applied toward the
Purchase Price at closing.
S-J Realty will pay the balance to AWI at the closing
date.
(2) Necessary Approvals
The parties' obligations under the Purchase Agreement are
contingent on the approval, consent or ratification of
AWI's Board of Directors and receipt of Bankruptcy Court
approval of the transactions. On December 5, 2005, AWI's
Board of Directors approved the Agreement through a
unanimous written consent.
(3) Closing
The closing will take place on March 31, 2006.
(4) S-J Realty's Access to the Property
Prior to the Closing, S-J Realty and its agents will
have access to the Property during the Review Period to
conduct any survey, cost estimates, environmental
studies, and tests necessary for S-J Realty to determine
if the Property suits its requirements. S-J Realty will
hold AWI harmless for any incident that occurs on the
Property during the Review Period.
(5) Condition of the Property
AWI will deliver the Property to S-J Realty in
substantially the same physical condition existing on
the Agreement's execution, with reasonable wear and tear
and loss by casualty excepted.
(6) Broker's Commission
AWI will pay CB Richard Ellis a sales commission equal
to 4% of the Purchase Price. On closing, CB Richard
Ellis will provide Armstrong Realty Group, a wholly owned
subsidiary of AWI, with a referral fee of 25% of the
Commission.
(7) Default
If AWI defaults under the Agreement, S-J Realty may:
-- terminate the Agreement and receive the return of
the deposit;
-- enforce specific performance of the Agreement; or
-- sue AWI for damages in the case of a willful
default.
If S-J Realty defaults, the deposit will be paid to and
retained by AWI as liquidated damages.
AWI believes that S-J Realty is creditworthy and possesses the
financial resources to close the transactions contemplated by the
Agreement.
Headquartered in Lancaster, Pennsylvania, Armstrong World
Industries, Inc. -- http://www.armstrong.com/-- the major
operating subsidiary of Armstrong Holdings, Inc., designs,
manufactures and sells interior floor coverings and ceiling
systems, around the world. The Company and its debtor-affiliates
filed for chapter 11 protection on December 6, 2000 (Bankr. Del.
Case No. 00-04469). Stephen Karotkin, Esq., at Weil, Gotshal &
Manges LLP, and Russell C. Silberglied, Esq., at Richards, Layton
& Finger, P.A., represent the Debtors in their restructuring
efforts. When the Debtors filed for protection from their
creditors, they listed $4,032,200,000 in total assets and
$3,296,900,000 in liabilities. (Armstrong Bankruptcy
News, Issue No. 88; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
AVANEX CORP: Posts $13.4 Mil. Net Loss in Fiscal 2006 Second Qtr.
-----------------------------------------------------------------
Avanex Corporation (Nasdaq: AVNX) reported financial results for
its second fiscal quarter ended Dec. 31, 2005.
Net revenue in the second fiscal quarter was $36.1 million,
compared with $41.2 million in the prior quarter and $41.9 million
in the second fiscal quarter of the prior year.
The company reported a net loss of $13.4 million in the second
quarter, an improvement over the net loss of $16.9 million in the
prior quarter and the net loss of $24.4 million in the second
fiscal quarter of the prior year. Excluding certain items, non-
GAAP net loss for the second fiscal quarter of 2006 was $9.3
million, compared with a net loss of $14.7 million in the prior
quarter. The non-GAAP net loss excludes amortization of
intangibles, restructuring charges, stock-based compensation and
other non-recurring items totaling $4.2 million. The non-GAAP net
loss in the second fiscal quarter a year ago, with the same
adjustments, was $17.5 million. Gross margins in the second
quarter were 7%, an increase of two percentage points over the
prior quarter gross margins of 5%, and an increase of 13
percentage points over the second fiscal quarter of the prior
year.
"Gross margins improved for the fourth consecutive quarter and are
up 13 percentage points from the same quarter in the prior year,
operating expenses declined sequentially and we significantly
reduced our cash burn by $14 million compared to the prior
quarter," said Jo Major, president and CEO of Avanex. "Although
we encountered operational issues during the transfer of
manufacturing to lower-cost contract manufacturing, which resulted
in a disappointing decrease in revenue, we continued to make
progress toward our overall goals and improving our operating
results," said Major.
Beyond underlying operational improvements, the company expects
approximately $13 million in liquidity improvements over the next
three quarters, resulting from the agreements reached in prior
quarters, which include rent and facilities credits, prepayments
from key customers and the redemption of French tax credits.
Avanex renegotiated some leases at the company's French subsidiary
that will reduce the company's future cash obligations. Avanex is
reviewing the accounting for these leases and to date the
accounting has not been finalized. The accounting for these
leases will not impact the company's current or future cash flow,
revenue or results of operations.
Revenue is expected to be in the range of $36 million to $40
million in the fiscal third quarter. Gross margins are expected
to increase based on continued cost improvements.
Going Concern Doubt
Deloitte & Touche LLP expressed substantial doubt about Avanex
Corporation's (Nasdaq: AVNX) ability to continue as a going
concern after it audited the Company's financial statements for
the fiscal year ended June 30, 2005. The auditing firm pointed to
the Company's recurring losses and negative cash flows from
operations.
About Avanex
Avanex Corporation -- http://www.avanex.com/-- provides
Intelligent Photonic Solutions(TM) to meet the needs of fiber
optic communications networks for greater capacity, longer
distance transmissions, improved connectivity, higher speeds and
lower costs. These solutions enable or enhance optical wavelength
multiplexing, dispersion compensation, switching and routing,
transmission, amplification, and include network-managed
subsystems. Avanex was incorporated in 1997 and is headquartered
in Fremont, Calif. Avanex also maintains facilities in Elmira,
N.Y.; Shanghai, China; Nozay, France; San Donato, Italy; and
Bangkok, Thailand.
AVETA INC: S&P Upgrades Counterparty Credit Rating to B from B-
---------------------------------------------------------------
Standard & Poor's Ratings Services raised its counterparty credit
rating on Aveta Inc. and its senior secured debt ratings on MMM
Holdings Inc. and Namm Holdings Inc., to 'B' from 'B-' and removed
these ratings from CreditWatch. The outlook is positive.
The credit facilities (issued by MMM and NAMM, collectively)
presently consist of a $287.6 million term loan due August 2011
and a $20 million revolver due August 2012.
The upgrade reflects Aveta's improved financial condition
attributed to strengthened health plan profitability and more
balance capital structure resulting from the repayment of debt and
addition of equity stemming from its recently completed private
placement of equity shares.
"Aveta is reasonably well positioned to sustain (and likely build
on) its existing market profile because we consider its core
Managed Medicare markets to be under-penetrated," explained
Standard & Poor's credit analyst Joseph Marinucci. "We also
believe that legislation supporting the Medicare Advantage Program
is likely to provide sufficient funding for the program over the
intermediate term and we believe the existing operating companies
have developed an infrastructure capable of supporting cost-
effective care-coordination initiatives."
Standard & Poor's considers this particularly important because
the rate structure has shifted and will continue to shift more
toward the inclusion of health risk adjusters and be less
influenced by demographic variables.
Standard & Poor's expects Aveta to achieve strong organic
enrollment growth over the near term (one year) and more moderate
growth over the intermediate term (five years). By year-end 2006,
Standard & Poor's expects total Medicare membership to grow by
about 25% and be 160,000-170,000 and for commercial membership to
be very modestly lower at about 210,000 members.
Standard & Poor's expects pretax income and cash flow for 2006 to
be $100 million-$110 million and $140 million-$150 million,
respectively. Also, Standard & Poor's expects financial leverage
and interest coverage to be 65%-75%, 1.5x-2.5x, and 6x-7x,
respectively, which would be viewed as conservative for the
rating.
The positive outlook reflects the potential for the ratings to be
raised by one notch to 'B+' if Aveta sustains its earnings and
cash flow profile and effectively manages its growth and return
objectives without jeopardizing operational focus. Conversely,
the outlook could be revised to stable if profitability were to
erode or if the company altered its capital structure in a way
that materially diminishes statutory capitalization or materially
increases debt outstanding.
BALL CORP: Agrees to Buy U.S. Can Corp's U.S. and Argentine Assets
------------------------------------------------------------------
U.S. Can Corporation entered into a definitive agreement to sell
its U.S. and Argentinean operations to Ball Corporation (NYSE:
BLL) for approximately 1.1 million shares of Ball common stock and
the repayment of approximately $550 million of U.S. Can's debt.
The current shareholders of U.S. Can will retain its European
businesses. The transaction is expected to close by the end of
the first quarter, subject to customary closing conditions.
"Ball Corporation is one of the most influential and competitive
players in the packaging industry," stated Carl Ferenbach, U.S.
Can Chairman and Managing Director of Berkshire Partners, LLC, a
private equity firm in Boston. "The sale of these operations from
U.S. Can to Ball puts them in very strong hands and assures their
continued support and development."
U.S. Can shareholders will retain the company's European
businesses and will continue to focus on developing the company's
European markets. U.S. Can is a leading manufacturer of steel
containers for personal care, household, automotive, paint and
industrial products in the U.S. and Europe, as well as plastic
containers in the U.S. and food cans in Europe.
About U.S. Can Corporation
Headquartered in Lombard, Illinois, U.S. Can Corporation --
http://www.uscanco.com-- manufactures steel containers for
personal care, household, automotive, paint and industrial
products in the United States and Europe, as well as plastic
containers in the United States and food cans in Europe.
About Ball Corporation
Headquartered in Broomfield, Colorado, Ball Corporation --
http://www.ball.com/-- is a supplier of high-quality metal and
plastic packaging products and owns Ball Aerospace & Technologies
Corp., which develops sensors, spacecraft, systems and components
for government and commercial customers. Ball reported 2005 sales
of $5.7 billion and the company employs 13,100 people worldwide.
* * *
As reported in the Troubled Company Reporter on Feb. 14, 2006,
Fitch Ratings affirmed the ratings of Ball Corporation (BLL) as:
-- Senior secured credit facilities at 'BB+'
-- Issuer default rating (IDR) at 'BB'
-- Senior unsecured notes at 'BB'
At the same time, Fitch revised the Rating Outlook to Stable from
Positive. The ratings affect approximately $1.6 billion of debt.
The revised Outlook reflects BLL's increasing allocation of
discretionary cash flow towards capital expenditures and share
repurchases as well as lower margins. As a result, while BLL's
credit profile remains comfortably within the current rating
category, future reduction in debt and leverage are not likely to
be substantial.
BENCHMARK ELECTRONICS: Reports $625MM of 4th Quarter 2005 Sales
---------------------------------------------------------------
Benchmark Electronics, Inc., posts $625 million sales for the
quarter ended Dec. 31, 2005, compared to $524 million for the same
quarter last year.
Benchmark's fourth quarter net income is $24.7 million. In the
comparable period last year, net income was $20.2 million.
The Company's sales revenue for the year ended Dec. 31, 2005, is
$2.3 billion, a 12.8% increase from $2.0 billion in the previous
year. Its net income for the year ended Dec. 31, 2005, is $80.6
million, compared to $71.0 million for the prior year.
Fourth Quarter 2005 Financial Highlights
* Operating margin for the fourth quarter was 4.65%.
* Cash flows provided by operating activities for the fourth
quarter was $15 million.
* Cash and short-term investments balance at December 31,
2005 of $327 million.
* No debt outstanding.
* Accounts receivable balance at December 31, 2005 of $366
million; calculated days sales outstanding were 53 days.
* Inventory of $362 million at December 31, 2005; inventory
turns were 6.4 times.
First Quarter and Full Year 2006 Guidance
The Company expects revenues for the first quarter of 2006 to be
between $590 million and $615 million and revenues for the full
year 2006 to be between $2.47 billion and $2.54 billion.
During 2006, the Company plans to continue to expand low-cost
capacity while realigning and further strengthening global
footprint to support continued business opportunities.
Restructuring charges associated with the re-alignment efforts,
primarily related to the closure of the Company's UK facility, are
estimated to be in the range of $3.5 million to $4.5 million pre-
tax during 2006. The actual timing of the charges has yet to be
determined, although it is expected that the majority of the
charges will be recorded in the first half of 2006.
Benchmark Electronics, Inc. -- http://www.bench.com/--
manufactures electronics and provides its services to original
equipment manufacturers of computers and related products for
business enterprises, medical devices, industrial control
equipment, testing and instrumentation products, and
telecommunication equipment. Benchmark's global operations
include facilities in eight countries. Benchmark's Common Shares
trade on the New York Stock Exchange under the symbol BHE.
* * *
Moody's assigned these ratings to Benchmark on March 12, 2003:
* Long term corporate family rating -- Ba3
* Bank loan debt -- Ba2
* Equity linked -- B2
Standard & Poor's assigned these ratings on July 22, 2003:
* Long term foreign issuer credit -- BB-
* Long term local issuer credit -- BB-
Benchmark Electronics, Inc., and any Designated Subsidiaries, is
the borrower under a $100,000,000 Second Amended And Restated
Credit Agreement dated as of January 20, 2005, with JPMorgan Chase
Bank, N.A., individually and as Administrative Agent, Collateral
Agent and Issuing Lender; Fleet National Bank, individually and as
Co-Documentation Agent; Comerica Bank, individually and as Co-
Documentation Agent; Wells Fargo Bank, N.A., individually and as
Co-Documentation Agent; The Bank of Tokyo-Mitsubishi, Ltd.,
Houston Agency; Citicorp Usa Inc.; Credit Suisse First Boston,
acting through its Cayman Islands Branch; and J.P. Morgan
Securities Inc., as Lead Arranger. The Credit Agreement matures
on January 20, 2008.
BIRCH TELECOM: Judge Walsh Approves & Second Amended Plan
---------------------------------------------------------
The Hon. Peter J. Walsh of the U.S. Bankruptcy Court for the
District of Delaware approved the adequacy of the Disclosure
Statement explaining Birch Telecom and its debtor-affiliates'
Second Amended Joint Reorganization Plan.
Judge Walsh determined that the Disclosure Statement contains
adequate information -- the right amount of the right kind of
information -- for creditors to make informed decisions when the
Debtor asks them to vote to accept the Plan.
The approval by the Court allows the Debtors to begin the process
of soliciting votes on its plan and ultimately seeking an Order
confirming the Plan.
"We are extremely pleased by the Court's approval of our
Disclosure Statement," said Gregory C. Lawhon, Birch's Chief
Executive Officer. "This represents a key step toward Birch's
successful reorganization and keeps us on track to emerge from
Chapter 11 by the end of March. We are especially gratified that
we are able to move forward with a Plan that is supported by our
major creditor constituencies, including the Official Committee of
Unsecured Creditors."
AT&T Agreement
The Debtors also said that it has reached a key agreement with
AT&T (formerly SBC), which will ensure continuous coverage for
Birch facility customers, while at the same time maximizing cost
savings for the Company. This commercial agreement is a
significant component of the plan and complements two agreements
reached in 2005 with BellSouth and AT&T for unbundled local phone
service.
The new commercial agreement the Debtors negotiated with AT&T
provides Birch with the stable supply of network elements at
prices far more favorable than the standard tariff rates allowed
by the FCC. "Given the new regulatory environment, this agreement
is an important milestone," said Mr. Lawhon. "Essentially, we
were able to move our negotiations from the regulatory courtroom
to the corporate conference room, reaching an agreement that
benefits everyone while stabilizing this key partnership for years
to come."
Under the plan, the Debtors also intend to implement a refocused
sales strategy that utilizes a targeted telesales and national
account-based approach, as it continues to attract new customers
in the 50 metropolitan markets they currently serve.
Overview of the Second Amended Joint Plan
The Debtors tell the Court that after completing the claims
reconciliation and claims objection process, they estimate that
allowed claims aggregate:
Reflected in Allowed
Schedules Claims
------------ -------
Administrative Claims $110,712 $0
Priority tax Claims $5,704,897 $1,325,000
Other Priority Tax Claims $2,929,648 $38,000
Lender Secured Claims $108,610,552 $42,000,000
Other Secured Claims $25,390,615 $1,045,000
Convenience Claims $125,000 $125,000
General Unsecured Claims $70,673,936 $27,795,413
Lender Deficiency Claims $1,140,634,563 $66,641,552
Terms of the Plan
Under the Plan:
* Priority Claims other than Administrative Claims and
Priority Tax Claims; and
* Other Secured Claims,
are unimpaired.
Treatment of Impaired Claims
Lender Claims
The Debtor tells the Court that Lender Secured Claims are divided
into 29 sub-classes:
1. Finance Lender Secured Claims; and
2. Birch and Guarantor Debtor Credit Agreement Guarantee
Secured Claims where the remaining 28 subclasses are
grouped.
Finance Lender Secured Claims
If the Court approves the Lender Settlement, then on the
Consummation Date:
(a) $35 million of indebtedness under the Credit Agreement
will be restructured as a New Secured Indebtedness under
the New Secured Credit Agreement;
(b) Reorganized Finance, Reorganized Birch and holders of
Finance Lender Secured Claims will execute and deliver the
New Secured Credit Agreement and related documents;
(c) under the New Secured Agreement, Reorganized Finance will
execute and deliver to the New Agent the New Promissory
Note evidencing the New Secured Indebtedness;
(d) Reorganized Finance will enter into and execute documents,
instruments and agreements requested by the New Agent to
confirm, affirm or grant to the New Agent for the ratable
benefit of the lenders under the New Secured Credit
Agreement, a duly perfected first priority lien on and
security interest in all of the assets of Reorganized
Financed owned on the Consummation Date or thereafter
acquired subject to liens securing Other Secured Claims
and other permitted liens as provided in the New Secured
Credit Agreement;
(e) Reorganized Finance will enter into and execute such other
documents, instruments and agreements as reasonably
requested by the new Agent pursuant to the terms of the
New Secured Credit Agreement and related documents,
including the New Guarantee and Collateral Agreement;
(f) holders of Finance Lender Secured Claims will receive a
pro rate share of the new equity;
(g) Finance and its Estate will release the Agent and the
Lenders; and
(h) Reorganized Birch will pay in full and in cash the
expenses of the Lender Steering Committee.
In the event that the Court does not approve the Lender
Settlement, then:
a) on the consummation date, holders of Finance Lender Secured
Claims will receive the same treatment except that:
* Finance and its Estate will not release the Agent and
the Lenders,
* Reorganized Finance will not deliver the New Promissory
Note to the new Agent, and
* the new equity will not be delivered to holders of
Finance Lender Secured Claims;
b) on the consummation date, Finance will deliver the New
Promissory Note to the Plan Trust Trustee who will then
receive the new equity;
c) pending final resolution for the Creditor Trust Action:
* all payments of principal and interest due and owing
under the New Promissory note will be paid to the Plan
Trust Trustee,
* the Plan Trustee will be responsible for declaring any
default under the New Secured Credit Agreement, and
* as directed by the plan Trust Committee, the Plan Trust
Trustee will exercise any stockholder rights with
respect to the new equity;
d) pending final resolution of the Creditor Trust Action, the
Plan Trust Trustee will hold the New Promissory Note, New
Equity and any payments of principal and interest paid by
the Reorganized Debtors under the New Promissory note and
new Secured Credit Agreement, in trust for the benefit of
the Finance Lenders and will be allocated in the manner
ordered by the Court or delivered to the Creditor Trust
Trustee upon final adjudication of the Creditor Trust
Action; and
e) upon final adjudication of the Creditor Trust Action, the
Plan Trust Trustee will immediately deliver to the Agent
any and all remaining New Equity, new Promissory Note and
other remaining Plan Trust Assets after deducting Plan
Trust Expenses.
If the Lender Settlement is not approved by the Court and the
Creditor Trust Action is unsuccessful, then the Plan Trust Trustee
will liquidate the Assigned Avoidance Actions and distribute a pro
rata share to holders of lender deficiency claims from the
proceeds of the avoidance actions, less the expenses of the Plan
Trust.
If the Lender Settlements is not approved by the Court and the
Creditor trust Action is unsuccessful, holders of Finance Lender
Secured Claims will receive a distribution of the New Equity, New
Promissory Note and proceeds from the Assigned Avoidance Actions.
Credit Agreement Guarantee Secured Claims
If the Court approves the Lender Settlement, then on the
consummation date:
(a) Reorganized Birch and the Reorganized Guarantor Subsidiary
Debtors will enter into and execute:
* a New Secured Credit Agreements, each as a guarantor of
Reorganized Finance's obligations, and execute such
other documents, instruments and agreements reasonably
by the New Agent to confirm, affirm or grant to the
lenders under the New Secured Credit Agreement a
guarantee by Reorganized Birch and each Reorganized
Guarantor Subsidiary Debtor of the indebtedness of
Reorganized Finance under the New Secured Credit
Agreement,
* the documents, instruments and agreements requested by
the New Agent to confirm or grant to the New Agent for
the ratable benefit of the lenders under the New
Secured Credit Agreement a duly perfected first
priority lien on and security interest in all of the
assets of Reorganized Birch and each Reorganized
Guarantor Subsidiary Debtor owned on the consummation
date or acquired thereafter subject to liens securing
Other Secured Claims and other permitted liens as
provided in the New Secured Credit Agreement, and
* other related documents, instruments and agreements as
requested by the new Agent pursuant to the terms of the
New Secured Credit Agreement including the New
guarantee and Collateral Agreement, and
* Birch and each Guarantor Subsidiary Debtor and their
respective estates will release the agent and the
lenders.
If the Lender Settlement is not approved by the Court, then:
a) on the consummation date, each of the transactions and
deliveries provided will occur with the exception that
Birch and each Guarantor Subsidiary Debtor and their
respective estates will not release the agent and the
lenders; and
b) pending final resolution of the Creditor Trust Action:
* any payments by Reorganized Birch and each Reorganized
Subsidiary Debtor of principal and interest due and
owing under the New Promissory Note will be paid to the
Plan Trust Trustee, and
* only the Plan Trustee, as directed by the plan Trust
Committee, may enforce the guarantee delivered by
Reorganized Birch.
General Unsecured Claims
Under the Plan, if holders of General Unsecured Claims and
Convenience Claims accept the Plan, the Official Committee of
Unsecured Creditors supports the Plan and the Court approves the
Lender Settlement, the Debtors will transfer, on the consummation
date, $2 million to the Unsecured Claims Settlement Account. On
the distribution date, holders of allowed general unsecured
claims:
* will receive in full satisfaction, a pro rata share of the
available cash in the Unsecured Claims Settlement Account,
* will be treated as a convenience claim if elected by the
holder of the general unsecured claim, or
* will receive other treatment agreed upon by the estate
representative and holder of the general unsecured claim.
Under this scenario, the Debtors relate, holders of allowed
general unsecured claims will recover 7% of their claims.
If the Court approves the Lender Settlement, the Unsecured
Committee objects to the Plan, and the holders of general
unsecured claims and convenience claims accept the Plan, the
Debtors will transfer $1,650,000 from the General Unsecured Claims
Creditor Trust Payment to the General Unsecured Claims Creditor
Trust. On the distribution date, holders of allowed general
unsecured claims:
* will receive in full satisfaction, a pro rata share of the
available cash in the General Unsecured Claims Creditor
Trust,
* will be treated as a convenience claim if elected by the
holder of the general unsecured claim, or
* will receive other treatment agreed upon by the Creditor
Trust Trustee and holder of the general unsecured claim.
Under this scenario, the Debtors tell the Court that holders of
allowed general unsecured claims will recover 5% of their claims.
If the Court does not approve the Lender Settlement and the
Creditor Trust Action is unsuccessful, then on the distribution
date, holders of allowed general unsecured claims:
* will receive in full satisfaction, a pro rata share of the
proceeds of the Assigned Avoidance Actions (along with
holders of allowed lender deficiency claims),
* will be treated as a convenience claim if elected by the
holder of the general unsecured claim, or
* will receive other treatment agreed upon by the Creditor
Trust Trustee and holder of the general unsecured claim.
Under this scenario, the Debtors say that holders of allowed
general unsecured claims will recover less than 1% of their
claims.
If the Lender Settlement is not approved by the Court but the
Creditor Trust Action is successful, then on the distribution
date, holders of general unsecured claims:
* will receive a pro rata share of General Unsecured Claims
Creditor Trust Recoveries and proceeds of the Assigned
Avoidance Actions,
* will be treated as a convenience claim if elected by the
holder of the general unsecured claim, or
* will receive other treatment agreed upon by the Creditor
Trust Trustee and holder of the general unsecured claim.
The Debtors did not disclose how much holders of general unsecured
claims would recover in this scenario.
Lender Deficiency Claims
The Debtor says that if the Court doesn't approve the Lender
Settlement, then all liability for allowed lender deficiency
claims will be assumed and be the sole responsibility of the Plan
Trust.
If the Court approves the Lender Settlement, the Unsecured
Committee approves the Plan and holders of General Unsecured
Claims and Convenience Claims accept the plan, then holders of
allowed deficiency claims will get nothing and will be
extinguished.
If the Lender Settlement is approved by the Court, the holders of
General Unsecured Claims and Convenience Claims accept the plan,
but the Unsecured Committee rejects the Plan, then holders of
allowed lender deficiency claims will receive, in full
satisfaction, a pro rata share of the Available Deficiency Claim
Trust Cash. The Debtors did not disclose how much the holders
would receive under this scenario.
If the Lender Settlement is not approved by the Court and the
Creditor Trust Action is unsuccessful, then holders of allowed
lender deficiency claims will receive, in full satisfaction, a pro
rata share of the proceeds of the Assigned Avoidance Actions,
along with the holders of general unsecured claims. The Debtors
did not disclose how much the holders would receive under this
scenario.
If the Lender Settlement is not approved by the Court but the
Credit Trust Action is successful, then holders of allowed
deficiency claims will receive a pro rata share of:
(a) the proceeds of the Assigned Avoidance Actions, along with
general unsecured claim holders, and
(b) the New Equity, the New Promissory Note and other Plan
Trust Assets remaining after distribution to General
Unsecured Claims Creditor Trust and allowed secured
claims.
The Debtors did not disclose how much the holders would receive
under this scenario.
Other Claims
Holders of:
* Intercompany Claims;
* Old Birch Series A Preferred Stock Interests;
* Old Birch Common Stock Interests;
* Old Subsidiary Equity Interest; and
* Other Equity Interests,
will receive nothing under the plan and on the consummation date,
will be cancelled and extinguished.
Subordinated Claims won't receive anything under the plan either.
Convenience Claims will receive in full satisfaction, cash equal
to the lesser of $125 and 25% of the allowed convenience claims.
Judge Walsh will convene a hearing on Mar. 22, 2006, at 9:30 a.m.,
to consider confirmation of the Debtors' Plan.
Headquartered in Kansas City, Missouri, Birch Telecom, Inc., and
its subsidiaries -- http://www.birch.com/-- own and operate an
integrated voice and data network, and offer a broad portfolio of
local, long distance and Internet services. The Debtors provide
local telephone service, long-distance, DSL, T1, ISDN, dial-up
Internet access, web hosting, VPN and phone system equipment for
small- and mid-sized businesses. Birch Telecom and 28 affiliates
filed for chapter 11 protection on Aug. 12, 2005 (Bankr. D. Del.
Case Nos. 05-12237 through 05-12265). Mark S. Chehi, Esq., at
Skadden, Arps, Slate, Meagher & Flom LLP, represents Birch and its
debtor-affiliates in its second chapter 11 restructuring since
2002. Robert P. Simons, Esq., and Kurt F. Gwynne, Esq., at Reed
Smith LLP, provide the Official Committee of Unsecured Creditors
with legal advice and Chanin Capital Partners LLC provides the
Committee with financial advisory services. When the Debtors
filed for protection from their creditors, they estimated more
than $100 million in assets and debts.
BLUE RIDGE: Moody's Confirms B3 Corporate Family Rating
-------------------------------------------------------
Moody's Investors Service confirmed Blue Ridge Paper Products
Inc.'s B3 corporate family rating and guaranteed senior secured
notes and changed the outlook to stable. The rating action is
based on Moody's belief that:
1) price increases for certain Blue Ridge products will help
offset expected high input costs in 2006;
2) operating performance will stabilize; and
3) the company's liquidity position will remain tight but
acceptable.
An increase in costs for energy, transportation, polymers, and
chemicals has significantly impacted Blue Ridge's gross margins.
In order to mitigate some of the cost increases, Blue Ridge
recently implemented energy surcharges and price increases.
Although the high input costs are expected to continue in 2006,
Moody's believes that favorable price increases should help offset
the increased input costs. Specifically, the company implemented
a $60/ton price increase for uncoated freesheet in January of 2006
and has already shown the ability to increase prices in the
packaging segment for cartons.
The stable outlook reflects Moody's expectation that Blue Ridge's
operating performance will stabilize in 2006 as increased prices
for products such as uncoated paper and certain cost initiatives
are realized, resulting in an improvement in liquidity. However,
the company will need to improve performance in the upcoming year
as little room exists for event risk. The ratings or outlook
would be negatively impacted by a sustained deterioration in
product prices, additional increases in energy costs, or a
potential work stoppage. Blue Ridge's labor contract expires in
May of 2006. Over the next 12 months, if the company fails to
improve operating performance such that adjusted EBITDA reaches a
run rate of approximately $27 million, or if the company fails to
generate any free cash flow, the ratings could be lowered. Other
factors that could negatively impact the ratings would be a
deterioration in paper industry fundamentals resulting in a
further decline in paper production and weaker liquidity.
In addition to operating performance, Moody's clarified the
company's liquidity position, which considerably weakened in 2005.
As of Sept. 30, 2005, the company's $50 million revolving credit
facility contained a revolver balance of $23.6 million and a
minimum availability balance of $13.3 million. The revolving
credit agreement contains a borrowing availability restriction of
$7.5 million and certain affirmative and negative operating
covenants. In the event of default or if the outstanding balance
of the revolving credit facility is greater than $25 million, the
borrowing availability falls below $7.5 million and the fixed
charge coverage ratio is less than 1.1 to 1.0, the credit
agreement provides for activation of controlled bank accounts to
apply daily cash collections toward the outstanding revolving loan
balance. Over the next 12 months, Moody's anticipates liquidity
to remain tight and that the company will continue to
significantly utilize its bank revolver to help support seasonal
working capital needs. However, Moody's believes the company will
maintain full access to its facility and will meet its two
interest payment requirements in 2006.
The ratings reflect the scale of Blue Ridge's operations which are
relatively modest in size compared to its competitors and highly
concentrated with the majority of its operations at one site. The
company's Canton Mill in North Carolina holds all of the company's
pulp and paper operations and supplies all of the paper needs for
Blue Ridge's extrusion facility which in turn supplies the
majority of the paper requirements for its DairyPak facilities.
As a result, any disruption at this facility could cause
significant problems throughout its operations. In addition,
customer concentration remains a concern even though the majority
of customers have been with the company for an extended period.
Blue Ridge's top ten customers represent approximately 42% of
total sales. However, when looking at the company's top 20
customers this percentage increases considerably.
The ratings are supported by Blue Ridge's position for various
products within its packaging segment, predominantly gable top
cartons that are more value-added and face less competition than
its other products. Within the gable top carton industry, the
company competes against International Paper, TetraPak and EloPak.
The company also has had steady customer relationships with the
majority of its packaging customers and approximately 90% of its
DairyPak sales are under longer-term contracts ranging from 1 to 7
years.
Blue Ridge Paper Products Inc., headquartered in Canton, North
Carolina, is a vertically integrated manufacturer of specialty
paperboard packaging products and a broad range of specialty and
commodity grades of paperboard and paper products.
BRICE ROAD: Files Amended Joint Plan of Reorganization in Ohio
--------------------------------------------------------------
Brice Road Developments, L.L.C., unveiled to the U.S. Bankruptcy
Court for the Southern District of Ohio, a disclosure statement
explaining its First Amended Joint Plan of Reorganization.
Summary of the Amended Joint Plan
On the Effective Date, SIR Kensington Associates LLC, a co-
proponent of the Plan, will make a $2.5 million initial
contribution to the Debtor, as capital or as a loan.
Proceeds of the initial contribution will be used on the Effective
Date, to partly fund the:
1. Unsecured Claims Fund in the amount of $275,000; and
2. miscellaneous closing costs, working capital reserves,
interest reserves, and deferred maintenance consisting of,
among other needs, repair to flood damaged units and
construction of remedial drainage systems, completion of
unit construction, and landscaping needs.
SIR Kensington anticipates that the balance of the initial
contribution will be used after the effective date to fund
miscellaneous closing costs, working capital reserves, interest
reserves, and deferred maintenance consisting of, among other
needs, repair to flood damaged units and construction of remedial
drainage systems, completion of unit construction, and landscaping
needs.
Treatment of Claims Under the Amended Joint Plan
Under the Amended Joint Plan, allowed claims for deposits,
totaling $34,000, will be satisfied in full within 60 days of the
effective date.
The Debtor discloses that General Electric Credit Equities has
elected to bifurcate its claim pursuant to Section 1111(b)(2) of
the Bankruptcy Code. Under the amended plan, GE Credit's
unsecured claim would have received, in full satisfaction, cash
equal to its Pro-Rata Share of the Unsecured Claims Fund and
proceeds of the Retained Bankruptcy Actions. However, because of
GE Credit's election under Section 1111(b)(2), GE Credit is
presumed not to have any unsecured allowed claim.
GE Credit's secured claims will be paid in full in amortized
amounts of:
a) payments with 5.5% interest per annum from the effective
date, commencing on the first day of the month after the
month of the effective date and continuing on the first day
of each of the next 23 months; and
b) commencing on the first day of the 25th month after
the month of the effective date, the Debtor will pay the
remaining amount of GE Credit's allowed secured claim, with
interest of 5.5% per annum, in 480 equal consecutive
monthly installments.
GE Credit will retain its lien on Kensington Commons and on any
other of Debtor's property securing its claim, to the extent of
the allowed amount of such Claim; otherwise, the lien will be void
and of no force and effect. As long as the Debtor does not
default in its obligations to GE Credit, then Debtor is permitted
to collect rents, revenues and other profits on the property
securing GE Credit's claim. The amended plan also provides that
the Debtor may prepay GE Credit's secured claim after the
effective date without penalty.
The Amended Plan also provides that in case of inconsistencies
between the terms of the plan and the terms of the Debtor's
agreement with GE Credit, the terms of the plan will prevail.
The provisions of the Mortgage Note dated January 19, 2001, and
executed and delivered by the Debtor to Armstrong Mortgage
Company, will remain in full force and effect subsequent to the
Effective Date. The Debtor tells the Court that the provisions of
that certain Open-End Mortgage Deed dated January 19, 2001, and
executed and delivered by the Debtor to Armstrong Mortgage
Company, and the Addendum, will remain in full force and effect
subsequent to the Effective Date, except that:
i) the debt secured thereby will be modified under the Amended
Plan, and
ii) provisions in the Mortgage Deed, specifically paragraphs 3,
11, 12, and 14, will be of no force and effect as of the
effective date.
The allowed secured claim of the Treasurer, totaling approximately
$112,046, will be paid in full with amortized amounts of 4%
interest per annum from the effective date over a period of 30
consecutive monthly installments, commencing on the first day of
the month after the month of the effective date.
The Allowed secured claim of SIR Kensington, totaling
approximately $10,000, will be paid in full with the issuance to
SIR Kensington or its designee, the Debtor's entire member
interests. Upon such issuance, the security interest of SIR
Kensington in the Commercial Tort Claims shall be deemed released
and satisfied.
Allowed Claims of the Mechanics Lien Holders will receive, in
cash, their pro-rata share of the Unsecured Claims Fund and their
pro-rata share of the Retained Bankruptcy Action Net Proceeds.
Unsecured Allowed Claims not having priority under Section 507 of
the Bankruptcy Code, and not included within the allowed claims of
the mechanics lien holders, in cash, their pro-rata share of the
Unsecured Claims Fund and their pro-rata share of the Retained
Bankruptcy Action Net Proceeds.
Allowed member interests will be cancelled on the effective date.
A full-text copy of the Disclosure Statement explaining its First
Amended Joint Plan of Reorganization is available for a fee at:
http://www.researcharchives.com/bin/download?id=060215022627
A full-text copy of the Disclosure Statement explaining its Joint
Plan of Reorganization is available for a fee at:
http://www.researcharchives.com/bin/download?id=051229023718
Headquartered in Dublin, Ohio, Brice Road Developments, L.L.C.,
owns Kensington Commons, a 264-unit apartment complex located
outside of Columbus, Ohio. The Company filed for chapter 11
protection on Sept. 2, 2005 (Bankr. S.D. Ohio Case No. 05-66007).
Yvette A Cox, Esq., at Bailey Cavalieri LLC represents the Debtor
in its restructuring efforts. When the Debtor filed for
protection from its creditors, it estimated assets and debts
between $10 million and $50 million.
BRIGHTPOINT INC: Discloses Fourth Quarter Financial Results
-----------------------------------------------------------
Brightpoint, Inc. (NASDAQ: CELL), reported its financial results
for the fourth quarter and year ended December 31, 2005.
Robert Laikin, CEO, said, "I am pleased with our performance in
the fourth quarter and 2005 overall. I believe that 2006 has the
potential, given all the positive recent market factors, to be a
record year for Brightpoint in the number of wireless devices
handled. I currently believe that the range of handsets sold
in the global wireless industry in 2006 will be approximately
900 million to 1 billion."
"We continue to focus our attention on growing earnings while
maintaining a strong balance sheet which is evidenced by our
increase in cash flow from operations and our improvement in the
cash conversion cycle," said Tony Boor, Brightpoint's Chief
Financial Officer.
Brightpoint experienced a 64% year-over-year increase in wireless
devices handled during the fourth quarter of 2005 and year-over-
year revenue growth for the quarter of 33%. Fee-based logistic
services units handled increased 77% while distribution units
handled increased 33%. Fee-based logistic services typically
generate significantly less revenue per transaction than
distribution sales. The percentage increase in revenue was less
than the growth rate in wireless devices handled due to a sales
mix-shift from units handled through distribution to fee-based
logistic services and a reduction in average fulfillment fee per
unit. Handset units handled in logistic services grew at a faster
pace than revenue as the Americas division experienced a shift in
services provided, which contributed to a decrease in the average
fulfillment fee per unit.
The Company's logistic services revenue is derived from a mix of
services with different fee structures that range from full pallet
pick, pack and ship services to higher value and more complex
software loading, kitting, customized packaging and individual
handset fulfillment services. While fee structures are higher for
more complex services, the Company generally strives to maintain a
consistent profit margin for each service. This is substantiated
by the improvement in our logistic services gross margin for the
quarter despite the decline in average fulfillment fee per unit.
In addition, the average fee per unit for logistic services was
diminished by lower fees for services provided to certain
customers due to volume discounts earned on their increased
activities. The growth in logistic services units handled
resulted in the percentage of wireless devices handled related to
fee-based logistic service agreements to increase to 76% of total
wireless devices handled as compared to 70% of the total wireless
devices handled in the fourth quarter of 2004.
The Company's Americas and Asia Pacific divisions were significant
contributors to its unit growth with 75% and 31% year-over-year
increases in wireless devices handled. The growth in unit volumes
in the Americas division was primarily driven by increased demand
due to market growth of fee based logistic services customers
(such as, Alltel, COMCEL, Cricket Communications, Metro PCS,
Sprint Nextel, Tracfone and Virgin Mobile) and increased demand
for, and availability of LG, Nokia and Samsung products to its
distribution channels. The unit volume increase in the Asia
Pacific division was mainly due to increased handset distribution
by operations in India.
Gross margin decreased from 7.1% in the fourth quarter of 2004 to
6.9% in the fourth quarter of 2005. The 0.2 percentage point
decrease in gross margin was primarily the result of a decrease in
distribution margin in the Asia Pacific region. The decrease in
distribution margin in the Asia Pacific region was due to
increased costs as a result of estimated non-recoverable value
added taxes. In addition, India's revenue was a larger proportion
of the region's total revenue and has had lower margins than the
Company's other businesses in the region. Gross profit increased
by $10.0 million, or 30% in the fourth quarter of 2005 as compared
to the fourth quarter of 2004. The increase in gross profit was
primarily the result of the increased revenue and an increase in
the logistic services margin partially offset by a decrease in
distribution margins. Logistic services gross margin increased
2.3 percentage points due to operating efficiencies gained through
leveraging existing capacity in the Americas division.
Selling, General and Administrative expenses increased 48% from
the fourth quarter of 2004 in comparison with a 33% increase in
revenue and a 30% increase in gross profit. As a percentage of
revenue, SG&A expense increased from 3.9% in the fourth quarter of
2004 to 4.3% in the fourth quarter of 2005. The increase in SG&A
was primarily due to a $3.5 million increase to support overall
growth in unit volumes, a $2.7 million increase in executive
incentive compensation related to performance, a $1.2 million
increase of non cash equity compensation, a $0.5 million increase
to support our investment in Advance Wireless Services (AWS) in
the Americas and $0.4 million of other non cash compensation.
Operating income from continuing operations was $16.2 million, an
increase of 8% from the fourth quarter of 2004. The year-over-
year growth in Operating Income for the quarter was driven by a
$10.0 million increase in gross profit partially offset by an
$8.8 million increase in SG&A expenses.
The effective income tax rate was 23.8% as compared to 30.7% in
the fourth quarter of 2004. The decrease in the effective income
tax rate is due primarily to recognition of certain deferred tax
assets not previously recognized.
The loss of $3.0 million from discontinued operations consisted of
approximately $2.2 million of non-cash loss on disposal relating
to the sale of the Company's operations in France. In the third
quarter of 2005, the Company announced its intention to sell its
operations in France. On December 16, 2005, the Company sold all
of the equity securities of Brightpoint France SARL (Brightpoint
France) to an entity formed by the former managing director
of Brightpoint France for an aggregate purchase price of
$1.6 million, of which, approximately $0.1 million has been
received, and with approximately $1.5 million payable in annual
installments on each of the first, second, and third anniversaries
following the date of closing.
Cash and cash equivalents (unrestricted) were $106 million at
December 31, 2005, a decrease of $6.7 million from September 30,
2005. The decrease in cash and cash equivalents (unrestricted)
from September 30, 2005 was primarily the result of $4.7 million
in capital expenditures, $8.7 million of cash used for contract
financing, $3.2 million due to the effect of exchange rates and
$6.9 million for the repurchase of Common Stock largely offset by
$14.2 million in cash flow from operations. Cash flow from
operations was reduced by approximately $4.5 million due to the
Company's decision to discontinue the sale of trade receivables to
third party financial institutions in Sweden and Norway.
At December 31, 2005, the balance of trade receivables sold to
third parties was approximately $15.7 million. The Company
expects the unwinding of these trade receivable sales to result in
a negative impact on cash flow from operations in the first
quarter of 2006. The cash conversion cycle for the fourth quarter
of 2005 was 5 days, an increase of 1 day from the third quarter of
2005 and a decrease of 1 day from the fourth quarter of 2004. Our
Liquidity (unrestricted cash and unused borrowing availability)
was approximately $186 million as of December 31, 2005, compared
to approximately $202 million as of September 30, 2005. Annualized
quarterly return on invested capital from operations was 34% for
the quarter, up from 29% in the fourth quarter of 2004 and up from
22% in the third quarter of 2005. On a trailing four-quarter
basis, ROIC was 22% as of December 31, 2005. Calculations of ROIC
can be found at the end of this earnings release.
During the fourth quarter of 2005, the Company repurchased
approximately 422 thousand shares of Common Stock at an average
price of $16.54 for a total of $6.9 million pursuant to the
amended share repurchase plan announced on November 11, 2005. As
of December 31, 2005, $18.1 million of share repurchases are
available to be made under our Amended Share Repurchase Plan,
which is currently scheduled to expire on December 31, 2007.
Brightpoint, Inc. -- http://www.brightpoint.com/-- is one of the
world's largest distributors of mobile phones. Brightpoint
supports the global wireless telecommunications and data industry,
providing quickly deployed, flexible and cost effective solutions.
Brightpoint's innovative services include distribution, channel
management, fulfillment, eBusiness solutions and other outsourced
services that integrate seamlessly with its customers.
* * *
As reported in the Troubled Company Reporter on February 9, 2005,
Standard & Poor's Ratings Services affirmed its 'B+' corporate
credit rating on Indianapolis, Indiana-based Brightpoint Inc., and
revised its outlook on the company to positive from stable.
Brightpoint North America L.P., Wireless Fulfillment Services LLC,
and other affiliates, are Borrowers under an Amended and Restated
Credit Agreement, dated as of March 18, 2004 (as twice amended on
September 30, 2004, and September 14, 2005) providing the
companies with access to up to $70,000,000 from:
Lender Commitment
------ ----------
General Electric Capital Corporation $35,000,000.00
LaSalle Bank National Association 15,555,555.55
National City Bank of Indiana 19,444,444.45
--------------
$70,000,000.00
The Second Amendment modified the Revolver by, among other things,
increasing the liquidity available under the Revolver by
increasing availability via Supplemental Advances by up to
$25 million based upon the levels of EBITDA of the Borrowers and
their subsidiaries then in effect for the most recent 12-month
period for which financial statements have been provided to GECC.
The Second Amendment provides for a tiered reduction in the
Supplemental Advance if the EBITDA level is less than $25 million
and the Supplemental Advance amount would be zero if the EBITDA
level is less than $20 million. The Second Amendment also
increased the Borrowers' Letter of Credit sublimit from
$25 million to $35 million, allows the Borrowers to guarantee
certain indebtedness of up to $20 million on behalf of
Brightpoint, Inc. and provided for a pledge to the lenders of
shares of certain foreign subsidiaries of Brightpoint, Inc. as
additional security.
The Second Amendment also provided the Borrowers with a limited
waiver from an event of default resulting from a negative covenant
on guaranteed indebtedness under the Revolver relating to a
previously issued Letter of Credit issued under the Revolver.
The Second Amendment additionally extended the maturity date of
the Revolver until September 14, 2008.
CATHOLIC CHURCH: Portland Tort Committee Files Chapter 11 Plan
--------------------------------------------------------------
The Official Tort Claimants Committee appointed in the Chapter 11
case of the Archdiocese of Portland in Oregon filed a Plan of
Reorganization and Disclosure Statement on February 13, 2006.
Tort Committee Chairman Donn Christiansen says the Plan provides
for the full payment of all claims on the later of the effective
date of the Plan, and when the claim becomes due by final order,
settlement or arbitration.
To ensure the Archdiocese's orderly payment of its obligations to
creditors as the obligations become due, a trust will be
established for the benefit of general creditors with claims in
excess of $7,500.
Portland will transfer to the Trust:
-- $42,000,000 in cash;
-- all of the Archdiocese's insurance rights in its insurance
policies covering tort claims;
-- all of the Archdiocese's interest in all distributions from
the Oregon Catholic Press; and
-- Trust Deeds on all of the Archdiocese's real property.
Portland is obligated to ensure that the Trust has sufficient
liquid assets to pay claims in cash when they become due. In the
event the Archdiocese does not maintain sufficient liquidity in
the Trust, then the Trust is granted the right to foreclose its
liens on Portland's real property as necessary to restore the
required liquidity in the Trust.
Moreover, the Plan does not require the sale of any church or
school, or otherwise impair the continued operation of the
Archdiocese's churches and schools. After the effective date of
the Plan and the initial funding of the Trust, the Reorganized
Debtor will retain $100,000,000 in cash and investments, and real
estate and other assets valued in excess of $400,000,000,
including $50,000,000 of real estate that is not being used as a
church or school. Although the Reorganized Debtor will remain
obligated to pay its debts, it will retain flexibility and
discretion with respect to the manner in which it chooses to fund
the payments.
Mr. Christiansen notes that among the reasons for the grant of
Trust Deeds on Portland's real property is that Portland intends
to separately incorporate its parishes and high schools, and
transfer its real property to the newly created parish and high
school corporations.
The Plan does not prohibit the formation of new entities or the
transfer of property to new entities, but any transfers will be
subject to the rights of the Trust as reflected by the Trust
Deeds.
Classification of Claims
The Committee's Plan groups claims against the Archdiocese in
seven classes:
Class Description
----- -----------
N/A Administrative Claims
N/A Priority Tax Claims
1 Other Priority Claims
2 Umpqua Secured Claim
3 Employee Benefit Claims
4 Small Unsecured Claims
5 General Unsecured Claims
6 Future Claims
7 Punitive Damage Claims
No class of claims is impaired under the Plan. Pursuant to
Section 1126(f) of the Bankruptcy Code, all creditors and all
classes are conclusively presumed to have accepted the Plan, and
solicitation of acceptances from creditors is not required.
Administrative Claims, Priority Tax Claims, and Classes 1, 2, 3
and 4 will be paid in full by Portland.
Classes 5, 6 and 7 will be paid in full by the Trust when due as a
result of settlement, arbitration or final orders.
Portland, however, is not discharged from its obligation to pay
claims, and the claimholders retain their legal, equitable and
contractual rights against Portland without alteration.
Post-Confirmation Management of Archdiocese
The administration of the Reorganized Debtor will continue as
before confirmation, with the Archbishop being the sole director.
The Tort Committee will continue until it is dissolved by action
of the members or until the termination of the Trust, whichever
occurs first. Similarly, David Foraker, the Future Claimants
Representative, will continue until he resigns or the Trust is
terminated.
Feasibility
Mr. Christiansen points out that the value of the Archdiocese's
assets exceeds $560,000,000. Portland received between $670,000
and $850,000 from the OCP during each of the Archdiocese's last
six fiscal years. The Tort Committee's preliminary research also
indicates that Portland has at least $50,000,000 in real property
that is not being used as a church, school or cemetery.
Accordingly, the Tort Committee believes that the Archdiocese can
raise over $110,000,000 for the payment of claims without any
interference with the operation of any church, school or cemetery.
A full-text copy of the Portland Tort Committee's Disclosure
Statement is available for free at:
http://researcharchives.com/t/s?56d
A full-text copy of the Portland Tort Committee's Plan is
available for free at:
http://researcharchives.com/t/s?56e
Portland's Statement on Competing Plan
The Archdiocese of Portland has learned that an alternative plan
of reorganization has been filed by the Tort Claimants Committee.
The Tort Claimant Committee's plan provides for the possible sale
of all parish churches and schools to pay claims without
considering what effect that would have on the parishioners'
rights to practice their religion as guaranteed by the First
Amendment to the United States Constitution and the Religious
Freedom Restoration Act. The Archdiocese cannot support a plan
that fails to take into account the needs of innocent
parishioners, who have generously donated money, property, time
and labor to build churches and schools in order to provide places
of religious worship and for the education of their children. The
Archdiocese believes that a successful conclusion to this
bankruptcy case must result in a plan that provides fair and
reasonable compensation to victims of clergy abuse while at the
same time allowing the Catholics of western Oregon to continue to
practice their religion, to continue the good works of outreach to
the poor, and to educate children, both non-Catholic and Catholic
alike.
Contrary to the Committee's plan, the Archdiocese of Portland has
proposed a plan that it believes will provide more than necessary
to pay reasonable compensation to all claimants, based upon the
extensive history of resolved claims over the past several years.
Unlike the Committee's plan, the Archdiocese's plan is not
dependent on the Court having to determine what assets can be
liquidated to pay claims and does not raise the significant First
Amendment issues inherent in the Committee's plan. Despite the
obstacle of a competing plan filed by the Committee, the
Archdiocese is committed to working in good faith with the
Committee and all claimants toward the formulation of a consensual
plan to resolve this Chapter 11 proceeding and bring healing and
closure to all parties involved.
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. 52; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
CATHOLIC CHURCH: Portland Disclosure Doc. Will Provide More Facts
-----------------------------------------------------------------
As previously reported in the Troubled Company Reporter on
Jan. 27, 2006, Albert N. Kennedy, Esq., at Tonkon Torp, LLP, in
Portland, Oregon, argued that the Disclosure Statement prepared by
the Archdiocese of Portland does not contain an adequate
description of Portland's Plan of Reorganization.
According to Mr. Kennedy, the Disclosure Statement:
* does not disclose any information relating to the source of
funding for Portland's Plan or whether there are conditions
or contingencies to the effectiveness of Portland's Plan;
* does not contain adequate information relating to Portland's
liabilities; and
* is inaccurate, incomplete and misleading in its description
of the assets of the estate.
Mr. Kennedy also tells the U.S. Bankruptcy Court for the District
of Oregon that Portland's Plan is fatally flawed and cannot be
confirmed because it violates the best interest of creditors test.
Portland Responds
Thomas W. Stilley, Esq., at Sussman Shank LLP, in Portland,
Oregon, informs the U.S. Bankruptcy Court for the District of
Oregon that the Archdiocese of Portland in Oregon will deliver a
revised Disclosure Statement to provide parties-in-interest an
adequate description of its Plan of Reorganization with respect
to:
(1) the timing and distribution to unresolved present tort
claims and future claims;
(2) the Claims Resolution Facility payments;
(3) the ownership and management of the Claims Resolution
Facility;
(4) the appeal of tort claims judgments; and
(5) the claims estimation methodology.
Mr. Stilley says the Archdiocese will also modify the Plan to
discuss or provide further information regarding its assets and
liabilities, which liabilities relate to:
-- postpetition interest on Prepetition Settled Tort Claims;
-- contingent and unliquidated Co-defendant Claims;
-- Oregon Insurance Guaranty Association Claim;
-- Key Bank Guaranty Claims;
-- Donor and Beneficiary Claims; and
-- Administrative Claims.
The Archdiocese will provide discussion and additional disclosures
with respect to certain of its assets like the "Perpetual
Endowment Fund", certain gross profits from cemetery operations,
annual payments received from Oregon Catholic Press, and amount of
cash and investments.
The Archdiocese will also describe in the Disclosure Statement the
Bankruptcy Court's initial decisions on the property of the estate
dispute, Mr. Stilley says.
With respect to the execution and feasibility of the Plan, Mr.
Stilley notes that the Archdiocese has not yet secured the "line
of credit" disclosed in the Plan but expects to do so prior to the
Disclosure Statement hearing. As soon as funding is secured,
Portland will provide the name of the lender and the details of
the financing. However, if the Archdiocese is unable to secure
the line of credit prior to approval of the Disclosure Statement,
it will disclose that the funding source has yet to be secured but
it expects to be able to secure the funding prior to Plan
confirmation. The Archdiocese will provide relevant documents
regarding the funding as exhibits to the Disclosure Statement.
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. 52; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
CCC INFORMATION: Loans Repaid & Moody's Withdraws Ratings
---------------------------------------------------------
Moody's Investors Service withdrew the ratings of CCC Information
Services Inc., following the completion of the company's
acquisition by affiliates of Investcorp, a global investment
group. All of CCCI's rated debt was repaid in connection with the
acquisition.
Moody's withdrew these ratings:
* $30 million senior secured revolving credit facility due
2009, rated B1
* $170 million senior secured term loan facility due 2010,
rated B1
* Corporate family rating, rated B1
* Senior unsecured issuer, rated B2
* Speculative Grade Liquidity Rating, rated SGL-1
Headquartered in Chicago, Illinois, CCC Information Services Inc.
is a leading provider of information and software solutions to the
automobile claims industry. Reported revenue for the twelve month
period ending Sept. 30, 2005 was $203 million.
CENTRAL ASSOCIATED: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------------
Debtor: Central Associated Engineers, Inc.
dba Central Associated Engineers & Geotechnical Services
446 East High Street
Lexington, Kentucky 40507
Bankruptcy Case No.: 06-50097
Type of Business: The Debtor offers engineering services
in several areas of expertise. See
http://www.caeeng.com/
Chapter 11 Petition Date: February 13, 2006
Court: Eastern District of Kentucky (Lexington)
Judge: Joseph M. Scott, Jr.
Debtor's Counsel: Tracey N. Wise, Esq.
Wise DelCotto PLLC
219 North Upper Street
Lexington, Kentucky 40507
Tel: (859) 231-5800
Fax: (859) 281-1179
Estimated Assets: $100,000 to $500,000
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Internal Revenue Service Federal taxes owed $326,642
P.O. Box 21126
Philadelphia, PA 19114
Hubert Vicars 1986 loan $128,432
Condoninios La Palapa No. 501
Calle Amapas 124
Puerto Vallarta Jarlisco,
Mexico 48351
Community Trust Bank Bank loan $97,315
c/o James B. Ratliff, Esq.
Baird & Baird PSC
P.O. Box 351
Pikeville, KY 41502-0351
LFUCG Taxes due $34,462
Ky. Dept. of Revenue State taxes due $23,540
Heartland Petroleum, LLC Trade debt $13,253
Wright Express Trade debt $8,667
Platinum Plus for Business Trade debt $8,145
Central Bank 401K 401-K match $6,783
Lynn Imaging Trade debt $6,583
Caine & Weiner Trade debt $6,015
Capital One Bank Trade debt $5,627
IKON Financial Services Trade debt $4,433
Arrow Electrical Contractor Trade debt $4,350
Stanley Fizer Trade debt $3,887
Darling & Reynolds Legal services $3,547
Mutual of Omaha Trade debt $3,233
Fayette County Public Taxes $2,813
Schools
Mccoy & Mccoy Labs Trade debt $2,384
Pitney Bowes Purchase Power Trade debt $2,244
CENTURY PACIFIC: Asher & Company Raises Going Concern Doubt
-----------------------------------------------------------
Asher & Company, Ltd., expressed substantial doubt about Century
Pacific Housing Fund I's ability to continue as a going concern
after it audited the Partnership's financial statements for the
fiscal years ended March 31, 2005 and 2004. The auditing firm
pointed to the Partnership's recurring losses from operations and
net capital deficiency.
In its annual report on form 10-KSB for the fiscal year ended
March 31, 2005, filed with the Securities and Exchange Commission
on Feb. 13, 2006, Century Pacific reported a $60,000 net loss on
zero revenues.
At March 31, 2005, the Partnership's balance sheet showed $4,934
in total assets and liabilities of $1,337,327, resulting in a
stockholders' deficit of $1,332,393.
A full-text copy of the regulatory filing is available for free
at http://researcharchives.com/t/s?55c
About Century Pacific
Century Pacific Housing Fund-I invests in multi-family housing
developments. The Partnership invests primarily in other limited
partnerships organized for the purpose of either constructing or
acquiring and operating existing affordable multi-family rental
apartments that are eligible for the Low-Income Housing Tax
Credit, or to a lesser extent, the Rehabilitation Tax Credit, both
enacted by the Tax Reform Act of 1986.
CLEARSTORY SYSTEMS: Losses Continue in Quarter Ended December 31
----------------------------------------------------------------
ClearStory Systems, Inc., fka Insci-Statements.com Corp.,
delivered its quarterly report on Form 10-QSB for the quarter
ended Dec. 31, 2005, to the Securities and Exchange Commission on
Feb. 10, 2006.
ClearStory incurred a $761,000 net loss for the three-months ended
Dec. 31, 2005, in contrast to a $421,000 net loss for the same
period in 2004. Revenues decreased by 22%, or $592,000, to
$2,112,000 as compared to revenues of $2,704,000 for the third
quarter of fiscal 2005.
At Dec. 31, 2005, the Company's balance sheet showed $6,108,000 in
total assets and liabilities of $$7,785,000, resulting in a
stockholders' deficit of $1,677,000.
ClearStory has a working capital deficit of $5,756,000 as of Dec.
31, 2005, compared to a working capital deficit of $3,708,000 as
of March 31, 2005. The Company expects its working capital
deficit to increase, as it expects to incur operating losses for
the remaining quarter of fiscal 2006 and the first half of fiscal
2007.
Going Concern Doubt
Miller Ellin & Company, LLP, expressed substantial doubt about
ClearStory Systems, Inc.'s ability to continue as a going concern
after it audited the Company's financial statement for the year
ended March 31, 2005. The auditing firm pointed to the Company's
recurring losses and working capital deficiency.
About ClearStory
ClearStory Systems, Inc. -- http://www.clearstorysystems.com/--
is an established provider of flexible, on-demand ECM solutions.
ClearStory's Radiant Content Suite provides discrete management
and on-demand access for the full spectrum of content - from
graphics and video to customer statements and email. The
company's standards-based technology provides a powerful platform
for integrating rich media and business documents into a multitude
of business-critical environments, including marketing and finance
departments, call centers, channel partner portals, compliance
initiatives, and global marketing extranets.
COLLINS & AIKMAN: Names Tim Trenary as Chief Financial Officer
--------------------------------------------------------------
The Board of Directors of Collins & Aikman Corporation (CKCRQ) has
named Tim Trenary as the company's Executive Vice President, Chief
Financial Officer and Treasurer effective immediately. Mr.
Trenary joined Collins & Aikman as Vice President and Treasurer in
September of 2005.
"Tim's sound financial judgment, experience and leadership
presence will play a critical role as we move ahead with our
reorganization and establish ourselves as a viable entity," said
Frank Macher, Collins & Aikman's President and Chief Executive
Officer. "Tim has performed a number of the CFO's roles since
arriving at the Company and has already provided vital guidance
during this transition time. He will bring an added focus to our
restructuring efforts as we work to emerge from bankruptcy
protection."
Mr. Trenary brings over 28 Years of financial and operational
experience to Collins & Aikman including transactions, capital
formation, treasury, audit and turnarounds. His prior employment
includes roles at Federal-Mogul from 2001 to 2005 as Director,
Reorganization Finance and Administration; Finance Director, South
America; and Director, Financial Services and Process. He
previously held the positions of Chief Operating Officer and Chief
Financial Officer at James Cable Partners from 1991 to 2000.
Mr. Trenary holds a Bachelor degree in Accounting from Michigan
State University and a Master of Business Administration from
University of Detroit.
Headquartered in Troy, Michigan, Collins & Aikman Corporation
-- http://www.collinsaikman.com/-- is a global leader in cockpit
modules and automotive floor and acoustic systems and is a leading
supplier of instrument panels, automotive fabric, plastic-based
trim, and convertible top systems. The Company has a workforce of
approximately 23,000 and a network of more than 100 technical
centers, sales offices and manufacturing sites in 17 countries
throughout the world. The Company and its debtor-affiliates filed
for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case
No. 05-55927). Richard M. Cieri, Esq., at Kirkland & Ellis LLP,
represents C&A in its restructuring. Lazard Freres & Co., LLC,
provides the Debtor with investment banking services. Michael S.
Stammer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents
the Official Committee of Unsecured Creditors Committee. When the
Debtors filed for protection from their creditors, they listed
$3,196,700,000 in total assets and $2,856,600,000 in total debts.
COMPUTERIZED THERMAL: Equity Deficit Tops $2 Mil. at December 31
----------------------------------------------------------------
Computerized Thermal Imaging, Inc., delivered its financial
results on Form 10-QSB for the quarter ended Dec. 31, 2005, to the
Securities and Exchange Commission on Feb. 13, 2005.
The Company reported a $203,279 net loss on $25,699 of net
revenues for the three months ended Dec. 31, 2005. At Dec. 31,
2005, the Company's balance sheet showed $201,812 in total assets
and liabilities of $2,568,504, resulting in a stockholders'
deficit of $2,366,692.
A copy of the regulatory filing is available for free at
http://researcharchives.com/t/s?567
Going Concern Doubt
HJ & Associates, LLC, expressed substantial doubt about
Computerized Thermal's ability to continue as a going concern
after it audited the Company's financial statements for the fiscal
years ended June 30, 2005 and 2004. The auditing firm pointed to
the Company's recurring losses and working capital deficit at
June 30, 2005.
About Computerized Thermal
Computerized Thermal Imaging, Inc. -- http://www.cti-net.com/--
designs, manufactures and markets thermal imaging and infrared
devices and services used for clinical diagnosis, pain management
and non- destructive testing of industrial products and materials.
CTI has developed six significant proprietary technologies, four
of which relate to its breast imaging system, BCS 2100. These
include a climate-controlled examination unit to provide patient
comfort and facilitate reproducible tests for the BCS 2100; an
imaging protocol designed to produce consistent results for the
BCS 2100; a statistical model that detects physiological
irregularities for the BCS 2100, and infrared imaging and analysis
hardware, including a proprietary heat-sensing camera. CTI also
markets the Thermal Image Processor and Photonic Stimulator, two
cleared pain management devices used for diagnostic imaging and
therapeutic treatment.
CONMED CORP: Earns $2.8 Million of Net Income in Fourth Quarter
---------------------------------------------------------------
CONMED Corporation (Nasdaq: CNMD) disclosed its financial results
for the fourth quarter and twelve months ended December 31, 2005.
Sales for the 2005 fourth quarter were $153.2 million compared to
$161.2 million in the fourth quarter of 2004. Net income equaled
$2.8 million for the quarter, compared to $7.4 million in the
fourth quarter of 2004, based on a weighted average share count
of 29.4 million for the quarter ended December 31, 2005. Total
sales for the twelve months ended December 31, 2005 grew 10.5% to
$617.3 million compared to $558.4 million in 2004. The Endoscopic
Technologies product line acquired from C.R. Bard in September
2004 contributed $44.4 million to revenue in the first nine months
of 2005 prior to its anniversary in September 2005. Net income
for the year was $32.0 million, or $1.08 per diluted share,
compared to $33.5 million, $1.11 per diluted share in 2004, based
on a weighted average share count of 29.7 million for the 2005.
Excluding transition charges related to an acquisition and other
unusual charges, non-GAAP net income for 2005 was $41.8 million
compared to 2004 non-GAAP net income of $50.5 million. Fourth
quarter non-GAAP net income was $5.3 million compared to fourth
quarter 2004 non-GAAP net income of $14.7 million.
Mr. Joseph J. Corasanti, President and Chief Operating Officer,
noted, "As we previously announced, the Company's revenues in the
fourth quarter were impacted by several market factors including,
we believe, lower than anticipated surgical procedures, extended
capital equipment purchasing decision timelines in certain
markets, and foreign currency translation. Further, our profits
during the second half of 2005 were impacted by higher raw
material costs related to petroleum based plastic, higher
transportation charges, legal fees related to litigation against a
competitor, and costs associated with scrap and rework regarding
packaging integrity on certain products of our Powered Surgical
Instrument line."
"Most importantly, CONMED has taken action to address these market
challenges. As previously announced, in relation to our
manufacturing expansion, we are actively working to increase our
investment in research and development as well as quality
management for enhanced customer satisfaction and regulatory
compliance. These initiatives added $7 million to the Company's
annual cost base and we believe these changes will over the long
run ultimately result in improved product design and customer
appreciation of our medical devices," said Mr. Corasanti.
During 2005, the Company repurchased $45 million of its common
stock with funds provided from operations and from proceeds of
stock issued under employee plans. The Company's debt to total
book capitalization ratio at December 31, 2005, was 40.4%, a
slight increase from 39.7% at December 31, 2004, due to the
$9.0 million reduction in the accounts receivable securitization
program and the resultant increase in long-term debt.
Sales outside the United States continued at a rapid pace in 2005
growing 17.4% overall, 12.0% excluding the effects of the
Endoscopic Technologies acquisition, and 10.2% on a constant
currency basis. In the fourth quarter of 2005, international
sales grew 3.3%, reported, and 5.3% in constant currency due to
the strengthening of the U.S. dollar in the last three months of
the year.
While the second half of 2005 had softer sales than the first half
of the year, the Company's business showed overall sales
improvement in the year. Arthroscopy product growth of 3.2% year
over year was led by its single- use sports medicine repair
products. Powered Surgical Instruments grew 2.6% as a result of
the effects of the new small bone handpiece, PowerPro Max(TM),
introduced to the market in early 2005. Electrosurgery's growth
of 3.0% year over year was primarily due to a 16% improvement in
sales of generators as the line continues to grow its market
share. Endosurgery's growth of 6.8% was due to a 22% increase in
sales outside the U.S. while domestic sales remain flat due to, we
believe, the illegal marketing practices of a competitor. In
Patient Care, the improved sales of the pulse oximetry line were
offset by reductions in the ECG electrode line as a result of the
loss of a GPO contract for electrodes. The Endoscopic
Technologies business, acquired on September 30, 2004 generally
met the Company's expectations, although pricing pressures in the
second half of 2005 inhibited the line's growth.
Outlook
In 2006, CONMED believes that a number of factors will have a
positive impact on the Company's sales growth rate, including the
anticipated new product pipeline and the return to normal elective
procedure rates. With these underlying factors, the Company
expects to achieve top-line organic growth of approximately 5% in
2006, an improvement from the 2% organic growth in 2005. The
Company expects continued higher levels of raw material costs,
unfavorable foreign exchange when compared to 2005, and higher
costs related to product quality management and legal matters will
impact the full year of 2006 causing operating profit margins to
decline approximately $12 million compared to 2005 amounts.
Mr. Corasanti concluded, "With 2005 behind us, 2006 forecasts to
be a rebuilding year. We believe that the business is poised
for continued long-term growth, our product franchise remains
top-notch, and our management and employees are dedicated to
improvement. Looking beyond 2006, we expect our operating margin
in 2007 will improve to approximately 14% as a percentage of sales
due to revenue growth leveraging the Company's cost base as well
as implementation of profit improvement actions."
The Company anticipates that the second half of 2006 should show
greater improvement over the first half of 2006 when compared to
respective 2005 amounts as profit improvement programs continue to
be implemented. Further, comparison to 2005 amounts will be more
favorable in the second half of the 2006 year due to the relative
softness of the last six months of 2005. For the first quarter of
2006, the Company expects revenues in the range of $153 million to
$158 million.
Conmed Corp. -- http://www.conmed.com/-- is a medical technology
company with an emphasis on surgical devices and equipment for
minimally invasive procedures and monitoring. The Company's
products serve the clinical areas of arthroscopy, powered surgical
instruments, electrosurgery, cardiac monitoring disposables,
endosurgery and endoscopic technologies. They are used by
surgeons and physicians in a variety of specialties including
orthopedics, general surgery, gynecology, neurosurgery, and
gastroenterology. Headquartered in Utica, New York, the Company's
2,800 employees distribute its products worldwide from eleven
manufacturing locations.
* * *
As reported in the Troubled Company Reporter on Nov. 19, 2004,
Moody's Investors Service assigned a B2 rating to ConMed
Corporation's $150 million senior subordinated convertible notes,
due 2024 and affirmed the Ba3 rating on ConMed's $240 million
guaranteed senior secured credit facility consisting of a $100
million revolving credit facility, due 2007, and a $140 million
Term Loan B, due in 2009.
CROWN HOLDINGS: Exchanging Existing Sr. Notes for Registered Bonds
------------------------------------------------------------------
Crown Holdings, Inc., Crown Americas LLC, and Crown Americas
Capital Corp. are offering to exchange:
-- $500 million aggregate principal amount of their 7-5/8%
Senior Notes due 2013; and
-- $600 million aggregate principal amount of their 7-3/4%
Senior Notes due 2015 due 2015,
in exchange for new notes with materially identical terms that
have been registered under the Securities Act of 1933, and are
generally freely tradable.
Terms of the Notes
The 2013 Notes will mature on November 15, 2013. Interest on the
2013 Notes will accrue at the rate of 7-5/8% per annum.
The 2015 Notes will mature on November 15, 2015. Interest on the
2015 Notes will accrue at the rate of 7 3/4% per annum.
Interest on the Notes will be payable in cash semi-annually in
arrears on May 15 and November 15, commencing on May 15, 2006, to
Holders of record on the immediately preceding May 1 and Nov. 1.
Interest on the Notes will accrue from the most recent date to
which interest has been paid or, if no interest has been paid,
from the Issue Date. Interest will be computed on the basis of a
360-day year comprising twelve 30-day months, and in the case of
an incomplete month, the number of days elapsed. The redemption
price at final maturity for the Notes will be 100% of their
principal amount.
The new notes will be the issuers' senior obligations. The notes
will not be guaranteed by Crown's foreign subsidiaries. The new
notes and new note guarantees will be effectively junior in right
of payment to all existing and future secured indebtedness of the
issuers and the guarantors to the extent of the value of the
assets securing the indebtedness and will be junior in right of
payment to all indebtedness of Crown's non-guarantor subsidiaries.
The Company and its affiliates will not receive any proceeds from
this exchange offer. Because the issuers are exchanging the new
notes for the old notes, which have substantially identical terms,
the issuance of the new notes will not result in any increase in
their indebtedness.
Net proceeds from the offering of the old notes were approximately
$1.1 billion, before deducting the initial purchasers' discount.
These net proceeds, together with the proceeds from the sale of
Crown's plastic closures business and the initial borrowings under
Crown's new term loan and revolving credit facility, were used to:
(1) repay principal and premium on approximately $1,076 million
aggregate principal amount of the $1,085 million dollar
denominated second priority notes, EUR267 million aggregate
principal amount of the EUR285 million euro denominated
second priority notes and $722 million aggregate principal
amount of the $725 million third priority notes,
(2) pay fees and expenses associated with the refinancing; and
(3) for general corporate purposes.
A full-text copy of the Registration Statement and Prospectus on
the offer is available for free at:
http://ResearchArchives.com/t/s?56a
Crown Holdings, Inc. -- http://www.crowncork.com/-- through its
affiliated companies, supplies packaging products to consumer
marketing companies around the world. World headquarters are
located in Philadelphia, Pennsylvania.
* * *
As reported in the Troubled Company Reporter on Oct. 28, 2005,
Standard & Poor's Ratings Services affirmed its 'BB-' corporate
credit rating on Crown Holdings Inc. The outlook is stable.
At the same time, Standard & Poor's lowered its senior secured
debt rating on EUR460 million of first-priority senior secured
notes due 2011 issued by wholly owned subsidiary Crown European
Holdings S.A. to 'BB-' from 'BB'.
The recovery rating on these notes was lowered to '2' from '1',
now indicating expectations for substantial, not full, recovery in
the event of a payment default.
DAVCRANE INC: Files Plan and Disclosure Statement in Texas
----------------------------------------------------------
Davcrane, Inc. and its debtor-affiliates submitted to the U.S.
Bankruptcy Court for the Southern District of Texas a corrected
Joint Consolidate Chapter 11 Plan of Reorganization.
Plan Funding
The Plan will be funded from the liquidation of the Debtor's
assets and the Excess Cash Flow created by the continued operation
of the Revested Debtor.
The Debtors tell the Court that the distributions under the Plan
are contingent on the realization of a fair value from the sale of
the existing property of the estate, including the sale of the
Patented Processes.
Treatment of Claims
Under the plan, Administration costs will be paid in full and in
cash.
Unsecured Priority Ad Valorem Tax Claims will be paid in full and
in cash on the Effective Date provided, that the Revested Debtors
may elect to pay any such claim through deferred cash payments
over a period not to exceed six years after the date of assessment
of such Claim. In such case, the claim will be paid in equal
annual installments with 5% interest.
Priority Ad Valorem Tax Claims will be paid in full in two
installments with interest equal to the statutorily mandated rate
of not more than 9%.
Other Priority Tax Claims will be paid in full and in cash
provided that the Revested Debtor may elect to pay the claim
through deferred cash payments for a maximum period of six years.
The payments will be made in equal annual installments of
principal of the face amount of the claim plus a 5% interest on
the unpaid portion of the claim.
Allowed Secured Claims will be treated to either provisions:
(a) If the Court determines that a secured claim is
unenforceable against the respective Collateral and its
property under applicable state law, the secured claim
shall be disallowed and no distribution shall be made on
account of the secured claim.
(b) If the Court determines that the secured claim is an
unexpired lease or executory contract, the Debtors may, at
their sole discretion, reject such lease or contract
pursuant to section 365(a) of the Bankruptcy Code and
surrender the property that is the subject of such lease
or contract to the secured claim holder in lieu of the
allowed claim. Allowed claims arising out of the
rejection of a lease or return of the collateral securing
the Debt contract shall be treated as an Allowed Unsecured
Claim.
(c) If the Court determines that the secured claim is under
secured, the under secured portion will be kept in the
same class as the Secured Claim and receive the same
treatment.
The Debtors relate that all allowed secured claims will retain
their lien, and be paid as provided in under the Plan. In the
event of a sale of any of the collateral securing any Allowed
Secured Claim, holders of the secured claim will be paid with the
remaining proceeds of the sale after payment of all ordinary and
customary closing costs.
Finning International's claim secured by real property of the
Debtors will receive, at the Debtors' election, either:
(a) a return of the collateral in lieu of the allowed secured
claim; or
(b) payment of 100% of the allowed amount of the secured claim
through 60 monthly payments with interest of 4%, amortized
on a 20-year term, with the remaining balance, plus
interests, payable in full by the 61st month.
Finning International's claim secured by Patent Rights or
Intangible Property of the Debtors will receive, at the Debtors'
election, either:
(a) full payment secured claim and paid as part of the cash
infusion to capitalize the Debtors and obtained from the
363 Sale Proceeds. The cash will be deposited into an
interest bearing escrow account pursuant to the 363 Sale
Order; or
(b) full payment of the secured claim with interest accruing
at 4.75% and to be paid 36 months from the Effective Date
of the Plan, or earlier if the collateral is sold pursuant
to the 363 Order or other authorized sale or disposition
of the collateral.
Secured Equipment Loan
Finning International's claim secured by the Debtors equipment,
will be paid through the return of the collateral.
The Allowed Secured Claim of Texas State Bank and Alamo Bank, less
the cash payment from Dan Davis or Davis Pipelayer, at the
Debtor's election will each receive these treatments:
(a) return of the Collateral in lieu of the Allowed Secured
Claim; or
(b) 100% of the allowed amount of the secured claim and paid
in 60 monthly payments, with interest of 4% amortized on a
20-year term. The entire unpaid principal and interest
will be payable in full on the 61st month.
To the extent that the Debtors do not elect return of the
Collateral, all loan balances, and all collateral of the allowed
secured claim, will be consolidated into a single loan fully
collateralized by all of the collateral. The Debtors say that the
secured claim may also be paid in accordance with any agreement
reached by the Debtors and the bank lenders.
The Lease Agreement dated Aug. 10, 2001, between Valley Leasing
Company and DavCrane, will be assumed and the defaults cured.
Holders of Unsecured Claims will be paid in full the face amount
of their allowed claim in 84 monthly payments without interest.
The funds will be taken from the remaining amount obtained from
the Proceeds of the Debtors' Asset Sale after payment of other
claims with higher priority.
Interest Holders shall retain their interests in the Debtors and
will only receive distribution after payment of all other classes.
Headquartered in Harlingen, Texas, Davcrane, Inc., --
http://www.davcrane.com/-- produces and develops cranes. The
Debtor filed for chapter 11 protection on November 12, 2004
(Bankr. S.D. Tex. 04-11507). Michael J. Urbis, Esq., at Jordan
Hyden Womble & Culbreth, represents the Company in its
restructuring efforts. When the Debtor filed for protection from
its creditors, it reported an estimated $1 million to $10 million
in assets and liabilities.
Headquartered in Harlingen, Texas, Davis Pipelayer, Inc., and its
president, Daniel Edward Davis, filed for chapter 11 protection on
Aug. 8, 2005 (Bankr. S.D. Tex. Case Nos. 05-21192 & 05-21194).
Shelby A. Jordan, Esq., at Jordan Hyden Womble and Culberth, P.C.,
represents the Debtors in their restructuring efforts. When Davis
Pipelayer filed for protection from its creditors, it listed total
assets of $12,884,960 and total debts of $890,771.
Davis Pipelayer, Inc. and Daniel Edward Davis' chapter 11 cases
are jointly administered under Davcrane, Inc.'s bankruptcy
proceedings.
DC PROPERTIES: Fights Proposed Putnam County Property Foreclosure
-----------------------------------------------------------------
DC Properties, LLC, asks the U.S. Bankruptcy Court for the
Southern District of West Virginia to deny United Bank, Inc.'s
request to lift the automatic stay so it can foreclose on real
property serving as collateral for the Debtor's prepetition debt.
United Bank wants to foreclose on the Debtors sole property
located at Pocatalico District in Putnam County, West Virginia
because, it says, the Debtor:
-- no longer has any equity on the real estate;
-- has failed to maintain insurance on the property and pay
real estate taxes;
-- has failed to market the property; and
-- can no longer pay monthly payments to adequately protect
its interests.
United Bank loaned the Debtor $1,454,000 pursuant to a Universal
Note and Security Agreement signed in July 2001. Under the terms
of the note, the Debtor is required to pay United Bank 240 monthly
installments of $11,903 beginning Aug. 3, 2001. The loan is
secured by a deed of trust on the Debtor's Putnam County property,
an assignment of rents and leases agreement and a guaranty
agreement executed by Frederick G. Davis, the Debtor's principal.
A copy of the Deed of Trust is available for a fee at:
http://www.researcharchives.com/bin/download?id=060215032928
When the Debtor defaulted on payments due on the loan from August
2005 to December 2005, United Bank initiated foreclosure
proceedings on the property. The foreclosure was stayed when the
Debtor filed for bankruptcy. United Bank asserts total arrearages
of $60,531.
James W. Lane Jr., Esq., tells the Bankruptcy Court that no
"equity cushion" protects United Bank's claims because the total
payoff on the note is $1,437,391, with interest accruing at $292
daily, while the real property is purportedly only worth $1.4 to
1.5 million.
Debtor's Response
The Debtor refutes United Banks' valuation of the property as
wells as the Bank's accusations that it has failed to insure and
successfully market the property.
Joseph W. Caldwell, Esq., at Caldwell & Riffee, asserts that the
property is valued at more than $1.7 million. Mr. Caldwell tells
the Bankruptcy Court that Realcorp, Inc., appraised the property
in June 2001 and valued it at $1,708,000.
Mr. Caldwell also assured the Bankruptcy Court that the property
is insured through St. Paul Travelers, Richmond, Virginia. He
says the insurance is currently in full force and effect.
In addition, Mr. Caldwell said that the Debtor will continue its
diligent efforts to market the property to allow the filing of a
feasible reorganization plan within a reasonable period of time.
Headquartered in Huntington, West Virginia, DC Properties, LLC
filed for chapter 11 protection on Dec. 20, 2005 (Bankr. S.D.
W.Va. Case No. 05-26014). Joseph W. Caldwell, Esq., at Caldwell &
Riffee, and Marshall C. Spradling, Esq., represents the Debtor in
its restructuring efforts. When the Debtor filed for protection
from its creditors, it estimated assets between $1 million and $10
million and estimated debts between $10 million and $50 million.
DELTA AIR: Posts $1.2 Billion Net Loss in 2005 Fourth Quarter
-------------------------------------------------------------
Delta Air Lines (OTC:DALRQ) reported results for the quarter and
year ended Dec. 31, 2005.
Delta reported a net loss of $1.2 billion in the fourth quarter
of 2005, compared to a net loss of $2.2 billion in the fourth
quarter of 2004. For the full year 2005, Delta recorded a net
loss of $3.8 billion, compared to 2004's full year net loss of
$5.2 billion.
"Losses of the magnitude that Delta recorded in 2005 are not
sustainable," said Edward H. Bastian, Delta's executive vice
president and chief financial officer. "These losses emphasize
the need for the urgency with which we have to pursue route
network and revenue improvements and the use of the bankruptcy
process to reduce the cost and complexity of our business."
Liquidity
At Dec. 31, 2005, the company had $2.9 billion in cash and cash
equivalents, of which $2 billion was unrestricted. In January
2006, Delta completed a letter of credit facility with Merrill
Lynch that enables the company to utilize up to $300 million in
cash that would have been held in reserve by Delta's
Visa/MasterCard processor. At Dec. 31, 2005, Delta was
in compliance with all of the financial covenants in its
post-petition financing arrangements.
December Monthly Operating Report
Delta filed with the U.S. Bankruptcy Court its Monthly Operating
Report for December 2005. As reflected in that report, the
company recorded a $372 million operating loss and $753 million
net loss for the month.
Restructuring Progress
On Sept. 14, 2005, Delta filed a petition for reorganization under
Chapter 11 of the U.S. Bankruptcy Code. Since the filing, Delta
has worked diligently to become a simpler, more efficient and
customer-focused company. Through its restructuring efforts,
Delta:
-- strengthened its route network by adjusting capacity to
match demand, including reducing capacity in its Cincinnati
hub, utilizing smaller aircraft in its Atlanta domestic
operations and shifting wide-body aircraft to its expanded
international operations. The Company also announced plans
to begin non-stop service from Atlanta and New York's John
F. Kennedy International Airport to new markets in Europe,
Latin America, Africa and the Middle East, and to launch a
new long-haul domestic Song(r) service.
-- made significant progress in restructuring its aircraft
fleet to reduce its cost structure and match its fleet to
future needs. In addition to a number of restructured
aircraft arrangements for which it is seeking bankruptcy
court approval, Delta has already reduced its fleet by 76
aircraft through the bankruptcy
restructuring process and lease returns.
-- reduced employment costs through employee productivity
improvements; pay and benefit reductions for non-pilot
employees, including executives; and an interim agreement
with the union representing Delta's pilots, ALPA.
Headquartered in Atlanta, Georgia, Delta Air Lines --
http://www.delta.com/-- is the world's second-largest airline in
terms of passengers carried and the leading U.S. carrier across
the Atlantic, offering daily flights to 502 destinations in 88
countries on Delta, Song, Delta Shuttle, the Delta Connection
carriers and its worldwide partners. The Company and 18
affiliates filed for chapter 11 protection on Sept. 14, 2005
(Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner,
Esq., at Davis Polk & Wardwell, represents the Debtors in their
restructuring efforts. Timothy R. Coleman at The Blackstone Group
L.P. provides the Debtors with financial advice. Daniel H.
Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss
Hauer & Feld LLP, provide the Official Committee of Unsecured
Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey
Howard & Zukin Capital and James S. Feltman at Mesirow Financial
Consulting, LLC, serve as the Committee's financial advisors. As
of June 30, 2005, the Company's balance sheet showed $21.5 billion
in assets and $28.5 billion in liabilities.
DOANE PET: Launches Exchange Offer for 10-5/8% Senior Sub. Notes
----------------------------------------------------------------
Doane Pet Care Company commenced an offer to exchange up to
$152 million principal amount of its 10-5/8% Senior Subordinated
Notes due 2015 for a like principal amount of 10-5/8% Senior
Subordinated Notes due 2015. The new notes have substantially
identical terms as the original notes, except that the new notes
have been registered under the Securities Act of 1933, as amended,
and will not contain restrictions on transfer, registration rights
or provisions for additional interest. The new notes, like the
outstanding notes, will not be listed on any securities exchange.
The exchange offer will expire at 5:00 p.m., New York City time,
on March 16, 2006, or such later date and time to which the
Company may extend it. Tenders of the original notes may be
withdrawn at any time prior to 5:00 p.m., New York City time, on
the Expiration Date.
The terms of the exchange offer and other information relating to
the Company are set forth in the prospectus dated Feb. 10, 2006
contained within the Company's registration statement for the new
notes. Wilmington Trust Company has been appointed as the
exchange agent for the exchange offer. Questions and requests for
assistance, requests for additional copies of the prospectus or of
the Letter of Transmittal should be directed to the exchange agent
at the address set forth below:
Wilmington Trust Company
Corporate Capital Markets
Attention: Sam Hamed
1100 N. Market Street, Rodney Square North
Wilmington, Delaware 19890
Eligible institutions may make requests by facsimile at
(302) 636-4139
Delivery other than as set forth in the prospectus will not
constitute a valid delivery. Beneficial owners of notes held in
street name may also contact their broker, dealer, commercial
bank, trust company, or other nominee in whose name the notes are
registered for assistance concerning this exchange offer.
Doane Pet Care Company -- http://www.doanepetcare.com/-- based in
Brentwood, Tennessee, is the largest manufacturer of private label
pet food and the second largest manufacturer of dry pet food
overall in the United States. The Company sells to approximately
550 customers around the world and serves many of the top pet food
retailers in the United States, Europe and Japan. The Company
offers its customers a full range of pet food products for both
dogs and cats, including dry, semi-moist, soft-dry, wet, treats
and dog biscuits.
* * *
As reported in the Troubled Company Reporter on Nov. 15, 2005,
Standard & Poor's Ratings Services raised its corporate credit
rating on private label pet food manufacturer Doane Pet Care Co.
to 'B+' from 'B' and its senior unsecured debt rating to 'B-'
from 'CCC+'.
At the same time, Standard & Poor's affirmed the 'BB-' bank loan
rating and recovery rating of '1' on Doane's $210 million senior
secured credit facility, and the 'B-' rating on its $152 million
10.625% subordinated notes due 2015.
Standard & Poor's withdrew its ratings on Doane's former
$230 million senior secured credit facility and $150 million
9.75% senior subordinated notes due 2007.
All remaining ratings on the Brentwood, Tennesee-based company
were removed from CreditWatch with positive implications, where
they were placed Aug. 29, 2005. The outlook is stable.
DURATEK INC: Shares Acquired by EnergySolutions for $396 Million
----------------------------------------------------------------
Duratek Inc. (NASDAQ: DRTK) has executed a definitive merger
agreement dated February 6, 2006, providing for the acquisition of
Duratek by EnergySolutions, a national energy services company
headquartered in Salt Lake City, Utah. EnergySolutions will
acquire all of the outstanding shares of Duratek for $22 per
share, in cash, which represents a premium of 25.7% over the
closing price of Duratek's stock on February 6, 2006. The total
transaction consideration is approximately $396 million, which
includes the assumption of Duratek's outstanding debt. The
acquisition will be funded through a combination of debt to be
provided by a group of banks led by Citigroup, cash held by
Duratek and EnergySolutions, and equity provided by the owners of
EnergySolutions.
Commenting on the transaction, Dr. Prince, CEO of Duratek, stated,
"Duratek is known as a leader in protecting people and the
environment from the effects of radiation and radioactive
materials. Over the past 20 years, we have achieved this position
of leadership by combining our proven technologies and services
capabilities with innovation, thereby providing integrated
solutions that address our customers' needs in the areas of
nuclear materials management and radioactive waste disposition.
Yet, changing domestic and international markets for our services
present opportunities for future growth, but not without
challenges for us and for our investors. The acquisition by
EnergySolutions not only provides very significant current value
for our stockholders, but it enables Duratek to become an even
more significant service provider in its markets. We will be able
to invest more aggressively in many of the innovative technologies
and capabilities for which we are known, provide a stronger future
for our employees, and enhance our service offerings to benefit
both our customers and the environment."
Mr. Creamer, CEO of EnergySolutions, added, "The addition of
Duratek is an important milestone in the execution of
EnergySolutions evolving growth strategy. Duratek will become an
integral part of our new company, which will be a major
international nuclear service supplier committed to meeting the
needs of government and the nuclear industry. With the addition
of Duratek, EnergySolutions will be well positioned to help solve
its customers' most difficult nuclear materials management and
waste disposition challenges. We are pleased to welcome the
employees of Duratek and look forward to working with them to
deliver innovation and value to our combined customers and
partners."
The transaction has been approved by the board of directors of
each company and is subject to approval by Duratek's stockholders,
regulatory approval, and other customary closing conditions
contained in the merger agreement. Duratek's board of directors
is unanimously recommending that Duratek's stockholders approve
the transaction.
Duratek expects to submit the merger to stockholders for their
consideration during the second quarter of 2006 and to close the
merger promptly following receipt of stockholder and regulatory
approval.
Bear Stearns & Co., Inc. is acting as financial advisor to Duratek
in connection with this transaction. Citigroup Global Markets
Inc., J.P. Morgan Securities Inc. and Calyon Securities (USA) Inc.
are acting as co-financial advisors to EnergySolutions in
connection with this transaction. The firms of Hogan & Hartson
L.L.P. and Weil, Gotshal & Manges LLP have served as legal counsel
to Duratek and EnergySolutions, respectively.
A full-text copy of the Agreement And Plan Of Merger is available
for free at http://ResearchArchives.com/t/s?559
Duratek Inc. provides radioactive materials disposition and
nuclear facility operations for commercial and government
customers.
Standard & Poor's Ratings Services placed its ratings on Duratek
Inc. on CreditWatch with negative implications, including the
'BB-' corporate credit rating.
Moody's Investors Service has affirmed the ratings of Duratek,
Inc., following Feb. 7, 2006's announcement of a definitive
merger agreement providing for the acquisition of Duratek by
EnergySolutions, formerly known as Envirocare of Utah, LLC.
Moody's affirmed these ratings:
* B1 rating on the $30 million secured revolving credit
facility due 2008;
* B1 rating on the $69 million secured term loan B due 2009;
* B1 Corporate Family Rating.
The ratings outlook remains stable.
ENVIRONMENTAL TRUST: Judge Adler Confirms Plan of Liquidation
-------------------------------------------------------------
The Honorable Louise DeCarl Adler of the U.S. Bankruptcy Court for
the Southern District of California confirmed the [Amended]
Liquidating Plan of Reorganization filed by The Environmental
Trust, Inc. Judge Adler confirmed the Debtor's Plan on Feb. 9,
2006.
Summary of the Plan
The Plan provides for the Debtor's liquidation and complete
cessation of its business and operations. The Debtor will
serially offer its interests in approximately 127 parcels of
conserved property and its Endowment Fund to interested parties.
Those interested parties, in order to accept that option, must
identify a qualified maintenance organization or a designated
holder approved by the jurisdictional agency to acquire those
property interests and funds. The entity acquiring the property
interests and funds will assume all of the Debtor's maintenance,
monitoring and management obligations with respect to the
conserved property.
All saleable real property and non-Endowment Fund assets will be
reduced to cash and paid to creditors holding allowed claims.
Treatment of Claims and Interests
1) Secured Tax Claims will be paid in full, in cash on or after
the effective date of the Plan.
2) Secured Real Property Tax Claims, totaling approximately
$3,100 will retain their liens and interests in any real
property affected by those claims. The underlying property
will be transferred pursuant to the Plan subject to all rights,
liens or claims held or asserted by the holders of allowed
Secured Real Property Tax Claims as of the effective date.
3) Priority Wage Claims, totaling approximately $2,000 will be
paid in cash after the effective date or the date the claim
becomes an allowed claim pursuant to entry of a final order.
4) Secured Claims, totaling approximately $12,500,000 will be
transferred subject to any and all claims, liens and
encumbrances of record. A Protective Conservation Easement
may be recorded against the property before the transfer as
provided under Section IV(E)(3) of the Plan regarding the
implementation of the Debtor's winding-up.
5) Endowment Claims, totaling approximately $4,028,174 will be
offered the option to direct transfers of the Debtor's
interests in conserved properties, proportionate endowment
payments and maintenance, monitoring and management obligations
to qualified maintenance organizations or designated holders.
6) Segregated Endowment Claims in the Reagan Account, total
approximately $7,150. The transaction involving that account
has been unwound and the contract rescinded. The amounts in
the segregated Reagan Account will be returned to the claimants
on the effective date.
7) General Unsecured Claims, totaling approximately $598,159 will
receive their pro rata share from the proceeds of the Fund A
Account.
A full-text copy of the black-lined version of the Disclosure
Statement and Plan of Liquidation showing changes from the
original iterations of those documents is available for a fee at:
http://www.researcharchives.com/bin/download?id=060215004417
Headquartered in San Diego, Calif., The Environmental Trust, Inc.,
filed for chapter 11 protection on Mar. 23, 2005 (Bankr. S.D.
Calif. Case No. 05-02321). Michael D. Breslauer, Esq., at Solomon
Ward Seidenwurm & Smith, LLP, represents the Debtor. When the
Debtor filed for protection from its creditors, it listed $1
million to $10 million in assets and $10 million to $50 million in
debts.
ENERSYS: Posts $7.8MM Net Earnings for 3rd Fiscal Quarter 2006
--------------------------------------------------------------
EnerSys reports $9.6 million pro forma net earnings for the third
quarter ending Jan. 1, 2006, compared to the $6.8 million net
earnings in the same period last year.
EnerSys' net earnings for the third fiscal quarter of 2006 is $7.8
million versus $6.8 million net earnings of the prior year.
Net sales for the Company's third fiscal quarter of 2006 is $321.8
million compared to $273.7 million in the comparable period of the
prior year, or an increase of 17.6%.
According to the Company, the results reflect the inclusion of the
acquisition of FIAMM SpA's motive power business, which occurred
in the first fiscal quarter of 2006, and GAZ GmbH's reserve power
business, which occurred in the third fiscal quarter of 2006. The
two acquisitions contributed sales of approximately $21 million in
the third fiscal quarter of 2006 or approximately 8 percentage
points of the increase compared to the prior year.
Additionally, the Company states that the foreign currency
translation had an unfavorable impact on their third fiscal
quarter of 2006 net sales, which resulted in an approximate 6
percentage point decrease compared to the comparable period in the
prior year.
Pro forma net earnings for the nine months of fiscal 2006 is $24.9
million compared to pro forma net earnings of $28.1 million in the
prior year.
Net earnings for the nine months of fiscal 2006 is $19.0 million
compared to net earnings of $22.2 million and net earnings
available to common shareholders of $14.1 million in the prior
year.
The pro forma adjustment for the nine months of fiscal 2006
relates primarily to the elimination of the restructuring charges,
while the pro forma adjustments for the prior year relate to the
effect of the IPO, elimination of a special charge and elimination
of the Company's non-cash Series A convertible stock dividend, the
Company says.
Net sales for the Company's nine months of fiscal 2006 is $930.1
million compared to $798.3 million in the prior year, or an
increase of 16.5%.
Headquartered in Reading, Pennsylvania, EnerSys, Inc. --
http://www.enersys.com/-- manufactures, distributes and services
reserve power and motive power batteries, chargers, power
equipment, and battery accessories to customers worldwide.
Reserve power batteries are used in the telecommunications and
utility industries, uninterruptible power suppliers, and numerous
applications requiring standby power. Motive power batteries are
utilized in electric forklift trucks and other commercial electric
powered vehicles. The Company also provides aftermarket and
customer support services to its customers from over 100 countries
through its sales and manufacturing locations around the world.
* * *
Standard & Poor's currently assigned these ratings to EnerSys:
* Long term foreign issuer credit -- BB
* Long term local issuer credit -- BB
FOOTSTAR INC: Registers 458,044 Common Shares for Resale
--------------------------------------------------------
Footstar Inc. filed a Registration Statement with the Securities
and Exchange Commission for the resale of 458,044 shares of common
stock which will be issued under the Company's 2006 Non-Employee
Director Stock Plan.
The Company estimates the distribution at $1,811,564.
A full-text copy of the 2006 Non-Employee Director Stock Plan is
available for free at http://ResearchArchives.com/t/s?557
The Company's common shares are traded in the Over-the-Counter
Bulletin Board under the symbol "FTSTQ.PK" The Company's common
shares traded between $3.88 and $4.50 this month.
A full-text copy of the Registration Statement is available for
free at http://ResearchArchives.com/t/s?556
Headquartered in West Nyack, New York, Footstar Inc., retails
family and athletic footwear. As of August 28, 2004, the Company
operated 2,373 Meldisco licensed footwear departments nationwide
in Kmart, Rite Aid and Federated Department Stores. The Company
also distributes its own Thom McAn brand of quality leather
footwear through Kmart, Wal-Mart and Shoe Zone stores. The
Company and its debtor-affiliates filed for chapter 11 protection
on March 3, 2004 (Bankr. S.D.N.Y. Case No. 04-22350). Paul M.
Basta, Esq., at Weil Gotshal & Manges represents the Debtors in
their successful restructuring. When the Debtor filed for chapter
11 protection, it listed $762,500,000 in total assets and
$302,200,000 in total debts. Judge Hardin confirmed the Debtors'
Amended Joint Plan on Jan. 25, 2006. The Plan became effective on
February 7, 2005.
FORD CREDIT: S&P Assigns Preliminary BB Rating to Class D Notes
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned its preliminary
ratings to Ford Credit Auto Owner Trust 2006-A's $3.014 billion
asset-backed notes series 2006-A. The preliminary ratings are
based on information as of Feb. 14, 2006. Subsequent information
may result in the assignment of final ratings that differ from the
preliminary ratings.
The preliminary ratings reflect:
* credit support including:
-- subordination of 7.0% for class A,
-- 4.0% for class B, and
-- 2.0% for class C (as a percentage of the adjusted
principal balance); and
* a nonamortizing, fully funded reserve account equal to 0.50%
of the initial gross pool balance.
The payment structure also features a turbo mechanism through
which excess spread, after covering losses, will be used to pay
the securities until the requisite overcollateralization is
reached. Further, because interest rates have increased since
Ford Motor Credit Co.'s previous securitizations, the discount
rate applied to the subvened loans was increased to 9.75% from
8.75% to prevent a decline in excess spread, thus allowing hard
credit enhancement to remain unchanged.
Preliminary ratings assigned:
Ford Credit Auto Owner Trust 2006-A
Class Rating Amount (mil. $)
----- ------ ---------------
A-1 A-1+ 540.000
A-2a* AAA 524.976
A-2b* AAA 524.975
A-3 AAA 901.239
A-4 AAA 316.809
B A 88.674
C BBB 59.116
D BB 59.116
* For the class A-2 notes, a 50/50 split is assumed between the
fixed- and floating-rate tranches. The actual size of these
tranches will be determined on the pricing date.
FORD CREDIT: Fitch Expects to Rate Class D Securities at BB+
------------------------------------------------------------
Fitch Ratings issued a presale report on Ford Credit Auto Owner
Trust 2006-A discussing the rating analysis behind Fitch's
expected ratings for the classes listed below:
-- Class A-1 'F1+'
-- Class A-2 'AAA'
-- Class A-3 'AAA'
-- Class A-4 'AAA'
-- Class B 'A'
-- Class C 'BBB+'
-- Class D 'BB+'
The securities are backed by a pool of retail installment sales
contracts secured by new and used automobiles and light duty
trucks.
GRANT PRIDECO: Earns $78.4 Million for Fiscal 2005 Fourth Quarter
-----------------------------------------------------------------
Grant Prideco, Inc. (NYSE: GRP) reported that its fourth quarter
2005 net income increased by 174% to $78.4 million on record
revenues of $388.7 million. Net income included $4.9 million
from the reversal of a deferred tax valuation reserve. These
results compare to net income of $28.6 million on revenues of
$283.1 million in last year's fourth quarter.
Each of the Company's operating segments reported significantly
improved results, reflecting the continued strong market activity.
The Company's backlog increased to a record $813.6 million at
Dec. 31, 2005 up from $742.5 million as of the end of the previous
quarter.
For the year, the Company reported net income of $189.0 million
on revenues of $1.35 billion compared to 2004 income from
continuing operations of $64.8 million on revenues of
$945.6 million. The 2005 year to date results includes
refinancing charges of $57.1 million related to the Company's
comprehensive debt restructuring program.
Consolidated revenues increased by $105.6 million, or 37%,
compared to last year's fourth quarter as the worldwide rig count
increased 18% during the same period. Consolidated operating
income margins increased to 24% from 20% for the same period.
This increase is primarily due to pricing gains and a favorable
product mix at the Company's Tubular Technology and Services
segment and overhead efficiencies in the Drill Bits segment.
Gross profit margins decreased slightly primarily due to a shift
in product mix at the Drilling Products and Services segment;
however, other operating expenses (sales and marketing, general
and administrative and research and engineering) were reduced to
18% of revenues from 23% for the same period. This improvement
primarily reflects reductions in sales and marketing expenses at
certain foreign locations at the Company's Drill Bits segment and
overhead cost focus at Tubular Technology and Services.
Acquisition
During the fourth quarter, the Company purchased the remaining 30%
interest in one of its Chinese operations, Grant Prideco Jiangsu
(GPJ) (formerly known as Jiangsu Shuguang Grant Prideco Tubular
Limited (JSG)) for approximately $10.5 million. The acquisition
was accretive to fourth quarter earnings by [$2.5 million].
Chairman and CEO, Michael McShane commented, "We are pleased to
report record results for the quarter and for the year. Continued
strong drilling activity, along with internal efficiencies, has
resulted in operating income margins of at least 27% in each of
our three operating segments. On the technology front, we
introduced the Raptor(TM) fixed cutter during the quarter, which
early results indicate is delivering significant improvements in
drilling efficiency for our customers, and we received our first
commitment on our IntelliServ (TM) drillpipe telemetry system
shortly after the end of the year.
"Our backlog increased another 10% from last quarter to
$813.6 million, and we have strong earnings momentum as we move
into 2006. We are currently forecasting that the average rig
count will increase approximately 8% to 10% from last year.
This activity increase, combined with improved pricing leads
us to forecast that our 2006 earnings will be in the range of
[$294 million to $318.5 million]. This forecast includes
[$2.5 million] from the expensing of stock options in
accordance with the new accounting rules being adopted in 2006."
Headquartered in Houston, Texas, Grant Prideco, Inc. --
http://www.grantprideco.com/ -- is the world leader in drill stem
technology development and drill pipe manufacturing, sales and
service; a global leader in drill bit technology, manufacturing,
sales and service; and a leading provider of high-performance
engineered connections and premium tubular products and services.
* * *
Grant Prideco, Inc. carries S&P's BB credit rating and its 9%
Senior Notes due 2009 also carries S&P's BB rating.
INEX PHARMA: Supreme Court of B.C. Dismisses Bankruptcy Petition
----------------------------------------------------------------
The Supreme Court of British Columbia has provided its ruling on
the Jan. 5 and 6, 2006 hearing that discussed Inex Pharmaceuticals
Corporation's (TSX: IEX) proposed Plan of Arrangement to spin out
its Targeted Immunotherapy assets into a new company, Tekmira
Pharmaceuticals Corporation. The hearing discussed whether the
plan can be completed given the terms of INEX's outstanding
convertible promissory notes as well as a bankruptcy petition
brought forward by Stark Trading and Shepherd Investments
International Ltd. on Dec. 20, 2005.
The court dismissed the bankruptcy petition and ruled that the
Plan of Arrangement can be completed given the terms of the
convertible debt. The judge also ruled that the noteholders
should be allowed to vote on the Plan of Arrangement. There will
be a final court hearing on the Plan of Arrangement that will
determine the fairness of the transaction and provide a final
ruling on whether or not the transaction can be completed. The
court commented that in its opinion a vote by the noteholders
against the Plan of Arrangement would not necessarily be
determinative of the outcome as there is authority for a court to
ignore a dissenting vote in deciding whether to approve the plan.
At the final hearing to approve the Plan of Arrangement, the court
will consider the fairness of the Arrangement to all parties from
a reasonable business perspective, not only what is fair from the
perspective of the noteholders.
On Jan. 26, 2006, shareholders of INEX voted 98.3% in favor of
spinning out the immunotherapy assets to create Tekmira.
Timothy M. Ruane, President and Chief Executive Officer of INEX,
said the next steps are to work towards the final fairness hearing
and completing the Tekmira spin-out. "We are pleased that the
court has dismissed the bankruptcy petition and provided clarity
that we can move forward towards completing the spin-out of
Tekmira. Over the next few weeks, we expect to be able to provide
more details on the court hearing required to complete the
transaction as well as the results of yesterday's Court of Appeal
hearing."
Stark is the majority holder of certain promissory notes issued by
Inex International Holdings, a subsidiary of INEX. The promissory
notes are not due until April 2007 and can be repaid in cash or in
shares, at INEX's option, at maturity.
A full-text copy of the spin-out transaction is available at no
charge at http://ResearchArchives.com/t/s?4c0
Vancouver, British Columbia, Inex Pharmaceuticals Corporation --
http://www.inexpharm.com/-- is a Canadian biopharmaceutical
company developing and commercializing proprietary drugs and drug
delivery systems to improve the treatment of cancer.
* * *
As reported in the Troubled Company Reporter on Dec. 22, 2005,
Inex Pharmaceuticals Corporation received notice on Dec. 20, 2005,
that Stark Trading and Shepherd Investments International Ltd.
filed a petition in the Supreme Court of British Columbia seeking
to have INEX declared bankrupt and that a receiving order be made
in respect of the property of INEX.
INEX believes that this latest petition brought forward by Stark
is an attempt to block the successful completion of the Plan of
Arrangement announced Nov. 17, 2005. As previously disclosed,
INEX has already asked the Supreme Court of British Columbia to
rule on whether the proposed plan can be completed given the terms
of the Notes. The Supreme Court will hear this plan on Jan. 5 and
Jan. 6, 2006. This hearing will also address Stark's bankruptcy
petition.
Timothy M. Ruane, President and Chief Executive Officer of INEX,
said INEX is continuing with its plan to spin out its Targeted
Immunotherapy assets into a new public company. "This is yet
another attempt by Stark to try and block the completion of our
plan to spin out our Targeted Immunotherapy technology. We
believe this transaction represents the greatest value for all
stakeholders, including the Note holders, and we will continue to
move forward to secure court and shareholder approvals for its
completion."
INEX PHARMA: Hearing on Noteholders' Appeal Completed
-----------------------------------------------------
Inex Pharmaceuticals Corporation (TSX: IEX) reported that the
hearing on Feb. 13, 2006, in the Appeal Court of British Columbia
concluded. Stark Trading and Shepherd Investments International
Ltd brought the appeal forward. Stark was appealing a Supreme
Court of British Columbia ruling that dismissed a bankruptcy
petition originally brought forward by Stark and dismissed on
Oct. 27, 2005. The Appeal Court reserved judgment until a later
date. INEX will report the judgment when it is received.
Stark is the majority holder of certain promissory notes issued by
Inex International Holdings, a subsidiary of INEX. The promissory
notes are not due until April 2007 and can be repaid in cash or in
shares, at INEX's option, at maturity.
Vancouver, British Columbia, Inex Pharmaceuticals Corporation --
http://www.inexpharm.com/-- is a Canadian biopharmaceutical
company developing and commercializing proprietary drugs and drug
delivery systems to improve the treatment of cancer.
* * *
As reported in the Troubled Company Reporter on Dec. 22, 2005,
Inex Pharmaceuticals Corporation received notice on Dec. 20, 2005,
that Stark Trading and Shepherd Investments International Ltd.
filed a petition in the Supreme Court of British Columbia seeking
to have INEX declared bankrupt and that a receiving order be made
in respect of the property of INEX.
INEX believes that this latest petition brought forward by Stark
is an attempt to block the successful completion of the Plan of
Arrangement announced Nov. 17, 2005. As previously disclosed,
INEX has already asked the Supreme Court of British Columbia to
rule on whether the proposed plan can be completed given the terms
of the Notes. The Supreme Court will hear this plan on Jan. 5 and
Jan. 6, 2006. This hearing will also address Stark's bankruptcy
petition.
Timothy M. Ruane, President and Chief Executive Officer of INEX,
said INEX is continuing with its plan to spin out its Targeted
Immunotherapy assets into a new public company. "This is yet
another attempt by Stark to try and block the completion of our
plan to spin out our Targeted Immunotherapy technology. We
believe this transaction represents the greatest value for all
stakeholders, including the Note holders, and we will continue to
move forward to secure court and shareholder approvals for its
completion."
INFOUSA INC: Refinances $250 Million Bank Credit Facility
---------------------------------------------------------
infoUSA(R) (Nasdaq:IUSA) refinanced its senior credit facility.
The previous $250 million senior credit facility, of which
approximately $121 million is currently outstanding, has been
restructured to a larger $275 million facility, comprised of a
$100 million term loan and a $175 million revolving line of
credit.
"The success of infoUSA has allowed the company to significantly
de-lever our balance sheet," Vin Gupta, Chairman and CEO of
infoUSA, said. "As a result, infoUSA has refinanced its senior
credit facilities to take advantage of our reduced leverage
position. infoUSA expects to benefit from reduced interest
expense in 2006 and for the term of the credit facility.
Additionally, we expect this senior credit facility to give
infoUSA the flexibility to invest in its business operations while
continuing to improve the company through acquisition."
Wells Fargo has acted as the lead arranger and administrative
agent, along with LaSalle Bank National Association and Citibank
F.S.B as syndication agents, and Bank of America, N.A, as
documentation agent, in providing the new senior credit facility.
Based in Omaha, Nebraska, infoUSA -- http://www.infoUSA.com/--
is the leading provider of business and consumer information
products, database marketing services, data processing services
and sales and marketing solutions. Founded in 1972, Content is
the essential ingredient in every marketing program, and infoUSA
has the most comprehensive data in the industry, and is the only
company to own a proprietary database of 250 million consumers and
14 million businesses under one roof. The infoUSA database powers
the directory services of the top Internet traffic-generating
sites. Nearly 3 million customers use infoUSA's products and
services to find new customers, grow their sales, and for other
direct marketing, telemarketing, customer analysis and credit
reference purposes.
* * *
As reported in the Troubled Company Reporter on Nov. 02, 2005,
Moody's Investors Service affirmed all of InfoUSA Inc.'s credit
ratings and changed the outlook to stable. Moody's placed the
company on negative outlook on June 21, 2005 in connection with an
offer by Vin Gupta, chairman and CEO of the company, to acquire
all of the publicly held common shares of InfoUSA in a debt
financed transaction. Although the offer was subsequently
rejected by a special committee of the board of directors and
withdrawn, the negative outlook reflected the heightened risk of a
capital structure transaction that could significantly increase
leverage. The change in outlook to stable reflects Moody's belief
that InfoUSA is not considering a transaction that will
significantly increase leverage and anticipates a conservative
financial profile over the intermediate term.
Moody's affirmed the following ratings:
* Corporate family rating, Ba3
* $50 million senior secured revolving credit facility due
2007, Ba3
* $94 million senior secured first lien term loan A due 2009,
Ba3
* $69 million senior secured term loan B due 2010, Ba3
INTEGRATED ELECTRICAL: S&P Lowers Corporate Credit Rating to D
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on Houston, Texas-based Integrated Electrical Services Inc.
to 'D' from 'CC'. At the same time, the rating on the company's
senior subordinated notes was lowered to 'D' from 'C'. IES, one
of the larger electrical contractors in the U.S., had total debt
of about $223 million as of Dec. 31, 2005.
"The downgrade reflects the company's decision to file for
reorganization under Chapter 11 of the U.S. Bankruptcy Code," said
Standard & Poor's analyst James Siahaan.
The company said that it has successfully negotiated an $80
million debtor-in-possession financing facility. To execute the
financial restructuring through a plan of reorganization, the
company has also come to an agreement with institutions
controlling 61% of the dollar value on IES' $173 million in senior
subordinated notes.
INTELSAT LTD: Exchanging Senior Notes for New Registered Bonds
--------------------------------------------------------------
Intelsat, Ltd., is offering to exchange its:
-- Floating Rate Senior Notes due 2012
-- 8-1/4% Senior Notes due 2013; and
-- 8-5/8% Senior Notes due 2015;
in exchange for new notes with materially identical terms that
have been registered under the Securities Act of 1933, and are
generally freely tradable.
The offer will expire at 5:00 p.m. New York City time on March 13,
2006, unless extended.
The original notes were issued by Intelsat (Bermuda), Ltd. Since
that time, Intelsat (Bermuda), Ltd. transferred substantially all
its assets to its wholly owned subsidiary, Intelsat Subsidiary
Holding Company, Ltd., and Intelsat Subsidiary Holding Company,
Ltd. at that time assumed substantially all of Intelsat (Bermuda),
Ltd.'s obligations, including its obligations in respect of the
original notes. Accordingly, Intelsat Subsidiary Holding Company,
Ltd. is currently the obligor on the original notes and will be
issuing any new notes issued in exchange therefore pursuant to
this exchange offer.
Each series of the notes will be unsecured senior obligations of
the Issuer. The notes will not be entitled to the benefit of any
mandatory sinking fund.
Floating Rate Notes
The floating rate notes mature on January 15, 2012. The floating
rate notes will bear interest at a rate per annum, reset
semi-annually, equal to LIBOR plus 4-7/8%, as determined by the
calculation agent, which will initially be the indenture trustee.
Interest on the floating rate notes will be payable semi-annually
in arrears on January 15 and July 15, commencing, in the case of
the exchange notes, on July 15, 2006. The Company will make each
interest payment to the holders of record of the floating rate
notes on the immediately preceding January 1 and July 1. Interest
on the floating rate notes that are exchange notes will accrue
from the most recent date to which interest has been paid on the
original notes. Interest on the floating rate notes will be
computed on the basis of a 360-day year for the actual number of
days elapsed.
2013 Notes
The 2013 notes mature on January 15, 2013. Interest on the 2013
notes will accrue at 8-1/4% per annum and will be payable semi-
annually in arrears on January 15 and July 15, commencing, in the
case of the exchange notes, on July 15, 2006. The Company will
make each interest payment to the holders of record of the 2013
notes on the immediately preceding January 1 and July 1. Interest
on the 2013 notes that are exchange notes will accrue from the
most recent date to which interest has been paid on the original
notes and will be computed on the basis of a 360-day year
comprised of twelve 30-day months.
2015 Notes
The 2015 notes mature on January 15, 2015. Interest on the
2015 notes will accrue at 8-5/8% per annum and will be payable
semi-annually in arrears on January 15 and July 15, commencing, in
the case of the exchange notes, on July 15, 2006. The Company
will make each interest payment to the holders of record of the
2015 notes on the immediately preceding January 1 and July 1.
Interest on the 2015 notes that are exchange notes will accrue
from the most recent date to which interest has been paid on the
original notes and will be computed on the basis of a 360-day year
comprised of twelve 30-day months.
A full-text copy of the Prospectus is available for free at
http://ResearchArchives.com/t/s?56b
Intelsat, Ltd., offers telephony, corporate network, video and
Internet solutions around the globe via capacity on 25
geosynchronous satellites in prime orbital locations. Customers
in approximately 200 countries rely on Intelsat's global
satellite, teleport and fiber network for high-quality
connections, global reach and reliability.
* * *
As reported in the Troubled Company Reporter on Nov. 16, 2005,
Intelsat, Ltd.'s announcement of its results for the third quarter
ended Sept. 30, 2005, does not affect the ratings of Intelsat,
wholly owned subsidiary Intelsat (Bermuda), Ltd., and operating
subsidiary Intelsat Subsidiary Holding Company Ltd. The company
remains on Rating Watch Negative.
As reported in the Troubled Company Reporter on Sept. 1, 2005,
Moody's Investors Service has affirmed Intelsat, Ltd.'s ratings
and changed the outlook for all ratings to developing from
negative following the company's announcement that it is acquiring
PanAmSat for $3.2 billion plus the assumption of PanAmSat's debt
($3.2 billion). The transaction, which Moody's expects to be
largely, if not entirely, financed with new debt, would
significantly increase Intelsat's pro forma leverage thereby
increasing credit risk for Intelsat debt holders and pressuring
the rating downwards. Therefore, Moody's anticipates placing all
ratings on review for possible downgrade or lowering the ratings
once the timing and structure of the transaction and resolution of
regulatory review becomes more certain.
Moody's has affirmed these ratings:
Intelsat:
* Corporate family rating -- B2
* $400 Million 5.25% Global notes due in 2008 -- Caa1
* $600 Million 7.625% Sr. Notes due in 2012 -- Caa1
* $700 Million 6.5% Global Notes due in 2013 -- Caa1
Intelsat Subsidiary Holding Company Ltd.:
* $300 Million Sr. Secured Revolver due in 2011 -- B1
* $350 Million Sr. Secured T/L B due in 2011 -- B1
* $1 Billion Sr. Floating Rate Notes due in 2012 -- B2
* $875 Million Sr. 8.25% Notes due in 2013 -- B2
* $675 Million Sr. 8.625% Notes due in 2015 -- B2
Intelsat (Bermuda) Ltd.:
* $478.7 Million Sr. Unsecured Discount Notes due 2015 -- B3
Moody's has changed the outlook to developing from negative.
IPSCO INC: Debt Reduction Prompts Moody's to Upgrade Ratings
------------------------------------------------------------
Moody's Investors Service upgraded IPSCO Inc.'s ratings to Baa3
from Ba1. IPSCO is enjoying very favorable demand and prices for
its primary products, steel plate and energy tubulars, and has
used its exceptional cash flow over the last two years to
significantly reduce debt. At the end of 2005, it had $358
million of debt and $583 million of cash. Given very strong demand
for IPSCO's products, supported by high energy prices, and its low
operating costs, Moody's expects the company's cash flow to remain
strong into 2007. IPSCO's rating outlook is stable.
Upgrades:
Issuer: IPSCO, Inc.
* Corporate Family Rating, Upgraded to Baa3 from Ba1
* Senior Unsecured Regular Bond/Debenture, Upgraded to Baa3
from Ba1
Outlook Actions:
Issuer: IPSCO, Inc.
* Outlook, Changed To Stable From Positive
These ratings were raised:
* Senior unsecured notes due 2013 -- to Baa3 from Ba1,
Corporate family rating -- to Baa3 from Ba1. The corporate family
rating will be withdrawn shortly as this rating is not used for
investment grade issuers.
IPSCO is a low cost producer of plate and energy tubulars, which
are among the two strongest products in the steel industry today.
Plate demand is strong and IPSCO is the largest of only seven
North American plate producers. Market fundamentals are even
stronger for its energy tubular business, where IPSCO is favorably
positioned to take advantage of high energy prices and increased
investment in energy exploration, production and transportation
projects that may well extend for many years. In the highly
variable large diameter pipe sector, IPSCO recently received a
commitment for two 30-inch diameter pipeline orders that should
keep its spiral weld pipe facilities running at full capacity for
all of 2006. IPSCO is one of just a few energy tubular producers
that makes its own steel and can, therefore, capture a large
portion of energy tubular price increases. In 2005, the company's
average selling price for all tubular products was a very high
$1,100 per ton, and it set a record with 903,000 tons of energy
tubular shipments.
Equally important for the ratings, IPSCO's cost structure benefits
from its modern steelmaking facilities, production flexibility,
productive work force, and modest legacy costs. It subscribes to
a "steel short" strategy, meaning that it can produce more tons of
finished steel than it can melt, which enables it to maintain
efficient operating rates when demand is weak; when demand is
strong, it purchases steel from third parties. Its Regina,
Saskatchewan steel mill generally operates at a high capacity
utilization rate, aided by its location and the pipe mills and
downstream processing operations that use Regina's coil and
discrete plate. Its two US mills are both operating extremely
well and at rated capacity. Overall, IPSCO's modern steelmaking
plants require only 0.7 man-hours to produce a ton of plate or
coil. For these reasons, we believe IPSCO will be profitable
throughout all but the most severe steel cycle.
Over the last two years, IPSCO has used cash from operations to
retire $450 million of debt and preferred shares, fund $200
million of working capital, and repurchase $133 million of common
shares. Nevertheless, cash has increased by $451 million and the
cash balance exceeds debt. Except for potential acquisition
activities, possible uses of cash over the next two years are
expected to be handily serviced by cash and operating cash flow.
These uses include higher than normal capital expenditures, a
possible buyout of the Montpelier steel mill lease for
approximately $120 million in October 2007, the possible call of
its 8.75% senior notes in June 2008, and discretionary share
repurchases. IPSCO still has about 1.4 million shares it could
purchase under its normal course issuer bid, but has purchased
very few shares since 2Q05 as its stock price steadily advanced
from $50 to its current level of around $90 per share. At $90 per
share, IPSCO would spend $130 million to complete the normal
course issuer bid.
For the reasons discussed above, Moody's biggest concern for
IPSCO's rating revolves around takeovers -- either of the company
or by the company. While the steel industry has been subject to
sweeping consolidation over the last four years, we believe that
IPSCO's high stock price protects it from takeover at this time.
In any case, IPSCO's senior note holders have the right to put the
notes back to the company should there be a change of control.
Regarding acquisitions the company might make, we believe they
would be done in a conservative manner, using balance sheet cash
for medium-sized deals and a conservative mix of equity and debt
for any large transactions. We also note that, while the company
has the ability to do a large transaction, any large target
company that has an energy focus is, like IPSCO, valued at very
high multiples and this makes such a transaction unlikely at this
time.
Moody's stable outlook balances the positive issues noted above
with the realization that IPSCO's business is volatile and is
currently experiencing unprecedented favorable conditions. The
rating outlook is also tempered by caution over the potential
impact that a large acquisition could have on the company's risk
profile. However, smaller acquisitions in IPSCO's core businesses
would be easily digestible.
When analyzing IPSCO using Moody's rating methodology for the
steel industry, IPSCO's indicated rating is in the A category.
Nevertheless, Moody's believes IPSCO's rating should be Baa3 at
this time due to its smaller scale compared to other investment
grade steel companies, the focused range of its products, the
historical volatility of its financial results, and Moody's
caution regarding potential acquisitions that the company may feel
compelled to pursue. In light of these factors, Moody's will
monitor IPSCO's actions with respect to acquisitions, stock
buybacks, and deployment of cash, as well as end-market strength,
before another upgrade is considered. Looking at the 11 rating
factors highlighted in Moody's steel industry rating methodology,
IPSCO does very well on all financial ratios, which all map to an
A or Aa rating, reflecting IPSCO's low leverage and record
earnings and cash flow. However, for size and diversity of
operations, IPSCO falls between a Ba and a Baa, and these are very
important rating determinants. For additional upgrades to occur,
IPSCO will most likely have to compensate for its small size and
limited diversity by a continuation of very strong financial
metrics. Also, the company earns a Ba rating on the factor that
judges its control over raw materials. IPSCO is only about 12%
self-sufficient for the scrap it uses. It does, however, recover
higher scrap costs through the surcharge mechanism. It has
limited control over its other input costs, except through the use
of short-term supply contracts and natural gas hedges.
IPSCO, headquartered in Lisle, Illinois, produces discrete plate
and coil and tubular products at 12 sites throughout Canada and
the US.
ISLE OF CAPRI: Moody's Confirms B2 Rating on $700MM Sr. Sub. Debt
-----------------------------------------------------------------
Moody's Investors Service confirmed Isle of Capri, Inc.'s
restricted group ratings and assigned a negative ratings outlook.
The confirmation is based primarily on recent improvements in
operating results as well as the company's announcement today that
it executed an agreement to sell its Bossier City, LA and
Vicksburg, MS casinos to privately owned Legends Gaming, LLC for
$240 million in cash. The agreement is subject to regulatory
approvals and other customary closing conditions. Isle expects to
complete the transaction in the second or third calendar quarter
of 2006.
This action concludes the review process which began on Oct. 11,
2005, when Moody's placed Isle's restricted group ratings on
review for possible downgrade following the company's announcement
that its board of directors has approved the repurchase of an
additional 1,500,000 shares under its share repurchase program.
The confirmation of Isle's restricted group ratings is based
largely on the company's Jan. 23, 2005, announcement that it is
experiencing better than expected overall operating results due
primarily to the reopening of its Biloxi casino, as well as
positive trends at the company's southern region properties. These
improved operating results make it more likely that Isle will be
able to reduce restricted group leverage to a level more
appropriate for a Ba3 corporate family rating. Restricted group
leverage for the latest twelve month period ended Oct. 23, 2005,
was about 6.0x. Prior to recent operating result improvements,
Isle was experiencing declines at several properties making it
less likely the company could maintain a credit profile consistent
with a Ba3 corporate family rating, particularly given the
company's planned and possible capital expenditure outlays.
The confirmation also anticipates that given recent operating
improvements, along with several capital expenditure initiatives,
Isle will not pursue share repurchases over the next twelve to
eighteen month period. Share repurchases during this period would
likely result in a downgrade.
The negative ratings outlook recognizes that the sale of Vicksburg
and Bossier City may have a temporary negative impact on leverage
to the extent that Isle decides to use the sale proceeds to fund
existing development projects that do not yet produce cash flow.
A decision regarding the use of asset sale proceeds along with
several quarters of continued improvement in overall operating
results and more definitive plans regarding, Biloxi, Florida and
Pittsburgh may be necessary before a stable ratings outlook is
considered.
These Isle restricted group ratings were affected:
* Corporate family rating -- Ba3;
* $400 million senior secured revolver due 2010 -- Ba2;
* $300 million senior secured term loan due 2011 -- Ba2;
* $500 million 7% senior subordinated debt due 2014 -- B2; and
* $200 million 9% senior subordinated debt due 2012 -- B2.
Isle of Capri Casinos, Inc. operates 15 casinos in 13 locations
across the U.S. The company also owns a 57 percent interest in
and operates land-based casinos in Black Hawk, Colorado, and has
international gaming interests including a casino that it operates
in Freeport, Grand Bahamas, and a two-thirds ownership interest in
casinos in Dudley, Walsall and Wolverhampton, England. Isle also
owns and operates Pompano Park Harness Racing Track in Pompano
Beach, Florida.
K&F INDUSTRIES: Earns $17 Million of Net Income in Fourth Quarter
-----------------------------------------------------------------
K&F Industries Holdings, Inc. (NYSE:KFI) reported its financial
results for the fourth quarter and full year ended Dec. 31, 2005.
"We are very proud of our accomplishments in the fourth quarter
and the full year 2005," stated Kenneth M. Schwartz, president and
CEO of K & F Industries. "The results reflect the power of our
broad portfolio of nearly 26,000 aircraft serviced by our products
and our ability to deliver strong performance through
diversification and balance. Expanding market penetration in our
regional jet and business jet segments, coupled with strong growth
in our military business drove revenues to record levels for the
year. Both of our operating divisions, Aircraft Braking Systems
Corporation (ABSC) and Engineered Fabrics Corporation (EFC) posted
excellent results for the fourth quarter and the year. We were
able to achieve these results while enhancing our financial
position, generating strong free cash flow and reducing our
long-term debt levels by $24 million during the year."
Results for Fourth Quarter 2005 Compared with Fourth Quarter 2004
-- Sales in the fourth quarter grew by $10 million, or 10% to
$106 million driven by 9% growth at ABSC and 15% growth at
EFC;
-- Adjusted EBITDA increased $1 million to $41 million, or 39%
of revenues;
-- Net income available to common stockholders was $17 million;
-- Fourth quarter consolidated market sector revenue
performance is as follows:
* Military revenues increased 29% to $38 million driven by
strong sales across all of K & F's product lines;
* General Aviation sales of $19 million were up 14% on
strong sales of wheels, brakes and braking systems to
business jet operators;
* Commercial transport sales declined $1 million to
$48 million as retirement of some mature aircraft was
offset by growth in the shipment of wheel and brake parts
for 70- and 90-passenger regional jets;
* Cash on hand increased $13 million during the quarter to
end the year at $35 million;
Results for 12 Months ended December 31, 2005
Compared with the 12 Months ended December 31, 2004
-- Sales grew to a record $385 million as both ABSC and EFC
revenues grew 9%;
-- Consolidated sector revenues for the full year are as
follows:
* General Aviation revenues grew 15% to $73 million;
* Military revenues rose 14% to $112 million;
* Commercial Transport revenues reached $200 million on a 4%
increase;
-- Adjusted EBITDA increased $4 million to $147 million;
-- Net income available to common stockholders was
$20 million, or $0.77 per diluted share on a GAAP basis;
-- Excluding the nonrecurring charges discussed below, and
reflecting a normalized long-term tax rate of 33% (rather
than 17% resulting from the utilization of net operating
loss carryovers and other credits in 2005), net income would
have increased by $16 million;
K & F Industries Holdings Inc. is the parent of K & F Industries,
which was acquired in November 2004 by an affiliate of Aurora
Capital Group and co-investors in exchange for approximately $1.06
billion in cash and a note for $14.7 million payable to the
previous equity holders of K & F Industries. The acquisition was
financed with $795 million of debt and over $300 million of
equity.
As a result of the acquisition and our initial public offering,
results for full year 2005 include a number of items that will not
occur in future periods as follows:
-- a $12 million non-recurring purchase accounting inventory
charge;
-- a $6 million charge for management services fees primarily
related to the non-recurring one-time payment of fees in
connection with the amendment and restatement of the
company's management services agreement with Aurora
Management Partners;
-- $15 million in interest expense related to the company's
11-1/2% Senior PIK Notes and 15% Senior Redeemable Preferred
Stock, both of which were retired during 2005;
-- Preferred Stock Dividends of $9 million related to the
company's 10% Junior Preferred Stock, which was redeemed
during 2005;
Regarding K & F's future outlook, Mr. Schwartz stated, "With our
broad portfolio of aircraft and a good balance between the
commercial, general aviation and military markets, K & F
Industries is positioned well for growth in 2006 as the markets we
serve continue to evolve. Within the commercial aircraft market,
we are ideally situated to leverage the ongoing shift from older
platforms to 70- to 90-seat regional aircraft. At the same time,
we expect EFC to continue to perform well, as demand remains
strong for these products. While we see solid opportunities for
growth, we are also focused on managing our sales mix to optimize
profitability, which, when combined with our productivity and cost
initiatives, will enable us to continue to deliver strong profit
growth. As a result, we are fortunate to have the financial
flexibility to invest our free cash flow into new business
opportunities and continue to deleverage our balance sheet to
support the consistent growth of revenues and earnings at K & F
over the long-term."
2006 Guidance
Based on current market conditions, the company expects its 2006
financial performance to be as follows:
-- Revenues for the year are expected to increase in the range
of 4% to 6% to between $400 million and $408 million;
-- Adjusted EBITDA is expected to increase by 7% to 10% to
between $158 million and $161 million;
-- Free cash flow, after all scheduled debt service and growth
investments, is expected to be approximately $40 million;
K&F Industries Inc., through its Aircraft Braking Systems
Corporation subsidiary, is a worldwide leader in the manufacture
of wheels, brakes and brake control systems for commercial
transport, general aviation and military aircraft. K & F
Industries Inc.'s other subsidiary, Engineered Fabrics
Corporation, is a major producer of aircraft fuel tanks, de-icing
equipment and specialty coated fabrics used for storage, shipping,
environmental and rescue applications for commercial and military
use.
Moody's Investors Service assigned K&F a B2 bank debt rating and a
Caa1 subordinated debt rating on Feb. 3, 2005.
LENSING EARTHWORKS: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------------
Debtor: Lensing Earthworks, Inc.
104 Bluff Street
P.O. Box 376
Rhineland, Missouri 65069
Bankruptcy Case No.: 06-20012
Chapter 11 Petition Date: February 13, 2006
Court: Eastern District of Missouri (Hannibal)
Judge: Kathy A. Surratt-States
Debtor's Counsel: Spencer P. Desai, Esq.
Capes, Sokol, Goodman & Sarachan, P.C.
7701 Forsyth Boulevard, 4th Floor
St. Louis, Missouri 63105
Tel: (314) 721-7701
Fax: (314) 721-0554
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Lensing Agriculture, Inc. Note payable $751,033
104 Bluff Street
P.O. Box 376
Rhineland, MO 65069
Jose B. Cruz Rental - $182,357 $352,357
30 Lensing Road Past due rental -
Rhineland, MO 65069 $74,427
Cash loans -
$95,434
Independent Concrete Pipe Trade Debt $323,956
Co.
12950 Gravois Road
Saint Louis, MO 63127
Dotson and Gibbs, Inc. Subcontractor $304,665
Operating Engineers Local Union benefits $221,806
513
Rhineland Grain Co. Trade debt $215,139
Bussen Quarries, Inc. Trade debt $141,194
Lensing Properties, LLC Note payable $137,093
Beelman Truck Co. Trade debt $97,343
Missouri Valley Materials, Operating capital $75,893
Inc.
Holcim Trade debt $74,673
Heartland Ecosystem Services Engineering consulting $70,000
Scott Agency, Inc. Insurance $56,000
A M Brick Contractor, Inc. Trade debt $46,919
Wehmeyer Farms, Inc. Trade debt $34,500
Lloyd A. Lynn, Inc. Trade debt $34,245
Warren County Concrete, LLC Trade debt $33,650
Laborers Benefit Office Union benefits $33,407
Missouri Valley Materials, Trade debt $31,553
Inc.
American Funds Service IRA $27,435
Company
LEVITZ HOME: Wants to Reject Eletto Delivery Services Agreement
---------------------------------------------------------------
As previously reported, the U.S. Bankruptcy Court for the Southern
District of New York authorized Levitz Home Furnishings, Inc., and
its debtor-affiliates to sell substantially all of their assets to
PLVTZ, LLC, and The Pride Capital Group, LLC, in December 2005.
By the Sale Order, the Purchaser acquired the right to notify the
Debtors of its decision not to assume or assign one or more of the
Debtors' executory contracts. The Debtors, in turn, had the right
to dispose of the excluded contract upon receipt of an Excluded
Contract Notice.
Joseph Eletto Transfer, Inc., and Levitz Furniture, L.L.C. were
parties to a delivery services agreement. Under the Agreement,
Eletto delivered furniture to the Debtors' customers in Southern
California.
On January 24, 2006, the Purchasers served a notice to the
Debtors identifying the Eletto Delivery Services Agreement as an
Excluded Contract.
Richard H. Engman, Esq., at Jones Day, in New York, notes that
since that the Debtors have sold all of their operating stores to
the Purchasers, they no longer need Eletto's delivery services.
The Delivery Services Agreement no longer provides a benefit to
the Debtors' estates or creditors.
For this reason, the Debtors seek the Court's authority to reject
the Delivery Services Agreement, effective as of February 6,
2006.
Headquartered in Woodbury, New York, Levitz Home Furnishings, Inc.
-- http://www.levitz.com/-- is a leading specialty retailer of
furniture in the United States with 121 locations in major
metropolitan areas principally the Northeast and on the West Coast
of the United States. The Company and its 12 affiliates filed for
chapter 11 protection on Oct. 11, 2005 (Bank. S.D.N.Y. Lead Case
No. 05-45189). David G. Heiman, Esq., and Richard Engman, Esq.,
at Jones Day, represent the Debtors in their restructuring
efforts. When the Debtors filed for protection from their
creditors, they reported $245 million in assets and $456 million
in debts. Levitz sold substantially all of its assets to Prentice
Capital on Dec. 19, 2005. (Levitz Bankruptcy News, Issue No. 9;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
LEVITZ HOME: Unitary Landlord Wants Debtors to Pay Rental Dues
--------------------------------------------------------------
Levitz Furniture Corporation and several of its affiliate-
debtors, as tenant, and various entities related to Levitz SL,
L.L.C., as the unitary landlord, are parties to a lease dated
June 8, 1999. The Lease is a single, non-severable agreement
under which Levitz Furniture leases 42 of its retail and
warehouse locations from the Unitary Landlord.
The Unitary Lease requires Levitz Furniture to pay basic rent for
each month in advance, on or before the 25th day of the month
preceding the month for which the rent is paid.
Pursuant to the Court Order authorizing Levitz Home Furnishings,
Inc., and its debtor-affiliates to sell substantially all of their
assets to PLVTZ, LLC, and The Pride Capital Group LLC, the
Purchasers agreed to assume certain of the Debtors' liabilities,
including those arising under the Unitary Lease.
According to Sarah L. Trum, Esq., at Winston & Strawn LLP, in New
York, the total basic rent due for February 2006, is $1,837,780.
The Purchaser failed to pay the February 2006 Basic Rent as
required. The Purchaser also failed to pay $449,275 of
postpetition October 2005 Basic Rent, Ms. Trum says.
Under the Unitary Lease, the Unitary Landlord is entitled to
applicable charges on unpaid rent and is to be compensated for
all detriment caused by the Debtors' breach of the Unitary Lease,
including reimbursement of reasonable attorneys' fees incurred.
For these reasons, the Unitary Landlord asks the U.S. Bankruptcy
Court for the Southern District of New York to:
(a) compel the Debtors and the Purchasers to pay the February
2006 Basic Rent, the outstanding balance of the October
2005 Basic Rent, and all other charges due under the
Unitary Lease, in full; and
(b) direct the Purchasers to comply with the Sale Order and
the corresponding Asset Purchase Agreement by timely
paying the Basic Rent.
Headquartered in Woodbury, New York, Levitz Home Furnishings, Inc.
-- http://www.levitz.com/-- is a leading specialty retailer of
furniture in the United States with 121 locations in major
metropolitan areas principally the Northeast and on the West Coast
of the United States. The Company and its 12 affiliates filed for
chapter 11 protection on Oct. 11, 2005 (Bank. S.D.N.Y. Lead Case
No. 05-45189). David G. Heiman, Esq., and Richard Engman, Esq.,
at Jones Day, represent the Debtors in their restructuring
efforts. When the Debtors filed for protection from their
creditors, they reported $245 million in assets and $456 million
in debts. Levitz sold substantially all of its assets to Prentice
Capital on Dec. 19, 2005. (Levitz Bankruptcy News, Issue No. 9;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
LINK PLUS: Balance Sheet Upside-Down by $2.6 Mil. at December 31
----------------------------------------------------------------
Link Plus Corporation delivered its quarterly report on Form 10-
QSB for the quarter ended Dec. 31, 2005, to the Securities and
Exchange Commission on Feb. 13, 2006.
The Company reported a $487,600 net loss on $20,876 of net
revenue for the quarter ended Dec. 31, 2005. At Dec. 31, 2005,
the Company's balance sheet showed $126,158 in total assets and
liabilities of $2,739,857, resulting in a stockholders' deficit
of $2,613,699.
A copy of the regulatory filing is available for free at
http://researcharchives.com/t/s?568
Going Concern Doubt
Russell Bedford Stefanou Mirchandani, LLP, expressed substantial
doubt about Link Plus' ability to continue as a going concern
after it audited the Company's financial statements for the fiscal
years ended March 31, 2005 and 2004. The auditing firm pointed to
the Company's recurring losses from operations.
About Link Plus
Headquartered in Columbia, Maryland, Link Plus Corporation -
http://www.linkplus.com/-- offers linked compressor and expander
(Lincompex) chipsets, boards, and related software for use in
communications equipment. Founder and CEO Robert Jones owns
approximately 32% of the company, while COO Jonathan Gluckman
holds nearly 16%. All officers and directors of Link Plus as a
group own about 70% of the company's equity.
LONG BEACH: Moody's Assigns Ba2 Rating to Class M-11 Certificates
-----------------------------------------------------------------
Moody's Investors Service has assigned a rating of Aaa to the
senior certificates issued by Long Beach Mortgage Loan Trust 2006-
WL1, and ratings ranging from Aa1 to Ba2 to the subordinate
certificates in the deal.
The securitization is backed by Long Beach Mortgage Company
originated adjustable-rate and fixed-rate mortgages. The ratings
are based primarily on the credit quality of the loans, and on the
protection from subordination, overcollateralization, excess
spread and a swap agreement provided by Goldman Sachs Mitsui
Marine Derivative Products, L.P. Moody's expects collateral losses
to range from 5.15% to 5.65%.
Long Beach Mortgage Company will act as master servicer and
Washington Mutual Bank will act as a servicer. Moody's has
assigned Washington Mutual its servicer quality rating (SQ2) as a
primary servicer of subprime loans.
Complete Rating Actions:
Issuer: Long Beach Mortgage Loan Trust 2006-WL1
* Class I-A1, Assigned Aaa
* Class I-A2, Assigned Aaa
* Class I-A3, Assigned Aaa
* Class II-A1, Assigned Aaa
* Class II-A2, Assigned Aaa
* Class II-A3, Assigned Aaa
* Class II-A4, Assigned Aaa
* Class M-1, Assigned Aa1
* Class M-2, Assigned Aa2
* Class M-3, Assigned Aa3
* Class M-4, Assigned A1
* Class M-5, Assigned A2
* Class M-6, Assigned A3
* Class M-7, Assigned Baa1
* Class M-8, Assigned Baa2
* Class M-9, Assigned Baa3
* Class M-10, Assigned Ba1
* Class M-11, Assigned Ba2
LUSCAR COAL: Moody's Withdraws Ba3 Ratings on Redeemed Debentures
-----------------------------------------------------------------
Moody's Investors Service has withdrawn Luscar Coal Ltd.'s senior
unsecured and corporate family ratings as the company has recently
redeemed substantially all of the debentures that Moody's rated.
Withdrawals:
Issuer: Luscar Coal Ltd.
* Corporate Family Rating, Withdrawn, previously rated Ba3
* Senior Unsecured Regular Bond/Debenture, Withdrawn,
previously rated Ba3
Outlook: Changed to Rating Withdrawn from Stable
MAIDENFORM BRANDS: Expects to Report $381 Million in 2005 Sales
---------------------------------------------------------------
Maidenform Brands, Inc. (NYSE: MFB) released selected preliminary
and unaudited financial results for the year ended Dec. 31, 2005.
The Company reported that its Board of Directors has approved a
share repurchase program of up to $20 million effective
immediately.
Maidenform expects to report net sales for 2005 in the range
of $381 million to $383 million, up approximately 13% from
$337 million in 2004, primarily due to the launch of the Dream
franchise along with other product introductions, new store growth
from customers and two specific product rollouts in the first
quarter of 2005 to one mass merchant customer and one chain store
customer. The Company had previously estimated net sales in the
range of $385 million to $390 million but these projections were
impacted late in the fourth quarter of 2005 by a strong
promotional environment and a greater emphasis on decreasing year-
end inventories by select customers.
Maidenform also experienced certain unexpected product shortages
late in the fourth quarter of 2005 with strong demand from
specific styles largely in Flexees and Lilyette. The Company is
addressing such increased consumer demand for these brands by
securing additional capacity with Maidenform's sourcing partners.
Wholesale segment net sales increased in 2005 approximately 16%
from $281.7 million in 2004, including international sales that
increased in 2005 more than 46% from $18.2 million in 2004.
Department stores/national chain stores net sales increased in
2005 approximately 7% from $189.3 million in 2004 largely due to
the introduction of the Dream Bra, strong demand for the Lilyette
and Flexees brands, and new store growth, in addition to
international expansion. In the fourth quarter, net sales were
affected by unusually large reserves for markdowns and returns,
particularly for the Full Support line. This product has been
redesigned with an improved alternative, Flex-to-Fit, that has
patent pending technology and will be delivered to customers in
the Spring of 2006. Maidenform was also affected by certain
retail customers in this channel cautiously driving down
inventories toward year-end.
Mass merchant channel net sales increased approximately 60% in
2005 from $46.7 million in 2004, which included an $8 million
increase in the first quarter of 2005 due to the product placement
in all domestic stores for a mass merchant customer. In addition,
this sales channel grew from new store openings and floor space
growth within existing stores, new product introductions, and
existing product rollouts.
Other net sales, which include sales to specialty retailers, off-
price retailers and licensing income, increased approximately 9%
in 2005 from $45.7 million in 2004 largely driven by continuity
programs and liquidations with off-price retailers, in addition to
licensing income.
Retail segment net sales for 2005 decreased approximately 1.5%
from $55.3 million in 2004 reflecting select store closings in
2005 due to the Company's efforts to optimize its portfolio of
outlet stores. The decline in retail net sales caused by fewer
stores was offset, in part, by increased same store sales of 5.5%
and internet sales nearly doubling in 2005 from $1.2 million in
2004. Maidenform operated 74 outlet stores at the end of 2005 as
compared to 81 at year-end 2004.
The Company expects adjusted non-GAAP gross margins for 2005 to be
approximately 36.5% compared to 38.7% in 2004 primarily due to the
impact of the Full Support line, a strong promotional environment
and a change in channel mix. GAAP gross margins for 2005 are
expected to be approximately 35.0% compared to 32.0% in 2004.
The 2005 non-GAAP gross margin excludes approximately $6 million
of plant closing costs, including negative manufacturing variances
associated with the closing of the production plants and losses on
the sale of production assets disposed. The 2004 non-GAAP gross
margin excludes $22.6 million of non-cash purchase accounting
adjustments and additional depreciation as a result of the May
2004 acquisition.
Maidenform expects non-GAAP operating income for 2005 to increase
approximately 13% to a range of $44.5 million to $45.5 million
compared to $39.7 million in 2004. Non-GAAP adjusted operating
income for 2005 was previously expected to be $46 million to
$48 million. GAAP operating income for 2005 is expected to be in
the range of $33 million to $34 million compared to $1.7 million
in 2004. The 2004 non-GAAP operating income eliminates
$23.7 million of non-cash purchase accounting adjustments and
additional depreciation and amortization and $14.3 million of
acquisition related charges. Included in the 2005 operating
results is a voluntary waiver of a 2005 incentive bonus of
$0.6 million by the Company's Chief Executive Officer, Thomas J.
Ward.
The 2005 adjusted non-GAAP operating income figure reflects the
elimination of approximately $7 million of unusual charges such as
initial public offering expenses, restructuring expenses, a
special cash bonus, stock compensation expense (cheap stock), the
elimination of $6 million of plant closing costs, and the addition
of $1.5 million of public company costs that would have been
incurred had the Company's initial public offering occurred at the
beginning of 2005.
Maidenform's total cash and cash equivalents at the end of
2005 were approximately $31 million versus $23 million at fiscal
year end 2004. The Company continued to de-leverage, repaying
$22.5 million of debt in 2005 subsequent to the refinancing of its
credit facility on June 29, 2005. Total debt outstanding at the
end of 2005 was $137.5 million.
Share Repurchase Program
Maidenform's Board of Directors has approved a share repurchase
program in an amount up to $20 million. The Company's current
credit facility was amended to permit share repurchases under the
plan, subject to certain restrictions and limitations set forth in
the amendment to the credit facility. The share repurchase
program, which is open-ended, will allow Maidenform to repurchase
its shares on the open market from available cash flow and
borrowings under the revolver, depending on market conditions and
other corporate considerations. As part of its ongoing strategy
to enhance value to its shareholders, the Company's Board of
Directors continues to evaluate the most appropriate action to
best utilize Maidenform's excess cash flow.
Chief Executive Officer Thomas J. Ward of Maidenform stated, "Our
team accomplished a great deal in 2005. We launched the Dream
franchise, achieved 13% net sales growth, exited internal
manufacturing and moved to 100% sourcing, became a public company,
refinanced our outstanding debt at significantly lower rates and
paid down $22.5 million of debt. Even with that, we believe that
Maidenform had the capacity to do even better and that is why I
made the decision not to take my 2005 incentive bonus. Some of
the business challenges that we encountered late in 2005 are with
us in 2006. However, the Company is taking the actions necessary
to build and grow the business such as introducing speed teams to
be first to market with our innovative products and to best serve
our customers, driving margin improvement by working with our
sourcing partners to identify additional cost savings and seizing
global opportunities."
In conclusion, Mr. Ward commented, "The announced share repurchase
program approved by the Board also clearly demonstrates our belief
in the Company and its ability to enhance value for shareholders."
Maidenform Brands, Inc. -- http://www.maidenform.com/-- is a
global intimate apparel company with a portfolio of established
and well-known brands, top-selling products and an iconic
heritage. Maidenform designs, sources and markets an extensive
range of intimate apparel products, including bras, panties and
shapewear. During the Company's 83-year history, Maidenform has
built strong equity for its brands and established a solid growth
platform through a combination of innovative, first-to-market
designs and creative advertising campaigns focused on increasing
brand awareness with generations of women. Maidenform sells its
products under some of the most recognized brands in the intimate
apparel industry, including Maidenform(R), Flexees(R),
Lilyette(R), Self Expressions(R), Sweet Nothings(R),
Bodymates(TM), Rendezvous(R) and Subtract(R). Maidenform products
are currently distributed in 48 foreign countries and territories.
* * *
Standard & Poor's has assigned a B+ corporate credit rating to
Maidenform Brands, Inc. Maidenform, Inc., earned Moody's
Investors Service's Ba3 rating on May 5, 2004.
MBA HOLDINGS: Semple & Cooper Raises Going Concern Doubt
--------------------------------------------------------
Semple & Cooper, LLP, expressed substantial doubt about M.B.A.
Holdings, Inc.'s ability to continue as a going concern after it
audited the Company's financial statements for the fiscal years
ended Oct. 31, 2005 and 2004. The auditing firm pointed to the
Company's significant losses and lack of working capital to fund
operations.
MBA Holdings reported a $7,855,486 net loss in fiscal 2005, in
contrast to a $1,209,455 net loss a year earlier. The Company
continues to incur significant losses as costs are incurred
relating to the start up of its motorcycle operations and as
continued efforts are expended to expand its warranty business.
Net revenues for the year ended Oct. 31, 2005 declined $857,000
from the $5,744,000 earned in fiscal 2004. The decline represents
a continuation of the trend that the Company has experienced in
the last several years as the major vehicle manufacturers become
increasingly larger factors in the vehicle finance marketplace.
Further, the growth that the Company expected from its motorcycle
rental locations did not materialize in fiscal 2005.
MBA Holdings has also experienced changes in its marketplace as
various states have legislated against Vehicle Service Contracts
in their entirety. Management says that state insurance
departments have been systematically tightening the regulation of
the warranty industry in an effort to provide further protections
to their citizens. This has seriously impacted the Company's
ability to do business in certain markets by forcing it to offer
the more expensive, and thus less competitive, insured product to
its customers.
The Company's balance sheet at Oct. 31, 2005, showed $6,841,954 in
total assets and liabilities of $8,594,101, resulting in a
stockholders' deficit of $1,752,147.
About MBA Holdings
MBA Holdings, Inc., through its subsidiary, Mechanical Breakdown
Administrators, Inc., markets and administers vehicular mechanical
breakdown insurance policies in the United States. It also sells
contracts for repair services to vehicles. The company is based
in Scottsdale, Arizona.
MED GEN: Issues $10 Million Shares to Paul Kravitz as Inducement
----------------------------------------------------------------
The Board of Directors of Med Gen, Inc., issued 10,000,000 shares
of common stock to Paul Kravitz as an inducement for his personal
guarantee for merchant banking lines of credit.
The Company is unable to independently secure lines of credit
because Stark Winter Schenkein & Co., LLP, Med Gen's independent
auditor expressed substantial doubt about Med Gen's ability to
continue as a going concern.
Mr. Kravitz, the president of Med Gen, is the direct owner of
10,178,685 shares, or 43.83% of Med Gen's issued and outstanding
common stock.
In the event of a default on the convertible debenture notes, NIR
Group has the right to receive the proceeds of the sale of the
shares owned by Mr. Kravitz. He has pledged these shares as
collateral for all of the 8% Convertible debentures.
Med Gen's 175,000 shares of common stock are subject to a six-
month lock-up agreement and cannot be sold until after Feb. 12,
2006. An additional 10,035,000 shares of common stock were
pledged as collateral security for the 8% Convertible Debenture
issued to a group of funds by the Company.
Med Gen Inc. -- http://www.medgen.com/-- manufactures and markets
the world's first liquid spray snoring relief formula, Snorenz(R).
Since its existence, Med Gen has continued to develop its "sprays
the way" technology, and in 2003 introduced Good Night's Sleep(R)
to the sleep-aid market. Both Snorenz(R) and Good Night's
Sleep(R) are nationally advertised and marketed to major chain and
drug stores as well as direct sales via the company web site.
* * *
As previously reported in the Troubled Company Reporter on
Jan. 26, 2006, Stark Winter Schenkein & Co., LLP, expressed
substantial doubt about Med Gen, Inc.'s ability to continue as a
going concern after it audited the Company's financial statements
for the fiscal years ended Sept. 30, 2005 and 2004. The auditing
firm pointed to the Company's significant losses from operations
as well as working capital and stockholder deficiencies.
MED GEN: Posts $779,899 Net Loss in Quarter Ended December 31
-------------------------------------------------------------
Med Gen, Inc. delivered its financial results for the quarter
ended Dec. 31, 2005, to the Securities and Exchange Commission on
Feb. 9, 2006.
For the three months ended Dec. 31, 2005, Med Gen incurred a
$779,899 net loss, versus a $259,398 net loss for the same period
in the prior year.
Sales decreased 64.51% to $100,148 for the quarter ended Dec. 31,
2005, from $282,173 for the quarter ended Dec. 31, 2004.
Management attributes the slump in sales to the Company's
inability to substantially increase "pull-thru's" of its products
as a result of its inadequate advertising budget.
Med Gen's balance sheet at Dec. 31, 2005, showed $1,094,460 in
total assets, $2,886,725 in current liabilities and $948,749 in
convertible debentures and derivative financial instruments,
resulting in a stockholders' deficit of $2,741,014.
At Dec. 31, 2005, the Company had a $2,070,728 working capital
deficit and a $27,199,662 accumulated deficit.
Going Concern Doubt
Stark Winter Schenkein & Co., LLP, expressed substantial doubt
about Med Gen's ability to continue as a going concern after it
audited the Company's financial statements for the fiscal years
ended Sept. 30, 2005 and 2004. The auditing firm pointed to the
Company's significant losses from operations as well as working
capital and stockholder deficiencies.
About Med Gen
Med Gen Inc. -- http://www.medgen.com/-- manufactures and markets
the world's first liquid spray snoring relief formula, Snorenz(R).
Since its existence, Med Gen has continued to develop its "sprays
the way" technology, and in 2003 introduced Good Night's Sleep(R)
to the sleep-aid market. Both Snorenz(R) and Good Night's
Sleep(R) are nationally advertised and marketed to major chain and
drug stores as well as direct sales via the company web site.
MERRILL CORP: S&P Places B+ Corporate Credit Rating on Watch
------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on
communications and document services company Merrill Corp.,
including its 'B+' corporate credit ratings, on CreditWatch with
positive implications.
The CreditWatch listing follows the announcement that Merrill has
filed a registration statement with the SEC for a proposed IPO of
its common stock in the amount of $253 million, which includes
common stock issuable upon exercise of the underwriters' over-
allotment option. The proposed offering will include shares sold
by Merrill Corporation, as well as by certain of Merrill's
stockholders including DLJ Merchant Banking Partners II L.P. The
St. Paul, Minnesotta-based company plans to use the IPO proceeds
for:
* debt reduction,
* working capital, and
* other general corporate purposes.
Provided the IPO closes as expected with proceeds earmarked to
make material levels of debt repayment, Standard & Poor's would
expect a sustainable improvement in Merrill's leverage profile and
ratings would be raised by one notch to 'BB-'. Standard & Poor's
previously stated that sustaining leverage on average under 4x
over the financial print business cycle would be consistent with
higher ratings.
MILLIPORE CORP: Expanded Cash Flow Cues Moody's to Lift Ratings
---------------------------------------------------------------
Moody's Investors Service upgraded Millipore Corporation's
existing ratings to Baa3 from Ba1, concluding a rating review for
possible upgrade initiated on Nov. 1, 2005. The ratings outlook
is stable.
The upgrade reflects Millipore's expansion of its cash flow and
financial flexibility over the past few years, as well as Moody's
expectations that the company will sustain its existing credit
metrics in the coming years. Moody's expects that Millipore will
generate more rapid organic revenue growth while expanding its
margins and operating cash flow. The ratings also reflect Moody's
view that structural subordination of the parent company's debt
due to its cash repatriation under the American Jobs Creation Act
will likely be modest.
The upgrade to Baa3 also reflects Moody's belief that the number
and size of acquisitions will increase, but will remain less than
$800 million in total between 2006 through 2008. If Millipore
exceeds this rate of acquisitions, the Baa3 rating could be
downgraded.
These ratings were upgraded:
* $100 Million 7.5% Senior Unsecured Notes due 2007 to Baa3,
from Ba1
* $300 Million Shelf Registration; (P) Baa3 from (P) Ba1
Moody's notes that when comparing Dec. 31, 2002 to the end of
2005, cash flow from operations expanded from $108 million to over
$185 million while free cash flow from operations increased from
$23 million to slightly under $100 million. In addition, the
company repaid approximately $234 million of net debt between
December 31, 2002 and September 30, 2005, which reduced total
outstanding debt from $334 million to $100 million for the same
periods. At the end of Dec. 2005, the company borrowed $452
million in international debt under its new revolving credit
facility and total outstanding debt increased to $552 million. At
the same time, the company's cash and marketable securities
increased from $152 million at the end of 2004 to $651 million at
Dec. 31, 2005.
Millipore's reported cash flow and earnings in 2005 was
constrained by several one-time factors and expenses. While
revenue grew by 12% in 2005, which included a meaningful
acceleration in the rate of organic revenue growth, operating
income grew by only 2%. Due to the manufacturing consolidation
plan, the reorganization of the company into two divisions, and
the reshaping of its management team, Millipore recorded almost
$31 million in extra expenses including severance and other items
in 2005.
Despite the increase in debt associated with the repatriation of
cash under the AJCA and a continued increase in capital spending,
Moody's forecasts only a slight and temporary deterioration in the
company's 2006 credit metrics. While Moody's anticipates that the
level of operating cash flow will stabilize at a range of $185
million to $190 million on a reported basis for 2006, an increase
in capital spending from $86 million in 2005 to over $100 million
in 2006 would result in a decline in reported free cash flow from
slightly under $100 million to a range of $85 million to $90
million for the same periods. The rapid acceleration in annual
capital spending in both 2005 and 2006 reflects the company's
building of a new research and development facility in the U.S,
the upgrade of manufacturing equipment at its existing plants, the
expansion of space at several plants, the closing and
consolidation of a few plants, and the streamlining and process
improvements of existing manufacturing.
Moody's anticipates that the level of free cash flow will rebound
in 2007 and beyond, supported by continued high single digit
revenue growth, continued margin expansion, recent improvements in
working capital management and a moderation in the rate of
increase in capital spending in 2007-2010. Moody's expects that
the consolidation of manufacturing plants and space, as well as
the improvement in process and equipment, should translate into
lower costs and boost gross margins. As a result, the level of
free cash flow should increase in 2007.
The repatriation of cash also improves Millipore's financial
flexibility. On a conservative basis, the cash could be used to
fund operating expenses, research and development, and the
upgrading and consolidation of domestic manufacturing plant and
space. Due to restrictions inherent in the AJCA act, the cash
cannot be utilized for paying a one-time dividend or purchasing
shares of the company's common stock. On a more aggressive basis,
the repatriated cash could support an acceleration in the pace or
size of acquisitions.
Moody's believes that the repatriation of the cash concurrent with
the international borrowings under its new credit facility creates
modest structural subordination for these reasons:
a) Moody's expects that the company has the capacity to reduce
substantially, if not repay all outstanding international
debt, in less than five years based on the cash flows of
its international subsidiaries; and
b) Moody's forecasts that cash flow from the domestic
subsidiaries in 2006 and 2007 could support the retirement
of the outstanding $100 million in the U.S due in 2007; and
c) The level of cash in excess of outstanding debt provides an
additional source of liquidity to support domestic debt.
The stable outlook incorporates Moody's expectations that the
expansion of Millipore's service and product platform,
re-invigoration of research and development, and the introduction
of new products and entry into new geographic markets will result
in high single digit to low double digit organic revenue growth in
constant currency for 2006. Moody's anticipates that the
contribution from acquisitions, higher gross margins from the
consolidation of manufacturing plants and the outsourcing of low
-margin products, as well as greater operating efficiency
emanating from the new organizational structure will lead to
expansion in margins and operating cash flow.
According to Moody's, a major risk to the company's financial
flexibility is the possibility of a more aggressive acquisition
strategy. In developing its forecasts, Moody's has assumed that
Millipore will complete several acquisitions over the next few
years, financed by a combination of cash and additional debt.
Based on those assumptions and more conservative projections for
the base business, Moody's projects adjusted operating cash flow
and free cash flow to adjusted debt ratios of approximately 30%
and 16%, respectively, in 2006. Moody's anticipates that these
same ratios will rebound to approximately 42% and 20% in 2007
based on solid growth in the core business and the expected return
on acquisitions. As a result, even under a stressed scenario, the
company will likely be able to maintain credit metrics indicative
of an investment grade company.
The ratings could be upgraded again if the company is able to
sustain credit metrics of adjusted operating cash flow to adjusted
debt of 35% to 40% and adjusted free cash flow to adjusted debt of
20% to 25%. The ability of Millipore to maintain these ratios
assumes that the company will continue to execute on its growth
strategy and expand operating cash flow while maintaining
sufficient financial flexibility.
The ratings could be downgraded if the company pursues a debt
financed transforming type of acquisition, which would result in
substantially less financial flexibility while limiting its
improvement in the adjusted free cash flow to adjusted debt ratio.
While Moody's believes that the current debt structure creates
modest structural subordination risk for US bondholders, any
material increase in U.S. debt would raise that risk. As a result,
it is possible that the addition of new debt at the US holding
company could cause a reversal of the upgrade.
Millipore, headquartered in Billerica, Massachusetts, is a leading
bioprocess and bioscience products and services company, organized
into two divisions. The Bioprocess division offers solutions that
optimize development and manufacturing of biologics. The
Bioscience division provides high performance products and
application insights that improve laboratory productivity. The
Company employs approximately 4,800 people worldwide and posted
revenues of approximately $991 million for the twelve months ended
Dec. 31, 2005.
MIRANT CORP: TransCanada & GTN Want Settlement Pacts Enforced
-------------------------------------------------------------
Mirant Corporation, its debtor-affiliates and TransCanada Gas
Services, Inc. and Gas Transmission Northwest Corporation are
parties to contracts for the transportation of natural gas. The
Contracts are governed by their tariffs regulated by the Federal
Energy and Regulatory Commission.
David W. Elrod, Esq., in Dallas, Texas, relates that the Debtors
rejected the Gas Contracts, which gave rise to rejection damages.
Gas Transmission and TransCanada timely filed their proofs of
claim.
Each time the Debtors filed proposed plans of reorganization, Gas
Transmission and TransCanada also filed timely objections to the
proposed Plans and associated disclosure statements, Mr. Elwood
states
In the days leading up to the confirmation hearing, the Debtors
engaged in negotiations with TransCanada and GTN in an attempt to
resolve their outstanding issues. The parties disputed on the
issue of the rate of interest to be paid and the classification
of the interest under the Second Amended Plan of Reorganization.
Mr. Elrod explains that the Debtors' Plan contains two provisions
for how claims will be treated with respect to interest:
a. Those claims that have a contractual rate accrue interest
at the non-default contractual rate, with compounding in
accordance with the scheduled payments; and
b. Those claims that do not have a contractual rate accrue 4%
simple interest.
Subsequently, the Debtors reached a settlement agreement with
TransCanada and Gas Transmission, on the eve of the plan
confirmation hearing. The Settlements addressed the interest
rate for each of the GTN and TransCanada claims and how they
would be treated under the Second Amended Plan.
For each of GTN and TransCanada, the agreement was that their
claims would accrue contractual interest at 4.7%. Because the
relevant, contractual FERC Interest Rate changes each quarter,
the 4.7% rate represents the blended rate over the 2.5% year
period of time from the Petition Date through the Effective Date.
Those agreements were read in open court at the status conference
in advance of the plan confirmation hearing on November 30, 2005,
Mr. Elrod says.
However, the Debtors are currently reneging on their agreement to
pay contractual interest under the Plan, Mr. Elrod tells the
Court. The Debtors refuse to execute final settlement documents
or file Rule 9019 motions, preventing TransCanada and GTN from
receiving their proper distributions in the Debtors' Chapter 11
cases.
By this motion, TransCanada and GTN ask the Court to compel the
Debtors to abide by their on-the-record agreements and provide
additional relief to TransCanada and GTN to compensate for the
Debtors' unjustified refusal to do so.
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), and emerged under the terms of a
confirmed Second Amended Plan on January 3, 2006. Thomas E.
Lauria, Esq., at White & Case LLP, represented the Debtors in
their successful restructuring. 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. 92 Bankruptcy Creditors' Service, Inc., 215/945-7000)
* * *
As reported in the Troubled Company Reporter on Dec. 8, 2005,
Standard & Poor's Ratings Services assigned its 'B+' corporate
credit rating to power generator and developer Mirant Corp. and
said the outlook is stable. That rating reflected the credit
profile of Mirant, based on the structure the company expects to
have on emergence from bankruptcy at or around year-end 2005, S&P
said.
MOOG INC: Commences Class A Common Stock Offering at $31 Per Share
------------------------------------------------------------------
Moog Inc. (NYSE: MOG.A and MOG.B) reported a public offering of
2.5 million newly issued shares of Class A common stock at $31.00
per share. Net proceeds to Moog from the offering are expected to
be approximately $73.4 million and will be used to repay
outstanding indebtedness under Moog's revolving bank credit
facility, which amount may be reborrowed for general corporate
purposes, including acquisitions. The closing of the offering is
expected to occur on February 21, 2006. Moog is offering all of
the shares solely pursuant to a prospectus supplement under Moog's
effective shelf registration statements.
SG Cowen & Co. is acting as the underwriter of the offering. Moog
has granted SG Cowen an option to purchase up to an additional
375,000 shares of Class A common stock within 30 days after the
offering to cover over-allotments, if any.
Copies of the final prospectus supplement and accompanying
prospectus related to the offering may be obtained from:
SG Cowen & Co., LLC
1221 Avenue of the Americas, 6th Floor
New York, NY 10020
Based in East Aurora, New York, Moog Inc. -- http://www.moog.com/
-- is a worldwide designer, manufacturer, and integrator of
precision control components and systems. Moog's high-performance
systems control military and commercial aircraft, satellites and
space vehicles, launch vehicles, missiles, automated industrial
machinery, and medical equipment.
Moog Inc.'s 6-1/4% Senior Subordinated Notes due 2015 carry
Moody's Investors Service's Ba3 rating and Standard & Poor's B+
rating. Moody's assigned that rating on July 27, 2001, and S&P
assigned its rating on January 5, 2005.
MOTHERS WORK: Earns $400,000 of Net Income in First Fiscal Quarter
------------------------------------------------------------------
Mothers Work, Inc. (Nasdaq: MWRK), disclosed its operating results
for the first quarter of fiscal 2006 ended December 31, 2005, and
significantly increased its targeted earnings guidance range for
the full year fiscal 2006.
Net income after stock option expense for the first quarter of
fiscal 2006 was $0.4 million. Net income before stock option
expense for the first quarter of fiscal 2006 was $0.7 million, a
significant improvement from the net loss for the first quarter of
fiscal 2005 of $(0.2) million, which did not include any stock
option expense. The Company recognized after-tax stock-based
employee compensation expense of approximately $0.3 million for
the first quarter of fiscal 2006, and did not recognize any stock
option expense in fiscal 2005 since, pursuant to the provisions of
Statement of Financial Accounting Standards (SFAS) No. 123(R), the
Company was not required to expense stock-based employee
compensation expense until the beginning of its fiscal 2006. The
Company recognized a non-recurring expense credit during the first
quarter of fiscal 2006, which benefited earnings by $0.05 per
share (diluted), for the Company's portion of the
Visa(R)/MasterCard(R) class action settlement fund.
The Company projects its stock option expense for fiscal 2006 will
be approximately $1.5 million on a pre-tax basis, approximately
$0.9 million on an after-tax basis, or approximately $0.16-$0.17
per share adverse impact on projected earnings per share for the
year, compared to no stock option expense recognized in fiscal
2005 due to the Company's adoption of SFAS No. 123(R) as of the
beginning of fiscal 2006.
Net sales for the first quarter of fiscal 2006 increased 13.3% to
$151.4 million from $133.6 million in the same quarter of the
preceding year. The increase in net sales for the quarter was
primarily driven by sales from the expansion of the Company's
proprietary Two Hearts(TM) Maternity collection to an additional
497 Sears(R) locations during late March 2005, sales from the
Company's Oh Baby! by Motherhood(TM) licensed arrangement with
Kohl's(R), which launched during the second quarter of fiscal
2005, as well as an increase in comparable store sales. Comparable
store sales increased 3.1% during the first quarter of fiscal 2006
(based on 1,019 locations) versus a comparable store sales
decrease of 4.2% during the first quarter of fiscal 2005 (based on
894 locations). The comparable store sales increase of 3.1% for
the first quarter of fiscal 2006 was favorably impacted by
approximately 0.5 percentage points due to having five Saturdays
in December 2005 compared to four Saturdays in December 2004. For
the quarter ended December 31, 2005, the Company opened 6 stores
(including the reopening of 3 stores, which had been closed since
late August 2005 due to Hurricane Katrina) and closed 7 stores.
The Company ended the quarter with 851 stores and 1,594 total
retail locations, compared to 880 stores and 1,111 total retail
locations at the end of December 2004. Adjusted EBITDA was
$10.6 million for the first quarter of fiscal 2006, a 34% increase
from the $7.9 million of Adjusted EBITDA for the first quarter of
fiscal 2005.
Rebecca Matthias, President and Chief Operating Officer of Mothers
Work, Inc., noted, "We are very pleased with our strong sales,
earnings and cash flow performance for the first quarter of fiscal
2006 and our strong sales in January, strengthening our conviction
that we will deliver significantly improved financial results in
fiscal 2006 and beyond, as evidenced by the significant increase
in our earnings guidance for the year. Our comparable store sales
for the first quarter of fiscal 2006 increased 3.1%, and we
continued this strong sales performance in January with a
comparable store sales increase of 3.9%, marking our fifth
consecutive month of comparable store sales increases. As we have
stated in our recent press releases, we believe the oversupply
conditions that plagued the maternity apparel business during our
fiscal 2004 and 2005 have eased somewhat, and we believe that our
strong sales trend in recent months reflects this. We are
optimistic about delivering significantly improved financial
results and continuing our strategic transition in fiscal 2006, as
we expect to see a continuation of our improved sales trend and
realize increased earnings contribution from our new strategic
initiatives, including increased contribution from our marketing
partnerships, a full year contribution from our Sears and Kohl's
initiatives, and the continued rollout of our multi-brand stores.
We continue to be very excited that our new strategic business
initiatives will promote our long-term growth in sales and
profitability, while addressing the continued competitive
pressures in the maternity apparel business.
"For the second quarter of fiscal 2006, we are targeting net sales
in the $142.5 to $144.5 million range, based on an assumed
comparable store sales increase of 0.5% to 2.0% for the quarter,
and are targeting earnings per common share (diluted) of between a
loss of $(0.05) per share to earnings of $0.01 per share after
stock option expense. Our second quarter comparable store sales
guidance of up 0.5% to up 2.0% is lower than our actual January
comparable store sales increase of 3.9% primarily because the
unseasonably warm weather in January may well have shifted some
early Spring sales from February into January, with January sales
exceeding our expectations. Also, our projected second quarter
comparable store sales range takes into account an expected
unfavorable impact of approximately 0.5 percentage points, due to
January 2006 having one less Saturday than January 2005 and the
timing of Easter shifting from March in 2005 to April in 2006.
"We are targeting net sales for fiscal 2006 in the $586 to
$593 million range, representing sales growth of approximately 4%
to 6% over fiscal 2005, based on the planned sales contribution
from the full-year impact of our Sears and Kohl's initiatives, an
assumed comparable store sales increase of between 1.7% and 2.6%
for the full fiscal year, and planned increases in Internet sales
and marketing partnership revenue.
"Our targeted sales for fiscal 2006 reflect our plan to open
between 15 and 22 new stores during the year, including
approximately 5 to 10 new multi-brand stores, and close
approximately 55 to 65 stores, with approximately 15 to 20 of
these planned store closings related to openings of new multi-
brand stores, including our Destination Maternity Superstores.
In addition, we now market our Two Hearts Maternity collection
through leased departments in 573 Sears locations, and distribute
our Oh Baby! by Motherhood collection through a licensed
arrangement at Kohl's stores throughout the United States and on
Kohls.com. Kohl's currently operates approximately 732 stores in
41 states.
"We project that our gross margin for fiscal 2006 will be
approximately 51.7% of net sales, an increase from our 50.6% gross
margin in fiscal 2005, driven by a planned increase in gross
margins in our own stores versus last year, partially offset by
the full year impact of the lower gross margin realized on sales
from our licensed business. We expect our operating expenses to
decrease modestly as a percentage of net sales for fiscal 2006
versus fiscal 2005, primarily as a result of the expense leverage
from the full year impact of our Sears and Kohl's initiatives and
our other planned sales increases, as well as a continued sharp
focus on expense control.
"Based on these assumptions, we are projecting operating income
for fiscal 2006 in the $22.0 million to $24.1 million range, and
Adjusted EBITDA (representing operating income before certain non-
cash charges) in the $40.8 million to $42.9 million range,
representing a projected increase of between 20% and 27% from our
fiscal 2005 Adjusted EBITDA of $33.9 million. Of course, our
ability to achieve these targeted results will depend, among other
factors, on the overall retail, economic, political and
competitive environment as well as the results from our new
initiatives.
"We plan our fiscal 2006 capital expenditures to be between
$11 million and $13 million, compared to $17.6 million for fiscal
2005, primarily for new store openings, expanding and relocating
selected stores, store remodelings, and some continued investment
in our management information systems and distribution center. We
expect our inventory at fiscal 2006 year end to decrease by at
least $5 million versus fiscal 2005 year end, as we anniversary
the increase in inventory from our new initiatives and from
intentionally bringing new season merchandise into our stores
earlier than the prior year, and as we more tightly plan our
inventory levels relative to sales. Based on these targets and
plans, we expect to generate significant positive free cash flow
during fiscal 2006. We project that we will end fiscal 2006 with
cash and cash equivalents plus short-term investments of at least
$20 million, a projected increase of at least $17 million over the
comparable fiscal 2005 year end balance of $3.0 million. As
of the end of the first quarter of fiscal 2006, our balance of
cash and cash equivalents plus short-term investments was
$25.3 million, an increase of $8.1 million over the comparable
fiscal 2005 end of first quarter balance of $17.2 million. We are
very pleased with our strong financial liquidity. Although we had
modest borrowings from our $60 million credit facility during
portions of fiscal 2005 and portions of the first quarter of
fiscal 2006, reflecting seasonal and other timing variations in
cash flow, we did not have any outstanding credit line borrowings
at the end of the first quarter of fiscal 2006 and expect to have
none at the end of fiscal 2006. Our average level of borrowings
under our credit facility was $1.3 million for the first quarter
of fiscal 2006, with no borrowings under our credit facility as of
the end of the quarter.
"Looking forward to fiscal 2007, we expect to generate
significantly higher earnings than fiscal 2006, while generating
significant positive free cash flow."
Mothers Work is reportedly the world's largest designer and
retailer of maternity apparel, using its custom TrendTrack(TM)
merchandise analysis and planning system as well as its quick
response replenishment process to "give the customer what she
wants, when she wants it." As of January 31, 2006, Mothers Work
operates 1,579 maternity locations, including 839 stores,
predominantly under the tradenames Motherhood Maternity(R), A Pea
in the Pod(R), Mimi Maternity(R), and Destination Maternity(TM),
and 740 leased departments, and sells on the web through its
DestinationMaternity.com, maternitymall.com and brand-specific
websites.
* * *
As reported in the Troubled Company Reporter on Oct. 12, 2005,
Standard & Poor's Ratings Services lowered its corporate credit
and unsecured note ratings on Philadelphia-based Mothers Work Inc.
to 'B-'from 'B'. S&P said the outlook remains negative.
As reported in the Troubled Company Reporter on Feb. 2, 2005,
Moody's Investors Service downgraded the long-term debt ratings of
Mothers Work, Inc. Moody's said the outlook is stable.
The ratings downgraded are:
* Senior Implied - to B3 from B2;
* $125 million senior secured guaranteed senior notes, maturing
2010 - to Caa1 from B3;
* Unsecured Issuer Rating - to Caa1 from B3.
MTI TECHNOLOGY: Balance Sheet Upside-Down by $2.6MM in 3rd Quarter
------------------------------------------------------------------
MTI Technology Corporation delivered its financial results for the
quarter ended Dec. 31, 2005, to the Securities and Exchange
Commission on Feb. 14, 2006.
MTI Technology generated $40.2 million of revenue for the quarter
ended Dec. 31,. 2005, a 27% sequential increase from $31.6 million
of revenue reported in the prior quarter and a slight increase
compared to $39.5 million of revenue reported in the comparable
prior year period.
The Company reported an operating loss of $1.56 million for the
quarter, an improvement of $1.7 million, or 52%, year-over-year
and $1.9 million, or 55%, sequentially. The improved operating
results were driven by a broad reduction in spending and increased
product sales.
Net loss applicable to common stockholders for the third quarter
was $3 million compared to a net loss of $3.2 million or in the
same quarter of the prior fiscal year and a net loss of $4.1
million for the preceding quarter.
MTI Technology's balance sheet at Dec. 31, 2005, showed a
stockholders' deficit of $2.6 million. As of Dec. 31, 2005, the
Company had $21.2 million in cash and cash equivalents. The
increase in cash and cash equivalents was due primarily to the
$19.2 million net proceeds raised from the sale of Series B
convertible preferred stock in November of 2005.
"Order volume recovered nicely from our summer quarter," stated
Tom Raimondi, President and CEO of MTI. "Our stronger backlog of
$6.8 million entering the current quarter is a positive sign for
continued momentum. With improving service margins and a strong
focus on keeping our spending in check, we continue to be focused
on reaching profitability and revenue growth."
A copy of the regulatory filing is available for free at
http://researcharchives.com/t/s?565
About MTI Technology
MTI Technology Corporation -- http://www.mti.com/-- is a leading
multi-national provider of professional services and comprehensive
data storage solutions for mid to large-size organizations. As a
strategic partner of EMC (NYSE:EMC), MTI offers the best data
storage, protection and management solutions available today. MTI
currently serves more than 3,000 customers throughout North
America and Europe.
MUSICLAND HOLDINGS: FTI Consulting Taking Bids for 400-Store Chain
------------------------------------------------------------------
FTI Consulting, Inc., serving as Musicland Holding Corp. and its
debtor-affiliates' financial advisor, is contacting strategic and
financial buyers who may have an interest in exploring a purchase
of assets or funding a stand-alone plan of reorganization.
Additional information is available from:
Jeffrey R. Manning
Senior Managing Director
FTI Capital Advisors, LLC
1201 Eye Street NW
Washington, DC 20005
Office (202) 312-9225
Mobile (917) 549-0312
Musicland is circulating a one-page Executive Summary saying:
SPECIAL SITUATIONS OPPORTUNITY
IN A LEADING SPECIALTY RETAILER
~ Time Sensitive Matter ~
Auction Date to Be Scheduled Based on Court Calendar
[Approximately mid to end of March 2006 has been
requested of the Court.]
Musicland Holdings, Inc.
A. Company Overview
As one of the top specialty retailers of music and movies in the
nation, the Company operates 400 stores in the U.S. and Puerto
Rico. With more than 191 stores (consisting of both mall and
stand-alone locations), the Company's Sam Goody concept sells CDs,
DVDs, videos, video games and other music-related items. In
addition, the Company owns 209 Suncoast Motion Picture Company
stores, which sell videos, DVDs, magazines, movie memorabilia, and
movie-themed apparel in mall locations. Sam Goody and Suncoast
also sell product on their websites, providing a vast library of
pre-recorded music, movies and video games.
The Company is facing challenging trends in the music and movie
retail industry, including growing use of digital content delivery
and channel shifting to discounters and mass merchandisers. As a
result of these challenges and a high degree of leverage, the
Company filed for Chapter 11 bankruptcy protection on January 12,
2006 in order to facilitate an operational and financial
reorganization. Musicland has closed or is in the process of
closing approximately 420 unprofitable Sam Goody and Suncoast
locations, resulting in a leaner and more profitable 400 chain
operation.
In its fiscal year ended February 2006, the Company's proforma
revenues assuming a go-forward 400 store chain are estimated
to be $441.0 million.
B. The Transaction
The Company is currently exploring strategic alternatives,
including the sale of its assets. The Company's 400 locations
offer an extensive catalog of music and movies (with over 14,700
titles) and knowledgeable sales force, providing a strong platform
for a financial investor or strategic buyer seeking the ability to
expand and diversify its operations. This opportunity would
enable a buyer or partner to capitalize on (i) the demographic of
music and movie enthusiasts aged 12 to 34; (ii) a strong well-
respected loyalty program with over 2.5 million members; and (iii)
a substantial national footprint of remaining stores offering a
critical mass of retail outlets in the U.S. Key members of the
Company's management team are prepared to remain with the Company
following the Transaction, subject to the acquirer's needs.
For additional information, please contact:
Musicland Group, Inc.
10400 Yellow Circle Drive, Minnetonka, MN 55343-9012
Fax: (952) 931-8659
Michael Madden
President & Chief Executive Officer
Office Tel: (952) 931-8870
Mobile Tel: (407) 375-6251
Craig Wassenaar
Chief Financial Officer
Office Tel: (952) 931-8310
Mobile Tel: (952) 334-4596
MUSICLAND HOLDING: Wants to Set Up Reclamation Claim Procedures
---------------------------------------------------------------
In the ordinary course of business, Musicland Holding Corp. and
its debtor-affiliates purchase a substantial volume of inventory
of music, movies, games and other entertainment-related goods from
third party vendors. Prior to their bankruptcy filing, the
Debtors received reclamation demands from these vendors. The
Debtors anticipate they will receive more reclamation demands as
their Chapter 11 cases progress.
The Debtors are concerned that a deluge of reclamation demands
could adversely affect their operations at the early stages of
their Chapter 11 cases, James H.M. Sprayregen, Esq., at Kirkland
& Ellis LLP, in New York, tells the U.S. Bankruptcy Court for the
Southern District of New York.
Accordingly, the Debtors propose these uniform procedures for
processing and reconciling reclamation claims:
(a) Any vendor asserting a claim for reclamation must satisfy
all requirements entitling it to have a right of
reclamation under Section 546(c)(1) of the Bankruptcy Code
and will send the reclamation demand to the Debtors at:
Musicland Holding Corp.
Attn: Lew Garett
10400 Yellow Circle Drive,
Minnetonka, Minnesota 55343
(b) After receiving all reclamation demands and reviewing it,
the Debtors will file a reclamation notice and serve that
Reclamation Notice on parties-in-interest, listing those
reclamation claims and amounts that they deem to be valid;
(c) The Debtors will file the Reclamation Notice within 90
days of the Court's approval of the proposed procedures;
(d) If the Debtors fail to file the Reclamation Notice within
the required period of time, any holder of a reclamation
claim may bring a motion on its own behalf, but may not
bring that motion earlier than 90 days after the Court's
ruling on the Debtors' request;
(e) Parties-in-interest will have the right and opportunity to
object to the inclusion or omission of any asserted
reclamation claim in the Reclamation Notice;
(f) Any reclamation claim that is included in the Reclamation
Notice and is not the subject of an objection within 20
days after service, will be a valid reclamation claim
allowed by the Court; and
(g) All valid reclamation claims pursuant to the procedure
will be considered subject to the requirements of
applicable law and subject to the prior rights of Wachovia
Bank, National Association, to the extent of Wachovia's
security interest in the goods or proceeds.
St. Clair Responds
St. Clair Entertainment Group, Inc., a vendor of various
entertainment-related goods, seeks clarification as to whether its
security interest in certain consigned goods is subject to the
Debtors' Reclamation Procedures.
Pursuant to a Consignment Agreement with St. Clair dated Jan. 27,
2005, the Debtors would order goods from St. Clair on consignment
and remit payment based on the sales of those goods. St. Clair
properly filed a UCC Financing Statement covering all of its
consigned goods.
Christopher R. Belmonte, Esq., at Satterlee Stephens Burke &
Burke LLP, in New York City, asserts that St. Clair has a duly-
perfected, first security interest in its consigned collateral.
Headquartered in New York, New York, Musicland Holding Corp., is a
specialty retailer of music, movies and entertainment-related
products. The Debtor and 14 of its affiliates filed for chapter
11 protection on Jan. 12, 2006 (Bankr. S.D.N.Y. Lead Case No.
06-10064). James H.M. Sprayregen, Esq., at Kirkland & Ellis,
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. (Musicland Bankruptcy
News, Issue No. 5; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
MUSICLAND HOLDING: Court OKs Injunction Against Utility Companies
-----------------------------------------------------------------
Section 366(a) of the Bankruptcy Code prevents utility companies
from discontinuing, altering or refusing service to a debtor
during the first 20 days of a bankruptcy case.
However, 30 days from the Debtor's bankruptcy filing, a utility
company has the option of terminating its services, pursuant to
Section 366(c)(2) if a debtor has not furnished adequate assurance
of payment.
Musicland Holding Corp. and its debtor-affiliates use gas, water,
sewer, electric, telephone and other similar utility services
provided by more than 2,200 utility companies. The Debtors
estimate that their average monthly obligations to the Utility
Providers total $2,000,000. The Debtors have a history of full
payment with each of the Utility Providers, according to James
H.M. Sprayregen, Esq., at Kirkland & Ellis LLP, in New York.
Moreover, the Debtors fully intend to pay all postpetition
obligations owed to the Utility Providers in a timely manner, Mr.
Sprayregen tells the U.S. Bankruptcy Court for the Southern
District of New York. The Debtors expect that unencumbered cash
and borrowings under their proposed postpetition credit facility
will be more than sufficient to pay all postpetition utility
obligations.
Mr. Sprayregen points out that uninterrupted utility services are
essential to the Debtors' operations. Any interruption in the
utility services, even for a brief period, could be damaging. The
impact on the Debtors' business operations, customer dealings,
revenue and profits would be extremely harmful and would
jeopardize the Debtors' restructuring efforts.
Adequate Assurance Procedures
Accordingly, the Debtors propose to provide a deposit equal to two
weeks of utility service to any Utility Provider who seeks a
deposit in writing provided that the requesting Utility Provider
(i) does not already hold a deposit equal to or greater than two
weeks of utility services, and (ii) is not currently paid in
advance for its services.
As a condition of requesting and accepting an Adequate Assurance
Deposit, the requesting Utility Provider will be deemed to have
stipulated that the Deposit comprises adequate assurance of future
payment within the meaning of Section 366, and will be considered
to have waived any right to seek additional adequate assurance
during the course of the Chapter 11 cases.
Any Utility Provider desiring an Adequate Assurance Deposit must
serve a request on:
(1) Musicland Holding Corp.
Attn: Kristin LeBre
10400 Yellow Circle Drive
Minnetonka, Minnesota 55343
(2) Kirkland & Ellis LLP
Attn: Jonathan Friedland, Esq.
200 East Randolph Drive
Chicago, Illinois 60601
Adequate Assurance Requests must:
(i) be made in writing;
(ii) state the location for which utility services are
provided;
(iii) include a summary of the Debtors' payment history relevant
to the affected accounts; and
(iv) state why the Utility Provider believes the Proposed
Adequate Assurance is not sufficient.
Upon the Debtors' receipt of any Adequate Assurance Request, the
Debtors will have the greater of 14 days from the receipt of the
Adequate Assurance Request or 30 days from the Petition Date to
negotiate with the Utility Provider to resolve that request.
Without further Court order, the Debtors may resolve any Adequate
Assurance Request by mutual agreement with the Utility Provider
and may provide a Utility Provider with additional adequate
assurance of future payment if they believe that additional
assurance is reasonable.
If the Debtors determine that the Adequate Assurance Request is
not reasonable and are not able to reach an alternative resolution
with the Utility Provider during the Resolution Period, the
Debtors can seek a Court hearing.
Pending resolution of any Determination Hearing, that Utility
Provider will be restrained from discontinuing, altering, or
refusing service to the Debtors on account of unpaid charges for
prepetition services or on account of any objections to the
Proposed Adequate Assurance.
Opting Out of the Adequate Assurance Procedures
Mr. Sprayregen points out that under the reading of revised
Section 366, on the 29th day after the Petition Date, a Utility
Provider could announce that the proposed adequate assurance is
not acceptable, demand an extortionary deposit and threaten to
terminate utility service unless the demand was complied with.
To avoid that situation, the Debtors propose these procedures:
(a) Any Utility Provider who objects to the Adequate Assurance
Procedures must file an objection;
(b) Any Procedure Objection must (i) be made in writing; (ii)
state the location for which utility services are
provided, including a summary of the Debtors' payment
history; (iii) state why the Utility Provider believes the
Proposed Adequate Assurance is not adequate; and (iv)
state why the Utility Provider believes it should be
exempted from the Adequate Assurance Procedures;
(c) The Debtors may resolve any Procedure Objection by mutual
agreement with the Utility Provider and without a court
order, and may provide a Utility Provider with additional
adequate assurance of future payment;
(d) If the Debtors determine that the Procedure Objection is
not reasonable and are not able to reach a prompt
alternative resolution with the Utility Provider, the
Procedure Objection will be heard at the Final Hearing;
and
(e) All Utility Providers who do not timely file a Procedure
Objection are deemed to consent to the Adequate Assurance
Procedures. Their sole recourse will be to submit an
Adequate Assurance Request and they will be enjoined from
ceasing performance pending any Determination Hearing that
may be conducted.
By this motion, the Debtors ask the Court to:
(a) determine that their Utility Providers have been provided
with adequate assurance of payment within the meaning of
Section 366;
(b) approve their proposed Adequate Assurance and Adequate
Assurance Procedures where Utility Providers may seek
additional or different adequate assurance;
(c) prohibit the Utility Providers from altering, refusing or
discontinuing services on account of prepetition amounts
outstanding or on account of any perceived inadequacy of
the Debtors' proposed adequate assurance;
(d) establish procedures for the Utility Providers to opt out
of the proposed Adequate Assurance Procedures;
(e) determine that they are not required to provide any
additional adequate assurance beyond what they proposed;
and
(f) set a final hearing on their proposed adequate assurance.
Objections
At least 27 utility companies ask the Court to deny the Debtors'
motion:
* Dominion East Ohio
* Dominion Peoples
* Dominion Virginia Power
* Consolidated Edison Company of New York, Inc.
* Long Island Lighting Company dba LIPA
* KeySpan Energy Delivery Long Island
* Public Service Electric and Gas Company
* San Diego Gas & Electric Company
* Niagara Mohawk Power Corporation
* Narragansett Electric
* Granite State Electric
* Massachusetts Electric
* Georgia Power Company
* Florida Power Corporation d/b/a Progress Energy Florida Inc.
* Carolina Power & Light d/b/a Progress Energy Carolinas
* Southern California Edison Company
* Connecticut Light & Power Company
* American Electric Power
* Energy Gulf States, Inc.
* Entergy Mississippi, Inc.
* Entergy Arkansas, Inc.
* Entergy Louisiana LLC
* Pepco Holdings, Inc.
* Potomac Electric Power Company
* Alabama Power Company
* Gulf Power Company
* Florida Power and Light
The Objecting Utilities assert that the Debtors' motion seeks to
improperly shift the burden of obtaining adequate assurance to
them.
On Pepco Holdings' behalf, William Douglas White, Esq., at
McCarthy & White, PLLC, in McLean, Virginia, relates that the
Debtors' motion is premature because the Debtors have not paid the
objecting utilities.
Mr. White adds that the Debtors' request for procedures should be
denied because the proposed procedures do not exist in Section
366 and would improperly prohibit the objecting utilities from
disconnection beyond the 30-day provision.
The Objecting Utilities ask the Court to compel the Debtors to pay
postpetition adequate assurances.
Utility Prepetition Debt Deposit Request
------- ---------------- ---------------
DEO $900 $869 (2-month)
DP $500 $969 (2-month)
DVP $4,976 $1,093 (2-month)
Con. Ed. $9,392 $17,095 (2-month)
KEDLI $230 $555 (2-month)
LIPA $19,700 $39,865 (2-month)
PSEG $4,559 $12,971 (2-month)
SDGE $45,667 $63,318 (2-month)
NIMO $34,279 $106,144 (2-month)
Narragansett $316 $250 (2-month)
Granite State $655 $1,200 (2-month)
Mass. Elec. $1,755 $1,667 (2-month)
GPC $23,769 $53,270 (2-month)
Progress Florida $5,394 $8,775 (2-month)
Progress Carolina $3,781 $13,576 (2-month)
SCE n/a $53,000 (2-month)
Alabama Power - $7,000
Gulf Power - $1,800
Entergy, et al. $6,290 $16,430
Connecticut Light $14,590 $37,600
Pepco - $7,100
Florida Power - $20,100
* * *
The Court grants the Debtors' request. Judge Bernstein also
authorizes the Debtors to pay amounts that may be due to Cass or
Avista.
However, the order will not apply to the Objecting Utilities.
Their objections will be heard at a later date.
Headquartered in New York, New York, Musicland Holding Corp., is a
specialty retailer of music, movies and entertainment-related
products. The Debtor and 14 of its affiliates filed for chapter
11 protection on Jan. 12, 2006 (Bankr. S.D.N.Y. Lead Case No.
06-10064). James H.M. Sprayregen, Esq., at Kirkland & Ellis,
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. (Musicland Bankruptcy
News, Issue No. 5; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
NAVISTAR INT'L: Ad Hoc Noteholders' Committee Forms & Begins Talks
------------------------------------------------------------------
The Ad Hoc Committee of Senior Noteholders of Navistar
International Corporation advised Navistar that its members now
collectively hold substantially more than a majority in principal
amount of each of those two series of notes and that it is
prepared to negotiate with the Company to address the Company's
inability to meet its financial reporting obligations under the
respective Indentures for these Notes. The Committee members are
financial institutions who are holders of Navistar's $250 million
issue of 7-1/2% Senior Notes due 2011 and its $400 million issue
of 6-1/4% Senior Notes due 2012. The Committee previously had
caused the Trustee for the Notes to issue a notice of that default
under the respective Indentures for the notes, which the Company
has acknowledged that it received on Feb. 3, 2006.
"The Ad Hoc Committee looks forward to having a constructive
dialogue with the Company and is hopeful that these discussions
will lead to a productive result for all concerned," J. Andrew
Rahl, Jr. of Anderson Kill & Olick, P.C., counsel to the Ad Hoc
Committee, commented.
Headquartered in Warrenville, Illinois, Navistar International
Corporation -- http://www.nav-international.com/-- is the parent
company of International Truck and Engine Corporation. The
company produces International(R) brand commercial trucks, mid-
range diesel engines and IC brand school buses, Workhorse brand
chassis for motor homes and step vans, and is a private label
designer and manufacturer of diesel engines for the pickup truck,
van and SUV markets. The company is also a provider of truck and
diesel engine parts and service sold under the International(R)
brand. A wholly owned subsidiary offers financing services.
* * *
As reported in the Troubled Company Reporter on Feb. 07, 2006,
Moody's Investors Service lowered the ratings of Navistar
International Corporation (senior unsecured to B1 from Ba3 and
subordinate to B3 from B2) and placed the ratings under review for
further possible downgrade. Moody's rating actions followed
Navistar's announcement that it has received notice from purported
holders of more than 25% of the company's approximately $200
million senior subordinated exchangeable notes due 2009, claiming
that the company is in default of reporting requirements relating
to the filing of its financial statements for the fiscal year
ending Oct. 31, 2005. The company disputes the allegation of
default. Nevertheless, receipt of the notice of default
represents a further negative development for the company stemming
from its inability to file financial statements in a timely manner
because of accounting issues.
The downgrade and review reflect the heightened financial risk
stemming from uncertainty as to Navistar's ability to file its
financial statements in a timely manner given the number and
complexity of various open items that the company continues to
discuss with its auditors Deloitte and Touche. As a result of
these open issues, Navistar cannot estimate the time frame for the
filing of its October 2005 financial statements.
NEWFIELD EXPLORATION: Earns $184 Mil. in Fourth Qtr. Ended Dec. 31
------------------------------------------------------------------
Newfield Exploration Company (NYSE: NFX) reported its financial
and operating results for the fourth quarter and full-year 2005.
Newfield's 2005 Highlights
-- Proved reserves increased 12% to 2 trillion cubic feet
equivalent. Diversification is evident with reserves more
evenly distributed among our focus areas:
* 29% in the Mid-Continent,
* 23% Onshore Gulf Coast,
* 20% Rocky Mountains,
* 20% Gulf of Mexico, and
* 8% International;
-- Added 467 Bcfe of proved reserves, nearly two times 2005
production. Almost all -- 96% -- of the reserve additions
came through the drillbit. No significant acquisitions were
completed in 2005;
-- Made several significant exploration discoveries, including
Grove in the U.K. North Sea and Wrigley in the deepwater
Gulf of Mexico. Production from both is expected to
commence in the fourth quarter of 2006, adding more than
100 MMcfe/d (gross);
-- Gained access to 52,000 acres in three South Texas counties
through a multi-year JV with a major oil company. The first
three wells drilled under the JV were successful and up to
10 additional wells are expected to be drilled in the
remainder of 2006. Plan to drill about 100 wells onshore
Texas in 2006;
-- Assimilated the Inland acquisition from 2004 and drilled
nearly 200 wells in the Monument Butte Field in Utah.
Production grew about 25%, exiting 2005 at more than
10,000 BOPD;
-- Began development of four fields offshore Malaysia.
Malaysian production expected to increase from a year-end
2005 rate of 10,000 BOPD gross to more than 45,000 BOPD
gross in 2008. In 2006, plan to drill 10-12 shallow water
wells (PM 318, 323) and the first deepwater well (Block 2C);
and
-- Began development of two fields in China's Bohai Bay. First
production is expected in late 2006.
Newfield's Fourth Quarter 2005 Financial Highlights
For the fourth quarter of 2005, Newfield reported net income of
$184 million, which reflects:
-- a $147 million gain ($95 million after-tax) associated with
unrealized changes in the fair market value of open
derivative contracts that do not qualify for hedge
accounting; and
-- a $10 million ceiling test write down associated with
decreased emphasis on Brazil and other international
exploration efforts in non-core regions.
Revenues in the fourth quarter of 2005 were $443 million. Net
cash provided by operating activities before changes in operating
assets and liabilities was $282 million.
By comparison, Newfield's net income for the fourth quarter of
2004 was $90 million. Net income in this period was negatively
affected by a $23 million after-tax charge for the impairment of
the Enserch Garden Banks floating production facility -- EGB --
and related pipelines and processing facility and a ceiling test
write down of $10 million for dry hole expense in the U.K. North
Sea. Without the effect of these items, net income for the fourth
quarter of 2004 would have been $123 million. Revenues in the
same period were $437 million. Net cash provided by operating
activities before changes in operating assets and liabilities was
$304 million in the fourth quarter of 2004.
Newfield's production in the fourth quarter of 2005 was 50.3 Bcfe,
reflecting an estimated 16 Bcfe of deferred production related to
hurricanes in the Gulf of Mexico. Production in the fourth
quarter of 2004 was 69.5 Bcfe.
Newfield's Full-year 2005 Financial Highlights
For 2005, Newfield posted net income of $348 million on revenues
of $1.8 billion, which reflects:
-- a $210 million charge ($137 million after-tax) associated
with unrealized changes in the fair market value of open
derivative contracts that do not qualify for hedge
accounting;
-- an $8 million benefit related to a reversal of the valuation
allowance on U.K. net operating loss carry forwards because
of a substantial increase in estimated future taxable income
as a result of the Grove discovery in the U.K. North Sea;
-- a $7 million gain ($5 million after-tax) on the sale of the
EGB; and
-- a $10 million ceiling test write down associated with
decreased emphasis on Brazil and other international
exploration efforts in non-core regions.
Net income in 2004 was $312 million, or $2.63 per share, on
revenues of $1.4 billion. Net income, excluding a $23 million
after-tax charge for the impairment of the EGB and a $17 million
ceiling test writedown associated with dry hole costs in the North
Sea, would have been $352 million. Net cash provided by operating
activities before changes in operating assets and liabilities was
$1.2 billion in 2005 compared to $965 million in 2004.
In 2005, Newfield produced 241.6 Bcfe, which reflects the deferral
of about 22 Bcfe related to hurricanes. Production in 2004 totaled
243.6 Bcfe.
As of Feb. 8, 2006, Newfield had no outstanding borrowings under
its credit arrangements. The remainder of long-term debt consists
of four separate issuances of notes that total $875 million in
principal amount.
Newfield Exploration Company -- http://www.newfield.com/-- is an
independent crude oil and natural gas exploration and production
company. The Company relies on a proven growth strategy that
includes balancing acquisitions with drill bit opportunities.
Newfield's areas of operation include the Gulf of Mexico, the U.S.
onshore Gulf Coast, the Anadarko and Arkoma Basins of the Mid-
Continent, the Uinta Basin of the Rocky Mountains and offshore
Malaysia. The Company has international development projects
underway in the U.K. North Sea and in Bohai Bay, China.
* * *
Newfield Exploration Company's 8-3/8% Senior Subordinated Notes
due 2012 carry Moody's Investor Services' Ba3 rating, Standard &
Poor's Ratings Services' BB- rating, and Fitch Ratings' BB-
rating.
NORTHWESTERN CORP: Harbinger Challenges Sale Process & Poison Pill
------------------------------------------------------------------
Harbinger Capital Partners Master Fund I, Ltd., a NorthWestern
Corporation shareholder, initiated a referendum among
NorthWestern's shareholders and is soliciting material pursuant to
Sec.240.14a-12 of the Securities Exchange Act of 1934.
Harbinger Capital wants shareholders to express their views to the
Company's Board of Directors on the advisability of the Board's
taking these actions proposed by Harbinger:
-- commit to an unambiguous, open, fair and formal process for
the sale or merger of the Company; and
-- repeal the Company's poison pill.
Harbinger Capital currently owns approximately 20% of the
Company's outstanding shares of common stock and is the Company's
largest stockholder,
Harbinger Capital is reportedly troubled by several recent actions
by the Board that have been "orchestrated to entrench the Board at
the expense of the stockholders."
In a Schedule 14A filing with the Securities and Exchange
Commission, Harbinger Capital laments, "the Board's actions
reflect a pattern of activity that violates good corporate
governance practices, stifles corporate democracy and is not in
the best interests of the Company and its stockholders."
As reported in the Troubled Company Reporter yesterday, the Board
had commenced "an evaluation of all strategic alternatives" and
that the Company had "entered into confidentiality agreements with
a select number of parties which have expressed interest in
participating in the process." At the same time the Board stated
that it may terminate the process at any time.
Harbinger Capital argues that the Board has a track record of not
acting in the best interests of the stockholders and it is
concerned that this ambiguous announcement is an indication that
the Board continues to attempt to entrench itself.
Harbinger Capital points out that the Company's share price has
consistently underperformed when compared to other utilities. The
share price has lagged behind the Dow Jones Utilities Index,
Philadelphia Stock Exchange Utility Index and Standard & Poor's
500 Electric Utilities Index throughout 2005. In Harbinger
Capital's view, the only times the Company's stock has been valued
at the level of its peers is when the market believed a sale of
the Company was likely.
The share price performed well at times when two offers were made
public, one from Montana Public Power, Inc., and the other from
Black Hills Corporation and when a confidentiality agreement with
Black Hills was finally announced. In the first two instances,
the share price subsequently fell in the following weeks and
months as the Board ignored or rejected each offer or created
obstacles to a sale or merger of the Company, such as adopting the
poison pill. Even when the Board announced its stand-alone plan
to increase stockholder value in November 2005, the share price
fell in response, which in Harbinger Capital's view clearly shows
that the market supports a sale of the Company.
The Other Disgruntled Shareholder
As reported in the Troubled Company Reporter on Jan. 13, 2006,
Harbert Distressed Investment Master Fund, Ltd., planned to
propose a slate of directors and solicit stockholders to vote for
their slate with the goal of removing the current Board at the
Company's next annual meeting.
Harbert Distressed Investment Master Fund, Ltd., HMC Distressed
Investment Offshore Manager, L.L.C., HMC Investors, L.L.C., Philip
Falcone, Raymond J. Harbert, and Michael D. Luce, hold
approximately 20% of the Company's common stock and approximately
33% of the Company's warrants.
As reported in the Troubled Company Reporter on December 22, 2005,
Harbert Distressed retained MacKenzie Partners, Inc., as proxy
solicitors to encourage other shareholders to share their views on
various issues regarding the Board's refusal to merge with other
companies.
Harbert Distressed believes the Company's Board and management
have pursued a policy of rejecting bona fide offers to merge or
sell the company regardless of the impact on shareholder value and
the well being of the company.
NorthWestern Corporation, d/b/a NorthWestern Energy --
http://www.northwesternenergy.com/-- is one of the largest
providers of electricity and natural gas in the Upper Midwest and
Northwest, serving more than 617,000 customers in Montana, South
Dakota and Nebraska. On Sept. 14, 2003, Northwestern filed a
voluntary petition for relief under chapter 11 of the Bankruptcy
Code. The U.S. Bankruptcy Court fort he District of Delaware
confirmed Northwestern's Plan of Reorganization on Oct. 19, 2004
and the plan became effective on Nov. 1, 2004.
* * *
As reported in the Troubled Company Reporter on Nov. 30, 2005,
Fitch Ratings has affirmed NorthWestern Corp.'s outstanding senior
secured debt obligations at 'BBB-' and the senior unsecured
revolving credit facility at 'BB+'. The Rating Outlook has been
revised to Evolving from Positive. The rating action follows the
disclosure by NOR on Nov. 23, 2005 that it is evaluating a merger
proposal received from Black Hills Corporation, Inc Plan Committee
overseeing the remaining claims reconciliation and settlement
process.
NTELOS HOLDINGS: S&P Affirms Corporate Credit Rating at B
---------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on NTELOS
Holdings Corporation and its wholly owned operating subsidiary,
NTELOS Inc., to stable from negative in expectation that proceeds
from the company's February 2006 IPO will be used to repay $135
million of floating rate notes when they become callable in April
2006.
At the same time, Standard & Poor's affirmed its ratings,
including the 'B' corporate credit ratings for both entities.
With healthy growth in the company's wireless business and steady
wireline performance, the improvement in adjusted debt to EBITDA,
which falls to the mid-4x area from the mid-5x area upon repayment
of the floating rate debt, results in financial parameters more
consistent with the current rating. Waynesboro, Virginia-based
NTELOS is an integrated local exchange carrier providing wireless
and wireline communications services throughout Virginia and West
Virginia. Pro forma for the IPO and debt repayment, debt
outstanding at Sept. 30, 2005, totaled about $629 million.
O'SULLIVAN IND: Court Approves Uniform Balloting Procedures
-----------------------------------------------------------
As previously reported in the Troubled Company Reporter on
Nov. 11, 2005, O'Sullivan Industries Holdings, Inc., and its
debtor-affiliates asked the U.S. Bankruptcy Court for the Northern
District of Georgia to approve a set of uniform noticing,
balloting, voting and tabulation procedures to be used in
connection with asking creditors to vote to accept their Chapter
11 plan of reorganization.
In accordance with Rule 3017(d) of the Federal Rules of
Bankruptcy Procedure, the Debtors will use and distribute
customized Ballots to holders of Senior Secured Notes Claims in
Class 2C, the creditors entitled to vote on the Plan.
* * *
Judge C. Ray Mullins approved the Solicitation and Voting
Procedures.
The Court ruled that:
(a) February 2, 2006, will be the Voting Record Date for
purposes of determining which Creditors are entitled to
vote on the Plan or to receive notifications of
non-voting status; and
(b) March 10, 2006, will be the Voting Deadline, and all
ballots accepting or rejecting the Plan must be actually
be received by the Balloting Agent by 5:00 p.m.,
prevailing Eastern Time:
(i) For United States mail:
The Garden City Group, Inc.
O'Sullivan Claims and Balloting Agent
P.O. Box 9000 #6362
Merrick, New York 11566-9000
(ii) For overnight courier or hand delivery:
The Garden City Group, Inc.
O'Sullivan Claims and Balloting Agent
105 Maxess Road
Melville, New York 11747.
The Debtors or the Court may extend or waive the period during
which the Debtors will accept votes. The extension or waiver of
the period during which votes will be accepted by the Debtors will
be subject to the review of the Senior Secured Noteholders
Representative and the Official Committee of Unsecured Creditors,
and in the event of a dispute, by the Court.
Headquartered in Roswell, Georgia, O'Sullivan Industries Holdings,
Inc. -- http://www.osullivan.com/-- designs, manufactures, and
distributes ready-to-assemble furniture and related products,
including desks, computer work centers, bookcases, filing
cabinets, home entertainment centers, commercial furniture, garage
storage units, television, audio, and night stands, dressers, and
bedroom pieces. O'Sullivan sells its products primarily to large
retailers including OfficeMax, Lowe's, Wal-Mart, Staples, and
Office Depot. The Company and its subsidiaries filed for chapter
11 protection on Oct. 14, 2005 (Bankr. N.D. Ga. Case No. 05-
83049). On Sept. 30, 2005, the Debtor listed $161,335,000 in
assets and $254,178,000 in debts. (O'Sullivan Bankruptcy News,
Issue No. 12; Bankruptcy Creditors' Service, Inc., 215/945-7000)
O'SULLIVAN IND: Court Extends Exclusive Periods Until July 11
-------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Georgia
approved O'Sullivan Industries Holdings, Inc., and its debtor-
affiliates' request to extend the time period within which they
have the exclusive right to:
(a) file a plan until May 15, 2006; and
(b) solicit acceptances of that plan until July 11, 2006.
Section 1121(b) of the Bankruptcy Code provides that only the
debtor may file a plan of reorganization during the initial 120
days after the Petition Date. Additionally, Section 1121(c)(3) of
the Bankruptcy Code also provides that if the plan is filed, the
debtor has the exclusive right to solicit acceptances of the plan
for 180 days after the petition date.
Headquartered in Roswell, Georgia, O'Sullivan Industries Holdings,
Inc. -- http://www.osullivan.com/-- designs, manufactures, and
distributes ready-to-assemble furniture and related products,
including desks, computer work centers, bookcases, filing
cabinets, home entertainment centers, commercial furniture, garage
storage units, television, audio, and night stands, dressers, and
bedroom pieces. O'Sullivan sells its products primarily to large
retailers including OfficeMax, Lowe's, Wal-Mart, Staples, and
Office Depot. The Company and its subsidiaries filed for chapter
11 protection on Oct. 14, 2005 (Bankr. N.D. Ga. Case No. 05-
83049). On Sept. 30, 2005, the Debtor listed $161,335,000 in
assets and $254,178,000 in debts. (O'Sullivan Bankruptcy News,
Issue No. 12; Bankruptcy Creditors' Service, Inc., 215/945-7000)
OUTBOARD MARINE: Ch. 7 Trustee Recognizes New Trust Claimants
-------------------------------------------------------------
The Hon. John H. Squires of the U.S. Bankruptcy Court for the
Northern District of Illinois, Eastern Division, authorized Alex
D. Moglia, the Chapter 7 Trustee for the bankruptcy estates of
Outboard Marine Corporation and its debtor-affiliates, to
recognize additional claimants and make further distributions
under the Outboard Marine Corporation Employees Welfare Benefit
Trust.
OMC established the Trust in 1984 to fund health and welfare
benefits for its employees. Immediately prior to its chapter 11
filing, OMC deposited $4.5 million with U.S. Bank National
Association, fka Firstar Bank, to fund its payment obligations
under the Trust.
Mr. Moglia commenced an adversary proceeding against U.S. Bank
alleging that the $4.5 million deposit constituted a fraudulent
transfer. The Trustee asked the Bankruptcy Court to compel U.S.
Bank to turnover the funds.
When Mr. Moglia filed the adversary proceeding the Trust account
had approximately $430,000 in remaining funds. At that time, all
pending claims against the Trust had been resolved.
After extensive negotiations, U.S. Bank eventually turned over
$$390,344 of the funds. The funds recovered from U.S. Bank plus
all miscellaneous refunds collected from participants were placed
in the Trust Account. As of January 2006, the Trust account has
increased 37% to $538,154.
Mr. Moglia told the Bankruptcy Court that he had identified 55
additional claimants entitled to claim a share in the Trust
Account. He asked for the Bankruptcy Court's authority to pay
these claimants.
A list of allowed Trust claimants is available for free at
http://researcharchives.com/t/s?55a
Outboard Marine Corporation and its debtor-affiliates filed for
chapter 11 protection on December 22, 2000 (Bankr. N.D. Ill. Case
No. 00-37405). On August 22, 2001, the Chapter 11 cases were
converted to Chapter 7. On Aug. 24, 2001, Alex D. Moglia was
appointed to serve as the Chapter 7 Trustee. Kathleen H. Klaus,
Esq., at Shaw Gussis Fishman Glantz Wolfson & Towbin, LLC serves
as Counsel to the Chapter 7 Trustee.
OWENS CORNING: Exclusivity Periods Stretched to June 31
-------------------------------------------------------
The Honorable Judith K. Fitzgerald of the Delaware Bankruptcy
Court extended the exclusivity periods of Owens Corning and its
debtor-affiliates to July 31, 2006.
Norman L. Pernick, of Saul Ewing LLP, argued before the Court at
the hearing on January 30, 2006, that there's plenty of reason
to extend the Debtors' exclusive periods to file and solicit
acceptances of a plan of reorganization. Mr. Pernick said the
objections to the Extension Motion should be overruled.
"I think it's easy for the Court to see that we have a
confirmable plan that's on the table. We treat similarly
situated creditors alike," he said.
Mr. Pernick also pointed out that the Objecting parties'
arguments were inconsistent. He maintained that the plan the
objectors prepared is not confirmable.
"It's not even close if you look at the terms of it," Mr.
Pernick told Judge Judith Fitzgerald. "They're asking asbestos
[claimants] to accept a recovery that asbestos, I think, is
going to tell you they're not interested in doing," he said.
According to Mr. Pernick, the Bondholder Committee's plan
basically is to litigate for another two or three years.
"Then once that litigation's resolved, and assuming that nobody
else can be creative and think of more litigation, maybe we'll
move forward then.
"We've done enough litigation."
Lewis Kruger, of Stroock, Stroock & Levine, counsel for certain
bondholders, clarified that it was not the bondholders'
intention to delay the process "but rather to make the process
one that would be more amenable to a consensual plan."
"We believe that we could indeed file one if the Court
terminated exclusivity," Mr. Kruger told the Court. "We believe
we could file a plan very promptly that would be acceptable to
both the banks and to the asbestos claimants and the Futures
Representative as well, and that we could do it on the same time
table that now exists with the April 5th hearing on the
disclosure document and the prospect of a summertime
confirmation of a plan," he said.
Anthony Gray, of Brown Rudnick Berlack Israels, on behalf of an
ad hoc committee of preferred and equity security holders,
argued that the Debtors have met their burden under Section 1121
of the Bankruptcy Code to show cause that granting an extension
for the exclusivity period for six months is warranted. Mr. Gray
complained that the Debtors are not including the equity and
preferred security holders in the plan process.
Mr. Gray represents 11 institutions that hold in the aggregate
19.5% of the Owens Corning common stock and 54.2% of the shares
of the outstanding preferred securities.
Judge Fitzgerald, however, reminded Mr. Gray that the Debtors
cannot go out to every constituent in the case and invite them
to participate in a case.
"This is an unofficial committee," the Court said.
"I see no basis on which to terminate the Debtor's exclusivity
under these circumstances," Judge Fitzgerald explained on
Debtors' exclusivity extension.
"The Debtor does have a plan on the table. I don't know whether
it will be confirmed, but at least facially, it looks as though
it is confirmable."
The Court noted that the bondholders' plan is dependent on the
passage of the FAIR Act, "which is nothing but a wish and a
prayer.
"Passage of the FAIR Act, if it happens, nobody knows what it's
going to be like," according to Judge Fitzgerald.
Judge Fitzgerald also believes that equity holders are out of
the money.
"I have no evidence in this case that there is going to be a
return unless some secured creditor somewhere decides that it
wants to give some of its money to equity that equity's going to
get any funds," she said.
The Court will hold a hearing on April 5, 2006, at 9:00 a.m., to
consider approval of the Disclosure Statement explaining the
Debtors' Fifth Amended Joint Plan of Reorganization.
Owens Corning -- http://www.owenscorning.com/-- manufactures
fiberglass insulation, roofing materials, vinyl windows and
siding, patio doors, rain gutters and downspouts. Headquartered
in Toledo, Ohio, the Company filed for chapter 11 protection on
October 5, 2000 (Bankr. Del. Case. No. 00-03837). Mark S. Chehi,
Esq., at Skadden, Arps, Slate, Meagher & Flom, represents the
Debtors in their restructuring efforts. (Owens Corning Bankruptcy
News, Issue No. 125; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
OWENS CORNING: Implements Retention Program for Some Participants
-----------------------------------------------------------------
Owens Corning and its debtor-affiliates notified the U.S.
Bankruptcy Court for the District of Delaware that they didn't
receive any objections to the proposed implementation of their
2006 Retention Program for Tier 2, 3 and 4 Participants.
Accordingly, the Debtors have implemented their 2006 Retention
Program for Tier 2, 3 and 4 Participants.
The 2004 Employee Retention Program expired for Tier 1, 2, 3 and
4 Participants on December 31, 2005. Norman L. Pernick, Esq., at
Saul Ewing LLP, in Wilmington, Delaware, told the Court that as
with the prior programs, the 2004 Retention Program was a success.
Voluntary turnover of Key Employees in 2004 and 2005 was 1%,
compared with a manufacturing industry median of 5.5%.
The 2004 Retention Program was structured as an evergreen program
which renews on an annual basis if the Debtors have not emerged
as of each January 1st. The Committees and the Futures
Representative have a right to object to the continuation of the
program on an annual basis.
Starting in September of 2005, the Debtors' Human Resources
Leaders, working with the Chairman of the Compensation Committee
of the Debtors' Board of Directors and Mercer Resources
Consulting, Inc. -- the Debtors' human resources consultants --
conducted a detailed analysis of the need for, and the
reasonableness of, continuing the 2004 Retention Program beyond
2005.
The Retention Team concluded that continuation of the 2004
Retention Program, subject to modifications, was necessary to
achieve the goal of retaining the Debtors' Key Employees,
particularly given the very favorable results of the prior
programs. The recommendations of the Retention Team were adopted
by the full Compensation Committee at a meeting on November 30,
2005.
On September 14, 2005, the Debtors sought Court authority to
amend the Debtors' Key Management Severance Agreements with David
T. Brown, the Debtors' Chief Executive Officer and Michael H.
Thaman, the Debtors' Chief Financial Officer and Chairman of the
Debtors' Board of Directors.
By letter dated December 15, 2005, the Debtors provided formal
notice to counsel to the Committees and the Futures
Representative of their intent to continue the 2004 Retention
Program, subject to these modifications as approved by the
Compensation Committee:
(a) The employee participation levels have been reduced from
25% to 100% of base salary to 25% to 75% of base salary;
(b) The cap on the annual cost of the plan has been reduced
from $19,500,000 to $13,900,000; and
(c) Messrs. Brown and Thaman will not participate in the 2006
Retention Program.
The 2006 Retention Program will have a limited number of
participants at 275, with firm dollar caps on individual
participation levels as well as the aggregate annual retention
payments.
Mr. Pernick told the Court that confirmation of the Debtors'
Fifth Amended Plan of Reorganization carries with it its own
level of uncertainty for employees, and the Debtors are fearful
that Key Employees may be recruited by other companies who can
provide greater corporate certainty and security, including stock
awards and options. Losing the Key Employees will severely harm
the Debtors in many ways:
(1) Employees of a debtor-in-possession are difficult to
replace because experienced job candidates often find
the prospect of working for a company in Chapter 11
unattractive;
(2) The Debtors may have to pay executive search firm fees to
recruit suitable replacement employees, as well as signing
bonuses, reimbursement for relocation expenses, and
above-market salaries to induce qualified candidates to
accept employment with chapter 11 debtors. The hidden
costs of retraining are more difficult to calculate, but
just as high, if not higher; and
(3) The loss of any important employee can lead to additional
employee departures, as employees often follow the example
of their resigning colleagues, mentors or leaders.
The Debtors believe that the 2006 Retention Program will
significantly benefit their cases by boosting employee morale at
a time when employee dedication and loyalty is needed most. The
2006 Retention Program is necessary to facilitate successful
emergence from bankruptcy, and the Debtors believe that it is a
sound exercise of their business judgment given its relatively
reasonable cost, Mr. Pernick said.
Owens Corning -- http://www.owenscorning.com/-- manufactures
fiberglass insulation, roofing materials, vinyl windows and
siding, patio doors, rain gutters and downspouts. Headquartered
in Toledo, Ohio, the Company filed for chapter 11 protection on
October 5, 2000 (Bankr. Del. Case. No. 00-03837). Mark S. Chehi,
Esq., at Skadden, Arps, Slate, Meagher & Flom, represents the
Debtors in their restructuring efforts. (Owens Corning Bankruptcy
News, Issue Nos. 123 & 124; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
PACIFIC BIOMETRICS: Balance Sheet Upside-Down by $180K at Dec. 31
-----------------------------------------------------------------
Pacific Biometrics Inc. delivered its financial statements for the
quarter ended Dec. 31, 2005, to the Securities and Exchange
Commission on Feb. 13, 2006.
The company earned $461,463 of net income on $3,113,248 of revenue
fir the three-months ended Dec. 31, 2005, versus a $362,812 net
loss on $1,008,755 of revenue for the comparable period in 2004.
At Dec. 31, 2005, the Company's balance sheet showed $4,123,236 in
total assets and liabilities of $4,303,242, resulting in a
stockholders' deficit of $180,006. The Company had working
capital of approximately $185,000 at Dec. 31, 2005, compared to
working capital of approximately $308,000 at June 30, 2005.
A full-text copy of Pacific Biometrics' financial statements for
the quarter ended Dec. 31, 2005, is available at no charge at
http://researcharchives.com/t/s?55b
Going Concern Doubt
Williams & Webster, PS, in Spokane, Washington, expressed
substantial doubt about Pacific Biometrics' ability to continue as
a going concern after it audited the Company's financial
statements for the fiscal year ended June 30, 2005. The auditing
firm points to the Company's recurring net losses and cash flow
shortages.
About Pacific Biometrics
Established in 1989, Pacific Biometrics Inc. --
http://www.pacbio.com/-- provides specialized central laboratory
and contract research services to support pharmaceutical and
diagnostic manufacturers conducting human clinical trial research.
The company provides expert services in the areas of
cardiovascular disease, diabetes, osteoporosis, arthritis, and
nutrition. The PBI laboratory is accredited by the College of
American Pathologists and through its non-profit affiliate Pacific
Biometrics Research Foundation is one of only three U.S.-based
laboratories approved and accredited by the Center for Disease
Control as a Cholesterol Reference Laboratory.
PARMALAT: Dr. Bondi Has RICO Claims vs. BofA, District Court Rules
------------------------------------------------------------------
The Honorable Lewis A. Kaplan of the U.S. District Court for the
Southern District of New York rules that Dr. Enrico Bondi,
extraordinary commissioner of Parmalat Finanziaria and its debtor-
affiliates, has valid claims under the federal Racketeer
Influenced and Corrupt Organizations Act and the North Carolina
RICO Act against Bank of America and certain of its affiliates for
the bank's role in Parmalat's collapse.
Specifically, Judge Kaplan says BofA is liable for its role in a
December 1996 loan to Parmalat Argentina, and a December 1997
Parmalat Venezuela transaction.
BofA loaned $60,000,000 to Parmalat Argentina, which was
guaranteed by Parmalat SpA. As previously reported, Dr. Bondi's
first amended complaint alleged that a side letter concealed the
actual interest rate, making it appear that the loan terms were
typical of a healthier company. Dr. Bondi said the transaction
was a rollover of debt by corrupt Parmalat insiders. In October
1997, he said, BofA facilitated a $150,000,000 private placement
by Parmalat Trust, the proceeds of which were used to pay off the
$60,000,000 loan.
BofA also entered into an $80,000,000 five-year credit agreement
with one of Parmalat's Venezuelan subsidiaries in 1997. The
First Amended Complaint alleged that a side letter gave BofA
additional guarantees, a $120,000 "arrangement fee," and interest
beyond the publicly disclosed rate. Dr. Bondi said the loan
proceeds were used to roll over maturing loans into new ones,
which hid "the deteriorating credit and poor liquidity of
Parmalat and its subsidiaries, caused by the managers' looting
scheme."
Dr. Bondi said BofA failed to disclose (1) the true interest rate
of the December 1996 loan to Parmalat Argentina, and (2) its real
exposure in the December 1997 Parmalat Venezuela transaction.
BofA sought dismissal of the First Amended Complaint, arguing
that the Parmalat Debtors are bound by their admissions in the
original complaint and that Dr. Bondi "may not file an amended
complaint that contradicts the factual allegations in the
[o]riginal [c]omplaint."
Judge Kaplan, however, finds BofA's argument meritless. While
prior inconsistent pleadings normally are admissible against a
party, they ordinarily are "controvertible, not conclusive"
admissions, he says.
Judge Kaplan notes that the First Amended Complaint tells a
different story as to the motivations and actions of the main
players. In contrast to the original complaint, the Amended
Complaint alleges that Parmalat itself did not benefit from sham
transactions BofA designed.
Dr. Bondi's claim for vicarious liability under federal and North
Carolina law, however, is dismissed. Judge Kaplan points out
that vicarious liability is a theory of liability -- in Dr.
Bondi's case under RICO -- not a separate cause of action. The
claim is redundant of the RICO claims.
A full-text copy of the District Court's opinion is available at
no charge at http://ResearchArchives.com/t/s?55e
Headquartered in Wallington, New Jersey, Parmalat USA Corporation
-- http://www.parmalatusa.com/-- generates more than 7 billion
euros in annual revenue. The Parmalat Group's 40-some brand
product line includes milk, yogurt, cheese, butter, cakes and
cookies, breads, pizza, snack foods and vegetable sauces, soups
and juices and employs over 36,000 workers in 139 plants located
in 31 countries on six continents. The Company filed for chapter
11 protection on February 24, 2004 (Bankr. S.D.N.Y. Case No.
04-11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at
Weil Gotshal & Manges LLP, represent the Debtors. When the U.S.
Debtors filed for bankruptcy protection, they reported more than
$200 million in assets and debts. The U.S. Debtors emerged from
bankruptcy on April 13, 2005. (Parmalat Bankruptcy News, Issue
No. 69; Bankruptcy Creditors' Service, Inc., 215/945-7000)
PENN NATIONAL: Calls for Redemption of 8-7/8% Senior Sub. Notes
---------------------------------------------------------------
Penn National Gaming, Inc. (PENN:Nasdaq) called for redemption all
$175 million in aggregate principal amount of its outstanding
8-7/8% Senior Subordinated Notes due March 15, 2010. The
redemption price is $1,044.38 per $1,000 principal amount, plus
accrued and unpaid interest to the scheduled redemption date,
which is March 15, 2006. The Company intends to fund the
redemption of the Notes from available cash and borrowings under
its revolving credit facility.
Penn National Gaming owns and operates casino and horse racing
facilities with a focus on slot machine entertainment. The
Company presently operates fifteen facilities in thirteen
jurisdictions including Colorado, Illinois, Indiana, Iowa,
Louisiana, Maine, Mississippi, Missouri, New Jersey, Ohio,
Pennsylvania, West Virginia, and Ontario. In aggregate, Penn
National's facilities feature over 17,500 slot machines, over 400
table games, over 2,000 hotel rooms and approximately 575,000
square feet of gaming floor space. The property statistics in
this paragraph exclude two Argosy properties which the company
anticipates divesting, but are inclusive of the Company's Casino
Magic - Bay St. Louis, in Bay St. Louis, Mississippi and the
Boomtown Biloxi casino in Biloxi, Mississippi, which remain closed
following extensive damage incurred as a result of Hurricane
Katrina.
* * *
As reported in the Troubled Company Reporter on Feb. 02, 2006,
Moody's Investors Service raised the ratings of Penn National
Gaming, Inc. and assigned a stable ratings outlook. This rating
action ends the review process that began on Oct. 3, 2005 when
Moody's placed Penn's ratings on review for possible upgrade
following the company's announcement that it had completed its
acquisition of Argosy Gaming Company.
These ratings were affected:
* Corporate family rating, to Ba2 from Ba3;
* $750 million revolver due 2010, to Ba2 from Ba3;
* $325 million term loan due 2011, to Ba2 from Ba3;
* $1,650 million term loan B due 2012, to Ba2 from Ba3;
* $175 million 8.875% guaranteed sr. sub. notes due 2010,
to Ba3 from B2;
* $200 million 6.875% guaranteed sr. sub. notes due 2011,
to Ba3 from B2; and
* $250 million 6.750% not guaranteed sr. sub. notes due 2015,
to B1 from B3.
The Ba2 corporate family rating acknowledges Penn's increased size
and diversification following the Argosy acquisition. It also
considers:
* the continued overall positive performance of the company's
casino properties;
* the good risk reward profile of current expansion plans; and
* the expectation that Penn will receive full recovery from
insurance proceeds related to hurricane damages.
PERFORMANCE TRANSPORTATION: Wants to Maintain AFCO Credit PFAs
--------------------------------------------------------------
Performance Transportation Services, Inc., and its debtor-
affiliates ask the U.S. Bankruptcy Court for the Western District
of New York for permission to maintain financing of their
insurance policies by continuing or renewing their agreements with
AFCO Credit Corporation, or entering into new premium financing
agreements in the ordinary course of business.
In the ordinary course of business, the Debtors maintain numerous
insurance policies providing coverage for, in part, general
liability, excess liability, workers' compensation, excess
workers' compensation, directors' and officers' liability,
automotive liability and motor truck cargo legal liability.
According to Garry M. Graber, Esq., at Hodgson Russ LLP, in
Buffalo, New York, the insurance policies are essential to the
preservation of the Debtors' business, property and assets, and,
in many cases, the insurance coverages are required by various
regulations, laws and contracts that govern their business
conduct.
It is not always economically advantageous for the Debtors to pay
the premiums on all of its insurance policies on a lump-sum basis,
Mr. Graber relates. Accordingly, the Debtors finance the premiums
on some of their policies under a premium financing agreement with
a third-party lender. The premiums under the financed insurance
policies, which cover the period April 1, 2005 until April 1,
2006, total $7,124,851.
The insurance policies are:
Insurer Type of Policy
------- --------------
Discover Property & Casualty Auto
Insurance Company
Discover Property & Casualty General Liability
Insurance Company
Fidelity and Guaranty Insurance Workers' Compensation
Company
Lexington Insurance Company Umbrella
American Home Assurance Company Excess Liability
United States Fidelity & Excess Workers'
Guaranty Company Compensation
Great American Assurance Company Excess Liability
The Debtors have one outstanding PFA with AFCO Credit Corporation
under which the Debtors pay $607,144 per month, nine months per
year, plus a down payment of $1,781,213. The final monthly
payment under the AFCO Agreement was recently paid. The Debtors
will likely consider renewing the AFCO Agreement or entering into
a new PFA since the Policies will expire on March 31, 2006.
The Debtors do not believe that they owe any amounts under the
AFCO Agreement or any insurance policies. However, out of an
abundance of caution, the Debtors seek permission to pay any
prepetition premiums or amounts necessary to avoid cancellation,
default, alteration, assignment, attachment, lapse, or any form
of impairment to the coverage, benefits or proceeds provided
under any insurance policies.
The Debtors also believe that the renewal or negotiation of
premium finance agreements falls squarely within their ordinary
course of business, and -- but for the constraints of Section 364
of the Bankruptcy Code -- they would not need the Court's prior
approval to enter into new PFAs.
If the Debtors intend to renew the AFCO Agreement, or enter into
a new PFA, on terms materially different from the AFCO Agreement,
they will notify the administrative agent for the prepetition
secured lenders under the First Lien Credit Agreement. If the
Agent objects, the Debtors will ask the Court to schedule a
hearing in connection with the renewal or entry of a PFA.
The Debtors do not seek to assume the policies at this time.
Headquartered in Wayne, Michigan, Performance Transportation
Services, Inc. -- http://www.pts-inc.biz/-- is the second largest
transporter of new automobiles, sport-utility vehicles and light
trucks in North America. The Company provides transit stability,
cargo damage elimination and proactive customer relations that are
second to none in the finished vehicle market segment. The
company's chapter 11 case is administered jointly under Leaseway
Motorcar Transport Company.
Headquartered in Niagara Falls, New York, Leaseway Motorcar
Transport Company Debtor and 13 affiliates filed for chapter 11
protection on Jan. 25, 2006 (Bankr. W.D.N.Y. Case No. 06-00107).
Garry M. Graber, Esq., at Hodgson Russ LLP represent the Debtors
in their restructuring efforts. When the Debtors filed for
protection from their creditors, they estimated assets between $10
million and $50 million and more than $100 million in debts.
(Performance Bankruptcy News, Issue No. 3; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
PERFORMANCE TRANSPORTATION: Proposes Contract Rejection Protocol
----------------------------------------------------------------
Performance Transportation Services, Inc., and its debtor-
affiliates are in the process of consolidating their operations,
which may require exiting non-core and unprofitable locations,
returning unnecessary equipment and terminating burdensome
contracts to minimize costs and strengthen the businesses. In
this regard, the Debtors anticipate that, in a very short time,
they may seek to reject a number of real property leases,
personal property leases and executory contracts.
Pursuant to Sections 365 and 554 of the Bankruptcy Code, the
Debtors ask the Court to approve an expedited procedure for the
rejection of executory contracts and unexpired leases of personal
and non-residential real property and the abandonment of the
Debtors' property.
The Debtors are parties to numerous executory contracts and
unexpired leases. Without the Rejection Procedures, the Debtors
will inevitably suffer delays and excess administrative costs,
Garry M. Graber, Esq., at Hodgson Russ LLP, in Buffalo, New York
contends.
Establishing the Rejection Procedures would afford parties-in-
interest the opportunity to appear and be heard with respect to
the rejection of the leases and contracts and the corresponding
abandonment of property.
In addition, Mr. Graber says, the Rejection Procedures will save
substantial legal expense and time that would otherwise be
incurred if multiple hearings were held on separate motions with
respect to each lease or contract that the Debtors determine to
be rejected or abandoned.
Rejection Procedures
The Debtors will file and serve a rejection notice, advising
parties-in-interest of the Debtors' intent to reject the
specified executory contract, lease, sublease or interest, as
well as the deadlines and procedures for filing objections to the
Notice. The Service Parties consist of:
(i) the U.S. Trustee;
(ii) counsel to the Debtors' prepetition secured lenders;
(iii) counsel to the Debtors' postpetition secured lenders;
(iv) counsel to any official committee appointed during the
course of the Debtors' Chapter 11 cases;
(v) the contract counterparty or landlord affected by the
Notice; and
(vi) any other parties-in-interest to the executory contract or
lease, including subtenants, if any, sought to be rejected
by the Debtors.
If a party-in-interest objects to the proposed rejection, it must
file with the U.S. Bankruptcy Court for the Western District of
New York and serve a written objection not later than 14 days
after the Debtors serve the rejection notice to:
* Kirkland & Ellis LLP,
* Hodgson Russ LLP, and
* the Service Parties.
If there are no objections, the rejection of a particular lease
or contract will become effective on the rejection date without
further notice, hearing or Court order.
If the Debtors have deposited amounts with a lessor or contract
counterparty as a security deposit or other arrangement, the
lessor or contract counterparty may not set-off or otherwise use
the deposit without prior Court authority.
Counterparties and lessors will be required to file a rejection
claim on the later of the claims bar date established in the
Debtors' Chapter 11 cases, if any, and 30 days after the
Rejection Date.
Abandonment Procedures
With respect to personal property at any of the premises subject
to a rejection notice, the Debtors will remove the property
before the objection deadline.
If the Debtors determine that the value of the property at a
particular location is de minimis compared to the costs of
removing the asset, the Debtors will generally describe the
property in the Notice and, absent an objection, the property
will be deemed abandoned as is, where is, effective as of the
rejection date of the unexpired lease.
Abandonment of the property will permit the Debtors to exit
certain markets efficiently and without incurring additional,
unnecessary administrative expenses. The Debtors believe that
any sales, which may be consummated after the removal of the
property, may be offset by the additional carrying costs of the
rejected leases or the costs of removing the property.
Headquartered in Wayne, Michigan, Performance Transportation
Services, Inc. -- http://www.pts-inc.biz/-- is the second largest
transporter of new automobiles, sport-utility vehicles and light
trucks in North America. The Company provides transit stability,
cargo damage elimination and proactive customer relations that are
second to none in the finished vehicle market segment. The
company's chapter 11 case is administered jointly under Leaseway
Motorcar Transport Company.
Headquartered in Niagara Falls, New York, Leaseway Motorcar
Transport Company Debtor and 13 affiliates filed for chapter 11
protection on Jan. 25, 2006 (Bankr. W.D.N.Y. Case No. 06-00107).
Garry M. Graber, Esq., at Hodgson Russ LLP represent the Debtors
in their restructuring efforts. When the Debtors filed for
protection from their creditors, they estimated assets between $10
million and $50 million and more than $100 million in debts.
(Performance Bankruptcy News, Issue No. 3; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
PLYMOUTH RUBBER: Files Amended Plan and Disclosure Statement
------------------------------------------------------------
Plymouth Rubber Company, Inc., and its debtor-affiliate,
Brite-Line Technologies, Inc., submitted to the U.S. Bankruptcy
Court for the District of Massachusetts their first amended
Disclosure Statement explaining their Joint Plan of
Reorganization.
Treatment of Claims
Under the modified Plan, Administrative Priority Claims will be
paid in full and Tax Priority Claims will be paid to the extent
required by law.
Holders of Class 1 Allowed Priority Claims will be paid in full
within 14 days of the Effective Date, or the date each claim
becomes an Allowed Claim.
These claims will be partially paid within 14 days after the
Effective Date:
-- Class 2 Allowed Secured Claim of LaSalle
-- Class 3 Allowed Secured Claim of GECC
-- Class 4 Allowed Secured Claim of BankNorth
-- Class 5 Allowed Secured Claim of PBGC
Class 6 Allowed Secured Claim of the Town of Canton will be paid
under Plan options A, B or C. The Allowed Secured Claim of the
Town of Canton will retain its lien on the Real Estate and be paid
in full, with interest as provided by law, at the time of and from
the proceeds of the sale of the Real Estate.
Holders of Class 7 Allowed Unsecured Claims are grouped into two
subclasses:
1. Subclass 7.1 Claimants -- will be paid a dividend of 25% of
the amount of the Allowed Claim, as so reduced, in cash
on or before 14 days after the Effective Date.
2. Subclass 7.2 Claimants -- will be paid, as applicable,
either or both of its Pro Rata Share of the Annual
Subclass 7.2 Unsecured Claim Dividend on or before
March 31, 2008, 2009, 2010 and 2011, and the applicable
Lump Sum Dividend as of the time any of the Lump Sum
Dividend will be paid.
Class 8 Intercompany Claims will be discharged without any
payment or distribution of any kind.
Class 9 Class A Common Stock Interests in PRC will be impaired to
the extent that the combined Class A and Class B equity interests
will be subject to dilution of potentially up to 100% on a fully
diluted basis through the issuance of New Securities on the
Effective Date, and each will be subject to being paid a Nominal
Cash Dividend if it is reduced to less than a full share through a
reverse stock split.
Class 10 Class B Common Stock Interests in PRC will be unimpaired
except that the combined Class A and Class B equity will be
subject to dilution of potentially up to 100% on a fully diluted
basis through the issuance of New Securities on the Effective
Date, and that it will be subject to being paid a Nominal Cash
Dividend if it is reduced to less than a full share through a
reverse stock split. Each holder of interests in this Class may
elect to surrender all interests in exchange for the Nominal Cash
Dividend.
For Class 11 Common Stock Interests in B-L, PRC will retain its
100% common stock interest in B-L for the benefit of its creditors
and shareholders but, under the Plan A or B options, may pledge
the interests as part of the Available Collateral to one or more
of the holders of Allowed Secured Claims.
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
$10 million to $50 million in assets and debts.
PLYMOUTH RUBBER: Wants to Pay 220 Employees under Retention Plan
----------------------------------------------------------------
Plymouth Rubber Company, Inc., and its debtor-affiliate, Brite
-Line Technologies, Inc., ask the U.S. Bankruptcy Court for the
District of Massachusetts, Eastern Division, for authority to make
payments pursuant to their employee retention plan pending
confirmation of the Plan.
The Court scheduled a hearing to consider the matter on
March 14, 2006, at 10:30 am.
Transition Plan
The Debtors' proposed payment is in line with Plymouth's
previously announced transition plan, which involves the eventual
termination of its manufacturing operations in Canton,
Massachusetts and the purchase of products now manufactured in
Canton from its partly owned joint venture in China.
Victor Bass, Esq., at Burns & Levinson, LLP, in Boston,
Massachusetts, points out that the Debtors' Employee Retention
Plan is not a typical Key Employee Retention Plan, rather, it
provides benefits only to the manufacturing employees whose jobs
are to be eliminated in the transition.
According to Mr. Bass, the Employee Retention Plan was designed to
allow the Debtors to maintain operations and services to customers
during the transition and to create an incentive for its affected
employees.
While the Employee Retention Plan was highly successful
prepetition in that the Debtor was able to retain the vast
majority of its employees, Mr. Bass relates that employees have
become increasingly concerned postpetition about whether the Plan
will be implemented given the uncertainty of the Debtor's cases.
Without a reasonable expectation of receiving the benefits
previously proposed under the Employee Retention Plan, Mr. Bass
argues that Plymouth's employees would have a strong incentive to
seek and take alternative employment, and the Debtors'
reorganization could be severely compromised by the premature
departure of even a relatively small additional number of its
employees.
Projected Payments
The Payments are anticipated to be made in two phases. The
Debtors project $2,841,676 in total payments for wages and
benefits to 173 hourly employees and 47 salaried employees divided
approximately 50% in phase one and 50% in phase two.
The maximum payment to any hourly employee is projected to be
$51,948 and retention payments to these employees will have a
median of $7,882 for a period of 11 weeks, and a mean of $10,528
over a period of 13.3 weeks.
Retention payments to salaried employees are projected to have a
median of $15,851 for 14.7 weeks, and a mean of $21,711 for 20.6
weeks. The maximum payment to any salaried employee is projected
to be $100,316 for one year to the director, maintenance and
engineering employees.
Unaffected Employees
Brite-Line's operations and employees as well as Plymouth's
remaining 57 non-manufacturing employees will be unaffected by the
transition.
Headquartered in Canton, Massachusetts, Plymouth Rubber Company,
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
$10 million to $50 million in assets and debts.
QWEST COMMS: Posts $528 Million Net Loss in Fourth Quarter 2005
---------------------------------------------------------------
Qwest Communications International Inc. (NYSE:Q) reported fourth
quarter and full year 2005 results that benefited from improved
performance in revenue, margin expansion, and strong growth in
free cash flow.
For the quarter, Qwest reported a loss of $528 million.
"We delivered on our performance goals for revenue, cash flow and
continued margin improvement while achieving new highs in service
measures and positioning us for profitability," said Richard C.
Notebaert, Qwest chairman and CEO. "A robust product portfolio, a
leading edge fiber network, and our unwavering focus on the
customer have positioned Qwest for growth."
Financial Results
Qwest's fourth quarter revenue of $3.5 billion increased 1.3%,
compared to $3.4 billion in the fourth quarter a year ago. This
represents the third consecutive quarter of year-over-year
improved revenues, driven by increases in mass markets and
business revenues, which includes $15 million in revenue from a
large government contract. For the full year, revenue was
$13.9 billion compared to $13.8 billion for 2004. This marks the
first year of improved revenue since 2001.
Revenue trends improved as a result of strong sales within Qwest's
portfolio of growth products, including high-speed Internet,
advanced data products, long-distance, and wireless, as well as
bundles. Qwest's growth businesses -- high-speed Internet, data,
wireless and long-distance services -- contributed over 50% of
revenue in the quarter compared with 45% two years ago.
Qwest's 2005 operating expenses totaled $13.0 billion, a decline
of $1.0 billion or 7.4%. The company continued to benefit from
improvements in productivity and operating efficiencies, as well
as optimization initiatives. The prior year includes expense
associated with reserves for legal settlements of $550 million.
Fourth quarter operating expenses totaled $3.3 billion, a decline
of 1% compared to the fourth quarter of 2004. The company
continued to benefit from improvements in productivity and
operating efficiencies, as well as wireline facilities cost
reductions.
"The company is showing strong momentum as we enter 2006," Oren G.
Shaffer, Qwest vice chairman and CFO said. "That, coupled with
the elimination of the high-coupon legacy debt in the fourth
quarter, has advanced us to break-even earnings per share, before
special items, and put us on a path to profitability."
Capital Spending, Cash Flow and Interest
Fourth quarter capital expenditures totaled $503 million, compared
to $372 million in the fourth quarter of 2004. For the year,
capital expenditures totaled $1.6 billion. The company's
disciplined approach to capital spending focuses on investment in
key growth areas and supporting the highest service levels.
Cash generated from operations of $725 million in the fourth
quarter exceeded capital expenditures by $222 million. This
includes two one-time payments in the quarter: the second and
final payment of $125 million to the SEC and a $79 million
settlement payment to KMC. This payment terminates the
relationship with KMC, including all obligations and the
previously disclosed lawsuit. Adjusting for these items, cash
from operations exceeded capital expenditures by $426 million in
the quarter and by $904 million for the year. Qwest anticipates
cash flow in 2006 to benefit primarily from improved operating
results and reduced interest expense.
Interest expense totaled $338 million for the fourth quarter and
$1.48 billion for the year compared to $366 million in the year
ago quarter and $1.53 billion in 2004.
Balance Sheet Update
The company successfully tendered for and retired $3 billion of
high coupon legacy debt in the quarter. As a result, interest
expense is expected to be reduced by approximately $300 million in
2006. Total debt less cash and short-term investments declined to
$14.5 billion in the fourth quarter. Qwest ended the quarter with
$947 million in cash and short-term investments.
During the quarter, rating agencies recognized the improvements in
Qwest's credit profile by upgrading the company's credit ratings.
Fitch and Moody's Investor Services both raised the company's
ratings by one to two notches, while Standard & Poor's improved
its rating of Qwest Corporation one notch.
Customer Connections
Total retail line losses improved to a decline of 4% year-over-
year, compared to a decline of 6% a year ago. This marks the
seventh consecutive quarter of stable or improving retail access
line loss trends.
Mass markets results reflect the success of new bundles launched
earlier this year. Qwest's customer connections -- which include
consumer and small-business primary and secondary access lines,
high-speed Internet subscribers and video customers -- grew to
12.3 million, the second sequential quarterly increase and up
nearly 200,000 since new bundling and localized sales initiatives
began in May 2005. The company ended 2005 with more customer
connections than it began the year.
Access line trends improved year-over-year in both mass market and
business retail channels with small-business access lines
increasing for the fifth consecutive quarter. These trends
exclude the impact of 32,000 affiliate-related disconnects in the
quarter. Offsetting the improvement was continued and anticipated
pressure from the decline in the number of access lines resold by
Qwest's competitors. As a result, switched access lines declined
4.6% to a total of 14.7 million, compared with the end of the
fourth quarter of 2004 and consistent with the rate of decline in
the last several quarters.
Qwest continued its leadership role in working with wholesale
customers by signing commercially negotiated agreements on the
company's Qwest Platform Plus contracts. However, wholesale
losses continued from competitive pressures and technology
substitution.
High-Speed Internet
An emphasis on newly launched bundles and promotions continued to
drive growth in Qwest's high-speed Internet service subscribers.
Qwest added 140,000 high-speed Internet lines in the fourth
quarter, bringing the total to 1.5 million -- a 10% increase
sequentially and a 43% increase year-over-year. The company's
mass markets data and Internet revenues increased 8% sequentially
and 28% year-over-year. The company sees a significant potential
revenue opportunity by increasing the current broadband
penetration to the industry average.
During the quarter, Qwest continued to invest in its high-speed
Internet footprint, as well as the speeds available to customers.
Currently 77% of Qwest's households are eligible for broadband
services, up from approximately 67% in 2004. About 96% of
qualified households are able to purchase broadband speeds of 1.5
Mbps or greater and more than 50% are able to purchase service at
speeds in excess of 3.0 Mbps.
Bundles
Aggressive marketing efforts are paying off for Qwest. The launch
of new bundles in May, followed by targeted incentives and
promotional initiatives, has significantly increased the number of
products in the company's bundles. Voice packages plus three
products are up over 65%, and packages plus four products are up
more than four times since launch. Customer demand for value-
added services has increased consumer average monthly revenue per
wireline customer by nearly 6% to $48 from $45 a year ago.
Qwest's full-featured bundled offering includes high-speed
Internet access, a national wireless offering, local and long-
distance service and integrated TV services through Qwest's own
ChoiceTV or its marketing alliance with DIRECTV, Inc. The
company's bundle penetration increased to 51% in the quarter,
compared to 46% a year ago.
In-Region Long-Distance
Long-distance penetration of total retail lines increased to 37%
in the fourth quarter, compared to 33% a year ago. Qwest
increased total long-distance lines by 73,000 in the quarter. The
company ended the quarter with 4.8 million long-distance lines, a
6% increase over a year ago.
Wireless
Qwest saw the third sequential quarter of subscriber growth in its
wireless subscribers. Revenue grew 5% sequentially as a result of
promotions and premium handset sales while the company's
subscriber base grew by 22,000 in the quarter, bringing total
wireless subscribers to 770,000. The company continues to benefit
from wireless in the bundle with approximately 75% of wireless
subscribers on an integrated bill with at least one other service.
This has contributed to significantly lower churn this year.
Qwest's data and enhanced features are driving higher wireless
ARPU, which increased 11% to $51 from $46 a year ago. The company
continues to focus on adding wireless data subscribers and
approximately 50% of new customers sign up for a data service.
VoIP
The Qwest OneFlex(TM) suite of services, including Qwest
Integrated Access and Hosted VoIP, continues to gain traction in
the business markets. The company continues to improve Qwest VoIP
service and streamline the implementation process leading to sales
success with small, medium and enterprise customers. Qwest has
deployed its business-grade VoIP services to more than 250 cities
across the United States, including 14 markets within Qwest's
operating region. Qwest launched its consumer-grade VoIP service
in 2005.
IP Product Suite
Qwest continued to advance its award-winning MPLS-based iQ
Networking(TM) product suite, which is focused on solving business
problems, reducing total cost and delivering superb end-to-end
wide area networking (WAN) solutions to business customers.
During the fourth quarter, Qwest added new features to iQ
Networking. Qwest announced that it has expanded a suite of IP
solutions to help wholesale customers migrate from traditional
service to next-generation data and IP services.
DIRECTV(R) Alliance
Qwest's DIRECTV service remains a key component of the bundle.
Customer net additions continued to grow in the fourth quarter;
subscribers currently total 128,000, a 31% improvement over the
prior quarter. Qwest and DIRECTV's previously announced strategic
relationship allows Qwest to offer DIRECTV digital satellite
television services to residential customers across the western
United States. With DIRECTV service, customers can enjoy a
variety of all-digital programming, including news, sports, movies
and music. Qwest is marketing and providing front-line customer
support for the DIRECTV service and has incorporated it as part of
a full suite of bundled communications services. Customers
receive an integrated bill, which includes both their DIRECTV
service and Qwest services.
Qwest Communications International Inc. -- http://www.qwest.com/
-- is a leading provider of high-speed Internet, data, video and
voice services. With approximately 40,000 employees, Qwest is
committed to the "Spirit of Service" and providing world-class
services that exceed customers' expectations for quality, value
and reliability.
* * *
As reported in the Troubled Company Reporter on Nov. 17, 2005,
Fitch has upgraded and removed from Rating Watch Positive Qwest
Communications International, Inc.'s Issuer Default Rating to 'B+'
from 'B'.
Fitch has also upgraded specific issue ratings and recovery
ratings assigned to Qwest and its wholly owned subsidiaries,
including upgrading the senior unsecured debt rating assigned to
Qwest Corporation to 'BB+' from 'BB'. In addition, Fitch has
revised the Rating Outlook to Positive from Stable.
RADIATION THERAPY: Earns $6.7 Million of Net Income in 4th Quarter
------------------------------------------------------------------
Radiation Therapy Services, Inc. (Nasdaq: RTSX), disclosed its
financial results for the fourth quarter and year ended
December 31, 2005 and provided 2006 guidance.
Total revenue for the fourth quarter was $64.4 million, an
increase of 41.1% from $45.6 million in the same quarter of 2004,
with 24.3% of the increase provided by new practices, or practices
operated by Radiation Therapy for less than twelve months. Net
patient service revenue, or revenue generated from services where
the Company bills patients directly, principally at freestanding
treatment centers, was $62.1 million. Other revenue, or revenue
generated principally from services where Radiation Therapy bills
the hospital for services provided, was $2.2 million. Revenue per
treatment on a same practice basis at the Company's freestanding
centers increased 18.2%, reflecting a favorable development in the
use of advanced technologies over the same period 2004.
Net income for the fourth quarter 2005 increased $1.7 million, to
$6.7 million from $5.0 million for the fourth quarter of 2004.
Total revenue for the year ended December 31, 2005, was
$227.3 million, an increase of 32.6% from $171.4 million in the
same period of 2004. Net patient service revenue, or revenue
generated from services where the Company bills patients directly,
principally at freestanding treatment centers, was $217.6 million.
Other revenue, or revenue generated principally from services
where Radiation Therapy bills the hospital for services provided,
was $9.7 million.
The financial results for 2005 reportedly exceeded the long-term
growth targets the Company has stated since going public in 2004.
Same practice revenue increased 15.2% year over year, above the
annual long-term target of 8% to 9% growth. Revenue per treatment
grew at 12.1%, well above the 5% to 6% long-term target rate.
During 2005, the Company entered the Scottsdale, Arizona, Central
Massachusetts and Palm Springs, California markets, exceeding its
stated goal to enter one to two new markets per year.
Net income for the year ended December 31, 2005, was $25 million.
Net income includes the effects of a second quarter gain from the
sale of an interest in one of the Company's facilities, first
quarter expenses associated with the transition of a practice to
hospital-based from freestanding, an impairment loss and a write-
off of deferred financing costs. Excluding these effects, net
income for the year ended December 31, 2005 was $25.6 million.
The fourth quarter results were impacted by Hurricane Wilma, which
struck both coasts of south Florida in mid-October. While the
Company's facilities were not damaged by Wilma, all of its
treatment centers in Florida were shut down the day of the storm.
The Company's facilities in Broward County and in Key West, as
well as most other area physician offices, were shut down until
power was restored. The shut down resulted in a delay in patients
receiving treatment and, therefore, in a deferral of the
associated net patient service revenue. The quarter also includes
a $124,000 write-off of deferred financing charges associated with
the Company's December refinancing of its senior credit facility.
During the fourth quarter of 2005, the Company installed four of
the previously announced stereotactic radiosurgery systems with
image guided radiation therapy (IGRT) capabilities. The systems
were installed in the Company's Las Vegas local market, completing
its post acquisition upgrades in that market, and in three local
markets in southwest Florida.
Also during the fourth quarter of 2005, the Company began treating
patients at its new Palm Springs, California facility. The
facility is equipped with a machine that includes stereotactic
radiosurgery, image guided and intensity modulated radiation
therapy capabilities and is currently treating over 15 patients
per day. The Company plans to begin developing a second de novo
center in Palm Springs in 2006 with an expected opening late in
2007.
In December 2005, the Company closed a $100 million debt
refinancing and added a $50 million accordion feature to the
facility, allowing it to increase the aggregate principal amount
of the Term B financing to $150 million. The Company used the
proceeds of the Term B loan to pay off its pre-existing term
loan as well as the borrowings drawn on its $140 million revolving
credit facility. As of December 31, 2005 the Company had
$139.7 million available to it under the revolver.
In January 2006, the Company acquired a treatment center in Opp,
Alabama and began treating patients at the facility. The center is
the Company's 69th treatment center in operation and the second
center in its southeastern Alabama local market.
Dr. Daniel Dosoretz, President and Chief Executive Officer, said,
"2005 was a strong year for Radiation Therapy, exceeding our
long-term growth goals. In the fourth quarter we continued to
execute on our plan to provide the most advanced treatment options
for our patients in a convenient and comfortable setting. We also
expanded, with a debt refinancing, the Company's financial
capability to provide the funding for further acquisitions and to
expand our local markets in 2006. We have seen strong demand in
local markets for IGRT technology, which we expect to contribute
to growth in 2006, along with key acquisitions in existing and
target markets."
Radiation Therapy generated $22.3 million in net cash from
operations for the year ended December 31, 2005, down from
$28.2 million in the same period of 2004. The Company became a C
corporation taxpayer coincident with its 2004 initial public
offering and made its first federal corporate income tax payment
of $6.0 million in the fourth quarter of last year while payments
of $17.6 million were made in the current year. Total capital
expenditures, including capital lease obligations, for the year
ended December 31, 2005, were $34.6 million, compared to
$23.2 million for the year ended December 31, 2004.
The Company's days sales outstanding for the fourth quarter 2005
were 54 days, compared to 53 days for the fourth quarter 2004.
For the fourth quarter 2005, Radiation Therapy reported an average
of 1,329 total treatments per day at its 56 freestanding centers,
a 21.8% increase from the same period in 2004.
Guidance
Excluding acquisition activity, other than the previously
announced acquisition in Opp, Alabama, for the full year 2006,
Radiation Therapy estimates revenues in the range of $255 million
to $270 million and EPS in the range of $1.25 to $1.28. The
Company reiterated its goal to enter one to two new markets per
year, and to grow same practice total revenue by 8% to 9%
annually.
For the first quarter 2006 the Company estimates revenues will be
in the range of $64 million to $68 million and diluted earnings
per share to be in the range of $0.35 to $0.37.
Over the next 12 to 18 months, Radiation Therapy estimates $45 to
$50 million in capital spending focused on expanding existing
local markets and updating the technology in its centers acquired
in 2005. This planned spending includes the equipment for new
centers to be developed in key local markets. The Company will
also continue to implement advanced technologies including image
guided radiation therapy and stereotactic radiosurgery systems.
Radiation Therapy Services, Inc. -- http://www.rtsx.com/-- which
operates radiation treatment centers primarily under the name 21st
Century Oncology, is a provider of radiation therapy services to
cancer patients. The Company's 68 treatment centers are clustered
into 22 local markets in 14 states, including Alabama, Arizona,
California, Delaware, Florida, Kentucky, Maryland, Massachusetts,
Nevada, New Jersey, New York, North Carolina, Rhode Island and
West Virginia. The Company is headquartered in Fort Myers,
Florida.
* * *
As reported in the Troubled Company Reporter on Dec. 8, 2005,
Standard & Poor's Ratings Services assigned its 'BB' corporate
credit rating to Radiation Therapy Services Inc. The rating
outlook is stable. In addition, the company's $240 million
secured credit facilities were rated 'BB', with a recovery rating
of '3', reflecting the expectation for meaningful recovery of
principal in the event of a payment default.
REFCO INC: Cancels Auction for Foreign-Exchange Assets of FX Unit
-----------------------------------------------------------------
Refco Inc. (OTC: RFXCQ) cancelled the auction scheduled for today,
Feb. 16, 2006, of the online foreign-exchange assets of its Refco
FX Associates LLC unit, because it had not received any additional
bids for the assets other than the original offer by Forex Capital
Markets LLC.
The hearing tomorrow in the U.S. Bankruptcy Court for the Southern
District of New York for the sale of the assets (approximately
17,000 retail client accounts and a 35% stake in FXCM) is expected
to be postponed because the Creditors' Committee in the Refco case
and the Agent for Refco's Bank lenders have advised Refco that
they intend to object to the approval of the sale to FXCM and have
requested more time for discovery.
A new hearing date has not yet been set.
Headquartered in New York, New York, Refco Inc. --
http://www.refco.com/-- is a diversified financial services
organization with operations in 14 countries and an extensive
global institutional and retail client base. Refco's worldwide
subsidiaries are members of principal U.S. and international
exchanges, and are among the most active members of futures
exchanges in Chicago, New York, London and Singapore. In addition
to its futures brokerage activities, Refco is a major broker of
cash market products, including foreign exchange, foreign exchange
options, government securities, domestic and international
equities, emerging market debt, and OTC financial and commodity
products. Refco is one of the largest global clearing firms for
derivatives.
The Company and 23 of its affiliates filed for chapter 11
protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006).
J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom
LLP, represent the Debtors in their restructuring efforts. Refco
reported $16.5 billion in assets and $16.8 billion in debts to the
Bankruptcy Court on the first day of its chapter 11 cases.
REFCO INC: Asks Court to Expand Scope of Adam Brooks' Employment
----------------------------------------------------------------
As reported in the Troubled Company Reporter on Jan. 27, 2006,
Refco Inc. will auction its prized art collection, comprising more
than 500 photographs by contemporary artists such as Cindy
Sherman, Charles Ray, Diane Arbus and Andy Warhol, as well as
paintings, sculptures and prints.
Refco Inc. asked for authorization from the U.S. Bankruptcy Court
of the Southern District of New York for Christie's to conduct a
series of sales of the highly sought after collection, with
proposed auction dates of April 25, May 5 and 10 and June 2006.
Refco Inc., and its debtor-affiliates tell the Court that for 20
years, Adam Brooks continues to be employed by the Debtors as
curator of their artwork collection. It was through Mr. Brooks'
expertise, knowledge and diligence that the Artwork became the
renowned collection that it is today.
In connection with the proposed sale of their Artwork, the
Debtors relate that Mr. Brooks is integral to their disposition
as the party most familiar with the Artwork, and has worked
diligently with the Debtors to negotiate the terms of the Sale's
auction process and a Consignment Agreement between the Debtors
and Christie's, Inc.
However, considering that the Artwork collection essentially
became dormant two and a half years ago, Mr. Brooks' compensation
was reduced by 60% to reflect the diminished time required to
oversee the acquisition of works for the Debtors' collection.
In the past few months, the need for Mr. Brooks' assistance with
oversight of the Artwork has greatly increased due to the
Debtors' desire to auction the Artwork to raise cash for their
estates, their creditors and other interested parties.
The Debtors note that the reduced compensation Mr. Brooks had
previously been receiving is accordingly far below the Debtors'
recent need for Mr. Brooks' assistance in connection with the
Debtors' proposed Sale.
The Debtors assert that without Mr. Brooks' assistance in the
processes of preparing the Artwork for Auction and Sale and
selecting Christie's as the best auction house to auction and
sell the Artwork, the Debtors would be unable to effectuate an
efficient and successful disposition of the Artwork.
Accordingly, the Debtors seek the Court's authority to expand the
scope of Mr. Brooks' employment to encompass those additional
services and to pay him $24,000 for the additional services.
Headquartered in New York, New York, Refco Inc. --
http://www.refco.com/-- is a diversified financial services
organization with operations in 14 countries and an extensive
global institutional and retail client base. Refco's worldwide
subsidiaries are members of principal U.S. and international
exchanges, and are among the most active members of futures
exchanges in Chicago, New York, London and Singapore. In addition
to its futures brokerage activities, Refco is a major broker of
cash market products, including foreign exchange, foreign exchange
options, government securities, domestic and international
equities, emerging market debt, and OTC financial and commodity
products. Refco is one of the largest global clearing firms for
derivatives.
The Company and 23 of its affiliates filed for chapter 11
protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006).
J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom
LLP, represent the Debtors in their restructuring efforts. Refco
reported $16.5 billion in assets and $16.8 billion in debts to the
Bankruptcy Court on the first day of its chapter 11 cases. (Refco
Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
REGIONAL DIAGNOSTICS: Files Second Amended Disclosure Statement
---------------------------------------------------------------
Regional Diagnostics, L.L.C., and its debtor-affiliates delivered
their second amended disclosure statement explaining their Joint
Plan of Liquidation to the U.S. Bankruptcy Court for the Northern
District of Ohio, Eastern Division.
As previously reported in the Troubled Company Reporter on
September 30, 2005, the Plan provides for the establishment of
Newco, an entity formed or funded by the Existing Lenders as the
successful purchaser of the Debtors' operating assets.
Under the Court-approved modified Plan, these claims will recover
100%, with all obligations to be assumed by Newco:
a) Administrative Claims;
b) Priority Tax Claims;
c) Class 1 Other Priority Claims; and
d) Class 3 Other Secured Claims.
The Existing Lender Secured Claims will also be paid in full with
obligations to be assumed by Newco, however, the holders have
already received, through the Existing Lender Agent, the value of
their secured claim through its credit bid and have already waived
the right to any Distribution on account of any General Unsecured
Claim.
Class 4 General Unsecured Claims in these subclasses will are
projected to recover 5% under the modified Plan:
Type of Claim Estimated Allowed Claim
------------- -----------------------
Class 4(a) $11,380,556
Seller Note Unsecured Claims
Class 4(b) $15,788,768
Subordinated Lender Claims
Class 4(c) $4,000,000
Trade Claims
All Non-Compensatory Damages Claims will be discharged as of the
Effective Date, and Class 6 RDH Interests will receive no
Distribution under the Plan.
Headquartered in Warrensville Heights, Ohio, Regional Diagnostics,
L.L.C. -- http://www.regionaldiagnostic.com/-- owns and operates
27 medical clinics located in Florida, Illinois, Indiana, Ohio and
Pennsylvania. The Company and its debtor-affiliates filed for
chapter 11 protection on April 20, 2005 (Bankr. N.D. Ohio Case No.
05-15262). Jeffrey Baddeley, Esq., at Baker & Hostetler LLP
represents the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they estimated
assets of $10 million to $50 million and debts of $50 million to
$100 million.
REYNOLDS AMERICAN: Earns $297 Mil. in Fourth Quarter Ended Dec. 31
------------------------------------------------------------------
Reynolds American Inc. (NYSE: RAI) reported strong full year and
fourth quarter 2005 financial results.
Reynolds American Inc. earned $297,000,000 of net income on
$1,952,000,000 of net sales for the three months ended Dec. 31,
2005.
"Reynolds American is off to a great start," Susan M. Ivey, RAI's
chairman, chief executive officer and president said. "In 2005,
we successfully rolled out R.J. Reynolds' portfolio strategy,
captured an additional $350 million in merger synergies and
completed the majority of our integration efforts. Our fourth
quarter and full year 2005 results demonstrate the significant
progress we are making in building a stronger business that
delivers sustained earnings growth."
"To further enhance shareholder value, we raised our dividend by
31%, to $5.00 a share. In doing so, we established a dividend
that returns approximately 75% of Reynolds American's net income
to shareholders," Ivey added.
RAI's fourth quarter and full year results follow in two sections:
one that presents measurements reported in accordance with U.S.
generally accepted accounting principles; and a second section
that provides certain pro forma GAAP measurements, to provide
additional perspective on the company's performance.
Fourth Quarter and Full Year Highlights
-- Fourth quarter and full year 2005 operating results include
$200 million in non-cash trademark and goodwill impairments.
Fourth quarter and full year 2005 net income also reflect
the additional benefits of $133 million from the favorable
resolution of prior years' tax matters, including an
extraordinary gain; and an incremental $2 million gain on
the 1999 sale of RJR's international tobacco business to
Japan Tobacco. Full year 2005 operating results also
include $52 million in incremental charges related to Phase
II tobacco grower obligations; $81 million in incremental
charges related to the stabilization inventory pool losses
associated with the tobacco quota buyout program (FETRA);
and the benefit of a $79 million Phase II growers' trust
offset. Full year 2005 operating results include net
charges of $24 million related to the second-quarter sale of
R.J. Reynolds' packaging business.
-- Fourth quarter and full year 2004 operating results include
the benefit of a $69 million Phase II growers' trust offset.
This benefit was offset by: fourth quarter and full year
net charges of $30 million and $5 million, respectively, for
restructuring charges; fourth-quarter non-cash trademark
impairment charges of $199 million; and $50 million in legal
settlements for the year (which include fourth quarter
charges of $17 million to settle the California MSA
advertising case and a first-quarter charge of $33 million
related to the settlement of the tobacco growers' lawsuit).
-- 2004 net income includes $175 million in favorable
resolutions of prior years' tax matters, with $30 million in
the fourth quarter, and a third quarter $49 million gain on
RJR's acquisition of Nabisco Group Holdings in 2000. 2004
net income also includes a $12 million gain on the 1999 sale
of RJR's international tobacco business to Japan Tobacco,
with $11 million in the fourth quarter.
Fourth Quarter Financial Results (GAAP)
On a GAAP basis, fourth quarter 2005 net sales were $2.05 billion,
up 2.3% from the prior-year period. The increase was due to
improved pricing and a prior-year returned goods charge, partially
offset by volume declines.
Fourth quarter 2005 operating income was $218 million, up 344.9%
from the prior year period. This was primarily due to the factors
that affected net sales, as well as the benefits of incremental
merger-related synergies, reduced merger-related costs and lower
restructuring charges. These were partially offset by a Phase II
growers trust benefit in the prior year quarter. In addition,
fourth quarter operating income was reduced by approximately
$200 million in non-cash impairment charges in both 2005 and 2004.
Net income was $297 million, up 290.8% compared with the prior
year quarter.
Full Year Financial Results (GAAP)
For full year 2005, net sales were $8.26 billion, up 28.3% from
2004. The increase was primarily due to incremental revenues
resulting from the July 30, 2004, business combination of R.J.
Reynolds Tobacco Company and the U.S. business of Brown &
Williamson Tobacco Corporation, as well as improved pricing.
Operating income for the full year was $1.46 billion, up 65.4%
from the year ago period. This reflected the same factors that
impacted net sales, as well as merger-related synergies and lower
merger related costs. These were partially offset by higher MSA
and tobacco quota buyout expenses, as well as charges related to
settlements and the sale of R.J. Reynolds' packaging business.
Full year 2005 net income of $1.04 billion was up 51.5% from the
prior year. This reflected the after tax net benefit of the full
year factors cited above, partially offset by a reduction in the
amount of income from favorable tax resolutions recorded in 2005
compared with that in 2004.
"With net income growing 29% on a pro forma basis, our 2005
results clearly demonstrate the success of the merger," Dianne M.
Neal, RAI's chief financial officer said. "We exceeded $1 billion
in net income, and we reached that despite significant incremental
charges."
Headquartered in Winston Salem, North Carolina, Reynolds American
Inc. (NYSE: RAI) -- http://www.reynoldsamerican.com/-- is the
parent company of R.J. Reynolds Tobacco Company, Santa Fe Natural
Tobacco Company, Inc., Lane Limited and R.J. Reynolds Global
Products, Inc. R.J. Reynolds Tobacco Company, the second- largest
U.S. tobacco company, manufactures about one of every three
cigarettes sold in the country. The company's brands include five
of the 10 best-selling U.S. brands: Camel, Kool, Winston, Salem
and Doral. Santa Fe Natural Tobacco Company, Inc., manufactures
Natural American Spirit cigarettes and other tobacco products for
U.S. and international markets. Lane Limited manufactures several
roll-your-own, pipe tobacco and little cigar brands, and
distributes Dunhill tobacco products. R.J. Reynolds Global
Products, Inc., manufactures, sells and distributes American-blend
cigarettes and other tobacco products to a variety of customers
worldwide.
* * *
Fitch Rating rated Reynolds American Inc.'s Bank Loan Debt at BB+
and the Company's Senior Unsecured Debt at BB on October 28, 2003.
REYNOLDS AMERICAN INC., and R.J. REYNOLDS TOBACCO HOLDINGS, INC.,
are parties to a Third Amended and Restated Credit Agreement,
dated as of July 30, 2004, as amended by a First Amendment to
Credit Agreement dated as April 22, 2005, with JPMORGAN CHASE
BANK, N.A. (formerly known as JPMORGAN CHASE BANK), Individually,
as Administrative Agent and as Senior Managing Agent; CITIBANK,
N.A., Individually, as Syndication Agent and Senior Managing
Agent; GENERAL ELECTRIC CAPITAL CORPORATION, Individually and as
Syndication Agent; LEHMAN COMMERCIAL PAPER INC., Individually and
as Documentation Agent; MIZUHO CORPORATE BANK, LTD., Individually
and as Documentation Agent; THE BANK OF NOVA SCOTIA; THE BANK OF
NEW YORK; CITY NATIONAL BANK OF NEW JERSEY; and WACHOVIA BANK,
NATIONAL ASSOCIATION. The Credit Agreement provides that if
RJR's 7-3/4% Senior Notes due May 15, 2006, are refinanced in
full prior to February 13, 2006, the Credit Agreement's
Maturity Date is automatically extended from February 13, 2006,
to January 30, 2007.
RITE AID: Fitch Downgrades Sr. Unsecured Notes' Ratings to CCC+
---------------------------------------------------------------
Fitch took these rating actions on Rite Aid Corporation:
-- Issuer Default Rating affirmed at 'B-'
-- $1.75 billion secured bank credit facility affirmed at
'BB-'/ Recovery Rating 'RR1'
-- Secured notes affirmed at 'BB-'/ Recovery Rating 'RR1'
-- Senior unsecured notes downgraded to 'CCC+' from
'B-'/Recovery Rating to 'RR5' from 'RR4'
Rite Aid's Rating Outlook remains Stable.
The ratings reflect Rite Aid's strategy to focus on its stores and
customer service levels, its adequate liquidity, and the positive
demographics of the drug retailing industry. Also considered is
Rite Aid's financial leverage, operating statistics that trail its
largest competitors, as well as the highly competitive nature of
the drug retailing business. The downgrade of the senior
unsecured notes reflects Fitch's recovery analysis of Rite Aid's
capital structure, which resulted in below average recovery for
the senior unsecured note holders given default. Rite Aid
maintains adequate liquidity through its $1.75 billion revolving
credit facility.
Over the past two years, Rite Aid's same store sales have trailed
those of its competitors with total same store sales up 1.6% and
0.6% in fiscal 2005 and the first nine months of 2006,
respectively. The weak trends have resulted from the loss of
customers due to:
* the conversion to mandatory mail in key markets;
* the growth of lower priced generic pharmaceutical sales;
* drug safety concerns; and
* lower reimbursement rates from various third party payers.
Rite Aid is addressing its sales trends by focusing on
strengthening its store base and customer service levels.
Specifically, management has:
* made improvements to inventory control and internal systems;
* increased store and labor hours; and
* re-merchandised the stores.
In addition, Rite Aid is in the process of updating its store base
with 200-225 new or relocated stores and 250 store remodels
planned through 2007. While Rite Aid's operating expenses have
increased as a result of this activity, Fitch anticipates that the
recent initiatives and store base investments will help the
company to remain competitive and drive customer traffic through
its stores. Fitch also expects that Rite Aid will benefit from
positive industry fundamentals, such as an aging population and
the growing use of prescription medications.
Nonetheless, Rite Aid continues to face a competitive marketplace,
with traditional and non-traditional competitors such as:
* supermarkets,
* mass merchants, and
* mail order services vying for customers.
In addition, Fitch remains concerned about the effect of certain
industry trends, such as Medicare Part D and changes in
reimbursement rates, on Rite Aid's future operating performance.
While Rite Aid has been able to reduce debt over time, debt
balances remain high at $3.1 billion on Nov. 26, 2005. As cash
flow generation is anticipated to be used to fund capital
expenditures, debt balances will likely remain near current
levels. Thus, any improvement in credit metrics will be driven by
strengthened operating results. For the twelve months ended
Nov. 5, 2005, Rite Aid's adjusted leverage was 6.2x and EBITDAR
coverage of interest and rent was 1.5x.
SAINT VINCENTS: Insurer Wants Adversary Proceeding Dismissed
------------------------------------------------------------
First American Title Insurance Company asserts that the adversary
proceeding launched by the Official Committee of Unsecured
Creditors of Saint Vincents Catholic Medical Centers of New York
and its debtor-affiliates against RCG Longview II, LP, must be
dismissed. First American is the successor-in-interest to RCG.
As reported in the Troubled Company Reporter on Jan. 12, 2006, RCG
made a $10,000,000 loan to Saint Vincents Catholic Medical Centers
of New York in May 2005, which loan was secured by a Subordinate
Mortgage and Security Agreement dated May 18, 2005. RCG made an
additional $6,000,000 loan to SVCMC in June 2005, which loan was
secured by a Third Subordinate Mortgage and Security Agreement
dated as of June 27, 2005.
The Creditors Committee asserted that at the time SVCMC filed for
Chapter 11, the Transfers were not recorded and perfected.
Accordingly, the Committee asked the Court to avoid the
$10,000,000 Subordinate Mortgage, the $10,000,000 Subordinate
Assignment, the $6,000,000 Subordinate Mortgage and the $6,000,000
Subordinate Assignment.
Martin G. Bunin, Esq., at Thelen Reid & Priest LLP, in New York,
tells Judge Beatty that the Transfers are voidable by a bona fide
purchaser of real property, other than fixtures, from SVCMC,
against whom applicable law permits those Transfers to be
perfected, that obtained the status of a bona fide purchaser and
perfected the Transfers on the Petition Date, whether or not a
purchaser existed.
First American explained that the Committees' adversary proceeding
must be dismissed because:
(1) Pursuant to Section 547 of the Bankruptcy Code, the
Transfers were:
-- intended to be substantially contemporaneous exchanges,
or in the alternative, were substantially
contemporaneous in fact, and are thus unavoidable;
-- in the payment of a debt incurred by the Debtors in the
ordinary course of business or financial affairs of the
Debtors and the transferee;
-- made in the ordinary course of business or financial
affairs of the Debtors and the transferee;
-- made according to ordinary business terms;
-- made to or for the benefit of a creditor who gave new
value to or for its benefit that is:
(i) not secured by an otherwise avoidable security
interest; and
(ii) on account of which new value the Debtors did
not make an otherwise unavoidable transfer to or
for the benefit of that creditor and are
therefore unavoidable;
(2) With regard to all fixtures of the property, a creditor on
a simple contract cannot acquire a judicial lien that is
superior to the interest of the transferee in all of the
fixtures of that property;
(3) The Complaint fails to state a claim on which relief can
be granted pursuant to Section 7012(b)(6) of the Federal
Rules of Bankruptcy Procedure;
(4) By virtue of the Debtors' misrepresentations in connection
with incurring the indebtedness:
-- they have an unavoidable constructive trust on the
property and the proceeds from two loans; and
-- they are barred by the equitable doctrine of "unclean
hands;" and
(5) The Debtors would be unjustly enriched by avoidance of the
mortgages.
First American reserves its right to raise any and all other
defenses pending the outcome of further investigation and
discovery in the action.
First American also denies all allegations regarding the
Committee's objection to RCG's claims.
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. 20; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
SAINT VINCENTS: Sandra Lindsay Withdraws State Court Action
-----------------------------------------------------------
Prior to the Petition Date, Sandra Lindsay, individually and as
administratrix of the Goods, Chattels, and Credits of Gary
Lindsay, commenced an action in the Supreme Court of the State of
New York, Kings County against the Debtors.
Ms. Lindsay alleging that the medical malpractice of one of Saint
Vincents Catholic Medical Centers of New York and its debtor-
affiliates' insured hospitals and insured doctors, specifically,
Catholic Medical Center of Brooklyn and Queens, Inc., St. Mary's
Hospital of Brooklyn, Jai Singh, M.D., Samuel Lehrman, M.D., and
Ming King Liu, M.D., led to the wrongful death of Mr. Lindsay.
Ms. Lindsay has determined that there is no need to continue the
Action and has agreed with the Debtors to modify the automatic
stay to allow her to discontinue the Action against all named
defendants, with prejudice.
Ms. Lindsay releases and forever discharges the Debtors from any
and all claims and actions that may be known or unknown.
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, filed the Debtors' chapter 11 cases. On Sept. 12,
2005, John J. Rapisardi, Esq., at Weil, Gotshal & Manges LLP took
over representing the Debtors in their restructuring efforts.
Martin G. Bunin, Esq., at Thelen Reid & Priest LLP, represents the
Official Committee of Unsecured Creditors. 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. 20;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
SALON MEDIA: Posts $900,000 Net Loss in Quarter Ended December 31
-----------------------------------------------------------------
Salon Media Group, Inc., delivered its financial results for the
quarter ended Dec. 31, 2005, to the Securities and Exchange
Commission on Feb. 13, 2006.
For the three-months ended Dec. 31, 2005, Salon Media incurred a
$900,000 net loss, compared to a $400,000 net profit for the three
months ended Dec. 31, 2004. Net revenues decreased 4% to $2.1
million for the three months ended Dec. 31, 2005 from $2.2 million
for same period in 2004.
Salon Media has historically relied on revenues and cash
generated from Salon Premium subscriptions since its
implementation in April 2002. Salon Premium subscriptions grew
from nothing to a high of approximately 89,100 as of Dec. 31,
2004. However, since the high experienced in Dec. 31, 2004,
subscriptions have been declining to approximately 69,700 as of
Dec. 31, 2005.
Going Concern Doubt
Burr, Pilger & Mayer LLP, expressed substantial doubt about Salon
Media's ability to continue as a going concern after it audited
the Company's financial statements for the year ended March 31,
2005. The firm pointed to the Company's losses from operations
and working capital deficit. The Company had previously received
a going concern qualification from PricewaterhouseCoopers LLP for
its fiscal 2004 financial statements.
About Salon Media
Founded in 1995, Salon Media -- http://www.salon.com/-- is an
Internet publishing company. Salon Media's award-winning
journalism combines original investigative stories and provocative
personal essays along with quick-take commentary and staff-written
Weblogs about politics, technology, culture and entertainment.
SENSIENT TECHS: S&P Places BB+ Corporate Credit Rating on Watch
---------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on
industrial flavor and fragrance manufacturer Sensient Technologies
Corp. on CreditWatch with negative implications, including its
'BB+' corporate credit rating. About $554 million of debt was
outstanding as of Dec. 31, 2005.
The CreditWatch listing is based on Sensient's continued weak
operating trends due to competitive challenges in its Color
segment and increased commodity and raw material costs. The
company's operating margins are currently trending at about 15%
compared with almost 17% in 2004. Sensient recently initiated
cost reduction and price increase initiatives to help stabilize
its operations. While the company has been able to reduce debt
levels through free cash flow generation in fiscal 2005, reduced
EBITDA resulted in further deterioration in its operating margin
and debt leverage compared to the prior year.
Standard & Poor's will meet with management to discuss the
company's initiatives to address its declining operating
performance.
SINCLAIR BROADCAST: Incurs $700,000 Net Loss in Fourth Quarter
--------------------------------------------------------------
BALTIMORE, Feb. 8 /PRNewswire-FirstCall/ --
Sinclair Broadcast Group, Inc. (Nasdaq: SBGI), reported its
financial results for the three months and twelve months ended
December 31, 2005.
Net broadcast revenues from continuing operations were $157.9
million for the three months ended December 31, 2005, a decrease
of 7.5% versus the prior year period result of $170.7 million.
Operating income was $44.2 million in the three-month period as
compared to $51.2 million in the prior year period, a decrease of
13.5%. The Company had a net loss available to common
shareholders of $0.7 million in the three-month period versus a
net loss available to common shareholders of $5.1 million in the
prior year period. The Company reported a diluted loss per common
share of $0.01 for the quarter versus a diluted loss per common
share of $0.06 in the prior year period. As a result of a
corporate restructuring in the fourth quarter, the Company
experienced a one-time loss of certain state net operating losses,
net of applicable valuation allowances, causing an increase to the
deferred tax provision of $11.0 million.
Net broadcast revenues from continuing operations were $614.4
million for the twelve months ended December 31, 2005, a decrease
of 3.2% versus the prior year period result of $634.6 million.
Operating income was $169.5 million in the twelve-month period, an
increase of 7.1% versus the prior year period result of $158.2
million. Net income available to common shareholders was $182.3
million in the twelve-month period versus the prior year period
net income available to common shareholders of $13.8 million.
Diluted earnings per common share were $2.14 in the twelve-month
period versus diluted earnings per common share of $0.16 in the
prior year period. Diluted earnings per common share on
continuing operations were $0.36 in the twelve-month period as
compared to $0.05 in the same period last year.
"We made great strides across our entire platform in 2005, a non-
political year, for which our employees should be proud and our
shareholders pleased," commented David Smith, President and CEO of
Sinclair. "We grew our new business revenues by 71%, experienced
ratings increases on our ABC and FOX stations where 62% of our
revenues are now affiliated, and grew our total market share from
17.3% to 17.8%. We also began the process of monetizing our
digital assets through retransmission consents, a process we have
only just begun but is already currently worth $25 million on an
annual basis, more than network compensation when it was at its
peak.
"On the expense side, we were able to decrease our television
production and selling, general and administrative costs for the
year by 3.5%. We entered into more economical news share
arrangements, structures which we will continue to pursue going
forward. We also optimized our mailer distribution which
increased our margins on that business to 51%."
Mr. Smith continued, "Lastly, we sold non-core assets at high
multiples, the proceeds of which were used to deliver the Company
and to increase our common stock dividend which, at an approximate
5% yield, is now one of the highest dividend yields in the
sector."
Sinclair Broadcast Group, Inc. -- http://www.sbgi.net/-- one of
the largest and most diversified television broadcasting
companies, owns and operates, programs or provides sales services
to 61 television stations in 38 markets. Sinclair's television
group includes FOX, WB, ABC, CBS, NBC, and UPN affiliates and
reaches approximately 23.0% of all U.S. television households.
* * *
As reported in the Troubled Company Reporter on April 18, 2005,
Standard & Poor's Ratings Services assigned its 'BB' rating to
Sinclair Television Group Inc.'s proposed $555 million secured
credit facilities. A recovery rating of '1' was also assigned,
indicating a high expectation of a full (100%) recovery of
principal in the event of a payment default. Borrowings are being
used to refinance the company's credit facility.
Sinclair Broadcast's 4-7/8% Convertible Senior Subordinated Notes
due 2018 carry Moody's Investor Service's B3 rating and Standard &
Poor's Rating Services at B rating.
SOLECTRON CORP: Moody's Rates Proposed $150 Mil. Sr. Notes at B3
----------------------------------------------------------------
Moody's Investors Service assigned a B3 rating to Solectron
Corporation's proposed $150 million ten-year senior subordinated
notes and affirmed Solectron's existing ratings including its B1
Corporate Family rating. The notes are being issued by
Solectron's 100% owned subsidiary Solectron Global Finance
Limited, and will be fully and unconditionally guaranteed by
Solectron. The proceeds of the Notes will be used to repay
Solectron's $150 million 7.375% Senior Notes due 2006, rated B1.
The ratings outlook remains stable.
The new B3 rating on the $150 million senior subordinated notes
reflects the contractual subordination of the notes to all
existing and future senior obligations. The guarantee is an
unsecured senior subordinated obligation of Solectron and will
rank equally in right of payment with all other senior
subordinated obligations of Solectron.
Moody's affirmation of Solectron's B1 corporate family reflects:
(A) Solectron's historical lack of profitability;
(B) the intense competitive landscape within the EMS sector;
(C) the on-going consolidation trend by EMS' OEM customers
which is accentuated by the lumpiness of the sector's
key customers; and
(D) continued sub-par financial performance in terms of
profitability and return measures.
The rating is supported by:
(1) Solectron's franchise value and its importance as a tier
one EMS provider in the global electronics supply chain;
and
(2) a liquid balance sheet with the company in a net cash
position and an unencumbered balance sheet.
The weak business fundamentals of Solectron continue to outweigh
the benefits of its liquid balance sheet. Despite growth in the
overall EMS industry, Solectron's revenue has declined quarter
over quarter between 2006 and 2005. The recent decline is in part
due to the weakness of one of its key handset customers amongst
others. Further, the on-going excess capacity in the industry
continues to provide pricing power to Solectron's OEM customers.
Such structural imbalance is further impacted given the lumpiness
of the sector's customers, with top 10 customers representing over
60% of Solectron's revenue. Moody's further notes that the recent
vendor consolidations by the OEMs further accentuate future
business volatility for the overall EMS sector including
Solectron.
Solectron has taken ongoing initiatives including investments in
faster growing industrial/medical sectors as well as post sale
services. However, Solectron's customer base remains largely
reliant on the traditional IT infrastructure and telecom
-munications, both of which continue to represent over 75% of the
company's total revenues. Given the lackluster growth in these
sectors and the aforementioned structural issues, Moody's expects
Solectron's revenue growth/visibility and profit improvement will
continue to be challenging.
As mentioned, Solectron has a highly liquid balance sheet with
over $1.3 billion cash balance. However, part of its cash balance
increase was due to a slow down in revenue in fiscal 2005 and the
resultant release of working capital. Solectron has $700 million
cash net of debt with the nearest maturity, post the current
refinancing, of $64 million in its fiscal 2007, after which
Solectron will not have any debt maturity until 2016. However,
given the volatility of its business, as well as working capital
intensity and increasing working capital requirements placed on
Solectron by its OEM customers, strong liquidity will remain an
important criterion for Solectron going forward.
The outlook or ratings could be raised if:
(a) there is evidence of revenue stability and sustained
revenue growth;
(b) improvements in operating margins;
(c) improvements in return measures; and
(d) reduced restructuring charges.
Moody's does not foresee Solectron's corporate family rating to
fall below the current B1 given its franchise value and importance
in the global electronics supply chain as well as its current
strong liquidity, unless significant developments were to take
place such as:
-- significant decline of further revenue either due to
secular decline of end markets served or market share loss;
-- significant deteriorations in operating metrics and return
measures; and
-- significant cash balance decline due partly to increasing
working capital intensity.
The SGL-1 speculative grade liquidity rating is supported by the
company's approximate $1.3 billion cash balance as of Nov. 30,
2005, and supplemental liquidity sources in the form of an undrawn
$500 million revolver. The ratings also take into account the
predominantly unsecured nature of existing debt. Solectron
currently does not monetize its accounts receivables but could
resort to such an arrangement to boost liquidity.
This new rating has been assigned;
* B3 rating on Solectron Global Finance Limited's
$150 million senior subordinated notes due 2016,
guaranteed by Solectron Corp.;
These existing ratings have been affirmed:
* Ba3 rating on Solectron's $500 million guaranteed senior
secured revolving credit facility, due 2007;
* B1 Corporate Family rating;
* B1 rating on Solectron's $450 million 0.5% convertible
senior notes, due 2034;
* B1 rating on Solectron's $150 million 7.375% senior notes,
due 2006;
* B3 rating on Solectron's $64.3 million 7.97% subordinated
debentures due 2006;
* SGL-1 speculative grade liquidity rating.
Solectron Corporation, headquartered in Milpitas, California, is a
leading global provider of customized, integrated manufacturing
and supply chain management services to OEMs in the electronics
industry. For the last twelve months ended November 2005, the
company generated approximately $10.2 billion in net sales and
$340 million in adjusted EBITDA.
SOLECTRON CORP: Fitch Rates Proposed $150 Million Sr. Notes at B+
-----------------------------------------------------------------
Fitch Ratings assigned a 'B+' rating to Solectron Corp.'s proposed
$150 million of senior subordinated notes due 2016. The proposed
private placement notes offering under Rule 144A will be issued by
Solectron Global Finance LTD's, an indirect, wholly-owned finance
subsidiary of Solectron formed for the sole purpose of issuing
debt securities. Solectron will guarantee the proposed notes on a
senior subordinated basis.
Net proceeds from the offering, together with available cash, are
expected to be used to repay approximately $150 million of 7.375%
senior unsecured notes due March 1, 2006. Pro forma for this
refinancing, Solectron's total debt is expected to be
approximately $705 million, comprised primarily of:
* $450 million 0.5% convertible senior notes due February 2034;
and
* $63 million 7.97% subordinated notes due November 2006.
SOLECTRON GLOBAL: Fitch Rates Proposed $150 Million Notes at B-
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B-' rating to
Solectron Global Finance LTD's proposed $150 million subordinated
notes due 2016, being offered pursuant to Rule 144a. The notes
will be guaranteed on a subordinated basis by Milpitas,
California-based Solectron Corp. Proceeds from the notes,
together with cash on hand, will be used to repay at maturity the
company's 7.375% senior notes, which mature on March 1, 2006. The
outstanding amount under those notes is about $150 million.
The ratings on Solectron reflect operating profitability at the
low end of the range of its peers in the highly competitive
electronics manufacturing services (EMS) industry and expectations
of revenue declines, somewhat offset by adequate financial
flexibility from cash balances and light leverage. The company
had about $806 million of lease-adjusted debt outstanding at
November 2005.
Sales declined 9% in the November quarter, compared with the
prior-year period, continuing a five-quarter trend. For the year
ended Aug. 31, 2005, sales were down 6%. The consumer segment has
been Solectron's weakest market, down 55% for the quarter,
primarily due to end-of-life product life cycles in handsets and
set-top box programs. Expectations are for continued year-over-
year weakness in the near term due to delayed ramps of new
contracts. Still, the company is experiencing modest sequential
quarterly improvements.
The EBITDA margin declined in the November quarter to about 2.6%,
below its previous range of 3.5%-3.7%, adjusting for nonrecurring
expenses. Inefficiencies caused by new product ramps, as well as
low capacity utilization, will constrain margin improvement over
the near term. Solectron's most recent restructuring program will
eliminate headcount and capacity in North America and Europe, but
results will not be apparent until May 2006. The company's
margins are at the bottom of the 4%-5% range for other top-tier
EMS companies.
"Solectron's leverage remains light at about 2.6x debt to EBITDA,
although this measure may deteriorate somewhat because of weakened
sales and profitability," noted Standard & Poor's credit analyst
Lucy Patricola. "The recent refinancing will not affect
leverage."
SOLUTIA INC: Monsanto Supports Debtor's Chapter 11 Plan
-------------------------------------------------------
The reorganization plan filed by Solutia Inc. in its bankruptcy
proceedings reflects the agreement in principle reached by
Solutia, Monsanto Company (NYSE: MON) and the Official Committee
of Unsecured Creditors in June 2005.
"The plan filed on Feb. 14, 2006, by Solutia, if approved by the
court, is one that we are committed to, and that we believe is an
important step forward in Solutia's ultimate emergence from
bankruptcy," said Terry Crews, Monsanto Chief Financial Officer.
Key elements of the plan related to Monsanto include:
-- Monsanto and Solutia would each manage designated
environmental remediation programs, and Monsanto retains
oversight with respect to resolution of tort litigation
claims. For its designated responsibilities, Monsanto
previously booked $284 million charge recorded in the
first quarter of fiscal year 2005.
-- a rights offering backed by Monsanto of up to $250 million
would provide funding for medical benefits for retirees
assigned to Solutia at the time of the spinoff in 1997 and
certain pre-spin environmental liabilities.
"Both Monsanto and Solutia worked hard to make sure the needs and
concerns of the legacy retirees were met as fairly and equitably
as possible in the reorganization plan," Mr. Crews said.
Monsanto's current fiscal year 2006 and 2007 cash flow guidance
does not include the effect of any potential use of cash for the
rights offering given that Solutia's reorganization plan must be
approved by the bankruptcy court and the timing of such approval
is uncertain. Monsanto's current guidance also does not reflect
any equity in Solutia that the company may receive as a result of
the bankruptcy process.
Solutia filed for Chapter 11 bankruptcy protection on Dec. 17,
2003. Solutia was formed in September 1997 when Pharmacia
Corporation (now a subsidiary of Pfizer, Inc.), formerly known as
Monsanto Company, spun off most of the chemical businesses to
shareowners as an independent entity. Present-day Monsanto
Company is focused on agriculture and was established by Pharmacia
in 2000. At that time, Monsanto agreed to indemnify Pharmacia for
certain liabilities assumed by Solutia at its spinoff to the
extent that Solutia failed to pay, perform or discharge those
liabilities.
Headquartered in St. Louis, Missouri, Monsanto Company --
http://www.monsanto.com/-- is a leading provider of technology-
based solutions and agricultural products that improve farm
productivity and food quality.
Headquartered in St. Louis, Missouri, Solutia, Inc. --
http://www.solutia.com/-- with its subsidiaries, make and sell a
variety of high-performance chemical-based materials used in a
broad range of consumer and industrial applications. The Company
filed for chapter 11 protection on December 17, 2003 (Bankr.
S.D.N.Y. Case No. 03-17949). When the Debtors filed for
protection from their creditors, they listed $2,854,000,000 in
assets and $3,223,000,000 in debts. Solutia is represented by
Richard M. Cieri, Esq., at Kirkland & Ellis.
STELCO INC: Court Approves Reorganization of Corporate Structure
----------------------------------------------------------------
Superior Court of Justice (Ontario) granted an Order on Feb. 14,
2006, approving the previously reported proposed reorganization of
the Stelco Inc.'s (TSX:STE) corporate structure. As a result,
distinct portions of Stelco's business will be transferred into
separate limited partnerships upon the Company's emergence
from its Court-supervised restructuring process.
In its Order, the Court declared that the proposed reorganization
was fair and reasonable . As disclosed on previous occasions,
among the features of the reorganization are provisions concerning
the pension plan funding arrangement contained in Stelco's
restructuring plan. Among these provisions, the ten-year funding
arrangement agreed to by the Company and the Province is
confirmed, the responsibilities of Stelco and the general partners
in the limited partnerships are identified, and the ongoing
pension funding obligations of Stelco and of any acquirer of the
Company are outlined. Stelco will also be prohibited from making
dividend payments or other forms of distribution on its common
shares while the pension funding arrangements are in effect.
Stelco, Inc. -- http://www.stelco.ca/-- is a large, diversified
steel producer. Stelco is involved in all major segments of the
steel industry through its integrated steel business, mini-mills,
and manufactured products businesses.
* * *
In early 2004, after a thorough financial and strategic review,
Stelco concluded that it faced a serious viability issue. The
Corporation incurred significant operating and cash losses in 2003
and believed that it would have exhausted available sources of
liquidity before the end of 2004 if it did not obtain legal
protection and other benefits provided by a Court-supervised
restructuring process. Accordingly, on Jan. 29, 2004, Stelco and
certain related entities filed for protection under the Companies'
Creditors Arrangement Act.
The Court extended the stay period under Stelco's Court-supervised
restructuring from Dec. 12, 2005, until Mar. 3, 2006.
STONE ENERGY: Reports $360 Million Capital Budget for 2006
----------------------------------------------------------
Stone Energy Corporation (NYSE: SGY) reported its 2006 capital
budget of $360 million (exclusive of capitalized salaries, general
and administrative costs and interest, and acquisitions), which
compares to 2005 capital expenditures of approximately $380
million.
Approximately 30% of the 2006 capital budget is projected to be
spent on Gulf of Mexico shelf properties, while an estimated 35%
of the budget is slated to be spent in the Rocky Mountains and
Williston Basin. The remaining 35% of the 2006 budget has been
primarily allocated to deep water and deep shelf exploration in
the Gulf of Mexico.
Stone expects 2006 net daily production to average between 200-230
MMcfe (million cubic feet of natural gas equivalent) per day,
which compares to estimated production of 228 MMcfe per day for
2005. During January 2006, production averaged approximately
185 MMcfe per day as third party pipeline and processing
facilities have returned at a slower than expected pace after the
2005 hurricanes.
Several key fields are projected to come back on-line during the
first quarter, suggesting net daily production for the quarter of
195-215 MMcfe per day. Stone is currently producing approximately
200 MMcfe per day. The 2006 production guidance reflects a
continued shift of capital towards projects with the potential for
longer lived reserves but lower rate production. For 2006, Stone
expects its Rocky Mountain and Williston Basin production to
increase over 50% from its 2005 average volume of 24 MMcfe per
day. The company plans to drill 32 gross wells (20 net wells) in
the Williston Basin and 24 gross wells (9 net wells) at the
Pinedale and Jonah fields this year.
Stone estimates its year-end 2005 proved reserves were 593 Bcfe
(billion cubic feet of natural gas equivalent), down from 670 Bcfe
on Sept. 30, 2005. All of Stone's year-end reserves were fully
engineered or audited by nationally recognized engineering firms.
In the fourth quarter of 2005, Stone had 15 Bcfe of production and
5 Bcfe of additions.
In addition, during the quarter Stone had a 67 Bcfe negative
revision, which included a 10 Bcfe adjustment for fuel use
reclassification, a 10 Bcfe timing adjustment of Pinedale
reserves, and a 5 Bcfe reduction due to higher costs. For the
year, there were 83 Bcfe of production and 88 Bcfe of additions,
which calculates to a 106% replacement of production with new
reserves, excluding revisions.
Stone also announced operational results from its drilling program
through January which included a successful exploratory well at
its Lexus Prospect on East Cameron Block 121 (100% working
interest) as well as seven successful development wells in the
Williston Basin and Pinedale Anticline. There were also five
unsuccessful exploration wells, including one deep water and two
deep shelf wells. Stone is scheduled to drill two additional deep
shelf prospects in the first quarter. Stone also continues to
evaluate a number of Williston Basin exploration opportunities.
At Dec. 31, 2005, Stone had availability of $124 million on its
$300 million credit facility and had a cash balance of
approximately $80 million.
Delays Filing of Form 10-Q
Stone will hold its year-end conference call on Friday, March 10,
2006, with details on the call to be provided at a later date.
Stone Energy expects to file its 2005 Form 10-K and its delayed
third quarter 2005 Form 10-Q before March 15, 2006.
Headquartered in Lafayette, Louisiana, Stone Energy Corporation --
http://www.stoneenergy.com/-- is an independent oil and gas
company and is engaged in the acquisition and subsequent
exploration, development, operation and production of oil and gas
properties located in the conventional shelf of the Gulf of
Mexico, deep shelf of the GOM, deep water of the GOM, Rocky
Mountain Basins and the Williston Basin.
* * *
As reported in the Troubled Company Reporter on Dec. 9, 2005,
Standard & Poor's Ratings Services lowered its corporate credit
rating on independent oil and gas exploration and production
company Stone Energy Corp. to 'B+' from 'BB-'. The ratings remain
on CreditWatch with negative implications.
Stone Energy Corp.'s 8.25% Senior Subordinated Notes due 2011
carry Moody's Investor Services' B3 rating and Standard & Poor's
Ratings Services' B- rating.
TEC FOODS: Wants Exclusive Plan-Filing Period Extended to May 2
---------------------------------------------------------------
TEC Foods, Inc., asks the U.S. Bankruptcy Court for the Eastern
District of Michigan to extend its exclusive periods to:
a) file a plan of reorganization through May 2, 2006; and
b) solicit acceptances of that plan through June 30, 2006.
The Debtor says it'll use the additional time to complete
negotiations of a global resolution with Wells Fargo Bank, N.A.
and Taco Bell Corporation.
In addition, the extension will allow FL Receivables Trust 2002 to
file a proof of claim, which the Debtor believes will trigger an
adjudication of its objection to certain elements of the claim.
The Debtor tells the Court that the Chapter 7 Trustee for TEC
Foods of Chicago, Inc., is willing to conduct a sale of TFIC's
intangible assets that are subject to FLRT's security interests.
The Debtor believes that the outcome of the sale, if it occurs
within the short term, would better define the amount of any
deficiency claim and narrow the issues and disputes between the
parties for the benefit of other creditors of the estate in the
context of plan confirmation.
Headquartered in Pontiac, Michigan, TEC Foods, Inc., filed for
chapter 11 protection on Nov. 3, 2005 (Bankr. E.D. Mich. case No.
05-89154). Paula A. Hall, Esq., at Butzel Long, P.C., represents
the Debtor in its restructuring efforts. When the Debtor filed
for protection form its creditors, it listed estimated assets and
debts of $10 million to $50 million.
U.S. CAN: Sells U.S. and Argentine Operations to Ball Corp.
-----------------------------------------------------------
U.S. Can Corporation entered into a definitive agreement to sell
its U.S. and Argentinean operations to Ball Corporation (NYSE:
BLL) for approximately 1.1 million shares of Ball common stock and
the repayment of approximately $550 million of U.S. Can's debt.
The current shareholders of U.S. Can will retain its European
businesses. The transaction is expected to close by the end of
the first quarter, subject to customary closing conditions.
"Ball Corporation is one of the most influential and competitive
players in the packaging industry," stated Carl Ferenbach, U.S.
Can Chairman and Managing Director of Berkshire Partners, LLC, a
private equity firm in Boston. "The sale of these operations from
U.S. Can to Ball puts them in very strong hands and assures their
continued support and development."
U.S. Can shareholders will retain the company's European
businesses and will continue to focus on developing the company's
European markets. U.S. Can is a leading manufacturer of steel
containers for personal care, household, automotive, paint and
industrial products in the U.S. and Europe, as well as plastic
containers in the U.S. and food cans in Europe.
About Ball Corporation
Headquartered in Broomfield, Colorado, Ball Corporation --
http://www.ball.com/-- is a supplier of high-quality metal and
plastic packaging products and owns Ball Aerospace & Technologies
Corp., which develops sensors, spacecraft, systems and components
for government and commercial customers. Ball reported 2005 sales
of $5.7 billion and the company employs 13,100 people worldwide.
About U.S. Can Corporation
Headquartered in Lombard, Illinois, U.S. Can Corporation --
http://www.uscanco.com-- manufactures steel containers for
personal care, household, automotive, paint and industrial
products in the United States and Europe, as well as plastic
containers in the United States and food cans in Europe.
As of Oct. 2, 2005, U.S. Can's balance sheet showed a $426,657,000
equity deficit, compared to a $398,429,000 deficit at Dec. 31,
2004.
UAL CORP: Gets Court Nod on Settlement with DaimlerChrysler et al.
------------------------------------------------------------------
UAL Corporation and its debtor-affiliates sought and obtained the
U.S. Bankruptcy Court for the Northern District of Illinois'
approval of a settlement agreement resolving tax indemnity claims
filed by DaimlerChrysler Services North America LLC, Lone Star Air
Partners LLC, USWFS Intermediary Trust, AT&T Credit Holdings Inc.,
and Peak Finance Partners III LP.
Rebecca O. Fruchtman, Esq., at Kirkland & Ellis LLP, in Chicago,
Illinois, relates that prior to their bankruptcy petition date,
the Debtors entered into leveraged lease financing arrangements
relating to certain aircraft in their fleet. DaimlerChrysler,
Lone Star, USWFS, AT&T, and Peak were owner participants under the
Financing Transactions.
DaimlerChrysler, Lone Star, USWFS, AT&T, and Peak filed these
unliquidated claims against the Debtors on account of certain
rights, remedies, and liabilities arising under the Financing
Transactions:
Claimant Claim No.
-------- ---------
DaimlerChrysler 44724
Lone Star Air Partners 36282
Lone Star Air Partners 36291 to 36293
Lone Star Air Partners 42981 to 42983
USWFS Intermediary Trust 36285
AT&T Credit Holdings 36283
Peak Finance Partners III 36278
Peak Finance Partners III 36286
The Debtors objected to the Claims. The Debtors argued that
these claims were overstated and should be disallowed.
After extensive, arm's-length negotiations, the Debtors reached a
final settlement with the Claimants, which resolves all issues
that are asserted in the Debtors' objections and allow the claims
in an agreed amount.
A scheduled of the settlement amount for each claim is available
for free at http://ResearchArchives.com/t/s?54d
In addition, the stipulations with the Owner Participants
provide, in relevant part, that:
(a) each of the Claims will be deemed amended to assert claims
only for the Settlement Amounts;
(b) the Amended Claims will be allowed as non-priority
general, unsecured claims against the Debtors' bankruptcy
estate;
(c) the Debtors will withdraw their objections as to the
Owner Participants' claims with prejudice.
Headquartered in Chicago, Illinois, UAL Corporation --
http://www.united.com/-- through United Air Lines, Inc., is the
holding company for United Airlines -- the world's second largest
air carrier. The Company filed for chapter 11 protection on
December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M.
Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq.,
and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $24,190,000,000
in assets and $22,787,000,000 in debts. Judge Wedoff confirmed
the Debtors' Second Amended Plan on Jan. 20, 2006. The Company
emerged from bankruptcy protection on February 1, 2006. (United
Airlines Bankruptcy News, Issue Nos. 112 & 113; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
US AIRWAYS: Files Prospectus for Securitization Exchange Offer
--------------------------------------------------------------
US Airways, Inc., filed a preliminary prospectus with the
Securities and Exchange Commission relating to its offer to sell
new class C pass through certificates, series 2000-3, in exchange
for outstanding class C pass through certificates, series 2000-3.
US Airways' Chairman, President and Chief Executive Officer W.
Douglas Parker relates that the outstanding class C pass through
certificates were issued in the original face amount of
$157,054,000. To date, principal payments of $75,540,639 have
been made on those certificates, so that the current outstanding
principal amount is $81,513,361.
As of January 30, 2006, the new class C certificates represent an
undivided interest in a trust that holds $76,851,843 of secured
promissory notes.
Mr. Parker notes that there is no existing market for the class C
certificates to be issued, and the company does not intend to
apply for a listing on any securities exchange or to arrange for
the company to be quoted on any quotation system.
Moreover, Mr. Parker relates:
* The terms of the new class C certificates, including their
subordination provisions, are substantially identical to the
terms of the outstanding class C certificates, except for
various transfer restrictions and registration rights
relating to the outstanding class C certificates;
* The exchange of certificates will not be a taxable exchange
for U.S. federal income tax purposes;
* The exchange offer expires on March 7, 2006, at 5:00 p.m.,
New York City time, unless extended; and
* The new class C certificates will accrue interest at the
rate of 8.39% per annum based on the outstanding pool
balance of the certificates, payable on March 1 and
September 1 of each year.
U.S. Bank National Association, as successor-in-interest to State
Street Bank and Trust Company, serves as exchange agent in the
exchange offer.
A full-text copy of the preliminary prospectus is available at no
charge at http://ResearchArchives.com/t/s?564
Headquartered in Arlington, Virginia, US Airways' primary business
activity is the ownership of the common stock of:
* US Airways, Inc.,
* Allegheny Airlines, Inc.,
* Piedmont Airlines, Inc.,
* PSA Airlines, Inc.,
* MidAtlantic Airways, Inc.,
* US Airways Leasing and Sales, Inc.,
* Material Services Company, Inc., and
* Airways Assurance Limited, LLC.
Under a chapter 11 plan declared effective on March 31, 2003,
USAir emerged from bankruptcy with the Retirement Systems of
Alabama taking a 40% equity stake in the deleveraged carrier in
exchange for $240 million infusion of new capital.
US Airways and its subsidiaries filed another chapter 11 petition
on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian
P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning,
Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and
Douglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtors
in their restructuring efforts. In the Company's second
bankruptcy filing, it lists $8,805,972,000 in total assets and
$8,702,437,000 in total debts. (US Airways Bankruptcy News, Issue
No. 113; Bankruptcy Creditors' Service, Inc., 215/945-7000)
VER-TRANS ELEVATOR: Case Summary & 22 Largest Unsecured Creditors
-----------------------------------------------------------------
Debtor: Ver-Trans Elevator Co., Inc.
P.O. Box 12282
Alexandria, Louisiana 71315
Bankruptcy Case No.: 06-80081
Type of Business: The Debtor sells and services elevators.
Chapter 11 Petition Date: February 13, 2006
Court: Western District of Louisiana (Alexandria)
Debtor's Counsel: Bradley L. Drell, Esq.
Gold, Weems, Bruser, Sues & Rundell
2001 MacArthur Drive
P.O. Box 6118
Alexandria, Lousiana 71307
Tel: (318) 445-6471
Fax: (318) 445-6476
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 22 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Internal Revenue Service $280,616
1555 Poydras St, Suite 220
Mail Stop 31
New Orleans, LA 70112
La. Dept. of Revenue $54,376
Withholding Tax
P.O. Box 91017
Baton Rouge, LA 70821-9017
TMC/MidSouth Bank $50,584
P.O. Box 3743
Lafayette, LA 70502
Mitsui Sumitomo Marine $46,772
Elevator Controls Corp. $21,599
American Express $15,734
La. Unemployment $13,700
Tyler Elevator Products $11,563
Elevator Solutions International $9,206
KONE, Inc. $9,037
Bob Jones $8,500
Home Depot $6,743
Samson Signal $6,083
La. Dept. of Labor $5,500
GAL Manufacturing Corp. $5,256
C E Electronics $4,319
Alps Wire Rope $4,263
Stine Lumber Company $4,236
Bell South $3,164
Janus Elevator $2,587
Internal Revenue Service $2,500
Protemp Staffing Solutions, Inc. $2,465
VERITAS DGC: Poor Investor Interest Cues Fitch to Withdraw Ratings
------------------------------------------------------------------
Fitch Ratings affirmed the issuer default rating of Veritas DGC,
Inc. at 'BB-'. In addition, Fitch affirmed Veritas' senior
unsecured convertible note rating at 'BB-' and the company's
senior secured credit facility rating at 'BB'. The Rating Outlook
for Veritas is Stable.
After affirming the ratings of the company, Fitch is withdrawing
the ratings. The decision to withdraw the ratings was driven by a
lack of investor interest.
VISHAY INTERTECH: Posts $62.3MM Net Earnings in 4th Quarter 2005
----------------------------------------------------------------
Vishay Intertechnology, Inc., earned $2,296,521,000 in net
revenues for the year ended Dec. 31, 2005, compared to
$2,414,654,000 for the same period in 2004.
Vishay's net revenues for the fiscal quarter ended Dec. 31, 2005,
totaled $593,690,000, as compared to sales of $542,714,000 for the
fiscal quarter ended Dec. 31, 2004. Net earnings for the same
period were $26,890,000, compared with a $54,458,000 net loss for
the quarter ended Dec. 31, 2004.
The Company's net earnings for the year ended Dec. 31, 2005, were
$62,274,000 versus $44,696,000 of net earnings for the year ended
Dec. 31, 2004.
The $62,274,000 net earnings for the year ended Dec. 31, 2005,
were impacted by:
* pre-tax charges for restructuring and severance costs of
$29,772,000;
* related asset write-downs of $11,416,000;
* purchased in-process research and development of $9,694,000;
and
* Siliconix transaction-related expenses of $3,751,000.
Those items were partially offset by a $2,120,000 gain on sale of
land and a $963,000 gain from adjustments to previously existing
purchase commitments.
The Company's $26,890,000 net earnings for the fourth quarter of
2005 were impacted by:
* pre-tax charges for restructuring and severance costs of
$11,594,000;
* related asset write-downs of $6,603,000; and
* a write-off of purchased IPR&D of $493,000.
Those items were partially offset by a $3,417,000 gain from
adjustments to previously existing purchase commitments.
Headquartered in Malvern, Pennsylvania, Vishay Intertechnology,
Inc. -- http://www.vishay.com/-- a Fortune 1,000 Company listed
on the NYSE (VSH), is one of the world's largest manufacturers of
discrete semiconductors and selected ICs, and passive electronic
components. Vishay's components can be found in products
manufactured in a very broad range of industries worldwide.
Vishay has operations in 17 countries employing over 25,000
people.
* * *
Vishay's 3-5/8% convertible subordinated notes due 2023 carry a
B3 rating from Moody's and a B+ rating from Standard & Poor's.
Both agencies assigned those ratings on March 1, 2004, to the
$500,000,000 debt issue.
WAMU MORTGAGE: Moody's Rates Class B-4 Certificates at Ba2
----------------------------------------------------------
Moody's Investors Service has assigned a rating of Aaa to the
senior certificates issued by WaMu Mortgage Pass-Through
Certificates, WMALT Series 2006-AR1, and ratings ranging from Aa2
to Ba2 to the subordinate certificates in the deal.
The securitization is backed by adjustable-rate mortgage loans
with a negative amortization option acquired by Washington Mutual
Mortgage Securities Corp., from affiliated or unaffiliated third
parties who either originated or purchased the mortgage loans
through correspondent or broker lending. Approximately 35.2%,
23.3% and 18.2% of the mortgage loans were originated by
Countrywide Home Loans, Inc., MortgageIT, Inc. and Alliance
Bancorp, respectively. The ratings are based primarily on the
credit quality of the loans, and on the protection from
subordination. Moody's expects collateral losses to range from
1.15% to 1.35%.
Washington Mutual Bank and Countrywide Home Loans, Inc., will
service respectively 64.8% and 35.2% of the loans.
Complete Rating Actions:
Issued: WaMu Mortgage Pass-Through Certificates
WMALT Series 2006-AR1
* Class A-1A, Assigned Aaa
* Class A-1B, Assigned Aaa
* Class A-1C, Assigned Aaa
* Class X-1, Assigned Aaa
* Class X-2, Assigned Aaa
* Class R, Assigned Aaa
* Class B-1, Assigned Aa2
* Class B-2, Assigned A2
* Class B-3, Assigned Baa2
* Class B-4, Assigned Ba2
WILLIAM MARTIN: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: William H. Martin III
Northern Kentucky Community Center, Inc.
fdba Northern Kentucky Community Center, Inc.
P.O. Box 2030
Covington, Kentucky 41012
Bankruptcy Case No.: 06-20069
Type of Business: The Debtor is a non-profit corporation.
Northern Kentucky Community has a history
of activity running social service programs,
including after school youth programs,
day care, & emergency relief in the areas of
housing, food, & utility relief.
Chapter 11 Petition Date: February 13, 2006
Court: Eastern District of Kentucky (Covington)
Debtor's Counsel: Virginia J. Southgate, Esq.
Patton & Southgate
4 West 4th Street, Suite 300
Newport, Kentucky 41071
Tel: (859) 491-1900
Fax: (859) 491-2293
Total Assets: $3,071,300
Total Debts: $230,983
Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Cinergy Utility service $30,000
P.O. Box 740320
Cincinnati, OH 45274
Housing Authority of Program funding $10,346
Covington reimbursement
P.O. Box 15279
Covington, KY 41015
Cincinnati Bell Telephone service $8,759
P.O. Box 748003
Cincinnati, OH 45274
Pro-Copy Technologies Professional services $3,731
Van Gorder, Walker & Co., Accounting services $3,724
Inc.
Clark, Schaefer, Hackett & Accounting services $1,733
Co.
Egelston-Maynard Sports Sports equipment, $1,264
uniforms & trophies
Nelson's Tents Festival equipment $1,026
rental
Platinum Plus for Business Business purchases $854
Stigler Supply Co. Business purchases $392
Northern Kentucky Water Water service $261
District
Simplex Time Recorder Co. Business purchases $249
Koch Sporting Goods Equipment purchases $205
Sanitation District No. 1 Sanitation services $177
Fyr-Fyter Sales and Service, Professional services $146
Inc.
Wiseway Supply Professional services $146
Paychex Payroll services $122
Arc Electric Heating Electrical service $110
ADP Ohio Pleasant Valley Professional services $103
CSI Waste Services Sanitation services $95
WOODWORKERS WAREHOUSE: Judge Carey Okays Closing of Chap. 11 Case
-----------------------------------------------------------------
The Honorable Kevin J. Carey of the U.S. Bankruptcy Court for the
District of Delaware approved The Buckley Group's request for
authority to make a final distribution to creditors. Judge Carey
also entered a final decree formally closing Woodworkers
Warehouse, Inc.'s chapter 11 case.
The Buckley Group is the Liquidation Manager appointed pursuant to
the confirmed Debtor's Second Amended Plan of Liquidation. The
Court confirmed the Debtor's Plan of Liquidation on July 30, 2004,
and the Plan took effect on Aug. 10, 2004.
As reported in the Troubled Company Reporter on Jan. 25, 2006, all
significant issues in the Debtor's chapter 11 case have been
resolved and only de minimis administrative matters remain,
which the Liquidation Manager believes will not affect the final
distribution to creditors.
Substantial consummation of the Debtor's chapter 11 case as
required under Section 1101(2) of the Bankruptcy Code has
occurred. There are no more deposit requirements under the Plan,
all properties required to be transferred are already done and all
adversary proceedings have been settled or resolved.
Additionally, Judge Carey approved on Feb. 10, 2006, the
Liquidation Manager's request for its final post-confirmation fee
application for compensation and reimbursement of expenses for the
time period from Aug. 11, 2004 through Aug. 31, 2006. That final
post-confirmation fee application and the final decree closing the
case were the only administrative matters remaining in the
Debtor's case.
Judge Carey rules that the Debtor's chapter 11 case will be
officially closed on Feb. 17, 2006.
Headquartered in Lynn, Massachusetts, Woodworkers Warehouse, Inc.,
nka WW Warehouse, Inc., was a retailer of woodworking equipment
and accessories. The Company filed for chapter 11 protection on
December 2, 2003 (Bankr. Del. Case No. 03-13655). Christopher A.
Ward, Esq., at The Bayard Firm represents the Debtor. The Court
confirmed the Debtor's chapter 11 Plan on July 30, 2004, and the
Plan took effect on Aug. 10, 2004. The Buckley Group is the
Liquidation Manager under the Plan. Donald J. Detweiler, Esq., at
Saul Ewing LLP represents the Liquidation Manager. When the
Company filed for chapter 11 protection, it listed $28,366,000 in
total assets and $34,669,000 in total debts.
* Cadwalader Wickersham Hires Three Lawyers as Special Counsel
--------------------------------------------------------------
Cadwalader, Wickersham & Taft LLP, one of the world's leading
international law firms, has named Glen P. Barrentine, James
Frazier and Susan R. Nevas as Special Counsel, all resident in
New York.
"We are pleased to have these exceptional attorneys join
Cadwalader. They bring with them a diversity of experience and
knowledge that will benefit our clients and further enhance the
level of service we provide," stated Robert O. Link, Jr.,
Cadwalader's Chairman and Managing Partner.
Glen Barrentine, the former Chief Regulatory Officer of the
American Stock Exchange, joined the firm in January as special
counsel in the Securities and Financial Institutions Regulation
Department. His practice is focused on legal and regulatory
matters affecting broker-dealers and other financial institutions.
He has extensive experience in the inspection and examination
process, responding to SRO and SEC inquiries, conducting internal
investigations and compliance reviews, and drafting policies and
procedures.
At the Amex, Mr. Barrentine:
* supervised the Exchange's enforcement, options and equities
surveillance and other regulatory programs;
* managed the Exchange's response to SEC inspections; and
* oversaw significant changes to the regulatory program's
structure, procedures, and surveillance routines.
Previously, Mr. Barrentine was an Assistant General Counsel with
Bank of America, where he was responsible for compliance and
regulatory issues affecting the Bank's institutional brokerage
firm, while also supporting several business units, including
Clearing, Prime Brokerage and Private Client Services. He also
served at the Securities and Exchange Commission as an Assistant
Director with the Office of Compliance Inspections and
Examinations, and before that with the Division of Market
Regulation where he participated in the administration of the
financial responsibility rules. Mr. Barrentine earned his J.D.,
magna cum laude, from Boston University School of Law and a B.A.
from St. John's College in New Mexico. He is admitted to practice
in New York and Massachusetts.
James Frazier joined Cadwalader in February as Special Counsel in
the Tax Department. Most recently with Schulte Roth & Zabel LLP,
he concentrates his practice in the areas of employee benefits and
ERISA law. He also worked as an associate at Katten Muchin
Rosenman LLP and Proskauer Rose LLP as well as a Pension Law
Specialist with the U.S. Department of Labor. Mr. Frazier
received his undergraduate degree from the University of North
Carolina, his J.D., cum laude, from the University of Arkansas
School of Law, and an LL.M. in Taxation and Certificate in
Employee Benefits Law followed by an LL.M. in Labor Law, with
distinction, from the Georgetown University Law Center. A
co-author of several articles on ERISA, he is admitted to practice
in New York and North Carolina.
Susan Nevas rejoined the firm in January as Special Counsel in the
Private Client Department. Experienced in advising high net worth
individuals and families regarding international and domestic tax
issues as well as in counseling major public and closely held
businesses on the tax aspects of business and investment
transactions, she also offers assistance to clients in connection
with tax planning and controversies and the impact of USA PATRIOT
Act financial provisions. Ms. Nevas' career includes practice in
her home state of Connecticut with Nevas, Nevas, Capasse & Gerard
and with Tyler Cooper & Alcorn LLP, as counsel, as well as with
Withers Bergman LLP. Ms. Nevas conducted a solo practice in
Washington, D.C. and began her career with the Washington office
of Dewey Ballantine. She is the author of numerous articles and a
member of the Executive Committee of the Tax Section of the
Connecticut Bar Association. Ms. Nevas received her B.A., magna
cum laude and Phi Beta Kappa, from Smith College, her M.A.T. from
Harvard University, her Ph.D. from Columbia University, and her
J.D. from Georgetown University Law Center, where she was an
editor of The Georgetown Law Journal and the recipient of an
American Jurisprudence Award.
Cadwalader, Wickersham & Taft LLP -- http://www.cadwalader.com/--
is one of the world's leading international law firms, with
offices in New York, London, Charlotte, Washington and Beijing.
Established in 1792, Cadwalader serves a diverse client base,
including many of the worlds top financial institutions,
undertaking business in more than 50 countries in six continents.
The firm offers legal expertise in antitrust, banking, business
fraud, corporate finance, corporate governance, environmental,
healthcare, insolvency, insurance and reinsurance, litigation,
mergers and acquisitions, private client, private equity, real
estate, securities and financial institutions regulation,
securitization, structured finance, and tax.
* Jennifer O'Connell Joins Cohen & Grigsby as Litigation Associate
------------------------------------------------------------------
Cohen & Grigsby, P.C. announced that Jennifer O'Connell has
recently joined the firm. Prior to joining Cohen & Grigsby, Ms.
O'Connell was an associate with the law firm of Bilzin Sumberg
Baena Price & Axelrod in Miami, Florida, and Jones Day in
Pittsburgh, Pennsylvania.
Jennifer O'Connell joins the firm as an Associate in the
Litigation Group. Ms. O'Connell concentrates her practice in the
areas of real estate, commercial and construction litigation law.
Ms. O'Connell focuses her practice on business and commercial
litigation and dispute resolution, including bankruptcy matters
and employment disputes. She earned her J.D., (cum laude;
Assistant Executive Editor, Buffalo Law Review; Publications
Editor, Buffalo Environmental Law Review; Dean's scholarship) from
the University of Buffalo School of Law in 2003 and her B.S. in
Elementary Education/Mental & Physically Handicapped (magna cum
laude) from the Edinboro University of Pennsylvania in 1997. She
is admitted to practice in Pennsylvania (Florida admission
pending). Prior to joining Cohen & Grigsby, Ms. O'Connell was an
associate with the law firm of Bilzin Sumberg Baena Price &
Axelrod in Miami, Florida and Jones Day in Pittsburgh,
Pennsylvania. She resides in Fort Myers, Florida.
Cohen & Grigsby -- http://www.cohenlaw.com/-- offers legal
services to private and publicly held businesses, nonprofits,
multinational corporations, individuals and emerging companies.
It has experience in bankruptcy, business, tax, employee benefits,
estates, trusts, intellectual property, international business,
litigation, labor and employment, and real estate. The firm is
headquartered in Pittsburgh, Pennsylvania and has offices in
Bonita Springs, Florida and Naples, Florida.
* Power, Rogers & Smith Partners Voted Top Lawyers in Illinois
--------------------------------------------------------------
Power, Rogers & Smith reported that Joe Power, Larry R. Rogers,
and Todd Smith, founding partners, have been voted Illinois Super
Lawyers and three of the top Chicago injury attorneys by 47,000 of
their peers. Joe Power was the top vote getter in the survey of
Illinois lawyers for the second year straight. The results,
featuring the top lawyers in Illinois, are posted in this month's
Chicago Magazine and Illinois Super Lawyer.
"I am very proud that my peers have given me the largest number of
votes in this poll," Power said.
Super Lawyers names the top lawyers as chosen by their peers and
through the independent research of Law & Politics. The list of
2006 Illinois Super Lawyers is based on surveys of more than
47,000 lawyers across the state. The goal was to select as Super
Lawyers the top 5% of top lawyers in Illinois in various practice
areas. The list of Illinois Super Lawyers is published annually
in the February issues of Chicago magazine and Illinois
Super Lawyers.
"We publish Super Lawyers lists in 14 states, and the feedback
from the lawyers in each jurisdiction has been fabulous," said
William White, publisher of Law & Politics.
Born and raised on Chicago's South Side, Mr. Power has been
committed to fighting for the underdog for more than a quarter of
a century. As a young Chicago personal injury attorney, at the
age of 28, Mr. Power was the nation's youngest attorney to win a
million-dollar verdict on behalf of an injured client.
Twenty-five years later, Mr. Power is still fighting for the
underdog as one of the leading Chicago injury attorneys.
Specializing in serious injury and wrongful death cases, he has
consistently recovered multimillion-dollar verdicts and
settlements on his clients behalf. Recently, Mr. Power secured
the largest personal injury, single-family settlement in Illinois-
$100 million in the well publicized case that brought down
Illinois' governor George Ryan.
Always committed to the community, Mr. Power has been honored with
the Citizen of the Year award from the City Club of Chicago, he
has received the Distinguished Award for Excellence from the
Illinois Bar Foundation and he is a member of the Inner Circle of
Advocates, an exclusive group of 100 of the top personal injury
and civil trial lawyers in the country.
A top Chicago injury attorneys law firm Power, Rogers & Smith has
been fighting and winning the hard fight for more than a quarter
of a century. Armed with the top lawyers in Illinois, Power,
Rogers & Smith has recovered over $260 million on behalf of their
injured clients in the past two years alone. With many of the law
firm's medical malpractice, product liability and wrongful death
cases featured in newspapers and on television screens across
America, the lawyers at Power, Rogers & Smith have been winning
some of the largest verdicts and settlements in the state and the
nation. For more information, please visit http://www.prslaw.com/
*********
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. Marie
Therese V. Profetana, Shimero Jainga, Emi Rose S.R. Parcon,
Rizande B. Delos Santos, Cherry A. Soriano-Baaclo, Terence Patrick
F. Casquejo, Christian Q. Salta, Jason A. Nieva, Lucilo Junior M.
Pinili, Tara Marie A. Martin and Peter A. Chapman, Editors.
Copyright 2006. 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 $725 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 ***