Northwest Cuts Fleet, Lionel Off Track and Other Financially Challenged U.S. Companies for March 20

 
The items below are taken from the Credit Manager’s Weekly Summary of Financially Challenged Companies. A full issue contains information on more than 200 companies. Please visit the insideARM bookstore for information on subscribing to the Summary.

Avatar Holdings Inc., a Carol Gables, Fla. developer of residential communities, reported its fiscal net income tumbled 88%–to $21.4 million. Revenue declined 65%–to $291 million.

Big Values Inc., a Fridley, Minn.-based regional dollar-store chain, plans to close its eleven Big Dollar and Big Value stores in Minnesota and North Dakota and said it will probably file for bankruptcy protection under Chapter 7. 

Constellation Copper Inc., a Denver firm which has lost nearly $170 million over the last two years, warned that it may be in default on a debenture and raised doubt about its ability to continue as a going concern. The firm added that it will consider filing for protection from creditors in both U.S. and Canadian courts if it can’t resolve its liquidity problems. 

Delta Air Lines Inc., Atlanta, is cutting its fleet by up to forty-five planes by the end of this year and reducing domestic capacity by as much as 10% by August to combat high fuel expenses. Delta also recently said it would cut its payroll by 2,000 positions.

ExpressJet, a Houston, carrier, failed to file its annual report with the Securities and Exchange Commission on time, because of questions about how to account for $65 million in auction-rate securities. The firm has struggled recently, reporting a loss in its fourth quarter.

Hillenbrand Industries Inc., Batesville, Ind., is projecting that it will have earnings in 2008 of between $1.11 and $1.30 a share. Revenue is expected to be in the range of $1.4 billion to $1.5 billion. Hillenbrand is in the middle of splitting itself up into Hill-Rom Holdings and Batesville Holdings Inc., which will carry on Hillenbrand’s casket operations. The splitup is expected to be completed by the end of the month.

Levitt Corp., the Fort Lauderdale, Fla. development and homebuilding company, reported a narrowed fourth quarter net loss of $8.3 million on an 88% plunge in revenue–to $20.6 million. That’s down from a $10.7 million loss a year ago. For the year, Levitt lost $235 million on a 27% revenue decline–to $416 million. The company’s Levitt and Sons homebuilding unit is currently operating under bankruptcy protection.

Lionel LLC, the model-train company, asked the U.S. Bankruptcy Court to speed up approval of a third amended reorganization plan and disclosure statement, which contain a change in its request for debt financing. Also, Lionel asked for approval from the U.S. Bankruptcy Court to delay the deadline for filing objections until March 25.

ML Macadamia Orchards in Hilo, Hawaii, reported a fiscal 2007 net loss of $4 million on revenue of $11.3 million, citing lower nut prices, writedowns and other matters. This compares with an $804,000 profit in 2006 on revenue of $17.2 million.

Northwest Airlines Corp., Eagan, Minn., is reducing its fleet by at least forty planes by the end of this year, hiking some fares and looking for additional cost-cutting measures as it combats high fuel expenses.

Pacific Ethanol Inc., a Sacramento, Calif. operator of ethanol plants, warned that it will lose $14 million in fiscal 2007. The company, facing liquidity issues, may have to delay or abandon its expansion plans. Over the winter, Pacific Ethanol stopped construction on a California facility.

Sunrise Senior Living Inc.’s shares fell on news that the McLean, Va. company missed an extended deadline for filing its annual report for 2006 and that it now faces the possibility of being delisted by the New York Stock Exchange. Sunrise, which owns almost 460 senior living centers, added that it will incur a $50 million impairment loss for 2007 connected to its investment in Trinity Hospice Inc. and another $22.3 million in pretax charges for the first quarter of the current year stemming from suspending senior-living condominium developments. If Sunrise fails to meet new filings deadlines at the end of July, it will default on a $108 million loan. 

Xerium Technologies’ shares plunged 74% after the Youngsville, N.C. maker of paper-manufacturing products canceled a dividend and issued a warning that it may have to file for bankruptcy protection. The firm meanwhile is negotiating with investors about a private placement to help it avoid a default.  Xerium, with 3,900 employees, focuses on making so-called roll covers, which help protect metal parts used in papermaking, and synthetic belts that move paper through equipment.