December 212006

 

Smart

Papers' Reorganization Plan Approved

Smart Papers received approval for its chapter 11 reorganization
plan, allowing it to emerge from bankruptcy by the end of December, the
Cincinnati Business Courier reported yesterday. Under the
approved plan, the company will issue 92.5 percent of its shares to
Plainfield Special Situations Master Fund Limited, a hedge fund group
based in Connecticut. Plainfield assumed up to $40 million of Smart
Papers' debt in August, and will have a seat on the board. The company
sold its Wisconsin paper mill in July, and auctioned off its Illinois
distribution and warehouse facilities in late October. Read more
face='Times New Roman' size='3'>. 

href='http://cincinnati.bizjournals.com/cincinnati/stories/2006/12/18/daily29.html?t=printable'>Read

more. (Registration required.)

name='2'>Amtrol Scores OK of DIP Loan

Two days after Amtrol Holdings Inc. first entered bankruptcy
protection, a federal judge gave the company the green light to tap up
to $107.5 million from its proposed chapter 11 financing deal,
BankruptcyData360 reported yesterday. Amtrol Holdings Inc., a private
company that manufactures parts for water, heating and ventilation
systems, filed for chapter 11 reorganization protection on Monday in the

U.S. Bankruptcy Court for the District of Delaware. Yesterday, U.S.
Bankruptcy Judge Kevin Gross gave interim approval to
the debtor-in-possession loan, granting Amtrol access to millions of
dollars. Read more. 

href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=15458'>Read

more. (Registration required.)

Auto

Big Delphi Holder
Floats Alternate Funding Plan

A battle for control of auto-parts giant Delphi Corp. could be
shaping up between rival investor groups, highlighting the growing
interest among private-capital players in the restructuring of the U.S.
auto industry, the Wall Street Journal reported today.

href='http://online.wsj.com/quotes/main.html?type=djn&symbol=ETR'>Highland

Capital, a hedge fund that is the second-largest shareholder in
Delphi, today announced it has sent a letter to Delphi's board outlining

a $4.7 billion capitalization plan for Delphi, which is under chapter 11

bankruptcy-court protection. That would counter a proposal from a group
of investors led by Appaloosa Management and Cerberus Capital Management

that would infuse up to $3.4 billion in preferred and common equity into

the company. 

href='http://online.wsj.com/article/SB116667307794156493.html?mod=home_whats_news_us'>Read

more. (Registration required.)

name='4'>Tower Automotive Reaches Financing
Deal

Tower Automotive Inc. said it
reached a deal with a group of investors that will permit the company to

raise $250 million to help finance its exit from bankruptcy proceedings,

the Associated Press reported yesterday. The Novi, Mich.-based auto
parts company, which has been in chapter 11 proceedings for nearly two
years, said in documents filed with the U.S. Bankruptcy Court in
Manhattan that its current bondholders agreed to acquire $250 million in

new common stock to be issued by the company. Tower identified the
bondholders who will underwrite the rights offering as Strategic Value
Partners, LLC, Wayzata Investment Partners LLC and Stark Investments.
The rights offering will 'form the basis' of a chapter 11 plan the
company intends to submit for court approval. Read more. 

href='http://www.detnews.com/apps/pbcs.dll/article?AID=/20061220/UPDATE/612200456'>Read

more. 

Ford Expected to Fall to
No. 3 Spot

According to internal Ford
projections, the Ford Motor Co. expects Toyota to unseat it for good
next year as the No. 2 company, said it behind General Motors, in the
American car market, a position Ford has held since the 1920s, the
New York Times reported today. Those projections show that

company officers believe that Ford will permanently fall to third place
as soon as January. The shift appears to be happening much faster than
Ford had previously signaled. 

href='http://www.nytimes.com/2006/12/21/business/21auto.html?ref=business'>Read

more.

Commentary: How Financiers
Pursue Profit at Skidding Auto-Parts Maker

KPS Special Situations Funds has put
more than $23 million into Jernberg Industries since 2005. It aims to at

least double its money in three years or so. Jernberg, which supplies
parts to Detroit's Big Three auto makers, tumbled into bankruptcy court
in 2005, joining a raft of other auto-parts makers there, the Wall
Street Journal said today in an opinion piece. For KPS and other
private-equity firms circling the auto-parts industry, these are some of

the most daunting turnarounds in all of business. But these turnaround
experts think the payday could be big. Some auto-parts plants are
antiquated and inefficient. Many existing contracts with labor and with
big customers are unfavorable. In bankruptcy court, these investors
figure, they can jettison the bad deals, close unneeded plants and start

more or less from scratch. And beleaguered workers, fearful of losing
their jobs, are likely to play ball.

href='http://online.wsj.com/article/SB116667204523156436-search.html?KEYWORDS=bankruptcy&COLLECTION=wsjie/6month'>Read

more.

Delta Plans to Stay in the Air
without US Airways Buyout

Delta Air Lines filed a
reorganization plan Tuesday that calls for it to emerge from bankruptcy
protection next spring as a stand-alone company worth as much as $12
billion, which would be more than the market value of the nation's two
biggest carriers combined, the Associated Press reported yesterday.
Delta said that under the plan, its unsecured creditors would recover 63

to 80 percent of their allowed claims. Delta's existing stock would be
wiped out under the plan and creditors generally would receive
distributions of new Delta common stock to settle their claims. Delta
outlined a five-year business plan and said it would be worth $9.4
billion to $12 billion after it's reorganized. 

href='http://www.washingtonpost.com/wp-dyn/content/article/2006/12/19/AR2006121900315.html'>Read

more. Meanwhile, the government's pension
insurer gave final approval to a plan to terminate the pensions of Delta

Air Lines pilots, a key step for the carrier to resolve a
multibillion-dollar issue in the airline's bankruptcy case, the
Washington Post reported today. Approval of the plan means the
Pension Benefit Guaranty Corp. will take over the pensions and pay
pilots a portion of the benefits they had expected to receive. Delta has

begun hiring pilots for the first time since 2001 as it adds
international flights.

Plan Unveiled to Scrap a
Sarbanes-Oxley Rule

Accounting industry overseers yesterday scrapped an audit rule
targeted by businesses as expensive and burdensome, proposing looser
guidelines that would direct accountants to focus on the integrity of
corporate managers and the most risky aspects of a company's financial
reports, the Washington Post reported today. The proposal is
designed to address the most contentious part of the 2002 Sarbanes-Oxley

law, passed by Congress after problems at Enron and WorldCom tarnished
the reputation of the accounting profession and rocked investor
confidence. The planned changes to a rule that requires auditors to
review the financial controls of their client companies come after more
than two years of complaints by businesses large and small. The overhaul

marks one of the most significant concessions by regulators in a broad
campaign by trade groups to make corporate rules and laws more flexible.

href='http://www.washingtonpost.com/wp-dyn/content/article/2006/12/19/AR2006121901433.html'>Read

more.

Home Products International
Files for Chapter 11

Housewares company Home Products International Inc. filed for
bankruptcy yesterday in Delaware, seeking to swap more than $116 million

in publicly held debt for equity in the reorganized company,
BankruptcyData360 reported today. The company, which sells
household products under the brand name “Homz,” had assets
of $172.2 million and debts of $217.4 million as of Dec. 2. The company
filed a slew of first-day motions yesterday, asking the court for
permission to retain counsel and a financial advisor, as well as pay its

approximately 700 employees.

href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=15460'>Read

more.

KPMG Cooking up Refinancing
Plan for Little Chef

KPMG has been called in to advise the owners of the U.K.’s
restaurant chain Little Chef as the restaurant network tries
to stay afloat, Britain’s Accountancy Age
reported today. The People's Restaurant Group (PRG)
acquired the business in 2005 for £52m, but is now
conducting talks with a American consortium in a last-ditch bid to save
the chain from bankruptcy. This latest development unfolded less than a
week after PRG entered into crunch talks with its landlord and other
creditors over cash issues. KPMG envoys joined PRG at the
negotiation table as talks began with the U.S. group to
hammer out a deal that would safeguard Little Chef's future
and galvanize its market presence with a package
of funds to enhance its network of about 235 outlets.

name='11'>TROUBLED COMPANIES IN THE NEWS

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articles below are taken from the

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Circuit City Stores Inc., the Richmond, Va.
electronics retailer, reported a third quarter net loss of $16 million,
including an operating loss of $15.6 million. Sales rose 7%--to $3.1
billion. The company is suffering from a pricing war that has forced it
into heavy discounting.

CPI Corp., the St. Louis, Mo. operator of photo
portrait studios in Sears stores, reported a third quarter net loss of
$950,000, including impairments and other charges of nearly $680,000.
Revenue declined 2%--to $77.1 million.

Dell Inc., the Round Rock, Tx. maker of
computers, hired Donald Carty, a former CEO of AMR Corp., as its chief
financial officer to replace James Schneider.  Mr. Schneider's
resignation is the latest in a series of management moves at the
company, which is trying to revive its fortunes. Recently, Dell has been

under pressure from rival computer makers and is undergoing an
investigation into its finances by the Securities and Exchange
Commission.  

Home Products International Inc., missing $5.6
million in interest payments resulting in a bond default, filed Chapter
11, with an aim to restructure $116 million in bonds. A month ago, the
Chicago, Il. housewares maker reached a deal with its bondholders to
swap its debt for a 95% interest in the company. According to its
reorganization plan, in agreement with its largest bondholder, Third
Avenue Management LLC, Home Products will issue $30 million in new bonds

to finance its exit from bankruptcy and Bank of America will provide up
to $11.5 million to help fund the company's
reorganization. Trade creditors owed $20 million will be paid in full.
Home Products, which lost $11 million on sales of $228 million in 2005,
expects this year to chalk up losses of more than $30 million on sales
of $224 million. As of 12/2, Home Products had assets and liabilities of

$172 million and $217 million respectively.  
 
Navistar International Corp., a Warrenville, Il.

maker of trucks, will continue being listed for trading on the New York
Stock Exchange, while the exchange reviews its earlier decision to
suspend the company. Navistar's appeal will be heard on 1/30. Recently,
the company said that its fiscal 2005 report won't be completed till
after 2/1.

Vitesse Semiconductor Cor., Camarillo, Ca.,
announced that it uncovered a wide array of financial irregularities,
including fake sales invoices, improper recognition of revenue, options
backdating and failure to take required writeoffs, among others.
 In fact, Vitesse's irregularities were so pervasive that the
company said it won't be able to file restated results for 2004 and
2005.  The stock-options backdating and manipulation alone
reportedly amounted to $120 million in expenses that were unaccounted
for over the last eleven years.