This report contains items about companies both in bankruptcy and not in bankruptcy. Updates Blockbuster and adds Sbarro filing as first item; Windstar Cruises in New Filing; Madoff, Point Blank, and LTAP in Updates; and CenturyLink in Downgrade.)
April 4 (Bloomberg) -- Sbarro Inc., an operator and franchiser of fast-food Italian restaurants, missed a $7.8 million interest payment on Feb. 1 and filed a prepackaged Chapter 11 petition this morning in New York to convert $34.2 million of second-lien debt and $157.8 million of senior notes to equity.
The plan, if confirmed by the bankruptcy court, would reduce debt by $195 million, a court filing says. The petition listed assets of $471 million and debt totaling $486.6 million.
The plan is supported by holders of all of the second-lien debt and 67 percent of the senior notes. The first-lien creditors are not in agreement on the plan, although discussions continue, according to the company statement.
The plan calls for extending the maturity of the first-lien debt by five years from the emergence from Chapter 11. First- lien obligations included a $21.5 million revolving credit and a $158 million term loan as of March 26, excluding letters of credit. Otherwise, the term loan would mature in January 2014, with the revolving credit maturing in January 2013.
The Chapter 11 case will be financed with a $35 million loan from some of the first-lien lenders. MidOcean Partners, which acquired Sbarro in January 2007 for $417 million, will backstop a $30 million rights offering along with Ares Corporate Opportunities Fund II LP. MidOcean holds 95 percent of the second-lien debt, according to a regulatory filing. Ares is the largest holder of senior notes, a court filing says.
Proceeds from the rights offering will be used to repay financing for the Chapter 11 case and supply working capital.
The term sheet for the plan calls for holders of second- lien debt to receive 36.5 million new shares and the right to pay $1 a share for 2.5 million shares in the rights offering.
Holders of senior notes are to receive 29 million shares and the right to pay $1 a share for 27.5 million shares in the rights offering. Senior noteholders will have an option to receive cash. The amount of the cash option is yet to be decided.
Trade suppliers for the ongoing business are to be paid in full. General unsecured creditors are to receive stock and new senior notes so their recovery will be the same as senior noteholders.
For the plan, the agreed equity value of the reorganized company is $96.5 million.
Holders of the senior unsecured notes declared a default in December based on allegations that the issuance of second-lien debt in 2009 violated their indenture.
The unsecured notes last traded on April 1 at $20.20, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.
Sbarro said bankruptcy resulted from the “decline in mall traffic” caused by the recession. The company said it has an “unsustainable balance sheet.”
For nine months ended in September, Sbarro had a $30.7 million net loss on total revenue of $239.1 million. The operating loss in the period was $13.6 million. The balance sheet at Sept. 26 had assets of $455.5 million and debt of $469.6 million. The assets included $352.2 million of goodwill and trademarks.
Melville, New York-based Sbarro owns or franchises 1,045 restaurants in 42 countries. From the total, 472 are owned.
The case is In re Sbarro Inc., 11-11527, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
New Filing
Windstar Cruises Files for Sale to Whippoorwill
Windstar Cruises, the operator of what it calls three luxury sailing yachts, filed under Chapter 11 on April 1 to sell the business to Whippoorwill Associates Inc. in exchange for debt, absent a higher offer at auction.
Two Windstar vessels accommodate 148 guests and the third has births for 312. The petition said assets are $86.4 million, with debt totaling $87.3 million.
Debt includes a first-lien term loan owing to Whippoorwill for $9.6 million. There are $19.7 million in 10 percent second- lien notes, where Whippoorwill holds 88 percent.
In addition, Windstar owes $31.2 million to holders of 3.75 percent convertible notes. A company statement says the holders won’t receive any distribution in the Chapter 11 case.
Trade suppliers are owed $3.9 million, according to a court filing.
The Maritime Administration of the U.S. Transportation Department is owed $13 million on a judgment.
With 22.2 percent, White Plains, New York-based Whippoorwill is already the largest shareholder. Highbridge International LLC is the second-largest shareholder with 11.4 percent.
The Chapter 11 case will be financed with a new $10 million loan, where $5 million would be available on an interim basis. The loan will also convert the $9.6 million pre-bankruptcy term loan into part of the so-called post-bankruptcy DIP loan.
The sale contract calls for a $40 million purchase price, to be paid with credit bids for the second-lien notes and the financing for the Chapter 11 case.
Windstar said there was a second purchase offer, although the price wouldn’t have paid Whippoorwill in full.
The company is proposing that the bankruptcy court authorize auction procedures where other bids would be due by April 29, followed by a May 2 auction and a hearing to approve the sale around May 6.
For nine months ended Sept. 30, Seattle-based Windstar had an $11.6 million net loss on revenue of $45.8 million. The operating loss was $9.5 million. The cash flow statement for the first three quarters revealed that $5.1 million of cash was consumed in operations.
Purchased from Carnival Corp. in April 2007, the business had been in financial distress almost from the outset, as described in a court filing.
The case is In re Ambassadors International Inc., 11-11002, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Updates
Blockbuster Has Multiple Bids for Today’s Auction
Blockbuster Inc., the movie-rental chain, received competing bids in advance of today’s auction from Carl Icahn, Dish Network Corp. and SK Telecom Co., according to a person familiar with the matter.
The bids are slightly higher than the offer from a group of secured creditors, said the person, who declined to be named because the talks are private.
The hearing for approval of the sale is scheduled for April 7. To read Bloomberg coverage, click here.
At auction, the opening bid of $290 million comes from a group holding some of the $630 million in first-lien bonds.
Dozens of landlords and other creditors filed objections to the sale. Some said the noteholder group failed to provide proof of its financial ability to operate the business and pay store rent going forward.
After bankruptcy, Blockbuster rejected about 220 leases for stores previously closing and is now rejecting another 185.
Dallas-based Blockbuster began reorganization in September with 5,600 stores, including 3,300 in the U.S. and the remainder abroad. Among the U.S. stores, 3,000 were owned. The rest are franchised. About 200 stores closed before bankruptcy.
The petition listed assets of $1.017 billion against debt of $1.465 billion. Blockbuster estimated it owes $57 million in accounts payable in addition to secured and subordinated notes.
The case is In re Blockbuster Inc., 10-14997, U.S. Bankruptcy Court, Southern District New York (Manhattan).
SIPC Proclaims Right to Pursue JPMorgan Suit
JPMorgan Chase & Co. would be wrong if it tries to preclude the Securities Investor Protection Corp. from participating in the lawsuit where the trustee for Bernard L. Madoff Investment Securities Inc. is trying to recover $6.4 billion, attorney Kevin H. Bell from SIPC said in an April 1 letter to a U.S. district judge.
Bell was responding to a letter from JPMorgan where the New York-based bank said it was reserving its rights in the future to object to SIPC’s participation in the lawsuit.
Bell quoted from a provision of the Securities Investor Protection Act saying that SIPC “shall be deemed to be a party in interest as to all matters ... with the right to be heard on all such matters, and shall be deemed to have intervened ... with the same force and effect as if a petition for such purpose had been allowed by the court.”
The letters were sent to U.S. District Judge Colleen McMahon, who will rule on a motion by JPMorgan to remove the suit from bankruptcy court where it was filed. If the motion is granted, the suit would be transferred to the district court. McMahon’s ruling on the so-called withdrawal-of-the-reference motion could be made later this month. For details on the issues, click here for the March 31 Bloomberg bankruptcy report.
The Madoff trustee alleges that JPMorgan was “at the very center of Madoff’s Ponzi scheme” and “turned a blind eye to billions of dollars worth of suspicious transactions.”
Sonja Kohn, founder of Bank Medici AG, told Das Magazin, “Often I would just love to disappear into thin air.”
Kohn, the bank, Bank Austria and UniCredit SpA are being sued for $19.6 billion by the trustee for Bernard L. Madoff Investment Securities Inc. The damages theoretically could be trebled to $58.8 billion if the trustee proves there was a criminal enterprise.
To read Bloomberg coverage, click here.
The Madoff firm began liquidating on Dec. 11, 2008, with the appointment of the trustee under the Securities Investor Protection Act. Bernard Madoff individually went into an involuntary Chapter 7 liquidation in April 2009. His bankruptcy case was consolidated with the firm’s liquidation. Madoff is serving a 150-year prison sentence following a guilty plea.
The motion to remove the case to district court is Picard v. JPMorgan Chase & Co., 11-00913, U.S. District Court, Southern District New York. The lawsuit in bankruptcy court is Picard v. JPMorgan Chase & Co., 10-04932, U.S. Bankruptcy Court, Southern District of New York (Manhattan). The Madoff liquidation case is Securities Investor Protection Corp. v. Bernard L. Madoff Investment Securities Inc., 08-01789, U.S. Bankruptcy Court, Southern District of New York (Manhattan). The criminal case is U.S. v. Madoff, 09-cr-00213, U.S. District Court for the Southern District of New York (Manhattan).
Judge Declines to Approve New Stream Financing
Bankruptcy judges seldom refuse to approve financing. U.S. Bankruptcy Judge Mary F. Walrath made an exception in the case of New Stream Capital LLC.
Walrath upheld objections from creditors of New Stream’s U.S. and Cayman Islands funds who say they invested more than $90 million. She gave New Stream the option of returning to court on April 8 to make another try if changes are made in the proposed financing.
Walrath also confirmed that the investors in the two funds not in bankruptcy have the right to appear and be heard in opposition to New Stream’s proposed reorganization. In addition, the judge said the objectors are entitled to more time to mount a defense to approval of the proposed Chapter 11 plan. To read Bloomberg coverage of the April 1 hearing, click here.
New Stream calls itself a fund manager specializing in “non-traded private debt.” It filed under Chapter 11 on March 13 with a prepackaged plan it says was accepted in advance by three classes of creditors.
The objecting investors contended that the financing was a “sub rosa plan” that controlled the outcome of the restructuring.
New Stream wanted the financing to pay premiums on its portfolio of life insurance policies. The lender is an affiliate of McKinsey & Co. Inc., which is under contract to buy New Stream’s life insurance portfolio for $127.5 million.
The investors filed involuntary Chapter 11 petitions against three New Stream funds not among those who filed the prepackaged petitions.
Ridgefield, Connecticut-based New Stream to a large extent invested in the so-called life settlement market, where life insurance policies are purchased for less than the death benefit from owners of policies on individuals’ lives.
The prepackaged case is In re New Stream Secured Capital Inc., 11-10753, U.S. Bankruptcy Court, District of Delaware (Wilmington). The first-filed involuntary case is In re New Stream Secured Capital Fund (U.S.) LLC, 11-10690, in the same court.
Judge May Decide Rittenhouse Dismissal This Month
The owner of 10 Rittenhouse Square, a 33-story condominium development in Center City Philadelphia, should know later this month whether the reorganization lives or dies.
In response to the owner’s motion in January for the right to use cash representing collateral for IStar Financial Inc., the lender countered with a motion of its own to dismiss the case, deny the use of cash, or allow foreclosure.
The bankruptcy judge held five days of hearings on the motions in March. The parties will submit their post-trial papers on April 21, giving U.S. Bankruptcy Judge Stephen Raslavich in Philadelphia the ability to issue a ruling late this month.
IStar, owed $205 million, contends the project won’t sell out for enough to pay off its loan in full. The owner believes the property is worth enough to pay the lender fully and filed a plan to pay off IStar over time. The hearing for approval of the disclosure statement explaining the owner’s plan is now set for May 5.
The project owner filed a motion seeking a three-month extension of the exclusive right to propose a Chapter 11 plan until July 29. The exclusivity motion is on the calendar for April 28, giving the judge the opportunity, if he wishes, to announce his ruling on IStar’s dismissal motion.
The project filed for reorganization on Dec. 30. It owes another $62 million on a mezzanine loan. The Chapter 11 filing was intended to avoid having a receiver appointed. The project is controlled by Delaware Valley Real Estate Investment Fund, a pension fund for Philadelphia construction workers. The fund is also the holder of the mezzanine loan.
The condominium units are priced from $600,000 to $4.5 million, according to the company’s website.
The case is In re Philadelphia Rittenhouse Developer LP, 10-31201, U.S. Bankruptcy Court, Eastern District of Pennsylvania (Philadelphia).
Vitro Judge to Rule on Involuntary Chapter 11 Petition
Given that Vitro SAB has been in default on $1.2 billion in bonds for two years, there would seem to be little question that U.S. subsidiaries should go into Chapter 11 involuntary. Vitro, Mexico’s largest glassmaker, nonetheless opposed the involuntary filings against U.S. subsidiaries, prompting the bankruptcy judge in Fort Worth, Texas, to hold a two-day trial on March 31 and April 1.
When the trial ended, U.S. Bankruptcy Judge Russell Nelms said he would rule later, without giving a date.
A business can be forced into bankruptcy involuntarily if it’s shown that the company isn’t “generally” paying its debts as they come due. Vitro argued that the U.S. subsidiaries are immune from involuntary bankruptcy because they are paying all their debts aside from the notes. The U.S. subsidiaries guaranteed the notes.
For Bloomberg coverage of the hearing, click here.
The involuntary Chapter 11 petition was filed in November by a group saying they hold some 60 percent of the defaulted bonds. They also filed involuntary petition in Mexico against Vitro companies.
A judge in Mexico dismissed Vitro’s voluntary reorganization in that country, saying Vitro couldn’t push through a plan based on the vote of $1.9 billion of intercompany debt when third-party creditors were opposed. Vitro is appealing.
Vitro was offering noteholders what it said would be a recovery of as much as 73 percent by exchanging existing debt for cash, new debt and convertible bonds. Bondholders believe Vitro is worth enough to pay them in full. For a summary of Vitro’s dismissed reorganization and the suits between Vitro and the noteholders, click here for the Dec. 15 Bloomberg bankruptcy report.
The first-filed involuntary case is In re Vitro Asset Corp., 10-47470, U.S. Bankruptcy Court, Northern District of Texas (Fort Worth). The Chapter 15 case to be dismissed is In re Vitro SAB, 10-16619, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
Miami Bankruptcy Judge to Decide Fisher Island Owner
Who are the legitimate mangers and creditors of a developer on Fisher Island, Florida, will be determined by the bankruptcy court in Miami, as the result of a colorful March 31 ruling by U.S. Bankruptcy Judge A. Jay Cristol.
Two different groups contend they properly are in control of the developer. One group includes purported creditors who filed an involuntary Chapter 11 petition on March 17. The same group includes people who allege they control the company and filed papers the next day acceding to the involuntary petition.
The competing group challenges the standing of the purported creditors and says that the consent to Chapter 11 was unauthorized.
Cristol said the outcome may turn on what he called a “remarkable promissory note” where nine entities are liable, although it wasn’t signed by four. Cristol said that the entity to be paid on the note is “Areal Plus Group.”
Cristol asked if the payee of the note is “a person whose last name is Group, first name Areal and middle name Plus?” Or, the judge said, is it a corporation or some kind of partnership?
Cristol cited how the note was purportedly assigned to three entities. The judge observed that the illegible signature didn’t indicate that the assignment was made by someone with authority to act for Areal Plus Group.
Cristol said he would hold one trial to decide if the note is legitimate and who properly controls the developer. The trial, he said, will decide if the note is valid or “an extension of Alice in Wonderland.”
Cristol told the parties to return to court for a status conference on April 11 and a pretrial conference on May 19.
A group claiming to be the actual owners say the involuntary petition was a “last ditch effort to maintain” claims to ownership.
There was a lawsuit already pending in Florida state court to decide who properly is in control of the company. The involuntary petition halted what otherwise would have been a state court hearing on March 29 regarding ownership.
One court filing says there are $100 million in legitimate claims for borrowed money. AIG Annuity Insurance Co. is one of the lenders, the filing say.
The creditors who filed the involuntary petition said they are collectively owed $32.4 million. They are also seeking appointment of a Chapter 11 trustee.
The first-filed case is In re Fisher Island Investments Inc., 11-17047, U.S. Bankruptcy Court, Southern District of Florida (Miami).
Point Blank Wants Bonuses For Exit From Chapter 11
Point Blank Solutions Inc., a manufacturer of soft body armor for police and military, is proposing a $271,000 bonus program for nine employees whose identity wasn’t disclosed. The company also wants the court to modify a previously approved bonus program where the performance targets weren’t met.
Payments under the new program, to be considered at a May 17 hearing, would be earned if the company emerges from Chapter 11 by July 16.
Under a bonus program approved in June 2010, designated employees and officers would have earned a bonus if the business were sold or a plan implemented by March 31. The target missed, Point Blank wants the judge to modify the prior program so the bonuses will be earned so long as the July 16 emergence target is met.
A footnote to the motion says no employee would receive more than one bonus. The motion says the creditors’ committee approves the bonus program.
Based in Pompano Beach, Florida, Point Blank has two plants. Revenue in 2009 exceeded $153 million. The former chief executive and chief operating officer were convicted in September of orchestrating a $185 million fraud.
The Chapter 11 petition in April 2010 listed assets of $64 million against debt totaling $68.5 million. Debt included a $10.5 million secured loan paid off by financing for the Chapter 11 case. Point Blank said it also owes $28.2 million to trade suppliers.
The case is In re Point Blank Solutions Inc., 10-11255, U.S. Bankruptcy Court, District of Delaware (Wilmington).
LTAP-Wells Fargo Settlement Approved, Dismissal Next
LTAP US LLP, a purchaser of life insurance policies in the so-called life settlement market, was authorized by the bankruptcy judge on April 1 to turn over assets to Wells Fargo Bank NA, owed $252 million. LTAP’s capitulation resulted from an opinion by the bankruptcy judge marking the death knell for the Chapter 11 case begun in December.
U.S. Bankruptcy Judge Kevin Gross in Delaware gave the bank the right to foreclose when he simultaneously refused to approve $40 million in financing that would have come ahead of the bank’s lien. The new money would have been used to pay premiums on life insurance policies.
For details on the settlement, which is structured like a sale to the San Francisco-based bank, click here for the March 21 Bloomberg bankruptcy report. The bank has the ability to cause the Chapter 11 case to be dismissed not less than 30 days after the settlement is carried out.
LTAP currently has 410 policies on 313 lives with aggregate death benefits of $1.36 billion, according to the settlement papers. In addition to Well Fargo, unsecured creditors are owed $7.6 million.
When LTAP filed for Chapter 11 protection in December, it said policies were worth $311.5 million. Based in Atlanta, LTAP is managed by a company wholly owned by Berlin Atlantic Holding GmbH & Co.
In the life settlement market, companies like LTAP buy a policy for less than the death benefit from the owner of a policy on an individual’s life. The price is higher than what the policy owner would receive were the policy instead surrendered.
The case is In re LTAP US LLP, 10-14125, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Lehman Broker’s Lawyers Paid $19.5 Million for Four Months
The law firm liquidating Lehman Brothers Inc., the brokerage subsidiary of Lehman Brothers Holdings Inc., were paid $19.5 million for four months’ work. For the first two years of the case through September, the firm Hughes Hubbard & Reed LLP was paid $108 million.
For Bloomberg coverage, click here.
The Lehman holding company filed under Chapter 11 in New York on Sept. 15, 2008, and sold office buildings and the North American investment banking business to Barclays Plc one week later. The Lehman brokerage operations went into liquidation on Sept. 19, 2008, in the same court.
The Lehman holding company Chapter 11 case is In re Lehman Brothers Holdings Inc., 08-13555, while the liquidation proceeding under the Securities Investor Protection Act for the brokerage operation is Securities Investors Protection Corp. v. Lehman Brothers Inc., 08-01420, both in U.S. Bankruptcy Court, Southern District of New York (Manhattan).
Specialty Products Seeks Six Months More Exclusivity
Specialty Products Holding Corp. and Bondex International Inc., subsidiaries of RPM International Inc., are requesting a six-month extension of the exclusive right to propose a Chapter 11 plan while they proceed with efforts to extract information from asbestos claimants.
If granted by the bankruptcy court in Delaware at a May 23 hearing, so-called exclusivity would be extended to Sept. 30.
The company explains how it filed four separate motions to gather information about asbestos claims from claimants themselves, lawyers for asbestos claimants, and trusts created to deal with asbestos claims in other completed Chapter 11 cases.
The bankruptcy court has held five hearings on the discovery motions since November. So far, none has been approved given opposition from asbestos claimants, their lawyers, and asbestos trusts. The most progress has been made on a protocol for receiving information from claimants themselves.
The companies filed Chapter 11 petitions in May 2010 to create a trust taking over liability for 10,000 asbestos claims. Affiliates not in bankruptcy also would be absolved of liability if the proposed reorganization works out. A provision in bankruptcy law expressly for asbestos cases allows companies not in bankruptcy to make contributions to a claimants’ trust and thereby receive absolution from claims.
Non-bankrupt subsidiaries of Specialty Products generate approximately $330 million in annual revenue. Bondex, which is no longer operating, is a Specialty Products subsidiary that is chiefly responsible for the asbestos claims from a company acquired in 1966 named Reardon Co. Medina, Ohio-based RPM had consolidated assets of $3.12 billion and $1.834 billion in liabilities as of Nov. 20. The Specialty Products and Bondex Chapter 11 petitions both said assets and debt exceed $100 million.
The case is In re Specialty Products Holding Corp., 10-11780, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Capmark Says Consensual Reorganization Plan Imminent
Capmark Financial Group Inc. said it is “finalizing for imminent filing of a consensual plan.” Accordingly, the bank holding company arranged a May 10 hearing for the fourth and last extension of the exclusive right to propose a reorganization.
If approved by the court, the exclusive right to solicit acceptances of a plan will run until June 25. No more extension are possible, because the company will have exhausted its maximum 18 months of plan-filing exclusivity.
Capmark said it is discussing the plan and disclosure statement with the creditors’ committee and a lender group.
The bankruptcy judge approved a settlement with secured lenders in November. It paid secured lenders 91 percent in cash on the $1.1 billion they were still owed, plus interest and reimbursement of fees spent in the Chapter 11 case. For details on the settlement and judge’s reasons for approving, click here for the Nov. 2 Bloomberg bankruptcy report.
Capmark intends to reorganize around its non-bankrupt bank subsidiary by giving stock to unsecured creditors. Based in Horsham, Pennsylvania, Capmark was called GMAC Commercial Holding Corp. before control was sold in 2006. It had been GMAC’s servicing and mortgage banking business.
KKR & Co., Goldman Sachs Group Inc., Dune Capital Management LP and Five Mile Capital Partners LLC owned 75.4 percent of Capmark following a 2006 acquisition from General Motors Corp. for $1.5 billion cash and repayment of $7.3 billion in debt. Capmark’s debt included a $1.5 billion term loan secured by all assets except Capmark’s bank’s assets, $234 million remaining under a bridge loan, a $4.6 billion senior credit, $2.34 billion in notes, and a $250 million junior subordinated debt. The bank had assets of $11.12 billion and deposits of $8.39 billion, according to a court filing.
The case is In re Capmark Financial Group Inc., 09-13684, U.S. Bankruptcy Court, District of Delaware (Wilmington).
Watch List
American Apparel Says Bankruptcy a Possibility
American Apparel Inc., a Los Angeles-based designer, manufacturer, and apparel retailer, said in a regulatory filing last week that there is substantial doubt about being able to continue to as a going concern. The 10-K annual report said bankruptcy is among the options if sufficient liquidity can’t be arranged.
For Bloomberg coverage, click here.
The company reported an $86.3 million net loss for 2010 on net sales of $533 million. The operating loss for the year was $50.1 million.
Although assets of $328 million on Dec. 31 exceeded total liabilities by 30 percent, current liabilities of $213.2 million were only slightly below current assets of $216.5 million.
Comparable store sales declined 13 percent in 2010 following a 10 percent drop in 2009.
Involuntary Filing
Anchorage Capital Files Involuntary on Zais Fund
Three funds advised by Anchorage Capital Group LLC filed an involuntary Chapter 11 petition on April 1 against Zais Investment Grade Ltd. VII.
The petition, in Trenton, New Jersey, said the creditors together have claims exceeding $133 million.
The Zais fund is affiliated with Zais Group LLC from Red Bank, New Jersey.
The case is In re Zais Investment Grade Ltd. VII, 11-20243, U.S. Bankruptcy Court, District of New Jersey (Trenton).
Downgrade
Qwest Acquisition Demotes CenturyLink to Junk at BB
The acquisition of Qwest Communications International Inc. by CenturyLink Inc. resulted in the loss of investment-grade status for Monroe, Louisiana-based CenturyLink, an incumbent local exchange carrier.
CenturyLink’s corporate grade slipped two notches to BB, the second-highest junk grade on the Standard & Poor’s scale.
With 15.4 million access lines and 5.3 million broadband customers, the two companies together became the largest predominantly wireline telecommunications provider in the U.S., S&P said.
The $23.8 billion stock acquisition was completed April 1.
Daily Podcast
Madoff-JPMorgan, Lehman-Paulson, Classifieds: Bankruptcy Audio
The Bloomberg bankruptcy podcast leads off with an analysis about whether JPMorgan Chase & Co. will succeed in moving the $6.4 billion lawsuit by the trustee for Bernard L. Madoff Investment Securities Inc. from the bankruptcy court to the U.S. district court. We explain why Lehman Brothers Holdings Inc. may be attempting to force disclosure about claims trading from Paulson & Co. Inc. and other creditors opposing the liquidating broker’s Chapter 11 plan. For New York investors, we offer a rundown on properties on Third Ave. and a Volkswagen dealership in the Bronx. Bloomberg Law’s Lee Pacchia and Bloomberg News bankruptcy columnist Bill Rochelle wind up with discussion of a district court opinion saying that bankruptcy courts are not “public complaint departments.” To listen, click here.
--With assistance from David McLaughlin, Linda Sandler, Tiffany Kary and Matt Townsend in New York; Matthias Wabl in Zurich; and Dawn McCarty and Michael Bathon in Wilmington, Delaware. Editors: Fred Strasser, Peter Blumberg
To contact the reporter on this story: Bill Rochelle in New York at wrochelle@bloomberg.net
To contact the editor responsible for this story: David Rovella at drovella@bloomberg.net
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