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/raid1/www/Hosts/bankrupt/TCR_Public/010731.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, July 31, 2001, Vol. 5, No. 148 Headlines 360NETWORKS: Trustee Appoints Unsecured Creditors' Committee ACME METALS: AK Steel Now Owns Alpha Tube Unit AMF BOWLING: Has Until August 3 To File Schedules and Statements ALAMAC KNIT: Mallen Offers $6 Million for Partnership Interest COMDISCO: Asks Court To Continue Using Existing Bank Accounts COMMERCIAL FINANCIAL: Andersen Objects to Disclosure Statement CRIIMI MAE: Annual Shareholders' Meeting Set For September 25 DENBURY RESOURCES: EnCap Co-Founder David Miller Joins Board DENBURY RESOURCES: Will Release Q2 Financial Results on August 2 DOLPHIN TELECOM: Commences English Insolvency Proceedings DOW CORNING: Reports Second Quarter Financial Results EASYLINK: Shares Subject To Nasdaq Delisting EDWARDS THEATRES: Selling Escondido Property For $2,350,000 FINOVA GROUP: Seeks To Extend Exclusive Period To November 2 FRUIT OF THE LOOM: Employs Innisfree As Tabulation Agent FRUIT OF THE LOOM: Reports Improved Second Quarter Results ICG COMM.: Asks Court To Stretch Exclusive Period To December 10 INTEGRATED HEALTH: Resolves Cardinal's Reclamation Claim KOMAG, INC.: Appeals Nasdaq's Delisting Determination L.L. KNICKERBOCKER: Proposes Asset Sale Procedures & Topping Fee LACLEDE STEEL: Files Chapter 11 Petition For the Second Time LACLEDE STEEL: Chapter 11 Case Summary MARINER POST-ACUTE: Summary Of Mariner Health's Chapter 11 Plan MICROCAP: Declares Final Liquidating Cash Distribution NATIONAL HEALTH: Reports Progress on Debt Restructuring NATIONAL HEALTH: Posts Second Quarter Operating Results OUTPOST.COM: Requests Hearing To Review Delisting Determination OWENS CORNING: Moves To Keep Non-Debtor Affiliate Setoff Rights PACIFIC GAS: Modesto Irrigation District Seeks Relief From Stay PILLOWTEX CORPORATION: Asks Court to Extend Exclusive Periods PLAY BY PLAY: CEO Duran Also Takes Over As Board Chairman PROVIDIAN FINANCIAL: Fitch Cuts Individual Rating To B/C From B PSA INC: Reorganization Plan Estimates 25% to 55% Recovery SSE TELECOM: Auction Set to Test TeleSystem's $3,205,000 Bid SOFTLOCK.COM: Looking to Reorganize Around Intellectual Property SUN HEALTHCARE: Asks Court To Okay Loan To Shared Healthcare SUPERIOR TELECOM: S&P Lowers Preferred Stock Rating To C TELEMUNDO HOLDINGS: S&P Rates $50 Mil Senior Notes at CCC+ TRISTAR CORPORATION: Intends To File For Bankruptcy Protection UNIFORET INC.: Files Amended Plan of Arrangement Under CCAA UNIFORET INC.: Posts First Quarter Financial Results U.S. INDUSTRIES: Reaches Restructuring Agreement With Lenders U.S. LEATHER: Asks Court To Establish Bidding Procedures USG CORPORATION: Cornerstone Seeks Reclamation Of Goods W.R. GRACE: Hires Reed Smith LLP As Zonolite Counsel WARNACO GROUP: Selling New York Condominium For $675,000 WINSTAR COMM: Court Grants Presscom's Request To Modify Stay ********* 360NETWORKS: Trustee Appoints Unsecured Creditors' Committee ------------------------------------------------------------ Carolyn S. Schwarz, the United States Trustee Region II, appoints these creditors of 360Networks (USA), Inc., et al., to serve on an 11-member Official Committee of Unsecured Creditors: Pirelli Cables & Systems, LLC 246 Stoneridge Drive, 4 Floor Columbia, South Carolina 29210-8000 Attn: Glenn J. Heiar, Vice-President and CFO (803) 951-1012 Kajima Construction Services, Inc. 395 West Passaic Street Rochelle Park, New Jersey 07662 Attn: Masato Kashiwakura, President/Chief Executive Officer (201) 518-2100 MasTec North America, Inc. 3155 NW 77 Avenue Miami, Florida 33122 Attn: Jose Sariego, Vice-President (305) 406-1954 Enron Broadband Services, Inc. 1400 Smith Street Houston, Texas Attn: Raj Thapar (713) 853-6400 Howard S. Wright Construction Co. 455 North 3rd Street, Suite 375 Phoenix, Arizona 85004 Attn: Jim Constance (602) 258-5670 Carrier Corporation Carrier Parkway P.O. Box 4808 Syracuse, New York 13221 Attn: Stephen G. Anderson, Manager, Treasury Services Wagner Equipment Co. 18000 Smith Road Aurora, Colorado 80011 Attn: K.C. Ware, Financial Manager (303) 793-3000 Spartan Building Corporation P.O. Box 490 Madisonville, Louisiana 70447 Attn: Terrence M. Donahue Qwest Communications, Corp. 13952 Denver West Parkway, Building 53 Golden, Colorado 80401 Attn: Walt Donovan, Vice-President (305) 445-7009 Metromedia Fiber Network Services, Inc. 360 Hamilton Avenue White Plains, New York 10601 Attn: Hadley E. Feldman AT & T Corp. 295 N. Maple Avenue Basking Ridge, New Jersey 07920 Attn: A. Paula Bock (908) 221-4054 Greg M. Zipes, Esq., is the staff attorney for the U.S. Trustee in charge of 360network's chapter 11 cases. (360 Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392- 0900) ACME METALS: AK Steel Now Owns Alpha Tube Unit ---------------------------------------------- AK Steel (NYSE: AKS) has completed its purchase of Alpha Tube Corporation, a leading manufacturer of welded steel tubing located in Walbridge, Ohio. Following the acquisition, the company has been renamed AK Tube LLC. AK Steel purchased the assets of the tube company through an auction conducted in federal bankruptcy court in Wilmington, Delaware. It had been owned by Acme Metals Incorporated, Riverdale, Illinois, which filed for Chapter 11 bankruptcy protection on September 28, 1998. Alpha Tube has continued to manufacture and market its products since the filing. "AK Tube LLC is another strategic addition to AK Steel's value- added product mix," said Richard M. Wardrop, Jr., chairman and chief executive officer of AK Steel. AK Tube LLC produces value-added large diameter, thin wall mechanical tubing for automotive, construction, heating and cooling, furniture and other markets. The company operates tube mills, slitters and a variety of finishing equipment and produces a wide range of specialty and coated steel tubing products. The company employs about 250 in its facility near Toledo. With headquarters in Middletown, Ohio, AK Steel produces flat- rolled carbon, stainless and electrical steel products for automotive, appliance, construction and manufacturing markets, as well as standard pipe and tubular steel products. The company has about 11,500 employees in plants and offices in Middletown, Coshocton, Mansfield, Walbridge, Warren and Zanesville, Ohio; Ashland, Ky.; Rockport, Ind.; and Butler, Sharon and Wheatland, Pa. AMF BOWLING: Has Until August 3 To File Schedules and Statements ---------------------------------------------------------------- Under 11 U.S.C. Sec. 521 and Rule 1007 of the Federal Rules of Bankruptcy Procedure, any chapter 11 debtor is required to file with the court (i) a schedule of assets and liabilities, (ii) a statement of financial affairs, (iii) a schedule of current income and expenditures, (iv) a statement of executory contracts and unexpired leases, and (v) a list of equity security holders, within 15 days from the date of filing its Chapter 11 petition. AMF Bowling Worldwide, Inc. does not believe this fifteen-day period will be sufficient for completion of their Schedules and Statements, given the size and complexity of their businesses. The Debtors have identified more than 40,000 creditors and other parties-in-interest that likely will be included in their Schedules and Statements. With the Debtors' operations in so many locations throughout North America, there are likely invoices that have not yet been received or entered into the Debtors' accounting systems. At the Debtors' behest, Judge Tice granted a further extension, establishing August 3, 2001, as the date by which the Debtors must file their Schedules and Statements, without prejudice to the Debtors' right to seek further extensions. (AMF Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392- 0900) ALAMAC KNIT: Mallen Offers $6 Million for Partnership Interest -------------------------------------------------------------- United Knitting Inc., UKIC, Inc. and Dyersburg Corporation, each debtor-affiliates of Alamac Knit Fabrics, Inc. et al. seek a court order authorizing the debtors United Knitting, Inc. and UKIC, Inc. to enter into an agreement to sell their partnership interests in debtor United Knitting Limited Partnership, I. A hearing on the motion will be held on August 6, 2001 at 10:30 AM before the Honorable Mary F. Walrath, Wilmington, DE. The Buyer, Mallen Industries, Inc., agrees to purchase the partnership interests for the sum of $6 million. The Buyer will also assume all of the Target's trade liabilities without further recourse to the debtors. The purchase price is subject to adjustment to reflect changes in the Target's working capital. In addition, the purchase price will be reduced by an amount equal to the liabilities of the Target at closing other than trade payables. Co-counsel to the debtor is Debevoise & Plimpton, New York and Pachulski, Stang, Ziehl, Young & Jones, PC. COMDISCO: Asks Court To Continue Using Existing Bank Accounts ------------------------------------------------------------- Comdisco, Inc. seeks a waiver from the US Trustees requirement to: (a) close existing account and open new debtor-in- possession bank accounts; (b) establish one debtor-in-possession account for all estate monies required for the payment of taxes, including payroll taxes; (c) maintain a separate debtor-in-possession account for cash collateral; and (d) obtain checks for all debtor-in-possession accounts which bear the designation "Debtor-In-Possession", the bankruptcy case number, and the type of accounts. Jack Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom, explains that these requirements will cause enormous disruption in the Debtors' business and impair their efforts to pursue alternatives to maximize value of assets. Mr. Butler claims that strict enforcement of bank account closing requirements does not serve the rehabilitative purpose of Chapter 11. Besides, Mr. Butler notes, foreign banks also require Comdisco to maintain an account for the affiliate to do business with the bank. To close these accounts would adversely affect the Debtors' foreign affiliates. If the Court permits the Debtors to maintain its existing accounts, Mr. Butler says, it will prevent the delays in payments to administrative creditors. It will also ensure smooth transition into Chapter 11 with minimal disruption, Mr. Butler adds. Aside from the waiver, the Debtors also ask Judge Barliant for an order that the bank accounts be deemed debtor-in-possession accounts and that their maintenance and continued use be authorized. (Comdisco Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-0900) COMMERCIAL FINANCIAL: Andersen Objects to Disclosure Statement -------------------------------------------------------------- Arthur Andersen LLP objects to the Disclosure Statement filed by Commercial Financial Services, Inc. He asserts that it does not adequately disclose the intended effect of the modified treatment of the ABS Claims on the Litigation. Arthur Andersen states that the plan of Orderly Liquidation provides for the deduction of bankruptcy claims filed by the ABS Trustees. The plan also provides that "resoulution" of the ABS Claims pursuant to the plan does not in any way resolve, involve or relate to claims asserted in particular causes of action brought by the holders of ABS Claims against Arthur Andersen and others. The Disclosure Statement recites that the proofs of claim filed by the ABS Trustee will be deemed to be amended to withdraw the bankruptcy claims of federal, state and common law fraud filed by the ABS Trustee. The Disclosure Statement also states that "resolution" of the ABS Claims pursuant to the plan does not in any way resolve involve or relate to claims asserted in particular causes of action described in general or in particular in the plan brought by the holders of ABS Claims against Arthur Andersen and others. Arthur Andersen states that the plan provides for the creation of a pool from which the ABS Claims will be paid. The holders of the claims who are plaintiffs in the litigation are seeking to recover the same damages in the litigation as those that are "withdrawn" as claims from the bankruptcy case. Andersen asserts that holders of the ABS claims are entitled only to satisfaction of their claims, not to an enhanced recovery. Arthur Andersen asserts that the Disclosure Statement does not adequately describe the actual or intended effect of the withdrawal or modification of the selected portion of the ABS Claims from the bankruptcy case on the litigation. If it is the intention of the plan to preclude a reduction of the damages claimed by the plaintiffs in the litigation by the amount of recovery in the bankruptcy case, the Disclosure Statement should disclose this purpose. The plan may be construed as attempting to shift that portion of the ABS Claims consisting of state, federal or common law fraud claims from the estate to the defendants in the litigation. If so, the Disclosure Statement should disclose this purpose. Arthur Andersen claims that the disclosure of the intended effect of the plan on the litigation is essential to allow those affected by the plan to decide how to vote on the plan. CRIIMI MAE: Annual Shareholders' Meeting Set For September 25 ------------------------------------------------------------- The Annual Meeting of Stockholders of Criimi Mae Inc. will be held at the Doubletree Hotel, 1750 Rockville Pike, Rockville, Maryland 20852, on Tuesday, September 25, 2001, at 10:00 a.m., Eastern time, for the following purposes: (1) To approve an amendment to the Company's Amended and Restated Articles of Incorporation to effect a one-for- ten reverse stock split of the shares of the Company's common stock, par value $0.01 per share. (2) To approve the 2001 Stock Incentive Plan. (3) To elect three Class I directors to serve until the 2004 annual meeting of stockholders and until their respective successors are elected and qualified. (4) To ratify the appointment of Arthur Andersen LLP as the Company's independent accountants for the fiscal year ending December 31, 2001. (5) To transact such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof. Only stockholders of record of the Company at the close of business on August 9, 2001 are entitled to notice of and to vote at the Annual Meeting. DENBURY RESOURCES: EnCap Co-Founder David Miller Joins Board ------------------------------------------------------------ In accordance with the terms of the merger agreement between Denbury and Matrix, Mr. David B. Miller joined Denbury's Board of Directors, increasing Denbury's board to nine members. Mr. Miller is a Managing Director and co-founder of EnCap Investments L.L.C., which is now a wholly owned subsidiary of El Paso Corporation (NYSE: EPG). As a result of the transaction, EnCap becomes Denbury's second largest shareholder, holding 3.9 million shares of Denbury common stock, or 7.5% of Denbury's post-closing 52.8 million shares outstanding. Prior to the formation of EnCap in 1988, Mr. Miller held executive positions with PMC Reserve Acquisition Company, MAZE Exploration Inc., and Republic National Bank of Dallas. Mr. Miller, age 51, also serves on the board of directors of 3TEC Energy Corporation and two other EnCap portfolio companies. DENBURY RESOURCES: Will Release Q2 Financial Results on August 2 ---------------------------------------------------------------- Denbury Resources Inc. is scheduled to release its earnings for the second quarter of 2001 on August 2, 2001. Although these results are not yet available, the Company does not expect results for the second quarter to vary significantly from its current forecasts. The Company's forecast for average daily production for the quarter is approximately 28,000 BOE/d. The Company's forecast for lease operating expenses is approximately $5.25 per BOE, excluding taxes, and the Company expects production taxes for the second quarter to be down slightly from the first quarter expense of $1.09 per BOE to approximately $1.05 per BOE. The Company's second quarter forecasted depletion, depreciation and amortization expense is approximately $5.15 per BOE and general and administrative expense is approximately $1.10 per BOE. The Company expects that its oil production during the second quarter was sold at an average discount to NYMEX oil prices of approximately $4.50 to $5.00 per Bbl and its natural gas production was sold at an average premium to NYMEX natural gas prices of 2% to 4%. The Company expects that the effect of generally lower prices for oil and natural gas in the second quarter as compared to the first quarter of 2001 will have a negative effect on quarter-to-quarter earnings and cash flow, offset to some degree by increases in production quantities. DOLPHIN TELECOM: Commences English Insolvency Proceedings --------------------------------------------------------- The Board of Directors of Dolphin Telecom plc (NASDAQ:TIWI) (TSE:TIW.) announces that it has presented a petition for administration which will give it protection from creditors under sections 9 and 10 of the English Insolvency Act 1986. An administration order was made immediately by the court. The Company intends to utilize the Administration process to restructure its balance sheet and propose company voluntary arrangements to creditors and shareholders. The Company continues to be in active discussions with potential investors with an objective of securing funding for the future development of the business. Mr. Simon Freakley and Mr. Alastair Beveridge of Kroll Buchler Phillips have been appointed Administrators of the Company. The Administrators will undertake a review of the Company's financial situation and meet with creditors with an objective of proposing a company voluntary arrangement. Dolphin Corporation Limited, Dolphin Telecommunications Limited and the three other United Kingdom operating companies have filed for protection from creditors. The companies are seeking the appointment of an administrator although this appointment has not yet been made. Dolphin will continue to operate its network and business normally and there will be no impact on the service it provides to its customers. Some of the operating subsidiaries of Dolphin Telecom in other European countries are reviewing their options, including seeking court protection, or are in discussions with their main creditors. The Company remains positive about the opportunity which exists to develop a European mobile service focused on the business customer. The Company believes that with restructured liabilities, it would be in a good position to seize the opportunity. About Dolphin Telecom plc Dolphin Telecom is in the process of building digital ESMR networks in Europe. It began offering national commercial ESMR services in the United Kingdom in the third quarter of 1999, and launched pilot commercial ESMR services, on a regional basis, in France in the fourth quarter of 2000. About TIW TIW is a global mobile communications operator with over 4.2 million subscribers worldwide. The Company's shares are listed on the Toronto Stock Exchange ("TIW") and NASDAQ ("TIWI"). DOW CORNING: Reports Second Quarter Financial Results ----------------------------------------------------- Dow Corning Corp. reported consolidated net income of $5.4 million for the second quarter of 2001, a decline of 82 percent from the $29.6 million net income reported in Q2 of 2000. These results included a one-time cumulative interest adjustment related to Chapter 11 resulting in $58.3 million expense ($36.7 million after tax). Excluding this non-recurring amount, as well as restructuring expenses and implant income in both years, adjusted net income increased by 32 percent in the quarter. First half 2001 net income was $33.1 million, down 48 percent from $63.5 million in the first half of 2000. Without non- recurring amounts, net income reported represents a 5 percent increase. Second quarter 2001 sales were $615.7 million, representing a 12 percent decline compared with sales of $700.6 million reported in the same quarter last year. First-half 2001 sales were $1.26 billion, down 10 percent from $1.40 billion through two quarters in 2000. "Cost savings from the restructuring implemented in the last few years helped moderate the impact of declining sales, preserving operating margins despite lower volumes, as shown by our increased adjusted net income," said Dow Corning's vice president for planning and finance and chief financial officer Gifford Brown. "To protect the company's financial health through the economic slowdown, Dow Corning will seek opportunities to accelerate sales revenue growth, improve our asset turnover and reduce operating spending levels." Dow Corning -- http://www.dowcorning.com--develops, manufactures and markets diverse silicon-based products and services, and currently offers more than 7,000 products to customers around the world. Dow Corning is a global leader in silicon-based materials with shares equally owned by The Dow Chemical Company and Corning Inc. More than half of Dow Corning's sales are outside the United States. EASYLINK: Shares Subject To Nasdaq Delisting -------------------------------------------- EasyLink Services Corporation (NASDAQ: EASY) announced that it received a Nasdaq Staff Determination on July 24, 2001 indicating that the Company has failed to regain compliance with the $1.00 minimum bid price requirement for continued listing (Marketplace Rule 4450(a)(5)). Its common stock is therefore potentially subject to delisting from the Nasdaq National Market. The Company will request a hearing before the Nasdaq Listing Qualifications Panel to review the Staff Determination. EasyLink stock will continue to be listed on the Nasdaq National Market unless the Panel does not grant the Company's request for an extension of time to regain compliance with the minimum bid price requirement. The hearing is expected to occur within 45 days of its hearing request. At the hearing, the Company intends to submit a plan that it believes will demonstrate its ability to regain compliance with the $1.00 minimum bid price requirement. The presentation will include, among other factors, the significant progress that the Company has made in implementing its business plan, debt restructuring and financing initiatives and a proposed reverse stock split. Subject to compliance with applicable regulatory requirements, the Company has scheduled a special meeting of stockholders for August 29, 2001 for the purpose of approving a reverse stock split. There can be no assurance the Panel will grant the Company's request for continued listing. A decision by the Panel is typically provided within four weeks of the hearing. Tom Murawski, CEO of EasyLink commented: "We continue to make significant progress in all key areas relating to the restructuring of our business and the implementation of our business plan. Based on the results of our efforts to date and our plan to regain compliance, we are confident that we will be able to demonstrate our ability to regain and maintain compliance with the minimum bid requirement." About EasyLink Services Corporation EasyLink Services Corporation (NASDAQ: EASY), based in Edison, NJ, is a leading global provider of outsourced messaging services to enterprises and service providers. The Company offers a comprehensive portfolio of messaging services to provide the essential communications infrastructure companies need to do business in today's 24x365 environment. EasyLink's solution set includes e-mail and groupware services including managed Microsoft Exchange, Novell GroupWise and Internet e-mail services; boundary services that offer virus protection, spam control and content filtering for business e-mail systems; message delivery services such as EDI, telex, desktop fax and broadcast and production messaging services; and professional services including managed services support, on-site applications management, help desk and staff augmentation services. For more information, please visit WWW.EASYLINK.COM. EDWARDS THEATRES: Selling Escondido Property For $2,350,000 ----------------------------------------------------------- Edwards Theatres Circuit, Inc. seeks an order approving the sale of five contiguous parcels of real property ("Escondido Property) for a purchase price of $2,350,000. The proposed buyer is the Escondido Charter High School District. The debtors assert that the offer exceeds the market value of the property, and although the debtors received an additional bid for the property, the school district's bid listed fewer contingencies. The debtors claim that the Escondido Property is not necessary for the debtors' business or reorganization because the theatre is obsolete and would not produce a profit if the debtors attempted to renovate the theatre. The proposed buyer is aware that the court may approve higher bids, and the school district would be awarded Due Diligence Costs not to exceed $50,000. On August 13, 2001 at 11:15 AM, the US Bankruptcy Court for the Central District of California, the Honorable Lynne Riddle presiding, will hold a hearing on this Motion. FINOVA GROUP: Seeks To Extend Exclusive Period To November 2 ------------------------------------------------------------ As previously reported, The FINOVA Group, Inc. filed a plan of reorganization. And they did so within the initial period of 120 days for them to have the exclusive right to file a plan, which expired on July 5, 2001. Now that the Court has approved the Debtors' third amended and restated Disclosure Statement, the Debtors are in the process of soliciting acceptance of the Plan from their creditors and interest holders, and a hearing is scheduled for August 10, 2001 to consider confirmation of the Plan. Since the Debtors have filed the Plan within the initial 120 days period, pursuant to Section 1121(b) of the Bankruptcy Code, the Debtors have 180 days after the commencement of the chapter 11 case to solicit and obtain acceptances of its plan, during which time competing plans may not be filed by any party in interest. Such 180 day period is scheduled to expire on September 3, 2001. The Debtors believe that such schedule should allow them to confirm the Plan before the expiration of the Exclusive Periods. In an abundance of caution, the Debtors seek an extension of the Exclusive Periods through and including November 2, 2001, and January 2, 2002, respectively. The Debtors militate in favor of granting the extension of the Exclusive Periods requested. In particular, considering the pace in which the Debtors have filed the Plan in their large and complex cases, the request for the extension of the Exclusive Periods is not a tactic to pressure creditors but is a means to ensure stability in the unlikely event that further negotiations are required. (Finova Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 609/392-0900) FRUIT OF THE LOOM: Employs Innisfree As Tabulation Agent -------------------------------------------------------- In connection with the distribution of a disclosure statement and solicitation of votes on the reorganization plan, Fruit of the Loom, Ltd. is in need of a well-qualified noticing, balloting and tabulation agent and consultant. In chapter 11 cases, publicly issued securities present certain limitations in the context of soliciting acceptances for a plan of reorganization because such securities often are held in a "street name" with a bank or brokerage firm, rather than the name of the beneficial owner or discretionary manager. Accordingly, Fruit of the Loom submits that retaining and employing a noticing, balloting and tabulation agent with specialized knowledge of the plan solicitation procedures is necessary to ensure Fruit of the Loom satisfies the voting and mailing requirements under the bankruptcy code in a cost- effective and efficient manner. Ms. Stickles tells Judge Walsh that Innisfree is qualified to act as Fruit of the Loom's balloting, noticing and tabulation agent and consultant and has broad experience in all types of bankruptcy solicitations. In addition, Innisfree maintains a state-of-the-art mailing facility and tabulation system, which is integral to ensuring an orderly and proper bankruptcy solicitation. Jane Sullivan, the Practice Director of Innisfree's Bankruptcy specialty practice, has the primary responsibility for ensuring that Fruit of the Loom satisfies its solicitation requirements in these cases. Ms. Sullivan has over 15 years of experience in public securities solicitations and other transactions and has specialized in bankruptcy solicitations since 1991. Ms. Sullivan has worked on over 40 prepackaged and traditional bankruptcy solicitations, including America West Airlines, Barney's, Eagle-Picher Industries, Federated Department Stores, First Republic Bank, I.C.H. Corporation, Corp., Resorts International and Zale Corporation. Ms. Sullivan will also work closely with the other members of Innisfree's staff, each of whom is experienced in public solicitations and has worked with banks and brokerage firms to conduct bankruptcy solicitations. Innisfree will coordinate efforts with Donlin Recano in order to make use of any information database that already exists and to minimize the duplication of efforts and costs to the estates. As balloting agent, in addition to managing the mailing of voting and non-voting plan documents, Innisfree will respond to inquiries from any creditor or security holder who may have questions about the plan. It will also conduct the tabulation of votes. Additionally, Innisfree will: (A) provide advice to Fruit of the Loom and its counsel regarding all aspects of the plan vote, including timing issues, voting and tabulation procedures and documents needed for the vote; (B) review the voting portions of the disclosure statement and ballots, particularly as they may be related to beneficial owners in street name; (C) work with Fruit of the Loom to request appropriate information from the trustee(s) of the bonds, the equity transfer agent, the Depository Trust Company and the claims agent; (D) mail voting and non-voting documents to creditors and registered record holders securities; (E) coordinate the distribution of voting documents to street name holders of public securities by forwarding the appropriate documents to the banks and brokerage firms holding the securities (or their agent), who in turn will forward it to beneficial owners for voting; (F) distribute copies of the master ballots to the appropriate nominees so that firms may cast votes on behalf of beneficial owners of securities; (G) prepare a certificate of service for filing with the court; (H) respond to requests for voting documents from any party who requests them, including brokerage firm and bank back- offices, institutional holders and any other party who may have an interest in the transaction; (I) respond to telephone inquiries from creditors and security holders regarding the disclosure statement and the voting procedures (Innisfree will restrict its answers to the information contained in the plan documents and seek assistance from Debtor or its counsel with questions beyond the scope of voting documents); (J) make telephone calls to a defined group of creditors or security holders to confirm that they have received the plan documents; (K) assist with an effort to identify beneficial owners of Fruit of the Loom publicly held bonds; (L) receive and examine all ballots and master ballots as well as date and time stamp the originals of all such ballots and master ballots upon receipt; (M) tabulate all ballots and master ballots received prior to the voting deadline in accordance with established procedures, and prepare a vote certification for filing with the Court; and (N) undertake such other related activities as may be mutually agreed upon by Innisfree and Fruit of the Loom. Innisfree will charge Fruit of the Loom for services rendered and seek reimbursement of costs incurred. For balloting services, Innisfree will charge a project fee of $10,000, plus $2,000 for each public debt or equity security entitled to vote on the plan of reorganization and $1,500 for each public debt or equity security not entitled to vote on the plan but entitled to receive notice. The foregoing balloting fees are for Innisfree's coordination with all brokerage firms, banks, institutions and other interested parties, including the distribution of voting materials. For the mailing to creditors and record holders of securities, Innisfree estimates its labor charges will be $1.75 per solicitation package, which assumes the package will include the disclosure statement, a ballot, a return envelope and one other document, and that a window envelope will be used for the mailing, and will therefore not require a matched mailing. Innisfree will charge a minimum fee of $3,750 to respond to up to 500 telephone calls from creditors and security holders within a 30-day solicitation period. If more than 500 calls are received within the solicitation period, Innisfree will charge Fruit of the Loom $7.50 per call. In addition, Innisfree will charge $7.50 per call for any calls made to creditors or security holders. If requested by Fruit of the Loom, Innisfree will provide bondholder identification services and will charge $5,000 per issue of bonds for such services. Innisfree will charge $100 per hour for the tabulation of ballots and master ballots, plus set up charges of $1,000 for each tabulation element (e.g. each security or, in the case of other creditors, each class). Innisfree will charge its customary hourly rates for any time spent by senior executives reviewing and certifying the tabulation and dealing with special issues that may develop. Innisfree will charge Fruit of the Loom for consulting services at its standard hourly rates. Consulting services include review and development of materials, including the disclosure statement, plan, ballots, and master ballots; participation in telephone conferences, strategy meetings or the development of strategy relative to the solicitation project; efforts related to special balloting procedures, including issues that may arise during the balloting or tabulation process; computer programming or other project-related data processing services; travel to cities outside of New York City for client meetings, legal or other matters; efforts related to the preparation of testimony and attendance at court hearings; and the preparation of affidavits, certifications, fee applications, invoices and reports. The hourly rates for Innisfree professionals are: * Managing Director $325 * Practice Director $250 * Account Executive $210 * Staff Assistant $150 * Telephone Representative $100 Innisfree will charge $0.50-$0.65 per holder, plus postage, for any notice mailings to creditors and registered record holders of securities, which rate assumes that labels and/or electronic data for these holders would be provided by the trustee, transfer agent or the claims agent. Innisfree will charge a fee of $4,000 to conduct the notice mailing to holders of the public securities. Innisfree will seek reimbursement from Fruit of the Loom for all out-of-pocket expenses, including travel costs, postage, messenger and courier charges, expenses incurred to obtain or convert depository participant, creditor, shareholder and /or NOBO listings, and costs for supplies, in-house photocopying and telephone tolls. Fruit of the Loom understands that Innisfree intends to apply to the Court for allowance of compensation and reimbursement of expenses in accordance with the Code. Jane Sullivan, practice director at Innisfree, files an affidavit declaring that her firm fulfills the legal definition of a disinterested party. (Fruit of the Loom Bankruptcy News, Issue No. 34; Bankruptcy Creditors' Service, Inc., 609/392-0900) FRUIT OF THE LOOM: Reports Improved Second Quarter Results ---------------------------------------------------------- Fruit of the Loom, Ltd. (OTC Bulletin Board: FTLAQ), one of the world's leading manufacturers and marketers of basic family apparel, reported operating results for its second quarter which reflect continuing improvement. Operating results for the second quarter significantly improved compared to the second quarter of 2000 as the Company continued to reduce operating costs and focus its efforts on core profitable products. Operating earnings before interest and other expenses, excluding consolidation costs of $34.0 million, were $31.9 million in the second quarter of 2001, a $43.3 million improvement from a loss of $11.4 million in the second quarter of 2000. Operating earnings before interest and other expenses, excluding consolidation costs of $40.7 million, were $29.1 million in the first six months of 2001, an $88.5 million improvement from a loss of $59.4 million in the six-month period ended July 1, 2000. The improvement in operating earnings in both the second quarter and six-month periods reflects reductions in production costs and lower selling, general and administrative expenses. Excluding consolidation costs, selling, general and administrative expenses decreased $20.8 million to $84.7 million for the six-month period ended June 30, 2001 compared to the corresponding period of 2000. These cost improvements more than offset the impact of volume and price reductions. Consolidation costs aggregated $40.7 million in the six-month period ended June 30, 2001, of which $35.8 million were non-cash costs. Consolidation costs primarily relate to the closure of manufacturing facilities as a result of increased efficiencies, reduced capacity requirements and the Company's continuing focus on low-cost production. For the six months ended June 30, 2001, the Company reported sales of $661.9 million compared to $823.0 million for the corresponding period in 2000. The lower sales volume was principally due to lower Activewear sales, which were affected by weakness in the overall Activewear market combined with competitively lower pricing. For the six-month period ended June 30, 2001, dozens in the overall Activewear market declined 8% when compared to the corresponding period of 2000. Higher sales volume in the comparable period of 2000 also included sales of discontinued non-core Retail and Activewear product lines, and the Gitano jeanswear business. The Company continued its leadership position in mass merchant sales of Men's and Boys' underwear as the Company's market share increased by 1.0 share points to 44.9% in the twelve months ended May 2001 over the same period of the preceding year. Net operating cash flows before reorganization items improved $23.7 million to $7.1 million in the six-month period ended June 30, 2001. The Company continues to focus on reducing inventories, achieving its lowest level in over eight years. Inventory at June 30, 2001 was $492.0 million, a reduction of $73.4 million from July 1, 2000. As of July 25, 2001, the borrowing availability under the Company's debtor-in-possession credit facility (DIP) was $260.9 million. During the first six months of the year, normally the seasonal peak for the Company's working capital needs, there were no borrowings under the revolver component of the DIP. In addition, the Company's cash and cash equivalents decreased by $10.4 million which was approximately equal to the overall reduction in the Company's indebtedness during the period. Management believes that the size of the DIP and cash and cash equivalents exceeding $100 million provide the Company with adequate financial flexibility and liquidity to pay its suppliers and meet customer expectations. Chief Executive Officer Dennis Bookshester commented, "As a result of our recent manufacturing consolidation efforts, we have aligned our production capacity and cost structure with our long-term strategy. Our focus on quality, service and profitability continues to position us for success. Our customer service measures remain excellent. The Company continues to be well positioned to emerge from bankruptcy." Fruit of the Loom filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code on December 29, 1999 and is currently working through its restructuring in bankruptcy proceedings. On March 15, 2001 the Company filed a Joint Plan of Reorganization with the United States Bankruptcy Court for the District of Delaware. At this time it is not possible to predict the outcome of the reorganization cases, in general, or the effects of the reorganization cases on the business of the Company or on the interests of creditors. There can be no assurance that the Joint Plan of Reorganization will be approved or that the Company will emerge from bankruptcy. Fruit of the Loom is a leading, international vertically integrated basic apparel company, emphasizing branded products for consumers of all ages. The Company is one of the world's largest manufacturers and marketers of men's and boys' underwear, women's and girls' underwear, printable T-shirts and fleece for the activewear industry, casualwear and childrenswear. Fruit of the Loom employs approximately 23,000 people in more than 50 locations worldwide. The Company sells its products principally under the FRUIT OF THE LOOM(R) and BVD(R) brands. For more information about the Company and its products, visit http://www.fruit.com ICG COMM.: Asks Court To Stretch Exclusive Period To December 10 ---------------------------------------------------------------- ICG Communications, Inc. et al. seeks an order further extending the exclusive periods during which the debtors may file a reorganization plan and solicit acceptances of such plan. The debtors request a court order extending the plan proposal period through and including December 10, 2001 and the solicitation period through and including February 8, 2002. The debtor states that the size and complexity of its cases alone constitutes sufficient cause to further extend the exclusive periods. The debtors are one of the largest competitive telecommunications companies in the U.S., with assets totaling over $2.7 billion and total debts of over $2.8 billion. Thus far the debtors have obtain a settlement with Qwest Communications Corporation, resolved disputes regarding the debtors' corporate headquarters, rejected contracts and leases and analyzed the debtors' capital leases and begun negotiations with large lessors/sellers under the capital leases. The debtor has completed their long-term business plan. The debtors are also currently engaged in attempting to secure sufficient exit financing to fund their plan. Successful completion of these efforts coupled with a resolution of the intercompany claims issues will, according to the debtors, enable them to draft and file a reorganization plan. INTEGRATED HEALTH: Resolves Cardinal's Reclamation Claim -------------------------------------------------------- In the ordinary course of their businesses, Integrated Health Services, Inc. purchased and received certain pharmaceutical supplies from Cardinal Distribution for use in their healthcare facilities. On February 2, 2000, IHS filed a voluntary petition for chapter 11 relief. On or about February 4, 2000, Cardinal served reclamation demands on the Debtors seeking the segregation and return of certain pharmaceutical supplies by Cardinal to the Debtors within the ten day period prior to the filing date, pursuant to applicable state law and section 546(c) of the Bankruptcy Code. After analyzing the Reclamation Demands with the assistance of their advisors and subsequent discussions with Cardinal, the Debtors have agreed that Cardinal has a valid and timely reclamation claim in the amount of $14,999.70. Accordingly, the parties desire to enter into a Stipulation and Order providing for the allowance and satisfaction of Cardinal's reclamation claim. Thus, the parties agree that: (1) Pursuant to section 546(c)(2)(A) of the Bankruptcy Code, the Reclamation Demands are denied. In lieu of reclamation, Cardinal is granted an allowed administrative expense claim in the amount of $14,999.70 pursuant to sections 503(b) and 546(c) of the Bankruptcy Code; (2) The allowed administrative expense claim will be paid in 6 equal monthly installments of $2,499.95 with the first installment to be made within 10 days of the Court's approval of the Stipulation and Order and each subsequent installment to be made on or before the 10th day of the next succeeding month until Cardinal's allowed reclamation claim has been satisfied in full. (3) In exchange, Cardinal agrees to supply products to the Debtors in accordance with the current supply agreements and terms between the Debtors and Cardinal; provided, however, that the payment terms will be net 30 days from the date of invoice. (4) Except as specifically set forth, nothing contained in the Stipulation and Order will be deemed a Waiver or release by the Debtors or Cardinal of any other rights, claims or defenses between the parties. (5) Nothing contained in the Stipulation and Order will be construed or deemed to be an assumption of any executory contract pursuant to section 365 of the Bankruptcy Code. (Integrated Health Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service, Inc., 609/392-0900) KOMAG, INC.: Appeals Nasdaq's Delisting Determination ----------------------------------------------------- Komag, Incorporated (Nasdaq: KMAG), the largest independent producer of media for disk drives, received a Nasdaq Staff Determination on July 5, 2001 indicating that the company is not in compliance with the minimum bid price requirement for continued listing set forth in Marketplace Rule 4450(a)(5), and as such the company's securities are subject to delisting from the Nasdaq National Market. The company will request a hearing before a Nasdaq Listing Qualifications Panel to review the Staff Determination. There can be no assurance the Panel will grant the Company's request for continued listing. Until the Panel reaches its decision following the oral hearing, Komag's stock will remain listed and will continue to be traded. About Komag Founded in 1983, Komag is the world's largest independent supplier of thin-film disks, the primary high-capacity storage medium for digital data. Komag leverages the combination of its U.S. R&D centers with its world-class Malaysian manufacturing operations to produce disks that meet the high-volume, stringent quality, low cost and demanding technology needs of its customers. By enabling rapidly improving storage density at ever-lower cost per gigabyte, Komag creates extraordinary value for consumers of computers, enterprise storage systems and electronic appliances such as peer-to-peer servers, digital video recorders and game boxes. For more information about Komag, visit Komag's Internet home page at http://www.komag.com L.L. KNICKERBOCKER: Proposes Asset Sale Procedures & Topping Fee ---------------------------------------------------------------- The L.L. Knickerbocker Co., Inc. reported the filing with the United States Bankruptcy Court of a motion for order approving overbid procedures and topping fee in connection with a proposed sale of substantially all of the company's assets. The United States Bankruptcy Court has scheduled a hearing on the Motion for July 31, 2001. The subject of the Motion is to establish bidding procedures and a topping fee for the sale of substantially all of Knickerbocker's assets to a company to be formed by Brian Blosil or his designee. In consideration for the purchase of Knickerbocker's assets, the purchaser will assume approximately $4 million of Knickerbocker's debts and liabilities and will issue to the pre-petition unsecured creditors of Knickerbocker redeemable preferred units with an aggregate redemption value of approximately $3 million. The Motion asks the Bankruptcy Court to approve procedures related to the sale of Knickerbocker's assets including the following: (1) the purchase price of competing bids must be at least $6 million in cash plus a topping fee of 3%, (2) competing bidders must provide to Knickerbocker a deposit of $1 million, (3) Brian Blosil will have the opportunity to match any competing bid and (4) if Brian Blosil does not match any competing bid, the assets will be sold to the competing bidder and the 3% topping fee will be paid to Brian Blosil as compensation for his costs and expenses. If the overbidding procedures are approved and no substantial overbid for Knickerbocker's assets is received, it is unlikely that the shareholders of Knickerbocker will receive any proceeds from the sale of assets. The L.L. Knickerbocker Co., Inc. is a multi-brand collectible products, gift, toy and jewelry company that designs, develops, produces and markets products over diverse distribution channels. The Company's products are sold through independent gift and collectible retailers, department stores, electronic retailers, Internet, and international distributors. The Company is a major supplier of collectible products and fashion jewelry to the leading electronic retailer. LACLEDE STEEL: Files Chapter 11 Petition For the Second Time ------------------------------------------------------------ Surging imports and the continued depressed steel market triggered Laclede Steel Co. to file again for chapter 11 protection, Reuters reports. This after the company just emerged from bankruptcy January this year. The filing affects Laclede's 525 steelworkers at two plants in Alton, Illinois and Fairless Hills, Pennsylvania. It does not involve, however, Laclede Chain Manufacturing Co., which continues to conduct business as usual, Reuters discloses. The company has hired New York-based Gordian Group to find a buyer for Laclede Chain. LACLEDE STEEL: Chapter 11 Case Summary -------------------------------------- Debtor: Laclede Steel Company 440 North 4th Street 3rd Floor Saint Louis, MO 63102 Chapter 11 Petition Date: July 27, 2001 Court: Eastern District of Missouri (St. Louis) Bankruptcy Case No.: 01-48321 Judge: Barry S. Schermer Debtor's Counsel: Lloyd A. Palans, Esq. Bryan Cave One Metropolitan Sq. 211 N. Broadway, Ste. 3600 St. Louis, MO 63102-2750 314-259-2000 MARINER POST-ACUTE: Summary Of Mariner Health's Chapter 11 Plan --------------------------------------------------------------- PNC Bank, National Association, and First Union National Bank as Agents for the Senior Bank Lenders to the Debtors in the jointly administered cases of Mariner Health Group, Inc., present the Court with the Senior Bank Lenders' Joint Plan of Reorganization outlining a scheme to reorganize the MHG Debtors' former and current operations and balance sheets. The MHG chapter 11 cases are separately administered from the chapter 11 cases for Mariner Post-Acute Network, Inc. and its subsidiaries. The Banks, as Plan Proponents are represented by lawyers at O'Melveny & Myers LLP and Blank Rome Comisky & McCauley LLP. The Plan, provides that: (1) the Senior Bank Claims will be deemed allowed in the aggregate amount of approximately $440 million, such that each holder of a Senior Bank Claim will receive its Ratable Proportion of (A) Excess Cash, (B) $50 million in New Senior Notes issued by Reorganized MHG or by one of its subsidiaries, (C) $48 million in New Subordinated Notes issues by Reorganized MHG or by one of its subsidiaries, (D) 80,000 shares of New Common Stock, representing 80% of the shares of New Common Stock of Reorganized MHG to be initially issued or reserved for issuance by Reorganized MHG, and (E) any distributions otherwise payable to holders of the Subordinated Note Claims to the extent such holders' subordination rights are not waived; (2) each holder of a Subordinated Note Claim (other than MPAN) will receive its Ratable Proportion of the General Unsecured Fund, and the Senior Bank Lenders will be deemed to have waived their subordination rights as to such bolder, if, but only if, (a) the class of Subordinated Note Claim holders has voted to accept the Plan and (b) such holder has not voted to reject the Plan; (3) each holder of an Allowed General Unsecured Claim will receive in full satisfaction of such Claim, its Ratable Proportion of the General Unsecured Fund, which will consist of the lesser of (a) $7,500,000 minus the amount necessary to make a 50% distribution to holders of Allowed Convenience Claims or (b) the amount necessary to fund a 5% distribution to holders of Allowed General Unsecured Claims and Allowed Non-MPAN Subordinated Note Claims ; (4) each holder of a Convenience Claim will receive Cash equal to 50% of the amount of such Allowed Convenience Claim; (5) each holder of a United States Claim will be treated according to the terms of a Settlement Agreement as contemplated in Section 9.1(c) of the Plan; and (6) no holder of an MPAN Claim, a Securities Litigation Claim or a Punitive Damage Claim against any of the Debtors, or any Equity Interest will receive or retain any property on account of such Claims or Interests. All distributions will be made as of the Effective Date or as soon thereafter as is practicable. The Plan is premised on a deemed consolidation of the MHG cases for purposes of the Plan. The MHG Debtors' operations are currently managed by MPAN pursuant to the terms of a certain "Management Protocol" established at the time the Debtors entered into the DIP Facility. In exchange for providing management services to the Debtors, MPAN receives compensation on a monthly basis equal to 5% of the gross revenues of the Debtors. Pursuant to the DIP Facility, MPAN's management of the Debtors may be terminated by the Plan Proponents at any time prior to the Effective Date of the Plan and a replacement manager for the Debtors may be selected by the Plan Proponents. MPAN also may be replaced as the manager of the Debtors' operations after the Effective Date of the Plan. If MPAN is terminated as the manager of the operations of the Debtors, whether before or after the Effective Date, it is expected that the Plan Proponents or Reorganized MHG will hire new management to operate Reorganized MHG and the Subsidiary Debtors, as reorganized. In that case, it is anticipated that Reorganized MHG will be required to provide the New Management up to 20% of the New Common Stock of Reorganized MHG through outright grants, options and stock option plans. In addition, if Reorganized MHG acquires any assets from the New Management (or any entity controlled by the New Management) that are used to operate Reorganized MHG, it is expected that such assets will be purchased in exchange for New Subordinated Notes. The Plan Proponents may elect to install New Management for Reorganized MHG prior to the Effective Date (subject to Section 5.3 of the Debtor-in-Possession Credit Agreement and Annex A of the DIP Order). After the Effective Date, any New Management would be chosen by the Board of Directors. The Plan Proponents or Board of Directors for Reorganized MHG will establish procedures and prepare for the New Management to assume responsibility for the management and operations of the Debtors. Termination of the DIP Facility The Plan provides that, on the Effective Date, all obligations of Reorganized MHG under the DIP Facility will be paid or otherwise satisfied in full in accordance with the terms of the DIP Facility. Upon payment or satisfaction in full of all obligations under the DIP Facility in accordance with the terms thereof, all liens and security interests granted to secure such obligations will be deemed cancelled and will be of no further force and effect. The Plan Proponents indicate that there are no outstanding borrowings under the DIP Facility, other than a letter of credit in the face amount of approximately $7.8 million. The letter of credit supports the Debtors reimbursement obligations in respect of certain surety bonds. All fees and expenses due and payable have been paid in a timely manner as at the time of filing of the Plan. The Creditors' Committee The Committee will continue in existence until the Effective Date, at which time it will be dissolved and its members will be released from all their duties, responsibilities and obligations in connection with the Chapter 11 cases or the Plan and its implementation. The retention or employment of the Creditors' Committee's attorneys, accountants, and other agents will terminate when the Committee's existence terminates. All Allowed expenses of Committee members and the Allowed fees and expenses of their professionals through the Effective Date will be paid by Reorganized MHG in accordance with the Bankruptcy Court Order. (Mariner Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 609/392-0900) MICROCAP: Declares Final Liquidating Cash Distribution ------------------------------------------------------ The MicroCap Liquidating Trust (OTC BB: MCAPS) announced that the final liquidating cash distribution was declared Friday totaling $364,092, or $0.15 per unit of beneficial interest in the Trust (Unit). This distribution includes proceeds received from the sale of the First Colony Coffee and Tea Company (First Colony), as discussed below, and the Trust's remaining cash balance less a reserve for final operating expenses. Raymond S. Troubh, Trustee, announced that the distribution will be paid on August 23, 2001 to Unit holders of record on August 14, 2001. As previously announced, the Trust completed the liquidation of its portfolio investments with the sale of its investment in First Colony for $100,000 on June 18, 2001. As a result of the completion of the liquidation of the Trust's portfolio investments, the Trust is terminating its operations effective with the payment of this final liquidating distribution to Unit holders. As a result of the termination of the Trust, the Trust's Units will be de-listed and trading discontinued from the OTC Bulletin Board as of August 23, 2001, the date of termination. The Trust was formed in February 1997 to continue the liquidation of the MicroCap Fund, Inc. (the "Fund"), a closed- end management investment company. Including the initial liquidating distribution of $3.50 per share paid by the Fund in August 1996, cumulative liquidating distributions paid to beneficiaries total $16.9 million, or $6.95 per unit of beneficial interest in the Trust. Continental Stock and Transfer is the transfer agent for the MicroCap Liquidating Trust. NATIONAL HEALTH: Reports Progress on Debt Restructuring ------------------------------------------------------- National Health Investors, Inc. (NYSE:NHI)(NYSE:NHIPR), one of the nation's largest health care real estate investment trusts, announced today its progress in reducing its short-term credit facility and in restructuring and writing down $22.6 million of certain loans and real estate in its portfolio. Credit Facility Reduction - Since September 2000, NHI has paid down its bank credit facility by approximately $91 million leaving outstanding a $26 million payment due Dec. 31, and approximately $10.6 million due July 1, 2002. Morningside - The net carrying value for these four assisted living facilities in Virginia and Maryland totaled approximately $21,300,000 at June 30. As a result of an NHI filed lawsuit, a final judgement against the individual guarantors has been obtained. On July 27, the outstanding principal amount of $21,300,000 on this loan was paid to NHI and is part of the $91 million principal reduction of the credit facility mentioned previously. The accrued interest and all collection costs still owed by Morningside have been reduced to a one-year promissory note secured with a letter of credit, individual guarantees, and a confession of judgement. SouthTrust Loan Participation - NHI has a 50% interest in a $52,500,000 loan originally made by SouthTrust Bank to Integrated Health Services, Inc. (IHS). NHI's interest in the note receivable balance at March 31, totaled $22,052,000 after a write-down of $3,591,000 during 2000. IHS and its affiliates have not paid principal and interest since March 2000 and filed for chapter 11 bankruptcy protection in February 2000. Subject to court approval, IHS agreed during the second quarter to deed the properties to an NHI subsidiary and lease them for a 66- month term with minimum rental payments equal to 6% of the loan balance amount plus additional rent based upon cash flow of the facility. IHS may terminate the lease with 90-day notice. It is anticipated that this transaction will be closed during the third quarter. Based on the events of the second quarter, NHI wrote down this asset by an additional $3 million to $19,052,000 effective June 30. Autumn Hills Convalescent Centers, Inc. - In 1997, NHI funded a mortgage loan for Autumn Hills in the original principal amount of $51,500,000. Collateral for the loan included first mortgages on 14 health care facilities and certain corporate and personal guarantees. NHI has received only partial interest payments since April 2000 and none since May 15. This asset was written down by $7,965,014 effective Dec. 31, 2000. The debtor filed for bankruptcy on May 15, and has agreed with NHI, subject to court approval, to either file a plan of reorganization by September 15, 2001 that meets the approval of NHI, or surrender the property to NHI no later than Dec. 4. NHI does not expect to receive payments during the bankruptcy. Based on the events of the second quarter, NHI wrote down this asset by an additional $10 million to $31,197,000 effective June 30. Alterra Properties - In early 1998, NHI entered into a purchase leaseback transaction with Alterra Healthcare Corporation. The $41 million transaction resulted in Alterra leasing 11 assisted living centers from NHI: four in Arizona, three in Florida, three in Tennessee and one in South Carolina. In March, Alterra defaulted on their rent payment. NHI immediately terminated the leases and arranged for new lessees. The new lessees took possession of five properties on April 1, three properties on May 1, one property on June 1, and one property on July 1. The last property is in litigation, but the court has ordered that its monthly rental payments be made to NHI pending final court ruling. NHI has filed suit for damages against Alterra. The company's previous carrying value for this property was $38,700,000. NHI has leased these properties to new lessees but, to date, has not received its full lease payments from the new lessees. Consequently, this investment was written down by $4,900,000 to $33,800,000 effective June 30. Other Write-Downs - Effective June 30, NHI additionally wrote down asset values on its mortgage notes secured by nine long- term care facilities owned by Lenox HealthCare ($3.1 million), and three Washington state real estate properties ($1.5 million) based on bankruptcy filings, non-payment and other second quarter events. Refinancing and Sales Initiatives - The Company has a number of refinancing and/or asset sales projects underway and anticipates closing one or more of these prior to year-end. "NHI has made significant progress in prepaying its bank credit facility and in working with its borrowers and lessees in restructuring and improving its position as it relates to non- performing loans and/or leases," said NHI President Andy Adams. "The company's cash flow of approximately $4 million per month will continue to be used to repay outstanding indebtedness. NHI reiterates its intention to preserve its status as a real estate investment trust." Adams added, "The significant asset write downs effective June 30 reflect our desire to keep our portfolio at current values." National Health Investors, Inc. is a health care real estate investment trust that makes first mortgage loans and leases certain owned real estate. The common and preferred stocks of the company trade on the New York Stock Exchange with the symbols NHI and NHIPr respectively. Additional information including the company's most recent press releases and a summary of the most recent financial highlights may be obtained on NHI's Web site http://www.nhinvestors.com NATIONAL HEALTH: Posts Second Quarter Operating Results ------------------------------------------------------- National Health Investors, Inc., (NYSE:NHI) (NYSE:NHIPR) one of the nation's largest health care real estate investment trusts, announced that a second quarter fixed asset and mortgage loan write-down of $22.6 million resulted in negative funds from operations for the quarter of $9,305,000 or 38 cents per share diluted, compared to funds from operations of $19,127,000 or 68 cents per share diluted for the same quarter last year. Net loss was $12,268,000 or 52 cents per share diluted for the quarter ended June 30 compared to net income of $13,914,000 or 55 cents per share diluted for the same period in 2000. Revenues for the second quarter were $33,438,000 compared to $37,999,000 for the same period last year. For the six months ended June 30 funds from operations per share diluted was 14 cents compared to $1.37 in 2000.Net loss for the six months ended June 30 was $2,379,000 compared to net income of $27,867,000 for the same period in 2000 and diluted per share net loss was 14 cents compared to net income of $1.10 in 2000. Revenues for the first six months were $66,811,000 compared to $76,022,000 in the first six months of 2000. The decline in FFO and net income in the second quarter is due primarily to a charge for loan loss expense and asset write- downs of $22.6 million or 93 cents per share, related to four mortgage loans and two owned property groups with net carrying amounts before the write-downs totaling $154,374,000. The balance of the decline in the second quarter and six-month period is due to certain of the company's loans and leases being on non-accrual status. The decline is partially offset by reduced borrowing costs. As has been previously stated, it is the company's intent to comply with REIT dividend requirements, thus the company anticipates that a dividend at least equal to 90% of projected 2001 taxable income will be declared in the fourth quarter and paid by January 31, 2002. It is currently believed that the dividend will be paid in a combination of cash and shares of the company. "NHI has made significant progress in prepaying its bank credit facility and in working with its borrowers and lessees in restructuring and improving its position as it relates to non- performing loans and/or leases," said NHI President Andy Adams. "The company's cash flow of approximately $4 million per month will continue to be used to repay outstanding indebtedness." Adams added, "The significant asset write downs effective June 30 reflect our desire to keep our portfolio at current values." The Board has additionally authorized, subject to bank credit facility approval, the incremental repurchase of up to $10 million of the company's stock in open market transactions National Health Investors, Inc. specializes in the financing of health care real estate by first mortgage and by purchase and leaseback transactions. The common and preferred stocks of the company trade on the New York Stock Exchange with the symbols NHI and NHIPr respectively. Additional information including the Company's most recent press releases and a summary of the most recent financial highlights may be obtained on NHI's Web site at http://www.nhinvestors.com OUTPOST.COM: Requests Hearing To Review Delisting Determination ---------------------------------------------------------------- Outpost.com (Nasdaq: COOL) Cyberian Outpost, Inc. a leading global Internet retailer of high-end technology products, announced that on July 23, 2001, it received a Nasdaq Staff Determination indicating the Company's failure to comply with Nasdaq's $1.00 minimum bid price requirement (Marketplace Rule 4450(a)(5)) for continued listing of its Common Stock on the Nasdaq National Market, and that its securities are, therefore, subject to delisting from The Nasdaq National Market. The Company has requested a hearing before a Nasdaq Listing Qualifications panel to review the Staff Determination and its Common Stock will continue to trade on The Nasdaq National Market pending the outcome of the hearing. A hearing date has not been set. There can be no assurance the Panel will grant the company's request for continued listing. If the Common Stock is delisted, the Company would likely apply to have it traded on the OTC Bulletin Board. About Outpost.com Outpost.com, established in 1995, is a leading Internet retailer of consumer technology products. Outpost.com has been named the top-rated consumer shopping experience on the Web by the on-line shoppers' rating service Bizrate.com, receiving the "Circle of Excellence Award" for Holiday 2000 and the 1999, 2000 and 2001 #1 PowerRanking for Computing by Forrester Research. Today, Outpost.com has an existing customer base of over 1.4 million. The company has partnered with leading consumer electronics retailer Tweeter Home Entertainment Group expanding its clicks and mortar presence. As a full service provider (FSP), Outpost.com provides its partners with e- commerce solutions encompassing site design, site maintenance, order management and fulfillment. OWENS CORNING: Moves To Keep Non-Debtor Affiliate Setoff Rights --------------------------------------------------------------- Prior to the Petition Date, Owens Corning Canada Inc., Vytec Corporation, Crown Manufacturing Inc., and OC Celfortec Inc., all of which are non-debtor affiliates of Owens Corning, in the ordinary course of their respective businesses, sold goods and/or services to the Debtors, including specifically Owens Corning, for which Owens and from time to time certain other Debtors became indebted to the affiliates. Similarly, from time to time prior to the Petition Date, the Debtors, including Owens, in the ordinary course of their business, sold goods and/or services to one or more of the affiliates and became entitled to royalties, for which the affiliates became indebted to the Debtors. As of the Petition Date, the affiliates were owed by the Debtors, and in turn owed Owens, amounts in Canadian dollars as prepetition claims: Receivable Owed Payable Owed Net Receivables By Debtors to Debtors Owed by Debtors ------------- ------------ -------------- OCC CND$23,734,999 CND$11,436,931 CND$12,298,068 Vytec CND$22,685,865 CND$ 72,705 CND$22,613,160 Celfortec CND$ 4,035,968 CND$ 48,440 CND$ 3,987,528 Crown CND$ 106,815 CND$ (222,640) CND$ 329,455 --------------- Total CND$39,228,211 As a result of the Debtors' prepetition indebtedness to the affiliates, the affiliates are entitled to set off the amounts owed by the Debtors against amounts the affiliates otherwise owe to the Debtors, subject to the automatic stay of all creditor action under the Bankruptcy Code. Rather than pursue their rights to seek relief from the automatic stay to exercise rights of setoff, the affiliates simply wish to confirm their intent to preserve the status quo with respect to the prepetition claims, without prejudice to their setoff rights, consistent with the holding of the United States Supreme Court in Citizens Bank of Maryland v. Strumpf, 5116 US 16 (1995). Accordingly, the parties have entered into a stipulation and order submitted as part of this Motion, and ask Judge Fitzgerald to take action to preserve the affiliates' rights of setoff by entering the order approving the stipulation, thereby confirming the preservation of the status quo and the parties' respective rights with respect to the prepetition claims and rights of setoff. Under the stipulation, the Debtors and the affiliates agree that: (a) The Debtors acknowledge that the affiliates have rights of setoff relating to the prepetition claims, and that the affiliates shall not be deemed to have effected a setoff by their refusal to pay amounts owed by them to the Debtors for prepetition claims. The parties simply intend to preserve the status quo with respect to the prepetition claims and the affiliates' rights of setoff as of the Petition Date; (b) Each of the affiliates shall reserve all of their rights and remedies with respect to the setoff claims referred to in the stipulation and order, and any defenses to such claims also shall be reserved; and (c) The stipulation and order is not intended to affect in any way the parties' postpetition dealings with each other. The Debtors argue that entry of this order approving the stipulation is in the best interest of the Debtors, their estates and creditors as it will serve to preserve the status quo with respect to the prepetition claims without altering the respective rights of the parties. (Owens Corning Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 609/392-0900) PACIFIC GAS: Modesto Irrigation District Seeks Relief From Stay --------------------------------------------------------------- An appeal captioned Modesto Irrigation District v. Pacific Gas and Electric Company, et al., No. 99-17069, pends before the United States Court of Appeals for the Ninth Circuit. Modesto seeks modification of the automatic stay to the extent necessary to permit prosecution of the appeal and any requests for, and further prosecution of, rehearing or certiorari review. Modesto does not ask for modification of the stay to permit prosecution of a trial of the underlying action in the event of a remand. Modesto's filed in initial lawsuit, Modesto Irrigation District v. Pacific Gas and Electric and Dynergy Power Services, Inc., No. C-98-3009-MHP (Dist. N.D. Calif. 1998), seeking a monetary judgment and injunctive relief under the Sherman Antitrust Act for damages arising out of PG&E's refusal to interconnect transmission lines with Modesto at substations in Pittsburg, California. That suit was dismissed, an amended complaint was filed to advance conspiracy allegations and challenge any claim to immunity under the Noerr-Pennington doctrine (which immunized efforts to prevent competition by involving governmental or regulatory processes), and that amended complaint was dismissed. Thereafter, Modesto appealed. Briefing and oral argument were completed on March 15 and the Court of Appeals took the matter under submission. The Ninth Circuit now advises that it will not render a decision until the bankruptcy stay applicable to PG&E is lifted. Delay, Merle C. Meyers, Esq., at Goldberg, Stinnett, Meyers & Davis, argues, will only serve to frustrate prompt resolution of the matter and needlessly increase costs for all of the parties. Lifting the stay will not unduly prejudice the Debtor because the matter must be resolved sooner or later. (Pacific Gas Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 609/392-0900) PILLOWTEX CORPORATION: Asks Court to Extend Exclusive Periods ------------------------------------------------------------- Pillowtex Corporation and its debtor-affiliates report that they've made substantial progress in their reorganization efforts. The Debtors tell the Court that their management and the Company's professionals spent a great deal of time in developing a comprehensive 3-year strategic business plan that will serve as the foundation for their reorganization efforts. Between March and July, the Debtors tell Judge Robinson that they continued to reduce costs and improve their operations in the midst of the unrelenting slowdown in the United States economy and increased competition from imports. The Debtors have closed six plants and five warehouse facilities. Around 1,600 employees were affected by this reduction of workforce. They have also: (i) hired a new chief financial officer and undertaken a search for a new chief executive officer; (ii) disposed of certain unproductive or nonessential assets; (iii) negotiated an agreement with their two larges and most significant cotton suppliers, which enable the Debtors to reject certain contracts to purchase cotton that were substantially above market and take advantage of the currently slumping market price for cotton; (iv) entered into arrangements with several customers that will enable the Debtors to expand the product lines sold to those customers; and (v) continued implementation of certain initiatives to improve customer service (for which the Debtors recently received customer service awards from two of their largest customers). Michael G. Wilson, Esq., at Morris, Nichols, Arsht & Tunnell, reminds Judge Robinson that the Debtors management team has been: (a) comprehensively reviewing the Debtors' businesses to address the Debtors' operational and financial problems, and (b) developing a three-year strategic plan since prior to the Petition Date. According to Mr. Wilson, the comprehensive review of the Debtors' operations and facilities is now nearing completion. Mr. Wilson also relates that the Debtors have made substantial progress toward completing their strategic planning process and preparing their business plan. The strategic planning process includes, among other things: (a) analyses focused on potential outsourcing opportunities, (b) manufacturing capacity and cycle times, (c) working capital reductions, (d) business process re-engineering, (e) brand development, (f) expanded licensing opportunities, and (g) strategic alliances. To assist them with the strategic planning process, the Debtors retained: (1) Stern Stewart & Co. as strategic business consultants to identify, measure and evaluate possible strategic operating alternatives, and (2) Interbrand Corporation as corporate brand management consultants to evaluate the Debtors' brand portfolio and develop strategic alternatives to better position that portfolio within the marketplace. According to Mr. Wilson, the work of Stern Stewart and Interbrand will be completed in the next couple of weeks. At the same time, the Debtors are earnestly working to complete their business plan as soon as reasonably possible, hopefully before October 14, 2001. Mr. Wilson explains that the Debtors had previously agreed to deliver their business plan by October 14, 2001 as a condition to extend the DIP Facility beyond November 12, 2001 when they were negotiating with the Secured Lenders regarding the post-petition financing. Mr. Wilson explains that the Debtors' business plan will serve as the basis for negotiations with the Secured Lenders, the Creditors' Committee and other constituencies regarding a plan or plans of reorganization. Once the Debtors have completed their strategic planning process and prepared their business plan, Mr. Wilson says, the Debtors intend to prepare a preliminary outline of a plan or plans of reorganization structured around the business plan to present to the secured lenders and the Creditors' Committee for input and discussion. The Debtors believe that this action plan will pave the way for their expeditious emergence from bankruptcy pursuant to a consensual plan or plans of reorganization. However, Mr. Wilson notes, it is possible that the Debtors will seek an additional extension of the Exclusive Periods in order to complete the process of negotiating and promulgating the plan or plans of reorganization. Mr. Wilson explains that one must consider the time-consuming nature of the processes described. On top of that, the Debtors will seek extensive input from their various creditor constituencies in the plan process. Nonetheless, by this motion, the Debtors seek only a four-month extension of the exclusive periods. Mr. Wilson says it will give their creditors and the Court a time frame against they can measure the Debtors' progress in achieving the results of their goals. The Debtors request Judge Robinson to extend the exclusive filing period through and including November 16, 2001, and the solicitation period through and including January 15, 2002 or 60 days after the expiration of the exclusive filing period. The hearing for this motion is scheduled on August 13, 2001. The Court expects all objections and responses to be filed by August 6, 2001. By application of Del.Bankr.LR 9006-2, the current deadline is automatically extended through the conclusion of the August 13 hearing. Mr. Wilson argues that: (i) The requested extension of the Exclusive Periods is justified by the size and complexity of the Debtors' Chapter 11 cases. The Debtors and their non-debtor affiliates comprise a large, complex and geographically diverse organization, Mr. Wilson tells Judge Robinson. As of December 2000, the Pillowtex Companies had approximately $1,300,000,000 in assets and $1,300,000,000 in liabilities. They conduct business throughout the United States and overseas, have tens of thousands of potential creditors and currently employ approximately 11,500 full-time and part-time employees. It is simply unrealistic, Mr. Wilson says, to expect that any party would be in a position to formulate and build consensus around a reorganization plan any earlier than November 16, 2001. Meanwhile, Mr. Wilson assures the Court, the Debtors are: (a) taking measures to reduce costs and improve their business operations, and (b) addressing the essential nuts and bolts of the administration of these chapter 11 cases. (ii) The Debtors' progress in these cases warrants an extension of the Exclusive Periods. The Debtors have accomplished much during the first nine months of these cases, Mr. Wilson notes. In addition to working to complete the comprehensive review of their businesses and their strategic planning process, the Debtors have made substantial progress in addressing major, pressing issues facing their estates, including the needs to obtain additional liquidity, preserve vital vendor relationships, develop a key employee retention plan, fill certain key management positions, dispose of unproductive and nonessential assets and reduce costs and consolidate or eliminate certain of their manufacturing and warehouse operations. (iii) The requested Extension of the Exclusive Periods will not harm the Debtors' creditors or other parties in interest. Mr. Wilson argues, "The relief requested herein will not result in a delay of the plan-of- reorganization process; rather, it will simply permit the process to move forward in an orderly fashion." (iv) Little time has elapsed in the Debtors' Chapter 11 cases. The debtors filed their voluntary petitions on November 14, 2000, approximately 9 months prior to the filing of this Motion, Mr. Wilson reminds the Court, and so the Debtors' request for a further extension of 4 months is relatively modest. The Debtors' request constitutes a fraction of the extensions granted by this and other courts in large reorganization cases. (Pillowtex Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 609/392-0900) PLAY BY PLAY: CEO Duran Also Takes Over As Board Chairman --------------------------------------------------------- Play-By-Play Toys & Novelties, Inc. (OTCBB: PBYP) has noted that Tomas Duran, in addition to his current position of Chief Executive Officer, is joining the Board of Directors as Chairman of the Board. Mr. Duran previously had been a director of the Company and a member of its Audit Committee. The Company's Board of Directors also appointed Ottis W. Byers to the positions of President and Chief Operating Officer. Mr. Byers had most recently been employed by the Company as its National Sales Director. Play-By-Play Toys & Novelties, Inc. designs, develops, markets and distributes a broad line of quality stuffed toys, novelties and consumer electronics based on its licenses for popular children's entertainment characters, professional sports team logos and corporate trademarks. The Company also designs, develops and distributes electronic toys and non-licensed stuffed toys, and markets and distributes a broad line of non-licensed novelty items. Play-By-Play has license agreements with major corporations engaged in the children's entertainment character business. PROVIDIAN FINANCIAL: Fitch Cuts Individual Rating To B/C From B --------------------------------------------------------------- Fitch affirms Providian Financial Corp's (Providian) and Providian National Bank's (PNB) long-term deposit rating of `BBB+', senior debt rating of `BBB', trust preferred stock of `BBB-' and short-term ratings of `F2'. The Individual rating for Providian and PNB has been lowered to `B/C' from `B'. The long- term Rating Outlook for both entities remains Stable. Fitch's affirmation and stable rating outlook continues to reflect the company's growing franchise in the U.S. credit card market, where it is the fifth largest credit card issuer with over $30 billion of managed loans and $17.7 million accounts, solid core earnings and profitability performance and sound risk-adjusted capitalization. Earnings and profitability remain relatively strong, although the risk-adjusted revenue margin (RARM), has come under pressure due to higher loss rates. For the most recent quarter ended June 30, 2001, Providian's RARM remained healthy at 13.79%, although down from previous periods. The company's capitalization on both an absolute and risk- adjusted basis, remains sound relative to the risk profile. Providian's equity to managed assets remained healthy at 6.76% at June 30, 2001. Despite these positive factors, Fitch has lowered the Individual rating of Providian and PNB to `B/C' from `B' reflecting the company's more pronounced shift into the lower spectrum of the consumer credit market which has contributed to higher net charge-offs and downward momentum in the risk-adjusted margin over the past few quarters. Furthermore, Fitch's analysis of lagged charge-off and delinquencies rates suggests that these trends will likely persist over the near term. Fitch's Individual rating, measures a bank's business and financial profile absent any external support, and assesses a bank's exposure, appetite and management of risk which Fitch believes, on balance, has increased. Providian has attempted to re- emphasize the `platinum' segment of the market, while at the same time lessen exposure to the `standard' segment where losses are highest. Fitch believes these initiatives have yet to show demonstrable results and therefore losses will remain at elevated levels. Providian Financial, based in San Francisco, CA, is a leading financial services holding company whose principal banking subsidiary is Providian National Bank. The company maintains a growing presence in the U.S. credit card market with over $30 billion of managed receivables at June 30, 2001. PSA INC: Reorganization Plan Estimates 25% to 55% Recovery ---------------------------------------------------------- PSA, Inc.; ETS Payphones, Inc.; ETS Vending, Inc.; Americom, Inc.; City Public Phones, Inc.; ETS Payphones of California, Inc.; ETS Management Services LLC; MSC National, Inc.; S and R Telecommunications Consultants, Inc.; TSC Payphone Corp.; and Phoenix Telecom of Puerto Rico, Inc., debtors filed Chapter 11 petitions on September 11 and 21, 2000. The Disclosure Statement is jointly promulgated by the debtors and the Creditors' Committee in compliance with the applicable provisions of the Bankruptcy Code. Once confirmed, the Joint Plan will allow debtors to emerge from bankruptcy as reorganized ETS with holders of Payphone Investor Claims as its shareholders. Holders of general unsecured claims, such as trade creditors, will receive distributions totaling approximately 25% to 55% of their allowed claims. As certain claims and causes of action are litigated or settled by debtors and the Creditors' Committee including, but not limited to, the repatriation of assets from and realization upon claims against Charles E. Edwards and others, the net proceeds will be paid into a Litigation Trust from which cash distributions will be made periodically and on a pro rata basis to Holders of General Unsecured Claims and Payphone Investor Claims. The estimated total of general unsecured claims is $13,681,791. Payphone Investor claims are estimated at $375 million. The estimated recovery for Payphone Investor Claimants is 6-16%. SSE TELECOM: Auction Set to Test TeleSystem's $3,205,000 Bid ------------------------------------------------------------ BANKRUPTCY AUCTION SSE TELECOM, INC. BANKRUPTCY CASE NO. 01-42831 LEADING MANUFACTURER OF SATELLITE TELECOMMUNICATION EQUIPMENT AND STAELLITE INTERNET TRANSPORTATION SOLUTIONS SALES DATE: August 22, 2001 at 2:00 p.m. Sales Location: United States Bankruptcy Court 1300 Clay Street, Ctrm. 220 Oakland, California 94612 Property Being Sold: Physical assets including inventories, test equipment, jigs & fixtures; Intellectual Property Rights, software, source codes, handbooks and manuals, customer lists, marketing collateral material and intangible property rights in connection with the following four product lines: Transceiver DDT tri-band terminals Modems iP3 satellite Internet gateway (Not including accounts receivable) You may view SSET's website -- http://www.sset.com-- for various specifications and full descriptions of the products and product lines that are being sold. Purchase Price: The Debtor has accepted as the highest bid, the bid of TeleSystems International Corporation in the amount of $3,205,000 for all four product lines. Any initial overbid shall be in the minimum amount of $3,305,000 and thereafter bidding shall be in increments of $10,000. Any overbidding party must be a qualified bidder. A qualified bidder must have available at the auction cash or cash equivalent of #100,000 (the minimum initial overbid amount) and must provide proof of its financial ability to pay the remaining balance of the purchase price in full. For additional information, contact Debtor's counsel, Aaron Paul at Tel. No. (510)763-1000 or Official Unsecured Creditors' counsel, Carl L. Grumer at (310)312-4149. Terms of Auction Sale: Any bid or ultimate over-bid shall be subject to approval of any sale by the United States Bankruptcy Court at the hearing. The Debtor will accept cash or cash equivalents with balance payable in full before any Property is delivered to the purchaser. Any purchaser will be responsible for taking possession of Property purchased and removal of it from the business premises of Debtor at purchaser's own cost and expense. The sale shall be on where-is as-is basis and without warranties of condition, title, or fitness for a particular purpose. The Debtor reserves the right to withdraw from sale any one or all of the product lines and/or to reject any and all bids if Debtor determines that to do so would be in the best interest of the bankruptcy estate and its creditors. SOFTLOCK.COM: Looking to Reorganize Around Intellectual Property ---------------------------------------------------------------- SoftLock.com, Inc., also known as DigitalGoods, reported on its current condition and business status and on its current plans for the future. As previously announced, the company ceased the active conduct of its business on May 1, 2001. Since that time, SoftLock has concentrated its efforts on assessing alternatives and developing an action plan for the future of the company. SoftLock's President and founder Jonathan Schull commented that "our goal has been and continues to be, to devise a plan that will address the needs of our creditors, our preferred stockholders and our common stockholders, in light of their relative legal rights but in a manner that can be accepted by all interested parties." The company's major remaining assets are cash and intellectual property, including certain patent rights and software. The company is actively seeking either a buyer for the intellectual property or a licensee of that intellectual property. In this regard, the company, directly and through its advisors (including Bramson & Pressman, a law firm specializing in licensing, selling and otherwise commercializing intellectual property) has begun formulating alternative approaches for how the intellectual property can best be used to generate the most value for creditors and stockholders. Various potential buyers have been contacted and the company believes that it can now begin negotiations for an acceptable transfer of the intellectual property. The company is hopeful that an agreement can be reached within the next 90 days although any such transaction will be subject to assurances that all necessary approvals and waivers are obtained. With respect to the creditors, the company has retained Looney & Grossman LLP as outside counsel, specializing in business reorganizations. The company has ceased paying its creditors whose debts arose prior to the cessation of business operations on May 1, 2001. It is SoftLock's intent to treat creditors equally and to pay valid claims upon the sale or license of the company's remaining assets. Existing cash reserves will be used to finance the efforts needed to sell or license the intellectual property and implement the company's liquidation and dissolution strategy. The company confirmed that a complete financial report will be made in connection with the filing of its Quarterly Report on Form 10Q for the quarter ended June 30, 2001. This Report will be released in early to mid-August. Of critical importance to the company also will be to maximize whatever value exists in the company's assets for the benefit of its preferred stockholders and common stockholders in addition to its creditors. For this to be successful, SoftLock believes that if the holders of the preferred stock will voluntarily forego all or a significant portion of the stated liquidation preferences, the common stockholders will have an opportunity to share in the net proceeds available upon final liquidation and dissolution and will be supportive of an efficient liquidation process. If such accommodations cannot be achieved through mutual consent, SoftLock believes that some other arrangement will be required in order to successfully complete the sale or licensing of the intellectual property on terms that would be required by a potential buyer or licensee. In addition, as part of the process of selling or licensing intellectual property, SoftLock intends to restructure its compensation arrangements with its sole remaining employee, Jonathan Schull. The company believes that, as the founder, inventor of the company's patents, sole director and sole officer, Mr. Schull's efforts are essential for SoftLock to achieve a successful sale or licensing of intellectual property. It is expected that Mr. Schull's compensation will be reduced and that he will be eligible to receive a bonus calculated as a percentage of the net proceeds received by SoftLock from the sale or licensing of the intellectual property. The details of this arrangement will be consistent with industry standards and subject to approval by the company's preferred stockholders. In a related matter, the company announced that suit has been filed against it by the landlord for the company's former facility in Maynard, Massachusetts. The suit alleges damages for breach of the lease including unpaid rent and also seeks to enjoin certain actions. The company believes that this suit can be resolved in a satisfactory manner as part of the overall plan for liquidation and dissolution. Finally, SoftLock has concluded that if a comprehensive plan such as the one described above cannot be implemented within the next 120 days then a formal Chapter 11 bankruptcy proceeding may be the sole remaining course of action. While this offers a certain and defined resolution of claims, it is the view of SoftLock that all interested parties can most beneficially be served other than through a federal bankruptcy proceeding. SUN HEALTHCARE: Asks Court To Okay Loan To Shared Healthcare ------------------------------------------------------------ Shared Healthcare Systems, Inc., a privately owned, Delaware corporation in the business of providing integrated solutions to the senior care market place, is short of cash because its development of a revolutionary integrated software package, known as Unison Orcas, has been delayed due to longer-than- expected time in completing coding for the software. The Debtors own an approximate 70% equity interest and an approximate 61% equity interest on a fully diluted basis. To preserve the Debtors' existing equity interest in SHS and enable SHS to implement its business plans, SHS and the Debtors have agreed, subject to Court approval, that the Debtors will make a short- term loan of up to $1.5 million to SHS through the provision of a Line-of-Credit Facility. The Orcas software is meant to bring together clinical, financial and case management documentation and workflow into one software package, for facilitating government regulation compliance and general administration of long-term healthcare providers. SHS anticipates that the introduction of its Orcas software will a profitable venture. Coding for the software is now scheduled to be completed by the fourth quarter of 2001. Once the coding for the Orcas software is completed, the company will deploy the software for retail sale. The Debtors believe it is sound business judgement for Sun to provide the Line-of-Credit Facility because: * The Debtors maintain a large equity stake (70% interest) in SHS. * SHS has been unable to raise capital from any other sources, including the owners of the remaining capital in SHS who are employees lacking the resources to be able to provide funding in meaningful amounts. * SHS is in the final stages of production of its Orcas software, which is targetted for deployment in the first quarter of 2002. * The Debtors believe that the Line-of-Credit Facility, together with other initiatives, should be sufficient to fund operations through December 2001. one such initiative is the sale of SHS' former office building (the Phillips Builging). In anticipation of heightened growth of their business, SHS erected a new office building in 1999. SHS anticipates realizing approximately $600,000 for this building and expects to close on the sale within the next few months. In the meantime, SHS continues to pursue other initiatives in the hopes of raising additional capital. * The Debtors are beneficiaries of a price protection provision with SHS, whereby the Debtors enjoy the most favored pricing for SHS products or services of any SHS customer for comparable services. * the Line-of-Credit Facility is secured by a first priority perfected security interest in all assets owned by SHS, including all intellectual property. The Debtors tell Judge Walrath they have obtained the consent of their postpetition lenders under the Revolving Credit and Guaranty Agreement for the Line-of-Credit Facility. Terms of the Line-of-Credit Facility The Line-of-credit Facility provides for, among other things: (1) A term of no later than August 2, 2001 but amounts advanced will be payable on demand of the Debtors; (2) Purpose of the proceeds will be solely for provision of working capital for SHS and other general corporate purposes; (3) First Priority security interest in all assets owned by SHS; (4) Interest equal to 8.6% during the period from the closing date through August 2, 2002, 9.6% during the period from August 3, 2002 through August 2, 2003 and 10.6% from August 3, 2003 through August 2, 2004 and addition 2% per year during the continuance of an event of default; (5) Indemnification by SHS of the Debtors and their respective representatives with respect to the Line-of-Credit Facility, the loan documentation or any of the transactions contemplated. Accordingly, the Debtors seek the Court's authority, pursuant to section 363(b)(1) of the Bankruptcy Code, to make a short-term loan of up to $1.5 million through the provision of a Line-of- Credit Facility, under the terms as described in the motion. (Sun Healthcare Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service, Inc., 609/392-0900) SUPERIOR TELECOM: S&P Lowers Preferred Stock Rating To C -------------------------------------------------------- Standard & Poor's placed its ratings on Superior Telecom Inc. on CreditWatch with negative implications. At the same time, Standard & Poor's lowered its preferred stock rating on the company to single-'C' from triple-'C'-plus. The rating actions follow the company's announcement that it intends to suspend payment of the quarterly cash dividend on its outstanding 8 �% trust convertible preferred securities and that it plans to substantially de-leverage its balance sheet through business divestitures. The preferred stock rating will be lowered to a 'D' when the dividend is deferred on Sept. 15, 2001. Superior Telecom's financial condition has deteriorated because of weak underlying conditions in its key business segment, particularly in its original equipment manufacturing (OEM) and electrical wiring businesses. The prevailing economic malaise has been instrumental in the deterioration of the OEM's business, which is directly tied to various industrial markets such as automotive, appliance/tools, and industrial equipment. Also, despite relatively consistent demand from the commercial building construction market, the company's electrical group, which primarily consist of building wire, continues to be plagued by excess supply that has affected building wire prices. The company's EBITDA of $96 million for the six months ending June 30, 2001, resulted in a very weak EBITDA to interest ration of 1.6 times. This compares with EBITDA of $122 million for the six months ending June 30, 2000, a 21% decline. As a result of the poor performance, the company amended its minimum financial leverage and operating earnings covenants under its bank credit agreement. Superior's debt leverage remains burdensome with almost $1.4 billion in debt (not including $136 million of convertible trust preferred securities). In order to improve its capital structure and address the pending $ 175 million principal payment due July 1, 2002, the company announced that it is exploring the divesture of some business units, which could result in significant proceeds applied towards debt reduction. However, any improvement in the company's capital structure would be tempered against the loss of cash flow from the business units as well as the business diversity provided by such operations. Although the timing of such asset sales is unknown, Standard & Poor's will continue to monitor the progress of any divestiture and will re-evaluate the company's credit and business profile when asset sales occur. RATINGS PLACED ON CREDITWATCH WITH NEGATIVE IMPLICATIONS Superior Telecom Inc. Ratings Corporate credit rating B+ Senior secured bank loan rating B+ Subordinated debt B- RATING LOWERED AND PLACED ON CREDITWATCH WITH NEGATIVE IMPLICATIONS Rating Superior Telecom Inc. To From Preferred stock rating C CCC+ TELEMUNDO HOLDINGS: S&P Rates $50 Mil Senior Notes at CCC+ ---------------------------------------------------------- Standard & Poor's assigned its triple-'C'-plus rating to Telemundo Holdings Inc.'s proposed $50 million (gross proceeds) senior discount notes due 2008. The notes will be sold under Rule 144A with registration rights and will contain an identical covenant package to the company's existing 11.5% senior discount notes due 2008. Offering proceeds, together with bank borrowing, will be used to finance the $65 million purchase of independent Dallas full power UHF television station KXTX. The existing ratings on Telemundo Holdings Inc. and its operating company subsidiary Telemundo Group Inc. are affirmed. The Telemundo Spanish-language TV network is currently distributed in Dallas, the eighth-largest U.S. Hispanic market, via a third-party owned affiliate station. That station's affiliation agreement, which expires in 2002, will be terminated upon the expected October 2001 close of the new station purchase. The new station provides better coverage of the market, greater operational control, and modest cash flow benefits. However, key credit measures will weaken slightly and there will likely be a reduction in audience levels in the near term due to the channel position change. The ratings continue to reflect Telemundo Holdings' ownership of stations affiliated with the Telemundo Network, the second- ranked U.S. Spanish-language television network, increasing competition for Spanish-language advertising, and high financial risk. These factors are tempered by Hispanic population and income growth, rising Spanish-language advertising spending, and the Telemundo network's improving audience shares. Pro forma for the KXTX acquisition, Telemundo will own and operate 10 full power UHF TV stations in nine large markets that include the top eight Hispanic markets. All stations are affiliated with the Telemundo Network, which provides most of the stations' programming. The company also owns the leading VHF station in Puerto Rico. Telemundo continues to face stiff competition from the financially much stronger Univision Television Network, which has more than 75% of the Hispanic TV audience. Competition will increase in 2002, when Univision expects to launch a second Spanish-language television network. Telemundo Holdings' margin is in the mid-30% area. Revenue and cash flow growth has slowed from very high rates in 2000 due to overall advertising softness. Pro forma coverage of cash interest is in the low-2 times (x) area and total interest coverage, including holding company discount notes, is thin at approximately 1.3x. Total debt divided by EBITDA is almost 8x. Advertising weakness and investment activity could restrain key credit measures improvement during the next 12 months. Capital spending is currently elevated at more than $20 million due to digital television conversion. Discretionary cash flow has been positive largely because of the non-cash interest component. There are no debt maturities for the next two years and cash interest payments on the discount notes do not begin until 2004. The revolving credit facility provides modest liquidity subject to financial covenants. OUTLOOK: POSITIVE Sustained favorable operating momentum of the stations and the network that produces key credit measures improvement amid increasing competition may lead to an upgrade in the intermediate to longer term. Further debt financed acquisitions or investment activity could delay a potential upgrade, Standard & Poor's said. RATING ASSIGNED Telemundo Holdings Inc. Rating $50 mil. (gross proceeds) sr. disc. nts due 2008 CCC+ RATINGS AFFIRMED Telemundo Holdings Inc. Corporate credit rating B Senior unsecured debt CCC+ Telemundo Group Inc. Corporate credit rating B Senior secured bank loan rating B+ TRISTAR CORPORATION: Intends To File For Bankruptcy Protection -------------------------------------------------------------- Tristar Corporation (TSAR) announced that the Company's financial condition has continued to deteriorate due to the effects of the slowing economy that began approximately a year ago. The Company is in discussion with its lender to secure interim financing and has a significant backlog of customer orders for the 2001 holiday season which it anticipates fulfilling. Interimly, the Company plans to seek protection under the federal bankruptcy laws as soon as practicable. As a result of the Company's inability to file its Quarterly Report on Form 10Q for the Fiscal Quarter ended May 26, 2001, the NASDAQ Stock Market has delisted the Company's Common Stock. Tristar Corporation is engaged in developing, manufacturing, and marketing an extensive line of value-priced products comprised of designer alternative fragrances, contemporary cosmetics, and selected toiletry products. These products are distributed by the Company in North and South America primarily to chain stores, mass merchandisers, retail outlets, distributors, and wholesalers. UNIFORET INC.: Files Amended Plan of Arrangement Under CCAA ----------------------------------------------------------- UNIFORET INC. and its subsidiaries, Uniforet Scierie-Pate Inc. and Foresterie Port-Cartier Inc. (the COMPANY) announced that they have filed in Court an amended plan of arrangement under the "Companies' Creditors Arrangement Act" which sets out the terms of the restructuring of their debts and obligations. The Company's creditors have been convened to meetings to be held on August 15, 2001 to vote on the amended plan of arrangement and all the necessary information to that effect has been sent to its creditors. On the other hand, further to proceedings instituted by a few of the US Noteholders, the meeting of the US Noteholders-creditors has been temporarily suspended by Court order rendered on July 26, 2001 until settlement of the composition of this class of creditors. As already announced, the Company keeps on its current operations. Suppliers who provide goods and services necessary for the operations of the Company are paid in the normal course of business. Uniforet Inc. is an integrated forest products company which manufactures softwood lumber and bleached chemi-thermomechanical pulp. It carries on its business through its subsidiaries located in Port-Cartier (pulp mill and sawmill) and in the Peribonka area in Quebec (sawmill). Uniforet Inc.'s securities are listed on The Toronto Stock Exchange under the trading symbol UNF.A, for the Class A Subordinate Voting Shares, and under the trading symbol UNF.DB, for the Convertible Debentures. UNIFORET INC.: Posts First Quarter Financial Results ---------------------------------------------------- Uniforet Inc. announces that is has incurred a net loss of $2.1 million ($0.04 per share) during its first quarter ended March 31, 2001, taking into account a gain before income taxes of $3.9 million resulting from the conversion of preferred shares, Series 1, compared with a net loss of $7.4 million ($0,14 per share) for the corresponding quarter of 2000, including a net loss of $3.8 million from continuing operations. On April 17, 2001, the Company filed in Court for protection under the "Companies' Creditors Arrangement Act" in order to prepare and present a plan of arrangement which sets out the terms of the restructuring of its debts to creditors. The plan of arrangement was filed in Court on July 11, 2001. The Company's creditors will express their opinion on the Company's plan during their meeting which will be held next August 15. The enclosed consolidated financial statements for the quarter ended March 31, 2001 have been compiled on the same basis as for the consolidated financial statements for the year ended December 31, 2000, using the going concern concept. In addition, these consolidated financial statements reflect no value adjustments nor reclassifications of assets, liabilities or operating results which could be required given recent developments and following the implementation of a possible plan of arrangement with creditors or any other plan aimed at reorganizing the Company's operations. On May 18, 2001, the Company announced that its wholly owned subsidiary 3735061 Canada Inc. has been unable to meet its obligations under the terms of the interim financing arrangement as required by Jolina Capital Inc., and that it had received from the latter a notice to exercise its hypothecary right to take in payment property pledged to it by its subsidiary as security, including outstanding 11.125% senior notes of the Company in an aggregate principal amount of US$64.6 million. The Company may no longer consolidate its own notes which it had acquired at a discount in June 2000, as its wholly owned subsidiary lost ownership of said notes. Consequently, an estimated loss of $49.0 million will be included in the Company's results for its second quarter of fiscal 2001. Furthermore, during the quarter, mills operated in a low selling price environment and in a context of decreasing demand for commercial pulp, which has led to the interruption of the Port- Cartier pulp mill's operations since last February 16 for an undetermined period. Afterwards, the Company sought to dispose of the Port-Cartier sawmill's woodchip production on open markets. As anticipated, the agreement on imports of Canadian lumber into the American market was not renewed upon its termination on last March 31, which created a context of great uncertainty on this market. Decisions as to the determination of countervailing or antidumping duties on imports of Canadian lumber into the American market are expected to be reached during the summer. SALES Sales dropped by 10.1% to $44.0 million for the first quarter of 2001, compared with the same quarter last year. Lumber sales decreased by 9.24% to $30.5 million, compared with the previous period due a 16.3% drop in selling prices and a decrease of 6.5% in shipments. Improved woodchip selling prices and increased woodchip shipments at the Port-Cartier sawmill into open markets resulting from the interruption of the pulp mill's operations partially offset the impact of declining selling prices. Pulp sales dropped by 12.2% to $13.5 million, compared with $15.4 million for the corresponding period due to a 15.6% reduction in shipments, while selling prices showed a slight improvement of 4%. OPERATING LOSS The operating loss for the first quarter of 2001 was $1.7 million, compared with an operating income of $1.8 million for the same quarter last year. The operating loss from the lumber business amounted to $0.7 million, compared with an operating income of $4,000 for the corresponding period, due to a reduction in selling prices (16.3%) and in lumber shipments (6.5%), partially offset by increased woodchip revenues. The operating loss from the pulp business reached $1.0 million, compared with an operating income of $1.8 million for the corresponding period as a result of a 15.6% drop in shipments and the interruption of the plant's operations since last February 16. CASH POSITION For the first quarter of 2001, $9.8 million were used in operations, compared with $4.0 million for the corresponding period of 2000. Net long-term debt repayments amounted to $0.3 million, compared with an increase of $1.6 million of long-term debt for the corresponding period of 2000. Additions to fixed assets were limited to $0.6 million, compared with $1.7 million for the corresponding period of 2000. $1.3 million were used in discontinued paper operations, compared with $2.4 million provided by operations in 2000. As at March 31, 2001, bank overdraft amounted to $27.6 million and authorized credit margins were used to capacity. As at March 31, the Company had a working capital deficiency of $7.5 million, for a ratio of 0.92:1, compared with a ratio of 0.98:1 as at December 31, 2000. OVERVIEW OF OPERATIONS Lumber production reached 88.6 million board-feet for the first quarter of 2001, compared with 96.1 million board-feet for the corresponding period one year ago. Pulp production attained only 23,135 metric tons, compared with 50,953 metric tons for the corresponding period last year, as a result of the interruption of the plant's operations since February 16. OUTLOOK The next few months will be decisive for the future of the Company. On the one hand, creditors will have to make a decision regarding the Company's plan of arrangement and, on the other hand, we will monitor closely any developments regarding the requests filed by the American Coalition of Lumber Producers, whose findings will be decisive for the future of the Canadian lumber industry. The lumber market has resumed its seasonal operations at the beginning of the second quarter, supported by a low interest rate environment. The conditions of the global commercial pulp market have deteriorated, which resulted in a drastic drop in prices and demand, forcing producers to slow down production. In this context, resumption of the Port-Cartier pulp mill's operations have been deferred to September 4, 2001. Uniforet Inc. is an integrated forest products company which manufactures softwood lumber and bleached chemi-thermomechanical pulp (BCTMP). The company carries on its business through its subsidiaries located in Port-Cartier (pulp mill and sawmill) and in the Peribonka area (sawmill). Uniforet's Class A subordinate voting shares are listed on the Toronto Stock Exchange under the stock symbol UNF.A, while convertible debentures are listed under the stock symbol UNF.DB. U.S. INDUSTRIES: Reaches Restructuring Agreement With Lenders ------------------------------------------------------------- U.S. Industries, Inc. (NYSE: USI) reached an agreement with its lenders on the terms of a comprehensive restructuring plan of its bank debt and the bank debt of Rexair Inc., which is guaranteed by U.S. Industries. The anticipated closing date of the restructuring is August 15, 2001, subject to satisfaction of customary closing conditions, including the execution of definitive documentation. The lenders have also agreed to continue the current waivers under the U.S. Industries and the Rexair credit facilities until the expected closing date, at which time the waivers will be replaced by the restructuring agreement. The restructuring will extend the final maturity date of the U.S. Industries credit facilities to November 30, 2002, which will coincide with the final maturity of the Rexair credit facility. Rexair will be reacquired upon the closing of the restructuring. The restructuring provides for significant scheduled reductions of the Company's senior debt during the term. The Company expects to satisfy the reductions through its cash flow, asset sales and/or a refinancing. David H. Clarke, U.S. Industries Chairman and Chief Executive Officer commented: "We have developed a solid debt restructuring plan intended to de-leverage the balance sheet, maximize the value of U.S. Industries' assets and put into place a repayment schedule that will enable us to meet all of our financial obligations to our creditors. I am pleased that we have gained the support of our lenders in this process." The Company said it has received expressions of interest and is accepting bids from potential purchasers of its businesses outside of its core Bath and Plumbing operations, and expects to evaluate competing offers and determine a course of action that would maximize value. As previously announced, the Company has retained Deutsche Bank Alex. Brown and Credit Suisse First Boston to assist in this process. Separately, the Company announced that it expects to report third quarter earnings per share from continuing operations in the range of $.17 to $.19 per share. This excludes a non-cash asset impairment charge of approximately $254 million, primarily related to the write-off of goodwill for certain operating units. USI continues to be affected by soft conditions in each of its main businesses. Earnings per share from continuing operations excluding the impairment charge and non-recurring charges for the full year are estimated to be $.50 to $.55 per share. USI will hold a conference call following the release of its third quarter results in mid-August. U.S. Industries owns several major businesses selling branded, consumer-oriented building products to leading home centers and mass merchants. These brands include Jacuzzi, Ames True Temper, Sundance Spas, and Zurn, among others. U.S. LEATHER: Asks Court To Establish Bidding Procedures -------------------------------------------------------- United States Leather, Inc. seeks a court order approving the contract between the debtor and the Mandel Group, Inc. and establishing bidding procedures and bidding protections in connection with the sale of real estate which includes certain properties in the city of Milwaukee, Wisconsin. The properties are located at 1531 North Water Street, 1548 North Water Street, 1635 North Water Street and 404 East Lyon Street. (The "Water Street Properties") The purchase price offered by Mandel is $3.4 million. Each competitive bid must be at a price greater than $3,650,000. The debtor believes that the sale of the properties pursuant to the Bidding Procedures will yield the highest and best bids because they promote a competitive auction and an expeditious sale. The hearing seeking entry of a final sale order pursuant tot he contract is to be scheduled between 25 and 35 days after (i) the date Mandel waives all of its Due Diligence Contingencies; or (ii) August 29, 2001, whichever first occurs. The debtor is represented by Bruce G. Arnold of Whyte Hirschboeck Dudek SC of Milwaukee, Wisconsin. USG CORPORATION: Cornerstone Seeks Reclamation Of Goods ------------------------------------------------------- Cornerstone Industrial Minerals (U.S.A.) Inc., based in Lakeview, Oregon, sold mined and processed perlite to USG Corporation. Cornerstone provides copies of invoices numbered 300-52 through 300-62 and 88-011 and 88-012 as proof of what was delivered. Cornerstone expected payment for the perlite after delivery. Instead, it read in the newspaper that USG filed for chapter 11 protection. Cornerstone believes the Debtors received the Goods on or after June 15, 2001. Cornerstone also believes the Debtors were insolvent at the time they received the Goods and that the Debtors had ceased to pay their debts in the ordinary course of their business as they became due or the sum of the Debtors' debts exceeded their property or assets. Cornerstone served the notice as a written demand on the Debtors in order for Cornerstone to reclaim the Goods pursuant to UCC Section 2-702 and 11 U.S.C. Section 546(c). Cornerstone believes the Debtors are still in possession of all or a portion of the Goods. The Debtors have not returned the Goods or delivered what is owed to Cornerstone under the Claim. Cornerstone states that when a seller learns a buyer has received goods on credit while insolvent, he may reclaim the goods upon demand made within 10 days after the receipt of goods according to UCC Section 2-702. The 10-day period is extended where the buyer files a bankruptcy petition pursuant to 11 U.S.C. Section 546c. Cornerstone seeks reclamation of its Goods pursuant to these rules. Cornerstone asks that if the Court denies reclamation to Cornerstone in whole or in part, then Cornerstone would like allowance of the Claim with the type of priority specified in 11 U.S.C. Section 503(b) in an amount of not less than $93,649.11 and $2,229.75 with respect to U.S.C. Section 546(c)(2)(A). If the Court denies reclamation to Cornerstone in whole or in part, then Cornerstone seeks the above amounts each secured by a lien on the Debtors' assets in accordance with 11 U.S.C. Section 546(c)(2)(B). (USG Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392-0900) W.R. GRACE: Hires Reed Smith LLP As Zonolite Counsel ---------------------------------------------------- W. R. Grace & Co. asks the Court for permission to employ Reed Smith LLP as special counsel to defend and otherwise represent them with respect to: (a) class actions and putative class actions brought on behalf of owners or occupants of homes containing an attic insulation product alleged to contain asbestos known as Zonolite Attic Insulation; (b) individual cases brought by homeowners whose homes contain Zonolite; (c) cases alleging property damage caused by asbestos- containing products formerly manufactured and sold by the Debtors including, without limitation, Monokote fireproofing, Zonolite and acoustical plaster; and (d) personal injury actions brought individually or as class actions relating to asbestos-containing products sold by the Debtors. Reed Smith will bill for its work at its customary hourly rates. The primary Reed Smith members who will be handling work for Grace and their current hourly rates are: James J. Restivo, Jr., Esq. $390 Lawrence E. Flatley, Esq. 340 Douglas E Cameron, Esq. 325 James W. Bentz, Esq. 260 Mr. Restivo, in Reed Smith's Pittsburgh office, discloses that the Debtors owe the firm $35,000 for prepetition work. Additionally, from time to time, Mr. Restivo discloses, Reed Smith has also represented Grace co-defendants, including Pittsburgh Corning Corporation, Owens-Illinois, GAF Corporation, AC&S Corporation and other peripheral defendants, under cost- sharing agreements. Reed Smith serves as bankruptcy counsel to Pittsburgh Corning in its own chapter 11 cases. (W.R. Grace Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 609/392-0900) WARNACO GROUP: Selling New York Condominium For $675,000 -------------------------------------------------------- The Warnaco Group, Inc. seeks an order: (i) approving and authorizing the sale of a condominium apartment located at 80 Park Avenue, Apartment #15J, in New York City, free and clear of all liens, claims and encumbrances, to Steven Chernys for a gross sales price of $675,000; and (ii) approving and authorizing the payment by the Debtors, out of the sale proceeds, of a real estate commission equal to 6% of the Purchase Price (or $40,500) to the Debtors' real estate broker for the NYC Apartment, Douglas Elliman, at the closing. Although the sale of the NYC Apartment is not being consummated pursuant to a plan of reorganization, the Debtors ask Judge Bohanon to exempt it from any transfer tax, stamp tax or other similar tax, pursuant to sections 105(a) and 1146(c) of the Bankruptcy Code. J. Ronald Trost, Esq., at Sidley Austin Brown & Wood, in New York, relates that the NYC Apartment has been used to provide overnight lodging, in lieu of a hotel room, for non-resident employees of the Debtors in New York City on company business. Prior to the Petition Date, Mr. Trost reveals, the Debtors have already determined that it was no longer necessary to maintain the NYC Apartment and so they listed it up for sale with a local real estate broker. Mr. Trost notes that Douglas Elliman marketed the NYC Apartment since late April to 60 interested parties. A month later, the Debtors entered into a contract of sale with Steven Chernys. According to Mr. Trost, Chernys deposited 10% of the purchase price, $67,500, with the Debtors' local real estate counsel, Frankfurt Garbus Kurnit Klein & Selz, P.C., which is acting as escrow agent for the transaction. Chernys will be turned over the rest of the money to the Debtors at the closing of the sale. The Debtors believe that Mr. Chernys' office is the highest and best price obtainable. Though other offers were lesser than the purchase price, Mr. Trost explains, payment was subject to financing. On the other hand, Mr. Chernys is willing to pay in cash. Mr. Trost notes the liens of the Post-Petition Lenders and the Pre-Petition Lenders on the NYC Apartment will attach to the proceeds of such sale, subject to the provisions of the DIP Financing Agreement. (Warnaco Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392-0900) WINSTAR COMM: Court Grants Presscom's Request To Modify Stay ------------------------------------------------------------ Allan Wendelburg, Esq., in Hockessin, Delaware relates that PressCom Inc. and the National Press Building Limited Partnership entered into a Concession Agreement in March 1996. Under the agreement, PressCom provided telecommunications services such as local calling, long distance calling and Internet access in the National Press Building located at 529 14th Street, N.W., Washington, D.C. According to Mr. Wendelburg, the Resource/Press Building Realty LLC is believed to succeed all the rights and obligations under the agreement when it acquired the building. Under the agreement, Mr. Wendelburg notes, the Resource/Press Building Realty agreed that "it will not grant a right or license to any person or entity, which would allow such person or entity to offer or provide services included in the" shared system. At the time of the Agreement, Mr. Wendelburg explains, some tenants in the building are already subscribed to telecommunications service providers other than PressCom. But this is fine, Mr. Wendelburg says, because the Agreement accommodates these preexisting systems. The parties are already halfway through the 10-year agreement. But in the early fall of last year, Mr. Wendelburg says, PressCom personnel observed the Debtors delivering telecommunications equipment to the building. PressCom believes this is a violation of the agreement. When PressCom confronted National Press Building Limited Partnership, Resource/Press Building Realty, and the Debtors through letters, their concern was downplayed. National Press Building Limited Partnership, Resource/Press Building Realty, and the Debtors claim the telecommunications services to be offered by the Debtors do not violate the agreement. But PressCom believes otherwise. On March 8, 2001, PressCom went to court seeking a temporary restraining order, preliminary and permanent injunctive relief and declaratory relief to protect its rights under the Agreement. The Superior Court issued a TRO a few days later. In their argument, PressCom pointed out that providing telecommunications services in the building is their only business while the Debtors provide telecommunications services to thousands of other entities. The entry of the Debtors in the building will destroy PressCom, Mr. Wendelburg warns. Because the Winstar Communications, Inc. Debtors filed these chapter 11 cases and out of deference for the bankruptcy process, PressCom filed a motion requesting the Bankruptcy Court to lift the automatic stay for the limited purpose of: (i) allowing the preliminary injunction hearing at the District of Columbia Superior Court Action entitled, PressCom Inc. versus National Press Building Limited Partnership, et al, to go forward against the Debtors on July 19, 2001; and (ii) allowing the temporary restraining order issued in the Civil Action to continue against Winstar until July 19, 2001. Judge Farnan granted PressCom's motion. In the event that PressCom's motion for preliminary injunction is granted on July 19, 2001, Judge Farnan orders the Debtors to comply with that relief, pending a trial on the merits of PressCom's Civil Action. But it is provided however,Judge Farnan clarifies, that PressCom shall be required to renew its motion in this Court for a lifting of the automatic stay. This will require the Debtors to appear and defend itself in any trial on the merits of the Civil Action, Judge Farnan explains. It is also in order for any decision or judgement issued in any trial on the merits of the Civil Action to apply to Winstar, including, but not limited to, if the court in the Civil Action should consolidate the hearing on the preliminary injunction with a trial on the merits and issue a permanent injunction. But if the trial on the merits is set sooner than 90 days after the ruling by the court in the Civil Action, Judge Farnan adds, PressCom's motion to lift the automatic stay shall be deemed renewed as of the date of the ruling in the Civil Action. PressCom will be required to notify the Debtors of the ruling in the Civil Action within 3 business days of that ruling. In turn, the Debtors will promptly file its objection, with a hearing on PressCom's renewed motion to lift the automatic stay to occur on an expedited basis no later than 45 days after the court's ruling in the Civil Action. (Winstar Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 609/392-0900) ********* Bond pricing, appearing in each Monday's edition of the TCR, is provided by DLS Capital Partners in Dallas, Texas. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. 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