LAIDLAW BANKRUPTCY NEWS Issue Number 1 ----------------------------------------------------------------- Copyright 2001 (ISSN XXXX-XXXX) June 30, 2001 ----------------------------------------------------------------- Bankruptcy Creditors' Service, Inc. 609-392-0900 FAX 609-392-0040 ----------------------------------------------------------------- LAIDLAW BANKRUPTCY NEWS is published by Bankruptcy Creditors' Service, Inc., 24 Perdicaris Place, Trenton, New Jersey 08618, On an ad hoc basis (generally every 10 to 20 days) as significant activity occurs in the Debtors' cases. Each issue is prepared by Peter A. Chapman, Editor. Subscription rate is US$45 per issue. Reproduction and re-mailing of LAIDLAW BANKRUPTCY NEWS is prohibited without permission of the publisher. ================================================================= IN THIS ISSUE ------------- [00000] HOW TO ORDER A SUBSCRIPTION TO LAIDLAW BANKRUPTCY NEWS [00001] BACKGROUND & DESCRIPTION OF LAIDLAW [00002] CONSOLIDATED BALANCE SHEET AT MARCH 31, 2001 [00003] COMPANY'S PRESS RELEASE ABOUT CHAPTER 11 & CCAA FILINGS [00004] LAIDLAW DEBTORS' CHAPTER 11 DATABASE [00005] LAIDLAW APPLICANTS' CCAA DATABASE 00006] LIST OF LAIDLAW'S 20 LARGEST UNSECURED CREDITORS [00007] DEBTORS' MOTION FOR JOINT ADMINISTRATION OF U.S. CASES [00008] APPLICANTS' MOTION TO PAY PREPETITION EMPLOYEE CLAIMS [00009] DEBTORS' MOTION TO PAY PREPETITION EMPLOYEE OBLIGATIONS [00010] OVERVIEW OF LAIDLAW'S CHAPTER 11 PLAN OF REORGANIZATION KEY DATE CALENDAR ----------------- 06/28/01 Voluntary Petition Date 07/13/01 Deadline for filing Schedules of Assets and Liabilities 07/13/01 Deadline for filing Statement of Financial Affairs 07/13/01 Deadline for filing Lists of Leases and Contracts 07/18/01 Deadline to provide Utilities with adequate assurance 08/27/01 Deadline to make decisions about lease dispositions 09/26/01 Deadline to removal actions pursuant to F.R.B.P. 9027 10/26/01 Expiration of Debtors' Exclusive Plan Proposal Period 12/25/01 Expiration of Debtors' Exclusive Solicitation Period 06/27/03 Deadline for Debtors' Commencement of Avoidance Actions Organizational Meeting with UST to form Committees Bar Date for filing Proofs of Claim First Meeting of Creditors pursuant to 11 USC Sec. 341 ----------------------------------------------------------------- [00000] HOW TO ORDER A SUBSCRIPTION TO LAIDLAW BANKRUPTCY NEWS ----------------------------------------------------------------- LAIDLAW BANKRUPTCY NEWS is distributed to paying subscribers by electronic mail. New issues are published on an ad hoc basis as significant activity occurs (generally every 10 to 20 days) in the Debtors' cases. The subscription rate is $45 per issue. newsletters are delivered via e-mail; invoices, transmitted following publication of each newsletter issue, arrive by fax. Distribution to multiple individuals at the same firm is provided at no additional charge; folks outside of your firm should set-up and pay for their own subscriptions. Subscriptions may be canceled at any time without further obligation. To continue receiving USG BANKRUPTCY NEWS, please complete the form below and return it by fax or e-mail to: Bankruptcy Creditors' Service, Inc. 24 Perdicaris Place Trenton, NJ 08618 Telephone (609) 392-0900 Fax (609) 392-0040 E-mail: peter@bankrupt.com We have published similar newsletters tracking billion-dollar insolvency proceedings since 1990. Currently, we provide similar coverage about the chapter 11 cases involving Safety-Kleen, Reliance Group Holdings & Reliance Financial, The FINOVA Group, Inc., W.R. Grace & Co., Owens Corning, Armstrong World Industries, USG Corporation, Pacific Gas and Electric Company, LTV, Wheeling-Pittsburgh, Fruit of the Loom, Pillowtex, Warnaco, Bridge Information Services, Service Merchandise, Winstar, 360networks, ICG Communications, PSINet, Lernout & Hauspie & Dictaphone, Imperial Sugar, Vlasic Foods, The Loewen Group International, Inc., Harnischfeger Industries, Inc., Vencor, Inc., Sun Healthcare Group, Inc., Mariner Post-Acute & Mariner Health, Genesis Health & Multicare, and Integrated Health Services. ================================================================= [ ] YES! Please enter my personal subscription to LAIDLAW BANKRUPTCY NEWS. Name: ---------------------------------------------- Firm: ---------------------------------------------- Address: ---------------------------------------------- ---------------------------------------------- > Phone: ---------------------------------------------- Fax: ---------------------------------------------- E-Mail: ---------------------------------------------- ----------------------------------------------------------------- [00001] BACKGROUND & DESCRIPTION OF LAIDLAW ----------------------------------------------------------------- LAIDLAW INC. 3221 North Service Road P.O.Box 5028 Burlington, Ontario L7R 3Y8 Telephone (905) 336-1800 http://www.laidlaw.com Laidlaw Inc. is a holding company which through its operating subsidiaries, provides essential, specialized services dedicated to "getting people where they have to go", throughout North America. The company holds leading positions in school and intercity bus service, municipal transit, ambulance transportation and hospital emergency department management. Laidlaw also has a growing presence in the tourism busing sector. Laidlaw's 95,000 employees provide services to passengers and patients from nearly 4000 locations in the United States and Canada. Corporate headquarters are in Burlington, Ontario, Canada. More than 90% of the company's revenue is generated from services provided to the public in the United States; the balance is generated by operations in Canada. A consolidator and operator of bus services since the early 1970's, Laidlaw entered the ambulance service business in 1993. Its solid waste interests were sold in 1996, and in 1997 its hazardous waste management business was taken public through a merger with Rollins Environmental. Laidlaw maintains a 44% interest in the entity which purchased Safety-Kleen Corp. in 1998 and adopted that corporate name. Laidlaw doubled its presence in the ambulance service business with the 1997 acquisition of American Medical Response, Inc. and extended its healthcare services to include emergency department management with the 1998 acquisition of EmCare Holdings, Inc. The company acquired Greyhound Canada Transportation Corporation in 1997 and Greyhound Lines, Inc., the primary intercity bus operator in the U.S., in March 1999. Laidlaw now holds the premier position in each of its transportation markets in North America. In September, 1999 Laidlaw Inc. classified its healthcare subsidiaries -- American Medical Response, Inc. and EmCare Holdings, Inc as discontinued. These assets remain for sale as the company focuses on its transportation services businesses. ----------------------------------------------------------------- [00002] CONSOLIDATED BALANCE SHEET AT MARCH 31, 2001 ----------------------------------------------------------------- LAIDLAW INC. CONSOLIDATED BALANCE SHEET At February 28, 2001 (Unaudited) ASSETS Current assets Cash and cash equivalents $216,900,000 Short-term investments and marketable Securities - at cost which approximates market value 5,000,000 Trade accounts receivable (net of allowance for doubtful accounts of $4,000,000) 284,600,000 Other receivables 33,600,000 Income taxes recoverable 900,000 Parts and supplies 37,800,000 Other current assets 35,100,000 -------------- Total current assets 613,900,000 Net assets of discontinued operations 433,200,000 Long-term investments 350,200,000 Property and equipment Land 156,300,000 Buildings 233,800,000 Vehicles 1,756,400,000 Other 190,300,000 -------------- 2,336,800,000 Less: Accumulated depreciation and amortization 858,300,000 -------------- 1,478,500,000 Other assets Goodwill (net of accumulated amortization of $155,200,000 1,189,300,000 Pension asset 45,100,000 Deferred charges 14,700,000 -------------- 1,249,100,000 -------------- Total assets $4,124,900,000 ============== LIABILITIES Current liabilities Accounts payable $90,900,000 Accrued interest payable 276,800,000 Other accrued liabilities 327,200,000 Current portion of long-term debt 3,381,000,000 -------------- Total current liabilities 4,075,900,000 Future income tax liability 13,300,000 Other long-term liabilities 226,900,000 Long-term debt 274,200,000 -------------- Total liabilities 4,590,300,000 -------------- SHAREHOLDERS' DEFICIENCY Preference Shares 7,900,000 Common Shares 325,927,870 shares issued and outstanding 2,222,600,000 Cumulative foreign currency translation Adjustments (163,200,000) Deficit (2,532,700,000) -------------- Total shareholders' deficiency (465,400,000) -------------- Total liabilities and shareholders' deficiency $4,124,900,000 ============== ----------------------------------------------------------------- [00003] COMPANY'S PRESS RELEASE ABOUT CHAPTER 11 & CCAA FILINGS ----------------------------------------------------------------- BURLINGTON, Ontario -- June 28, 2001 -- Laidlaw Inc. (TSE:LDM; OTC:LDWIF) announced today that as part of its financial restructuring, the company and five of its subsidiary holding companies -- Laidlaw Investments Ltd., Laidlaw International Finance Corporation, Laidlaw One, Inc., Laidlaw Transportation, Inc. and Laidlaw USA, Inc. -- have filed voluntary petitions for reorganization under chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Western District of New York. As part of the U.S. filings, the company filed its Plan of Reorganization, Disclosure Statement and ancillary exhibits. The company and Laidlaw Investments Ltd. will be filing cases under the Canada Companies' Creditors Arrangement Act (CCAA) in the Ontario Superior Court of Justice in Toronto, Ontario later today. None of the company's operating units is included in the filings; they are not affected by today's actions and will continue to carry on their businesses as usual. Stephen Cooper, managing partner of Zolfo Cooper LLC, a New York-based consulting firm specializing in restructurings and reorganizations and Laidlaw's vice chairman and chief restructuring officer, said, "In light of Laidlaw Inc.'s excessive leverage and the deterioration in value of certain of its assets, our primary objective has been to minimize the impact of the restructuring process on our operating companies - their employees, customers and vendors. We believe achieving this objective will maximize the value of the company for its creditors and other parties in interest. Today's filings represent a significant step in achieving this objective as the restructuring process will be contained at the holding companies level. "Significant progress in our restructuring efforts, which is reflected in the Plan and Disclosure Statement, has been made in resolving issues between our bank lenders and bondholders. We will now concentrate our efforts to resolve other litigation and alleged claims involving the filed companies through additional processes available to us under chapter 11 and the CCAA. "The restructuring plan as filed, among other matters, sets forth our views on the reorganized company's capital structure, which anticipates that all of the equity in the reorganized company will be distributed to the company's creditors. Unfortunately, as we have previously discussed and is often the case with reorganizations, the value of the company's assets proved to be insufficient to support a recovery for the company's current shareholders, " Mr. Cooper continued. Subject to receiving court approval and completing final documentation, Laidlaw expects to enter into a $200 million debtor-in-possession (DIP) financing facility with GE Capital. The DIP financing would provide total borrowing availability of $200 million, including a $100 million letter of credit sub- facility. The company is today seeking, and expects to obtain, interim authority to borrow up to $50 million under the facility, subject to completion of definitive documentation. Further, Greyhound Lines, Inc. and its direct subsidiaries, which are not subject to the chapter 11 or CCAA filings, are parties to a separate revolving credit facility which provides total borrowing availability of up to $125 million. Current availability under this facility is approximately $58 million. It is anticipated that cash-on-hand today of approximately 200 million and these financing sources -- the DIP and the Greyhound facility -- will provide the operating companies with sufficient capital to maintain their business-as-usual climate during their parent company's reorganization. "We believe that our operating companies are generating more than adequate cash flows to meet their working capital requirements for the foreseeable future. They have been more effectively managing cash and have continued to meet all their obligations to their suppliers," said John R. Grainger, Laidlaw Inc.'s president and chief executive officer. "By filing chapter 11 and CCAA cases and obtaining the additional financing provided by the $200 million DIP facility, we will ensure that all our operating companies will be able to maintain the normal high levels of service and safely deliver service to their customers. As our operating companies are not parties to these filings, our daily operations will continue as usual while we complete a holding company-level restructuring with our creditors. As reflected in our reorganization plan, we intend to emerge from this process with a capital structure appropriate for our long-term business plan," Mr. Grainger continued. Mr. Grainger emphasized that during the restructuring period and beyond, employees will continue to be paid their wages and health and welfare benefits without interruption and that no layoffs are planned. The company's businesses will continue operations as usual and vendors will continue to be paid in the normal course of business. Each of Laidlaw Inc.'s operating units is the largest in its sector: Laidlaw Education Services provides school bus services in the U.S. and Canada; Greyhound Lines, Inc. provides intercity bus transportation in Canada, the U.S. and Mexico; Laidlaw Transit Services operates bus systems for public transit authorities in the U.S. and Canada; American Medical Response, Inc. (AMR) is the largest provider of ambulance services in the United States; and EmCare Holdings, Inc. and its operating units comprise the leading U.S. emergency department management business. ----------------------------------------------------------------- [00004] LAIDLAW DEBTORS' CHAPTER 11 DATABASE ----------------------------------------------------------------- Lead Debtor: Laidlaw USA, Inc. 600 Six Flags Drive, Suite 300 Arlington, TX 76011 Debtor affiliates filing separate chapter 11 petitions: Laidlaw Inc. Laidlaw Investments Ltd. Laidlaw International Finance Corporation Laidlaw Transportation, Inc. Laidlaw One, Inc. Chapter 11 Petition Date: June 28, 2001 Court: United States Bankruptcy Court Western District of New York Olympic Towers 300 Pearl Street, Suite 250 Buffalo, NY 14202-2501 (716) 551-4130 Bankruptcy Case Nos.: 01-14099 through 01-14104, inclusive Judge: The Honorable Michael J. Kaplan Debtors' Lead Counsel: Richard M. Cieri, Esq. Thomas C. Daniels, Esq. Jones, Day, Reavis & Pogue North Point 901 Lakeside Avenue Cleveland, Ohio 44114 (216) 586-3939 Fax (216) 579-0212 and Paul E. Harner, Esq. Joseph M. Witalec, Esq. Jones, Day, Reavis & Pogue 1900 Huntington Center 41 South High Street Columbus, Ohio 43215 (614) 469-3939 Debtors' Local Counsel: Garry M. Graber, Esq. Hodgson Russ LLP One M&T Plaza, Suite 2000 Buffalo, NY 14203 (716) 856-4000 ----------------------------------------------------------------- [00005] LAIDLAW APPLICANTS' CCAA DATABASE ----------------------------------------------------------------- Applicants: Laidlaw Inc. Laidlaw Investments Ltd. Court File No.: 01-CL-4178 Application Date: June 28, 2001 Court: Superior Court of Justice Commercial List 393 University Avenue Toronto, Ontario M5G 1E6 Judge: Mr. Justice James Farley Applicants' Counsel: Jay A. Carfagnini, Esq. Delia Rhea, Esq. Goodmans LLP 250 Younge Street, Suite 2400 Toronto, Ontario M5B 2M6 (416) 979-1234 Fax (416) 597-4178 ----------------------------------------------------------------- [00006] LIST OF LAIDLAW'S 20 LARGEST UNSECURED CREDITORS ----------------------------------------------------------------- Entity Nature Of Claim Claim Amount ------ --------------- ------------ US Bank Trust National Indenture Trustee $400,000,000 Association for 7.65% Corporate Trust Services Debenture Dated Attn: Manager, Bondholder 9/11/1997 Services Due 2006 180 East Fifth Street Saint Paul, Minnesota 55101 Tel: (612) 973-5840 Fax: (651) 244-1142 US Bank Trust National Indenture Trustee $225,000,000 Association for 6.65% Corporate Trust Services Debenture, Dated Attn: Manager, Bondholder 9/11/1997 Services Due 2004 180 East Fifth Street Saint Paul, Minnesota, 55101 Tel: (612) 973-5840 Fax: (651) 244-1142 Canadian Imperial Bank of Lender Under $205,096,620 Commerce Syndicated Attn: managing Director bank Facility Commerce Court West, 7th Floor Toronto, Ontario M5L 1A2 Tel: (416) 980-4412 Fax: (416) 359-5151 US Bank Trust National Indenture Trustee $200,000,000 Association for 6.50% Corporate Trust Services Debenture, Dated Attn: Manager, Bondholder 9/11/1997 Services Due 2005 180 East Fifth Street Saint Paul, Minnesota 55101 Tel: (612) 973-5840 Fax: (651) 244-1142 US Bank Trust National Indenture Trustee $200,000,000 Corporate Trust Services for 7.70 % Attn: Manager, Bondholder Debenture, Dated Services 7/22/1992 180 East Fifth Street Due 2002 Saint Paul, Minnesota 55101 Tel: (612) 973-5840 Fax: (651) 244-1142 US Bank Trust National Indenture Trustee $200,000,000 Corporate Trust Services for 6.72% Attn: Manager, Bondholder Debenture, Dated Services 9/11/1997 180 East Fifth Street Due 2027 Saint Paul, Minnesota 55101 Tel: (612) 973-5840 Fax: (651) 244-1142 Toronto Dominion (Texas) Lender Under $182,487,437 Inc. Syndicated Bank Attn: Vice President Facility 31 West 52nd Street New York, NY 10019 Tel: (713) 653-8281 Fax: ((713) 951-9921 US Bank Trust National Indenture Trustee $150,000,000 Corporate Trust Services for 7.875% Attn: Manager, Bondholder Debenture, Dated Services 7/22/1992 180 East Fifth Street Due 2005 Saint Paul, Minnesota 55101 Tel: (612) 973-5840 Fax: (651) 244-1142 US Bank Trust National Indenture Trustee $150,000,000 Corporate Trust Services for 8.75% Attn: Manager, Bondholder Debenture, Dated Services 7/22/1992 180 East Fifth Street Due 2025 Saint Paul, Minnesota 55101 Tel: (612) 973-5840 Fax: (651) 244-1142 Royal Bank of Canada Lender Under $149,936,550 Attn: Senior Account Manager Syndicated Royal Bank Plaza Bank Facility 200 Bay Street 13th Floor, South Tower Toronto, Ontario Canada M5J 2J5 Tel: (416) 974-7077 Fax: (416) 974-0248 Bank of America Canada Lender Under $146,727,473 Attn: Senior Credit Syndicated 200 Front Street West, Bank Facility Suite 2700 Toronto, Ontario Canada M5V 3L2 Tel: (416) 349-5413 Fax: (416) 349-4295 Bank of Montreal Lender Under $118,838,345 Attn: Vice President Syndicated 1 First Canadian Place Bank Facility 24th Floor Toronto, Ontario Canada, M5X 1A1 Tel: (416) 867-4800 Fax: (416) 867-4741 US Bank Trust National Indenture Trustee $100,000,000 Association for 8.25% Corporate Trust Services Debenture, Dated Attn: Manager, Bondholder 7/22/1992 Services Due 2023 180 East Fifth Street Saint Paul, Minnesota 55101 Tel: (612) 973-5840 Fax: (651) 244-1142 US Bank Trust National Indenture Trustee $100,000,000 Association for 7.05% Corporate Trust Services Debenture, Dated Attn: Manager, Bondholder 7/22/1992 Services Due 2003 180 East Fifth Street Saint Paul, Minnesota 55101 Tel: (612) 973-5840 Fax: (651) 244-1142 US Bank Trust National Indenture Trustee $100,000,000 Association for 6.07% Corporate Trust Services Debenture, Dated Attn: Manager, Bondholder 9/11/1997 Services Due 2008 180 East Fifth Street Saint Paul, Minnesota 55101 Tel: (612) 973-5840 Fax: (651) 244-1142 Bank One Capital Markets, Lender Under $94,847,993 Inc. Syndicated Attn: Vice President Bank Facility 1 Bank One Plaza, 10th Floor Chicago, IL 60670-0324 Tel: (312) 732-8872 Fax: (312) 732-3885 Bear Stearns & Co. Lender under $93,971,256 Attn: Managing Director Syndicated 245 Park Ave., 4th Floor Bank Facility New York, NY 10010 Tel: (212) 272-9499 Fax: (212) 272-8709 Bank of America, N.A. (NC) Lender Under $77,449,505 Attn: Managing Director Syndicated 1850 Gateway Blvd., Bank Facility 5th Floor Concord, CA 94520 Tel: (925) 675-8066 Fax: (925) 675-8051 Bank of Nova Scotia Lender Under $73,087,495 Attn: Managing Director Syndicated Scotia Plaza Bank Facility 40 King Street West 29th Floor Toronto, Ontario Canada M5H 1H1 Montreal Trust Company Indenture Trustee $67,540,000 of Canada for 10.95% c/o Computershare Investor Debenture, Services, Inc. Series A, Dated Attn: Manager, Corporate 4/16/1991, Trust Due 2001 100 University Avenue 11th Floor Toronto, Ontario M5J 2Y1 Tel: (416) 263-9362 Fax: (416) 981-9777 ----------------------------------------------------------------- [00007] DEBTORS' MOTION FOR JOINT ADMINISTRATION OF U.S. CASES ----------------------------------------------------------------- The Debtors ask, pursuant to Rule 1015(b)(4) of the Federal Rules of Bankruptcy Procedure, that the U.S. Bankruptcy Court order their chapter 11 cases be jointly administered. Administration of one bankruptcy case on the Court's dockets, Garry M. Graber, Esq., at Hodgson Russ LLP explains, will reduce costs and facilitate a more efficient administrative process, unencumbered by the procedural problems otherwise attendant to the administration of multiple chapter 11 cases. At the First Day Hearing, Judge Kaplan directed that the U.S. Debtors' chapter 11 cases be consolidated, solely for administrative purposes, and that all pleadings and papers be captioned: UNITED STATES BANKRUPTCY COURT WESTERN DISTRICT OF NEW YORK In re: : : Jointly Administered LAIDLAW USA, INC., : Case No. 01-14099 A New York corporation, et al., : : Chapter 11 Debtors. : Case No. 01-2094 Further, Judge Kaplan makes it clear that his Order neither contemplates a substantive consolidation of the Debtors' estates nor prejudices the right of any party-in-interest to seek a substantive consolidation of the Debtors' estates. ----------------------------------------------------------------- [00008] APPLICANTS' MOTION TO PAY PREPETITION EMPLOYEE CLAIMS ----------------------------------------------------------------- The Canadian Applicants sought and obtained authority at a First Day Hearing, in accordance with the Company's stated policies, as such policies may be modified from time to time, and in their sole discretion, to pay: $30,472 for wages, salaries and contractual compensation; 55,031 for earned and accrued vacation pay; 8,200 for reimbursements of employee business expenses; 7,394 for withheld retirement savings deposits; and 964 for miscellaneous employee payroll deductions. The Applicants currently employ approximately 50 workers in Canada. "The continued and uninterrupted service of these Employees is essential to the Applicants' continuing operations and to their ability to reorganize," Jay A. Carfagnini, Esq., from Goodmans LLP. told Mr. Justice Farley at the First Day Hearing. Mr. Carfagnini explains that Laidlaw filed for chapter 11 protection in the midst of a regular payroll period. Payroll checks need to be issued this week. Telling employees to file proofs of claim is not something for which Laidlaw management is prepared and management is convinced that the Company's failure to honor the first postpetition payroll would destroy employee morale. Persuaded by these arguments, Mr. Justice Farley granted Laidlaw authority to honor these obligations. ----------------------------------------------------------------- [00009] DEBTORS' MOTION TO PAY PREPETITION EMPLOYEE OBLIGATIONS ----------------------------------------------------------------- The U.S. Debtors sought and obtained authority from Judge Kaplan to honor and pay all prepetition employee-related claims in accordance with the Company's stated policies, as such policies may be modified from time to time, and in their sole discretion. Judge Kaplan makes it clear that nothing in the Debtors' Motion or his Order shall be construed as an assumption of any executory contract pursuant to 11 U.S.C. Sec. 365. ----------------------------------------------------------------- [00010] OVERVIEW OF LAIDLAW'S CHAPTER 11 PLAN OF REORGANIZATION ----------------------------------------------------------------- Laidlaw's financial rehabilitation under a chapter 11 plan of reorganization is premised on a threshold series of Restructuring Transactions: * Laidlaw Inc. ("LINC") will cause Laidlaw Investments Ltd. ("LIL") to become a direct, wholly owned subsidiary of LINC. * LIL will acquire from LINC, in exchange for a combination of Cash, New Notes and common stock of LIL all of LINC's assets (other than its stock in LIL), including all of the equity and debt of LINC's Canadian and non-U.S. operations, Greyhound Canada Transportation Corp. and Laidlaw Transit Ltd. * LIL will continue as a Delaware corporation, and LIL will become New LINC. When Laidlaw's officers are finished inking the corporate paperwork, the Plan calls for: * All of LIL's outstanding shares will be converted into shares of New Common Stock. * LINC will transfer a combination of Cash, New Notes and New Common Stock that LINC received from LIL in the Restructuring Transactions to the existing creditors of LINC in full satisfaction and discharge of all claims, liabilities and debts against LINC. * Each holder's recovery will be received first in exchange for the principal amount of the holder's Allowed Claim, not the unpaid pre-Effective Date interest (if any) on such Allowed Claim. * The bank debt of Laidlaw Transportation, Inc. and Laidlaw One, Inc. will be satisfied and discharged on the Effective Date pursuant to Section III.C.1 of the Plan. * The outstanding stock of LINC and rights to acquire such stock will be canceled for no consideration. When these transactions are complete, the ultimate parent company in the corporate structure will be New LINC, the Delaware corporation. The consummation of these transactions results in the elimination of approximately $2,800,000,000 of indebtedness and wipes-out all existing equity interests. While New LINC will continue to be substantially leveraged following the Effective Date of the Plan, Laidlaw management believes it has a Business Plan that will enable New LINC's operations to increase revenues, reduce operating costs and enhance cash flow. Reorganized Laidlaw's three-legged Business Plan calls for: (A) Revenue increasing initiatives are expected to include: * price increases through renegotiation of contracts scheduled for renewal in the education services operations and the public transit portion of the inter- city, transit & tour business; * expansion of non-traditional, non-vehicle-intensive services offered by the education services business; * more emphasis on travel services and package express initiatives by Greyhound, in addition to continued growth of Greyhound's core businesses; and * improvements designed to enhance collection rates in the ambulance services portion of the healthcare businesses. (B) Operating cost reduction initiatives are expected to include: * termination and non-renewal of education services contracts that do not meet target return criteria; * information systems-driven improvements to operations; and * administrative efficiency in all operations. (C) Cash flow improvements are expected to result from improved profitability, as well as more efficient use of capital assets due to the increased focus on services in education and inter-city, transit & tour that do not require additional vehicles. Laidlaw cautions that New LINC's business is capital intensive, and the Projections anticipate that New LINC will make significant capital expenditures after the Effective Date to implement the Reorganized Debtors' business plan. For example, capital expenditures in fiscal 2002-2003 are expected to be higher than historical levels as a result of projected replacements of a disproportionate number of older vehicles used in the education services business that were acquired in previously consummated acquisitions. However, management believes that, assuming consummation of the Plan in accordance with its terms and achievement of the Reorganized Debtors' business plan, New LINC will have sufficient liquidity through at least [2004] to service the post-reorganization indebtedness and conduct of its business as contemplated by the Reorganized Debtors' business plan. New LINC plans to have access to a new senior secured revolving Exit Financing Facility, consisting of a $350,000,000 revolving credit facility with a $150,000,000 letter of credit sub-facility, to fund its working capital needs, including those needs created by seasonal operating fluctuations. Dresdner Kleinwort Wasserstein, Laidlaw's financial advisors, estimate the reorganization enterprise value of New LINC to fall between $2,700,000,000 and $3,400,000,000 as of [December 31, 2001]. Based on a review of DrKW's analysis, Laidlaw assumes that New LINC's estimated reorganization enterprise value is $3,000,000,000, the approximate mid-point of the reorganization enterprise value range estimated by DrKW. In consultation with DrKW and its other advisors, after giving effect to the Debtors' operating businesses and the proposed debt restructuring, the Debtors estimate total debt at the Effective Date to be approximately $1,320,000,000, consisting of: $425,000,000 of senior secured term indebtedness to be incurred in connection with the Exit Financing Facility, assuming the Debtors distribute $75,000,000 in Excess Cash at the Effective Date and reduce the senior secured term indebtedness by a corresponding amount, and subject to increase if distributions of Excess Cash are less than $75,000,000 or if all or part of the corresponding debt reduction is allocated to the New Notes; $64,700,000 in senior revolving credit facility borrowings to be incurred in connection with the Exit Financing Facility; $450,000,000 aggregate principal amount of New Notes, subject to reduction in connection with distributions of Excess Cash, issued to holders Unsecured Bank Debt Claims, Prepetition Noteholder Claims and General Unsecured Claims. $383,500,000 in existing indebtedness of New LINC's operating subsidiaries. Laidlaw estimates the reorganization equity value to be $1,680,000,000 billion as of an assumed Effective Date of [December 31, 2001], after giving effect to the Debtors' operating businesses, the expected present value of certain non- operating assets and the debt balances resulting from the proposed restructuring at and beyond the Effective Date. *** End of Issue No. 1 ***