Delphi, Solutia, Tousa, Asarco, Levitt: Bankruptcy
Hephaestus Holdings Inc., whose
subsidiaries forge parts for auto makers, emerged as the winning
bidder at an auction for the bearings business belonging to
Delphi Corp. Neither Delphi nor the buyer disclosed the price in
statements yesterday.
The hearing to approve the sale is scheduled for March 19.
Delphi went into the auction with a contract in hand calling
for the sale of the wheel bearing business to private-equity
investor Resilience Capital Partners for as much as $44.2
million.
Hephaestus is owned by KPS Capital Partners LP and an
affiliate of Mitsubishi Corp.
The main bearing plant is a 1.3 million-square-foot facility
in Sandusky, Ohio, with 1,000 workers.
In bankruptcy court yesterday, Delphi was given approval to
sell the worldwide steering and halfshaft businesses to Platinum
Equity LLC in a transaction that Delphi values in total at $447
million, including $190 million in debt assumption and $257
million to be received even without the sale under the
restructuring agreement with General Motors Corp.
To read Bloomberg coverage on the steering sale, click here.
Although the bankruptcy court in New York signed a
confirmation order on Jan. 25 formally approving Delphis
reorganization plan, the Troy, Michigan-based auto-parts maker
still must obtain $5.8 billion in new secured financing before
emerging from Chapter 11.
The case is In re Delphi Corp., 05-44481, U.S. Bankruptcy
Court, Southern District New York (Manhattan).
Other Updates
Pope Talbot Predicts Plan Distribution to Unsecured Creditor
Pope Talbot Inc., the pulp and lumber producer with
operations in Canada and the U.S., expects the nearly-completed
sale of assets will pay secured creditors in full, generating a
surplus permitting unsecured creditors to receive a distribution
under a liquidating Chapter 11 plan.
The prediction was made in a Feb. 20 court filing asking for
a 75-day extension of the excusive right to propose a Chapter 11
plan. If granted by the U.S. Bankruptcy Court in Delaware at a
March 11 hearing, no one else could file a plan before June 2.
The company said in the filing its not yet clear how much
will be generated from the four sales of mills and the
liquidation of inventory.
Pope Talbot began reorganizing in Canada under the
Companies Creditors Arrangement Act near the end of October and
filed under Chapter 11 in Delaware in November. The Canadian case
was moved to British Columbia from Ontario.
The Portland, Oregon-based company says the assets are
$347.9 million while total debt is $473.2 million.
The U.S. case is In re Pope Talbot Inc., 07-11738, U.S.
Bankruptcy Court, District of Delaware (Wilmington).
Asarco Reports $26 Million January Profit, Settles Lead Claims
Arizona copper miner Asarco LLC generated net income of
$25.9 million in January from $194.8 million in sales, the
company disclosed in an operating report filed Feb. 20 with the
U.S. Bankruptcy Court in Corpus Christi, Texas.
For January, operating income was $41.8 million. Income
before interest, taxes, depreciation and amortization for the
month was $45.3 million.
The bankruptcy judge this week authorized Asarco to settle
claims arising from exposure to lead at sites in Arizona,
Oklahoma and Texas. Before settlement, 850 claims were on file
seeking almost $1.5 billion in damages.
The settlement gives the claimants approved unsecured claims
totaling $28 million in satisfaction of their damages.
Separately, Asarco agreed to settle $135 million in
groundwater pollution claims arising from a site in Everett,
Washington, by giving two state agencies approved unsecured
claims for $38 million. The hearing for approval of the
settlement will be held April 18. To read Bloomberg coverage,
click here.
Asarco is putting the company up for auction as part of its
Chapter 11 reorganization plan. Asarco reported negotiating with
six prospective buyers. Harbinger Capital Partners Master Fund I
Ltd. and Citigroup Global Markets Inc. told the U.S. Bankruptcy
Judge in Corpus Christi, Texas, at a Feb. 8 hearing that they
hope to be the so-called stalking horse at auction.
Asarco filed to reorganize in August 2005 to deal with
asbestos claims.
The Chapter 11 case is In re Asarco LLC, 05-21207, U.S.
Bankruptcy Court, Southern District of Texas (Corpus Christi).
Wachovia Starts Dispute with Homeowners on Releasing Mortgages
Wachovia Bank NA started a lawsuit in the bankruptcy
reorganization of homebuilder Levitt Sons LLC to find out
whether it must release the mortgages it holds against 83 homes
sold for $25 million before the bankruptcy filing.
The unit of Charlotte, North Carolina-based Wachovia Corp.
explains in its complaint how the closing lawyers for Levitt
transferred ownership to the buyers even though Wachovia didnt
release its mortgages at the closings. The mortgages came from
financing Wachovia supplied to build the projects.
Wachovia says that its loans to Levitt were in default at
the time the homes were sold and contends it therefore wasnt
required to release its liens, even though Levitt was paid the
price for the homes. If the bank isnt required to release its
mortgages, Wachovia says its claims against Levitt will be
smaller. The bank was owed $122 million when the bankruptcy
reorganization began.
Wachovias court filing says the buyers or the banks
financing the purchases may have obtained title insurance.
Wachovias new lawsuit should sort out whether the bank, the
title companies, or the homeowners end up with claims against
Wachovia. The closing lawyers might also have exposure to
liability.
Levitt filed amended lists of assets and liabilities showing
more than $430 million in debt.
The parent Levitt Corp. did not file and nor did affiliate
Core Communities LLC, a developer of master planned communities.
The case is In re Levitt Sons LLC, 07-19845, U.S.
Bankruptcy Court, Southern District of Florida (Fort Lauderdale).
Blackhawk Wants Exclusivity Extension Pending Sale of Business
Blackhawk Automotive Plastics Inc., a designer and
manufacturer of injection-molded plastic parts for auto makers,
wants its exclusive right to propose a Chapter 11 plan extended
until May 19. Otherwise, someone could file a plan in the middle
of the sale process.
Blackhawk intends to sell the business for $20.8 million to
Flex-N-Gate LLC unless someone else offers a better price at a
March 3 auction. Bids are due Feb. 29.
The hearing for an extension of so-called exclusivity will
be held March 5.
The sale must be completed by March 14 under financing
agreements for the Chapter 11 reorganization begun in October.
The Salem, Ohio-based company listed assets of $58.7 million
against debt totaling $52.2 million. Blackhawk has almost 1,600
workers and generated $136 million in revenue in 2006.
The case is In re Blackhawk Automotive Plastics Inc., 07-
42671, U.S. Bankruptcy Court, Northern District of Ohio
(Youngstown).
Tousa Aims to Sell Defaulted $16.3 Million Note for 83%
Tousa Inc., the homebuilder that filed to reorganize at the
end of January, is asking for authority to sell a defaulted
$16.3 million mortgage for $13.5 million.
Tousa in 2005 spent $28 million purchasing 59 acres on
International Drive in Orlando, Florida. Although it sold 18
acres for $7 million, the remainder proved difficult to resell.
Last June Tousa sold the remainder to a buyer who paid
$8 million cash while borrowing $16.3 million from Tousa secured
by a mortgage on the property.
The buyer defaulted on the mortgage. Rather than foreclose,
Tousa found a buyer willing to purchase the defaulted note and
mortgage for $13.5 million, representing an 83 percent recovery.
Tousa wants the U.S. Bankruptcy Judge in Fort Lauderdale to
approve the sale without an auction. A hearing date for approval
of the sale has not yet been fixed.
The Chapter 11 petition was accompanied by an outline of a
plan to pay in full or reinstate all secured claims while
swapping existing senior notes and other unsecured claims for the
new stock and a sharing of recoveries from a litigation trust.
Holders of subordinated notes would be offered a share of the
litigation trust and warrants to purchase new stock.
Tousa filed its formal lists of assets and debt showing
property said to be worth $2.1 billion against liabilities of
$2 billion.
The case is In re Tousa Inc., 08-10928, U.S. Bankruptcy
Court, Southern District of Florida (Fort Lauderdale).
Lillian Vernon Approved To Begin Going-Out-of-Business Sales
Lillian Vernon Corp., the direct-mail and catalogue
specialty retailer that filed in Chapter 11 on Feb. 20, was given
authority yesterday by the U.S. Bankruptcy Judge in Delaware to
begin going-out-of-business sales.
The bankruptcy judge also allowed hiring Great American
Group LLC on an interim basis as the consultant to help run the
sale. The court will hold another hearing March 7 for final
approval to hire Great American.
The court yesterday also gave interim authority to borrow
$8.5 million. Final borrowing permission will be considered March
7.
To read Bloomberg coverage, click here.
Court filings say the company owes $15.6 million to the
pre-bankruptcy secured lenders, who are offering $18.5 million in
financing for the Chapter 11 case.
Virginia Beach, Virginia-based Lillian Vernon also owes
$7.5 million on a second-lien secured credit owed to investors
and $13.5 million to trade suppliers. Inventory had a book value
of $26 million.
The company was acquired in mid-2006 by private equity
investor Sun Capital Partners.
The case is In re Lillian Vernon Corp., 08-10323, U.S.
Bankruptcy Court, District of Delaware (Wilmington).
Watch List
Wilsons Leather Closes 41% of All Stores, 62% of Mall Locations
Wilsons The Leather Experts Inc., a 391-store leather goods
retailer, is closing as many as 160 of its 259 mall-based stores,
the company said in a Feb. 15 statement.
Wilsons also said it is undertaking aggressive cost
cutting initiatives and will remodel the remaining 100 mall-
based stores to a new concept emphasizing womens fashion
accessories.
Wilsons said it has begun discussions with landlords at
the stores being closed.
The Brooklyn Park, Minnesota-based specialty retailer has
118 outlet stores and 14 airport locations in addition to the
mall operations.
The stock closed yesterday at 68 cents a share, down 2 cents
in Nasdaq Stock Market trading.
Finlay Downgraded to Caa2 on Loss of Some Macys Locations
Finlay Enterprises Inc., a jewelry retailer, received its
second downgrade in less than a year yesterday when Moodys
Investors Service downgraded the corporate rating by two clicks
to Caa2 while the senior notes became Caa3.
Moodys reacted to the decision by Macys Inc. not to renew
Finlays leases for 94 of 350 stores when they expire next
January.
The credit-rating company also cited very weak operating
performance and expects further weakening.
The new Moodys rating is two levels below the rating given
early last month by Standard Poors.
New York-based Finlays has 794 locations in total,
including 688 leased jewelry departments in department stores.
Finlay has free-standing stores under the names Bailey Banks
Biddle, Carlyle, and Congress Jewelers.
Briefly Noted
The trial began yesterday in U.S. Bankruptcy Court in New
York on the effort by specialty chemical manufacturer Solutia
Inc. to force Citigroup Inc., Goldman Sachs Credit Partners LP,
Deutsche Bank Trust Company Americas and Deutsche Bank Securities
Inc. to fund a $2 billion loan they committed to make in October.
The lenders told the judge they were unanimous in their decision
not to fund the loan given what they see as a material adverse
change in the loan syndication market. The trial is continuing
today and tomorrow, resuming again on Feb. 25. To read Bloomberg
coverage, click here. Solutia must have the loan to carry out the
Chapter 11 reorganization plan the bankruptcy judge approved in a
Nov. 29 confirmation order. Solutia, based in St. Louis, filed
its Chapter 11 reorganization petition in December 2003, listing
assets of $2.85 billion against debt totaling $3.22 billion. The
case is In re Solutia Inc., 03-17949, U.S. Bankruptcy Court,
Southern District New York (Manhattan).
Sharper Image Corp., the 184-store specialty retailer that
filed in Chapter 11 on Feb. 19, won interim approval yesterday to
borrow $35 million from $60 million in secured financing promised
for the reorganization. The final hearing for borrowing approval
will be March 7. The petition filed in U.S. Bankruptcy Court in
Delaware listed assets of $251.5 million and debt totaling
$199 million. The company is closing 90 stores. At filing, San
Francisco-based Sharper Image owed $44.5 million on a pre-
petition secured term loan and revolving credit agreement. The
case is In re Sharper Image Corp., 08-10322, U.S. Bankruptcy
Court, District of Delaware (Wilmington).
While objections by labor unions to bonuses for managers
seldom succeed, auto parts maker Dura Automotive Systems Inc. won
only measured victory yesterday over opposition from the United
Automobile Workers Union to approval of a trimmed-back
$2.5 million bonus program that excludes the top four executives.
The U.S. Bankruptcy Judge approved the program, although Dura
cant pay the bonuses without another hearing if its still in
Chapter 11 by July. To read Bloomberg coverage, click here. For
lack of financing, Dura is renegotiating the reorganization plan
creditors already accepted. Dura filed under Chapter 11 in
September 2006 with 16,000 employees at 63 factories in 14
countries. The operations outside the U.S. and Canada arent in
reorganization. The petition by Rochester Hills, Michigan-based
Dura listed $2 billion in assets and debt of $1.7 billion. The
case is In re Dura Automotive Systems, Inc., 06-11202, U.S.
Bankruptcy Court, District of Delaware (Wilmington).
Downgrade
Truckers Yellow and Roadway Downgraded Again
Although YRC Worldwide Inc. lost investment grade status in
December, Standard Poors once again downgraded the largest
less-than-truckload freight hauler in the U.S., moving the
corporate rating another click lower to BB.
SP this time has concern regarding refinancing risk,
earnings performance, and liquidity position over the next year,
given the slowing U.S. economy and continuing pressures in the
trucking sector.
Maturities this year include $255 million in notes that
mature in December and an asset-backed facility that needs
refinancing in May.
Overland Park, Kansas-based YRC generates $9.6 billion in
annual revenue operating more than 17,500 tractors and 670
terminals under the names Yellow Transportation and Roadway
Express.
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