/raid1/www/Hosts/bankrupt/TCR_Public/060227.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Monday, February 27, 2006, Vol. 10, No. 49
Headlines
ADELPHIA COMMS: Prestige Entities Say Ch. 11 Plan Impairs Rights
ADZONE RESEARCH: Incurs $5 Mil. Net Loss in Quarter Ended Dec. 31
AMERIQUEST MORTGAGE: Fitch Rates $15 Mil. Class M-11 Certs. at BB
ANCHOR GLASS: U.S. Trustee Balks at Saybrook Indemnification
ANCHOR GLASS: Court Approves AIG Insurance Agreement
ANCHOR GLASS: Settles Adequate Protection Issues with Geary Energy
ANECO ELECTRICAL: Debtor is Administratively Insolvent
ARMSTRONG WORLD: Gets Court Nod to Continue Cash Retention Program
ASARCO LLC: Christensen Wants Cure Payments & Adequate Assurance
ASARCO LLC: Wants Settlement Agreement with Minerals Approved
ASARCO LLC: Wants to Pay Quarterly Pension Plan Payments
ATA AIRLINES: Settles Dispute Over AMR's $4.28-Mil. Unsec. Claim
ATA AIRLINES: Georges Want Stay Lifted to Proceed with PI Lawsuit
AVANEX CORP: Reports Revised Net Loss for Fiscal 2006 Second Qtr.
BEVERLY ENTERPRISES: Accepting Subordinated Notes for Conversion
BOYDS COLLECTION: Wants Lease Decision Period Extended to June 13
BROKERS INC: Court Confirms Second Amended Plan of Liquidation
CALPINE CORP: Judge Lifland Okays Assumption of Geysers Agreement
CALPINE CORP: Can Employ Davis Wright as Special Counsel
CALPINE CORP: Committee Gets Court OK to Hire Akin Gump as Counsel
CLARK GROUP: Liquidating Agent Wants Chapter 11 Cases Closed
CNET NETWORKS: Good Performance Cues S&P to Upgrade Rating to B
COLLINS & AIKMAN: Blocks Active Mould's Move to Recover Molds
COLLINS & AIKMAN: Court Allows Shirley Grady to Pursue Lawsuit
COLLINS & AIKMAN: Settles Payment Dispute With Breitkreuz Molds
COMMUNICATION DYNAMICS: Settles Four Adversary Proceedings
COMMUNITY HEALTH: Earns $48.1 Million in Fourth Quarter
CREDIT SUISSE: Moody's Affirms Ba1 Rating on $8.3MM Certificates
DSLA MORTGAGE: S&P Holds Low-B Ratings on 18 Certificate Classes
EASYLINK SERVICES: Has Until August 21 to Comply with Nasdag Rule
EDUCATE INC: Earns $15.4 Million in Fiscal Year 2005
EMERGE CAPITAL: Sells Mortgage Lending Subsidiary
ENTECH ENVIRONMENTAL: Equity Deficit Tops $1 Million at Dec. 31
ENTERGY LOUISIANA: Fitch Maintains Negative Outlook on Rating
EXTENDICARE HEALTH: S&P Affirms Corporate Credit Rating at BB-
FIRST NATIONAL: Weak Profits Prompt Moody's to Downgrade Ratings
GALVEX HOLDINGS: Court Okays Joint Administration of Ch. 11 Cases
GOODING'S SUPERMARKETS: Panel Wants to Hire Akerman as Counsel
HARD ROCK: Likely Sale Prompts Moody's to Affirms B2 Rating
HEILIG-MEYERS: Anthony Schnelling Appointed as Liquidation Trustee
HILTON HOTELS: Hilton Int'l Merger Cues S&P to Lower Ratings to BB
HILTON HOTELS: Fitch Rates $5.75 Billion Senior Facility at BB
HUTCHINSON TECH: S&P Rates $225 Mil. Convertible Sub. Notes at B-
INCYTE CORP: Posts $27.6 Million Net Loss in Fourth Quarter
INTEGRATED HEALTH: Has Until March 6 to Remove Civil Actions
INTEGRATED HEALTH: Claim Objection Deadline Stretched to May 4
JARDEN INC: Poor Performance Prompts S&P's Negative Outlook
KULLMAN INDUSTRIES: Court Says No to Plan-Filing Extension
MAGNATRAX CORP: Has Until May 12 to Object to Proofs of Claim
MERIDIAN AUTOMOTIVE: Court Okays Assumption of GR Glen Lease
MERIDIAN AUTOMOTIVE: Stanfield Wants Milbank Disqualified
MERIDIAN AUTOMOTIVE: Committee Dismisses Suit Against 22 Lenders
METALFORMING TECH: Wants Until May 15 to Decide on Office Lease
MILLENNIUM CHEMICALS: Jury Verdict Prompts S&P's Negative Watch
MILLS CORPORATION: Hires Professionals to Explore Alternatives
MILLS CORPORATION: Can't Meet March 16 Form 10-K Filing Deadline
MILLS CORPORATION: Names Mark Ordan as Chief Operating Officer
NORSTAN APPAREL: Hires NachmanHaysBrownstein as Managers
NORTH CAROLINA MEDICAL: Fitch Lowers $50.8MM Bonds' Ratings to BB-
OHIO CASUALTY: S&P Holds BB+ Rating & Revises Outlook to Positive
ORBITAL SCIENCES: Earns $7.6 Million in Fourth Quarter
OWENS CORNING: Wants Court to Compel Discovery from Shintech
PARKWAY HOSPITAL: Plan-Filing Period Extended Until March 1
PAXAR CORP: Foresees $25 Million One-Time Cash Costs in 2007
PCS EDVENTURES!.COM: Posts $589K Net Loss in Quarter Ended Dec. 31
PERFORMANCE TRANSPORTATION: Court OKs Kirkland & Ellis' Retention
PERFORMANCE TRANSPORTATION: Court Okays $500,000 Customer Payment
PERFORMANCE TRANSPORTATION: Teamsters Say No to Compensation Plan
PHOTOCIRCUITS CORP: Has Until May 12 to File Chapter 11 Plan
PLUM POINT: Moody's Rates Proposed $760 Mil. Sr. Facilities at B1
PORT TOWNSEND: Moody's Junks Rating on $125 Million Senior Notes
PRICE OIL: Files Schedules of Assets and Liabilities
PSYCHIATRIC SOLUTIONS: Earns $27.15 Million for Fiscal Year 2005
PXRE GROUP: Deferred Tax Writedown Cues S&P to Cut Rating to BB-
RADNET MANAGEMENT: Moody's Junks Proposed $60MM Term Loan Rating
S3 INVESTMENT: Posts $68K Net Loss in Quarter Ended December 31
SOLUTIA INC: Rothschild Values Company at $2.0 to $2.3 Billion
SOUTHERN UNION: Moody's Holds Ba2 Rating on Preferred Securities
STATION CASINOS: S&P Rates Proposed $300 Million Sub. Notes at B+
STATION CASINOS: To Issue $300 Million of 6-5/8% Senior Notes
STEINWAY MUSICAL: 69% of 8.75% Senior Noteholders Tender Bonds
TORCH OFFSHORE: Louisiana Revenue Dept. Objects to Amended Plan
TRUST ADVISORS: Exclusive Plan Filing Period Ends April 12
USG CORPORATION: Court Okays Rights Offering Backstop Agreement
USG CORP: Overview & Summary of Chap. 11 Plan Of Reorganization
USG CORP: Liquidation Analysis of Chap. 11 Plan of Reorganization
WICKES INC: Has Until March 15 to Solicit Acceptances of Plan
WICKES INC: Hires DiMonte & Lizak to Sue Wells Fargo
WINN-DIXIE: Wants Assessment Technologies as Property Tax Advisor
WINN-DIXIE: Court Denies Equity Panel's Request for Reinstatement
WINN-DIXIE: Objects to Louise Clark's $3 Billion Claim
WINSTON HOTELS: Closes First Loan Program with GE Commercial
WORLDCOM INC: Court Rejects TSR Trustee's Claims Settlement
WORLDCOM INC: Balks at Kennedy's Motion for Document Production
* BOND PRICING: For the week of Feb. 20 - Feb. 24, 2006
*********
ADELPHIA COMMS: Prestige Entities Say Ch. 11 Plan Impairs Rights
----------------------------------------------------------------
Prestige Georgia and Prestige NC owned cable systems in Georgia,
North Carolina, Virginia and Maryland, with Prestige Georgia
owning the cable the systems in Georgia and Prestige NC owning
the cable systems in the other three states.
In 1999, the owners of Prestige decided to sell all of the cable
systems.
Adelphia Communications Corporation proposed to purchase 100% of
the assets of Prestige NC and 100% of the stock of Prestige
Georgia for $1.1 billion. Adelphia entered into an Asset Purchase
Agreement and a Stock Purchase Agreement, wherein:
-- approximately $795,000,000 of the purchase price was
allocated to Prestige NC for the assets, and
-- approximately $300,000,000 was allocated to Prestige
Georgia for the stock.
The sale closed in July 2000.
Adelphia immediately resold the stock of Prestige Georgia to
Highland Prestige, a company controlled by the Rigases, for
approximately $300,000,000 plus a 10-year payment stream of
approximately $138,000,000, having a present value of
approximately $67,000,000 to $100,000,000 at the time of the
transaction.
In 2004, the Debtors, through the Official Committee of Unsecured
Creditors, commenced a lawsuit against Prestige Communications of
NC, Inc., Jonathan J. Oscher, Lorraine Oscher McClain, Robert F.
Buckfelder, Buckfelder Investment Trust and Anverse, Inc.
The crux of the Committee's claims is that following the
acceptance of Adelphia's $1.1 billion offer, the Rigases caused
the price of the Prestige NC assets to be inflated relative to
the price of the Prestige Georgia stock "so that the purchase
price of the Prestige Georgia systems allocated to the Rigas
Family would be substantially discounted from the amount Adelphia
paid."
The Committee maintains that the Prestige Defendants aided and
abetted the Rigases in this alleged misconduct.
The Prestige Defendants object to the Plan to the extent the Plan
purports to impair or otherwise affect their rights, claims and
defenses, particularly their right to assert and recover on any
Section 502(h) claim and their right to demand rescission in the
event any transfer is avoided.
The Prestige Defendants argue that the Plan violates Sections
1129(a)(1) and (a)(3) of the Bankruptcy Code because the Plan
does not preserve the Prestige Defendants' rights in the Prestige
Lawsuit.
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. Kasowitz, Benson, Torres & Friedman, LLP, and Klee,
Tuchin, Bogdanoff & Stern LLP represent the Official Committee of
Unsecured Creditors. (Adelphia Bankruptcy News, Issue No. 122;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
ADZONE RESEARCH: Incurs $5 Mil. Net Loss in Quarter Ended Dec. 31
-----------------------------------------------------------------
AdZone Research, Inc., delivered its quarterly report on Form
10-QSB for the quarter ended Dec. 31, 2005, to the Securities and
Exchange Commission on Feb. 17, 2006.
The Company reported a $5,067,2372 net loss on $139,993 of revenue
for the three-months ended Dec. 31, 2005, versus a $3,563,373 net
loss on $244,423 of revenue for the comparable period in 2004.
At Dec. 31, 2005, the Company's balance sheet showed $553,375 in
total assets and $3,937,113 in total liabilities, resulting in a
stockholders' deficit of $3,383,738.
A full-text copy of the regulatory filing is available at no
charge at http://researcharchives.com/t/s?5cb
Going Concern Doubt
As reported in the Troubled Company Reporter on July 20, 2005,
Aidman, Piser & Company, P.A., expressed substantial doubt about
AdZone's ability to continue as a going concern after it audited
the Company's financial statements for the year ended Mar. 31,
2005. The auditing firm points to the Company's significant
losses and the usage of significant levels of cash for its
operations.
Headquartered in Calverton, New York, AdZone Research, Inc.
engages in the extraction of data through the monitoring of
Internet Web sites. The company operates as an Internet
advertising research firm that provides various market research
statistics and other focused information on the Internet. The
company focuses on providing Internet analysis of security related
data transmissions. AdZone, through NetGet Internet monitoring
technology, a subscription-based online application, accesses data
from Web sites that are hosted within the United States, the
United Kingdom, Europe, and Asia, and provides such data to its
clients in various customizable report formats. The company
markets its products and services through email distributions,
direct sales contacts and its Web sites. The company hosts two
Web sites at http://www.adzoneinteractive.com/and
http://www.adzoneresearch.com/
AMERIQUEST MORTGAGE: Fitch Rates $15 Mil. Class M-11 Certs. at BB
-----------------------------------------------------------------
Fitch Ratings rates Ameriquest Mortgage Securities Inc.'s asset-
backed pass-through certificates as:
-- $1.165 billion classes A-1, A-2A, A-2B, A-2C and A-2D 'AAA'
-- $82.5 million class M-1 'AA+'
-- $63 million class M-2 'AA'
-- $30 million class M-3 'AA-'
-- $24.8 million class M-4 'A+'
-- $23.3 million class M-5 'A'
-- $21 million class M-6 'A-'
-- $20.3 million class M-7 'BBB+'
-- $15 million class M-8 'BBB'
-- $9 million class M-9 'BBB'
-- $11.3 million class M-10 'BBB-'
-- $15 million class M-11 'BB'
Credit enhancement for the 'AAA' rated class A certificates
reflects the 22.50% credit enhancement provided by classes M-1
through M-11, monthly excess interest and initial over
collateralization (OC) of 1.50%.
Credit enhancement for the 'AA+' rated class M-1 certificates
reflects the 17.0% credit enhancement provided by classes M-2
through M-11, monthly excess interest and initial OC.
Credit enhancement for the 'AA' rated class M-2 certificates
reflects the 12.80% credit enhancement provided by classes M-3
through M-11, monthly excess interest and initial OC.
Credit enhancement for the 'AA-' rated class M-3 certificates
reflects the 10.80% credit enhancement provided by classes M-4
through M-11, monthly excess interest and initial OC.
Credit enhancement for the 'A+' rated class M-4 certificates
reflects the 9.15% credit enhancement provided by classes M-5
through M-11, monthly excess interest and initial OC.
Credit enhancement for the 'A' rated class M-5 certificates
reflects the 7.60% credit enhancement provided by classes M-6
through M-11, monthly excess interest and initial OC.
Credit enhancement for the 'A-' rated class M-6 certificates
reflects 6.20% credit enhancement provided by classes M-7 through
M-11, monthly excess interest and initial OC.
Credit enhancement for the 'BBB+' rated class M-7 certificates
reflects the 4.85% credit enhancement provided by classes M-8
through M-11, monthly excess interest and initial OC.
Credit enhancement for the 'BBB' rated class M-8 certificates
reflects the 3.85% credit enhancement provided by classes M-9
through M-11, monthly excess interest and initial OC.
Credit enhancement for the 'BBB' rated class M-9 reflects the
3.25% credit enhancement provided by classes M-10 and M-11,
monthly excess interest and initial OC.
Credit enhancement for the 'BBB-' rated class M-10 certificates
reflects the credit enhancement provided by class M-11, monthly
excess interest and initial OC of 2.50%.
Credit enhancement for the 'BB' rated class M-11 certificates
reflects the credit enhancement provided by monthly excess
interest and initial OC of 1.50%.
In addition, the ratings reflect the integrity of the
transaction's legal structure as well as the capabilities of
Ameriquest Mortgage Company as master servicer. Deutsche Bank
National Trust Company will act as trustee.
As of the cut-off date, the group I mortgage loans have an
aggregate principal balance of $1,258,594,398, and the average
balance of the mortgage loans is approximately $156,018. The
weighted average loan rate is approximately 8.537%. The weighted
average remaining term to maturity is 355 months. The weighted
average original loan-to-value (OLTV) ratio is 79.18%. The
properties are primarily located in:
* Florida (11.57%),
* California (9.03%),
* New Jersey (6.97%), and
* New York (6.89%).
All other states represent less than 5% of the group I pool
balance as of the cut-off date.
As of the cut-off date, the group II mortgage loans have an
aggregate principal balance of $241,418,645, and the average
balance is approximately $246,597. The weighted average loan rate
is approximately 8.254%. The weighted average remaining term to
maturity is 357 months. The weighted average OLTV ratio is
79.60%. The properties are primarily located in:
* California (23.99%),
* New York (11.84%),
* Florida (10.14%),
* New Jersey (7.83%), and
* Massachusetts (5.57%).
All other states represent less than 5% of the group II pool
balance as of the cut-off date.
The mortgage loans were originated by Ameriquest Mortgage
Securities Inc., a direct wholly-owned subsidiary of Ameriquest
Mortgage Company. Ameriquest Mortgage Company is a specialty
finance company engaged in the business of originating, purchasing
and selling retail and wholesale subprime mortgage loans.
ANCHOR GLASS: U.S. Trustee Balks at Saybrook Indemnification
------------------------------------------------------------
Felicia S. Turner, the United States Trustee for Region 21, asks
the U.S. Bankruptcy Court for the Middle District of Florida to
deny Anchor Glass Container Corporation's request to indemnify
Saybrook Restructuring Advisors LLC.
Benjamin E. Lambers, Esq., trial attorney for the U.S. Trustee, in
Tampa, Florida, argues that Saybrook is not entitled to any
indemnification from the Debtor because Saybrook is not retained
under Section 327 nor Section 1103 of the Bankruptcy Code.
Mr. Lambers continues that Saybrook is not entitled to
indemnification because its duty is exclusive to the Ad Hoc
Committee of Noteholders and benefits only a certain category of
secured creditors and not the Debtor.
On September 15, 2005, the Court authorized Anchor Glass Container
Corporation to issue postpetition notes and obtain other financial
accommodations from Wells Fargo Bank, National Association, as
agent for certain Noteholders of the Debtor.
Pursuant to that Order, the Debtor is required to pay the fees of
any professionals or advisors retained by the Ad Hoc Committee of
Noteholders owing and incurred before the Petition Date.
The Ad Hoc Committee of Noteholders engaged Saybrook Restructuring
Advisors LLC to serve as its financial advisors. The Letter of
Engagement provides that the Debtor will indemnify Saybrook.
The Debtor has no objection providing indemnification to Saybrook.
The indemnification provision is customary in engagements of this
type, Robert A. Soriano, Esq., at Carlton Fields PA, in Tampa,
Florida, says.
Headquartered in Tampa, Florida, Anchor Glass Container
Corporation is the third-largest manufacturer of glass containers
in the United States. Anchor manufactures a diverse line of flint
(clear), amber, green and other colored glass containers for the
beer, beverage, food, liquor and flavored alcoholic beverage
markets. The Company filed for chapter 11 protection on Aug. 8,
2005 (Bankr. M.D. Fla. Case No. 05-15606). Robert A. Soriano,
Esq., at Carlton Fields PA, represents the Debtor in its
restructuring efforts. Edward J. Peterson, III, Esq., at
Bracewell & Guiliani, represents the Official Committee of
Unsecured Creditors. When the Debtor filed for protection from
its creditors, it listed $661.5 million in assets and $666.6
million in debts. (Anchor Glass Bankruptcy News, Issue No. 19;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
ANCHOR GLASS: Court Approves AIG Insurance Agreement
----------------------------------------------------
The Hon. Alexander L. Paskay of the U.S. Bankruptcy Court for the
Middle District of Florida allowed Anchor Glass Container
Corporation to enter into insurance programs with certain
affiliates of American International Group, Inc.
Judge Paskay makes it clear that the Insurance Programs with
American International Group, Inc., may not be altered by any plan
of reorganization.
As reported in the Troubled Company Reporter on Jan. 27, 2006, the
AIG Insurance Program will cover:
* Primary Workers' Compensation;
* Primary Workers' Liability Insurance;
* Primary Auto Liability and Physical Damage Insurance; and
* Commercial General Liability Insurance.
The premiums due under the binder, updated Jan. 18, 2006, will be
determined retrospectively based on Anchor Glass' actual loss
experience. In addition, Anchor Glass must pay $3,930,000 as loss
provision of the premium. The Binder also sets a minimum loss
provision of $2,950,000 and a maximum loss provision of
$5,900,000.
The Binder requires Anchor Glass to provide a $1,000,000 letter of
credit to secure Anchor Glass' obligations to the Insurer.
Anchor Glass also seeks to obtain excess casualty insurance
coverage from AIG under a proposal dated December 14, 2005, with
respect to:
* General Liability and Products/Completed Operations;
* Employers' Liability; and
* Auto Liability.
The policy premium due for the excess casualty coverage program
is $160,000.
AIG explicitly stated in the Binder that failure to obtain
approval of Insurance Program before February 15, 2006, is ground
for cancellation of the Insurance Policies. In addition, the
Binder provides that Anchor Glass will not seek an administrative
bar date with respect to any claims of American International
Companies.
In addition, AIG will provide additional services to the Debtor,
including, claims handling, loss control consulting, and managed
care.
Headquartered in Tampa, Florida, Anchor Glass Container
Corporation is the third-largest manufacturer of glass containers
in the United States. Anchor manufactures a diverse line of flint
(clear), amber, green and other colored glass containers for the
beer, beverage, food, liquor and flavored alcoholic beverage
markets. The Company filed for chapter 11 protection on Aug. 8,
2005 (Bankr. M.D. Fla. Case No. 05-15606). Robert A. Soriano,
Esq., at Carlton Fields PA, represents the Debtor in its
restructuring efforts. Edward J. Peterson, III, Esq., at
Bracewell & Guiliani, represents the Official Committee of
Unsecured Creditors. When the Debtor filed for protection from
its creditors, it listed $661.5 million in assets and $666.6
million in debts. (Anchor Glass Bankruptcy News, Issue No. 19;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
ANCHOR GLASS: Settles Adequate Protection Issues with Geary Energy
------------------------------------------------------------------
Anchor Glass Container Corporation, the Official Committee of
Unsecured Creditors and Geary Energy LLC, reached a settlement
regarding issues related to adequate protection and prepetition
utility expenses payment.
The settlement includes a new contract between the Debtor and
Geary.
Under the New Contract, Geary will continue to provide natural gas
to the Debtor's Henryetta Plant for another two years at agreed
prices, with no other protection except for an administrative
priority claim for unpaid postpetition amounts.
The Debtor will pay $506,274 to Geary for its prepetition dues.
Geary will transfer $40,000 to an escrow account designated in
writing by the Committee. The $40,000 will be settled in two
equal payments before February 26 and March 26, 2006. The escrow
account will only benefit the general unsecured creditors of the
Debtor.
If Geary fails to pay the first installment, the second
installment will immediately become due and payable without any
action of the Committee or further Court order. The Committee
may enforce this obligation by:
(a) obtaining an order requiring the Debtor to pay the $40,000
to the Escrow Account and to deduct that sum from amounts
otherwise due to Geary under the New Contract;
(b) obtaining an order compelling payment; or
(c) obtaining a final judgment against Geary upon submission
of an affidavit of non-payment.
Headquartered in Tampa, Florida, Anchor Glass Container
Corporation is the third-largest manufacturer of glass containers
in the United States. Anchor manufactures a diverse line of flint
(clear), amber, green and other colored glass containers for the
beer, beverage, food, liquor and flavored alcoholic beverage
markets. The Company filed for chapter 11 protection on Aug. 8,
2005 (Bankr. M.D. Fla. Case No. 05-15606). Robert A. Soriano,
Esq., at Carlton Fields PA, represents the Debtor in its
restructuring efforts. Edward J. Peterson, III, Esq., at
Bracewell & Guiliani, represents the Official Committee of
Unsecured Creditors. When the Debtor filed for protection from
its creditors, it listed $661.5 million in assets and $666.6
million in debts. (Anchor Glass Bankruptcy News, Issue No. 18;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
ANECO ELECTRICAL: Debtor is Administratively Insolvent
------------------------------------------------------
Aneco Electrical Construction, Inc., wants the U.S. Bankruptcy
Court for the Middle District of Florida to dismiss its chapter 11
case. The Debtor says a reorganization under chapter 11 is
impossible because the estate is administratively insolvent.
Scott A. Stichter, Esq., at Stichter, Riedel, Blain, & Prosser,
P.A., in Tampa, Florida, tells the Court the Debtor can't pay
Safeco Insurance Company of America's $2.2 million superpriority
administrative claim nor pay these holders of administrative
claims:
Claimant Claim Amount
-------- ------------
Archer Western Contractors, Ltd. $12,130,091
Zurich American Insurance Company $149,194
Enterprise Leasing Company $83,786
Kleiber $10,796
Hillsborough County Tax Collector $189
Express Scripts, Inc. $54
M.C. Dean, Inc. No amount stated
After filing for bankruptcy, the Debtor borrowed $1.175 million
from Safeco to fund its operations and continue performing
electrical subcontracting services on various construction
projects. The Debtor also sought and obtained authority to use
cash collateral securing its $3.836 million loan from Safeco.
The Court gave Safeco several protections under the transaction:
(1) Safeco was granted a first priority security interests and
liens to secure the DIP Loan;
(2) Safeco was granted a super-priority allowed administrative
expense claim having priority over ordinary administrative
expense claims of the estate, other than the carve-out;
(3) the Debtor agreed to assign certain receivables to Safeco.
(4) Safeco was granted the right to seek expedited relief from
the automatic stay in the event of a default.
The initial term of the DIP Loan was for six weeks and accrued
interest at 5%. The Debtor has been unable to pay the DIP Loan in
full and Safeco has been unable to collect any amounts on account
of the Pledged Receivables.
The Debtor also owes Liberty Partners 21, LLC, $13.78 million,
secured by a second lien on the Debtor's assets.
Mr. Stichter says there are no unencumbered assets to fund a
chapter 11 plan.
As of January 17, 2006, the claims register reflects:
-- secured claims totaling $35,159,240.27;
-- priority claims of $1,196,576.89; and
-- unsecured claims of $11,556,393.39.
in addition to the amounts owed to Safeco and Liberty.
The claims register does not reflect St. Paul Travelers'
$261,688,760 claim.
Mr. Stichter argues that even a chapter 7 conversion is futile
since there are no more assets to be administered.
Headquartered in Clearwater, Florida, Aneco Electrical
Construction, Inc. -- http://www.anecoinc.com/-- is an electrical
and telecommunications company serving the commercial,
entertainment, industrial, medical, government and institutional
building markets in the southeastern United States. The Company
filed for chapter 11 protection on Dec. 30, 2004 (Bankr. M.D. Fla.
Case No. 04-24883). Scott A. Stichter, Esq., at Stichter, Riedel,
Blain & Prosser, represents the Debtor in its restructuring
efforts. When the Debtor filed for protection from its creditors,
it listed $51 million in estimated assets and $41 million in
estimated debts.
ARMSTRONG WORLD: Gets Court Nod to Continue Cash Retention Program
------------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware allowed
Armstrong World Industries, Inc., and its debtor-affiliates to
continue implementing their cash retention program until
December 31, 2006.
The Cash Retention Program is part of an employee retention
program designed to provide the necessary financial and other
security and incentives to:
-- minimize turnover of key employees;
-- encourage the Key Employees to remain with AWI;
-- attract highly competent new executives; and
-- motivate all Key Employees to work diligently and
productively to maximize enterprise value throughout
the Debtors' Chapter 11 case and to achieve a successful
conclusion of their bankruptcy.
The Cash Retention Program, in particular, was designed to
address the fact that, as a result of the Chapter 11 filing, the
stock-based compensation the Key Employees had previously received
had become worthless and that AWI faced significant retention
issues, increased senior management attrition, and targeting of
its employees by employment recruiters. The Cash Retention
Program served to ensure that total compensation paid to AWI's Key
Employees remained competitive with other potential employers.
AWI also maintains customary incentive compensation plans
consisting of an annual incentive plan for key managers and senior
level executives and a long-term cash incentive plan, Mr. Collins
relates.
The Cash Retention Program implemented in 2005 helped to alleviate
the employee concerns in 2005, reducing the Key Employee voluntary
turnover rate from 8% in 2004 to approximately 2.6% over the first
nine months of 2005.
Mr. Collins also assures the Court that the Debtors informed each
of the committees in their Chapter 11 cases that they seek
approval of the 2006 Cash Retention Program and provided the
committees with information about and discussed the proposed
modifications from the 2005 Cash Retention Program.
Under the 2006 Cash Retention Program, approximately 60 Key
Employees will be eligible to receive an annual cash retention
payment for the one-year period ending December 31, 2006. The
payments will range from 20% to 100% of the Key Employee's base
salary, depending on the retention risk as well as the nature of
the work performed. Key Employees will be entitled to receive
this payment only if they are still employed with AWI on the
applicable payment date. In the event of death or disability, a
pro rata amount of the payment may be made.
It is contemplated that if a reorganization plan becomes effective
in 2006, the Key Employees will be entitled to receive the full
amount of scheduled payment for 2006, payable in December 2006.
The number of eligible Key Employees and estimated costs related
to the 2006 Cash Retention Program have been decreased
significantly when compared to the 2005 Cash Retention Program and
the Cash Retention Program, Mr. Collins observes. Whereas the
annual cost of the 2005 Cash Retention Program will be
approximately $8,600,000, the 2006 Cash Retention Program is
estimated to cost $3,500,000, which is less than half of the
annual costs associated with the 2005 Cash Retention
Program.
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)
ASARCO LLC: Christensen Wants Cure Payments & Adequate Assurance
----------------------------------------------------------------
As reported in the Troubled Company Reporter on Feb. 8, 2006,
ASARCO LLC sought permission from the U.S. Bankruptcy Court for
the Southern District of Texas in Corpus Christi to assume the
Layne Christensen Contract.
ASARCO LLC and Layne Christensen were parties to a Construction
and Repairs Contract, where Christensen performs drilling and
sampling services in exploration drill holes at agreed-upon rates,
effective as of March 22, 2005. As of Aug. 9, 2005, $103,610 was
due and owing to Christensen under the Contract.
If the Contract is assumed, ASARCO estimates that an additional
$355,242 will be paid to Christensen under the Contract as
additional work is completed.
Layne Christensen Objects
Layne Christensen Company LLC points out that ASARCO LLC failed
to address the payment of the cure amount. ASARCO also did not
address any adequate assurance for Layne. ASARCO also did not
confirm that any default would entitle Layne to an administrative
expense claim.
Layne asserts that it is entitled to cure of all the monetary
defaults owed by ASARCO.
Layne further asserts that it is entitled to adequate assurance
of future performance of the Contract.
Accordingly, Layne asks the Court to:
(a) authorize ASARCO's assumption of the Contract;
(b) direct ASARCO to pay all existing monetary defaults;
(c) grant adequate assurance of future performance; and
(d) confirm that any default under the Contract will entitle
Layne an administrative expense claim.
Headquartered in Tucson, Arizona, ASARCO LLC --
http://www.asarco.com/-- is an integrated copper mining,
smelting and refining company. Grupo Mexico S.A. de C.V. is
ASARCO's ultimate parent. The Company filed for chapter 11
protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207).
James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A.
Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter
Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq.,
at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor
in its restructuring efforts. Lehman Brothers Inc. provides the
ASARCO with financial advisory services and investment banking
services. Paul M. Singer, Esq., James C. McCarroll, Esq., and
Derek J. Baker, Esq., at Reed Smith LLP give legal advice to
the Official Committee of Unsecured Creditors and David J.
Beckman at FTI Consulting, Inc., gives financial advisory
services to the Committee. When the Debtor filed for protection
from its creditors, it listed $600 million in total assets and
$1 billion in total debts.
The Debtor has five affiliates that filed for chapter 11
protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521
through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO
Pipe Company, Inc., Cement Asbestos Products Company, Lake
Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about
their asbestos-driven chapter 11 filings have appeared in the
Troubled Company Reporter since Apr. 18, 2005.
Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle,
Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No.
05-21346) also filed for chapter 11 protection, and ASARCO has
asked that the three subsidiary cases be jointly administered with
its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was
converted to a Chapter 7 liquidation proceeding. The Court
appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7
Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at
Law Offices of Michael B. Schmidt represent the Chapter 7
Trustee. (ASARCO Bankruptcy News, Issue No. 17; Bankruptcy
Creditors' Service, Inc., 215/945-7000).
ASARCO LLC: Wants Settlement Agreement with Minerals Approved
-------------------------------------------------------------
ASARCO LLC's predecessor Asarco, Incorporated, and Oglebay Norton
Minerals, Inc., were parties to an October 1995 Slag Purchase
Agreement. Minerals was obligated to remove all "minus 50" fines
from a slag stockpile in ASARCO's El Paso, Texas facility, or pay
ASARCO $0.65 per ton of the unremoved Fines.
ASARCO and Minerals have long disputed the actual volume of the
Fines in the slag stockpile, as well as the interpretation and
application of the Slag Purchase Agreement.
In December 2005, the Texas Commission on Environmental Quality
issued Notices of Violations to the Parties, requiring them to
remove the Fines from an adjacent historic cemetery property.
The Parties debated the source of the Fines and the extent of
their obligations, if any, to remove them.
To resolve their disputes, the Parties have agreed:
(a) to terminate the Slag Purchase Agreement;
(b) that Minerals will negotiate with TCEQ and perform
necessary clean-up activities at the Cemetery. Minerals
will pay $0.65 per ton to ASARCO for 400,000 tons of
existing Fines materials, plus the same rate for any
additional Fines removed from the Cemetery;
(c) that ASARCO will release Minerals from all obligations
contained in the Slag Purchase Agreement, and allow the
placement of any Fines removed from the Cemetery on the
ASARCO property; and
(d) to mutually release each other from all financial
obligations related to the Cemetery cleanup.
However, the Settlement Agreement do not release the Parties from
potential claims that may exist related to environmental damage,
personal injury, or property damage in or around El Paso, Texas.
Jack L. Kinzie, Esq., at Baker Botts LLP, in Dallas, Texas, tells
the Court that the Settlement Agreement is reasonable, fair and
equitable.
Mr. Kinzie explains that ASARCO LLC can use the Fines materials,
including the Fines removed from the Cemetery in its ongoing
efforts to fill, grade, and cover portions of its El Paso
property. ASARCO will also have control over the Fines, hence,
it can take steps to prevent their being blown around.
The Settlement Agreement also allows the Parties to resolve their
disputes without need of potentially costly and protracted
litigation.
Accordingly, ASARCO seeks authority from the U.S. Bankruptcy Court
for the Southern District of Texas in Corpus Christi to enter into
the Settlement Agreement with Minerals.
Headquartered in Tucson, Arizona, ASARCO LLC --
http://www.asarco.com/-- is an integrated copper mining,
smelting and refining company. Grupo Mexico S.A. de C.V. is
ASARCO's ultimate parent. The Company filed for chapter 11
protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207).
James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A.
Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter
Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq.,
at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor
in its restructuring efforts. Lehman Brothers Inc. provides the
ASARCO with financial advisory services and investment banking
services. Paul M. Singer, Esq., James C. McCarroll, Esq., and
Derek J. Baker, Esq., at Reed Smith LLP give legal advice to
the Official Committee of Unsecured Creditors and David J.
Beckman at FTI Consulting, Inc., gives financial advisory
services to the Committee. When the Debtor filed for protection
from its creditors, it listed $600 million in total assets and
$1 billion in total debts.
The Debtor has five affiliates that filed for chapter 11
protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521
through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO
Pipe Company, Inc., Cement Asbestos Products Company, Lake
Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about
their asbestos-driven chapter 11 filings have appeared in the
Troubled Company Reporter since Apr. 18, 2005.
Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle,
Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No.
05-21346) also filed for chapter 11 protection, and ASARCO has
asked that the three subsidiary cases be jointly administered with
its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was
converted to a Chapter 7 liquidation proceeding. The Court
appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7
Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at
Law Offices of Michael B. Schmidt represent the Chapter 7
Trustee. (ASARCO Bankruptcy News, Issue No. 17; Bankruptcy
Creditors' Service, Inc., 215/945-7000).
ASARCO LLC: Wants to Pay Quarterly Pension Plan Payments
--------------------------------------------------------
In October 2005, the Court authorized ASARCO LLC to make pension
payments to both its hourly and salaried employees. The Court
also approved a Memorandum of Agreement between ASARCO and its
workers' unions directing pension payments for hourly employees.
ASARCO has also sought and obtained the Court's authority to make
quarterly pension payments due Jan. 15, 2006, on account of
its salaried employees.
Notwithstanding the pension payments made, C. Luckey McDowell,
Esq., at Baker Botts LLP, in Dallas, Texas, tells the U.S.
Bankruptcy Court for the Southern District of Texas in Corpus
Christi that ASARCO still need to pay $228,886 on March 15, 2006,
as final pension payment for the 2004 plan valuation.
The Pension Payments associated with the 2005 plan valuation also
become due on a quarterly basis. The next payments are due on
April 15, July 15, and Oct. 15, 2006. It is estimated that
the three quarterly payments for the 2005 plan valuation will be
$351,503.
Accordingly, ASARCO seeks the Court's authority to make the March
15 Pension Plan payments and the three quarterly pension plan
payments without further Court order.
Mr. McDowell says the remaining pension plan payments will boost
the employees' morale and augment the company's reputation with
its employees. The pension plan payments also ensure equal
treatment among ASARCO's hourly and salaried employees.
If ASARCO is not permitted to make the Pension Payments, Mr.
McDowell says, a penalty tax of 10% of the amount accumulated
will be imposed under Section 4971(a) of the Internal Revenue
Code. Tax will automatically be increased to 100% if the
accumulated funding deficiency is not corrected by the end of the
fourth quarter after the quarter in which the scheduled payment
was missed. Under the Employee Retirement Income Security Act of
1974, the Pension Benefit Guaranty Corporation may also have the
option to begin an involuntary termination proceeding against the
plan in the event of a missed payment, Mr. McDowell adds.
Headquartered in Tucson, Arizona, ASARCO LLC --
http://www.asarco.com/-- is an integrated copper mining,
smelting and refining company. Grupo Mexico S.A. de C.V. is
ASARCO's ultimate parent. The Company filed for chapter 11
protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207).
James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A.
Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter
Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq.,
at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor
in its restructuring efforts. Lehman Brothers Inc. provides the
ASARCO with financial advisory services and investment banking
services. Paul M. Singer, Esq., James C. McCarroll, Esq., and
Derek J. Baker, Esq., at Reed Smith LLP give legal advice to
the Official Committee of Unsecured Creditors and David J.
Beckman at FTI Consulting, Inc., gives financial advisory
services to the Committee. When the Debtor filed for protection
from its creditors, it listed $600 million in total assets and
$1 billion in total debts.
The Debtor has five affiliates that filed for chapter 11
protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521
through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO
Pipe Company, Inc., Cement Asbestos Products Company, Lake
Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about
their asbestos-driven chapter 11 filings have appeared in the
Troubled Company Reporter since Apr. 18, 2005.
Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle,
Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No.
05-21346) also filed for chapter 11 protection, and ASARCO has
asked that the three subsidiary cases be jointly administered with
its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was
converted to a Chapter 7 liquidation proceeding. The Court
appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7
Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at
Law Offices of Michael B. Schmidt represent the Chapter 7
Trustee. (ASARCO Bankruptcy News, Issue No. 17; Bankruptcy
Creditors' Service, Inc., 215/945-7000).
ATA AIRLINES: Settles Dispute Over AMR's $4.28-Mil. Unsec. Claim
----------------------------------------------------------------
As previously reported, AMR Leasing Corporation filed multiple
claims against the estates of ATA Airlines, Inc., ATA Holdings
Corp., and C8 Airlines, Inc., asserting general unsecured non-
priority damages claims arising from the rejection of certain
leases.
AMR also sought payment of $5,399,746 in administrative expense
claims in connection with the lease of six Saab Model 340B
aircraft. The Reorganizing Debtors objected to AMR's request.
Following arm's-length negotiations, the Reorganizing Debtors and
AMR agree, in a Court-approved stipulation, that:
(i) AMR's total unsecured, non-priority claim against the
Reorganizing Debtors, or any of the other Debtors,
including C8 Airlines, Inc., for the Aircraft Claims is
$4,276,703; and
(ii) Claim No. 2058 will be amended and allowed against the
estate of ATA Airlines Inc., for $4,276,703 as a general
unsecured non-priority claim.
The Allowed AMR Claim fully and finally resolves all of AMR's
Claims against the Reorganizing Debtors, or any of the other
Debtors.
Claim Nos. 1278, 1322, 1331, 2059, 2060, 2061, 2062, 2063 and
2064, are expunged in their entirety.
Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA
Holdings Corp. -- http://www.ata.com/-- is the nation's 10th
largest passenger carrier (based on revenue passenger miles) and
one of the nation's largest low-fare carriers. ATA has one of the
youngest, most fuel-efficient fleets among the major carriers,
featuring the new Boeing 737-800 and 757-300 aircraft. The
airline operates significant scheduled service from Chicago-
Midway, Hawaii, Indianapolis, New York and San Francisco to over
40 business and vacation destinations. Stock of parent company,
ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The
Company and its debtor-affiliates filed for chapter 11 protection
on Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868
through 04-19874). Terry E. Hall, Esq., at Baker & Daniels,
represents the Debtors in their restructuring efforts. Daniel H.
Golden, Esq., Lisa G. Beckerman, Esq., and John S. Strickland,
Esq., at Akin Gump Strauss Hauer & Feld, LLP, represents the
Official Committee of Unsecured Creditors. When the Debtors filed
for protection from their creditors, they listed $745,159,000 in
total assets and $940,521,000 in total debts. (ATA Airlines
Bankruptcy News, Issue No. 48; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
ATA AIRLINES: Georges Want Stay Lifted to Proceed with PI Lawsuit
-----------------------------------------------------------------
In April 2004, Milton George and Lois George were passengers
aboard an ATA Airlines, Inc., flight, when both contracted food
poisoning. As a result, the Georges sustained damages, including
personal injuries, medical expenses, loss of services and pain and
suffering.
The Georges timely filed a claim in the Debtors' Chapter 11 cases
on January 24, 2005.
The Georges intend to file a personal injury lawsuit against ATA
Airlines for damages sustained. For this reason, the Georges ask
the Court to lift the automatic stay and any injunction entered as
a result of the Reorganizing Debtor's confirmed Plan of
Reorganization, to allow them to:
* proceed with their litigation against ATA Airlines; and
* engage in discovery to determine the existence of potential
additional defendants.
Christopher C. Hagenow, Esq., at Hopper Blackwell, P.C., in
Indianapolis, Indiana, asserts that there will be no monetary
consequences to the Debtors or the bankruptcy estate by allowing
the Georges to pursue the Lawsuit because the Georges seek only to
recover damages from any applicable policy of liability insurance
available to cover their claims.
Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA
Holdings Corp. -- http://www.ata.com/-- is the nation's 10th
largest passenger carrier (based on revenue passenger miles) and
one of the nation's largest low-fare carriers. ATA has one of the
youngest, most fuel-efficient fleets among the major carriers,
featuring the new Boeing 737-800 and 757-300 aircraft. The
airline operates significant scheduled service from Chicago-
Midway, Hawaii, Indianapolis, New York and San Francisco to over
40 business and vacation destinations. Stock of parent company,
ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The
Company and its debtor-affiliates filed for chapter 11 protection
on Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868
through 04-19874). Terry E. Hall, Esq., at Baker & Daniels,
represents the Debtors in their restructuring efforts. Daniel H.
Golden, Esq., Lisa G. Beckerman, Esq., and John S. Strickland,
Esq., at Akin Gump Strauss Hauer & Feld, LLP, represents the
Official Committee of Unsecured Creditors. When the Debtors filed
for protection from their creditors, they listed $745,159,000 in
total assets and $940,521,000 in total debts. (ATA Airlines
Bankruptcy News, Issue No. 48; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
AVANEX CORP: Reports Revised Net Loss for Fiscal 2006 Second Qtr.
-----------------------------------------------------------------
Avanex Corporation (Nasdaq: AVNX) disclosed that in connection
with the filing of its quarterly report on Feb. 14, 2006, to the
Securities and Exchange Commission, the net loss for its second
fiscal quarter has been revised.
The company finalized the accounting treatment for the
extinguishment of the capital leases at the company's French
subsidiary. In the previously announced results, the one-time
non-cash gain of $4.5 million was recognized as other income in
the company's second quarter financial statements. The final
accounting treatment will spread this gain over the twelve-year
term of the remaining lease.
The company previously reported a net loss of $13.4 million. The
revised net loss included in the Form 10-Q for the second fiscal
quarter is $18.5 million. For the second fiscal quarter,
excluding certain items, the company previously reported a non-
GAAP net loss of $9.3 million. The revised non-GAAP net loss for
the second fiscal quarter is $9.1 million.
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.
BEVERLY ENTERPRISES: Accepting Subordinated Notes for Conversion
----------------------------------------------------------------
Beverly Enterprises, Inc. (NYSE: BEV), reported that as a result
of its pending merger with Fillmore Capital Partners, L.L.C., its
2.75% Convertible Subordinated Notes due 2033 may be surrendered
for conversion into BEI common stock at any time from and after
February 27, 2006, until March 31, 2006.
The conversion rate for the Notes is 134.1922 shares of BEI common
stock per $1,000 principal amount of Notes, or approximately $7.45
per share of BEI common stock. However, any note submitted for
conversion on or after the effective time of the merger on the
date of the merger will be converted into the merger
consideration, which is $12.50 per share in cash.
The right to convert Notes as a result of the pending merger is
separate and apart from any other right to convert that holders of
the Notes may have. Specifically, the indenture governing the
Notes provides that holders may convert any of their Notes into
BEI common stock during any fiscal quarter if the sale price of
the common stock for at least 20 consecutive trading days in the
30 trading days ending on the last trading day of the immediately
preceding fiscal quarter exceeds 120 percent of the conversion
price on that 30th trading day. The Notes are currently
convertible pursuant to this provision of the indenture through
and including March 31, 2006.
To convert interests in a global Note held through the Depository
Trust Company, the holder must deliver to DTC the appropriate
instruction form for conversion pursuant to DTC's conversion
program, and to convert certificated Notes a holder must complete
the conversion notice on the back of the Note and deliver the
executed notice (or facsimile) to the Bank of New York, as Trustee
and Conversion Agent for the Notes. In addition, if a holder
requests that the BEI common stock issuable upon conversion of the
Notes be issued in the name of or delivered to someone other than
the holder, the holder must pay all applicable transfer taxes and
duties, if any.
Beverly Enterprises, Inc., and its operating subsidiaries
providers of healthcare services to the elderly in the United
States. BEI, through its subsidiaries, operates 342 skilled
nursing facilities, as well as 18 assisted living centers, and 67
hospice/home care centers. Through Aegis Therapies, Inc., BEI
offers rehabilitative services on a contract basis to nursing
facilities operated by other care providers.
* * *
As reported in the Troubled Company Reporter on Feb. 21, 2006,
Fitch Ratings affirmed and removed from Rating Watch Evolving
these ratings of Beverly Enterprises, Inc.:
-- Secured bank facility 'BB';
-- Issuer Default Rating 'BB-';
-- Senior secured subordinated notes 'B+'; and
-- Senior subordinated convertible notes 'B+'.
Further, Fitch withdrew these ratings on Beverly following the
shareholder vote to sell the company to Fillmore Capital Partners,
L.L.C.
BOYDS COLLECTION: Wants Lease Decision Period Extended to June 13
-----------------------------------------------------------------
The Boyds Collection, Ltd., and its debtor-affiliates ask the U.S.
Bankruptcy Court for the District of Maryland to further extend,
until June 13, 2006, the period within which they can assume,
assume and assign, or reject unexpired non-residential real
property leases.
As reported in the Troubled Company Reporter on Dec. 27, 2005, the
Debtors are parties to four unexpired leases for property located
at:
Lease
Leased Premises Expiration Date
--------------- ---------------
McSherrystown Warehouse, McSherrystown, Pa. Dec. 31, 2009
Hanover Business Center Ltd., Hanover, Pa. Nov. 30, 2006
AmericasMart location, Atlanta, Ga. April 30, 2009
York County Warehouse, York County, Ga. June 31, 2006
The Debtors are currently using the leased properties in the
ordinary course of their business operations.
The Debtors tell the Court that they can't make informed judgments
about what to do with the property leases by March 15, 2006. They
will not only examine the unexpired leases and analyze their terms
and payments to determine whether these leases should be assumed
or rejected but will also examine whether there are alternative
locations available.
In addition, the Debtors' decision on unexpired leases is
dependent upon their future business plans, which are still being
formulated with input and assistance from their advisors, the
Creditors' Committee, and the prepetition and postpetition
lenders.
Headquartered in McSherrystown, Pennsylvania, The Boyds
Collection, Ltd. -- http://www.boydsstuff.com/-- designs and
manufactures unique, whimsical and "Folksy with Attitude(SM)"
gifts and collectibles, known for their high quality and
affordable pricing. The Company and its debtor-affiliates filed
for chapter 11 protection on Oct. 16, 2005 (Bankr. Md. Lead Case
No. 05-43793). Matthew A. Cantor, Esq., at Kirkland & Ellis LLP
represents the Debtors in their restructuring efforts. As of
June 30, 2005, Boyds reported $66.9 million in total assets and
$101.7 million in total debts.
BROKERS INC: Court Confirms Second Amended Plan of Liquidation
--------------------------------------------------------------
The Honorable Catharine R. Carruthers confirmed Brokers
Incorporated's Second Amended Plan of Liquidation after
determining that the Plan satisfies the 13 standards for
confirmation under Section 1129(a) of the Bankruptcy Code.
The Second Amended Plan calls for the liquidation of the Debtor's
remaining assets for the highest possible value with the net sale
proceeds and all collections to be distributed to creditors. A
Liquidation Fund will be established in an interest-bearing
deposit account to be funded from the net proceeds of the sale of
the remaining assets.
Treatment of Claims and Interests
Class 1 claims, consisting of allowed administrative claims, will
be fully paid in cash, after the effective date of the Plan or
within five business days after the entry of an order approving
those claims.
Class 2 claims, comprised of allowed priority claims other than
priority security deposit claims and priority tax claims under
Section 507(a)(6) and 507(a)(8) of the Bankruptcy Code, will be
paid from the proceeds of the Liquidation Fund after full payment
of all allowed class 1 claims.
Class 3 claims, being all allowed priority security deposit claims
under Section 507(a)(8), will be fully paid from the proceeds of
the Liquidation Fund after the effective date or on other terms
agreed between the Debtor and the holders of those claims;
Class 4 tax claims, totaling $248,156 and having priority under
Section 507(a)(8), will be paid from the proceeds of the
Liquidation Fund after full payment of all allowed class 1, class
2 and class 3 claims.
Branc Bank and Trust, holding a Class 5 claim, and SunTrust Banks,
Inc., holding a Class 6 claim, have both been paid in full during
the Debtor's bankruptcy proceeding, and they will receive no
payments under the Plan.
SunTrust Bank holds a class 7 claim on account of a Promissory
Note dated Sept. 20, 2004, and a SunTrust Loan II Agreement.
SunTrust's claims total about $200,000. The Debtor's obligation
under the Loan II Agreement will be modified to extend the
maturity to three years and the terms of the Agreement will remain
in full force after the Plan's confirmation.
Bank of North Carolina holds a class 8 claim pursuant to the BNC
Loan Documents totaling approximately $492,827. The terms of the
terms of Loan Documents will remain in full force after the Plan's
confirmation and BNC's claim will be paid from the liquidation of
the first BNC property and the rent collections from the second
BNC property.
Class 9 claims consist of the disputed secured claim of Carlton
Eugene Anderson. In the event Mr. Anderson's claim is allowed,
his claim will be paid from the Anderson Reserve Account upon the
entry of a final order determining the Debtor's exact liability
for that claim, but if that claim is disallowed, Mr. Anderson will
not receive anything.
Class 10 general unsecured claims, estimated at approximately
$1,213,937, will be paid after full payment of all claims in
Classes 1 through 4. Payments to Class 10 will accrue interest at
6.25% from the petition date until those claims are paid in full.
Class 11 claim consists of the claim of the Estate of Dolen J.
Bowers, which will be paid from the proceeds of the Liquidation
Fund after full payment of all claims under classes 1 to 10.
Class 12 claims consist of equity security holders, who will
retain their equity interest in the Debtor but will not receive
any distribution until full payment of claims under classes
1 to 10.
A full-text copy of the Modified Disclosure Statement explaining
Brokers Incorporated's Second Amended Plan of Liquidation is
available for a fee at:
http://www.ResearchArchives.com/bin/download?id=060109024656
Headquartered in Thomasville, North Carolina, Brokers
Incorporated, filed for chapter 11 protection on Nov. 22, 2004
(Bankr. M.D. N.C. Case No. 04-53451). Christine L. Myatt, Esq.,
at Nexsen Pruet Adams Kleemeier, PLLC, represents the Debtor in
its restructuring efforts. C. Edwin Allman, III, Esq., in
Winston-Salem, North Carolina represents the Official Committee of
Unsecured Creditors. When the Debtor filed for protection
from its creditors, it listed estimated assets of $10 million to
$50 million and $1 million to $10 million in estimated debts.
CALPINE CORP: Judge Lifland Okays Assumption of Geysers Agreement
-----------------------------------------------------------------
Calpine Corporation and its debtor-affiliates seek the U.S.
Bankruptcy Court for the Southern District of New York's authority
to assume an agreement between Thermal Power Company and Steam
Heat, LLC, which granted Thermal the right to designate a
purchaser of Steam Heat's beneficial interest in the Geysers
Statutory Trust.
The Geysers Projects
Geysers Power Company, LLC, leases 19 geothermal electric
generating facilities located in the Sonoma and Lake Counties,
California, from Geysers Statutory Trust, a Connecticut statutory
trust controlled by Steam Heat, LLC, pursuant to a Third Amended
and Restated Facility Lease Agreement, dated as of May 7, 1999.
Calpine Corporation owns the equity in the Geysers Project though
its first-tier subsidiary Calpine Power Company, which directly
owns all of the equity of Anderson Springs Energy Company, which
directly owns all of the equity of Thermal Power Company, which
directly owns all of the equity of GP I and all of the membership
interests in GP II. GPI and GP II, in turn, together own all of
the limited liability company interests in GPC.
Through a series of transactions ending in the late 1990s, GPC
had acquired the Geysers Facilities, as well as rights to the
real estate upon which the Geysers Facilities are located, and
GPC and its affiliate Silverado Geothermal Resources, Inc.,
acquired related mineral and other real estate rights -- Steam
Field Assets -- which produce steam for the operation of the
Geysers Facilities.
Richard M. Cieri, Esq., at Kirkland & Ellis LLP, in New York,
notes that the Steam Field Assets, which produce the steam
required for operation of the Geysers Facilities, have little
economic utility other than as a source of fuel for the Geysers
Facilities. Likewise, the Geysers Facilities cannot generate
electricity, and thus economic value, without the steam provided
by the Steam Field Assets. As a result, the Steam Field Assets,
on the one hand, and the Geysers Facilities, on the other hand,
are of limited value on a stand-alone basis. However, Mr. Cieri
says, when combined with the Geysers Plant Sites and other assets
comprising the Geysers Project, these assets become extremely
valuable and are estimated to have a market value of in excess of
$2.5 billion.
The Geyser Agreement
According to Mr. Cieri, Steam Heat had no contractual obligation
under the sale-leaseback transactions to sell the Geysers
Interest to the Debtors. The Debtors feared that Steam Heat
would raise the price of the Geysers Interest dramatically once
it discovered, via the Debtors' disclosures at the outset of
their reorganization cases, that the Debtors urgently needed to
consummate the Steam Heat Transactions in order to obtain
postpetition financing on favorable terms. As a precaution, the
Debtors decided to enter into a purchase agreement with Steam
Heat to lock-in the price of the Geysers Interest. On Dec. 20,
2005, Thermal entered into an Agreement with Steam Heat, LLC.
A full-text copy of the Geysers Agreement is available for free
at http://bankrupt.com/misc/calpine_geysersagreement.pdf
Pursuant to the Geysers Agreement, Thermal acquired the exclusive
right to designate a purchaser of the Geysers Interest for a
purchase price of $165,000,000.
* * *
The Honorable Burton R. Lifland of the Bankruptcy Court for the
Southern District of New York authorizes the Debtors to assume the
Geysers Agreement and consummate the Geysers Transactions by
performing all obligations, including, without limitation, paying:
-- $165,000,000 plus $16,666 per day from January 1, 2006,
through the Closing Date to Steam Heat LLC in consideration
for Thermal Power Company's right to designate the
purchaser of Steam Heat's beneficial interest in the
Geysers Statutory Trust; and
-- all outstanding principal, accrued interest and Make-Whole
Amounts owing to the Geysers Lenders in connection with the
redemption of the Geysers Lessor Notes, together with
payment in full of all Geysers Lease Debt Expenses.
In connection with the assumption of the Geysers Agreement, the
consummation of the Geysers Transactions and the completion of
the DIP Financing, TPC is authorized to designate itself or
Geysers Project II as the Purchaser under the Geysers Agreement.
TPC or GP II as the Purchaser pursuant to the Geysers Agreement
is authorized to:
(1) purchase the Geysers Interest from Steam Heat on the terms
and conditions provided and as set forth in the Geysers
Agreement;
(2) pay to each of the Geysers Lease Debt Parties all amounts
required in connection with the redemption of the Geysers
Lessor Notes;
(3) terminate the Geysers Facility Lease and any and all other
related agreements or to the Geysers Lessor Notes, except
the agreements as the Debtors consider to be necessary and
useful to the continued operation of the Geysers
Facilities, and to amend certain agreements which would
otherwise expire or terminate upon termination of the
Geysers Facility Lease to extend the term of the
agreements; and
(4) cause the Geysers Statutory Trust to be merged into
Geysers Power Company and, if TPC is the Purchaser of the
Geysers Interest, to contribute its resulting ownership
interest in GPC to its subsidiaries in proportion to their
ownership.
Judge Lifland further authorizes the Debtors to assume and cure
any and all defaults in respect to the Agnews Operative Documents
and the Related Agnews Agreements.
Upon the date on which the closing occurs under the Geysers
Agreement and each of the Geysers Lease Debt Parties and Geysers
Lease Equity Parties receives payment in full of all amounts
required, each of Calpine, TPC, the Purchaser and each affiliate
to which any of the Geysers Facilities may be transferred, will
indemnify each of the Geysers Lease Equity Parties and their
affiliates, each of the Geysers Lease Debt Parties and their
affiliates, and their shareholders.
On the Effective Date, all of the indemnification obligations
will constitute administrative priority claims against each of
the Indemnifying Parties and their bankruptcy estates pursuant to
Section 503(b)(1)(A) and 507(a)(1) of the Bankruptcy Code.
Headquartered in San Jose, California, Calpine Corporation --
http://www.calpine.com/-- supplies customers and communities
with electricity from clean, efficient, natural gas-fired and
geothermal power plants. Calpine owns, leases and operates
integrated systems of plants in 21 U.S. states and in three
Canadian provinces. Its customized products and services include
wholesale and retail electricity, gas turbine components and
services, energy management and a wide range of power plant
engineering, construction and maintenance and operational
services. The Company filed for chapter 11 protection on Dec. 20,
2005 (Bankr. S.D.N.Y. Lead Case No. 05-60200). Richard M. Cieri,
Esq., Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert
G. Burns, Esq., Kirkland & Ellis LLP represent the Debtors in
their restructuring efforts. Michael S. Stamer, Esq., at Akin
Gump Strauss Hauer & Feld LLP, represents the Official Committee
of Unsecured Creditors. As of Dec. 19, 2005, the Debtors listed
$26,628,755,663 in total assets and $22,535,577,121 in total
liabilities. (Calpine Bankruptcy News, Issue No. 8; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
CALPINE CORP: Can Employ Davis Wright as Special Counsel
--------------------------------------------------------
Calpine Corporation and its debtor-affiliates sought and obtained
authority from the U.S. Bankruptcy Court for the Southern District
of New York's to employ Davis Wright Tremaine LLP, nunc pro tunc
to the Petition Date, as their special counsel for:
1. energy regulatory matters relating to various federal and
state regulatory proceedings and energy transactions; and
2. human resources matters, including representing Debtors in
employment-related litigation in California.
DWT is a full-service law firm that maintains legal practices in
energy regulation, energy transactions, energy-related
litigation, energy financings, human resources and employment
matters. Since 1997, it has maintained a dedicated core group of
attorneys in its San Francisco office that have worked closely
with the Debtors to provide legal services for energy regulatory
matters, and, since 2001, human resources matters.
Matthew A. Cantor, Esq., at Kirkland & Ellis LLP, in New York,
relates that prior to the Petition Date, the Debtors employed DWT
as counsel for energy regulatory matters in various state and
federal proceedings and as human resources counsel, which
includes representing Debtors in California-based employment
litigation. On regulatory proceedings, DWT has represented the
Debtors before various state and federal energy regulatory
agencies, including primarily the Federal Energy Regulatory
Commission and the California Public Utilities Commission.
As a result, DWT has considerable and intimate knowledge
concerning the Debtors and is already familiar with the Debtors'
business affairs, ongoing energy regulatory proceedings, human
resources policies and structure and California-based litigation
regarding employment matters to the extent necessary for the
scope of the proposed and anticipated services. The Debtors
believe that the firm's experience and knowledge will be valuable
to the Debtors in their efforts to reorganize.
As special counsel for energy, DWT will:
(a) represent and prepare pleadings for the Debtors in various
proceedings before the FERC and provide day-to-day
counseling and advice with respect to the proceedings and
with respect to financing, contractual and transactional
matters;
(b) represent and prepare pleadings for the Debtors in various
state regulatory proceedings;
(c) provide day-to-day regulatory, contractual, financing
and commercial advice with respect to issues relating
to public utility jurisdiction, rate, utility resource
procurement, utility renewable resource acquisitions,
fuel supply contracts, reliability must run agreements,
qualifying facility standard offer agreements, other
power purchase agreements and interconnection and
interconnection facilities agreements;
(d) represent and prepare pleadings for the Debtors in matters
relating to the California Independent System Operator;
(e) advise the Debtors on state and federal regulatory issues,
including, obtaining any necessary governmental approvals
and providing opinions with respect to financings and
encumbrances of and dispositions and possible acquisitions
of assets that are or may be subject to state or federal
public utility regulatory jurisdiction;
(f) provide day-to-day advice and counsel regarding employment
and human resources matters relating to the Debtors'
employees; and
(g) represent the Debtors in litigation related to California
employment and human resources issues and other
employment-related litigation matters.
For the period January 1, 2005, to December 31, 2005, DWT billed
the Debtors at a negotiated hourly billing rate plus additional
discounts if total billings exceed specified thresholds.
For 2006, DWT's hourly rates are increased to reflect economic
and other conditions:
Billing Category Hourly Rate
---------------- -----------
Partners $350 to $445
Of Counsel $350 to $400
Associates $245 to $325
Paraprofessionals $140 to $160
DWT will also be reimbursed for actual and necessary out-of-
pocket expenses.
Steven F. Greenwald, Esq., a partner at DWT, assures the Court
that DWT has no connection with the Debtors, their creditors, the
U.S. Trustee or any other party with an actual or potential
interest in the Chapter 11 cases. DWT does not hold or represent
any interest adverse to the Debtors or their estates with respect
to the matters on which DWT is to be employed.
Headquartered in San Jose, California, Calpine Corporation --
http://www.calpine.com/-- supplies customers and communities
with electricity from clean, efficient, natural gas-fired and
geothermal power plants. Calpine owns, leases and operates
integrated systems of plants in 21 U.S. states and in three
Canadian provinces. Its customized products and services include
wholesale and retail electricity, gas turbine components and
services, energy management and a wide range of power plant
engineering, construction and maintenance and operational
services. The Company filed for chapter 11 protection on Dec. 20,
2005 (Bankr. S.D.N.Y. Lead Case No. 05-60200). Richard M. Cieri,
Esq., Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert
G. Burns, Esq., Kirkland & Ellis LLP represent the Debtors in
their restructuring efforts. Michael S. Stamer, Esq., at Akin
Gump Strauss Hauer & Feld LLP, represents the Official Committee
of Unsecured Creditors. As of Dec. 19, 2005, the Debtors listed
$26,628,755,663 in total assets and $22,535,577,121 in total
liabilities. (Calpine Bankruptcy News, Issue No. 9; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
CALPINE CORP: Committee Gets Court OK to Hire Akin Gump as Counsel
------------------------------------------------------------------
The Official Committee of Unsecured Creditors in Calpine
Corporation and its debtor-affiliates' chapter 11 cases sought and
obtained authority from the U.S. Bankruptcy Court for the Southern
District of New York's to retain Akin Gump Strauss Hauer & Feld
LLP as its bankruptcy counsel, nunc pro tunc to January 6, 2006.
The Committee needs Akin Gump to:
(1) advise the Committee with respect to its rights, duties
and powers in the Chapter 11 cases;
(2) assist and advise the Committee in its consultations with
the Debtors relative to the administration of the cases;
(3) assist the Committee in analyzing the claims of the
Debtors' creditors and the Debtors' capital structure and
in negotiating with holders of claims and equity
interests;
(4) assist the Committee in its investigation of the acts,
conduct, assets, liabilities and financial condition of
the Debtors and of the operation of the Debtors'
businesses;
(5) assist the Committee in its analysis of, and negotiations
with, the Debtors or any third party concerning matters
related to, among other things, the assumption or
rejection of certain leases of non-residential real
property and executory contracts, asset dispositions,
financing of other transactions and the terms of one or
more plans of reorganization for the Debtors and
accompanying disclosure statements and related plan
documents;
(6) assist and advise the Committee as to its communications
to the general creditor body regarding significant matters
in the cases;
(7) represent the Committee at all hearings and other
proceedings;
(8) review and analyze applications, orders, statements of
operations and schedules filed with the Court and advise
the Committee as to their propriety;
(9) advise and assist the Committee with respect to any
legislative, regulatory or governmental activities;
(10) assist the Committee in preparing pleadings and
applications as may be necessary in furtherance of the
Committee's interests and objectives;
(11) assist the Committee in its review and analysis of all of
the Debtors' various power agreements;
(12) prepare, on behalf of the Committee, any pleadings,
including without limitation, motions, memoranda,
complaints, adversary complaints, objections or comments;
and
(13) investigate and analyze any claims against the Debtors'
non-debtor affiliates.
William J. Patterson, managing director of SPO Partners & Co., in
its capacity as chairman of the Committee, tells the Court that
Akin Gump possesses extensive knowledge and expertise in the
areas of law relevant to the Chapter 11 cases, and that Akin Gump
is well qualified to represent the Committee.
In selecting counsel, the Committee sought attorneys with
considerable experience in representing unsecured creditors'
committees in Chapter 11 reorganization cases and other debt
restructurings. Akin Gump, Mr. Patterson notes, represents
official creditors' committees in the Chapter 11 cases of:
* Collins & Aikman Corporation,
* Delta Airlines, Inc.,
* Exide Technologies,
* Kaiser Aluminum Corporation,
* Tower Automotive, and
* WorldCom, Inc.
Akin Gump will be paid based on the Firm's current hourly rates:
Billing Category Hourly Rate
---------------- -----------
Partners $435 - $895
Special Counsel and Counsel $300 - $735
Associates $235 - $475
Paraprofessionals $65 - $225
These Akin Gump attorneys are currently expected to have primary
responsibility for providing services to the Committee:
Hourly
Attorney Rank Department Rate
-------- ---- ---------- ------
Michael S. Stamer Partner Financial Restructuring $775
Steven H. Scheinman Partner Corporate $650
David M. Zensky Partner Litigation $635
Philip C. Dublin Counsel Financial Restructuring $525
Abid Qureshi Counsel Financial Restructuring $525
Alexis Freeman Associate Financial Restructuring $420
Cleo F. Sharaf Associate Financial Restructuring $400
Mr. Patterson assures the Court that Akin Gump does not represent
and does not hold any interest adverse to the Debtors' estates or
their creditors in the matters upon which Akin Gump is to be
engaged.
Headquartered in San Jose, California, Calpine Corporation --
http://www.calpine.com/-- supplies customers and communities
with electricity from clean, efficient, natural gas-fired and
geothermal power plants. Calpine owns, leases and operates
integrated systems of plants in 21 U.S. states and in three
Canadian provinces. Its customized products and services include
wholesale and retail electricity, gas turbine components and
services, energy management and a wide range of power plant
engineering, construction and maintenance and operational
services. The Company filed for chapter 11 protection on Dec. 20,
2005 (Bankr. S.D.N.Y. Lead Case No. 05-60200). Richard M. Cieri,
Esq., Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert
G. Burns, Esq., Kirkland & Ellis LLP represent the Debtors in
their restructuring efforts. Michael S. Stamer, Esq., at Akin
Gump Strauss Hauer & Feld LLP, represents the Official Committee
of Unsecured Creditors. As of Dec. 19, 2005, the Debtors listed
$26,628,755,663 in total assets and $22,535,577,121 in total
liabilities. (Calpine Bankruptcy News, Issue No. 9; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
CLARK GROUP: Liquidating Agent Wants Chapter 11 Cases Closed
------------------------------------------------------------
Charles W. Riske, the liquidating agent for Clark Group, Inc., and
its debtor-affiliates, asks the Honorable David P. McDonald of the
U.S. Bankruptcy Court for the Eastern District of Missouri to
enter a final decree closing the Debtors' chapter 11 cases.
Mr. Riske was appointed as Liquidating Agent under the Debtors'
chapter 11 liquidation plan, which took effect on Nov. 22, 2005.
A pre-packaged plan was confirmed on Nov. 10, 2005, a little over
a year after the Debtors filed it on October 5, 2004. Mr. Riske
served as counsel to the Official Committee of Unsecured Creditors
before his appointment as Liquidating Agent.
Under the plan, substantially all of the Debtors' assets were sold
to Sierra Craft, Inc. The proceeds from that sale and the sale of
the excluded assets were transferred to a Liquidation Trust.
Mr. Riske tells Judge McDonald that distributions to allowed, non-
priority, unsecured claimants and to allowed, priority, unsecured
claimants and convenience class creditors have not yet been made.
He anticipates a 20% pro rata dividend to general unsecured
creditors. All fees due to the United States Trustee have already
been paid.
Robert E. Eggmann, Esq., at Copeland Thompson Farris PC, in St.
Louis, Missouri, contends that the transfer of the sale proceeds
to the Liquidation Trust, the cessation of Debtors' active
operations and the commencement of a final distribution by the
Liquidating Agent are all it takes to enter a final decree closing
Debtors' chapter 11 cases.
Headquartered in St. Louis, Missouri, Clark Group, Inc. --
http://www.clarksprinkler.com/-- provides a comprehensive line of
fire protection products and the highest quality service and
expert knowledge on fire protection products. The Company and its
debtor-affiliates filed for chapter 11 protection on October 1,
2004 (Bankr. E.D. Mo. Case No. 04-52536). Bonnie L. Clair, Esq.,
and David A. Sosne, Esq., at Summers, Compton, Wells & Hamburg,
PC, represent the Debtors. When the Company filed for protection
from its creditors, it estimated assets and debts of $10 million
to $50 million.
CNET NETWORKS: Good Performance Cues S&P to Upgrade Rating to B
---------------------------------------------------------------
Standard & Poor's Ratings Services raised its ratings on Internet
publisher CNET Networks Inc., including raising the corporate
credit rating to 'B' from 'B-'. The outlook is positive. Total
debt outstanding was about $142 million as of Dec. 31, 2005.
"The upgrade was based on improving business and financial
performance driven by strong Internet ad demand," said Standard &
Poor's credit analyst Andy Liu.
The ratings on CNET reflect:
* the company's dependence on online advertising;
* vulnerability to the financial health of the consumer
electronics niche;
* acquisition-oriented growth strategy; and
* high financial risks.
These risks are only slightly offset by CNET's position as a
leading publisher of consumer electronic product reviews and the
currently strong Internet ad demand.
CNET's niche in Internet publishing -- addressing electronic
products, video game, and entertainment -- is almost entirely
advertising-driven, making it highly vulnerable to the ebb and
flow of advertising spending. CNET is currently benefiting from
growth in online advertising, which, according to the Interactive
Advertising Bureau, grew 28% during the first nine months of 2005.
This is indicative of advertising spending's shift online; total
advertising spending was up only modestly since 2004.
With year-over-year increases in unique monthly visitors and
average daily page views, consumers appear to be more reliant on
CNET for product and entertainment information, which makes CNET
more attractive to advertisers. With non-technology-oriented
properties such as TV.com and Webshot, CNET has been able to
somewhat diversify its revenue base by attracting new, out-of-
category advertisers such as consumer packaged goods and financial
services. Recently, the company sold its Computer Shopper
magazine, which represented the bulk of its print operation and
had been in decline for many quarters.
COLLINS & AIKMAN: Blocks Active Mould's Move to Recover Molds
-------------------------------------------------------------
Active Mould & Design Ltd. sought relief from the automatic stay
to enforce its alleged statutory lien rights on various molds that
it sold and delivered to Collins & Aikman Corporation and its
debtor-affiliates prepetition.
Patrick J. Kukla, Esq., at Carson Fischer, P.L.C., in Bloomfield
Hills, Michigan, counters that Active Mould has not established
that it has a valid, properly and timely perfected and enforceable
security interest in the Molds. In fact, Mr. Kukla continues,
Active Mould may have contractually waived any lien claim.
Mr. Kukla further contends that Active Mould has failed to
establish cause for lifting the automatic stay. Pursuant to
Section 362(d) of the Bankruptcy Code, the U.S. Bankruptcy Court
for the Eastern District of Michigan may lift the stay either:
-- for cause, including lack of adequate protection; or
-- with respect to an act against property, if the debtor has
no equity in the property and if the property is not
necessary for an effective reorganization.
The concept of adequate protect is intended to protect an entity's
interest in property from a decline or threatened decline in
value. Mr. Kukla argues that there is no evidence, as Active
Mould suggests, that the Debtors' continued use of the Molds
substantially impairs their value.
Furthermore, the Debtors currently use the Molds to produce
component parts for certain of their major customers. Clearly,
Mr. Kukla asserts, the Molds are necessary for an effective
reorganization.
Even if the Court lifts the stay, Active Mould is not entitled to
immediate possession of the Molds. Active Mold would still have
to pursue the appropriate non-bankruptcy remedies at law to
"repossess" the Molds, Mr. Kukla says.
The Official Committee of Unsecured Creditors agrees with the
Debtors' arguments.
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.
(Collins & Aikman Bankruptcy News, Issue No. 25; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
COLLINS & AIKMAN: Court Allows Shirley Grady to Pursue Lawsuit
--------------------------------------------------------------
Shirley Grady filed a lawsuit against Collins & Aikman Corporation
and its debtor-affiliates, and certain other parties, to recover
damages for worker's compensation. The lawsuit is pending in the
Davidson County Chancery Court, in Nashville, Tennessee.
The damages asserted may be within the scope of one of the
Debtors' policies issued by American Home Insurance Company.
In a stipulation approved by the U.S. Bankruptcy Court for the
Eastern District of Michigan, the parties agree to permit Ms.
Grady to prosecute the Action to the entry of judgment provided
that no judgment or settlement may be enforced against the
Debtors, their assets or their estates.
The Debtors do not admit any liability or the validity of any
damages with respect to the Action and Ms. Grady is willing to
waive her right to collect any claims against the Debtors.
Ms. Grady will seek recovery solely from any available insurance
coverage.
Ms. Grady also waives any right to a claim for punitive or other
exemplary damages against the Debtors.
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.
(Collins & Aikman Bankruptcy News, Issue No. 25; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
COLLINS & AIKMAN: Settles Payment Dispute With Breitkreuz Molds
---------------------------------------------------------------
In a stipulation approved by the U.S. Bankruptcy Court for the
Eastern District of Michigan, Collins & Aikman Corporation, its
debtor-affiliates, the United States Internal Revenue Service, and
Breitkreuz Molds and Plastics, Inc., agree that:
a. The Debtors will pay the IRS $85,889 by February 19, 2006,
which will satisfy all claims that the IRS and Breitkreuz
may hold arising from the plastic injection molds or the
purchase order to produce those molds; and
b. Upon receipt of the payment by the IRS, the IRS and
Breitkreuz's request for allowance of an administrative
claim will be deemed withdrawn in its entirety.
The Court will retain jurisdiction to resolve any disputes or
controversies arising from or related to the Stipulation.
As reported in the Troubled Company Reporter on Dec. 5, 2005, the
Debtors and Breitkreuz, entered into a prepetition contract for
the production of plastic injection molds for the General Motors
2005 GMX001 Chevrolet Cavalier program.
Pursuant to the Contract, the Debtors were obligated to pay
$469,800 for the Molds production subject to a discount, which the
parties agreed would be $4,500. In March 2004, the Debtors paid
$145,500 leaving a balance due of $319,800.
The IRS served a levy on the Debtors to collect the amounts due to
Breitkreuz on the account receivable. However, the Debtors
refused to comply with the legally enforceable levy. Instead, on
November 1, 2004, the Debtors paid $168,169 leaving a remaining
unpaid balance of $151,631.
By virtue of the levy, the IRS succeeded to the rights of payment
of Breitkreuz and became a fully secured creditor for the
remaining balance.
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.
(Collins & Aikman Bankruptcy News, Issue No. 25; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
COMMUNICATION DYNAMICS: Settles Four Adversary Proceedings
----------------------------------------------------------
The CDI Trust asks the U.S. Bankruptcy Court for the District of
Delaware to approve separate stipulations resolving its disputes
with National Strand Products, Inc., AT&T and Roadway Express,
Inc.
The CDI Trust was created pursuant to the confirmed Second Amended
Chapter 11 Plan of Communication Dynamics, Inc., and its debtor-
affiliates. Substantially all of the Debtors' assets were
transferred and assigned to the Trust pursuant to the Plan. The
Trust has the exclusive authority to prosecute, settle or
compromise causes of action. AMJ Advisors LLC serves as Plan
Trustee.
The Trust commenced avoidance actions against the three entities,
among others, in order to recover preferential transfers pursuant
to Section 547 and 550 of the Bankruptcy Code. The Trust wanted
to recover:
-- $296,323 from AT&T;
-- $252,865 from National Strand Products, Inc.; and
-- $365,755 from Roadway Express, Inc.
However, after reviewing the Debtors' books and records as well as
the defenses asserted by the defendants, the Plan Trustee
concluded that each of the Defendants had valid defenses that
could substantially reduce or eliminate any recovery by the Trust.
To avoid the costs and uncertainties of further litigation, the
Trust has agreed to settle its claims against the defendants for a
cash payment of:
-- $2,250 from AT&T;
-- $25,000 from Southwest Wire Rope, LP, as successor-in-
interest to National Strand; and
-- $55,000 from Roadway Express.
Upon receipt of the payments, the Trust agrees to release and
waive all prepetition and postpetition claims, demands and causes
of action against the defendants. Gazes LLC, the Trust's Counsel,
will hold the payments in escrow until the Bankruptcy Court
dismisses the adversary proceedings against the defendants.
Copies of the settlement agreements between the Trust and the
three defendants are available for a fee at:
http://www.researcharchives.com/bin/download?id=060224030239
Headquartered in Annville, Pennsylvania, Communication Dynamics,
Inc., is one of the largest multinational suppliers of
infrastructure equipment to the broadband communications industry.
The Company and its debtor-affiliates filed for chapter 11
protection on Sept. 23, 2002 (Bankr. Del. Case No. 02-12753).
Jeffrey M. Schlerf, Esq., and Eric M. Sutty, Esq., at The Bayard
Firm and Scotta E. McFarland, Esq., at Pachulski, Stang, Ziehl,
Young, Jones & Weintraub, P.C. represent the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors, they listed more than $100 million both in
estimated assets and debts. The Court confirmed the Debtors'
chapter 11 plan on Feb. 25, 2004. The Plan took effect on
April 13, 2004.
COMMUNITY HEALTH: Earns $48.1 Million in Fourth Quarter
-------------------------------------------------------
Community Health Systems, Inc. (NYSE: CYH) released its financial
and operating results for the quarter and year ended December 31,
2005.
Net operating revenues for the quarter ended December 31, 2005,
totaled $982.1 million, a 16.8% increase compared with
$840.6 million for the same period last year. Income from
continuing operations increased 19.7% to $50.8 million for the
quarter ended December 31, 2005, compared with $42.5 million
for the same period last year. Net income increased 19.7% to
$48.1 million for the quarter ended December 31, 2005, compared
with $40.2 million for the same period last year. Loss on
discontinued operations for the quarter ended December 31, 2005,
consists of an after-tax loss of approximately $2.7 million,
related to the operations from one hospital designated during the
second quarter of 2005 as being held-for-sale.
Adjusted EBITDA for the fourth quarter of 2005 was $151.8 million,
compared with $130.6 million for the same period last year,
representing a 16.2% increase. Adjusted EBITDA is EBITDA adjusted
to exclude discontinued operations and minority interest in
earnings. The Company uses adjusted EBITDA as a measure of
liquidity. Net cash provided by operating activities for
the fourth quarter of 2005 was $75.3 million, compared with
$62.6 million for the same period last year, an increase of 20.3%.
The consolidated financial results for the quarter ended
Dec. 31, 2005, reflect a 9.1% increase in total admissions
compared with the same period last year. On a same-store basis,
admissions increased 1.5% and adjusted admissions increased 0.5%
compared with the same period last year. On a same-store basis,
net operating revenues increased 9.2% compared with the same
period last year.
Net operating revenues for the year ended December 31, 2005,
totaled $3.738 billion, compared with $3.204 billion for the same
period last year, a 16.7% increase, again demonstrating the
Company's successful integration of acquisitions over the last
several years. Income from continuing operations increased 17.1%
to $190.1 million for the year ended December 31, 2005, compared
with $162.4 million for the same period last year.
Loss on discontinued operations for the year ended Dec. 31, 2005,
consists of an after-tax loss of approximately $22.6 million,
related to the loss on sale and operational losses relating to the
sale of four hospitals during the first quarter of 2005, one of
which was designated as being held-for-sale as of Dec. 31, 2004,
the termination of one hospital's lease during the first quarter
of 2005 and an impairment write-down related to the designation
of one additional hospital as being held-for-sale during the
second quarter of 2005. Net income increased 10.6% to
$167.5 million, for the year ended December 31, 2005, compared
with $151.4 million, for 2004.
Adjusted EBITDA for the year ended December 31, 2005, was
$573.2 million, compared with $494.1 million for the same
period last year, a 16.0% increase. Net cash provided by
operating activities for the year ended December 31, 2005, was
$411.0 million, compared with $325.8 million for the same period
last year, an increase of 26.2%.
The consolidated financial results for the year ended
Dec. 31, 2005, reflect a 9.1% increase in total admissions
compared with the same period last year. On a same-store basis,
admissions increased 2.1%, adjusted admissions increased 1.8%, and
net operating revenues increased 9.0%, compared with the same
period last year.
"Our fourth quarter performance capped off another year of dynamic
growth for Community Health Systems," commented Wayne T. Smith,
chairman, president and chief executive officer of Community
Health Systems, Inc. "With over 16 percent annual revenue growth
resulting in record revenues of $3.7 billion and income from
continuing operations up 17 percent, we again demonstrated our
ability to meet our financial targets in 2005 while selectively
acquiring new hospitals and building the foundation for future
success. Our same store growth metrics are another key indicator
that our operating strategy is working as we continued to drive
admissions and revenues in our hospitals throughout the country."
"We acquired five hospitals in 2005, further extending our market
reach," Mr. Smith added. "Our acquisition pace has been strong and
steady and we have established a track record for not only finding
hospitals that fit our criteria, but also for successfully
assimilating these facilities into our system. As we look ahead
to 2006, we believe there are additional opportunities to expand
our portfolio as more hospitals seek a proven operator who will
enable them to more effectively provide healthcare services in
their respective communities. We believe that Community Health
Systems is well positioned to continue to execute its growth
strategy and we remain focused on delivering value to both our
shareholders and the communities we serve."
Located in the Nashville, Tennessee, suburb of Brentwood,
Community Health Systems -- http://www.chs.net/-- is a leading
operator of general acute care hospitals in non-urban communities
throughout the country. Through its subsidiaries, the company
currently owns, leases or operates 71 hospitals in 21 states. Its
hospitals offer a broad range of inpatient medical and surgical
services, outpatient treatment and skilled nursing care. Shares
in Community Health Systems, Inc. are traded on the New York Stock
Exchange under the symbol "CYH."
* * *
As reported in the Troubled Company Reporter on Sep. 26, 2005,
Standard & Poor's Ratings Services revised its outlook on
Brentwood, Tennessee-based hospital operator Community Health
Systems Inc. to positive from stable. Ratings on the company,
including the 'BB-' corporate credit rating, were affirmed.
CREDIT SUISSE: Moody's Affirms Ba1 Rating on $8.3MM Certificates
----------------------------------------------------------------
Moody's Investors Service affirmed the ratings of Credit Suisse
First Boston Mortgage Securities Corp., Commercial Mortgage Pass-
Through Certificates, Series 2004-TFL2:
* Class A-1, $190,674,820, Floating, affirmed at Aaa
* Class A-2, $165,000,000, Floating, affirmed at Aaa
* Class A-X, Notional, affirmed at Aaa
* Class A-Y, Notional, affirmed at Aaa
* Class B, $26,000,000, Floating, affirmed at Aaa
* Class C, $23,000,000, Floating, affirmed at Aa1
* Class D, $19,000,000, Floating, affirmed at Aa3
* Class E, $19,000,000, Floating, affirmed at A1
* Class F, $19,000,000, Floating, affirmed at A2
* Class G, $16,500,000, Floating, affirmed at A3
* Class H, $17,500,000, Floating, affirmed at Baa1
* Class J, $16,500,000, Floating, affirmed at Baa2
* Class K, $15,500,000, Floating, affirmed at Baa3
* Class L, $8,345,891, Floating, affirmed at Ba1
The Certificates are collateralized by four senior participation
interests and two whole loans. The loans range in size from 10.6%
to 29.1% of the pool based on current principal balances. As of
the Jan. 16, 2006 distribution date, the transaction's aggregate
certificate balance has decreased by approximately 36.2% to $536.0
from $840.3 million at securitization as a result of the payoff of
five loans and amortization associated with the Pacific Shores
Center Loan.
Moody's current weighted average loan to value ratio is 59.9%,
compared to 60.2% at securitization, resulting in the affirmation
of all classes. The increased credit support from the loan
payoffs has been offset by the poorer performance of the BlueLinx
Portfolio Loan.
The largest loan is secured by Pacific Shores Center, a 1.7
million square foot Class A office campus located in Redwood City,
California. The property consists of ten office buildings
situated on 106 acres. The campus was completed in 2002 and has
an extensive amenities package including a junior Olympic swimming
pool, softball fields, biking and jogging trails and a day care
center.
At securitization the property was 63.6% leased to 11 tenants but
55.0% occupied. Informatica Corp., had given notice of its
intention to vacate the property by the end of 2004, although it
is obligated to continue paying rent through the lease expiration.
Nuance Communications had vacated its space but also continues to
pay rent through lease expiration. Moody's did not recognize rent
from these two tenants in its analysis. As of October 2005 the
property was 71.3% leased but 45.5% occupied. Although leasing
conditions in the submarket have improved, vacancy for Class A
office space remains in excess of 25.0%.
New leases are being executed at the property at significantly
lower rents. This floating rate loan matures in April 2007 and
the borrower has two 12-month extension options. There is a
junior participation interest in an approximate amount of $73.5
million and mezzanine debt of approximately $31.4 million. The
loan has several beneficial features such as 25-year amortization,
$55 million of letters of credit and excess cash reserves. The
loan sponsors are Jay Paul Company, Walton Street Capital, and DLJ
Real Estate Capital Partners. Moody's LTV is 60.5%, compared to
61.7% at securitization. Moody's current shadow rating is Baa2,
the same as at securitization.
The second largest loan is secured by the BlueLinx Portfolio, a
pool of 61 cross-collateralized and cross-defaulted warehouse and
distribution facilities located in 36 states. California is the
largest state concentration at 12.8% of the allocated loan
balance.
The facilities total 8.4 million square feet and range in size
from 37,000 square feet to 685,000 square feet with an average
size of approximately 137,556 square feet. The facilities are
leased BlueLinx for a term of 15 years with no termination options
at rents that are approximately 23.5% above market.
The loan sponsor is the BlueLinx Corporation, which is controlled
by Cerberus Capital Management, L.P., a New York based global
private investment firm which together with its affiliates manages
in excess of $14.0 billion of private equity and hedge fund
capital.
BlueLinx, formerly owned by Georgia Pacific, is a leading
distributor of building products. BlueLinx Holdings Inc.,
reported total sales of $5.62 billion for calendar year 2005,
compared to $5.56 billion in calendar year 2004. Although total
sales increased by 1.1%, gross profit declined by 9.1% from
$563.8 million in calendar year 2004 to $512.4 million in calendar
year 2005.
Net income for calendar year 2005 was $44.6 million, compared to
$74.6 million in calendar year 2004. Although the company
continues to gain market share its operating results have been
affected by a weakened pricing environment. This floating rate
interest only loan matures in November 2007. The borrower has two
12-month extension options. There is a junior participation in
the amount of $45.0 million. Moody's current shadow rating is
Ba2, compared to Baa3 at securitization.
The third largest loan is secured by Seminole Towne Center, an
enclosed regional mall located in Sanford, Florida, approximately
17 miles north of the Orlando CBD. Total mall area is 1.13
million square feet of which approximately 660,800 square feet
serves as loan collateral. Anchors include Dillard's, Macy's,
Sears, McRae's, J.C. Penney and a 10-screen United Artists Theater
on a ground lease. Dillard's, Sears and J.C. Penny are anchor-
owned stores. In-line occupancy was 83.2%, compared to 82.4% at
Moody's last review in August 2005 and compared to 84.2% at
securitization.
Comparable in-line tenant sales for calendar year 2005 are
projected to amount to $350 per square foot, compared to actual
sales of $305 per square foot in calendar year 2004. Projected
calendar year 2005 sales of $193,900 per screen for the United
Artists Theater represent a decrease from $228,100 per screen for
the trailing 12-month period ending April 2004 and $317,905 per
screen at securitization. The theater, which does not have
stadium seating, has been impacted by increased competition within
the area. Approximately 41.0% of the in-line space expires in
2006.
To date slightly more than 50.0% of this space has committed to
early lease renewals. This floating rate interest only loan
matures in July 2006 and the borrower has three 12-month extension
options. The loan sponsors are Simon Property Group, L.P. and
Teacher's Retirement System of Illinois. Moody's LTV is 57.3%,
essentially the same as at Moody's last review and compared to
56.5% at securitization. Moody's current shadow rating is A1, the
same as at securitization.
The fourth largest loan is secured by the Roosevelt Hotel, a
1,013-room full-service hotel located in New York City. For the
trailing 12-month period ending November 2005, RevPAR was $150.11,
compared to $115.00 for the trailing 12-month period ending June
2004.
RevPAR increased by approximately 22.7% for the 11-month period
ending November 2005, compared to the same time period the
previous year. The property has undergone extensive renovations
since 1996. The New York City full service hotel market has a
Red-Yellow-GreenTM score of Green (68) as of fourth quarter of
2005. This floating rate loan amortizes over a 25-year period and
matures in March 2006. The borrower has three 12-month extension
options. There is a junior participation in the amount of $29.7
million. The loan sponsor is PIA Investments LTD. Moody's LTV is
52.3%, compared to 55.4% at Moody's last review and compared to
56.5% at securitization. Moody's current shadow rating is A3,
compared to Baa1 at securitization.
The fifth largest loan is secured by 20 Exchange Place, a 56-story
Class B office building containing 775,913 square feet located in
New York City's financial district. The property was acquired for
the purpose of converting the tower portion of the building to
residential use. The base portion of the building will be
converted to a single commercial condominium unit and continue to
operate as an office building. The remaining 126,333 square feet
is comprised of mezzanine, ground floor and basement space.
Occupancy has dropped to 50.2% as of September 2005 from 66.2% at
securitization as ownership vacates office tenants in preparation
for the residential conversion.
The loan includes reserves to re-tenant vacant space if the
residential conversion plan fails to be implemented. This
floating rate interest only loan matures in June 2006 and the
borrower has three 12-month extension options. There is a junior
participation in the amount of $25.0 million and $45.0 million of
mezzanine debt. The loan sponsors are Nathan Berman and Yaron
Bruckner. Moody's LTV is 58.2%, compared to 59.2% at Moody's last
review and compared to 59.3% at securitization. Moody's current
shadow rating is Baa2, the same as at securitization.
The sixth largest loan is secured by the Marriott Indianapolis, a
615-room full-service hotel located in downtown Indianapolis,
Indiana. The hotel is the newest and largest in its market. The
hotel is well located, connected via a skywalk to a primary demand
generator, the RCA Dome which is home to the Indiana Convention
Center. For the trailing 12-month period ending October 2005,
total revenue increased approximately 4.0% from securitization.
The Indianapolis full service hotel market has a Red-Yellow-
GreenTM score of Yellow (57) as of the fourth quarter of 2005.
The Marriott Indianapolis competes with seven hotel properties
aggregating 3,447 rooms. This floating rate interest only loan
matures in February 2007 and has two 12-month extension options.
The loan sponsor is LaSalle Hotel Operating Partnership, L.P.
Moody's LTV is 62.6%, essentially the same as at Moody's last
review and compared to 63.4% at securitization. Moody's current
shadow rating is Baa3, the same as at securitization.
DSLA MORTGAGE: S&P Holds Low-B Ratings on 18 Certificate Classes
----------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its ratings on 120
classes of mortgage-backed certificates from nine DSLA Mortgage
Loan Trust transactions.
The affirmations are based on credit support percentages that are
sufficient to maintain the current ratings on the certificates.
Credit support for these transactions is provided by
subordination. Additionally, series 2004-AR1, 2004-AR2, 2005-AR2,
2005-AR3, and 2005-AR5 benefit from bond insurance policies issued
by either AMBAC Assurance Corp. or Financial Security Assurance
Inc., each of which has a 'AAA' financial strength rating.
According to the January 2006 remittance data, delinquencies
ranged between 0.81% and 5.53% of the current pool balances. The
mortgage loans have not experienced any realized losses.
The underlying collateral for these transactions consists mostly
of option ARM, first-lien, residential mortgage loans.
Ratings affirmed:
DSLA Mortgage Loan Trust
Series Class Rating
------ ----- ------
2004-AR1 A-1A,A-1B,A-2A,A-2B,X-1 AAA
2004-AR1 X-2,A-R AAA
2004-AR1 B-1 AA
2004-AR1 B-2 A
2004-AR1 B-3 BBB
2004-AR1 B-4 BB
2004-AR1 B-5 B
2004-AR2 A-1A,A-1B,A-2A,A-2B,X-1 AAA
2004-AR2 X-2,A-R AAA
2004-AR2 B-1 AA
2004-AR2 B-2 A
2004-AR2 B-3 BBB
2004-AR2 B-4 BB
2004-AR2 B-5 B
2004-AR3 1-A1A,1-A1B,2-A1,2-A2A AAA
2004-AR3 2-A2B,X,A-R AAA
2004-AR3 B-1 AA
2004-AR3 B-2 A
2004-AR3 B-3 BBB
2004-AR3 B-4 BB
2004-AR3 B-5 B
2004-AR4 1-A1A,2-A1A,2-A1B,2-A2A AAA
2004-AR4 2-A2B,X-1,X-2,A-R AAA
2004-AR4 B-1 AA
2004-AR4 B-2 A
2004-AR4 B-3 BBB
2004-AR4 B-4 BB
2004-AR4 B-5 B
2005-AR1 1-A,2-A-1A,2-A2B,2-A2 AAA
2005-AR1 X-1,X-2,A-R AAA
2005-AR1 B-1 AA
2005-AR1 B-2 A
2005-AR1 B-3 BBB
2005-AR1 B-4 BB
2005-AR1 B-5 B
2005-AR2 1-A,2-A1A,2-A1B,2-A1C AAA
2005-AR2 2-A2,X-1,X-2,PO,A-R AAA
2005-AR2 B-1 AA
2005-AR2 B-2 A
2005-AR2 B-3 BBB
2005-AR2 B-4 BB
2005-AR2 B-5 B
2005-AR3 1-A,2-A1A,2-A1B,2-A1C AAA
2005-AR3 2-A2,X-1,X-2,PO,A-R AAA
2005-AR3 B-1 AA
2005-AR3 B-2 A
2005-AR3 B-3 BBB
2005-AR3 B-4 BBB-
2005-AR3 B-5 BB
2005-AR3 B-6 B
2005-AR4 1-A,2-A1A,2-A1B,2-A1C AAA
2005-AR4 2-A1D,2-A-2,X-1,X-2 AAA
2005-AR4 PO,A-R AAA
2005-AR4 B-1 AA
2005-AR4 B-2 A
2005-AR4 B-3 BBB
2005-AR4 B-4 BBB-
2005-AR4 B-5 BB
2005-AR4 B-6 B
2005-AR5 1-A1A,1-A1-B,2-A1-A AAA
2005-AR5 2-A1-B,X-1,X-2,PO,A-R AAA
2005-AR5 B-1 AA+
2005-AR5 B-2 AA-
2005-AR5 B-3 BBB+
2005-AR5 B-4 BBB
2005-AR5 B-5 BB
2005-AR5 B-6 B
EASYLINK SERVICES: Has Until August 21 to Comply with Nasdag Rule
-----------------------------------------------------------------
EasyLink Services Corporation (NASDAQ: EASY) reported that NASDAQ
has determined that EasyLink is entitled to the additional 180-day
grace period to regain compliance with NASDAQ's $1 minimum bid
price requirement. As a result of the determination, EasyLink
will have until Aug. 21, 2006 to comply with the $1.00 minimum
closing bid price requirement on the Nasdaq Capital Market. The
Company may regain compliance with the minimum bid price rule if,
at any time before Aug. 21, 2006, the bid price of its common
stock closes at $1.00 per share or more for a minimum of ten
consecutive trading days. The NASDAQ staff may, in its
discretion, require the Company to maintain a bid price of at
least $1.00 per share for a period in excess of ten consecutive
business days (but generally no more than 20 consecutive business
days) before determining that the Company has demonstrated the
ability to maintain long-term compliance.
Going Concern Doubt
KPMG LLP expressed substantial doubt about EasyLink's ability to
continue as a going concern after it audited the company's
financial statements for the fiscal year ended Dec. 31, 2004.
The company said it again received that going concern
qualification notwithstanding the significant improvements in its
financial condition and results of operations over the past three
years. The auditors point to the company's working capital
deficiency and an accumulated deficit. The company also received
qualified opinions from its auditors in 2000, 2001, 2002 and 2003.
EasyLink Services Corporation (NASDAQ: EASYE), --
http://www.EasyLink.com/-- headquartered in Piscataway, New
Jersey, is a leading global provider of outsourced business
process automation services that enable medium and large
enterprises, including 60 of the Fortune 100, to improve
productivity and competitiveness by transforming manual and
paper-based business processes into efficient electronic business
processes. EasyLink is integral to the movement of information,
money, materials, products, and people in the global economy,
dramatically improving the flow of data and documents for
mission-critical business processes such as client communications
via invoices, statements and confirmations, insurance claims,
purchasing, shipping and payments. Driven by the discipline of
Six Sigma Quality, EasyLink helps companies become more
competitive by providing the most secure, efficient, reliable, and
flexible means of conducting business electronically.
EDUCATE INC: Earns $15.4 Million in Fiscal Year 2005
----------------------------------------------------
Educate, Inc., reported its financial results for the fourth
quarter and fiscal year ended Dec. 31, 2005.
For the three months ended Dec. 31, 2005, Educate Inc. incurred a
net loss of $4,733,000, compared to $1,904,000 of positive net
income for the same three-month period in 2004.
For the 12 months ended Dec. 31, 2005, Educate Inc.'s total
revenues increased to $330,414,000 from total revenues of
$273,124,000 for the year ended Dec. 31, 2004. Net income for
12 months ended Dec. 31, 2005, increased to $15,405,000 from
$6,412 of net income for the year ended Dec. 31, 2004.
Revenue growth for the year 2005 was fueled by the acquisition of
60 franchise territories, expanding the scope and distribution of
Hooked on Phonics educational programs and expansion of the
Learning Center network by 47 territories. The benefits of that
revenue growth were offset by short-term costs related to the
integration and improvement of recently acquired company-owned
territories and the expansion of distribution channels and
programs for Hooked on Phonics as the Company focused on consumer
education services and products.
Other financial highlights for the quarter ended Dec. 31, 2005,
are revenues from continuing operations increasing to
$76.6 million and Learning Center same territory revenue declined
4% during the fourth quarter.
Other financial highlights for the year ended Dec. 31, 2005, are
Learning Center same territory revenue growth was 3% for the year
and operating income from continuing operations increasing to
$45.6 million.
As of Sept. 30, 2005, Educate Inc. reported total assets of
$429,198,000 and total liabilities of $213,222,000.
Headquartered in Baltimore, Maryland, Educate, Inc. --
http;//www.educate-inc.com -- is a leading pre-K-12 education
company delivering supplemental education services and products to
students and their families. Educate's consumer services
business, Sylvan Learning Center, North America's best-known and
most trusted tutoring brand, operates the largest network of
tutoring centers, providing supplemental, remedial and enrichment
instruction. Its Educate Products business delivers educational
products including the highly regarded Hooked on Phonics early
reading, math and study skills programs. Catapult Learning, its
school partnership business unit, is a leading provider of
educational services to public and non-public schools.
* * *
As reported in the Troubled Company Reporter on Aug. 4, 2005,
Standard & Poor's Ratings Services revised its outlook on Educate
Inc. to positive from stable. At the same time, Standard & Poor's
affirmed the 'B+' corporate credit rating on the company. Total
debt was $141 million as of June 30, 2005. Baltimore, Maryland-
based Educate provides retail K-12 tutoring through Sylvan
Learning Centers and supplemental education programs in schools.
EMERGE CAPITAL: Sells Mortgage Lending Subsidiary
-------------------------------------------------
Emerge Capital Corp. (OTCBB:EMGC) has sold its interest in its
residential mortgage lending subsidiary, Aim American Mortgage,
Inc.
Emerge Capital President and CEO Tim Connolly commented "This sale
is part of our continuing plan to focus our resources and capital
in those areas we believe will provide the greatest return to our
shareholders. Rising interest rates and softening housing markets
led to our recent decision to divest ourselves of our real estate
subsidiary, Lehigh, and our mortgage lending subsidiary. We can
now concentrate our efforts on executing the Emerge Capital Corp.
long term business plans."
Emerge Capital Corp. provides Business Restructuring, Turnaround
Management, and Advisory Services for emerging and re-emerging
public and private companies through its wholly owned operating
subsidiary, Corporate Strategies, Inc. CSI helps micro-cap public
companies accelerate growth, provides working capital strategies,
funding alternatives and in select cases, makes direct investments
in our client companies. CSI markets its turnaround services to
hedge funds, institutional investors, and banks that have
significant exposure in troubled micro-cap public companies.
Typically, these companies are in operational or financial
difficulty, may be in default of lending or equity agreements, and
may be facing bankruptcy or liquidation if their operations are
not turned around. CSI is compensated with cash payments on a
monthly or quarterly basis, and the most significant part of our
compensation is in outright grants of equity in the form of common
stock, and/or warrants for purchasing common stock. The company
believes this compensation plan provides us with an opportunity to
achieve venture capital like returns on our equity participation,
and aligns our interests with the client company and its
shareholders because our ultimate compensation is determined by
successfully increasing shareholder value. This performance based
arrangement clearly demonstrates that our interests are consistent
with the goals of the company's clients, their shareholders, and
the shareholders of Emerge Capital Corp.
At Sept. 30, 2005, Emerge Capital Corp.'s balance sheet showed a
stockholders' deficit of $3.4 million, compared to a $1.6 million
deficit at Dec. 31, 2004.
ENTECH ENVIRONMENTAL: Equity Deficit Tops $1 Million at Dec. 31
---------------------------------------------------------------
Entech Environmental Technologies, Inc., delivered its financial
results for the quarter ended Dec. 31, 2005, to the Securities and
Exchange Commission on Feb. 17, 2006.
Entech's net loss contracted 66% from $575,000 in the quarter
ended Dec. 31, 2004, to $195,000 in the quarter ended Dec. 31,
2005.
The Company generated $1,547,741 of consolidated revenue for the
quarter ended Dec. 31, 2005, a 37.1% increase from $1,128,842 of
consolidated revenue for the comparable period in the prior year.
Entech reports that:
-- construction services revenues increased $389,000, or
122.1%, this quarter over the prior year quarter due to
successful sales and marketing efforts targeting HBC's
core customers;
-- maintenance services revenues decreased by $40,000, or
6.5%, from the prior year quarter to the current year
quarter due to the Company's decision to focus on higher
quality customers and elimination of non-critical
customers.
-- consumer services revenues increased $66,000, or 34.1%,
this quarter over the prior year quarter due to
stabilization of operations after initial start-up.
Entech's balance sheet at Dec. 31, 2005, showed $2,274,820 in
total assets and $3,356,707 in liabilities, resulting in a
stockholders' deficit of $1,195,268.
At Dec. 31, 2005, the Company had negative working capital of $1.6
million. In addition, the Company owes Barron Partners, LP, $1.1
million that is due Sept. 30, 2006. The Company has not filed a
registration statement to register the shares underlying the
convertible notes payable, and will continue to incur liquidated
damages at the rate of 36% per year on the outstanding balance of
the notes payable until a registration statement is effective.
Management says the Company has not timely filed the registration
statement due to the tumultuous restructuring process and its past
inability to timely file reports required under the Securities and
Exchange Act of 1934.
A full-text copy of the regulatory filing is available for free
at http://researcharchives.com/t/s?5ca
Going Concern Doubt
Mendoza Berger & Company, LLP, expressed substantial doubt about
Entech Environmental Technologies, Inc.'s ability to continue as a
going concern after it audited the Company's financial statements
for the fiscal year ended Sept. 30, 2005. The auditing firm
pointed to the Company's significant losses.
The Company's former auditors, Russell Bedford Stefanou
Mirchandani LLP, also expressed substantial doubt about Entech's
ability to continue as a going concern after auditing the
Company's financial statements for fiscal year 2004.
About Entech
Entech Environmental Technologies, Inc., fka Cyber Public
Relations, Inc., through its H.B.Covey subsidiary, provides
construction and maintenance services to petroleum service
stations in the southwestern part of the United States of America,
and provides installation services for consumer home products in
Southern California.
The HBC subsidiary is a 58-year old construction and maintenance
company that specializes in construction and maintenance services
for the retail petroleum industry, commercial and industrial
users, municipal organizations, and in support of major equipment
manufacturers.
ENTERGY LOUISIANA: Fitch Maintains Negative Outlook on Rating
-------------------------------------------------------------
Fitch Ratings maintained the Negative Rating Outlook on:
* Entergy Louisiana LLC (ELL),
* Entergy Louisiana Holdings, Inc., and
* Entergy Gulf States, Inc. (EGSI),
following the decision by the Louisiana Public Service Commission
(LPSC) to allow interim recovery of up to $20 million of storm
costs.
The companies had jointly requested interim recovery of
$64 million over ten years to provide the financial community with
some assurance that costs will ultimately be recovered. From
March to September 2006, ELL and EGSI can collect from customers
up to $14 million and $6 million, respectively. The amounts
actually recovered will depend on actual fuel costs and over-
earnings in 2006 and may be less than the authorized $20 million,
which is a minor amount relative to the utilities' combined $700
million of storm repair and restoration costs.
The LPSC's decision reinforces the fact that many hurdles to storm
cost recovery still face ELI and ESGI. These hurdles include:
a) submission of a final storm cost bill, currently estimated
at $510 million for ELI and $195 million for the Louisiana
portion of ESGI;
b) an audit of the final bill by LPSC staff;
c) a decision from the LPSC on the permanent recovery amount;
and
d) the approval of a recovery plan by the LPSC, which may
include securitization.
Fitch believes that the LPSC is unlikely to issue an order for the
permanent recovery amount until the amount of federal and state
aid and insurance proceeds becomes certain. The resolution of
these matters may not occur until late 2006 or early 2007. A
favorable decision by the LPSC on permanent recovery amount and
the companies' securitization plans would be positive on credit
quality and could raise the Rating Outlook. However, a
substantial delay in recovery or an under-recovery could result in
ratings downgrades for one or both companies.
EXTENDICARE HEALTH: S&P Affirms Corporate Credit Rating at BB-
--------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on nursing
home and assisted-living facilities provider Extendicare Health
Services Inc. to negative from stable.
At the same time, Standard & Poor's affirmed the company's
existing ratings, including its 'BB-' corporate credit rating.
Total Extendicare debt outstanding as of Dec. 31, 2005, was $519
million.
The outlook revision reflects the announcement that the company is
considering various options to enhance shareholder value.
"In our view, should a sale or reorganization of the parent
Extendicare Inc. occur, it is more likely that it will weaken the
credit profile of both the parent and Extendicare. This belief
stems from the recent trend in the nursing home industry of
similar transactions, each of which resulted in weaker credit
profile," said Standard & Poor's credit analyst David Peknay.
If the company opts not to pursue such activity, and its financial
policy remains consistent with recent history, the outlook would
be revised back to stable.
FIRST NATIONAL: Weak Profits Prompt Moody's to Downgrade Ratings
----------------------------------------------------------------
Moody's Investors Service lowered the long-term deposit and debt
ratings of First National Bank of Omaha. The rating action
concludes the review for possible downgrade that began in November
2005. First National Bank of Omaha is the lead bank subsidiary of
First National of Nebraska, Inc., which is unrated. Following the
rating change, the outlook is stable.
The lower rating reflects the weakness in FNBO's profitability
metrics and the likelihood that profitability will remain weaker
than the peer median into the intermediate-term. A key measure of
profitability for Moody's is pre-tax, preprovision earnings less
consumer net charge-offs as a percentage of risk-weighted and
securitized assets. By that measure, FNBO's profitability is more
than 100 basis points below the median for similarly-rated peers.
Moody's explained that weak earnings reduces the coverage for
bondholders and depositors from unexpected problems elsewhere in
the organization, such as a significant downturn in credit
quality.
The primary contributor to FNBO's weak profitability has been its
underperforming credit card franchise. To address that challenge,
management has recruited a number of seasoned industry
participants from large national credit card issuers. Moody's
believes that the new business line managers will succeed in
stabilizing and enhancing the card unit's performance over time
through improved marketing, risk management and strategic
initiatives. However, the extent to which profitability will be
restored, as well as the timing, remains uncertain. As such,
FNBO's lower ratings reflect the uncertainty surrounding overall
future profitability. Should profitability improve more quickly
and be more robust than is currently anticipated, positive rating
pressure would result.
Despite the rating downgrade, Moody's noted that FNBO's ratings
derive significant support from its leading direct banking
presence in Omaha and contiguous markets, its conservative asset
and liability management, and its valuable retail and commercial
deposit base, which enhances both liquidity and profitability.
FNBO's C- bank financial strength rating and its Prime-2 short-
term rating were affirmed. Those ratings were not on review since
a C- bank financial strength rating and a Prime-2 short-term
rating are consistent with long-term ratings of either Baa1 or
Baa2 for bank deposits.
These ratings were lowered:
Issuer: First National Bank of Omaha
* Issuer Rating, Downgraded to Baa3 from Baa2
* OSO Senior Unsecured OSO Rating, Downgraded to Baa3 from
Baa2
* Senior Unsecured Deposit Rating, Downgraded to Baa2 from
Baa1
* Subordinated Regular Bond/Debenture, Downgraded to Ba1
from Baa3
Outlook Actions:
Issuer: First National Bank of Omaha
* Outlook, Changed To Stable From Rating Under Review
First National Bank of Omaha is the lead bank subsidiary of First
National of Nebraska, Inc. FNNI is based in Omaha and reported
total managed assets of approximately $15 billion at Sept. 30,
2005.
GALVEX HOLDINGS: Court Okays Joint Administration of Ch. 11 Cases
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
approved the request of Galvex Holdings Limited and its debtor-
affiliates directing joint administration of their chapter 11
cases pursuant to Rule 1015(b) of the Federal Rules of Bankruptcy
Procedures.
All entries in the Debtors' chapter 11 proceedings will now be
made under case number 2006-10082.
The Debtors gave the Court four reasons in favor of jointly
administering their chapter 11 cases:
1) joint administration of the Debtor's cases will avoid
the preparation, replication, filing and service of
duplicative notices, applications and orders, saving the
Debtors and their estates considerable time and expenses;
2) the rights of creditors will not be adversely affected
because the joint administration of the Debtors' cases will
only result in administrative consolidation of the cases and
not substantive consolidation of the estates;
3) each creditor can file its claim against a particular
estate and the rights of all creditors will be enhanced by
the reduced costs that will result from the joint
administration of these cases; and
4) the Bankruptcy Court will be relieved of the burden of
entering duplicative orders and maintaining duplicative
files and supervision of the administrative aspect of the
Debtors' chapter 11 cases by the U.S. Trustee for the
Southern District of New York will be simplified.
Headquartered in New York City, New York, Galvex Holdings Limited
-- http://www.galvex.com/-- and its affiliates operate the
largest independent galvanizing line in Europe. The Debtors have
offices in New York, Tallinn, Bermuda, Finland, Ukraine, Germany
and the United Kingdom. The company and four of its affiliates
filed for chapter 11 protection on Jan. 17, 2006 (Bankr. S.D.N.Y.
Case No. 06-10082). David Neier, Esq., and John E. Tardera, Esq.,
at Winston & Strawn LLP, represent the Debtors in their
restructuring efforts. When the Debtors filed for protection
from their creditors, they estimated assets and debts of more
than $100 million.
GOODING'S SUPERMARKETS: Panel Wants to Hire Akerman as Counsel
--------------------------------------------------------------
The Official Committee of Unsecured Creditors in Gooding's
Supermarkets, Inc.'s chapter 11 case asks the U.S. Bankruptcy
Court for the Middle District of Florida for permission to employ
Akerman Senterfitt as its bankruptcy counsel.
Akerman Senterfitt will:
1) assist, advise and represent the Committee in its
consultation with the Debtor in relation to the
administration of its chapter 11 case and attend meetings
and negotiate with representatives of the Debtor, secured
creditors and other parties in interest;
2) assist, advise and represent the Committee in analyzing the
Debtor's assets and liabilities, investigate the extent and
validity of liens and review any proposed asset sales or
dispositions;
3) assist and advise the Committee in its examination and
analysis of the conduct of the Debtor's affairs and assist
in the review, analysis and negotiation of any funding or
funding arrangements;
4) assist the Committee in the review, analysis and negotiation
of any plan or plans of reorganization that may be filed and
assist in the review, analysis and negotiation of the
accompanying disclosure statement or statements;
5) take all necessary action to protect and preserve the
Committee's interests, including prosecuting actions on its
behalf, negotiating all litigation in which the Debtor is
involved and reviewing and analyzing all claims filed
against the Debtor's estate;
6) prepare on behalf of the Committee all necessary motions,
applications, answers, order, reports and papers in support
of positions taken by the Committee;
7) appear before the Bankruptcy Courts, the appellate courts
and other courts and protect the Committee's interests
before those courts; and
8) perform all other legal services to the Committee that are
necessary in the Debtors' chapter 11 case.
W. Glenn Jensen, Esq., a shareholder of Akerman Senterfitt, is one
of the lead attorneys from his Firm performing services to the
Committee. Mr. Jensen charges $270 per hour for his services.
Mr. Jensen reports Akerman Senterfitt's professionals bill:
Designation Hourly Rate
----------- -----------
Partners & Counsel $270 - $425
Associates $170 - $230
Paralegals $115 - $155
Akerman Senterfitt assures the Court that it does not represent
any interest materially adverse to the Debtor or its estate and
and is a "disinterested person" as that term is defined in Section
101(14) of the Bankruptcy Code and as modified by Section 1107(b).
The Court will convene a hearing tomorrow, Feb. 28, 2006, at
10:00 a.m., to consider the Committee's request.
Headquartered in Orlando, Florida, Gooding's Supermarkets, Inc.,
dba Gooding's, offers catering services and operates a chain of
supermarkets in Central Florida. The Company filed for chapter 11
protection on Dec. 30, 2005 (Bankr. M.D. Fla. Case No. 05-17769).
R. Scott Shuker, Esq., at Gronek & Latham LLP represents the
Debtor, When the Debtor filed for protection from its creditors,
it estimated assets of $1 million to $10 million and estimated
debts of $10 million to $50 million.
HARD ROCK: Likely Sale Prompts Moody's to Affirms B2 Rating
-----------------------------------------------------------
Moody's Investors Service affirmed Hard Rock Hotel Inc.'s B2
Corporate Family Rating and changed the outlook to developing. The
rating action was prompted by an announcement that the company has
received and will review proposals to acquire its hotel and casino
in Las Vegas, Nevada.
The developing outlook incorporates uncertainty as to the
likelihood, timing and potential impact on creditors of a
potential sale. The acquisition of the Hard Rock by a higher
rated entity could have positive rating implications and
conversely, acquisitions by a more leveraged entity could have
negative rating implications. Moody's will continue to monitor
developments and take further rating action as more information
becomes available.
Hard Rock Hotel, Inc., owns and operates the Hard Rock Hotel &
Casino in Las Vegas, Nevada, which is located one mile east of the
Las Vegas Strip. Revenues for the last twelve months ended Sept.
30, 2005, were approximately $170 million. Debt-to-EBITDA for the
twelve-month period ended Sept. 30, 2005, was about 4.5x
HEILIG-MEYERS: Anthony Schnelling Appointed as Liquidation Trustee
------------------------------------------------------------------
Heilig-Meyers Company and certain of its wholly owned
subsidiaries, Heilig-Meyers Furniture Company, Heilig-Meyers
Furniture West, Inc., HMY Star, Inc., and MacSaver Financial
Services, Inc. reported that the Third Amended and Restated Joint
Liquidating Plan of Reorganization became effective on Feb. 17,
2006.
The Heilig-Meyers Liquidation Trust was established on the
Effective Date, and Anthony H. N. Schnelling was appointed as the
Liquidation Trustee. Pursuant to the terms of the Third Amended
Plan, pre-petition creditors will receive beneficial interests in
the Liquidation Trust in settlement of their claims. On the
Effective Date, all of the Companies' assets were transferred to
the Liquidation Trust to be converted to cash for distribution or,
in the alternative, distributed directly to the beneficiaries of
the Liquidation Trust. Existing shares of the Companies' common
stock were cancelled on the Effective date, the holders of which
will receive no distribution under the Third Amended Plan and will
have no interest in the Liquidation Trust.
Heilig-Meyers Company filed for chapter 11 protection on
Aug. 16, 2000 (Bankr. E.D. Va. Case No. 00-34533), reporting
$1.3 billion in assets and $839 million in liabilities. When the
Company filed for bankruptcy protection it operated hundreds of
retail stores in more than half of the 50 states. In April 2001,
the company shut down its Heilig-Meyers business format. In
June 2001, the Debtors sold its Homemakers chain to Rhodes, Inc.
GOB sales have been concluded and the Debtors are liquidating
their remaining Heilig-Meyers assets. Bruce H. Matson, Esq., Troy
Savenko, Esq., and Katherine Macaulay Mueller, Esq., at LeClair
Ryan, P.C., in Richmond, Va., represent the Debtors.
HILTON HOTELS: Hilton Int'l Merger Cues S&P to Lower Ratings to BB
------------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
and senior unsecured ratings on Hilton Hotels Corp. (Hilton) to
'BB' from 'BBB-' following the close of Hilton's acquisition of
the lodging assets of Hilton Group PLC.
At the same time, all ratings for Hilton were removed from
CreditWatch with negative implications. The acquisition closed in
accordance with the terms that were announced in December 2005.
The outlook is stable.
Hilton acquired Hilton International's (HI) lodging assets from
Hilton Group PLC, paying $5.6 billion in cash, plus the assumption
of debt and operating leases at HI. Hilton financed the
acquisition with existing cash balances and the company's new
$5.75 billion senior credit facility (which is not rated).
HILTON HOTELS: Fitch Rates $5.75 Billion Senior Facility at BB
--------------------------------------------------------------
Fitch Ratings downgraded these ratings for Hilton Hotels
Corporation upon completion of its acquisition of Hilton plc:
-- Issuer Default Rating (IDR) to 'BB' from 'BBB-'
-- Senior unsecured to 'BB' from 'BBB-'
Additionally, Fitch assigns a 'BB' rating to the $5.75 billion
senior secured credit facility.
Fitch removes Hilton from Rating Watch Negative, where it was
originally placed on Dec. 29 2005. The Rating Outlook is Stable.
These actions reflect Hilton's significantly levered balance sheet
subsequent to the completion of its $6 billion acquisition of
Hilton PLC, which was funded with:
* $1.2 billion of cash;
* $4.6 billion of bank debt; and
* $130 million of assumed Hilton PLC debt.
The new debt consists of:
* a $3.25 billion revolver ($1.86 billion outstanding);
* a $2 billion equivalent term loan A; and
* a $500 million term loan B.
The revolving credit facility, term loans, and all senior debt
will be secured by 100% of the capital stock of Hilton's U.S.
domestic subsidiaries and 100% of the capital stock in the U.K.
acquisition entity.
Additionally, Fitch believes pro forma lease payments could
approach $500 million, up from $57 million in 2004, due to the
significant number of leased rooms (43,000) being acquired from
Hilton PLC. Fitch includes in its calculation of off-balance-
sheet items annual lease expense. As a result of the debt funded
transaction and the assumed increase in annual lease expense,
Fitch anticipates Hilton's pro forma adjusted debt number will
exceed $12 billion.
The rating also takes into consideration:
* Hilton's superior and diversified asset base;
* its improved cash flow generating capabilities; and
* the favorable lodging industry outlook.
Hilton is a leading hotel engaged in the ownership and management
of lodging facilities. Brands within Hilton cover the value chain
and include:
* Hilton,
* Hilton Garden Inn,
* Doubletree,
* Embassy Suites,
* Hampton,
* Homewood Suites by Hilton, and
* Conrad.
Hilton PLC owns the rights to the Hilton brand name outside of the
U.S. as well as the Scandic and Conrad brands. The transaction
with Hilton International will increase the number of rooms in the
Hilton system by more than 25% to over 475,000 (80% managed or
franchised, 17% owned/leased). Pro forma 2005 EBITDA allocation
is:
* 43% owned;
* 33% managed/franchised;
* 16% leased; and
* 8% timeshare.
Approximately:
* 71% of pro forma EBITDA will be generated in the Americas;
* 26% in Europe/Africa; and
* 3% in the Middle East/Asia Pacific.
Fitch expects Hilton to generate a significant amount of free cash
flow in the future despite a large capital program and healthy
dividend payments. Assuming that in 2006 Hilton can:
a) generate revenue per available room (RevPAR) gains in the
upper single digits;
b) slightly improve margins;
c) keep its capital spending near $635 million; and
d) maintain dividend payments of $67 million,
Fitch believes free cash flow could approach $200 million.
Additionally, management has suggested it will continue to divest
some owned assets, although no target has been revealed. The
credit facility includes a mandatory prepayment of the term loan A
with proceeds from asset sales outside of the U.S.
Furthermore, Hilton management reiterated in its recent quarterly
conference call that its strategy is to sell 'many of the Hilton
International's assets and use the proceeds to pay down debt.'
Fitch believes that the robust lodging environment should also
allow Hilton to make progress at reducing debt in the near to
intermediate term. Fitch expects the industry's fundamentals to
remain strong in 2006, as solid demand growth should again
outstrip very modest expansion in the supply of available rooms.
Improvements in pricing will be supported by robust demand in all
segments of the industry (luxury, upscale, and limited service).
Lodging demand from business, group, and leisure segments should
increase modestly in 2006 based on GDP growth of 2%-3%.
Complementing the increased demand will be reduced supply growth,
particularly in the U.S. Two factors expected to contribute to
the limited supply growth are rising construction costs and
increasing interest rates. As a result of stronger lodging demand
and limited additional room supply, Fitch expects average RevPAR
to increase for the third consecutive year. Reasonable margin
improvements are anticipated for most lodging companies as RevPAR
growth will likely exceed growth in:
* labor,
* utility, and
* insurance costs.
The Stable Outlook is based on Fitch's expectations for the
lodging industry along with Hilton successfully integrating the
acquired assets. Also incorporated in the Stable Outlook are
meaningful asset sales in the intermediate term and strong cash
flow with the proceeds directed toward debt reduction.
HUTCHINSON TECH: S&P Rates $225 Mil. Convertible Sub. Notes at B-
-----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B+' corporate
credit rating to Hutchinson Technology Inc. At the same time,
Standard & Poor's assigned its 'B-' rating to the company's $225
million of convertible subordinated notes, issued on Jan. 25,
2006. Hutchinson has $375 million of funded debt outstanding.
The outlook is stable.
The Hutchinson, Minnesotta-based company's vulnerable business
profile is characterized by:
* lack of business diversity;
* participation in a technology-intensive and volatile niche
market;
* high capital requirements and customer concentration; and
* manufacturing challenges.
These factors are partially offset by:
* a strong market position within a niche market;
* solid secular growth trends;
* good customer coverage; and
* technology barriers to entry.
While profitability metrics are generally good (EBITDA margins),
revenues are historically volatile and free operating cash
generation is modest because of substantial capital investment
requirements.
"Sustained improvements over time in free operating cash flow
generation could result in a positive outlook," said Standard &
Poor's credit analyst Joshua G. Davis, "although lack of business
diversity and HDD industry characteristics limit upside potential
in the rating."
INCYTE CORP: Posts $27.6 Million Net Loss in Fourth Quarter
-----------------------------------------------------------
As of Dec. 31, 2005, Incyte Corporation's reported cash and
short-term investments totaling $345.0 million as compared
to $469.8 million as of Dec. 31, 2004.
Incyte's total revenues are $1.0 million for the fourth quarter
2005 and $7.8 million for the full year ended Dec. 31, 2005,
compared to $2.3 million and $14.1 million for the same periods
in 2004.
Incyte used a total of $103.8 million in cash in 2005 and incurred
net losses of $27.6 million for the fourth quarter 2005 and
$103.0 million for the full year 2005. The Company's incurred a
net loss of $37.5 million for the fourth quarter of 2004 while net
loss for the full year ended 2004 was $164.8 million.
The Company's research and development expense for the
fourth quarter and full year ended 2005 is $23.9 million
and $95.6 million, respectively, versus $21.1 million and
$88.3 million for the same periods in 2004.
According to the Company, the increase in research and development
expense results from expanded drug discovery and development
activities.
The Company's selling, general and administrative expense for
the fourth quarter and full year ended 2005 is $3.4 million and
$11.7 million, respectively, versus $4.6 million and $20.6 million
for the same periods in 2004. The decrease in selling, general
and administrative expense is a result restructuring and cost
reduction efforts, the Company says.
2006 Financial Guidance
The Company foresees its cash use in 2006 to range from
$98 million to $105 million and its revenue to be between
$20 and $25 million.
For 2006, the Company expects up to $98 million in research and
development expense and up to $16 million in selling, general and
administrative expense.
The Company also expects interest income to be in the range of
$8 to $9 million while interest expense is expected to be
approximately $16 million.
Alliance with Pfizer
In November, Incyte entered into a worldwide development and
commercialization agreement with Pfizer granting Pfizer rights to
the Company's portfolio of CCR2 antagonist compounds. In
exchange, the Company will receive up to $743 million in future
development and milestone payments, as well as royalties on
worldwide sales.
Headquartered in Wilmington, Delaware, Incyte Corporation --
http://www.incyte.com/-- is a drug discovery and development
company with a growing pipeline of oral compounds to treat HIV,
inflammation, cancer and diabetes. The company's most advanced
product candidate, dexelvucitabine, DFC (formerly Reverset) is an
oral, once-a-day therapy in Phase IIb clinical development to
treat patients with HIV infections. The company has a broad CCR2
antagonist program that is the subject of a global collaborative
research and license agreement with Pfizer. Pfizer's rights
extend to the full scope of potential indications, with the
exception of multiple sclerosis and one other undisclosed
indication, where Incyte retains exclusive worldwide rights, along
with certain compounds. The company has a proprietary oral
sheddase inhibitor that is in Phase I/II development as a
potential treatment for cancer. Incyte has several other early
drug discovery programs underway in the areas of HIV,
inflammation, cancer and diabetes.
* * *
Standard & Poor's assigned B ratings to Incyte's long term foreign
and local issuer credits. Those ratings were placed on August 16,
2000, with a stable outlook.
INTEGRATED HEALTH: Has Until March 6 to Remove Civil Actions
------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware gave IHS
Liquidating LLC an extension of the period within which it may
file notices of removal with respect to civil actions pending on
the Petition Date, through and including March 6, 2006.
According to Robert S. Brady, Esq., at Young Conaway Stargatt &
Taylor, LLP, in Wilmington, Delaware, IHS Liquidating is still in
the process of investigating disputed claims against the IHS
Debtors, some of which are the subject of actions currently
pending in the courts of various states and federal districts to
determine which of these Prepetition Actions will be litigated and
whether they should be removed pursuant to Rule 9027(a) of the
Federal Rules of Bankruptcy Procedure.
Mr. Brady notes that IHS Liquidating has already resolved many of
these Prepetition Actions through the claims reconciliation
process. However, IHS Liquidating anticipates that removal may be
appropriate with respect to certain of the unresolved Prepetition
Actions. IHS Liquidating believes it is prudent to preserve the
IHS Debtors' Chapter 11 estates' right to seek removal until IHS
Liquidating has completed its analysis of the Prepetition Actions.
The extension sought will give IHS Liquidating an opportunity to
make more fully informed decisions concerning the removal of each
Prepetition Action and will assure that IHS Liquidating does not
forfeit the valuable rights afforded to it under Section 1452 of
the Judiciary Code, Mr. Brady tells Judge Mary F. Walrath.
Integrated Health Services, Inc. -- http://www.ihs-inc.com/--
operated local and regional networks that provide post-acute care
from 1,500 locations in 47 states. The Company and its
437 debtor-affiliates filed for chapter 11 protection on
February 2, 2000 (Bankr. Del. Case No. 00-00389). Rotech Medical
Corporation and its direct and indirect debtor-subsidiaries broke
away from IHS and emerged under their own plan of reorganization
on March 26, 2002. Abe Briarwood Corp. bought substantially all
of IHS' assets in 2003. The Court confirmed IHS' Chapter 11 Plan
on May 12, 2003, and that plan took effect September 9, 2003.
Michael J. Crames, Esq., Arthur Steinberg, Esq., and Mark D.
Rosenberg, Esq., at Kaye, Scholer, Fierman, Hays & Handler, LLP,
represent the IHS Debtors. On September 30, 1999, the Debtors
listed $3,595,614,000 in consolidated assets and $4,123,876,000 in
consolidated debts. (Integrated Health Bankruptcy News, Issue
No. 101; Bankruptcy Creditors' Service, Inc., 215/945-7000)
INTEGRATED HEALTH: Claim Objection Deadline Stretched to May 4
--------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware further
extended the deadline within which IHS Liquidating, LLC, as
successor to Integrated Health Services, Inc., and certain of its
direct and indirect subsidiaries, can file objections to claims in
the IHS Debtors' Chapter 11 cases to May 4, 2006, without
prejudice to its right to seek additional extensions.
As reported in the Troubled Company Reporter on Feb. 1, 2006,
Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor, LLP, in
Wilmington, Delaware, told the Court that the IHS Liquidating's
claims resolution efforts, at this time, are focused on:
(a) prosecuting the remaining omnibus claims objections; and
(b) reviewing all additional unresolved claims to determine
whether any additional claims objections are necessary.
Mr. Brady asserted that the extension would allow a conclusive
determination as to the existence of any remaining late or
otherwise objectionable claims.
Integrated Health Services, Inc. -- http://www.ihs-inc.com/--
operated local and regional networks that provide post-acute care
from 1,500 locations in 47 states. The Company and its
437 debtor-affiliates filed for chapter 11 protection on
February 2, 2000 (Bankr. Del. Case No. 00-00389). Rotech Medical
Corporation and its direct and indirect debtor-subsidiaries broke
away from IHS and emerged under their own plan of reorganization
on March 26, 2002. Abe Briarwood Corp. bought substantially all
of IHS' assets in 2003. The Court confirmed IHS' Chapter 11 Plan
on May 12, 2003, and that plan took effect September 9, 2003.
Michael J. Crames, Esq., Arthur Steinberg, Esq., and Mark D.
Rosenberg, Esq., at Kaye, Scholer, Fierman, Hays & Handler, LLP,
represent the IHS Debtors. On September 30, 1999, the Debtors
listed $3,595,614,000 in consolidated assets and $4,123,876,000 in
consolidated debts. (Integrated Health Bankruptcy News, Issue
No. 101; Bankruptcy Creditors' Service, Inc., 215/945-7000)
JARDEN INC: Poor Performance Prompts S&P's Negative Outlook
-----------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on house
wares manufacturer Jarden Inc. to negative from stable.
At the same time, Standard & Poor's affirmed all its outstanding
ratings on the company, including its 'B+' corporate credit
rating. Total debt outstanding at Dec. 31, 2005, was about $1.5
billion.
The outlook revision follows Jarden's weaker-than-expected
operating performance for its fiscal year ended December 2005, as
well as the company's plan to amend its credit agreement to
increase its basket for share repurchases by an incremental $150
million.
"We view this shift in financial policy as more aggressive because
we had expected free cash flow to be applied largely to debt
reduction," said Standard & Poor's credit analyst David Kang.
Pro forma EBITDA for the fiscal year ended December 2005 was
behind Standard & Poor's expectations by about 10% due to
integration issues related to its Holmes and FoodSaver businesses,
as well as higher raw material and freight costs. As such, credit
protection measures have weakened and are below Standard & Poor's
previous expectations.
KULLMAN INDUSTRIES: Court Says No to Plan-Filing Extension
----------------------------------------------------------
The Hon. Kathryn C. Ferguson of the U.S. Bankruptcy Court for the
District of New Jersey denied Kullman Industries, Inc.'s request
to extend its exclusive period to file a chapter 11 plan until
April 16, 2005, and solicit acceptances of that plan until
June 15, 2006.
The Debtor's exclusive period to file a plan of reorganization
expired on Feb. 15, 2006.
As reported in the Troubled Company Reporter on Feb. 22, 2006,
James N. Lawlor, Esq., at Wollmuth Maher & Deutsche LLP, in
Newark, New Jersey, told the Bankruptcy Court that the Debtor was
working closely with the Official Committee of Unsecured Creditors
to develop an exit strategy for its reorganization. Mr. Taylor
said that the Debtor had been unable to formulate a plan because
it has focused on the sale of its assets, and engaged in
activities to insure a smooth transition into chapter 11.
Headquartered in Lebanon, New Jersey, Kullman Industries, Inc.
-- http://www.kullman.com/-- is a modular construction builder.
The company filed for chapter 11 protection on Oct. 17, 2005
(Bankr. D. N.J. Case No. 05-60002). James N. Lawlor, Esq., at
Wollmuth, Maher & Duetsch, LLP represents the Debtor in its
restructuring efforts. Bruce D. Buechler, Esq., Peter J. D'Auria,
Esq., and Sharon L. Levine, Esq., at Lowenstein Sandler represent
the Official Committee of Unsecured Creditors. When the Debtor
filed for protection from its creditors, it estimated assets
between $1 million and $10 million and debts between $10 million
to $50 million.
MAGNATRAX CORP: Has Until May 12 to Object to Proofs of Claim
-------------------------------------------------------------
The Hon. Peter J. Walsh of the U.S. Bankruptcy Court for the
District of Delaware extended, until May 12, 2006, the deadline
for Magnatrax Corporation and its debtor-affiliates to object to
proofs of claim filed against their estates.
As reported in the Troubled Company Reporter on Jan. 20, 2006, the
Debtors need more time to properly analyze and evaluate numerous
remaining claims.
Headquartered in Alpharetta, Georgia, Magnatrax Corporation is a
diversified North American manufacturer and marketer of engineered
building products and services for non-residential and residential
construction markets. The Debtor and its affiliates filed for
chapter 11 protection on May 12, 2003 (Bankr. D. Del. Case No.
03-11402). Joel A. Waite, Esq., at Young Conaway Stargatt &
Taylor, LLP represents the Debtors. When the Debtor filed for
protection from its creditors, it listed total assets of
$207,000,000 and total debts of $326,000,000. The Court confirmed
the Debtors' chapter 11 Plan on Nov. 17, 2003, and the Plan took
effect on Jan. 20, 2004.
MERIDIAN AUTOMOTIVE: Court Okays Assumption of GR Glen Lease
------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware authorized
Meridian Automotive Systems, Inc., and its debtor-affiliates to
enter into and perform their obligations under a third amendment
with respect to the lease for Glenwood Hills Corporate Centre,
located at 3196 Kraft Avenue, S.E., in Grand Rapids, Michigan.
The Court also authorized the Debtors to assume the Amended Lease
from GR Glen, LLC, the lessor.
GR Glen Lease
As reported in the Troubled Company Reporter on Jan. 26, 2006,
Meridian Automotive Systems, Inc., entered into the Lease on
Dec. 23, 1999. The Premises include approximately 19,382
square feet of office space and 1,112 square feet of storage
space. The Debtors use the Premises for their general corporate
accounting and finance operations. The Lease will expire on
Sept. 30, 2008.
Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor, LLP,
in Wilmington, Delaware, told the Court that the Amendment will
become effective on March 1, 2006, and the lease expiration date
will be extended for an additional 29 months, until Feb. 28,
2011. Meridian will also have an additional five-year renewal
option under the Amended Lease.
Substitute Premises
Mr. Brady points out that pursuant to the Amendment, prior to
March 1, 2008, GR Glen has the right to relocate Meridian to a
different office building owned by GR Glen and that is acceptable
to the Debtors upon 90 days' prior notice. After March 1, 2008,
GR Glen will not have the right to relocate Meridian.
Mr. Brady notes that GR Glen will also provide Meridian with a
$44,000 moving and relocation allowance, which will accrue
interest at 3% annually beginning March 1, 2006, until March 1,
2008.
Furthermore, Mr. Brady states that upon relocation to the
Substitute Premises, the parties will execute an amendment to the
Amended Lease extending the lease term for an additional year
until Feb. 28, 2012, and reducing the base rent by $1 per
square foot at the Substitute Premises for the remaining portion
of the Rental Period.
Headquartered in Dearborn, Mich., Meridian Automotive Systems,
Inc. -- http://www.meridianautosystems.com/-- supplies
technologically advanced front and rear end modules, lighting,
exterior composites, console modules, instrument panels and other
interior systems to automobile and truck manufacturers. Meridian
operates 22 plants in the United States, Canada and Mexico,
supplying Original Equipment Manufacturers and major Tier One
parts suppliers. The Company and its debtor-affiliates filed for
chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos.
05-11168 through 05-11176). James F. Conlan, Esq., Larry J.
Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at
Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon
L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks,
Esq., at Young Conaway Stargatt & Taylor, LLP, represent the
Debtors in their restructuring efforts. Eric E. Sagerman, Esq.,
at Winston & Strawn LLP represents the Official Committee of
Unsecured Creditors. The Committee also hired Ian Connor
Bifferato, Esq., at Bifferato, Gentilotti, Biden & Balick, P.A.,
to prosecute an adversary proceeding against Meridian's First Lien
Lenders and Second Lien Lenders to invalidate their liens. When
the Debtors filed for protection from their creditors, they listed
$530 million in total assets and approximately $815 million in
total liabilities. (Meridian Bankruptcy News, Issue No. 22;
Bankruptcy Creditors' Service, Inc., 215/945-7000).
MERIDIAN AUTOMOTIVE: Stanfield Wants Milbank Disqualified
---------------------------------------------------------
Francis A. Monaco, Jr., Esq., Monzack & Monaco, P.A., in
Wilmington, Delaware, tells the U.S. Bankruptcy Court for the
District of Delaware that as of May 15, 2005, Stanfield Capital
Partners, LLC, has held, for itself and through managed accounts
for its investment clients an aggregate of at least:
* $37,800,000 -- 16.4% -- of Meridian's first lien secured
debt;
* $27,500,000 -- 15.7% -- of Meridian's second lien secured
debt; and
* $11,300,000 -- 15% -- of Meridian's DIP loan since July 26,
2005.
Prior to Milbank, Tweed, Hadley & McCloy LLP's retention by the
Informal Committee of First Lien Secured Lenders, Stanfield
retained Milbank to advise it regarding its holdings of the
Meridian Debt. That representation is ongoing and is directly
adverse to the current position of the First Lien Committee, Mr.
Monaco contends.
According to Mr. Monaco, although Milbank received $25,000 from
Stanfield for its work, Milbank has ignored its responsibilities
towards Stanfield and, despite Stanfield's continuing objections,
is now also representing the First Lien Committee, which is an
adverse party in the same bankruptcy proceeding.
Mr. Monaco tells the Court that Milbank has also failed to
describe its representation of Stanfield in its verified
statement pursuant to Bankruptcy Rule 2019 or otherwise inform
the Court of its dual, conflicting representations. These
actions should not be condoned. The appropriate remedy is to
disqualify Milbank from its representation of the First Lien
Committee, thereby preventing further harm to Stanfield, Mr.
Monaco asserts.
Accordingly, Stanfield asks the Court to disqualify Milbank as
counsel to the First Lien Committee.
Headquartered in Dearborn, Mich., Meridian Automotive Systems,
Inc. -- http://www.meridianautosystems.com/-- supplies
technologically advanced front and rear end modules, lighting,
exterior composites, console modules, instrument panels and other
interior systems to automobile and truck manufacturers. Meridian
operates 22 plants in the United States, Canada and Mexico,
supplying Original Equipment Manufacturers and major Tier One
parts suppliers. The Company and its debtor-affiliates filed for
chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos.
05-11168 through 05-11176). James F. Conlan, Esq., Larry J.
Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at
Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon
L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks,
Esq., at Young Conaway Stargatt & Taylor, LLP, represent the
Debtors in their restructuring efforts. Eric E. Sagerman, Esq.,
at Winston & Strawn LLP represents the Official Committee of
Unsecured Creditors. The Committee also hired Ian Connor
Bifferato, Esq., at Bifferato, Gentilotti, Biden & Balick, P.A.,
to prosecute an adversary proceeding against Meridian's First Lien
Lenders and Second Lien Lenders to invalidate their liens. When
the Debtors filed for protection from their creditors, they listed
$530 million in total assets and approximately $815 million in
total liabilities. (Meridian Bankruptcy News, Issue No. 22;
Bankruptcy Creditors' Service, Inc., 215/945-7000).
MERIDIAN AUTOMOTIVE: Committee Dismisses Suit Against 22 Lenders
----------------------------------------------------------------
As reported in the Troubled Company Reporter on Sept. 9, 2005, the
Official Committee of Unsecured Creditors, on Meridian Automotive
Systems, Inc., and its debtor-affiliates' behalf, wanted to avoid
certain liens and claims of the first lien lenders and second lien
lenders.
Panel Dismisses Three Defendants
As reported in the Troubled Company Reporter on Dec. 22, 2005, in
separate stipulations, the Official Committee of Unsecured
Creditors agreed to dismiss, without prejudice, Defendants
Oppenheimer & Co., Inc., Deutsche Bank, and Deutsche Bank Trust
Company Americas from the Avoidance Action.
The Committee determined that the Defendants:
(i) are not proper parties to the Avoidance Action; and
(ii) do not hold or assert any security interest, lien or claim
with respect to any of the Debtors' assets in connection
with the First Lien Facility and the Second Lien Facility.
Goldman Sachs Intervenes & Responds
Goldman Sachs Capital Markets, L.P., was not named as a party to
the Adversary Proceeding. Thus, GSCM seeks the Court's approval
to intervene as a party defendant in the Adversary Proceeding.
GSCM believes that its intervention is necessary to adequately
represent its interest with respect to certain property and
rights which are the subject of the Adversary Proceeding and
which the Official Committee of Unsecured Creditors has sought to
avoid.
Accordingly, in a Court-approved stipulation, pursuant to Section
1109(b) of the Bankruptcy Code and Rule 7024 of the Federal Rules
of Bankruptcy Procedure, the parties agreed that GSCM is
authorized to intervene and respond to the Complaint.
GSCM contends that the Complaint, and every claim of the
Committee, does not state facts sufficient to constitute a
cause of action against GSCM.
According to Joseph J. Bodnar, Esq., at Monzack & Monaco, P.A.,
in Wilmington, Delaware, the transfers referenced in the
Complaint, if and to the extent made to GSCM, were transfers
under a swap agreement made by or to a swap participant, in
connection with a swap agreement prior to the Petition Date. As
a result, the Committee is barred from recovery against GSCM, in
whole or in part, pursuant to Section 546(g) of the Bankruptcy
Code.
Mr. Bodnar asserts that the Transfers are not recoverable by the
Committee as voidable preferences. He explains that the
Transfers were made for debts incurred by the Debtors in the
ordinary course of business between the Debtors and GSCM, were
made in the ordinary course of business, and were made according
to ordinary business terms, pursuant to Section 547(c)(2) of the
Bankruptcy Code.
Mr. Bodnar further asserts that the Committee is barred from
recovery, in whole or in part, because:
(a) the First Lien Financing Statement was and is still fully
and properly perfected and effective since;
-- GSCM is not bound by the unauthorized acts of the
Debtors' agent;
-- a termination statement is not effective unless
authorized by the secured party of record. The CSFB
First October UCC Statement was not authorized by CSFB;
-- the CSFB First October UCC Statement is inconsistent
and ambiguous on its face, and thus, is not effective
under Delaware law;
(b) as of the date the April 2005 UCC Statement was filed and
as of the Petition Date, GSCM was fully secured by
properly perfected security interests in assets of the
Debtors other than those subject to the April 2005 UCC
Statement;
(e) GSCM was fully secured by properly perfected security
interests in all assets of the Debtors in favor of Credit
Suisse First Boston, as Second Lien Collateral Agent; and
(f) the April 2005 UCC Statement is not a preference since:
-- it was not a transfer of the Debtors' property;
-- it was not made while the Debtors were insolvent; and
-- it did not enable GSCM to receive more than it would
have received under Chapter 7 of the Bankruptcy Code
absent that filing.
Mr. Bodnar also contends that the Committee is barred from
profiting as a result of the negligent or intentional misconduct
of the Debtors' Escrow Agent.
GSCM asserts that the Complaint must be dismissed because:
(a) the relief it seeks is moot; and
(b) the Committee's claims and purported causes of action are
or may be rendered moot or otherwise untenable, in whole
or in part, as a result of rights, claims, or interests
granted or afforded under the Final DIP Order.
Pursuant to the Final DIP Order, the Committee's claims are
barred because a Challenge was not timely served on GSCM in
accordance with the terms of the Final DIP Order.
Accordingly, GSCM asks the Court to declare that the Committee
take nothing by way of its Complaint and the Complaint is
dismissed with prejudice. GSCM also seeks to be awarded its
attorney's fees and costs of suit incurred.
GSCM demands a jury trial for all issues triable to a jury.
23 Defendants Respond to Complaint
Twenty-three defendants respond to the Complaint and incorporate
all defenses raised by other defendants in the adversary
proceeding, to the extent applicable to them:
(1) Carlyle Loan Opportunity Fund,
(2) Carlyle,
(3) Carlyle Loan Opportunity FD,
(4) Comac Acquisition L.P.,
(5) Comac Acquisition,
(6) Credit Suisse First Boston,
(7) Goldman Sachs Credit Partners L.P.,
(8) Goldman Sachs Asset Management L.P.,
(9) Goldman Sachs PTS LP,
(10) GSC Recovery II LP,
(11) GSC Recovery IIA LP,
(12) GSC Partners,
(13) GSC Partners CDO Fund Corp.,
(14) JPMorgan Chase Bank, NA,
(15) JP Morgan Chase,
(16) JP Morgan Chase Bank,
(17) Longhorn CDO (Cayman) Ltd.,
(18) Merrill Lynch Asset Management, LP,
(19) Merrill Lynch Asset Management,
(20) Morgan Stanley Senior Funding, Inc.,
(21) Morgan Stanley Senior Funding,
(22) Morgan Stanley Broker/Dealer, and
(23) Quadrangle Master Funding Ltd.
The 23 Defendants assert that any and all interests the Committee
has, is deemed to have, or could have in the Composites
Collateral, are junior to the interests of the First Lien Lenders
in the Composites Collateral when, inter alia:
(a) the Committee has not challenged and cannot challenge the
validity and perfection of the Second Liens on the
Composites Collateral -- under the DIP Order or otherwise;
(b) as between the Second Lien Lenders and the Committee, the
Second Lien Lenders' interest in the Composites Collateral
are senior to any interests the Committee has, could have,
or is deemed to have in the Composites Collateral; and
(c) as between the First Lien Lenders and the Second Lien
Lenders, any and all interest of the First Lien Lenders in
the Composites Collateral are senior to any and all
interests of the Second Lien Lenders in the Composites
Collateral pursuant to, inter alia, the Intercreditor
Agreement.
The 23 Defendants also contend that the Committee is barred from
recovery; that the Committee's claims are barred; and that the
Complaint should be dismissed because the relief it seeks is
moot.
Eleven of the Defendants assert that they are not proper parties
to the Complaint because they do not hold or assert any security
interest, lien or claim with respect to any assets of the Debtors
in connection with the First Lien Facility or the Second Lien
Facility:
(1) Goldman Sachs Credit PTS LP,
(2) GSAM,
(3) Comac Acquisition,
(4) JP Morgan Chase,
(5) JP Morgan Chase Bank,
(6) Carlyle,
(7) Carlyle Loan Opportunity FD,
(8) Merrill Lynch Asset Management,
(9) Merrill Lynch Asset Management, LP,
(10) Morgan Stanley Senior Funding, and
(11) Morgan Stanley Broker/Dealer
Pursuant to Rule 12(e) of the Federal Rules of Civil Procedure,
the Committee should make a more definite statement insofar as
the Complaint purports to make allegations concerning them, the
11 Defendants contend.
Accordingly, the 23 Defendants demand judgment dismissing the
Complaint with prejudice, together with the costs and
disbursements of their actions.
22 More Defendants Dismissed
The Committee has determined that 22 more defendants:
(i) are not proper parties to the Avoidance Action; and
(ii) do not hold or assert any security interest, lien or
claim with respect to any of the Debtors' assets in
connection with the First Lien Facility and the Second
Lien Facility.
Accordingly, in separate stipulations, Committee agreed to
dismiss from the Avoidance Action, without prejudice, subject to
certain conditions:
* Caspian Capital Partners, L.P.,
* Caspian Capital,
* Mariner Atlantic,
* Mariner Investment Group, Inc.,
* Anchorage Capital Master Offshore Ltd.,
* Anchorage Capital Group LLC,
* Oppenheimer Senior Floating Rate Fund,
* Watershed Capital Partners LP,
* Watershed Cap Inst Partners LP,
* Watershed Partners (Offshore),
* Xerion Capital Partners LLC,
* Xerion Partners I LLC,
* Xerion Partners II Master Fund Ltd.,
* Quantum Partners LDC,
* Caspian Capital Management, LLC,
* Cerberus Partners, L.P.,
* TRS SVCO LLC,
* Silver Point Capital Fund, L.P.,
* TRS Stark LLC,
* Wachovia Bank NA,
* Satellite Senior Income Fund, LLC, and
* Satellite Asset Management, L.P.
Headquartered in Dearborn, Mich., Meridian Automotive Systems,
Inc. -- http://www.meridianautosystems.com/-- supplies
technologically advanced front and rear end modules, lighting,
exterior composites, console modules, instrument panels and other
interior systems to automobile and truck manufacturers. Meridian
operates 22 plants in the United States, Canada and Mexico,
supplying Original Equipment Manufacturers and major Tier One
parts suppliers. The Company and its debtor-affiliates filed for
chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos.
05-11168 through 05-11176). James F. Conlan, Esq., Larry J.
Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at
Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon
L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks,
Esq., at Young Conaway Stargatt & Taylor, LLP, represent the
Debtors in their restructuring efforts. Eric E. Sagerman, Esq.,
at Winston & Strawn LLP represents the Official Committee of
Unsecured Creditors. The Committee also hired Ian Connor
Bifferato, Esq., at Bifferato, Gentilotti, Biden & Balick, P.A.,
to prosecute an adversary proceeding against Meridian's First Lien
Lenders and Second Lien Lenders to invalidate their liens. When
the Debtors filed for protection from their creditors, they listed
$530 million in total assets and approximately $815 million in
total liabilities. (Meridian Bankruptcy News, Issue No. 22;
Bankruptcy Creditors' Service, Inc., 215/945-7000).
METALFORMING TECH: Wants Until May 15 to Decide on Office Lease
---------------------------------------------------------------
Metalforming Technologies, Inc., and its debtor-affiliates ask the
Honorable Mary F. Walrath of the U.S. Bankruptcy Court for the
District of Delaware for authority to extend its time to assume,
assume and assign, or reject an unexpired nonresidential real
property lease. The Debtors want until May 15, 2006, to decide on
their Magnificent Mile headquarter lease located at 980 North
Michigan Avenue, in Chicago, Illinois.
The Debtors say that they are current in their postpetition rent
payments to TMB Industries, the lessor.
The Debtors do not want to prematurely decide on the lease because
if they reject it, they will have to relocate their administrative
offices. If they will assume the lease, they might be required to
pay the cure amount and face the potential elevation of
prepetition claims to administrative expense status prior to the
confirmation of their plan.
Objections, if any, must be submitted today, Feb. 27, 2006, at
4:00 p.m. Judge Walrath will convene a hearing at 10:30 a.m. on
March 6, 2006, to consider the Debtors' request.
Headquartered in Chicago, Illinois, Metalforming Technologies,
Inc., and its debtor-affiliates manufacture seating components,
stamped and welded powertrain components, closure systems,
airbag housings and charge air tubing assemblies for automobiles
and light trucks. The Company and eight of its affiliates filed
for chapter 11 protection on June 16, 2005 (Bankr. D. Del. Case
Nos. 05-11697 through 05-11705). Michael E. Foreman, Esq., Sanjay
Thapar, Esq., and Lia M. Pistilli, Esq., at Proskauer Rose LLP,
and Joel A. Waite, Esq., Robert S. Brady, Esq., Sean Matthew
Beach, Esq., and Timothy P. Cairns, Esq., at Young Conaway
Stargatt & Taylor LLP represent the Debtors in their restructuring
efforts. Francis J. Lawall, Esq., at Pepper Hamilton LLP
represents the Official Committee of Unsecured Creditors. Robert
del Genio at Conway, Del Genio, Gries & Co., LLC, provides the
Debtors with financial and restructuring advice and Larry H.
Lattig at Mesirow Financial Consulting LLC serves as the
Committee's financial advisor. As of May 1, 2005, the Debtors
reported $108 million in total assets and $111 million in total
debts.
MILLENNIUM CHEMICALS: Jury Verdict Prompts S&P's Negative Watch
---------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on:
* Millennium Chemicals Inc. (BB-/Watch Neg/--);
* Valhi Inc. (BB/Watch Neg/--);
* Sherwin-Williams Co. (A+/Watch Neg/A-1); and
* subsidiaries
on CreditWatch with negative implications, following the jury
verdict in Rhode Island finding the companies liable for creating
a public nuisance by making lead-based paints decades ago.
"The CreditWatch listing reflects both the considerable
uncertainties with respect to the final resolution of this
litigation and the potential negative implications for the
defendants, given that possible damages could be substantial,"
said Standard & Poor's credit analyst Wesley E. Chinn.
"Moreover, the prospect of a lengthy legal process and further
litigation could result in an overhang on the defendants'
flexibility to address investment opportunities and to access the
capital markets."
The ratings on Millennium's parent, Lyondell Chemical Co.
(BB-/Positive/--) and its affiliate, Equistar Chemicals L.P.
(BB-/Positive/--), are affirmed.
The verdict found Sherwin-Williams, Millennium, and NL Industries
Inc. (a subsidiary of Valhi) responsible for the abatement of the
lead-based paints, which have been banned in the U.S. since 1978
because of serious health issues caused by lead poisoning. Some
estimates have placed the number of affected homes in Rhode Island
in the range of 200,000 to 300,000 and cleanup costs of $2 billion
to $3 billion. The cost of abatement in Rhode Island is still
uncertain at this time as the judge presiding over that trial will
determine the specifics of that program. Product liability
insurance related to lead poisoning would be a mitigating factor
when assessing potential outlays for claims and defense costs, but
the extent of effective coverage, relative to the potential
obligations, is unknown.
This recent jury decision could prompt more lead-based paint
litigation against Sherwin-Williams and its co-defendants in other
states. Other former lead-paint manufacturers, or companies who
sold lead paint including DuPont (E.I.) De Nemours & Co., could
also face additional lead-paint legal proceedings.
Standard & Poor's will update the CreditWatch listing as
developments unfold, including additional court proceedings to be
held next week at which time arguments will be heard on whether
punitive damages should be awarded -- the jury did not award
compensatory damages. Lawyers for the three companies are
expected to pursue motions to dismiss the case. If those fail,
they will appeal the verdict to the Rhode Island State Supreme
Court, at which time they will have to post a bond.
MILLS CORPORATION: Hires Professionals to Explore Alternatives
--------------------------------------------------------------
The Mills Corporation (NYSE:MLS) reported that its Board of
Directors has decided to explore strategic alternatives to enhance
shareholder value. Such alternatives may include a sale of all or
part of the Company or a recapitalization.
The Company has retained:
* Goldman, Sachs & Co. and
* J.P. Morgan Securities Inc.
as their financial advisors, and are turning to:
* Wachtell, Lipton, Rosen & Katz
* Hogan & Hartson LLP and
* Willkie Farr & Gallagher LLP
for legal advice.
The Company says there can be no assurance that the exploration of
strategic alternatives will result in any transaction. The
Company does not intend to disclose developments with respect to
the exploration of strategic alternatives unless and until its
Board of Directors has approved a specific transaction.
"Our Board and management team are committed to enhancing value
for shareholders," said Laurence C. Siegel, Chairman and Chief
Executive Officer of The Mills. "The Company and the Board of
Directors are open-minded about strategic alternatives, and intend
to pursue that process aggressively."
Oversight Committee
In connection with its Board's decision, the Company noted that
the Board of Directors has formed an Oversight Committee of the
Board, comprised of three independent directors. The Committee
will, among its other duties, oversee and provide advice to
management regarding strategic initiatives, and provide oversight
and coordination as to matters arising out of or relating to the
pending restatement of the Company's financial statements. The
Committee's charter is available on the Company's web site.
More Workforce Reduction
The Company also said that it has implemented a further workforce
reduction as part of its strategic plan designed to focus on the
Company's core operations and development opportunities,
streamline management, increase operating efficiencies and reduce
costs. The workforce reduction will result in the further
elimination of 77 positions. The Company expects to record
charges related to the workforce reduction of approximately $1.2
million in the first quarter of 2006, all of which will be paid in
cash.
Waiver from Lenders
Under the terms of its revolving credit facility, the Company is
obligated to complete the restatement of its financial statements
by Apr. 1, 2006. The Company is seeking an extension from the
lenders under that facility of the time for completing the
restated financial statements and issuing its 2005 audited
financial statements. At the same time, the Company will seek a
waiver of any covenant defaults that may exist, in order to obtain
borrowing capacity under its credit facility.
Headquartered in Arlingotn, Virginia, The Mills Corporation --
http://www.themills.com/-- is a developer, owner and manager of a
diversified global portfolio of retail destinations including
regional shopping malls, market dominant retail and entertainment
centers, and international retail and leisure destinations. It
currently owns 42 properties in the U.S., Canada and Europe,
totaling 51 million square feet. In addition, The Mills has
various projects in development, redevelopment or under
construction around the world. Its portfolio of real estate
properties generated more than $8.7 billion in retail sales in
2004. The Mills is traded on the New York Stock Exchange under
the MLS ticker.
MILLS CORPORATION: Can't Meet March 16 Form 10-K Filing Deadline
----------------------------------------------------------------
The Mills Corporation does not expect to meet the Mar. 16, 2006
deadline to file its Annual Report on Form 10-K for the year ended
Dec. 31, 2005.
The Company is working diligently to complete its 2005 Form 10-K
and the restatement of its 2000 through 2004 financial statements
and quarterly unaudited financial statements for the first three
quarters of 2005, which will be reflected in the audited 2005
financial statements included in the 2005 Form 10-K, and is also
continuing to cooperate fully with the previously announced SEC
informal inquiry. The filing of the 2005 Form 10-K will be made
after the Audit Committee of the Company's Board of Directors,
with the assistance of Gibson, Dunn & Crutcher, LLP, the Audit
Committee's outside counsel, completes an independent
investigation addressing, among other matters, the previously
announced restatement as well as prior restatements announced by
the Company in February 2003 and February 2005.
Ernst & Young LLP, the Company's auditors, will also need to
complete audit procedures relating to the 2005 financial
statements and the prior period restated financial statements.
The Company is unable at this time to provide an expected date for
the filing of its 2005 Form 10-K.
The Company noted that additional adjustments may be identified
during the restatement and those additional adjustments could be
material, either individually or in the aggregate. Because the
Company files a joint Annual Report on Form 10-K with its
operating partnership subsidiary, The Mills Limited Partnership,
the Company also does not expect TMLP to meet the filing deadline
for its 2005 Form 10-K.
Waiver from Lenders
Under the terms of its revolving credit facility, the Company is
obligated to complete the restatement of its financial statements
by Apr. 1, 2006. The Company is seeking an extension from the
lenders under that facility of the time for completing the
restated financial statements and issuing its 2005 audited
financial statements. At the same time, the Company will seek a
waiver of any covenant defaults that may exist, in order to obtain
borrowing capacity under its credit facility.
The Company believes that it has adequate liquidity to fund its
operating cash needs and normal leasing costs. The Company is
exploring additional sources to fund its currently planned
development and expansion program, and believes it can obtain
adequate funds for such purposes. However, no assurance can be
given as to these matters. The Company intends to take
appropriate actions to preserve and enhance long-term shareholder
value and maintain flexibility as it explores strategic
alternatives, which may include a reduction in dividend payments.
The Company also stated that the Company's 2005 earnings and funds
from operations will be significantly below the market's
expectations and that prior earnings/FFO guidance for the year
ended December 31, 2005 should no longer be relied upon. The
Company does not presently anticipate issuing additional guidance
in advance of the release of its results for the year ended
December 31, 2005.
Headquartered in Arlingotn, Virginia, The Mills Corporation --
http://www.themills.com/-- is a developer, owner and manager of a
diversified global portfolio of retail destinations including
regional shopping malls, market dominant retail and entertainment
centers, and international retail and leisure destinations. It
currently owns 42 properties in the U.S., Canada and Europe,
totaling 51 million square feet. In addition, The Mills has
various projects in development, redevelopment or under
construction around the world. Its portfolio of real estate
properties generated more than $8.7 billion in retail sales in
2004. The Mills is traded on the New York Stock Exchange under
the MLS ticker.
MILLS CORPORATION: Names Mark Ordan as Chief Operating Officer
--------------------------------------------------------------
The Mills Corporation named Mark S. Ordan as Chief Operating
Officer, effective Mar. 6, 2006, reflecting the Company's ongoing
commitment to the strength of its core operations.
Mr. Ordan will report directly to Laurence C. Siegel, the
Company's Chairman and Chief Executive Officer, and will be
responsible for many of the real estate operations of the Company,
in addition to serving with Mr. Siegel and the Company's
President, Mark D. Ettenger, to advise on corporate strategy.
Mr. Ordan is currently non-executive Chairman of the Board of
Federal Realty Investment Trust (NYSE:FRT), where he has served as
a member of the board of trustees for 11 years, and also serves as
Chief Executive Officer of Balducci's, a specialty food market
with stores in Connecticut, New York, Washington, D.C., Maryland
and Virginia. Mr. Ordan has had a 15-year career as a CEO in the
specialty retailing industry. At Federal, Mr. Ordan has been
involved in strategic decision-making as well as many aspects of
Federal's operations. Mr. Ordan is expected to remain a member of
Federal's board of trustees for the duration of his current term,
and to leave his position as CEO of Balducci's upon assuming his
duties with the Company.
Waiver from Lenders
Under the terms of its revolving credit facility, the Company is
obligated to complete the restatement of its financial statements
by Apr. 1, 2006. The Company is seeking an extension from the
lenders under that facility of the time for completing the
restated financial statements and issuing its 2005 audited
financial statements. At the same time, the Company will seek a
waiver of any covenant defaults that may exist, in order to obtain
borrowing capacity under its credit facility.
Headquartered in Arlingotn, Virginia, The Mills Corporation --
http://www.themills.com/-- is a developer, owner and manager of a
diversified global portfolio of retail destinations including
regional shopping malls, market dominant retail and entertainment
centers, and international retail and leisure destinations. It
currently owns 42 properties in the U.S., Canada and Europe,
totaling 51 million square feet. In addition, The Mills has
various projects in development, redevelopment or under
construction around the world. Its portfolio of real estate
properties generated more than $8.7 billion in retail sales in
2004. The Mills is traded on the New York Stock Exchange under
the MLS ticker.
NORSTAN APPAREL: Hires NachmanHaysBrownstein as Managers
--------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of New York
approved the request of Norstan Apparel Shops Inc., dba Fashion
Cents, and its debtor-affiliates to employ NachmanHaysBrownstein,
Inc., as their professional managers.
NHB will report to the Debtors' Board of Directors but will not
engage in any major project without the agreement of the
Creditors' Committee.
NHB is expected to:
a) administer the day-to-day wind down activities of the estate
and take physical possession of the Debtors' books and
records to enable the Debtors to vacate their Long Island
facility in New York;
b) prepare periodic reports to the Debtors' Board, the
Committee, Amsouth, and the U.S. Trustee, as may be required
by parties-in-interest;
c) monitor the "earn out" payments due Norstan Apparel from the
Purchaser pursuant to the consummated sale and report
relevant information to the Debtors' Board;
d) respond to information by various parties-in-interest,
including the Court-approved professionals retained by the
Committee and the Debtors in these chapter 11 cases,
including, but not limited to, the professionals preparing
the Debtors' tax returns;
e) assist in the process of reconciling claims against the
Debtors if requested; and
f) perform other currently unspecified tasks for the
administration and wind-down of the Debtors' estates,
including overseeing the payment of administrative expenses
through the DIP Win-Down Facility.
John L. Palmer, a NHB partner, disclosed that he will be paid $375
per hour for his services rendered. The Firm's professionals'
current billing rates:
Professional Hourly Rate
------------ -----------
Principals $475
Managing Directors $375
Staff $125 - $275
Mr. Palmer will serve as the Debtors' Chief Administrative
Officer. The Firm agreed that its fees will be subject to a
monthly cap of $12,500.
To the best of the Debtors' knowledge, NHB is a "disinterested
person" as that term is defined in section 327(a) and 101(14) of
the Bankruptcy Code.
Headquartered in Long Island City, New York, Norstan Apparel Shops
Inc., dba Fashion Cents, operates 229 retail stores selling
women's budget-priced apparel. The stores are located in 24
states throughout the Midwestern, Midsouthern, Mid-Atlantic and
southeastern regions of the United States. The Company and its
debtor-affiliates filed for chapter 11 protection on April 8, 2005
(Bankr. E.D.N.Y. Case No. 05-15265). Jeff J. Friedman, Esq., at
Katten Muchin Zavis Rosenman represents the Debtors in their
restructuring efforts. When the Debtors filed for protection from
their creditors, they listed total assets of $19,637,000 and total
debts of $44,776,000.
NORTH CAROLINA MEDICAL: Fitch Lowers $50.8MM Bonds' Ratings to BB-
------------------------------------------------------------------
Fitch Ratings downgraded to 'BB-' from 'BB+' the approximately
$50.8 million North Carolina Medical Care Commission Hospital
revenue bonds (Maria Parham Hospital Project) series 2003. The
Rating Outlook is Negative.
The rating downgrade is primarily due to Maria Parham Healthcare
Association, Inc.'s covenant violations and further credit profile
deterioration since Fitch last reviewed the credit on August 25,
2005. In fiscal 2005, Maria Parham violated its debt service rate
covenant of 1.2x and liquidity covenant of 60 days cash on hand.
In accordance with bond documents, the hospital has engaged a
management consultant.
At Dec. 30, 2005 (unaudited), Maria Parham had:
-- 46.1 days cash on hand,
-- 1.8x cushion ratio, and
-- 13.9 % cash to debt;
down from:
-- 54.8 days cash on hand,
-- cushion ratio of 2.3x, and
-- cash to debt of 17.6% at fiscal 2005.
Coverage of maximum annual debt service by earnings before
interest, taxes, depreciation and amortization (EBITDA) for fiscal
2005 was a weak 0.1x, and Maria Parham reported a loss of $4.55
million (negative 6.4% operating margin) in fiscal 2005. Further
credit concerns are decreased inpatient volume, down 7.3% since
fiscal 2003, and weak economic indicators of the primary service
area. Management attributed the poor operating performance and
decreased liquidity to:
-- a decline in patient volume;
-- employee staffing expenses not being appropriately matched
to the lower patient volume;
-- further writedown of accounts receivable; and
-- the use of unrestricted cash to fund debt service.
Credit strengths for Maria Parham are its strong market share, the
opening of new patient units as a part of Maria Parham's
construction project and new executive leadership. Effective
Dec. 5, 2005, a new Chief Executive Officer with previous hospital
turnaround experience was hired. Fitch believes this newly formed
management team (current Chief Financial Officer hired in June of
2005) will make the stabilization of the hospital a top priority.
The Negative Outlook is based on Maria Parham's balance sheet
weakness and inability to stem recent losses. New management will
be challenged to increase patient volumes and cut costs to bring
the hospital into compliance with bond covenants and improve
liquidity. Fitch will review the consultant's report when it
becomes available and expects to monitor Maria Parham's results on
a quarterly basis. Further balance sheet deterioration and
ongoing sizable losses from operations will prompt further
negative rating actions.
Maria Parham Healthcare Association serves as the parent
corporation and controls operations at the only other member of
the obligated group, Maria Parham Medical Center. Maria Parham
Medical Center is a 102-licensed bed acute care hospital located
in Henderson, North Carolina, approximately 45 miles north of
Raleigh. Total annual revenue for the consolidated organization
equaled approximately $71.5 million in fiscal 2005.
Maria Parham covenants to disclose only annual financial
information to the nationally recognized municipal securities
information repositories (NRMSIRs), which Fitch views negatively.
However, Maria Parham does currently disclose annual and
quarterly information to the NRMSIRS through Digital Assurance
Certification, LLC. Disclosure to date has been thorough and
timely and has included:
* balance sheet,
* income statement,
* cash flows, and
* utilization data,
but no management discussion and analysis.
OHIO CASUALTY: S&P Holds BB+ Rating & Revises Outlook to Positive
-----------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on Ohio
Casualty Corp. (NASDAQ:OCAS) and the members of the Ohio Casualty
Insurance Co. Intercompany Pool to positive from stable.
At the same time, Standard & Poor's affirmed its 'BBB+'
counterparty credit and financial strength ratings on the members
of OCIP (American Fire & Casualty Co., Ohio Casualty Insurance
Co., Ohio Security Insurance Co., and West American Insurance Co.)
and affirmed its 'BB+' counterparty credit rating on Ohio Casualty
Corp.
In addition, Standard & Poor's assigned its 'BBB+' counterparty
credit and financial strength rating to OCIP member Avomark
Insurance Co. The outlook is positive.
"The positive outlook reflects the company's very strong
capitalization and continued underwriting profitability due
primarily to expense-reduction and loss control initiatives,"
explained Standard & Poor's credit analyst Donovan Fraser.
"Offsetting the company's strengths is a lack of top-line
growth and continued challenges in the company's commercial lines
division."
The expense ratio is expected to decline further over the next
couple of years due to continued expense and information
technology initiatives coupled with a modest low single-digit
increase in the top-line in 2006. In addition, the company's
attention to loss control is expected to produce a combined
ratio of less than 97% in 2006. Capitalization is expected to
remain very strong and in excess of 160% while aggregate reserve
levels are expected to remain stable.
Continued sustainable underwriting profit coupled with moderate
premium growth and strong capitalization levels could lead to an
upgrade. Conversely, a continued decline in the top line, a
reversion to operating losses, or continued commercial lines
underwriting losses could lead to the outlook being revised to
stable.
ORBITAL SCIENCES: Earns $7.6 Million in Fourth Quarter
------------------------------------------------------
Orbital Sciences Corporation (NYSE: ORB) released financial
results for the fourth quarter and full year 2005. Orbital
reported fourth quarter 2005 revenues of $199.6 million compared
to revenues of $175.2 million in the fourth quarter of 2004. The
company's fourth quarter 2005 operating income was $13.8 million
as compared to $12.3 million of operating income in the comparable
quarter in 2004.
Orbital's fourth quarter 2005 net income was $7.6 million as
compared to adjusted net income of $5.8 million, in the fourth
quarter of 2004. The company also reported free cash flow of
$26.5 million in the fourth quarter of 2005 and firm backlog of
$1.26 billion as of December 31, 2005.
For the full year, Orbital's 2005 revenues increased to
$703.5 million, compared to $675.9 million in 2004. Operating
income was $53.0 million in 2005, compared to $55.3 million in
2004. Net income was $28.2 million, or $0.45 diluted earnings per
share, compared to adjusted net income of $26.2 million in 2004.
Full-year 2005 free cash flow was $59.1 million.
Commenting on the fourth quarter and full year 2005 financial
results, Mr. David W. Thompson, Orbital's Chairman and Chief
Executive Officer, said, "In the final quarter of last year,
Orbital continued to generate strong financial results, with good
revenue and earnings growth and excellent free cash flow
performance. For the year as a whole, the company set new records
for new business volume, cash flow and overall operational
activity. Building on this solid foundation, we are very
optimistic about 2006 as we look forward to another year of
operational and financial progress."
Orbital's fourth quarter 2005 revenues increased 14% to
$199.6 million, compared to fourth quarter 2004 revenues of
$175.2 million. This increase was driven by revenue growth in all
of the company's reporting segments. Satellites and related space
systems segment revenues increased due to significantly higher
communications satellites product line revenue, offset partially
by revenue decreases in the science, technology and defense
satellites and the technical services product lines. The growth
in communications satellites revenue was primarily due to work on
several new satellite contracts awarded in 2005. The growth in
launch vehicles segment revenues was driven by increased program
activity in the interceptor launch vehicles and space launch
vehicles product lines. Revenues in the transportation management
systems segment increased slightly, reflecting program activity on
several recently awarded contracts offset partially by the
completion or near-completion of other contracts.
For full year 2005, Orbital reported $703.5 million in revenues,
up from $675.9 million for 2004, primarily due to growth in the
launch vehicles and satellites and related space systems segments,
partially offset by a revenue decrease in the transportation
management systems segment. The launch vehicles segment growth
was driven by higher revenues in interceptor launch vehicles and
target launch vehicles, partially offset by lower revenues from
space launch vehicles. The satellites and related space systems
segment growth was driven by higher revenues from communications
satellites, offset partially by lower revenues from science,
technology and defense satellites and technical services.
Transportation management systems segment revenues decreased due
to the completion or near-completion of certain contracts.
Cash Flow and Balance Sheet
As of December 31, 2005, Orbital's unrestricted cash balance was
$158.8 million. The company generated $26.5 million of free cash
flow for the fourth quarter of 2005 and $59.1 million for the full
year. The company repurchased $14.6 million of its common stock,
or 1.23 million shares, in the fourth quarter, while it
repurchased $34.6 million of its stock, or 3.17 million shares,
during the full year.
New Business Highlights
During the fourth quarter of 2005, Orbital booked approximately
$120 million in new firm orders and $100 million in new option
orders. For the year as a whole, Orbital received about
$580 million in new firm orders and $990 million in new option
orders. In addition, the company received option exercises under
existing contracts totaling approximately $155 million for the
fourth quarter of 2005 and $210 million for the full year.
As of December 31, 2005, the company's firm contract backlog
was approximately $1.26 billion, up 8% from $1.17 billion a
year earlier. Total backlog (including options, indefinite-
quantity contracts and undefinitized orders) was approximately
$2.90 billion at year-end 2005, an increase of 26% compared to
$2.31 billion at year-end 2004. Firm and total backlog include
new orders less current period revenues, order cancellations and
other adjustments.
2006 Financial Guidance Update
The company updated its financial targets for 2006, indicating
that it anticipates full year 2006 revenues to be in the
$760 million to $780 million range and operating income margin in
the 7.75% to 8.25% range. The company also expects to generate
$55 to $60 million in free cash flow for 2006.
Orbital Sciences Corporation develops and manufactures small space
and rocket systems for commercial, military and civil government
customers. The company's primary products are satellites and
launch vehicles, including low-orbit, geosynchronous and planetary
spacecraft for communications, remote sensing, scientific and
defense missions; ground- and air-launched rockets that deliver
satellites into orbit; and missile defense systems that are used
as interceptor and target vehicles. Orbital also offers space-
related technical services to government agencies and develops and
builds satellite-based transportation management systems for
public transit agencies and private vehicle fleet operators.
* * *
As reported in the Troubled Company Reporter on July 15, 2005,
Standard & Poor's Ratings Services affirmed its ratings, including
the 'BB-' corporate credit rating, on Orbital Sciences Corp. S&P
revised its outlook to positive from stable.
OWENS CORNING: Wants Court to Compel Discovery from Shintech
------------------------------------------------------------
Owens Corning and its debtor-affiliates and Shintech Incorporated
are involved in litigation regarding a rejection claim Shintech
filed for amounts due to it pursuant to a supply contract.
Shintech supplied polyvinyl chloride resin to Debtor Exterior
Systems, Inc.'s predecessors, from January 1, 2000, to December
31, 2001.
The Debtors rejected the Contract pursuant to an agreed-upon
order dated June 19, 2001. Shintech filed Claim No. 12105 for
$38,942,063 against the Debtors, asserting:
* a prepetition claim for $5,298,751 relating to prepetition
accounts receivable; and
* a rejection claim for $33,643,312 asserting failure to
accept contract volume.
The Debtors objected and Shintech reduced the Rejection Claim to
$14,061,446.
In response to discovery propounded by the Debtors, Shintech has
refused to disclose fundamental information about its rejection
damages, including the prices at which it resold resin. Michael
F. Bonkowski, Esq., at Saul Ewing LLP, in Wilmington, Delaware,
tells the Court that Shintech evades the Discovery Requests by
claiming confidentiality and pointing to an index of published
prices.
As a result, Mr. Bonkowski says the Debtors are unable to
determine whether Shintech suffered any damage due to the
rejection of the contract and, if it did, the amount of damages.
The Debtors ask the U.S. Bankruptcy Court for the District of
Delaware to compel Shintech to provide full and complete responses
to all of their Discovery Requests.
The Discovery Requests, which seek to discover Shintech's actual
resale prices and other information concerning damages, are
clearly relevant the Rejection Claim, Mr. Bonkowski maintains.
The Debtors believe they are entitled to more than the published
prices.
"If Shintech is unwilling to disclose its actual sale prices and
other damage information, then [it] should voluntary withdraw the
Rejection Claim," Mr. Bonkowski argues. "Unless and until it
does so, the Debtors are entitled to full and complete responses
to all of the Discovery Requests. . . ."
Additionally, the Debtors ask the Court to require Shintech to
reimburse the Debtors for the reasonable expenses they incurred
in pursuing the request, including attorneys' fees.
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)
PARKWAY HOSPITAL: Plan-Filing Period Extended Until March 1
-----------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
extended, until March 1, 2006, the time within which The Parkway
Hospital, Inc., has the exclusive right to file a chapter 11 plan.
The Debtor also has until May 1, 2006, to solicit acceptances of
that plan from its creditors without interference from anyone
wanting to promote a competing plan.
The Debtor tells the Court that it is presently preoccupied with
various important matters concerning the administration of its
chapter 11 case, including being currently involved in
negotiations with various creditor constituencies and other
parties-in-interest for the terms of a consensual plan of
reorganization.
The extension of its exclusive periods will also give the Debtor
more opportunity to analyze the claims asserted against its
estate.
The Parkway Hospital, Inc., operates a 251-bed proprietary, acute
care community hospital located in Forest Hills, New York. The
Company filed for chapter 11 protection on July 1, 2005 (Bankr.
S.D.N.Y. Case No. 05-14876). Timothy W. Walsh, Esq., at DLA Piper
Rudnick Gray Cary US LLP, represents the Debtor in its
restructuring efforts. When the Debtor filed for protection from
its creditors, it listed $28,859,000 in total assets and
$47,566,000 in total debts.
PAXAR CORP: Foresees $25 Million One-Time Cash Costs in 2007
------------------------------------------------------------
In connection with its global realignment plan, Paxar Corporation
anticipates that it will incur one-time cash costs of $20 to $25
million, largely by the middle of 2007. The expenses according to
Paxar relate to manufacturing and associated support costs. Other
non-cash charges over the same time frame will range from $5 to $8
million, Paxar says.
Paxar estimates ongoing savings at an annual rate of $20 to $25
million by the end of 2007, and potentially higher in the
following years.
Paxar's Asia Pacific companies report record sales, achieving in
excess of 20% growth for the second consecutive quarter of 2005.
Paxar also reports a successfully completed refinancing and
repatriation programs resulting in $4 to $5 million in savings in
2006.
For the fourth quarter of 2005, the Company earned $206.8 million
in sales, compared with sales of $207.4 million for the fourth
quarter of 2004.
The Company incurred a net loss of $0.8 million for the fourth
quarter of 2005, versus net income of $12.7 million for the fourth
quarter of 2004.
For the year 2005, the Company posts sales of $809.1 million and
net income of $23.0 million. In 2004, the Company's sales were
$804.4 million with a net income of $47.4 million.
2006 Outlook
The Company expects sales of $820 million to $840 million in 2006,
and earnings per share to be in the range of $1.13 to $1.23,
before the adoption of FAS 123(R) and excluding restructuring and
other non-recurring costs. Including the impact of FAS 123(R),
earnings per share are projected to be in the range of $1.07 to
$1.17, excluding restructuring and other non-recurring costs.
Headquartered in White Plains, New York, Paxar Corporation
-- http://www.paxar.com/-- is a global leader in providing
identification solutions to the retail and apparel industry,
worldwide. Paxar's leadership in brand development, information
services and supply chain solutions enables the Company to meet
and satisfy customer needs around the world with quality,
innovation and competitive products and services.
* * *
Paxar Corp.'s senior unsecured debt carries Moody's B1 rating.
The rating, placed on Dec. 23, 1996, is one notch lift from B2 in
Sept. 7, 1995.
PCS EDVENTURES!.COM: Posts $589K Net Loss in Quarter Ended Dec. 31
------------------------------------------------------------------
PCS Edventures!.COM, Inc., delivered its financial results for the
quarter ended Dec. 31, 2005, to the Securities and Exchange
Commission on Feb. 17, 2006.
PCS incurred a $589,597 net loss for the three-months ended Dec.
31, 2005, compared to a $203,965 net loss for the same period in
2004. Revenues for the three-month period ended Dec. 31, 2005,
increased to $284,638, or by12%, as compared to $254,161 for the
three-month period ended Dec. 31, 2004. Management attributes
higher revenues to higher local and international sales and
increased marketing efforts throughout the country.
The Company's balance sheet at Dec. 31, 2005, showed $1,207,029 in
total assets and $1,631,648 in liabilities, resulting in a
stockholders' deficit of $424,619.
A full-text copy of the regulatory filing is available for free
at http://researcharchives.com/t/s?5cc
HJ & Associates, LLC, expressed substantial doubt about PCS'
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 and working capital
deficit.
The Company's auditing firm can be reached at:
HJ & Associates, LLC
Certified Public Accountants
50 West Broadway, Suite 600
Salt Lake City, Utah 84101
Phone: (801) 328-4408
Fax: (801) 328-4461
http://www.hjcpafirm.com/
About PCS
PCS Edventures! -- http://www.edventures.com/-- is the recognized
leader in design, development and delivery of hands-on, project
based learning labs to the K-14 market worldwide. It has sold and
installed more than 2,750 hands-on, Engineering, Robotics &
Science labs at public and private schools, pre-schools, Boys &
Girls Clubs, YMCAs, and other after-school programs in all 50
states in the U.S., as well as sites in 15 countries
internationally. The Labs are supported by Edventures! OnLine,
which is an Internet-based and accessed program available in
multiple languages, through its curriculum, communication,
assessment capabilities, and online community features.
PERFORMANCE TRANSPORTATION: Court OKs Kirkland & Ellis' Retention
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of New York
approved Performance Transportation Services, Inc., and its
debtor-affiliates request to employ Kirkland & Ellis LLP as their
bankruptcy counsel.
As the Debtors' bankruptcy counsel, the firm will:
a. advise the Debtors with respect to their powers and duties
as debtors-in-possession in the continued management and
operation of their business and properties;
b. attend meetings and negotiate with representatives of
creditors and other parties-in-interest;
c. take all necessary action to protect and preserve the
Debtors' estates, including prosecuting actions on the
Debtors' behalf, defending any action commenced against the
Debtors and representing the Debtors' interests in
negotiations concerning all litigation in which the Debtors
are involved, including objections to claims filed against
the estates;
d. prepare all motions, applications, answers, orders, reports
and papers necessary to the administration of the Debtors'
estates and their bankruptcy case;
e. take any necessary action on behalf of the Debtors to
obtain approval of a disclosure statement and confirmation
of the Debtors' plan of reorganization;
f. represent the Debtors in connection with obtaining
postpetition financing;
g. advise the Debtors in connection with any potential sale of
assets;
h. appear before the Bankruptcy Court, any appellate courts
and the United States Trustee and protect the interests of
the Debtors' estates before those Courts and the United
States Trustee;
i. consult with the Debtors regarding tax matters; and
j. perform all other necessary legal services to the Debtors
in connection with their Chapter 11 cases, including:
-- the analysis of leases and executory contracts and
the agreements' assumption, rejection or assignment;
-- the analysis of the validity of liens against the
Debtors; and
-- advice on corporate, litigation and other matters.
The Debtors will pay Kirkland & Ellis at these hourly rates:
Position Rate
-------- ------------
Partners $520 to $950
Of Counsel $280 to $685
Associates $245 to $520
Paraprofessionals $90 to $240
The professionals expected to have primary responsibility for
providing services to the Debtors and their hourly rates are:
Professional Billing Rate
------------ ------------
James A. Stempel, Esq. $745
James W. Kapp III, Esq. $675
Jocelyn A. Hirsch, Esq. $575
Sven T. Nylen, Esq. $445
Michelle Mulkern, Esq. $395
Paul Wierbicki, Esq. $295
Kathryn L. Koenig, Esq. $295
Mr. Stempel, a partner at Kirkland & Ellis, attests that the firm
is disinterested as that term is defined in Section 101(14) of
the Bankruptcy Code.
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).
James A. Stempel, Esq., James W. Kapp, III, Esq., and Jocelyn A.
Hirsch, Esq., at Kirkland & Ellis, LLP, and 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. 4; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
PERFORMANCE TRANSPORTATION: Court Okays $500,000 Customer Payment
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of New York
approved, on a final basis, Performance Transportation Services,
Inc., and its debtor-affiliates' request to honor and perform up
to $500,000 in prepetition obligations relating to its Customer
Programs.
The Bankruptcy Court directs the Debtors to provide Huron
Consulting Group, the financial advisor for the Official Committee
of Unsecured Creditors, with monthly reports concerning
postpetition payments on account of the Damage obligations,
provided that:
a. the reports will be for Huron's "eyes" only;
b. Huron will treat the reports confidentially; and
c. Huron will not provide the reports to the members of the
Committee.
In response to the Debtors' request to honor its customer
obligations, the Committee pointed out that:
-- as of December 31, 2005, the Debtors have yet to process
for payment approximately $2,800,000 in Damage Obligations,
which amount exceeds one quarter of the Debtors' total
trade debt;
-- the Debtors' request gives no dollar magnitude for the
Rebate Program;
-- the Debtors have not yet provided the memorialization,
history, projections and detail of the Customer Programs
for review by the Committee or Huron.
The Committee contends that any payment on Damage Obligations or
the Rebate Program or any other expenditure under the Customer
Programs needs to be considered and made in consultation with and
after approval by Huron.
As reported in the Troubled Company Reporter on Feb. 10, 2006, in
the ordinary course of their businesses, the Debtors engage in
customer programs to develop and sustain a positive reputation in
the marketplace for their products and services. The Debtors'
Customer Programs primarily pertain to obligations arising from
vehicles damaged in the ordinary course of business by the
Debtors.
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).
James A. Stempel, Esq., James W. Kapp, III, Esq., and Jocelyn A.
Hirsch, Esq., at Kirkland & Ellis, LLP, and 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. 4; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
PERFORMANCE TRANSPORTATION: Teamsters Say No to Compensation Plan
-----------------------------------------------------------------
The Teamsters National Automobile Transporters Industry
Negotiating Committee, and Local Unions 25, 63, 104, 120, 215,
222, 294, 299, 312, 355, 377, 449, 490, 492, 560, 580, 651, 657,
710, 745, 957, 964, and 988, and all affiliated with the
International Brotherhood of Teamsters ask the U.S. Bankruptcy
Court for the Western District of New York to deny Performance
Transportation Services, Inc., and its debtor-affiliates' request
to approve an incentive program for three of its senior executives
pursuant to Sections 105 and 363 of the Bankruptcy Code.
The Teamsters are the exclusive representatives for collective
bargaining purposes of approximately 2,100 employees of the
Debtors and their affiliates in the United States and Canada,
Frederick Perillo, Esq., at Previant Goldberg Uelmen Gratz Miller
and Brueggeman, s.c., in Milwaukee, Wisconsin, relates.
The Debtors and the Teamsters are parties to a single master
collective bargaining agreement -- the NMATA -- setting forth the
wages, hours and working conditions of those of the Debtors'
employees who perform the productive labor. The accrued but
unpaid benefits under the NMATA exceed $8,000,000.
According to Mr. Perillo, the Teamsters oppose the Debtors'
request because:
a. there was inadequate notice, and parties were given fewer
than 10 days to respond to a request that is clearly not a
true emergency;
b. the program violates the proscriptions in the Bankruptcy
Abuse Prevention and Consumer Protection Act of 2005
inasmuch as it is a thinly disguised KERP masquerading as a
"performance incentive," when in fact the bonuses are
realized by executives for merely continuing to work for
the Debtors doing their current jobs;
c. the program contains prohibited severance pay in violation
of BAPCPA;
d. the program is not justified in any event because the
payments to insiders must be judged under the rigorous
scrutiny test of Pepper v. Litton, 308 U.S. 295 (1939); and
e. the program is an enormous windfall to executives not
warranted by the financial or other performance of the
Debtors or any of the facts and circumstances of the
Debtors' Chapter 11 cases.
Mr. Perillo contends that in In re Regensteiner Printing Co., 222
B.R. 323 (N.D. Ill. 1990) and In re Club Dev. & Management Corp.,
27 B.R. 610, 613 (9th Cir. BAP 1982), a bonus program converts
prepetition unsecured indebtedness into an administrative
expense, and involves self dealing by insiders of the debtors.
"The executives seeking such bonuses and severance pay bear a
heavy burden of proof that is not met here," Mr. Perillo says.
Mr. Perillo also points out that the Debtors do not state when or
how EBITDA targets were established, or what must be achieved.
The Debtors' request does not define the potential payments to
executives. For all creditors can tell, instead of vaulting a
high hurdle, the executives have set a very low bar for
themselves to achieve a very large but thinly-disguised pay
increase. No outside compensation consultant was used; the
program was established by using the Debtors' regular financial
advisor, so it lacks objectivity.
There is also no apparent connection between the efforts of the
executives and the achievement of very large bonuses. If the
targets are, for example, $3,000,000 per month, then a very
modest increase -- to $4,125,000 per month -- will achieve an
enormous bonus, doubling the executive salaries in a very short
time. The lack of an audit for an early payment makes the
program even more suspect, according to Mr. Perillo.
If the Court is not inclined to deny the request, the Teamsters
in the alternative, ask the Court to permit discovery into the
issues and establish a trial schedule to give executives the
opportunity to carry the burden imposed on insiders who seek
enormous bonuses at the expense of a troubled Debtor.
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).
James A. Stempel, Esq., James W. Kapp, III, Esq., and Jocelyn A.
Hirsch, Esq., at Kirkland & Ellis, LLP, and 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. 4; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
PHOTOCIRCUITS CORP: Has Until May 12 to File Chapter 11 Plan
------------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of New York
extended until May 12, 2006, the period within which Photocircuits
Corporation has the exclusive right to file a chapter 11 plan.
The Court also extended the Debtor's exclusive plan solicitation
period to July 11, 2006.
The extension, the Debtor says, will provide it more time to move
from focusing on the asset sale process to the bankruptcy exit
process through the liquidation of its remaining assets. Since a
claims bar date has not yet been set, the extension will allow the
Debtor to qualify the claims against it and to proceed with a
viable plan of liquidation.
Headquartered in Glen Cove, New York, Photocircuits Corporation
-- http://www.photocircuits.com/-- was the first independent
printed circuit board fabricator in the world. Its worldwide
reach comprises facilities in Peachtree City, Georgia; Monterrey,
Mexico; Heredia, Costa Rica; and Batangas, Philippines. The
Company filed for chapter 11 protection on Oct. 14, 2005 (Bankr.
E.D.N.Y. Case No. 05-89022). Gerard R. Luckman, Esq., at
Silverman Perlstein & Acampora LLP, represents the Debtor in its
restructuring efforts. Ted A. Berkowitz, Esq., and Louis A.
Scarcella, Esq., at Farrell Fritz, P.C., represent the Official
Committee of Unsecured Creditors. When the Debtor filed for
protection from its creditors, it estimated more than $100 million
in assets and debts.
PLUM POINT: Moody's Rates Proposed $760 Mil. Sr. Facilities at B1
-----------------------------------------------------------------
Moody's Investors Service assigned a B1 rating to Plum Point
Associates, LLC's proposed $760 million senior secured credit
facilities consisting of:
* a $590 million term loan due 2014,
* a $105 million synthetic letter of credit facility expiring
in 2014, and
* a $65 million revolving credit facility expiring in 2012.
The rating outlook is stable.
Proceeds from the term loan and the synthetic letter of credit
facility along with approximately $205 million of equity funds
provided by the sponsor, LS Power and potential co-investors, will
be used to fund the costs associated with Plum Point's approximate
63% ownership interest in a 665 MW coal-fired electric generating
facility that will be constructed in Osceola, Arkansas. The
synthetic letter of credit facility is expected to ultimately
back-up a similar amount of tax-exempt financing to be issued post
closing. The Project will be co-owned with various municipal, co-
operative, and investor-owned load serving entities operating
within the region owning 37% of the Project.
The B1 rating for the facilities reflects these credit challenges:
1) The Project is a green-field construction project that is
not scheduled to generate revenues until 2010.
Construction could take longer, or cost more, than
anticipated.
2) Currently, only approximately 10-20% of the Plum Point's
418 MW interest in the Project will be sold under contract.
The remaining capacity will be partially hedged through a
natural gas put option structure with the power output sold
on a merchant basis into the Entergy region of the
Southeast Electric Reliability Council, a bilateral market
with significant excess capacity.
3) A financing structure that is highly levered, with a ratio
of funds from operations to total debt that is projected to
be approximately 4-8% during the cash flow generating term
of the loan and which leaves approximately 80% of the
initial total term debt outstanding at maturity in early
2014.
4) The Project will not have an operating agreement or fuel
supply agreement in place at the time of closing; the
actual fuel and operating costs of the project could vary
significantly from those projected.
5) Due to the Project's joint ownership, collateral for the
lenders will be limited to Plum Point's undivided ownership
interest in the Project and associated contracts. Plum
Point may also secure up to $45 million of its potential
obligations under future hedges on a pari-passu basis with
the credit facilities.
6) The debt service reserve is provided via a multi-purpose
revolving credit facility that expires prior to the
maturity of the term loan.
The B1 rating also considers these credit strengths:
-- The project is expected to be one of the more efficient
sources of low-cost base-load power within the region.
-- The project is being constructed by a joint venture of
experienced contractors under a fixed price contract with
joint and several guarantees.
-- During the life of the term loan, approximately 50% of the
project's revenues are projected to be either contracted
via power purchase agreements or hedged via a forward
option.
-- A traditional project finance structure with standard
covenant restrictions, including a waterfall of accounts
controlled by a trustee, liquidity and a six month debt
service reserve provided by a revolving/letter of credit
facility, and a cash sweep mechanism that requires 100% of
excess cash be used to repay debt.
-- The experience of the Project sponsor and asset manager.
The rating recognizes that the Entergy region of SERC is currently
an over-supplied market with reserve margins that are estimated at
close to 50%. In 2010, when the project comes on line, it is
likely there will still be a significant amount of excess capacity
in the region. When completed, the Project's guaranteed heat rate
of approximately 9,300 should position it as one of the more
efficient base-load units in the region. Total project operating
costs are projected to be significantly below the average
historical around-the-clock price for power in the region. If
dispatched economically, the Project should be able to achieve its
projected capacity rate of approximately 90%.
The rating reflects the fact the Project will be under
construction for several years. This risk is mitigated to some
extent by its fixed-price turnkey Engineering, Procurement and
Construction Agreement with a joint venture of Gilbert Central
Corp., Overland Contracting, Inc., and Zachary Construction Corp.
The EPC contract provides for liquidated damage payments and
parent guarantees on a joint and several basis. Moody's notes
however that the amount the Project would receive as daily damages
for delays under the EPC agreement would be somewhat less than the
costs the Project would be incurring for fixed costs and interest
expense at that time. Any such shortfall would need to be funded
either out of contingency or by use of up to $35 million
specifically available under the revolving credit facility.
The rating considers the relative stability of cash flows that are
expected to be generated via a combination of power purchase
agreements and financial hedges. At closing, it is anticipated
that the Project will have sold approximately 90 MW of its 418 MW
of capacity under long-term PPAs with municipal or co-operative
electric systems. In addition, the Project has purchased options
from J. Aron & Company which effectively hedge the revenues the
Project will receive for power sold during peak hours over a range
of potential gas prices and market heat rates. As a result,
approximately 50% of the project's revenues, and approximately 40%
of its cash flow available for debt service, will be either
contracted or hedged.
The financing structure is highly leveraged, with an initial debt
to capital ratio of approximately 80%. Over the term of the
financing, under base case assumptions prepared by the sponsor and
reviewed by Moody's, the ratio of funds from operations to total
debt ranges from approximately 4-8%. Project economics are most
vulnerable to increases in fuel costs, higher interest rates,
lower capacity factors and gas prices below $4.00. However, in
most downside scenarios, cash flow coverage of required debt
service remains strong.
The financing will include a typical project finance structure,
including a cash-flow waterfall controlled by a trustee,
restrictive covenants and perfected security interests in all of
the Plum Point's assets and contracts. Given the joint ownership
nature of the Project, Plum Point's assets will consist primarily
of an undivided ownership interest in the Project. The initial
hedge structure will not require Plum Point to post collateral.
However, Plum Point may secure up to $45 million of its potential
obligations under future hedges on a pari-passu basis with the
credit facilities. Plum Point may also secure an additional $45
million of potential obligations under future hedges or PPAs on a
second lien basis.
Liquidity is provided via a revolving credit facility that can be
used for construction overruns, and for general purposes,
including the funding of a six month debt service reserve or the
issuance of a letter of credit in the amount of six months of debt
service. The six year revolving credit facility expires two years
prior to the maturity of the term loan, if drawn; it would require
repayment prior to repayment of the term loan.
The financing terms include amortization of 1% of the original
principal amount of the term loan per annum; in addition, 100% of
excess cash flow will be allocated to make quarterly repayments of
the term loan. There will also be a mandatory repayment of a pro-
rata portion of the term loan, and cancellation of a pro-rata
portion of the letter of credit and revolver commitments if Plum
Point were to sell more of its ownership interest in the Project
to co-owners.
The rating outlook is stable reflecting Moody's expectation of on-
time, on-budget, construction of the project, a high percentage of
contracted cash flows, and an assumption that operating costs will
not differ materially from those projected. The rating could be
revised upward if there were to be a significant reduction in
leverage, a significant improvement in power market conditions in
SERC, or if Plum Point were to enter into a significant number of
long term contracts that could be expected to produce increased
cash flows on a sustainable basis. The rating could be revised
downward if there were to be significant construction delays or
cost overruns, if there were to be significant operating issues or
increases in operating costs, if the hedge does not function as
generally projected, or if the revolving credit facility is not
extended or replaced or prior to its maturity in 2012.
The rating of the credit facilities is predicated upon the final
structure and documentation being consistent with Moody's current
understanding of the transaction.
Plum Point Energy Associates, LLC is a special purpose company
formed to own approximately 50-60% of a 665 MW coal-fired merchant
electric generating facility in Osceola, Arkansas. Headquartered
in East Brunswick, New Jersey, Plum Point is a wholly owned
subsidiary of LS Power Associates, L.P. a member of the LS Power
group.
PORT TOWNSEND: Moody's Junks Rating on $125 Million Senior Notes
----------------------------------------------------------------
Moody's Investors Service lowered the ratings of Port Townsend
Paper Corporation's $125 million guaranteed senior secured notes
and corporate family rating to Caa1 from B3 and affirmed the SGL-4
speculative grade liquidity rating. The outlook is negative.
The ratings downgrade reflects Port Townsend's weak operating
performance, which continues to fall short of Moody's previous
expectations, persistently high leverage, tenuous liquidity
position, weak balance sheet, minimal coverage of interest, and
negligible free cash flow generation. The ratings also reflect
the modest scale of Port Townsend's operations, the commodity
focus of its product mix, exposure to raw material prices,
competitive pressures, and the continued uncertainty regarding
product pricing over time.
For the twelve month period ending Dec. 31, 2005, credit metrics
continued to deteriorate with leverage on an adjusted EBITDA to
total debt basis of over 7.0x and coverage on an adjusted EBITDA
to interest basis of just over 1.0x, while EBIT was insufficient
to cover interest. Liquidity was also weak with marginal cash
balances and only $8 million of availability under its asset based
revolving credit facility. However, if availability under the
revolver falls below $5 million Port Townsend would be subject to
a minimum fixed charge coverage covenant, which the company
believes it would not be able to meet if the covenant were
triggered.
Affirmation of the SGL-4 speculative grade liquidity rating
reflects Moody's view that over the next twelve months a lack of
free cash flow generation and limited availability of third party
financing in relation to its cash requirements over this period,
will result in significantly weak liquidity.
To help Port Townsend meet its cash requirements the company will
have to receive a release of an audit reserve for $3 million. The
audit reserve voids $3 million of availability under the company's
credit facility until the company deliver's audited financial
statements.
The SGL-4 rating also reflects Moody's view that alternate sources
of liquidity are limited. All tangible and intangible assets of
the company are pledged as collateral to either the bank facility
or the secured notes, resulting in the bank revolver being the
primary source of liquidity. Availability under the revolver is
governed by a borrowing base calculation of 85% of eligible
receivables, 65% of eligible inventory, and a covenant threshold
of $5 million. The bank is also secured by all inventory and
receivables of the company.
The negative outlook reflects Moody's expectation that operating
performance will continue to be impacted by competitive pressures,
the difficulty of passing through higher input costs, and the
uncertainty of continued price increases. The outlook also
reflects Moody's view that Port Townsend's liquidity position will
remain tenuous in the near term and could deteriorate further if
operating performance fails to meet management's expectations for
improved pricing and sustained volumes.
In Moody's view, the company will need to achieve recently
announced price increases at current volume levels just to reach a
breakeven level of cash flow. Any volume weakness, price erosion,
deterioration in liquidity, or an inability to pass through higher
raw material or input costs will likely result in further ratings
downgrades. An additional factor weighting on the outlook and
ratings is the company's delay in providing audited financial
statements for the years ended 2004 and 2005 and re-audited
statements for years ending 2002 and 2003. The ratings could also
be negatively impacted in the event the receipt of audited
financial statements reveals significantly greater operating
weakness than previously believed.
Port Townsend is a vertically integrated producer of fiber based
packaging products. The scale of Port Townsend's operations is
modest compared to most of its competitors, who are considerably
larger and with greater access to capital. The company produces
approximately 320,000 short tons of pulp capacity at its Port
Townsend mill, of which 90,000 tons are sold as market pulp
through a third party broker and the remainder used to produce
about 230,000 tons of lightweight containerboard.
The company's converting operations consist of four facilities in
Western Canada with aggregate annual converting capacity of about
1.8 million square feet. For 2005, approximately 35% of
containerboard production of its mill was used internally by its
converting operations and 65% was sold externally through a third
party broker. Port Townsend competes with companies such as
Smurfit/MBI, Norampac, and St Laurent Paperboard Inc., in its
Western Canadian converting operations and with Georgia-Pacific,
Smurfit-Stone, Weyerhaeuser and regional producers for
containerboard.
The company is also exposed to the price volatility of raw
material inputs, predominantly old corrugated containers and
energy. Although Port Townsend has contracted for the supply of
most commodity inputs such as OCC, woodchips, and energy, the
contract pricing remains market based, which subjects the company
to price fluctuations. Even though gradual cost creep can usually
be passed through to the customer with little difficulty, any
sudden unforeseen increases remain extremely difficult to recover.
As a result, margins and cash flows could be impaired in the event
the company is unable to pass through higher raw input prices to
its customers. On average, the company uses approximately 40% of
OCC in its current pulping process but can generally shift OCC
content between 20% and 65% depending on various product
requirements.
The Caa1 rating on the guaranteed senior secured notes reflects
the benefit the notes derive from a first priority lien on the
consolidated company's property, plant and equipment, a second
lien on current assets, and guarantees from all subsidiaries and
the parent company. The secured notes represent the bulk of the
capital structure and are rated the same as the senior implied.
Port Townsend Paper Corporation, headquartered in Port Townsend,
Washington, is a vertically integrated producer of fiber based
packaging products in Western Canada and the United States.
PRICE OIL: Files Schedules of Assets and Liabilities
----------------------------------------------------
Price Oil, Inc., delivered its Schedules of Assets and
Liabilities to the U.S. Bankruptcy Court for the Middle District
of Alabama, disclosing:
Name of Schedule Assets Liabilities
---------------- ------ -----------
A. Real Property $3,575,000
B. Personal Property $4,438,395
C. Property Claimed as Exempt Not Applicable
D. Creditors Holding
Secured Claims $11,736,667
E. Creditors Holding
Unsecured Priority Claims $3,364,703
F. Creditors Holding
Unsecured Nonpriority Claims $5,270,902
---------- -----------
Total $8,013,395 $20,372,273
Headquartered in Niceville, Florida, Price Oil, Inc., supplies
gasoline fuel to convenience store owners and operators throughout
Alabama and Florida panhandle. The Debtor also owns, operates and
lease multiple convenience stores. The Debtor and five of its
affiliates filed for chapter 11 protection on Dec. 22, 2005
(Bankr. M.D. Ala. Case No. 05-34286). M. Leesa Booth, Esq., at
Bradley, Arant, Rose & White represents the Debtors in their
restructuring efforts. The Debtors tapped Cahaba Capital
Advisors, L.L.C. and AEA Group, L.L.C., for financial and
restructuring advice. When the Debtor filed for protection from
its creditors, it listed $10 million to $50 million in assets and
debts.
PSYCHIATRIC SOLUTIONS: Earns $27.15 Million for Fiscal Year 2005
----------------------------------------------------------------
Psychiatric Solutions, Inc. reported financial results for the
fourth quarter and fiscal year ended Dec. 31, 2005.
For the three months ended Dec. 31, 2005, Psychiatric Solutions'
revenues increased $224,150,000 from $133,873,000 for the same
period in 2004.
For the 12 months ended Dec. 31, 2005, the Company's total
revenues increased to $727,774,000 from total revenues of
$481,893,000 for the same period in 2004. Net income for the
fiscal year ended Dec. 31, 2005, increased to $27,154,000 from net
income of $16,801,000 for 2004.
PSI stated that its organic growth strategy contributed
significantly to increased revenue, as reflected in the 6.4%
expansion in same-facility revenue for the fourth quarter, the
13th consecutive quarterly increase. The Company's 8% growth in
same-facility revenue for the full year was driven by a 4.6%
increase in patient days and a 3.3% increase in revenue per
patient day. That performance was in line with PSI's continuing
targets of 7% to 9% annual same-facility revenue growth and 3% to
5% annual growth in both patient days and revenue per patient day.
For the fiscal year ended Dec. 31, 2005, Psychiatric Solutions
reported total assets of $1,175,612,00 and total liabilities of
$635,900,000.
Headquartered in Franklin, Tennessee, Psychiatric Solutions, Inc.
-- http://www.psysolutions.com-- offers an extensive continuum of
behavioral health programs to critically ill children, adolescents
and adults through its operation of 58 owned or leased
freestanding psychiatric inpatient facilities with more than 6,500
beds in 27 states. PSI also manages freestanding psychiatric
inpatient facilities for government agencies and psychiatric
inpatient units within medical/surgical hospitals owned by others.
* * *
The company's revolving loan facility maturing in 2009 and term
loan agreement maturing in 2012 carry Standard & Poor's Rating
Service's B+ rating and '3' recovery rating. Those ratings were
assigned on June 15, 2005. Full-text copies of the Company's loan
agreements arranged by Citicorp and Bank of America are available
at no charge at http://researcharchives.com/t/s?5d1
PXRE GROUP: Deferred Tax Writedown Cues S&P to Cut Rating to BB-
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its counterparty credit
and financial strength ratings on Bermuda-based PXRE Reinsurance
Ltd. and U.S.-based PXRE Reinsurance Co. (collectively referred to
as PXRE) to 'BBB-' from 'BBB+'.
Standard & Poor's also said that it lowered its counterparty
credit ratings on holding companies PXRE Group Ltd. (NYSE:PXT) and
PXRE Corp. to 'BB-' from 'BB+'.
All of these ratings remain on CreditWatch with negative
implications, where they were placed on Feb. 16, 2006.
"The downgrades reflect PXRE's announcement of a writedown of its
deferred tax asset, the adverse impact of two counterparties
canceling their reinsurance contracts, and an increase in the
group's estimated 2005 hurricane losses," explained Standard &
Poor's credit analyst Steven Ader.
Although PXRE's capital and liquidity are sufficient to meet known
obligations, its competitive position has materially diminished,
as demonstrated by its disclosure that a substantial loss in
premium volume could result from current reinsurance clients
exercising their right to cancel their reinsurance contracts.
This possibility also materially hampers PXRE's financial
flexibility, borne from its prospective business opportunities,
previously incorporated into the rating. Financial flexibility is
further hampered by the group's disclosure that it is currently
precluded under Bermuda holding company law from declaring or
paying dividends, subject to a shareholder vote in April 2006.
The ratings remain on CreditWatch negative because of the fluid
nature of developing events relative to PXRE's:
* competitive position,
* financial flexibility,
* capital adequacy, and
* liquidity.
Standard & Poor's expects to resolve the CreditWatch status of the
ratings within the next 90 days. The absence of further material
negative events will likely result in the ratings being affirmed.
Alternatively, the ratings could be lowered again if there is
further material adverse reserve development or an unanticipated
capital and liquidity impact from ongoing commutations.
The current ratings reflect PXRE's:
* good liquidity,
* good capital adequacy, and
* a favorable long-term debt maturity structure.
Offsetting these strengths are PXRE's materially diminished
competitive position and weak financial flexibility.
RADNET MANAGEMENT: Moody's Junks Proposed $60MM Term Loan Rating
----------------------------------------------------------------
Moody's assigned B3 rating to the proposed first lien credit
facilities of RadNet Management, Inc., a subsidiary of Primedex
Health Systems, Inc., consisting of a $15 million senior secured
first lien revolving credit facility and an $85 million senior
secured first lien term loan, and a Caa1 rating to the proposed
$60 million senior secured second lien term loan and a speculative
grade liquidity rating of SGL-2. Additionally, Moody's has also
assigned a corporate family rating of B3 to RadNet.
Proceeds derived from the new credit facilities will be utilized
to refinance existing indebtedness, finance growth capital
expenditures and for general corporate purposes.
The ratings reflect the company's significant amount of financial
leverage, constraints on free cash flow because of the need for
material investment in capital expenditures that are required for
growth, and the competitive nature of the industry, including
regional and national companies as well as individual and group
physician practices with access to reasonable equipment financing.
The ratings reflect also a number of qualitative concerns with
respect to the company. First, the company has limited geographic
diversity. Primedex operates only in the state of California, a
market that is highly competitive, has significant managed care
penetration and exhibits a distinctly different pricing profile
relative to Medicare because contracts within the state are
typically negotiated at a discount to Medicare rates. These
factors are likely to constrain pricing, margin growth and cash
flow.
Another key rating consideration is that Radnet's affiliate,
Beverly Radiology Medical Group provides services at the majority
of the company's centers through one long-term management contract
that expires in 2014. However, given that BMRG is the sole
provider of services, any disagreement or potential breach of this
agreement could cause significant disruption to Radnet's business.
Additionally, the CEO and 30% owner of Primedex, owns 99% of BMRG,
a situation which could result in a conflict at the executive
level if the parties experience a disagreement.
The company recently added a second independent director to its
five-member Board of Directors. However, the Board is still
weighted toward company executives, and therefore, Moody's
questions whether there is sufficient oversight of management.
Nevertheless, the company hired a Chief Financial Officer in 2004,
which hopefully has improved internal controls and internal
financial oversight. Previously, the current CEO had also
performed the function of the CFO.
The ratings also reflect the lack of an historical record of
effective financial management. The company completed a "pre-
packaged" Chapter 11 plan of reorganization on Sept. 4, 2003 with
the objective of modifying the terms of its convertible
subordinated debentures, thereby extending the maturity of the
issue. The balance of this issue of roughly $16 million will
remain in place in tandem with the proposed transaction, but are
not rated by Moody's. The bulk of the company's previous
financial difficulties were the result of an aggressive financial
profile focused on growth through acquisitions. In addition,
Primedex has exhibited a history of operating losses and resultant
negative equity.
One of the primary factors that somewhat mitigates these concerns
is the company's positioning relative to proposed changes in
Medicare reimbursement for diagnostic imaging services that become
effective on Jan. 1, 2007. Briefly, the Deficit Reduction Act of
2005 that President Bush signed into law on Feb. 8, 2006, provides
that reimbursement for the technical component of imaging services
in non-hospital based, freestanding facilities will be capped at
the lesser of the Medicare Part 'B' Physician Fee Schedule or the
Hospital Outpatient Prospective Payment System. Current
reimbursement generally allows for higher reimbursement than is
available under the HOPPS.
Changes in Medicare reimbursement for imaging services under the
DRA will also result in the reduction in reimbursement for
multiple images on contiguous body parts as previously announced
by the Centers for Medicare and Medicaid Services in November
2005. Currently, Medicare reimburses at a level of 100% of the
technical component of each procedure. Under the new rules,
Medicare will pay 100% of the technical component of the higher
priced imaging procedure with payments for additional scans
performed on contiguous body parts to be reduced by 25% for 2006
and 50% for 2007 and beyond.
The impact of the forthcoming changes in Medicare reimbursement
rates is likely to be minor for Primedex relative to the
competition for several reasons:
1) favorable payor mix: Only 15% of Primedex's revenues are
derived from Medicare;
2) favorable scan volume by modality: less than 45% of
Primedex's net revenue derived from MRI vs. approximately
60% to 70% for its major competitors. Of all scan
modalities, MRI and CT are expected to be the most heavily
affected by the new Medicare rates; and
3) high payor mix of exclusive capitated contracts: the
exclusive nature of these contracts provides revenue
stability with a proven history of obtaining rate
increases. In addition, the contracts eliminate billing
and bad debt costs and enable the firm to obtain lucrative,
incremental "pull-through" fee-for-service business.
Somewhat offsetting the advantages of capitation is the fact that
while the contracts have historically been profitable to the
company due to favorable price increases coupled with effective
management of costs and utilization, the contracts represent
financial risks, including high-than-expected utilization, the
increased costs of which would be borne by Primedex. Moreover, it
is Moody's opinion that over the long-term, there is a risk that
rate increases under capitated contracts may trend downward as a
consequence of the changes in Medicare reimbursements as the
contracts evolve.
Further mitigating the aforementioned concerns are the fact that
the structure of the proposed transaction would simplify the
company's capital structure, extend maturities and reduce
amortization requirements.
Additional positive factors supporting the ratings include the
company's position as the largest regional network provider of
outpatient diagnostic imaging services in the state of California.
The company has also invested heavily in new technology resulting
in a network of multi-modality centers equipped with new systems
and technology, the latter exemplified by the fact that none of
its closed system MRI's are less than 1.5 Tesla. The significant
investment in capital should serve to improve the company's
competitive position. Further, payors have recently focused on
growth in utilization resulting from self-referrals by specialists
with ownership interests in imaging practices. Therefore, the
company should be well positioned if payors begin to demand
independently accredited service providers.
The stable outlook reflects our anticipation of an increased level
of financial discipline. In addition, the rating agency expects a
continuation of moderate revenue and EBITDA growth with modest
improvements in cash flow from operations and free cash flow.
Moody's also anticipates the company will begin to reflect
positive net income in the near term, due to three major drivers:
an increase in the number of capitation contracts, pricing power
with respect to capitation contracts and an increase in PET and CT
scan volume. Additionally, net operating loss carry-forwards will
benefit the company by limiting required tax payments. The
ratings also assume the company will maintain a balanced approach
to growth through a combination of selective acquisitions and
center expansions.
The SGL-2 rating reflects Moody's belief that the company will
evidence good cash flow over the next twelve months. Operating
cash flow will be sufficient to cover all but extraordinary
capital expenditures for the next four quarters ending Jan. 31,
2007. We expect the company to continue to grow primarily through
incremental volume at existing facilities and to a lesser extent,
through modest acquisitions of one or two centers per year, which
will be funded from cash flow from operations.
Moody's does not anticipate that the company will have to rely on
its $15 million revolving credit facility over the next twelve
months but could access the revolver for working capital
requirements. However, Moody's notes that external liquidity is
limited by the modest size of the revolver. Moody's expects the
covenant levels on the new facility to be set with adequate
cushion so as to not limit the availability of the revolver.
Moody's also notes that the assets of the company will be fully
encumbered under the terms of the proposed agreement, thereby
limiting the possibility of raising additional liquidity through
asset sales or by means of the issuance of incremental secured
indebtedness.
Leverage, defined as adjusted debt to adjusted EBITDA, has
historically been high: for the year ended Oct. 31, 2005, this
ratio equaled 6.3 times. Following the proposed refinancing, the
company is expected to de-leverage slowly. Moody's estimates that
adjusted free cash flow to adjusted debt will exceed 5% and that
adjusted debt to adjusted EBITDA will equal roughly 5.5 times for
the year ending Oct. 31, 2006, metrics that are considered strong
for the B3 category. Nevertheless, the ratio of EBITDA less
capital expenditures to interest is estimated at only 1.4 times
and total debt as a percentage of revenues is very high at 137%
for the same time period.
The proposed $15 million revolving credit facility and the $85
million first lien term loan are rated at the corporate family
rating at B3. An incremental loss cushion supporting the first
lien debt is provided by the $60 million second lien term loan. In
addition, the first lien debt benefits from a $16 million
subordinated debt layer. The senior subordinated notes were
issued at the Primedex Health Systems, Inc., level and are both
structurally and contractually subordinated to the proposed credit
facilities. The senior subordinated notes are not rated by
Moody's.
The proposed $60 million second lien term loan is rated one notch
below the corporate family rating at Caa1. Notching reflects the
support provided by the $16 million layer in first loss
subordinated debt.
The intended borrower is RadNet Management, Inc., the operating
company. Beverly Radiology Medical Group III will pledge its
long-term management contract with RadNet Management Inc., which
expires in 2014, to secure the senior secured bank facilities.
Both the first and second lien facilities are secured by the same
collateral package consisting of substantially all of the assets
and stock of the borrower and each of its direct and indirect
subsidiaries. The facilities will also be secured by the assets
of the parent, Primedex. Guarantees by Primedex, all of the
borrower's U.S. subsidiaries and BRMG will support the proposed
credit facilities. Financial covenants will include a minimum
fixed charge coverage ratio, a maximum total leverage ratio, a
maximum senior leverage ratio, and a maximum capital expenditures
limitation. A 75% cash flow recapture will apply first to the
term loan 'B', next to the outstanding balance under the revolver
and last to the second lien term loan with step-downs based on
leverage. Moody's ratings are subject to our review of final
documentation for the transaction.
The ratings assigned are:
* $15 million revolving credit facility due 2011, B3
* $85 million first lien term loan due 2011, B3
* $60 million second lien term loan due 2012, Caa1
* Corporate family rating, B3
* Speculative grade liquidity rating, SGL-2
Primedex Health Systems, Inc., provides diagnostic imaging
services through a network of 57 fixed-site, free-standing
outpatient imaging centers in the state of California. For the
twelve months ended Oct. 31, 2005, the company recognized revenue
of approximately $146 million.
S3 INVESTMENT: Posts $68K Net Loss in Quarter Ended December 31
---------------------------------------------------------------
S3 Investment Co. Inc. delivered its financial results for the
quarter ended Dec. 31, 2005, to the Securities and Exchange
Commission on Feb. 17, 2006.
S3 Investment reported a $68,818 net loss for the three-months
ended Dec. 31, 2005, as compared to a $14,130 net loss for the
same period in 2004. The Company generated $20,319 of revenue in
the three-month period ended Dec. 31, 2005 compared to no revenue
for the same periods ended Dec. 31, 2004.
The Company's balance sheet at Dec. 31, 2005, showed $1,220,379 in
total assets and $501,293 in total liabilities. As of Dec. 31,
2005, the Company had a deficit in working capital of $500,765.
In addition, it had accumulated $3,025,578 of net operating losses
through Dec. 31, 2005.
A full text-copy of the regulatory filing is available at no
charge at http://researcharchives.com/t/s?5cd
Going Concern Doubt
Chisholm, Bierwolf & Nilson expressed substantial doubt about S3
Investment's ability to continue as a going concern after it
audited the Company's financial statements for the year ended June
30, 2005. The auditing firm pointed to the Company's working
capital deficit and recurring losses.
S3 Investment Co. Inc. -- http://www.s3investments.com/-- is a
Business Development Company regulated by the Investment Company
Act of 1940. Its first operating subsidiary, Securesoft Systems
Inc. -- http://www.securesoftsystems.com/-- was acquired in April
2003. S3 Investments has subsequently acquired 100 percent of
Redwood Capital to participate in the fast-growing investment
banking market in China and 51 percent of SINO UJE, a non-stocking
distributor of medical and industrial high-tech products to
markets throughout China. S3 is currently seeking to acquire
additional synergistic companies and is focused on assembling a
portfolio of investments that will provide value to its
shareholders.
SOLUTIA INC: Rothschild Values Company at $2.0 to $2.3 Billion
--------------------------------------------------------------
Rothschild, Inc., has advised Solutia Inc. and its debtor-
affiliates with respect to their hypothetical reorganization value
on a going concern basis. Rothschild estimates the total range of
going-concern values at $1,600,000,000 to $1,900,000,000. To
arrive at the total enterprise value, Rothschild has added to the
going-concern values estimates the Debtors' 50% joint ownership
interest in Flexsys L.P. of approximately $300,000,000 to
$400,000,000. The resultant total enterprise value of the Debtors
is approximately $2,000,000,000 to $2,300,000,000.
Rothschild reduced those total enterprise value estimates by the
estimated pro forma net debt levels of the Debtors (approximately
$1,200,000,000) to estimate implied reorganized equity value of
the Debtors. Rothschild estimates that the Debtors' implied
reorganized equity value will range from $700,000,000 to
$1,100,000,000.
The estimated potential range of recoveries for Holders of
General Unsecured Claims on a fully diluted basis is 56% to 48%,
assuming the mid-point of the estimated range of implied
reorganized equity value of $912,000,000.
In preparing its analysis, Rothschild:
(a) reviewed recent publicly available financial results of
the Debtors;
(b) reviewed the Debtors' internal financial and operating
data, including the business projections prepared and
provided by the Debtors' management relating to their
business and their prospects;
(c) discussed with senior executives the Debtors' current
operations and prospects;
(d) reviewed operating and financial forecasts prepared by the
Debtors, including the business projections in the
Disclosure Statement;
(e) discussed with senior executives of the Debtors' key
assumptions related to the Projections;
(f) prepared discounted cash flow analyses based on the
Projections, utilizing various discount rates, and
separately value and accounted for the Debtors' NOLs;
(g) considered the market value of certain publicly-traded
companies in businesses reasonably comparable to the
operating businesses of the Debtors;
(h) considered the value assigned to precedent change-in
control transactions for businesses similar to the
Debtors; and
(i) separately valued the Debtors' 50% joint venture ownership
interest in Flexsys, LP.
Rothschild also considered a range of potential risk factors,
including:
(a) the overhang and impact from operating under bankruptcy
protection;
(b) the ability to execute and realize savings from planned
operational initiatives;
(c) Reorganized Solutia's capital structure;
(d) the ability to meet projected growth targets; and
(e) the potential environmental and other Legacy Liabilities.
In addition, Rothschild relied on these assumptions with respect
to the valuation of the Debtors:
-- Effective date will be on June 30, 2006;
-- The Debtors are able to capitalize with adequate liquidity
as of the Effective Date;
-- The Debtors are able to implement the Global Settlement
reached with Monsanto Company, Pharmacia Corporation, the
Creditors' Committee and the Retirees Committee;
-- The pro forma net debt levels of the Debtors will
approximate $1,200,000,000;
-- The Projections assume that a material portion of the
Debtors' NOLs will be available to the Reorganized Debtors;
and
-- General financial and market conditions as of the Effective
Date will not differ materially from those conditions
prevailing as of the date of the Disclosure Statement.
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. Daniel H. Golden,
Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin
Gump Strauss Hauer & Feld LLP represent the Official Committee of
Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey
Howard & Zukin Capital provides the Creditors' Committee with
financial advice. (Solutia Bankruptcy News, Issue No. 55;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
SOUTHERN UNION: Moody's Holds Ba2 Rating on Preferred Securities
----------------------------------------------------------------
Moody's Investors Service confirmed the Baa3 senior unsecured debt
ratings of Southern Union Company with negative outlook and its
transportation and storage subsidiary, Panhandle Eastern Pipe Line
Company, LLC, with stable outlook. This rating action concludes
the review for possible downgrade initiated on December 19, 2005
following the company's announcement to acquire Sid Richardson
Energy Services Co., a gas gathering and processing company based
in Fort Worth, Texas, for $1.6 billion.
With the announced agreements to sell its LDCs in Pennsylvania and
Rhode Island, SUG in 2006 will remain predominantly a gas
transmission company with distribution and gas gathering and
processing each comprising approximately twenty percent of overall
EBITDA.
Moody's assigned an overall Baa3 rating for the combined
businesses of SUG, after factoring in the evolving nature of the
company's corporate governance and uncertainty of future corporate
direction. SUG remains both an operating utility and a
diversified holding company, whose board oversight extends to all
business segments. Therefore, the uncertainties surrounding the
parent's corporate strategy and corporate governance carry
directly into the credit ratings of Panhandle Eastern.
The ratings assume that both SUG and Panhandle will continue their
de-leveraging programs and improve their cash flows from
operations and coverage ratios as they undertake further growth
capital expenditure programs and commence a cash dividend payout
program.
The negative outlook on SUG as corporate parent stems from the
questionable ability for it to extract additional dividends from
its remaining operating gas LDCs in Missouri and Massachusetts and
Panhandle Eastern Pipe Line which it owns directly and from
Transwestern Pipeline Company and Florida Gas Transmission Co.,
which it owns indirectly through CCE Holdings, a joint-venture LLC
together with GE as principal partner, as these operating
companies undertake their own capital expenditure expansion and
maintenance programs during the next few years. After the sale of
its Pennsylvania and Rhode Island LDCs, SUG will still have
approximately $675 million of term debt which will have to be
serviced from the operating division cash flows and dividend
payments from operating companies even as these companies
undertake their own capital expenditure spending programs and
service their own debt needs. Furthermore, while the Sid
Richardson gas gathering and processing business appears
promising, there remain questions of financial, operating and
personnel integration of a privately-run company into a publicly-
held holding company that has more specific public disclosure and
reporting requirements under SEC rules.
The stable outlook on Panhandle stem from its successful
integration into SUG and more defined business plan with stable
customer base and term contracting. Panhandle's subsidiary
Trunkline LNG Holdings, LLC, is undertaking some sizeable capital
expenditure programs that should eventually generate more stable
revenues when completed, but Panhandle still has over $1 billion
of debt which it must also service, leaving little or no spare
cash to dividend to the parent during the next few years.
Confirmed Ratings are:
* Southern Union Company -- Baa3 senior unsecured debt; Baa3
corporate family rating.
* Southern Union Company -- Ba2 non-cum. perpetual preferred
securities.
* Panhandle Eastern Pipe Line Company, LLC -- Baa3 senior
unsecured debt.
Southern Union Company is a diversified energy company engaged
primarily in the business of transportation, storage, distribution
of natural gas and will be entering the gas gathering and
processing business as well. It maintains its headquarters in
Houston, Texas.
STATION CASINOS: S&P Rates Proposed $300 Million Sub. Notes at B+
-----------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on Station
Casinos Inc. to stable from positive.
At the same time, Standard & Poor's assigned its 'B+' rating to
the company's proposed $300 million senior subordinated notes due
2018. Net proceeds from the notes will be used to repay a portion
of the outstanding debt under its existing bank facility. At the
same time, Standard & Poor's affirmed its ratings, including the
'BB' corporate credit rating, on the Las Vegas-based casino owner.
Total pro forma debt outstanding is about $2.2 billion.
"The outlook revision reflects our expectation that Station's
financial policy will be aggressive and is likely to include
continued active capital spending initiatives and the potential
for meaningful share repurchases. As a result, an upgrade is not
likely during the timeframe that we had previously envisioned,"
said Standard & Poor's credit analyst Michael Scerbo.
From Oct. 1, 2005, through Feb. 22, 2006, Station repurchased
about 3.4 million shares of common stock (roughly $230 million at
current stock prices) and has the authority to repurchase about
6.9 million additional shares (roughly $463 million at current
stock prices) as of Feb. 22, 2006. Despite this aggressive
financial policy, operating performance over the intermediate term
is expected to continue to trend in line with current ratings.
STATION CASINOS: To Issue $300 Million of 6-5/8% Senior Notes
-------------------------------------------------------------
Station Casinos, Inc. (NYSE: STN) reported that it has agreed to
issue $300 million of 6-5/8% senior subordinated notes due March
15, 2018. The offering was priced at 99.5 to yield 6.69%.
Proceeds from the sale of the notes will be used to reduce a
portion of the amounts outstanding on the Company's revolving
credit facility. Such borrowings were used for capital
expenditures and general corporate purposes, including the
repurchase of shares of the Company's common stock previously
authorized for repurchase by the Company's Board of Directors.
Since Dec. 31, 2005, the Company has repurchased approximately 3.2
million shares of its common stock and has authorization to
repurchase approximately 6.9 million additional shares.
Station Casinos, Inc. is the leading provider of gaming and
entertainment to the residents of Las Vegas, Nevada. Station's
properties are regional entertainment destinations and include
various amenities, including numerous restaurants, entertainment
venues, movie theaters, bowling and convention/banquet space, as
well as traditional casino gaming offerings such as video poker,
slot machines, table games, bingo and race and sports wagering.
Station owns and operates Palace Station Hotel & Casino, Boulder
Station Hotel & Casino, Santa Fe Station Hotel & Casino, Wildfire
Casino and Wild Wild West Gambling Hall & Hotel in Las Vegas,
Nevada, Texas Station Gambling Hall & Hotel and Fiesta Rancho
Casino Hotel in North Las Vegas, Nevada, and Sunset Station Hotel
& Casino, Fiesta Henderson Casino Hotel, Magic Star Casino and
Gold Rush Casino in Henderson, Nevada. Station also owns a 50%
interest in Green Valley Ranch Station Casino, Barley's Casino &
Brewing Company and The Greens in Henderson, Nevada and a 6.7%
interest in the Palms Casino Resort in Las Vegas, Nevada. In
addition, Station manages Thunder Valley Casino near Sacramento,
California on behalf of the United Auburn Indian Community.
* * *
As reported in today's Troubled Company Reporter, Standard &
Poor's Ratings Services revised its outlook on Station Casinos
Inc. to stable from positive.
At the same time, Standard & Poor's assigned its 'B+' rating to
the company's proposed $300 million senior subordinated notes due
2018. Net proceeds from the notes will be used to repay a portion
of the outstanding debt under its existing bank facility. At the
same time, Standard & Poor's affirmed its ratings, including the
'BB' corporate credit rating, on the Las Vegas-based casino owner.
Total pro forma debt outstanding is about $2.2 billion.
STEINWAY MUSICAL: 69% of 8.75% Senior Noteholders Tender Bonds
--------------------------------------------------------------
Steinway Musical Instruments, Inc. (NYSE: LVB) reported that, in
connection with its previously announced tender offer and consent
solicitation for its 8.75% Senior Notes due 2011, holders of
$114,354,000 aggregate principal amount, representing 68.81% of
the total outstanding principal amount, had tendered their 8.75%
Notes prior to the consent deadline of 5:00 p.m., New York City
time, on Feb. 22, 2006.
As a result of the consents and early tenders, Steinway has
received the requisite consents to execute a supplemental
indenture relating to the 8.75% Notes as described in the Offer to
Purchase and Consent Solicitation Statement dated February 8,
2006. The settlement for the early tender of the 8.75% Notes is
expected to occur today, February 23, 2006. The supplemental
indenture will become operative upon early settlement of the
tender offer.
The tender offer will expire at 9:00 a.m., New York City time, on
Mar. 9, 2006, unless extended. Settlement for all 8.75% Notes
tendered after the consent deadline but prior to the expiration
date is expected to be completed promptly after the expiration
date. Holders who tender 8.75% Notes after the consent deadline
but on or prior to the expiration date will be entitled to
receive, upon our acceptance of such 8.75% Notes for payment, the
tender offer consideration but not the consent fee, as more fully
described in the Offer to Purchase and Consent Solicitation
Statement.
Steinway has engaged UBS Securities LLC to act as dealer manager
for the tender offer. Questions about the tender offer and
consent solicitation may be directed to the Liability Management
Group of UBS Securities LLC at (888) 722-9555 x4210 (toll free).
Requests for documentation should be directed to D.F. King & Co.,
the Information Agent for the tender offer and consent
solicitations, at (212) 269-5550 (collect) or (800) 628-8536
(toll free).
Steinway Musical Instruments -- http://www.steinwaymusical.com/--
through its operating subsidiaries, designs, manufactures and
markets high quality musical instruments. The Company has one of
the most valuable collections of brands in the music industry.
Through a worldwide network of dealers, Steinway Musical
Instruments' products are sold to professional, amateur and
student musicians, as well as orchestras and educational
institutions. The company employs a workforce of over 2,300 and
operates 14 manufacturing facilities in the United States and
Europe.
* * *
As reported in the Troubled Company Reporter on Feb. 15, 2006,
Standard & Poor's Ratings Services revised its outlook on Waltham,
Massachusetts-based Steinway Musical Instruments Inc. to stable
from negative.
A 'BB-' rating was also assigned to Steinway's planned $175
million senior unsecured note issue due in 2014. Upon completion
of the planned note sale, the rating on Steinway's existing senior
unsecured notes due in 2009 will be withdrawn. Pro forma debt
levels are expected to be about $196 million.
At the same time, Standard & Poor's affirmed its 'BB-' corporate
credit rating and raised the senior unsecured debt rating to 'BB-'
from 'B+'.
The $175 million planned note offering will be used to refinance
the company's existing senior unsecured notes. The revised
outlook reflects the company's improved leverage during the past
two years and Standard & Poor's expectation that Steinway will
maintain key credit measures and liquidity in line with the
existing ratings over the intermediate term. The upgrade is based
on Standard & Poor's expectation that Steinway's peak usage of its
senior secured revolving credit facility will not significantly
disadvantage senior unsecured debt holders.
TORCH OFFSHORE: Louisiana Revenue Dept. Objects to Amended Plan
---------------------------------------------------------------
The Louisiana Department of Revenue objects to Torch Offshore,
Inc., and its debtor-affiliates' First Amended Joint Plan of
Reorganization and asks the U.S. Bankruptcy Court for the Eastern
District of Louisiana to deny confirmation of that Plan.
The Department complains that the Debtors' plan does not contain a
default provision that would protect the Department in the event
of a default in the proposed plan payments.
To remedy the alleged deficiency in the Plan, the Department wants
the Debtors to incorporate this default provision:
"A failure by the reorganized Debtors to make a payment to
the Louisiana Department of Revenue pursuant to the terms
of the Plan shall be an event of default. The Louisiana
Department of Revenue shall give the Debtors written notice
thereof, with a copy to the Debtors' counsel, and the
Debtors may cure such default within twenty days from
receipt of such notice. If the reorganized Debtors fail to
cure an event of default within twenty days after receipt
of written notice of default, then the Louisiana Department
of Revenue may enforce the entire amount of its claim in
Bankruptcy Court or exercise any and all rights and
remedies allowed under applicable state law, or both."
In addition, the Department said that an injunction against the
assertion of a claim against any officer of the Debtors embodied
in the Plan prejudices its right to seek payment from these
officers. The Department wants to reserve its right to recover,
from the officers, income tax withheld from employees' but not
remitted to the Department in case the Debtors fail to remit the
taxes.
As reported in the Troubled Company Reporter on Feb. 22, 2006, the
Debtors filed an Amended Disclosure Statement explaining their
First Amended Joint Plan of Reorganization with the Bankruptcy
Court on Feb. 9, 2006.
The Debtors' Amended Plan proposes to make a pro rata distribution
to unsecured creditors, owed approximately $3,9035,210, from funds
derived from:
1) the secured lenders' $100,000 contribution;
2) proceeds from recoveries of D&O claims;
3) all unencumbered proceeds from the auction upon
resolution of potentially priming liens against Cal Dive
Vessels; and
4) net proceeds from prosecution of avoidance actions after
administrative claims are paid.
These claims will be paid in full:
-- $1.8 million of administrative claims;
-- $685,000 of priority claims; and
-- allowed priming maritime lien claims totaling $14,350,042;
Regions Bank and Export Development Canada's secured claims will
be paid in accordance with the Nov. 7 distribution order from the
proceeds of the sale of the Cal Dive Vessels. Deficiency in
Regions' claim, estimated at $23 million, will be treated as an
unsecured claim.
Other secured claims and maritime lien claims, estimated at
$11,264,577, will be treated as unsecured claims.
Intercompany claims and equity interest will be cancelled on the
effective date.
On the effective date of the Plan, the Debtors will establish a
Liquidating Trust for the sole purpose of liquidating and
distributing the Trust Assets. A Liquidating Trust Agreement will
govern the rights powers, obligations, appointment and removal of
a Plan Administrator.
A full-text copy of the Amended Disclosure Statement is available
for a fee at:
http://www.researcharchives.com/bin/download?id=060221020404
Headquartered in Gretna, Louisiana, Torch Offshore, Inc., provides
integrated pipeline installation, sub-sea construction and support
services to the offshore oil and gas industry, primarily in the
Gulf of Mexico. The Company and its debtor-affiliates filed for
chapter 11 protection (Bankr. E.D. La. Case No. 05-10137) on
Jan. 7, 2005. Christopher T. Caplinger, Esq., in New Orleans,
Louisiana, represents the Debtors. When the Debtors filed for
protection from their creditors, they listed $201,692,648 in total
assets and $145,355,898 in total debts.
TRUST ADVISORS: Exclusive Plan Filing Period Ends April 12
----------------------------------------------------------
The U.S. Bankruptcy Court for the District of Connecticut extended
until April 12, 2006, the period within which Trust Advisors
Stable Value Plus Fund has the exclusive right to file a chapter
11 plan. The Debtor also has until May 28, 2006, to solicit
acceptances of that plan.
As reported in the Troubled Company Reporter on Feb. 13, 2006,
Trust Advisors asked the Bankruptcy Court to extend its exclusive
plan filing and solicitation periods so that it can:
a) continue its efforts to resolve certain matters in In re
Grafton Partners, L.P., et al. (Bankr. N.D. Calif. Case No.
01-10606) and a lawsuit against PricewaterhouseCoopers LLP
pending in the California State Court (Alameda County
Superior Ct. No. 2002-056106) to further clarifying
the value of the estate;
b) negotiate with other parties regarding the possibility of
returning value to the Fund; and
c) consult with the recently appointed Equity Committee
regarding the plan of reorganization.
Headquartered in Darien, Connecticut, Trust Advisors Stable Value
Plus Fund filed for chapter 11 protection on Sept. 30, 2005,
(Bankr. D. Conn. Case No. 05-51353). Scott D. Rosen, Esq., at
Cohn Birnbaum & Shea P.C. represents the Debtor in its
restructuring efforts. Robert A. White, Esq., Robert E. Kaelin,
Esq., and Lissa J. Paris, Esq., at Murtha Cullina LLP, represent
the Official Committee of Unsecured Investor Creditors. When the
Debtor filed for protection from its creditors, it estimated
assets and debts of more than $100 million.
USG CORPORATION: Court Okays Rights Offering Backstop Agreement
---------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware approved
USG Corp.'s rights offering backstop agreement.
USG disclosed, on Jan. 30, 2006, an agreement to resolve the
asbestos personal injury claims in its Chapter 11 reorganization
case. Under the agreement, USG will establish and fund a personal
injury trust to pay asbestos personal injury claims. USG's bank
lenders, bondholders and trade suppliers will be paid in full with
interest. Stockholders will retain ownership of the company.
Financing for the plan is expected to be provided from USG's cash
on hand, the $1.8 billion rights offering to existing stockholders
backstopped by Berkshire Hathaway Inc., tax refunds and new long-
term debt. The terms of the agreement were included in the in the
company's plan of reorganization filed on Feb. 17, 2006, along
with a disclosure statement. After voting on the plan, the plan
will require approval by both the Bankruptcy Court and the
District Court that oversees the cases.
The Court approved backstop agreement assures that USG would
receive $1.8 billion in equity proceeds to fund a portion of the
company's asbestos personal injury claim settlement underlying the
reorganization plan USG announced on Jan. 30, 2006. Berkshire
Hathaway will receive a $67 million non-refundable fee for its
backstop commitment.
Headquartered in Chicago, Illinois, USG Corporation --
http://www.usg.com/-- through its subsidiaries, is a leading
manufacturer and distributor of building materials producing a
wide range of products for use in new residential, new
nonresidential and repair and remodel construction, as well as
products used in certain industrial processes. The Company filed
for chapter 11 protection on June 25, 2001 (Bankr. Del. Case No.
01-02094). David G. Heiman, Esq., Gus Kallergis, Esq., Brad B.
Erens, Esq., Michelle M. Harner, Esq., Mark A. Cody, Esq., and
Daniel B. Prieto, Esq., at Jones Day represent the Debtors in
their restructuring efforts. Lewis Kruger, Esq., Kenneth
Pasquale, Esq., and Denise Wildes, Esq., represent the Official
Committee of Unsecured Creditors. Elihu Inselbuch, Esq., and
peter Van N. Lockwood, Esq., at Caplin & Drysdale, Chartered,
represent the Official Committee of Asbestos Personal Injury
Claimants. Martin J. Bienenstock, Esq., Judy G. Z. Liu, Esq.,
Ralph I. Miller, Esq., and David A. Hickerson, Esq., at Weil
Gotshal & Manges LLP represent the Statutory Committee of Equity
Security Holders. Dean M. Trafelet is the Future Claimants
Representative. Michael J. Crames, Esq., and Andrew A. Kress,
Esq., at Kaye Scholer, LLP, represent the Future Claimants
Representative. Scott Baena, Esq., and Jay Sakalo, Esq., at
Bilzen Sumberg Baena Price & Axelrod LLP, represent the Asbestos
Property Damage Claimants Committee. When the Debtors filed for
protection from their creditors, they listed $3,252,000,000 in
assets and $2,739,000,000 in debts.
USG CORP: Overview & Summary of Chap. 11 Plan Of Reorganization
---------------------------------------------------------------
USG Corporation and its debtor-affiliates' joint plan of
reorganization provides, among other things, for the creation of
an asbestos personal injury trust under Section 524(g) of the
Bankruptcy Code to satisfy all asbestos personal injury claims and
obligations against and equity interests in the Debtors.
Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, in
Wilmington, Delaware, tells the U.S. Bankruptcy Court for the
District of Delaware that the Plan will also implement the
Debtors' agreement with the Asbestos Personal Injury Committee and
Dean M. Trafelet, the Legal Representative for Future Asbestos
Personal Injury Claimants, to resolve all asbestos personal injury
claims.
Under the Asbestos Agreement, USG will use its reasonable best
efforts to have the Effective Date of the Plan occur on or before
July 1, 2006. Unless otherwise agreed in writing by the parties,
the agreement terminates if, among other things, the Effective
Date has not occurred on or before August 1, 2006.
Mr. DeFranceschi relates that the Effective Date will not occur
and the Plan will not be consummated unless and until a
Confirmation Order has been entered by the Bankruptcy Court and
fully affirmed by the District Court.
Creation of Asbestos Personal Injury Trust
The Asbestos Personal Injury Trust will be established on the
Effective Date. The Trust is intended to be a "qualified
settlement fund" within the meaning of the Treasury Regulations
issued under Section 468B of the Internal Revenue Code.
The Asbestos Personal Injury Trust aims to:
(1) direct the processing, liquidation and payment of all
Asbestos PI Claims in accordance with distribution
procedures and order confirming the Plan;
(2) preserve, hold, manage and maximize the assets of the
Asbestos Personal Injury Trust for use in paying and
satisfying Asbestos PI Claims; and
(3) qualify at all times as a qualified settlement fund.
Under the Plan, the sole recourse of a PI Claimholder will be to
the Asbestos Personal Injury Trust, and that holder will have no
right whatsoever at any time to assert its PI Claim against any
"Protected Party," constituting:
* any debtor, reorganized debtor or any affiliate;
* any former or present director, officer or employee of any
debtor but only in their capacity;
* any stockholder;
* any entity that becomes a direct or indirect transferee of
or, successor to, any assets of any debtor or the Asbestos
Personal Injury Trust;
* any entity that makes a loan to any debtor or the Asbestos
Personal Injury Trust, but only to the extent that debt is
asserted to exist by reason of that entity becoming a
lender or to the extent any pledge of assets made in
connection with a loan is sought to be upset or impaired;
* any entity alleged to be directly or indirectly liable for
the conduct of, claims against or demands on any debtor,
to the extent that alleged liability arises due to:
-- an entity's ownership of a financial interest in any
debtor or affiliate;
-- an entity's involvement in the management of any
Debtor;
-- an entity's service as an officer, employee or any
entity that owns a financial interest in any debtor;
-- an entity's involvement in a transaction changing
the corporate structure, or in a loan or other
financial transaction affecting the financial
condition, of any party that owns a financial
interest in any debtor, including, involvement in
providing financing or advice and acquiring or
selling a financial interest in any entity; or
* any Settling Insurer, defined as any insurance asset
entity that enters into a settlement prior to the
conclusion of the Plan's confirmation hearing that is:
-- sufficiently comprehensive in the determination of
the Debtors, the PI Committee, and the Futures
Representative to warrant treatment of those
protected parties as to the Asbestos PI Claims
channeled to the Asbestos Personal Injury Trust; and
-- approved by the Bankruptcy Court.
The PI Trust will indemnify and hold each Protected Party
harmless from and against any PI Claim and related damages.
Asbestos Personal Injury Trust Fund
According to Mr. DeFranceschi, the amounts the Debtors must pay
into the Asbestos Personal Injury Trust depend on whether the
Fairness in Asbestos Injury Resolution Act of 2005 or
substantially similar legislation is enacted and made law
pursuant to the Plan.
The Debtors will fund the Asbestos Personal Injury Trust:
(a) On the Effective Date, the Debtors will pay $890,000,000
and issue a $10,000,000 promissory note to the PI Trust,
payable no later than December 31, 2006.
(b) On the Effective Date, the Debtors will issue one or
more contingent payment notes aggregating $3,050,000,000
to the PI Trust, which notes will be payable in the
event that the FAIR Act of 2005 or any substantially
similar legislation creating a national trust or similar
fund has not been enacted and made law on or before the
date -- Trigger Date -- that is 10 days after final
adjournment of the 109th Congress of the United States.
However:
(i) If the FAIR Act is not enacted and made law on or
before the Trigger Date, the obligations under
the Contingent Payment Note will vest and the
Reorganized Debtors will satisfy the Contingent
Payment Note.
(ii) If the FAIR Act is enacted and made law on or
before the Trigger Date and is not subject to a
constitutional challenge to its validity on or
before 60 days after the Trigger Date, the
obligations under the Contingent Payment Note
will not vest and will be fully canceled.
(iii) If the FAIR Act is enacted and made law on or
before the Trigger Date but is subject to a
Challenge Proceeding as of 60 days after the
Trigger Date, the Debtors' obligations under the
Contingent Payment Note will depend on whether
the Challenge Proceeding is upheld:
A) If the Challenge Proceeding is resolved by a
Final Order in that the FAIR Act is
unconstitutional in its entirety or as applied
to debtors in Chapter 11 cases whose plans of
reorganization have not yet been confirmed and
become substantially consummated, so that those
debtors will not be subject to the FAIR Act,
then the obligations under the Contingent
Payment Note will vest and the Reorganized
Debtors will satisfy the Contingent Payment
Note, with the first payment of $1.9 billion
being due within 30 days after the Final Order
and the second payment of $1.15 billion being
due within 180 days after the Final Order; and
B) If the Challenge Proceeding is resolved by any
other Final Order, then the obligations under
the Contingent Payment Note will not vest and
the Contingent Payment Note will be fully
canceled.
Until the time as the Contingent Payment Note is either paid in
full or canceled, Reorganized USG will not declare any dividend
to the holders of its stock or repurchase its stock in an amount
that exceeds $150,000,000.
In addition, until the Contingent Payment Note is either paid in
full or canceled, the amount of the Reorganized Debtors'
indebtedness that is senior to the Contingent Payment Note will
be limited to:
-- an exit financing facility not to exceed $750,000,000;
-- amounts necessary to fund any Plan distributions, after
taking into account available cash, including payments to
the Asbestos Personal Injury Trust, the unsecured
creditors and PD Claimholders;
-- amounts necessary to fund the operations, capital
expenditures and working capital of the Reorganized
Debtors;
-- other customary items like leases, hedging, interest rate
protection, taxes and similar items;
-- $125,000,000 general basket; and
-- any refinancing.
As a result, Mr. DeFranceschi explains, if the FAIR Act is made
into law, the Debtors' payments for the PI Claims would be
limited to $900,000,000 -- an amount that the Debtors believe is
approximately what they would be required to pay into the
national trust fund contemplated by the current version of the
FAIR Act of 2005.
"The Plan, if approved, provides a clear path for the Debtors to
emerge from [C]hapter 11 regardless of the outcome of the FAIR
Act, thus, avoiding a potentially lengthy, contentious and
uncertain bankruptcy case," Mr. DeFranceschi says.
The PI Committee and the Futures Representative, after
consultation with the Debtors, will select individuals to serve
as Asbestos Personal Injury Trustees.
The Asbestos Personal Injury Trustees will implement the PI Trust
Distribution Procedures that will process and pay the unpaid
portion of the PI Claims' liquidated value generally on an
impartial, first-in, first-out basis, with the intention of
paying all claimants over time as equivalent a share as possible
of the claims value.
The Asbestos Personal Injury Trust will protect, defend,
indemnify and hold harmless, to the fullest extent, each
Protected Party from and against any Asbestos PI Claim and any
related damages.
A.P. Green Issues
The Asbestos Personal Injury Committee, the Asbestos Personal
Injury Futures Representative and the Asbestos Property Damage
Committee have asserted that the Debtors are liable for claims
arising from the sale of asbestos-containing products by A.P.
Green Refractories Co. and its successors.
A.P. Green was acquired by merger into U.S. Gypsum in 1967 and
became a publicly traded company in 1988.
The Plan, if confirmed, will channel all Asbestos Personal Injury
Claims asserted against the Debtors on account of or relating to
A.P. Green or any of its affiliates or predecessors, to the
Asbestos Personal Injury Trust, and those claims will be paid
pursuant to the Asbestos Personal Injury Trust Distribution
Procedures.
Sources of Cash
Mr. DeFranceschi informs Judge Fitzgerald that financing for the
Plan is expected to be provided from:
(1) Cash
The financial and operational performance of the
Debtors' businesses during the reorganization cases has
enabled them to accumulate almost $1,600,000,000 in cash
and marketable securities. Most of that cash will be
used in funding the Plan.
(2) Rights offering to USG stockholders
The Debtors expect to raise $1,800,000,000 in new equity
funding through a Rights Offering. For each share of
common stock outstanding on the record date, the
stockholder will receive a right to purchase one new USG
common share at $40. If all stockholders exercise their
rights, the percentage ownership of each stockholder in
USG will remain unchanged following the Rights Offering.
The Rights Offering will be supported, subject to
Bankruptcy Court approval, by a backstop equity agreement
from Berkshire Hathaway Inc., USG's largest shareholder
with approximately 15% of USG's shares and the Chairman of
the Official Committee of Equity Security Holders.
(3) New debt financing
The Debtors expect to raise about $1,000,000,000 of debt
financing in the second half of 2006 if the payments
pursuant to the Contingent Payment Note become necessary.
Terms of that financing have not been determined.
(4) Tax refunds
The Debtors' transfers of cash to the Asbestos Personal
Injury Trust, including payments of principal and
interest on the Note and the Contingent Payment Note,
are expected to produce tax deductions that will offset
the Debtors' taxable income in the years in which the
transfers are made and generate net operating losses in
those years that may be carried back to 10 previous
taxable years. Based on the amount of taxes that they
paid during the carry-back period, the Debtors expect to
obtain refunds of around $1,100,000,000 assuming that
the Debtors transfer a total of $3,950,000,000 to the
Asbestos Personal Injury Trust.
Distributions Under the Plan
Mr. DeFranceschi relates that although asbestos property damage
claims will not be channeled to the PI Trust, the Debtors have
been making, and will continue to make, efforts to resolve all
Claims, including the unliquidated or disputed PD Claims.
Holders of stock interests in USG Corporation as of the Effective
Date will retain their shares and will have the right to purchase
additional reorganized USG's common stock in connection with a
rights offering.
Furthermore, Mr. DeFranceschi states that only the PI Claim
holders under Class 7, which will receive their distributions
from the Asbestos Personal Injury Trust, are entitled to vote on
the Plan. All other classes are unimpaired because the Plan does
not modify the legal, equitable or contractual rights attaching
to the claims or interests of certain classes, other than by
curing defaults and reinstating maturities.
Mr. DeFranceschi says that distributions to be made to holders of
Allowed Claims will be deemed made on the Effective Date or as
promptly as practicable, but in any event no later than 60 days
after the Effective Date or the later date when the applicable
conditions regarding cure payments for executory contracts and
unexpired leases, undeliverable distributions, or canceled
instruments or securities are satisfied.
Reorganized USG will make all Distributions of cash, the Note,
the Contingent Payment Note and other instruments or documents
required under the Plan. Each Disbursing Agent will serve
without bond, and any Disbursing Agent may employ or contract
with other entities to assist in or make the Distributions
required by the Plan.
On the Effective Date, each holder of an Allowed Claim will
receive the full amount of the Distributions. On each quarterly
distribution date, distributions will also be made to holders of
Disputed Claims in any class that were allowed during the
preceding calendar quarter, to the extent not distributed earlier
at the discretion of the applicable Disbursing Agent.
About USG Corp
Headquartered in Chicago, Illinois, USG Corporation --
http://www.usg.com/-- through its subsidiaries, is a leading
manufacturer and distributor of building materials producing a
wide range of products for use in new residential, new
nonresidential and repair and remodel construction, as well as
products used in certain industrial processes.
The Company filed for chapter 11 protection on June 25, 2001
(Bankr. Del. Case No. 01-02094). David G. Heiman, Esq., Gus
Kallergis, Esq., Brad B. Erens, Esq., Michelle M. Harner, Esq.,
Mark A. Cody, Esq., and Daniel B. Prieto, Esq., at Jones Day
represent the Debtors in their restructuring efforts.
Lewis Kruger, Esq., Kenneth Pasquale, Esq., and Denise Wildes,
Esq., represent the Official Committee of Unsecured Creditors.
Elihu Inselbuch, Esq., and peter Van N. Lockwood, Esq., at Caplin
& Drysdale, Chartered, represent the Official Committee of
Asbestos Personal Injury Claimants. Martin J. Bienenstock, Esq.,
Judy G. Z. Liu, Esq., Ralph I. Miller, Esq., and David A.
Hickerson, Esq., at Weil Gotshal & Manges LLP represent the
Statutory Committee of Equity Security Holders. Dean M. Trafelet
is the Future Claimants Representative. Michael J. Crames, Esq.,
and Andrew A. Kress, Esq., at Kaye Scholer, LLP, represent the
Future Claimants Representative. Scott Baena, Esq., and Jay
Sakalo, Esq., at Bilzen Sumberg Baena Price & Axelrod LLP,
represent the Asbestos Property Damage Claimants Committee.
When the Debtors filed for protection from their creditors, they
listed $3,252,000,000 in assets and $2,739,000,000 in debts. (USG
Bankruptcy News, Issue No. 104; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
USG CORP: Liquidation Analysis of Chap. 11 Plan of Reorganization
-----------------------------------------------------------------
To confirm USG Corporation and its debtor-affiliates' Chapter 11
Plan, the U.S. Bankruptcy Court for the District of Delaware must
determine that it is in the best interests of each holder of a
claim or interest in any impaired class who has not voted to
accept the Plan.
According to Daniel J. DeFranceschi, Esq., at Richards, Layton &
Finger, in Wilmington, Delaware, if the Asbestos Personal Injury
Claims under Class 7 does not unanimously accept the Plan, the
"best interests" test requires that the Bankruptcy Court find
that the Plan provides to each member of impaired class a
recovery on account of the member's claim or interest that has a
value at least equal to the distribution value that each member
would receive if the applicable Debtors were liquidated under
Chapter 7 of the Bankruptcy Code.
To estimate what members of Class 7 would receive if the Debtors
were liquidated under Chapter 7, the Debtors have prepared
liquidation analyses both for U.S. Gypsum alone and the Debtors
on a consolidated basis to determine the aggregate dollar amount
that would be available if their cases were converted to a
Chapter 7 case and each of the assets were liquidated by a
Chapter 7 trustee.
The hypothetical liquidation is assumed to commence on June 30,
2006, and to be completed within nine months.
Mr. DeFranceschi explains that the Liquidation Value would
consist of the net proceeds from the disposition of the Debtor's
assets, augmented by any cash held by the Debtor.
The Liquidation Value available to holders of Unsecured Claims
and Interests would be reduced by, among other things:
-- the claims of secured creditors to the extent of their
collateral value;
-- the costs, fees and expenses of the liquidation, as well
as other administrative expenses of the Chapter 7 case;
-- unpaid administrative claims of the Debtors' Chapter 11
case; and
-- priority and priority tax claims.
The Debtors believe that the liquidation itself would trigger
certain priority claims and would likely accelerate the payment
of other priority claims and priority tax claims, which would be
paid in full out of the net liquidation proceeds before the
balance would be made available to pay Unsecured Claims or to
make any distribution in respect of Interests.
In addition, the Debtors assert that the liquidation would
generate a significant increase in Unsecured Claims, including
contract rejection damage claims and tax and other governmental
claims.
The Liquidation Analysis is based on a number of estimates and
assumptions that are subject to significant uncertainties,
including those relating to the proceeds of sales of assets, the
timing of those sales, the impact of pending liquidations on
continuing operations and values and certain tax matters.
The Debtors also note that Chapter 7 liquidations could result in
substantial litigation that could delay the liquidation beyond
the periods assumed. That delay, Mr. DeFranceschi points out,
could reduce materially the amount determined on a present value
basis available for distribution to creditors.
Moreover, the litigation and attendant delay could adversely
affect the values realizable in the sale of the Debtors' assets
collectively, and U.S. Gypsum's assets separately, to an extent
that cannot be estimated at present.
Accordingly, the Debtors believe that the Plan will provide a
substantially greater ultimate return to PI Claimholders than
would Chapter 7 liquidations.
The Debtors will file documents relating to their Liquidation
Analysis with the Bankruptcy Court at a later date.
About USG Corp
Headquartered in Chicago, Illinois, USG Corporation --
http://www.usg.com/-- through its subsidiaries, is a leading
manufacturer and distributor of building materials producing a
wide range of products for use in new residential, new
nonresidential and repair and remodel construction, as well as
products used in certain industrial processes.
The Company filed for chapter 11 protection on June 25, 2001
(Bankr. Del. Case No. 01-02094). David G. Heiman, Esq., Gus
Kallergis, Esq., Brad B. Erens, Esq., Michelle M. Harner, Esq.,
Mark A. Cody, Esq., and Daniel B. Prieto, Esq., at Jones Day
represent the Debtors in their restructuring efforts.
Lewis Kruger, Esq., Kenneth Pasquale, Esq., and Denise Wildes,
Esq., represent the Official Committee of Unsecured Creditors.
Elihu Inselbuch, Esq., and peter Van N. Lockwood, Esq., at Caplin
& Drysdale, Chartered, represent the Official Committee of
Asbestos Personal Injury Claimants. Martin J. Bienenstock, Esq.,
Judy G. Z. Liu, Esq., Ralph I. Miller, Esq., and David A.
Hickerson, Esq., at Weil Gotshal & Manges LLP represent the
Statutory Committee of Equity Security Holders. Dean M. Trafelet
is the Future Claimants Representative. Michael J. Crames, Esq.,
and Andrew A. Kress, Esq., at Kaye Scholer, LLP, represent the
Future Claimants Representative. Scott Baena, Esq., and Jay
Sakalo, Esq., at Bilzen Sumberg Baena Price & Axelrod LLP,
represent the Asbestos Property Damage Claimants Committee.
When the Debtors filed for protection from their creditors, they
listed $3,252,000,000 in assets and $2,739,000,000 in debts. (USG
Bankruptcy News, Issue No. 103; Bankruptcy Creditors' Service,
Inc., 215/945-7000)
WICKES INC: Has Until March 15 to Solicit Acceptances of Plan
-------------------------------------------------------------
The Honorable Bruce W. Black of the U.S. Bankruptcy Court for the
Northern District of Illinois, Eastern Division, extended, until
March 15, 2006, Wickes Inc.'s time to solicit acceptances of its
plan of liquidation from its creditors.
The Debtor says the extension is necessary because:
-- its bankruptcy case is large and complex,
-- it has made good faith progress toward an orderly and
successful liquidation by completing the sale of
substantially all of its assets, and
-- it will give the Debtor additional time to resolve many
administration matters to allow for a consensual plan of
liquidation.
Headquartered in Vernon Hills, Illinois, Wickes Inc. --
http://www.wickes.com/-- is a retailer and manufacturer of
building materials, catering to residential and commercial
building professionals, repairs and remodeling contractors and
project do-it-yourself consumers. Wickes, Inc., and GLC Division,
Inc., filed for chapter 11 protection on January 20, 2004 (Bankr.
N.D. Ill. Case No. 04-02221). The Court dismissed GLC's case on
Feb. 17, 2005. Richard M. Bendix Jr., Esq., at Schwartz, Cooper,
Greenberger & Krauss and Steven J. Christenholz, Esq., David N.
Missner, Esq., and Deborah M. Gutfeld, Esq., at DLA Piper Rudnick
Gray Cary US LLP represent the Debtors in their restructuring
efforts. When the Debtors filed for protection from their
creditors, it listed $155,453,000 in total assets and $168,199,000
in total debts.
WICKES INC: Hires DiMonte & Lizak to Sue Wells Fargo
----------------------------------------------------
Wickes Inc. asks the Honorable Bruce W. Black of the U.S.
Bankruptcy Court for the Northern District of Illinois, Eastern
Division, for permission to employ DiMonte & Lizak, LLC, as
special counsel, nunc pro tunc to Jan. 17, 2006.
The Debtor wants to pursue certain causes of action against Wells
Fargo Equipment Finance, Inc., under Sections 544, 547, 549 and
550 of the U.S. Bankruptcy Code. The Debtor's bankruptcy counsel
-- DLA Piper Rudnick Gray Cary US LLP -- and its existing special
counsel -- Schwartz, Cooper, Greenberger & Krauss -- have
potential conflicts of interest that prevent them from suing Wells
Fargo.
DiMonte & Lizak will:
(a) perform and provide detailed analyses in connection with
the causes of action and the other claims, as appropriate;
(b) institute litigation against Wells Fargo and administer,
manage and direct all aspect of that litigation; and
(c) prepare settlement documents, if necessary.
Abraham Brustein, Esq., a member at DiMonte & Lizak, LLC,
discloses that the Firm's hourly rates are:
Designation Hourly Rate
----------- -----------
Senior Attorneys $350
Paralegals $75
Mr. Brustein assures the Court that DiMonte & Lizak, LLC, and the
members of the Firm are disinterested as that term is defined in
Section 101(14) of the U.S. Bankruptcy Code.
Headquartered in Vernon Hills, Illinois, Wickes Inc. --
http://www.wickes.com/-- is a retailer and manufacturer of
building materials, catering to residential and commercial
building professionals, repairs and remodeling contractors and
project do-it-yourself consumers. Wickes, Inc., and GLC Division,
Inc., filed for chapter 11 protection on January 20, 2004 (Bankr.
N.D. Ill. Case No. 04-02221). The Court dismissed GLC's case on
Feb. 17, 2005. Richard M. Bendix Jr., Esq., at Schwartz, Cooper,
Greenberger & Krauss and Steven J. Christenholz, Esq., David N.
Missner, Esq., and Deborah M. Gutfeld, Esq., at DLA Piper Rudnick
Gray Cary US LLP represent the Debtors in their restructuring
efforts. When the Debtors filed for protection from their
creditors, it listed $155,453,000 in total assets and $168,199,000
in total debts.
WINN-DIXIE: Wants Assessment Technologies as Property Tax Advisor
-----------------------------------------------------------------
Pursuant to Section 327(a) of the Bankruptcy Code, Winn-Dixie
Stores, Inc., and its debtor-affiliates seek authority from the
U.S. Bankruptcy Court for the Middle District of Florida to employ
Assessment Technologies, Ltd., as their property tax consultants,
nunc pro tunc to Nov. 1, 20005.
The Debtors have retained ATL as an ordinary course tax
consulting professional.
The Debtors have agreed to pay ATL under an agreement dated
Feb. 3, 2006, on a contingency fee basis equal to 35% of the
Net Tax Savings recovered by ATL for the Debtors. The Debtors
will only pay ATL if they recover a Tax Savings benefit, D. J.
Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New
York, tells the Court.
ATL will:
(a) review the current and proposed tax assessments on the
Debtors' real and personal properties -- both owned and
leased;
(b) consult the Debtors regarding tax assessments and proofs
of claim filed by taxing authorities; and
(c) where necessary, represent the Debtors before the
appropriate tax assessment and collection authorities in
an effort to negotiate the lowest possible assessment or
tax claim amount.
The Net Tax Savings received by the Debtors include the
difference between the proposed assessed valuation and the final
assessed value, the amount of refunds, credits and interest
recovered, and the reduction in claims fees.
ATL seeks relief from any requirement to maintain detailed time
records for services rendered under the Service Agreement. ATL
agrees, however, to keep reasonably detailed descriptions of the
services it renders to the Debtors under the Service Agreement.
Because of the contingency basis on which it is to be paid, ATL
has advised the Debtors that it further seeks relief from
complying with the monthly, interim, and final fee application
requirements of the Court-approved interim compensation
procedures for professionals. Instead, ATL proposes to submit
detailed invoices to those parties identified in the Fee Order.
If there is no objection, the Debtors may pay the invoice in
full.
According to James Hausman, ATL's senior vice president, the
firm:
(a) neither holds nor represents any interest adverse to the
Debtors or to their estates;
(b) is a "disinterested person" within the meaning of Sections
101(14) and 327(a); and
(c) has no connection with the Debtors, their creditors, or
any party-in-interest or their attorneys and accountants,
the United States Trustee, any person employed in the
office of the U.S. Trustee, or the Bankruptcy Judge
presiding over the Debtors' cases.
Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc.
-- http://www.winn-dixie.com/-- is one of the nation's largest
food retailers. The Company operates stores across the
Southeastern United States and in the Bahamas and employs
approximately 90,000 people. The Company, along with 23 of its
U.S. subsidiaries, filed for chapter 11 protection on Feb. 21,
2005 (Bankr. S.D.N.Y. Case No. 05-11063, transferred Apr. 14,
2005, to Bankr. M.D. Fla. Case Nos. 05-03817 through 05-03840).
D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and
Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King &
Spalding LLP, represent the Debtors in their restructuring
efforts. Paul P. Huffard at The Blackstone Group, LP, gives
financial advisory services to the Debtors. Dennis F. Dunne,
Esq., at Milbank, Tweed, Hadley & McCloy, LLP, and John B.
Macdonald, Esq., at Akerman Senterfitt give legal advice to the
Official Committee of Unsecured Creditors. Houlihan Lokey &
Zukin Capital gives financial advisory services to the
Committee. When the Debtors filed for protection from their
creditors, they listed $2,235,557,000 in total assets and
$1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News,
Issue No. 33; Bankruptcy Creditors' Service, Inc., 215/945-7000).
WINN-DIXIE: Court Denies Equity Panel's Request for Reinstatement
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the Middle District of Florida
denies the Official Committee of Equity Security Holders of Winn-
Dixie Stores, Inc., and its debtor-affiliates' motion for
reappointment. The Order has been filed under seal and is not
available for public review.
As reported in the Troubled Company Reporter on Aug. 22, 2005,
Felicia S. Turner, the United States Trustee for Region 21,
appointed five parties willing to serve on the Official
Committee of Equity Security Holders in Winn-Dixie Stores, Inc.,
and its debtor-affiliates' chapter 11 cases:
1. Brandes Investment Partners, L.P.;
2. Houston N. Maddox;
3. Poul Madsen;
4. Michael Nakonechny; and
5. Kenneth M. Thomas
On Jan. 11, 2006, the U.S. Trustee disbanded the Equity Committee.
As reported in the Troubled Company Reporter on Feb. 10, 2006,
the Equity Committee asked the Court to:
(1) immediately set aside the Notice of Disbandment and
reinstate the Equity Committee;
(2) require the U.S. Trustee, to the extent it believes that
disbandment is appropriate, to file appropriate pleadings
with the Court seeking to disband the Equity Committee so
that all interested parties will receive notice,
opportunity to conduct discovery and be heard at a
hearing; and
(3) appoint the Equity Committee, nunc pro tunc to Jan. 11,
2006, under Section 1102(a)(2) of the Bankruptcy Code.
The Equity Committee also wanted the pleadings and proceedings in
the Disbandment Motion unsealed.
Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc.
-- http://www.winn-dixie.com/-- is one of the nation's largest
food retailers. The Company operates stores across the
Southeastern United States and in the Bahamas and employs
approximately 90,000 people. The Company, along with 23 of its
U.S. subsidiaries, filed for chapter 11 protection on Feb. 21,
2005 (Bankr. S.D.N.Y. Case No. 05-11063, transferred Apr. 14,
2005, to Bankr. M.D. Fla. Case Nos. 05-03817 through 05-03840).
D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and
Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King &
Spalding LLP, represent the Debtors in their restructuring
efforts. Paul P. Huffard at The Blackstone Group, LP, gives
financial advisory services to the Debtors. Dennis F. Dunne,
Esq., at Milbank, Tweed, Hadley & McCloy, LLP, and John B.
Macdonald, Esq., at Akerman Senterfitt give legal advice to the
Official Committee of Unsecured Creditors. Houlihan Lokey &
Zukin Capital gives financial advisory services to the
Committee. When the Debtors filed for protection from their
creditors, they listed $2,235,557,000 in total assets and
$1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News,
Issue No. 33; Bankruptcy Creditors' Service, Inc., 215/945-7000).
WINN-DIXIE: Objects to Louise Clark's $3 Billion Claim
------------------------------------------------------
Winn-Dixie Stores, Inc., and its debtor-affiliates object to the
allowance of Louise Clark's Claim No. 8003 for $3,000,000,000
because:
(a) they have no liability on the debt alleged in the Claim;
(b) they dispute the amount of debt alleged in the Claim;
(c) Ms. Clark failed to attach any documentation
substantiating the basis for the claim;
(d) the debt asserted by the claim is barred by the applicable
statute of limitations; and
(e) the claim is barred by res judicata.
The Debtors reserve, without waiver, the right to assert further
or additional objections to the Claim, D. J. Baker, Esq., at
Skadden, Arps, Slate, Meagher & Flom LLP, in New York, tells the
Court.
Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc.
-- http://www.winn-dixie.com/-- is one of the nation's largest
food retailers. The Company operates stores across the
Southeastern United States and in the Bahamas and employs
approximately 90,000 people. The Company, along with 23 of its
U.S. subsidiaries, filed for chapter 11 protection on Feb. 21,
2005 (Bankr. S.D.N.Y. Case No. 05-11063, transferred Apr. 14,
2005, to Bankr. M.D. Fla. Case Nos. 05-03817 through 05-03840).
D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and
Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King &
Spalding LLP, represent the Debtors in their restructuring
efforts. Paul P. Huffard at The Blackstone Group, LP, gives
financial advisory services to the Debtors. Dennis F. Dunne,
Esq., at Milbank, Tweed, Hadley & McCloy, LLP, and John B.
Macdonald, Esq., at Akerman Senterfitt give legal advice to the
Official Committee of Unsecured Creditors. Houlihan Lokey &
Zukin Capital gives financial advisory services to the
Committee. When the Debtors filed for protection from their
creditors, they listed $2,235,557,000 in total assets and
$1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News,
Issue No. 33; Bankruptcy Creditors' Service, Inc., 215/945-7000).
WINSTON HOTELS: Closes First Loan Program with GE Commercial
------------------------------------------------------------
Winston Hotels, Inc., recently closed on its first loan in a
program with GE Commercial Franchise Finance, to provide a highly
streamlined, cost-effective loan product for hoteliers. Under the
program, GEFF and Winston provide seamless first mortgage loans
for up to 85 percent of a project's cost.
Winston initially funded $600,000 of the total $2.3 million first
loss piece, or the "B" note, of a $12 million total loan amount
for a to-be-built 140 room Hilton Garden Inn in Columbia, SC.
Winston is obligated to fund the remaining balance of the "B" note
ratably over the projected construction period that has commenced
and is expected to be completed during the fourth quarter of 2006.
The underlying construction-to-five-year-permanent loan, bears
interest at an all in annual yield to the company equal to 30-day
LIBOR plus approximately 12%.
Winston had $1.9 million net income available to common
shareholders for the 2005 fourth quarter, compared to the $0.9
million net income for the same period a year earlier.
For the year, Winston's net loss available to common shareholders
is $1.7 million, compared to net income available to common
shareholders of $7.8 million for the full year 2004.
The Company's funds from operations available to common
shareholders for the 2005 fourth quarter rose 19% to $6.4 million,
compared to $5.4 million in the 2004 fourth quarter.
For the full year 2005, FFO available to common shareholders
decreased to $16.4 million, compared to $26.2 million for 2004.
2005 Highlights
A) Hotel Debt Financing Program
-- For the full year, the Company closed on five loans
totaling approximately $23 million, including $14.0 million
of four senior participation interests in certain mezzanine
loans originated by Credit Suisse First Boston and
purchased by the Company in the fourth quarter of 2005.
-- In 2005, four loans with outstanding balances in the
aggregate of $16 million, were repaid to the Company, prior
to their maturity date, resulting in prepayment and related
fees totaling $1.6 million.
B) Financing
-- The Company expanded its line of credit with GE Capital in
2005 from $155 million to $215 million. Winston had
approximately $68 million available under the line as of
Dec. 31, 2005.
-- In 2005, the Company financed four of its existing hotel
loans under its $50 million master repurchase agreement
with Marathon Structured Finance Fund, L.P., borrowing
approximately $9 million. Availability under the Marathon
master repurchase agreement is approximately $41 million.
-- Winston established two new credit facilities with Marathon
totaling $13.2 million to finance hotel loans under the
Company's hotel debt financing program.
2006 First Quarter Outlook and Guidance
For the 2006 first quarter, the Company forecasts net income per
share available to common shareholders of ($0.02) to $0.00. On a
same store basis, the Company expects 2006 first quarter RevPAR to
increase 5 to 7%, compared to the prior year's first quarter, as
well as a slight increase in gross operating profit margins for
the first quarter of 2006, compared to the previous year's first
quarter.
Headquartered in Raleigh, North Carolina, Winston Hotels, Inc.
-- http://www.winstonhotels.com/-- is a real estate investment
trust specializing in providing subordinate financing for and the
development, acquisition, repositioning of premium limited-
service, upscale extended-stay and full-service hotels, with a
portfolio increasingly weighted toward the leading brands in the
lodging industry's upscale segment.
As of Dec. 31, 2005, the Company owned or has invested in 56 hotel
properties in 17 states having an aggregate of 7,668 rooms. This
included 49 wholly owned properties with an aggregate of 6,720
rooms, a 60% ownership interest in a joint-venture that owns one
hotel with 138 rooms, a 49% ownership interest in a joint venture
that owns one hotel with 118 rooms, a 48.78% ownership interest in
a joint venture that owns one hotel with 147 rooms, and a 13.05%
ownership interest in a joint venture that owns four hotels with
an aggregate of 545 rooms. As of Dec. 31, 2005, the Company had
hotel loans receivable totaling $38.1 million. The company does
not hold an ownership interest in any of the hotels for which it
has provided financing.
* * *
Moody's assigned a B3 rating to Winston Hotel's preferred stock.
That rating was placed on May 14, 2002 and has a positive outlook.
WORLDCOM INC: Court Rejects TSR Trustee's Claims Settlement
-----------------------------------------------------------
TSR Wireless LLC and TSR Wireless Holdings LLC filed voluntary
chapter 7 petitions in the United States Bankruptcy Court for the
District of New Jersey, on December 8, 2000. Subsequently,
Charles M. Forman, a member of the law firm of Forman Holt &
Eliades LLC, was appointed as the Trustee of those estates.
Mr. Forman relates that WorldCom, Inc., and some of its
subsidiaries are creditors of TSR.
According to Mr. Forman, TSR issued checks to the Debtor and two
of its subsidiaries, MCI WorldCom Wireless and Skytel Corp., in
payment of their prepetition invoices, totaling $1,998,184.
Subsequently, Mr. Forman filed these Proofs of Claim:
Claim Nos. Claim Amount
---------- ------------
16451 $126,909
16452 $1,031,295
16453 $839,979
MCI, Inc., then objected to those Claims.
MCI and Mr. Forman entered into a settlement agreement pursuant to
which Claim Nos. 16451 and 16452 were allowed as Class 6 unsecured
claims and Claim No. 16453 was disallowed.
Pursuant to the terms of the Debtors' Modified Second Amended
Joint Plan of Reorganization, each holder of a WorldCom general
unsecured claim will receive 7.14 shares for each $1,000 of the
holder's allowed claim as well as cash.
Mr. Forman relates that he has allowed Class 6 general Unsecured
Claims for $566,149. Thus, Mr. Forman asserts that he is entitled
to receive $101,057 in cash as well as 4,042 shares of
MCI stock.
Mr. Forman tells the Court that he subsequently received a check
for $72,761 from MCI. The remittance on the check indicated that
the gross amount was $101,057, but that amount was discounted by
$28,296.
In addition, Mr. Forman claims that he only received 906 shares of
MCI stock.
Mr. Forman says that MCI can't explain why the check was
discounted or when he can expect the remaining 3,136 shares.
Thus, Mr. Forman asks the Court to compel MCI to cancel the
$72,761 check and issue a check for $101,057, and 3,136 shares of
MCI stock.
Debtors Respond
Darrell W. Clark, Esq., at Stinson Morrison Hecker LLP, in
Washington D.C., informs the Court that MCI, Inc., and certain
subsidiaries, are currently in the process of investigating Mr.
Forman's claims and correcting the payment and distribution of the
shares of stock. However, due to the numerous claims that
MCI is attempting to pay, and the internal procedures MCI has
implemented for paying claims, MCI needs additional time to
investigate and correct Mr. Forman's payment issue.
* * *
Judge Gonzalez notes that the issues raised by Mr. Forman have now
been resolved. Thus, the Court denies Mr. Forman's request as
moot.
Headquartered in Clinton, Mississippi, WorldCom, Inc., now known
as MCI -- http://www.worldcom.com/-- is a pre-eminent global
communications provider, operating in more than 65 countries and
maintaining one of the most expansive IP networks in the world.
The Company filed for chapter 11 protection on July 21, 2002
(Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the
Debtors listed $103,803,000,000 in assets and $45,897,000,000 in
debts. The Bankruptcy Court confirmed WorldCom's Plan on October
31, 2003, and on April 20, 2004, the company formally emerged from
U.S. Chapter 11 protection as MCI, Inc. (WorldCom Bankruptcy News,
Issue No. 113; Bankruptcy Creditors' Service, Inc., 215/945-7000)
WORLDCOM INC: Balks at Kennedy's Motion for Document Production
---------------------------------------------------------------
As reported in the Troubled Company Reporter on Nov. 3, 2005,
Kennedy and Associates, Inc., filed a proof of claim pertaining to
an agreement with WorldCom, Inc., for services related to
consulting on and auditing of certain of WorldCom's ERISA-governed
benefit plans. Kennedy asserted that the Benefit Plans Consulting
Services Agreement is an executory contract and was assumed by
WorldCom, Inc., and its debtor-affiliates pursuant to their
Modified Second Amended Joint Plan of Reorganization.
WorldCom opposed Kennedy's Claim and argues that Kennedy was paid
for the work it did. WorldCom also maintained that no executory
contract exists, or ever existed, between them.
Dean J. Polales, Esq., at Ungaretti & Harris LLP, in Chicago,
Illinois, related that in connection with the dispute, Kennedy
served 83 document requests on WorldCom. WorldCom's response was
initially due on April 25, 2005. However, at WorldCom's request,
Kennedy extended the deadline for WorldCom to complete its
responses to the document requests through May 11, 2005.
Mr. Polales said that WorldCom still did not e-mail, fax or send
the responses to Kennedy's counsel by the May 11 Deadline.
WorldCom's counsel came to the offices of Kennedy's counsel the
next day to take Patrick Kennedy's disposition. Moreover,
WorldCom's counsel attested that the company's responses to the
Document Requests were mailed on May 11, 2005, via First Class
U.S. Mail. Kennedy's counsel, however, received those responses
nearly two weeks later, on May 23, 2005.
According to Mr. Polales, the Responses consist, almost
exclusively, of objections, most of which appear to be
disingenuous and made in bad faith. Also, in response to a number
of requests, WorldCom said that it was unfamiliar with terms
common to those familiar with employee benefit plans and plan
assets, especially their mismanagement and mistaken reporting.
WorldCom also objected to the production of certain requested
documents on the basis that it disagrees with Kennedy's legal and
factual positions on the merits in the dispute.
WorldCom asserts that the requested documents are irrelevant to
the matter.
Mr. Polales argued that WorldCom cannot contest Kennedy's Claim
and legal and factual positions and then deny Kennedy the right
provided to it by the Federal Rules of Civil Procedure and the
Federal Rules of Bankruptcy Procedure, to substantiate its
position.
On June 13, 2005, Kennedy's counsel conferred with WorldCom's
counsel in an effort to secure the requested documents without
court action. Mr. Polales related that at that time, it became
clear that WorldCom objected to many of the Document Requests
because it disagrees with Kennedy's interpretation of the
Contract. Thus, rather than allow the U.S. Bankruptcy Court for
the Southern District of New York to decide which interpretation
of the Contract is correct, based on all of the relevant and
available evidence, WorldCom has already decided that its
interpretation, if any, is correct, and has decided to entertain
only those Document Requests that are in line with its
interpretation of the Contract.
Accordingly, Kennedy asked the Court to compel WorldCom to produce
documents responsive to the requests to which it expressly
objected and also compel WorldCom to produce documents in response
to the other Document Requests, without first using its contrived
"relevance" filter.
Debtors Object
Sara E. Welch, Esq., at Stinson Morrison Hecker LLP, in Kansas
City, Missouri, tells the Court that the Debtors objected to the
Claim because the Debtors never signed the Benefit Plans
Consulting Services Agreement and did not agree to its terms.
According to Ms. Welch, Dona J. Miller, the Debtors' former Vice
President of Benefits, denies seeing or receiving a signed version
of the Agreement.
Ms. Welch relates that the Debtors have responded to the first
nine requests and produced documents in their possession, custody
or control. However, most of the remaining 74 requests for
production of documents have very little to do with Kennedy's
contract claim.
Ms. Welch argues that many of Kennedy's requests are inappropriate
because they seek irrelevant information, and seem designed to
further the personal agenda of Kennedy's employees.
Ms. Welch notes that it would pose an enormous burden on the
Debtors to require the Debtors' employees to respond and search
for documents in response to the remainder of these requests.
The difficulty in gathering the requested documents and the length
of time required to do so is understandable, due to:
(1) the sheer breadth of the totality of information
requested by Kennedy;
(2) the fact that the requests relate primarily to benefit
plans that are no longer in effect and which were
maintained by an office located in Boca Raton that closed
more than two years ago;
(3) the overwhelming obligations of the Debtors' benefits
group with respect to the Debtors' day-to-day business
operations, as well as other matters and requests for
information relating to the bankruptcy case; and
(4) the fact that a number of employees in the benefits
group, have left the company in connection with recent
reductions in the workforce.
Ms. Welch argues that it is clear from the Kennedy Motion that the
documents Kennedy seeks are designed to show not only the alleged
breaches of fiduciary duties, but more specifically the alleged
millions of dollars that Kennedy believes the Debtors should have
saved in their benefit plans, without the alleged breaches of
fiduciary duties.
Kennedy Responds
Dean J. Polales, Esq., at Kennedy & Associates, Inc., in Chicago,
Illinois, asserts that the documents Kennedy seeks are necessary
not only with respect to Kennedy's damages, but to prove the terms
of the Contract.
In addition, Mr. Polales asserts, Kennedy is entitled to the
documents it seeks because all the documents sought directly and
circumstantially will prove the nature and scope of Kennedy's
engagement pursuant to the Contract, and they will tend to rebut
the asserted position of WorldCom that the scope of the project
was limited to a mere review of some of WorldCom's employees'
social security disability benefit files.
Mr. Polales says that the discovery sought will help prove
WorldCom's motivation in denying the existence and terms of the
Contract.
Mr. Polales also notes that Kennedy provided WorldCom with over a
dozen boxes of relevant documents and the names and contact
information of 100 people who may have knowledge concerning their
dispute. Mr. Polales points out that, Kennedy, in good faith,
complied with Rule 7026(a)(1) of the Federal Rules of Bankruptcy
Procedure and the discovery procedures.
Mr. Polales also argues that a number of Dona Miller's statements
directly contradict the documents Kennedy already produced to
WorldCom, and even contradicts some documents WorldCom produced to
Kennedy.
Headquartered in Clinton, Mississippi, WorldCom, Inc., now known
as MCI -- http://www.worldcom.com/-- is a pre-eminent global
communications provider, operating in more than 65 countries and
maintaining one of the most expansive IP networks in the world.
The Company filed for chapter 11 protection on July 21, 2002
(Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the
Debtors listed $103,803,000,000 in assets and $45,897,000,000 in
debts. The Bankruptcy Court confirmed WorldCom's Plan on October
31, 2003, and on April 20, 2004, the company formally emerged from
U.S. Chapter 11 protection as MCI, Inc. (WorldCom Bankruptcy News,
Issue No. 113; Bankruptcy Creditors' Service, Inc., 215/945-7000)
* BOND PRICING: For the week of Feb. 20 - Feb. 24, 2006
-------------------------------------------------------
Issuer Coupon Maturity Price
------ ------ -------- -----
ABC Rail Product 10.500% 12/31/04 0
Adelphia Comm. 3.250% 05/01/21 2
Adelphia Comm. 6.000% 02/15/06 2
Adelphia Comm. 7.500% 01/15/04 64
Adelphia Comm. 7.750% 01/15/09 68
Adelphia Comm. 7.875% 05/01/09 67
Adelphia Comm. 8.125% 07/15/03 66
Adelphia Comm. 8.375% 02/01/08 65
Adelphia Comm. 9.250% 10/01/02 64
Adelphia Comm. 9.375% 11/15/09 69
Adelphia Comm. 9.500% 02/15/04 64
Adelphia Comm. 9.875% 03/01/05 65
Adelphia Comm. 9.875% 03/01/07 67
Adelphia Comm. 10.250% 06/15/11 67
Adelphia Comm. 10.250% 11/01/06 69
Adelphia Comm. 10.500% 07/15/04 67
Adelphia Comm. 10.875% 10/01/10 67
Allegiance Tel. 11.750% 02/15/08 25
Allegiance Tel. 12.875% 05/15/08 27
Amer & Forgn Pwr 5.000% 03/01/30 63
Amer Color Graph 10.000% 06/15/10 72
American Airline 9.980% 01/02/13 69
Ames Dept Stores 10.000% 04/15/06 0
AMR Corp. 10.290% 03/08/21 73
Antigenics 5.250% 02/01/25 58
Anvil Knitwear 10.875% 03/15/07 45
AP Holdings Inc 11.250% 03/15/08 15
Archibald Candy 10.000% 11/01/07 7
Armstrong World 6.350% 08/15/03 60
Armstrong World 6.500% 08/15/05 64
Armstrong World 7.450% 05/15/29 62
Asarco Inc. 7.875% 04/15/13 61
Asarco Inc. 8.500% 05/01/25 62
At Home Corp. 4.750% 12/15/06 1
ATA Holdings 12.125% 06/15/10 4
ATA Holdings 13.000% 02/01/09 5
Atlantic Coast 6.000% 02/15/34 12
Atlas Air Inc 8.770% 01/02/11 57
Autocam Corp. 10.875% 06/15/14 70
Avado Brands Inc 11.750% 06/15/09 1
Aviation Sales 8.125% 02/15/08 54
Avondale Mills 10.250% 07/01/13 72
Banctec Inc 7.500% 06/01/08 71
Bank New England 8.750% 04/01/99 6
Bank New England 9.500% 02/15/96 5
Big V Supermkts 11.000% 02/15/04 0
Budget Group Inc. 9.125% 04/01/06 0
Builders Transpt 8.000% 08/15/05 0
Burlington North 3.200% 01/01/45 61
Cell Therapeutic 5.750% 06/15/08 63
Charter Comm Hld 10.000% 05/15/11 52
Charter Comm Hld 10.250% 01/15/10 67
Charter Comm Hld 11.125% 01/15/11 54
Charter Comm Inc 5.875% 11/16/09 74
Chic East Ill RR 5.000% 01/01/54 50
CIH 10.000% 05/15/14 53
Ciphergen 4.500% 09/01/08 75
Clark Material 10.750% 11/15/06 0
CMI Industries 9.500% 10/01/03 0
Collins & Aikman 10.750% 12/31/11 28
Color Tile Inc 10.750% 12/15/01 0
Comcast Corp. 2.000% 10/15/29 41
Coyne Intl Enter 11.250% 06/01/08 72
CPNL-Dflt12/05 4.000% 12/26/06 10
CPNL-Dflt12/05 4.750% 11/15/23 33
CPNL-Dflt12/05 6.000% 09/30/14 26
CPNL-Dflt12/05 7.625% 04/15/06 47
CPNL-Dflt12/05 7.750% 04/15/09 50
CPNL-Dflt12/05 7.750% 06/01/15 17
CPNL-Dflt12/05 7.875% 04/01/08 47
CPNL-Dflt12/05 8.500% 02/15/11 34
CPNL-Dflt12/05 8.625% 08/15/10 35
CPNL-Dflt12/05 8.750% 07/15/07 48
CPNL-Dflt12/05 10.500% 05/15/06 48
Cray Inc. 3.000% 12/01/24 75
Cray Research 6.125% 02/01/11 31
Curative Health 10.750% 05/01/11 62
Dal-Dflt09/05 9.000% 05/15/16 23
Dana Corp 5.850% 01/15/15 66
Dana Corp 7.000% 03/01/29 67
Dana Corp 7.000% 03/15/28 67
Decorative Home 13.000% 06/30/02 0
Decrane Aircraft 12.000% 09/30/08 73
Delco Remy Intl 9.375% 04/15/12 40
Delco Remy Intl 11.000% 05/01/09 46
Delphi Auto System 6.500% 05/01/09 55
Delphi Auto System 7.125% 05/01/29 55
Delphi Corp 6.500% 08/15/13 52
Delphi Trust II 6.197% 11/15/33 28
Delta Air Lines 2.875% 02/18/24 22
Delta Air Lines 7.700% 12/15/05 23
Delta Air Lines 7.900% 12/15/09 23
Delta Air Lines 8.000% 06/03/23 22
Delta Air Lines 8.187% 10/11/17 61
Delta Air Lines 8.300% 12/15/29 22
Delta Air Lines 8.540% 01/02/07 29
Delta Air Lines 8.540% 01/02/07 38
Delta Air Lines 8.540% 01/02/07 61
Delta Air Lines 9.200% 09/23/14 69
Delta Air Lines 9.250% 03/15/22 22
Delta Air Lines 9.250% 12/27/07 17
Delta Air Lines 9.300% 01/02/10 54
Delta Air Lines 9.375% 09/11/07 70
Delta Air Lines 9.480% 06/05/06 47
Delta Air Lines 9.750% 05/15/21 23
Delta Air Lines 9.875% 04/30/08 64
Delta Air Lines 10.000% 06/01/10 49
Delta Air Lines 10.000% 06/01/11 28
Delta Air Lines 10.000% 06/18/13 63
Delta Air Lines 10.000% 08/15/08 23
Delta Air Lines 10.000% 12/05/14 46
Delta Air Lines 10.060% 01/02/16 66
Delta Air Lines 10.080% 06/16/08 58
Delta Air Lines 10.080% 06/16/08 58
Delta Air Lines 10.080% 06/16/08 58
Delta Air Lines 10.125% 05/15/10 22
Delta Air Lines 10.125% 05/15/10 39
Delta Air Lines 10.125% 06/16/09 61
Delta Air Lines 10.125% 06/16/10 58
Delta Air Lines 10.125% 06/16/10 58
Delta Air Lines 10.125% 06/16/10 61
Delta Air Lines 10.375% 02/01/11 23
Delta Air Lines 10.375% 12/15/22 23
Delta Air Lines 10.430% 01/02/11 20
Delta Air Lines 10.500% 04/30/16 62
Delta Air Lines 10.790% 03/26/14 20
Delta Mills Inc. 9.625% 09/01/07 39
Discovery Zone 13.500% 08/01/02 0
Diva Systems 12.625% 03/01/08 1
Duane Reade Inc 9.750% 08/01/11 74
Dura Operating 9.000% 05/01/09 52
Dura Operating 9.000% 05/01/09 53
DVI Inc. 9.875% 02/01/04 15
Eagle Food Centre 11.000% 04/15/05 1
Eagle-Picher Inc 9.750% 09/01/13 70
Encompass Service 10.500% 05/01/09 0
Enrnq-Dflt05/05 7.375% 05/15/19 39
Epix Medical Inc. 3.000% 06/15/24 64
Exodus Comm. Inc. 5.250% 02/15/08 0
Exodus Comm. Inc. 11.625% 07/15/10 0
Fedders North AM 9.875% 03/01/14 62
Federal-Mogul Co. 7.375% 01/15/06 39
Federal-Mogul Co. 7.500% 01/15/09 38
Federal-Mogul Co. 8.160% 03/06/03 32
Federal-Mogul Co. 8.370% 11/15/01 35
Federal-Mogul Co. 8.800% 04/15/07 35
Finova Group 7.500% 11/15/09 32
FMXIQ-DFLT09/05 13.500% 08/15/05 15
Foamex L.P.-DFLT 9.875% 06/15/07 16
Ford Motor Co 6.500% 08/01/18 68
Ford Motor Co 7.400% 11/01/46 65
Ford Motor Co 7.500% 08/01/26 71
Ford Motor Co 7.700% 05/15/97 71
Ford Motor Co 7.750% 06/15/43 66
Ford Motor Co 8.875% 01/15/22 75
Ford Motor Cred 5.650% 12/20/11 73
Ford Motor Cred 5.750% 01/21/14 71
Ford Motor Cred 5.750% 02/20/14 71
Ford Motor Cred 5.750% 02/21/12 73
Ford Motor Cred 5.900% 02/20/14 74
Ford Motor Cred 6.000% 01/20/15 74
Ford Motor Cred 6.000% 01/21/14 75
Ford Motor Cred 6.000% 02/20/15 73
Ford Motor Cred 6.000% 03/20/14 73
Ford Motor Cred 6.000% 03/20/14 74
Ford Motor Cred 6.000% 11/20/14 70
Ford Motor Cred 6.000% 11/20/14 72
Ford Motor Cred 6.000% 11/20/14 72
Ford Motor Cred 6.050% 01/20/15 73
Ford Motor Cred 6.050% 02/20/14 75
Ford Motor Cred 6.050% 03/20/14 75
Ford Motor Cred 6.050% 12/22/14 73
Ford Motor Cred 6.050% 12/22/14 74
Ford Motor Cred 6.150% 12/22/14 71
Ford Motor Cred 6.250% 01/20/15 75
Ford Motor Cred 6.250% 03/20/15 75
Ford Motor Cred 6.250% 12/20/13 74
Ford Motor Cred 6.250% 12/20/13 75
Ford Motor Cred 6.300% 05/20/14 75
Ford Motor Cred 6.350% 04/21/14 74
Ford Motor Cred 6.500% 03/20/15 72
Ford Motor Cred 7.250% 07/20/17 74
Ford Motor Cred 7.500% 08/20/32 74
Gateway Inc. 2.000% 12/31/11 71
General Motors 7.125% 07/15/13 73
General Motors 7.400% 09/01/25 64
General Motors 8.250% 07/15/23 69
General Motors 8.375% 07/15/33 70
General Motors 8.800% 03/01/21 70
General Motors 9.400% 07/15/21 72
Global Health SC 11.000% 05/01/08 1
GMAC 5.250% 01/15/14 71
GMAC 5.900% 01/15/19 73
GMAC 5.900% 01/15/19 73
GMAC 5.900% 02/15/19 70
GMAC 5.900% 10/15/19 72
GMAC 6.000% 02/15/19 71
GMAC 6.000% 02/15/19 72
GMAC 6.000% 02/15/19 75
GMAC 6.000% 03/15/19 72
GMAC 6.000% 03/15/19 72
GMAC 6.000% 03/15/19 72
GMAC 6.000% 03/15/19 73
GMAC 6.000% 04/15/19 69
GMAC 6.000% 09/15/19 71
GMAC 6.000% 09/15/19 73
GMAC 6.050% 08/15/19 68
GMAC 6.050% 08/15/19 71
GMAC 6.050% 10/15/19 72
GMAC 6.100% 09/15/19 70
GMAC 6.125% 10/15/19 74
GMAC 6.150% 08/15/19 71
GMAC 6.150% 10/15/19 70
GMAC 6.200% 04/15/19 72
GMAC 6.250% 01/15/19 74
GMAC 6.250% 04/15/19 74
GMAC 6.250% 05/15/19 75
GMAC 6.250% 07/15/19 75
GMAC 6.250% 12/15/18 74
GMAC 6.300% 08/15/19 74
GMAC 6.350% 04/15/19 73
GMAC 6.350% 07/15/19 70
GMAC 6.350% 07/15/19 71
GMAC 6.400% 11/15/19 70
GMAC 6.400% 12/15/18 74
GMAC 6.500% 01/15/20 71
GMAC 6.500% 06/15/19 72
GMAC 6.500% 11/15/18 74
GMAC 6.550% 12/15/19 73
GMAC 6.650% 02/15/13 67
GMAC 6.650% 06/15/18 75
GMAC 6.700% 06/15/19 75
GMAC 6.700% 12/15/19 73
GMAC 6.750% 03/15/20 72
GMAC 6.750% 05/15/19 75
GMAC 6.750% 06/15/19 75
GMAC 6.900% 06/15/17 74
GMAC 7.000% 06/15/22 73
GMAC 7.000% 09/15/21 75
GMAC 7.000% 11/15/24 73
GMAC 7.000% 11/15/24 74
GMAC 7.000% 11/15/24 74
GMAC 7.050% 03/15/18 75
Golden Books Pub 10.750% 12/31/04 0
Graftech Int'l 1.625% 01/15/24 73
Gulf Mobile Ohio 5.000% 12/01/56 74
Gulf States STL 13.500% 04/15/03 0
HNG Internorth 9.625% 03/15/06 37
Horizon Fin Corp 11.750% 05/08/09 0
Imperial Credit 9.875% 01/15/07 0
Inland Fiber 9.625% 11/15/07 51
Insight Health 9.875% 11/01/11 56
Insilco Corp 12.000% 08/15/07 0
Iridium LLC/CAP 10.875% 07/15/05 27
Iridium LLC/CAP 11.250% 07/15/05 28
Iridium LLC/CAP 13.000% 07/15/05 28
Iridium LLC/CAP 14.000% 07/15/05 28
Isolagen Inc. 3.500% 11/01/24 57
Isolagen Inc. 3.500% 11/01/24 58
Jordan Industries 10.375% 08/01/07 55
JTS Corp. 5.250% 04/29/02 0
Kaiser Aluminum & Chem. 9.875% 02/15/02 51
Kaiser Aluminum & Chem. 10.875% 10/15/06 50
Kaiser Aluminum & Chem. 10.875% 10/15/06 51
Kaiser Aluminum & Chem. 12.750% 02/01/03 10
Key Plastics 10.250% 03/15/07 0
Key3Media Group 11.250% 06/15/11 0
Kmart Corp. 8.540% 01/02/15 16
Kmart Corp. 8.990% 07/05/10 19
Kmart Corp. 9.350% 01/02/20 26
Kmart Funding 8.800% 07/01/10 30
Kmart Funding 9.440% 07/01/18 47
Level 3 Comm. Inc. 2.875% 07/15/10 72
Level 3 Comm. Inc. 6.000% 03/15/10 69
Level 3 Comm. Inc. 6.000% 09/15/09 74
Liberty Media 3.750% 02/15/30 56
Liberty Media 4.000% 11/15/29 61
Macsaver Financl 7.400% 02/15/02 3
Macsaver Financl 7.600% 08/01/07 3
MCMS Inc. 9.750% 03/01/08 0
Medquest Inc 11.875% 08/15/12 74
Merisant Co 9.500% 07/15/13 63
Metamor Worldwid 2.940% 08/15/04 1
Moa Hospitality 8.000% 10/15/07 70
Mosler Inc 11.000% 04/15/03 0
Motels of Amer 12.000% 04/15/04 68
Movie Gallery 11.000% 05/01/12 67
MRS Fields 9.000% 03/15/11 70
MSX Int'l Inc. 11.375% 01/15/08 66
Muzak LLC 9.875% 03/15/09 62
Natl Steel Corp. 8.375% 08/01/06 8
Natl Steel Corp. 9.875% 03/01/09 10
New World Pasta 9.250% 02/15/09 8
Nexprise Inc. 6.000% 04/01/07 0
North Atl Trading 9.250% 03/01/12 62
Northern Pacific RY 3.000% 01/01/47 60
Northern Pacific RY 3.000% 01/01/47 60
Northwest Airlines 6.625% 05/15/23 34
Northwest Airlines 7.248% 01/02/12 13
Northwest Airlines 7.625% 11/15/23 34
Northwest Airlines 7.626% 04/01/10 73
Northwest Airlines 7.875% 03/15/08 35
Northwest Airlines 8.070% 01/02/15 72
Northwest Airlines 8.130% 02/01/14 58
Northwest Airlines 8.700% 03/15/07 36
Northwest Airlines 8.875% 06/01/06 34
Northwest Airlines 8.970% 01/02/15 26
Northwest Airlines 9.179% 04/01/10 26
Northwest Airlines 9.875% 03/15/07 37
Northwest Airlines 10.000% 02/01/09 37
NTK Holdings Inc. 10.750% 03/01/14 69
Nutritional Src. 10.125% 08/01/09 60
NWA Trust 11.300% 12/21/12 69
Oakwood Homes 7.875% 03/01/04 8
Oakwood Homes 8.125% 03/01/09 15
Osu-Dflt10/05 13.375% 10/15/09 0
O'Sullivan Ind. 10.630% 10/01/08 61
Outboard Marine 9.125% 04/15/17 0
Overstock.com 3.750% 12/01/11 72
Overstock.com 3.750% 12/01/11 75
PCA LLC/PCA Fin 11.875% 08/01/09 20
Pegasus Satellite 9.625% 10/15/05 9
Pegasus Satellite 12.375% 08/01/06 10
Pegasus Satellite 12.500% 08/01/07 10
Pegasus Satellite 13.500% 03/01/07 0
Pen Holdings Inc. 9.875% 06/15/08 62
Phar-Mor Inc. 11.720% 09/11/02 1
Piedmont Aviat 9.900% 11/08/06 0
Piedmont Aviat 10.000% 11/08/12 9
Piedmont Aviat 10.200% 05/13/12 0
Piedmont Aviat 10.250% 01/15/49 0
Piedmont Aviat 10.250% 01/15/49 0
Piedmont Aviat 10.350% 03/28/11 0
Pixelworks Inc. 1.750% 05/15/24 70
Pliant-DFLT/06 13.000% 06/01/10 25
Pliant-DFLT/06 13.000% 06/01/10 27
Polaroid Corp. 11.500% 02/15/06 0
Pope & Talbot 8.375% 06/01/13 70
Pope & Talbot 8.375% 06/01/13 70
Primedex Health 11.500% 06/30/08 56
Primus Telecom 3.750% 09/15/10 40
Primus Telecom 8.000% 01/15/14 66
Psinet Inc. 10.000% 02/15/05 0
Railworks Corp. 11.500% 04/15/09 0
Read-Rite Corp. 6.500% 09/01/04 7
Refco Finance 9.000% 08/01/12 51
Reliance Group Holdings 9.000% 11/15/00 20
Renco Metals Inc 11.500% 07/01/03 0
RJ Tower Corp. 12.000% 06/01/13 65
Salton Inc. 12.250% 04/15/08 64
Scotia Pac Co 7.110% 01/20/14 73
Scotia Pac Co 7.710% 01/20/14 75
Silicon Graphics 6.500% 06/01/09 72
Solectron Corp. 0.500% 02/15/34 75
Solutia Inc 6.720% 10/15/37 75
Solutia Inc 7.375% 10/15/27 72
Source Media Inc. 12.000% 11/01/04 0
Steel Heddle 10.625% 06/01/08 0
Steel Heddle 13.750% 06/01/09 0
Sterling Chem 11.250% 04/01/07 0
Tekni-Plex Inc. 12.750% 06/15/10 56
Teligent Inc 11.500% 12/01/07 0
Thermadyne Holdings 12.500% 06/01/08 0
Tom's Foods Inc. 10.500% 11/01/04 5
Toys R Us 7.375% 10/15/18 74
Transtexas Gas 15.000% 03/15/05 0
Tribune Co 2.000% 05/15/29 72
Trism Inc 12.000% 02/15/05 0
Triton Pcs Inc. 8.750% 11/15/11 69
Triton Pcs Inc. 9.375% 02/01/11 69
Tropical SportsW 11.000% 06/15/08 10
Twin Labs Inc. 10.250% 05/15/06 2
United Air Lines 7.270% 01/30/13 48
United Air Lines 7.371% 09/01/06 58
United Air Lines 7.762% 10/01/05 72
United Air Lines 7.870% 01/30/19 64
United Air Lines 8.250% 04/26/08 3
United Air Lines 9.020% 04/19/12 71
United Air Lines 9.350% 04/07/16 68
United Air Lines 9.560% 10/19/18 70
Univ Health Svcs 0.426% 06/23/20 58
US Air Inc. 10.250% 01/15/49 0
US Air Inc. 10.250% 01/15/49 3
US Air Inc. 10.250% 01/15/49 7
US Air Inc. 10.250% 01/15/49 8
US Air Inc. 10.700% 01/01/49 8
US Air Inc. 10.700% 01/15/49 25
US Air Inc. 10.750% 01/15/49 13
US Air Inc. 10.750% 01/15/49 25
US Air Inc. 10.800% 01/01/49 4
US Air Inc. 10.800% 01/01/49 27
US Air Inc. 10.900% 01/01/49 3
US Airways Pass 6.820% 01/30/14 65
Venture Hldgs 9.500% 07/01/05 1
Venture Hldgs 11.000% 06/01/07 1
Venture Hldgs 12.000% 06/01/09 0
WCI Steel Inc. 10.000% 12/01/04 54
Werner Holdings 10.000% 11/15/07 24
Westpoint Steven 7.875% 06/15/05 0
Westpoint Steven 7.875% 06/15/08 0
Wheeling-Pitt St 6.000% 08/01/10 72
Winstar Comm 10.000% 03/15/08 0
Winstar Comm 12.750% 04/15/10 0
World Access Inc. 13.250% 01/15/08 5
*********
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 ***