T R O U B L E D C O M P A N Y R E P O R T E R Thursday, January 17, 2002, Vol. 6, No. 12 Headlines 360NETWORKS: Big Pipe Wants Debtors to Decide on Contract ABC-NACO: Completes Court-Approved Sale of Assets to TCF Railco A.G.A. FLOWERS: Sets Jan. 30 as Deadline for Filing of Ballots ANC RENTAL: Seeking Okay to Pay Prepetition PIP Coverage Claims ARCH WIRELESS: Has Until Feb. 6 to File Schedules & Statements AUDIO VISUAL: Deadline for Filing Schedules Moved to April 1 AVIATION SALES: Sets Special Shareholders Meeting for Feb. 19 BENEDEK COMMS: Net Loss Widens to $6.2MM as Revenues Drop in Q3 BETHLEHEM STEEL: Court Approves Surplus Asset Sale Procedures BURLINGTON: Asking for Open-Ended Lease Decision Period CASTLE ENERGY: Sells Oil & Gas Properties to Delta for $20 Mill. ENRON CORP: Bringing-In Fergus as Special Regulatory Counsel ENRON NATURAL GAS: Case Summary & Largest Unsecured Creditors ENRON: Gottesdiener Says E-mail Reveals Mishandling of Lockdown ENRON CORPORATION: Begins Trading Under New Stock Symbol "ENRNQ" EXODUS COMMS: Eden Calling for Performance of Lease Obligations FANSTEEL INC: Files for Chapter 11 Reorganization in Delaware FANSTEEL INC: Case Summary & 20 Largest Unsecured Creditors FEDERAL-MOGUL: Claimants' Committee Hires Legal Analysis Systems GARDENBURGER INC: Completes Refinancing of Debt Obligations GENERAL BINDING: S&P Places Low-B Ratings on Watch Negative GUILFORD MILLS: Current Waiver under Credit Pact Expires Friday HAYES LEMMERZ: Court Okays Bankruptcy Services as Claims Agent IT GROUP: Files Chapter 11 Petition in DE to Sell Assets to Shaw IT GROUP: Case Summary & 50 Largest Unsecured Creditors INTEGRATED ELECTRICAL: S&P Profit Concerns Prompt Low-B Ratings JACOBS ENTERTAINMENT: S&P Puts B Rating on Company & New Notes JACOBSON STORES: Files for Chapter 11 Reorganization in Michigan KMART CORPORATION: DebtTraders Reports Bankruptcy Rumors Abound LASON: Files Joint Plan of Reorg. & Disclosure Statement in DE LERNOUT & HAUSPIE: Bakers Want Liquidation of Holdings Debtor LESCO INC: Completes Refinancing of Principal Debt Agreements LODGIAN INC: Tapping Curtis Mallet-Prevost as Conflict Counsel MICROCELL: S&P Affirms Low-B Ratings with Positive Outlook MILLENIUM SEACARRIERS: Case Summary & Largest Creditors NATIONSRENT INC: Signs-Up Robinson Lerer as Corp. PR Consultants NETIA HOLDINGS: Subsidiary Defaults on 13-1/8% & 13-1/2% Notes NORSKE SKOG: S&P Revises Outlook Over Deteriorating Performance PIONEER COMPANIES: Will Idle Chlor-Alkali Plant in Washington POINT.360: CEO R. Luke Stefanko Discloses 18.7% Equity Interest POLAROID CORP: Wants Period to Remove Actions Extended to July 9 POLAROID: Court Grants Formal Recognition of Retirees' Committee PRECISION SPECIALTY: Wants Lease Decision Time Pushed to May 14 RURAL/METRO: Dismisses Arthur Andersen & Hires PwC as Auditors SAFETY-KLEEN: Dai-Ichi Seeks Allowance & Payment of $1.8MM Claim THORN MEDIA: Chapter 11 Case Summary UNDERWRITERS GUARANTEE: Receivership Spurs S&P Rating Cut UNISOURCE INSURANCE: S&P Assigns R Financial Strength Rating W.R. GRACE: Zonolite's Move to Dismiss Chap. 11 Cases Draws Fire WINSTAR COMMS: Wins Nod to Hire Kelley Drye's as Special Counsel WORLDTEX INC: Delaware Court Confirms Plan of Reorganization YORK RESEARCH: Seeks to Dismiss Involuntary Bankruptcy Petition ZIFF DAVIS: Taps Greenhill to Evaluate Debt Refinancing Options * DebtTraders' Real-Time Bond Pricing ********* 360NETWORKS: Big Pipe Wants Debtors to Decide on Contract --------------------------------------------------------- Big Pipe Inc., and Big Pipe (U.S.) Inc., ask the Court for an order compelling 360networks inc., and its debtor-affiliates to assume or reject, no later than February 11, 2002, an Agreement under which the Debtors agreed, among other things, to deliver fiber to Big Pipe along two distinct and independent, but connected, routes that the Debtors would construct and maintain. Audrey S. Trundle, Esq., at Gibson, Dunn & Crutcher LLP, in New York, New York, tells the Court that the two Big Pipe entities are subsidiaries of Shaw Communications Inc., which is a diversified Canadian communications company whose core business is providing broadband cable television, Internet and satellite services to approximately 2,800,000 customers in the United States and Canada. According to Mr. Trundle, Big Pipe provides the fiber optic network that carries Shaw's Internet, telecommunication and E-Commerce services to its customers. Since early 2000, Mr. Trundle relates, Big Pipe wanted to increase the number of customers and geographic locations it serves. To implement that plan, Mr. Trundle explains, Big Pipe decided to acquire its own fiber in order to provide a stable, reliable foundation for delivery of its services and sufficient guaranteed future capacity to support its growth plans and position as a leader in its industry. So, Mr. Trundle says, Big Pipe entered into the Agreement. The critical components of this undertaking are represented by two interrelated agreements and their supporting indemnities, as amended: (a) a Fiber Sale Agreement, dated July 27, 2000, among 360 USA, 360networks (CDN Fiber) ltd. and Big Pipe, as amended on August 15, 2000, November 3, 2000, June 8, 2001, June 15, 2001, and October 4, 2001; (b) a Fiber Sale Indemnity Agreement, dated July 27, 2000, among 360networks Inc., 360 USA, 360 CDN and Big Pipe; (c) an IRU Agreement, dated July 27, 2000 between 360 USA and Big Pipe (U.S.) Inc., as amended on August 15, 2000, June 8, 2001, June 15, 2001, and October 4, 2001; and (d) an IRU Indemnity Agreement, dated July 27, 2000, among 360networks Inc., 360 USA and Big Pipe (U.S.) Inc. Mr. Trundle states that the Agreement provides Big Pipe with either title to or an indefeasible right to use a certain number of dark or inactive strands of optical fiber, along with undivided interests in, inter alia: (i) the infrastructure of the Routes, (ii) certain rights (rights of way, easements and licenses) necessary for the construction, installation, maintenance and operation of the Routes, and (iii) critical equipment shelters located approximately every 100 kilometers along the Routes and points of presence or terminal facilities located in major cities that serve as interconnection points along the Routes. Each of the two routes was to span both the United States and Canada and then connect at key end points. In addition, Mr. Trundle continues, the Agreement obligates the Debtors to provide ongoing and long-term maintenance and repair services for the Routes, which have critical timing requirements. Furthermore, Mr. Trundle relates that Big Pipe has acquired capacity, on an interim basis, from 360 under a Capacity Lease Agreement, dated July 27, 2000, among 360networks Services Ltd., 360networks Services Inc. and Big Pipe for the delivery of its Internet services. The Capacity Lease has no connection to the Agreement, Mr. Trundle explains, except as a short-term, interim measure to provide Big Pipe with capacity until such time as the 360 Parties provide Big Pipe with the whole of the Routes and the optical fiber is operational. Big Pipe asserts that the 360 Parties have breached material aspects of the Agreement, including, but not limited to, their failure to complete work necessary to light and fully utilize the Routes and indications that certain portions of the Routes will likely not be constructed or delivered at all. The Debtors have also not demonstrated an ability to perform their future obligations under the Agreement, Mr. Trundle adds. According to Mr. Trundle, Big Pipe has serious and fundamental concerns regarding the ability of the 360 Parties to ensure the reliability of the Routes and to give Big Pipe what it bargained for. Specifically, Mr. Trundle relates, Big Pipe is concerned about: (i) whether the whole of the Northern Route will be delivered, in light of indications by the 360 Parties that they do not intend to build a substantial portion, roughly 30%, of that route and the apparent absence of sufficient funding to acquire fiber for Big Pipe in these uncompleted locations. Delivery of a complete Northern Route is important in order to complete (and thus render operational) a protection path for the Southern Route (a key to reliability), to connect the Northern Route to major markets and important cities, and to the overall layout of the Routes; (ii) the ability of the 360 Parties to retain and protect the Underlying Rights necessary for the use of the Routes, in light of the fact that the 360 Parties still need, and do not appear to have the ability, to pay for the full amount of Underlying Rights. Failure to make the Underlying Rights Payments puts both Routes in jeopardy; (iii) Big Pipe's ability to access equipment it owns which is, or will be upon the completion of the Northern Route, located in each of the equipment shelters and other facilities approximately every 100 kilometers along the Routes. Continued operations of and access to these facilities is critical because it is Big Pipe's equipment therein which lights the fiber and renders it operational; and (iv) the increased and ongoing costs of relying on leased fiber optic capacity until both Routes are operational. Mr. Trundle tells the Court that Big Pipe relied on the Debtors' commitment to provide useable fiber optic capacity along the Routes. But the Debtors have been either unwilling, unable or both to provide such capacity in accordance with the terms of the Agreement, Mr. Trundle observes. "Big Pipe needs to know now whether the Debtors are willing and able to perform under the Agreement, or whether Big Pipe will have to make alternative arrangements for the fiber optic capacity required," Mr. Trundle asserts. If the Debtors cannot comply with the terms of the Agreement, and provide assurances that they will be able to comply with all of their present and future obligations thereunder, Mr. Trundle suggests that the Debtors should promptly reject the Agreement, allowing Big Pipe to contract with another provider. On the other hand, Mr. Trundle notes, if the Debtors intend to comply with all of the terms of the Agreement, the Debtors should assume such Agreement, demonstrating to the Court and to Big Pipe the Debtors' commitment and ability to perform all of their obligations, both now and in the future, under the Agreement. Mr. Trundle argues that neither party benefits from a delay in the assumption/rejection decision with respect to the Agreement. Mr. Trundle observes that the Debtors have had sufficient time to determine whether they can perform under the Agreement and have in fact failed to perform all of their obligations. Furthermore, Mr. Trundle continues, Big Pipe has made several requests, including direct communications with the Debtors, for adequate assurance regarding the 360 Parties' ability to perform all of their obligations under the Agreement. "However, no such assurance has been given," Mr. Trundle says. Delaying the rejection decision only increases the damages that Big Pipe can assert against the Debtors' estates, Mr. Trundle warns. But if the Debtors assume the Agreement soon, Mr. Trundle maintains that such a decision will not cause any hardship to the Debtors. "After all, performance will obligate Big Pipe to pay amounts that have now been withheld or suspended - and provides the assurances that Big Pipe requires," Mr. Trundle contends. Responses (1) Debtors In order to prevail in compelling the assumption or rejection of the Agreements now - rather than upon confirmation of a Plan, the Debtors assert that Big Pipe must satisfy their burden of proving, inter alia, that: (a) such a decision would be timely now; (b) extraordinary circumstances exist that would gravely harm Big Pipe absent a prompt decision on assumption or rejection; and (c) such circumstances warrants this Court overriding the Debtors' strong countervailing interests in making any such determination concert with confirmation of a reorganization plan. But Alan J. Lipkin, Esq., at Willkie Farr & Gallagher, in New York, New York, observes that Big Pipe has ignored its burden of proof as to all three elements. "Thus, Big Pipe fails to distinguish themselves from virtually every other party to a contract with the Debtors," Mr. Lipkin tells the Court. Moreover, the Debtors complain that Big Pipe's request loses all credibility upon close examination: Mr. Lipkin observes that while Big Pipe is pressuring the Debtors to make a decision whether to assume or reject the Agreement, the Motion reveals nothing that would adversely impact Big Pipe if a decision on assumption or rejection was not made for months or even years. "That is because, inter alia, Big Pipe has access to ample fiber optic network capacity for its needs for the foreseeable future under the Capacity Lease," Mr. Lipkin informs Judge Gropper. Even the cost of such capacity is a non-issue for Big Pipe, Mr. Lipkin notes, because the Capacity Lease (and Big Pipe's rent obligation thereunder) would continue into the future even if the various fiber segments at issue were delivered to Big Pipe today. Furthermore, Mr. Lipkin explains, the Debtors are the ones who are currently suffering harm. Since Petition Date, Mr. Lipkin recounts that the Debtors have worked diligently (and at Big Pipe's request) to address Big Pipe's concerns (whether legitimate or not) regarding segments already delivered and to deliver the remaining segments. In fact, in December 2001, Mr. Lipkin says, Big Pipe was tendered three of the five remaining segments. "Nonetheless, although all of that post-petition work was done at Big Pipe's behest, Big Pipe then arbitrarily determined that alleged future uncertainties somehow permitted Big Pipe to withhold the more than C$74,000,000 now due to 360networks," Mr. Lipkin complains. The Debtors contend that such a tactic is the equivalent of an improper account freeze or setoff and, in any event, breaches Big Pipe's obligation to pay for post-petition goods and services solicited by Big Pipe. Moreover, Mr. Lipkin notes that Big Pipe attempted to justify its improper anticipatory setoff through an unfounded contract interpretation. Specifically, Mr. Lipkin explains, Big Pipe contends it could receive all but one segment, but never have to pay a dime for any of the segments (which cost hundreds of millions of dollars) because "a condition precedent to payment for any segment is delivery or assurance of delivery of every segment". Indeed, Mr. Lipkin says, Big Pipe asserts it would have no payment obligation even were all segments delivered absent Big Pipe determining in its sole discretion that it had absolute assurance of performance of all other 360networks' obligations over the next 20 years. Consequently, Mr. Lipkin adds, Big Pipe's Motion is not only deficient on its face, but upon closer scrutiny, is wrong on the law, the facts, and the equities. Thus, the Debtors assert that Big Pipe's motion should be denied. (2) Creditors' Committee The Official Committee of Unsecured Creditors also supports the Debtors' objection. Norman N. Kinel, Esq., at Sidley, Austin, Brown & Wood LLP, notes that the Agreements with Big Pipe may represent a significant asset of the Debtors' estates, and thus may well be a critical element in the Debtors' ongoing reorganization efforts. Mr. Kinel asserts that Big Pipe's Motion is entirely premature, having been made at a relatively early stage in these highly complex proceedings. "The Debtors' period of exclusivity has not yet terminated and neither the Debtors, nor the Committee have had an adequate opportunity to assess the value of the Debtors' agreements with the Movants or to fully determine the financial implications to the Debtors' estates if they were to assume or reject such agreements," Mr. Kinel contends. Also, Mr. Kinel continues, if the Debtors are prematurely compelled to assume the agreements, they may subject their estates to sizeable unnecessary potential administrative liabilities. "This is of particular concern to the Committee," Mr. Kinel emphasizes. Moreover, Mr. Kinel adds, while the Movants claim that the Debtors are in default of their obligations under the agreements, it is of enormous concern to the Committee that apparently it is the Movants themselves who are in default on their obligations to the Debtors - to the tune of approximately $70,000,000. Therefore, the Committee asserts, the Court should deny Big Pipe's motion. (360 Bankruptcy News, Issue No. 17; Bankruptcy Creditors' Service, Inc., 609/392-0900) ABC-NACO: Completes Court-Approved Sale of Assets to TCF Railco --------------------------------------------------------------- ABC-NACO Inc., announced that the sale of substantially all of its assets to TCF Railco Acquisition LLC has been completed. A hearing was held in the U.S. Bankruptcy Court in the Northern District of Illinois on January 11, 2002 at which time the terms of the final purchase agreement were approved. The assets sold included substantially all of ABC-NACO's U.S. operating assets and the stock of the operations in Europe and China. The Company's Rail Products subsidiaries in Canada and Mexico were not part of the sale. The Canadian subsidiary, Dominion Castings Limited, is currently in receivership and the Mexican operation in Sahagun, Hidalgo, Mexico has ceased operations. It is not expected that the Company will realize any of its investment in these two operations. As a result, ABC-NACO will be left with very minimal assets. As announced, on October 18, 2001, ABC-NACO and its U.S. subsidiaries voluntarily filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Northern District of Illinois. The Company's liabilities in this filing were approximately $310 million of which in excess of $150 million was secured by substantially all of the Company's assets under the indebtedness to the U.S. senior secured bank group. The sales proceeds, which are approximately $65 million (subject to certain adjustments and assumption of certain liabilities), from the sale of the assets to TCF will be used to satisfy the indebtedness to the senior secured bank group including its debtor in possession loans advanced after the bankruptcy filing. Since the sales proceeds will be substantially less than the amount owed to the senior secured bank group, proceeds for the settlement of claims of unsecured creditors, if any, will be minimal and there will be no proceeds available for recovery by shareholders. TCF is owned by Three Cities Funds III, L.P. and affiliates. The Three Cities Funds are primarily engaged in making control investments in medium-sized companies, where its investment can lead to a meaningful, positive influence on the future direction of the enterprise. Effective following the closing of this transaction, the operations purchased by TCF will operate under the name of Meridian Rail. A.G.A. FLOWERS: Sets Jan. 30 as Deadline for Filing of Ballots -------------------------------------------------------------- UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF FLORIDA (MIAMI DIVISION) --------------------------------- In re ) Chapter 11 A.G.A. FLOWERS, INC., et al., ) Case Nos. 01-13984-BKC-RAM Debtors. ) Substantively Consolidated --------------------------------- NOTICE AND SUMMARY DISCLOSURE STATEMENT TO EQUITY HOLDERS OF GERALD STEVENS, INC. PURSUANT TO BANKRUPTCY CODE SECTION 1125 ------------------------------------------------------------- TO HOLDERS OF EQUITY INTERESTS IN DEBTOR GERALD STEVENS: On April 23, 3001 (the "Petition Date"), Gerald Stevens, Inc. together with its 55 wholly-owned debtor subsidiaries (together, the "Debtors") filed in the United States Bankruptcy Court of the Southern district of Florida (the "Bankruptcy Court") voluntary petitions for relief under Chapter 11 of the Bankruptcy code. Support of Debtors' first Amended Joint Chapter 11 Plan of Liquidation. No ballots will be sent to you as a Holder of Equity Interest because Holders of Allowed Equity Interests shall be deemed to vote against the Plan. Furthermore, any and all claims that the Holder of an Equity Interest in the Debtors could bring, by virtue of their equity ownership, either against the Debtors or their respective agents, members, affiliates, representatives, officers, or directors shall be transferred to the Liquidating Trust and the Liquidating Trustee shall have the sole right to prosecute any such claims. Debtors will not provide you with copies of the Disclosure Statement or the Plan unless you request copies in writing. Please direct your written request to First Union, Claimstrack services Group, 210 North Ridgecrast Lane, No 100, Jacksonville, Florida 32259. First Union will provide you with copies of the Disclosure Statement and the Plan at the Debtors' expense. DEADLINE FOR OBJECTIONS TO CONFIRMATION: February 4, 2002 DEADLINE FOR FILING BALLOTS ACCEPTING OR REJECTING PLAN: January 30, 2002 Under the terms of the Plan, holder of Allowed Administrative Claims will be paid in full in cash on the Confirmation Date. The holders of Allowed Class 1 Claims shall be paid in full on the effective date, or shall receive deferred cash payments. The holder of the Allowed Class 2 Claim will receive the proceeds from the sale of certain of its collateral in satisfaction of its secured claim. The holder of the Allowed Class 2 Claim shall have a deficiency claim, which shall be treated as a Class 4 Claim. The holder of the Allowed Class 3 claims shall receive at the option of the Liquidating Trustee in full satisfaction of their Allowed Claims; (a) the collateral securing their claim; (b) Payment of their Allowed Claims in full on the Effective Date, or deferred Cash payments over a period not to exceed six years from the Effective Date. A holder of an Allowed Class 4 Claim will receive, in full and complete satisfaction of its Allowed Claim, a pro rata share of the cash in the A.G.A. Liquidating Trust in accordance with the terms of the Plan and the Trust Documents. The Assets of the A.G.A. Liquidating Trust shall consist of any and all causes of Actions of the Debtors or their estates, plus $500,000 in cash. Finally Holder of Class 5 Equity interests shall receive nothing under the Plan, and all equity interest shall be cancelled. Dated: December 27, 2001 ANC RENTAL: Seeking Okay to Pay Prepetition PIP Coverage Claims --------------------------------------------------------------- ANC Rental Corporation, and its debtor-affiliates seek entry of an order pursuant to sections 105(a) and 363(c)(1) of the Bankruptcy Code authorizing them to fulfill certain pre-petition payment obligations with respect to personal injury claims. In the ordinary course of business, Mark J. Packel, Esq., at Blank Rome Comisky & McCauley LLP in Wilmington, Delaware, states that the Debtors rent automobiles to individual drivers who, in some instances, are involved in accidents while renting and driving Debtors' vehicles. In order to qualify to rent cars and do business in the United States, Debtors are required to provide insurance up to certain minimum amounts pursuant to the various applicable State laws. In approximately 17 States, as part of the insurance coverage, Mr. Packel tells the Court that the Debtors are required to pay directly certain expenses of the parties to an accident such as medical bills and other expenses or losses incurred by the injured parties. These payments, referred to as no-fault or Personal Injury Protection, must be made promptly after the request for payment. The time frames vary in each State but generally payments are due within 30 days after the bill is submitted to the Debtors. Failure to make the requisite payments may result in the assessment of penalties, interest and attorneys' fees against the Debtors and the relevant States may refuse to renew the Debtors' certification and prohibit them from doing business in that State if the Debtors fail to comply with their State mandated insurance obligations. Mr. Packel maintains that the Debtors customarily make the Personal Injury Protection payments in the ordinary course of business but, since the Filing Date, have not paid PIP for pre-petition expenses related to pre-petition accidents. As of the date of this Motion, the Debtors owe approximately $3,500,000 in Personal Injury Protection for personal injury claims pending as of the Filing Date. The Debtors' cash flow projections provided to the Court at each of the cash collateral hearings since the Filing Date include the amounts necessary to satisfy Debtors' Personal Injury Protection obligations. Mr. Packel informs the Court that the Debtors have been working closely with the Creditors' Committee to develop a plan to authorize the Debtors to continue to settle and make payments on the pre-petition personal injury claims consistent with the ordinary course practices of the Debtors prior to the Filing Date. Payment of the Personal Injury Protection obligations is consistent with the Debtors' goal of developing a plan to continue to resolve the pre-petition personal injury claims. Mr. Packel asserts that Debtors' compliance with their insurance obligations is an integral part of their business as the insurance aspect is intertwined with every facet of the Debtors' operations. For all the reasons set forth above, payment of the Personal Injury Protection obligations, a component of the Debtors' insurance responsibility in numerous States is critical and necessary to the Debtors' reorganization efforts. (ANC Rental Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 609/392-0900) ARCH WIRELESS: Has Until Feb. 6 to File Schedules & Statements -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Massachusetts granted Arch Wireless Inc. an extension of time to file Schedules and Statements of Affairs through February 6, 2002, which is 60 days after the Petition Date. Arch Wireless, Inc. through its subsidiaries, is a leading provider of wireless messaging and information services in the United States. The Company filed for chapter 11 protection on December 6, 2001 in the U.S. Bankruptcy Court for the District of Massachusetts. Mark N. Polebaum, Esq. at Hale & Dorr LLP represents the Debtors in their restructuring effort. When the company filed for protection from its creditors, it listed $696,449,000 in assets and $2,163,053,000 in debt. ARMSTRONG HOLDINGS: Bar Date for EPA Claims Extended to April 30 ---------------------------------------------------------------- Armstrong Holdings, Inc., and its debtor-affiliates present Judge Newsome with a third stipulation and order agreeing to extend the bar date for filing proofs of claim by the United States Environmental Protection Agency and the Federal Natural Resources Trustee from the present date of December 16, 2001, to and including April 30, 2002. The reason given is that the United States asked for the extension, and, subject to Judge Newsome's approval, the Debtors have agreed to it. Judge Newsome promptly signs the Order approving and implementing the stipulation. (Armstrong Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., 609/392-0900) AUDIO VISUAL: Deadline for Filing Schedules Moved to April 1 ------------------------------------------------------------ Audio-Visual Services Corporation and its Debtor-Affiliates obtained Court approval to extend the time within which they must file their respective Schedules and Statement of Financial Affairs through April 1, 2002. Audio-Visual Services filed for chapter 11 protection on December 17, 2001 in the U.S. Bankruptcy Court for the Southern District of New York. James M. Peck, Esq. at Schulte Roth & Zabel LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $507,803,000 in total assets and $449,226,000 in total debts. AVIATION SALES: Sets Special Shareholders Meeting for Feb. 19 ------------------------------------------------------------- Aviation Sales Company (OTCBB:AVIO) has commenced its previously announced rights offering and note exchange offer and consent solicitation. In addition, the Company announced that its special stockholders meeting to consider and vote upon the proposed restructuring will be held on February 19, 2002. The Rights Offering Holders of the Company's common stock at the close of business on Friday, December 28, 2001 have been issued non-transferable rights to purchase up to 24,024,507 post-reverse split shares of the Company's common stock in the rights offering. Each right allows the holder thereof to purchase one share of the Company's post-reverse split common stock at a purchase price of $.8325 per share (or the equivalent of $.0833 per pre-reverse split share). The rights offering will expire on February 20, 2002, unless it is extended. The rights offering is subject to a number of conditions, including the completion of the note exchange offer and consent solicitation and the receipt of stockholder approval of the restructuring, including approval of the rights offering, the note exchange, a proposed reverse split of the Company's currently outstanding common stock on a one- share-for-ten-shares basis and a proposed increase in the Company's authorized common stock from 30 million shares to 500 million shares. The complete terms of the rights offering are contained in the Company's prospectus dated January 9, 2002. Copies of the prospectus and rights offering documents can be obtained from Continental Stock Transfer & Trust Company, which is the subscription agent for the rights offering, or from Morrow & Co., Inc., which is the information agent for the rights offering. Morrow & Co.'s telephone number is (800) 607-0088. Continental's telephone number is (212) 509-4000 (Ext. 535). The Note Exchange Offer and Consent Solicitation The Company is offering to exchange all of its currently outstanding $165 million of 8 1/8% senior subordinated notes due 2008 for $10 million in cash, $100 million of the Company's new 8% senior subordinated convertible PIK notes due 2006, shares of the Company's post-reverse split common stock and warrants to purchase additional shares of the Company's post-reverse split common stock. The note exchange offer and consent solicitation will expire on February 20, 2002, unless it is extended. Holders must tender their old notes prior to the expiration date in order to receive the exchange offer consideration. The note exchange offer and consent solicitation is conditioned on a number of conditions, including receipt of tenders from holders of at least $132 million in aggregate principal amount of the old notes (80% of the outstanding old notes), completion of the rights offering and the receipt of stockholder approval of each of the parts of the restructuring. The holders of 73.02% of the outstanding old notes have previously agreed to exchange their old notes in the exchange offer. The complete terms of the exchange offer and consent solicitation are contained in the Company's prospectus dated January 9, 2002. Houlihan Lokey Howard & Zukin Capital is the exclusive dealer manager for the note exchange offer and consent solicitation and HSBC Bank USA is the exchange agent for the note exchange offer and consent solicitation. Copies of the prospectus and consent solicitation and exchange offer documents can be obtained by calling HSBC Bank USA at (800) 662-9844. Additional information concerning the terms and conditions of the note exchange offer and consent solicitation may be obtained by contacting Houlihan Lokey Howard & Zukin Capital at (212) 497-4100. General The Company's registration statements relating to the rights offering and the note exchange offer and consent solicitation have recently become effective under the Securities Act of 1933. The Company has also mailed a definitive proxy statement to its stockholders relating to the February 19, 2002 meeting of its stockholders, which meeting has been called to consider and vote upon the terms of the restructuring. These documents contain important information about the Company, the rights offering, the note exchange offer and consent solicitation and related matters. Noteholders, stockholders and other interested parties are urged to carefully read these documents for information regarding these matters. The prospectus and consent solicitation, the related letter of transmittal and certain other documents related to the note exchange offer and consent solicitation and the prospectus and other documents related to the rights offering will be made available to all stockholders and noteholders as of the record date, at no expense to them. These documents are also available at no charge at the SEC's website at http://www.sec.gov This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the new notes or the shares of common stock to be offered in the rights offering in any state where such offer, solicitation or sale would be unlawful. Aviation Sales Company is a leading independent provider of fully integrated aviation maintenance, repair and overhaul (MR&O) services for major commercial airlines and maintenance and repair facilities. The Company currently operates four MR&O businesses: TIMCO, which, with its three locations, is one of the largest independent providers of heavy aircraft maintenance services in North America; Aerocell Structures, which specializes in the MR&O of airframe components, including flight surfaces; Aircraft Interior Design, which specializes in the refurbishment of aircraft interior components; and TIMCO Engine Center, which refurbishes JT8D engines. The Company also operates TIMCO Engineered Systems, which provides engineering services to our MR&O operations and our customers. DebtTraders reports that Aviation Sales Company's 8.125% bonds due 2008 (AVIAS1) are trading between 38 and 40. See http://www.debttraders.com/price.cfm?dt_sec_ticker=AVIAS1for real-time bond pricing. BENEDEK COMMS: Net Loss Widens to $6.2MM as Revenues Drop in Q3 --------------------------------------------------------------- Benedek Communications Corporation owns and operates 23 network- affiliated television stations throughout the United States. The stations are geographically diverse and serve small to medium-sized markets in 24 states. Eleven of the stations are affiliated with CBS, seven are affiliated with ABC, four are affiliated with NBC and one is affiliated with Fox. In the third quarter of 2001, the Company reported net revenues of $32.7 million compared to net revenues of $39.5 million in the third quarter of 2000. The Company experienced a net loss of $6.2 million for the third quarter of 2001 compared to a net loss of $4.0 million for the corresponding period in 2000. Adjusted EBITDA for the third quarter of 2001 was $8.1 million as compared to $13.2 million for the third quarter of 2000. Adjusted EBITDA on a same station basis for the third quarter of 2001 was $8.1 million as compared to $13.3 million for the third quarter of 2000. The decrease in net revenues was $6.8 million, or 17.2%. Commercial-free programming in the days immediately following the attacks on September 11, 2001 and the cancellation or reduction of normal advertising schedules in the subsequent weeks had a significant negative impact. The Company estimates that approximately $3.5 million of net advertising revenues were not realized as a result of these events. This further exacerbated an already difficult advertising climate caused by continued economic weakness and the lack of political advertising revenues in the third quarter of 2001. National advertising decreased by $2.1 million, or 15.4%, from the same period in 2000. Local/regional revenues were impacted by a lesser amount and were $22.0 million in the three months ended September 30, 2001 as compared to $23.6 million for the same period in 2000, a decrease of 6.7%. Also contributing to the decline in net revenues was a $4.7 million decrease in political advertising revenue for the third quarter of 2001 as compared to the same period in 2000. Net loss was $6.2 million for the third quarter of 2001 as compared to a net loss of $4.0 million for the corresponding period in 2000 as a result of factors noted above. In the first nine months of 2001 net revenues were $102.7 million as compared to $112.8 million for the same period in 2000, a decrease of $10.1 million. A $5.3 million or 12.6% decline in national advertising revenue negatively impacted net revenues. Additionally, local/regional revenues decreased by 1.5 million, or 1.7%. The lack of significant political advertising revenue in 2001 resulted in a decrease of $6.2 million in political revenue to $1.1 million for the first nine months of 2001 from $7.3 million during the corresponding period in 2000. The national crisis as a result of the September 11, 2001 attacks and the continued weakness in economic conditions also contributed to the decrease. On a same station basis, net revenues for the first nine months of 2001 declined by $13.4 million, or 11.5%, to $102.5 million as compared to $115.9 million in the corresponding period of 2000 as a result of prevailing economic conditions. A $6.4 million, or 15.0% decline, in national advertising revenue caused most of the decrease. In addition, political advertising revenues decreased by $6.2 million for the first nine months of 2001 due to the absence of national political races in odd- numbered years. On a same station basis, local/regional revenues for the first nine months of 2001 were also lower by $3.5 million, or 4.9%, from the same period in 2000. Local/regional revenues declined less than national revenues because of the continued focus on local markets and strong relationships with customers at that level. The Company recognized a gain of $61.2 million for the first nine months of 2000 as a result of the exchange of the assets of WWLP-TV with a fair market value of $123.0 million and $18.0 million in cash for the assets of KAKE-TV and WOWT-TV. The Company also realized a $0.3 million gain on the sale of KOSA-TV in 2000. KOSA-TV was sold on March 21, 2000 for $8.0 million. Net loss was $18.2 million for the first nine months of 2001 as compared to net income of $15.2 million for the corresponding period of 2000. Benedek Communications owns nearly 25 television stations primarily in small and medium-sized markets in the Midwest and South. Its stations are affiliated with all four major networks. The company also operates station-affiliated Web sites. Benedek, which generates more than 50% of sales from local and regional advertising, has been struggling with a slump in the ad market. The family of chairman and CEO Richard Benedek owns about 95% of the company; president and COO James Yager, 5%. As at June 30, 2001, the company's balance sheet was upside-down, reporting a total shareholders' equity deficit of $233 million. BETHLEHEM STEEL: Court Approves Surplus Asset Sale Procedures ------------------------------------------------------------- The Court approves these Surplus Asset sale procedures as proposed by Bethlehem Steel Corporation and its debtor- affiliates: (a) The Debtors shall give notice of each proposed sale of Surplus Assets subject to any lien or encumbrance (other than Surplus Assets subject only to liens or encumbrances held by or for the benefit of the Debtors' (x) post-petition lenders or (y) pre-petition lenders under that certain $320,000,000 revolving credit facility) and/or for a purchase price in excess of $500,000 to: (i) the United States Trustee, (ii) attorneys for the statutory creditors' committees, (iii) attorneys for the Debtors' (x) post-petition lenders and (y) pre-petition lenders under that certain $320,000,000 revolving credit facility, and (iv) the holder of any lien or encumbrance relating to the Surplus Asset(s) proposed to be sold and, if requested by such holder of a lien or encumbrance, the attorneys for such holder of a lien or encumbrance. Notices shall be served by facsimile, so as to be received by 5:00 p.m. (Eastern Standard or Daylight Time) on the date of service. The Notice shall specify the: (i) Surplus Asset(s) to be sold, (ii) the identity of the seller, (iii) the identity of the proposed purchaser, (iv) the proposed purchase price, (v) a brief statement of the Debtors' marketing efforts with respect to the Surplus Asset(s) proposed to be sold, (vi) the current estimated fair market value of the Surplus Asset(s) to be sold, and (vii) an estimate of the net proceeds of the proposed sale. (b) The Notice Parties shall have 10 days after the Notice is served to object to the proposed transaction. All objections shall be in writing, delivered to Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York, New York 10153, Attn: Jeffrey L. Tanenbaum, Esq. and George A. Davis, Esq., the Debtors' counsel, so as to be actually received by 5:00 p.m. (Eastern Standard or Daylight Time) 10 days after the Notice is served. If Weil Gotshal receives no written objection prior to the expiration of such objection period, the Debtors shall be authorized to consummate the proposed sale transaction and to take such actions as are necessary to close the transaction and obtain the sale proceeds. (c) If a Notice Party objects to the proposed transaction within 10 days after the Notice is sent, the Debtors and such objecting Notice Party shall use good faith efforts to resolve the objection. If the Debtors and the objecting Notice Party are unable to achieve a consensual resolution, the Debtors shall not proceed with the proposed transaction pursuant to these procedures, but may seek Court approval of the proposed transaction upon notice and a hearing. (d) The Debtors shall be authorized to consummate the sale of Surplus Assets not subject to any lien or encumbrance (other than Surplus Assets subject only to liens or encumbrances held by or for the benefit of the Debtors' (x) post-petition lenders or (y) pre-petition lenders under that certain $320,000,000 revolving credit facility) and for a purchase price of $500,000 or less without providing notice to any parties; provided, however, that to the extent the aggregate consideration received by the Debtors for sales of Surplus Assets to any single entity exceeds $500,000, the Debtors must follow the procedures prescribed in subparagraphs a through c herein with respect to such excess amount of Surplus Assets. (e) To the extent the aggregate consideration received by the Debtors for sales of Surplus Assets to any single entity exceeds $6,000,000 during any 60-day period, the Debtors may not sell such excess amount of Surplus Assets pursuant to the Sale Procedures. (Bethlehem Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 609/392-0900) BURLINGTON: Asking for Open-Ended Lease Decision Period -------------------------------------------------------- Burlington Industries and its debtor-affiliates are tenants under approximately 36 unexpired non-residential real property leases. The leases primarily relate to: (a) distribution and warehousing facilities, (b) office space, (c) showrooms and (d) sales offices. These leases remain in effect and have not expired or terminated, and thus, they are subject to assumption, assumption and assignment or rejection under section 365 of the Bankruptcy Code. By this motion, the Debtors ask Judge Walsh for an open-ended extension, through confirmation of a plan of reorganization, of their time to assume or reject all unexpired nonresidential real property leases wherein they are lessees or sublessees. Paul N. Heath, Esq., at Richards, Layton & Finger, in Wilmington, Delaware, informs the Court that since the Petition Date, the Debtors have focused their efforts in completing a smooth transition to operations in chapter 11, as well as fulfilling various administrative and reporting obligations related to their cases. Thus, the Debtors have been unable to: (i) evaluate any of the leases thoroughly, (ii) determine which of the leases will contribute to the Debtors' restructuring efforts, or, (iii) solicit the views of the Creditors' Committee and other constituencies regarding the appropriate treatment of each lease. Furthermore, Mr. Heath states that given the potential importance of the leases to the Debtors' ongoing operations and the number of issues the Debtors must consider and resolve in deciding whether to assume or reject the leases, it would be impossible and imprudent for the Debtors to provide a decision within the 60-day period specified. "Without an extension, the Debtors are at risk of prematurely assuming leases that may later be discovered as burdensome or prematurely rejecting leases that may later be discovered as critical to their reorganization efforts," Mr. Heath adds. Mr. Heath assures the Court that if the relief is granted, the Debtors will continue to complete all evaluations, determinations and negotiations necessary to assume or reject the leases. "Pending to the Debtors decision, they will continue to perform all their obligations under the leases including payment of post-petition rent due," Mr. Heath says. Thus, Mr. Heath asserts that the extension of time requested will not prejudice the Lessors under the leases. Therefore, the Debtors ask the Court to grant them an extension of time to assume or reject all the leases, through and including the confirmation date. Judge Walsh will hold a hearing on this request today in Wilmington. (Burlington Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 609/392-0900) CASTLE ENERGY: Sells Oil & Gas Properties to Delta for $20 Mill. ---------------------------------------------------------------- Castle Energy Corporation (Nasdaq:CECX) announced that it had entered into a purchase and sale agreement to sell all of its domestic oil and gas properties to Delta Petroleum Company (Nasdaq:DPTR). The purchase price is $20,000,000 cash plus 9,566,000 shares of Delta's common stock, which would result in the Company owning approximately 43% of Delta. The effective date of the sale is October 1, 2001 and closing is expected by April 30, 2002 or later. Pursuant to the terms of the purchase and sale agreement, the cash portion of the purchase price will be reduced by the cash flow from the properties between the effective date and the closing date. The sale is subject to approval by the shareholders of Delta. Each party is subject to penalties for failure to close the transaction. Delta may repurchase 3,188,667 of its shares from Castle for $4.50 per share for a period of one year after closing. Mr. Joseph L. Castle II, Chief Executive Officer of the Company, indicated that the decision to enter into the transaction with Delta was based upon Delta's significant undeveloped crude oil reserves, its potential to realize the value inherent in its offshore California federal leases, the opportunity to eliminate duplicate general and administrative costs and the chance for the Company to sell its domestic oil and gas properties for a reasonable price with potential upside with only minor tax consequences. Mr. Castle also indicated that the Company's Board of Directors believes that the Company's resulting indirect interest in the combined oil and gas reserves of Delta and the Company would enhance shareholder value. To that end, the Company's Board of Directors is currently considering various future alternatives for the Company, including but not limited to continuing operations or liquidation assuming the sale closes as planned. The Company's domestic oil and gas properties currently consist of oil and gas interests in approximately 525 oil and gas wells in fourteen states in the United States. In addition, the Company still owns a fifty percent interest in a drilling concession in Romania and a thirty-five percent membership interest in Networked Energy LLC, a private company engaged in the operation of energy facilities that supply power, heating and cooling services directly to retail customers. ENRON CORP: Bringing-In Fergus as Special Regulatory Counsel ------------------------------------------------------------ Enron Corporation, and its debtor-affiliates seek the Court's authority to employ Fergus and Gary S. Fergus, Esq., as their special regulatory counsel, as of January 1, 2002, in connection solely with proceedings before the United States Federal Energy Regulatory Commission captioned, San Diego Gas & Electric Co. v. Sellers of Energy and Ancillary Services Into Markets Operated by the California Independent System Operator Corporation and the California Power Exchange. According to Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP, in New York, these FERC matters arose out of a complaint filed by San Diego Gas & Electric alleging that all sellers of electric energy into the California market had collected unlawfully high prices during the period between October 2, 2000 and June 21, 2001. Mr. Rosen relates that the complaint and subsequent investigation by the FERC were based upon Section 206 of the Federal Power Act. Mr. Rosen recounts the events: -- August 23, 2000: the Commission started an investigation into the wholesale electricity rates charged in California. -- November 1, 2000: the Commission issued an order finding that the "electric market structure and market rules for wholesale sales of electric energy in California were seriously flawed and that these market structures and rules, in conjunction with an imbalance of supply and demand in California, have caused, and continue to have the potential to cause, unjust and unreasonable rates for short-term energy . . . under certain terms and conditions." -- June 19, 2001: the Commission issued an order convening a settlement conference for purpose of resolving refund claims for past periods. No settlement was reached. -- July 12, 2001: the Chief Judge of the Federal Regulatory Commission issued a report finding that refunds owed to purchasers of electricity "amounted to hundreds of millions of dollars, probably more than a billion dollars in aggregate sum," although not the $8,900,000,000 claimed by the State of California and its public utilities. -- July 25, 2001: the Commission issued an order convening an evidentiary hearing to determine what the just and reasonable rates should have been during the period October 2, 2000 through June 20, 2001, the amount of the refunds owed, the amount of outstanding sums owed to sellers for energy delivered and any applicable offsets. To date, Mr. Rosen tells the Court, the Debtors have been represented in connection with these matters by Gary Fergus, Esq., a partner in the law firm of Brobeck, Phleger, & Harrison LLP, and Dan Watkiss of Bracewell and Patterson, who have retained expert witnesses, interviewed and prepared witnesses, and reviewed complex data of the Debtors as well as data provided in discovery by other parties, all in contemplation of and in preparation for the evidentiary hearing. "At stake for the Debtors are outstanding accounts receivable and potential offsets worth tens of millions of dollars as well as potential liability for refunds," Mr. Rosen emphasizes. But effective January 1, 2002, Mr. Rosen notes, Mr. Fergus will no longer be a partner in Brobeck because he will have created his own law firm, Fergus. The Debtors want to continue to retain Mr. Fergus as special counsel. Thus, the Debtors request Judge Gonzalez to approve Fergus' employment as special counsel in the Federal Energy Regulatory Commission Matters at Fergus' standard hourly rates and pursuant to Fergus' normal policies for reimbursement of disbursements. Gary Scott Fergus, Esq., founder of Fergus, asserts that his firm's current hourly rates and disbursement policies are inherently reasonable in comparison to the competitive national market for legal services. Subject to change from time to time, Fergus' customary hourly rates are: $540 for Gary Fergus $200 to $400 for associates $50 to $125 for paraprofessionals Mr. Fergus tells the Court that his firm regularly charges for reimbursement of out-of-pocket expenses including secretarial overtime, travel, copying ($.15 per page), outgoing facsimiles ($1.75 per page domestic), document processing, court fees, transcript fees, long distance phone calls, postage, messengers, overtime meals and transportation. As a routine part of its practice, Mr. Fergus says, Fergus may appear in cases, proceedings, and transactions involving many different attorneys, accountants, financial consultants, real estate consultants and investment bankers, including other professionals representing the Debtors and other parties in interest. In certain instances, Mr. Fergus admits that such professionals may be direct clients of Fergus. But Mr. Fergus assures the Court that he nor his firm does not represent any party-in-interest in matters adverse against the Debtors. (Enron Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 609/392-0900) ENRON NATURAL GAS: Case Summary & Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Enron Natural Gas Marketing Corp. 1400 Smith Street Houston, Texas 77002 Bankruptcy Case No.: 02-10132-ajg Type of Business: Marketer of natural gas and oil. Chapter 11 Petition Date: January 11, 2002 Court: Southern District of New York (Manhattan) Judge: Arthur J. Gonzalez Debtor's Counsel: Melanie Gray, Esq. Weil, Gotshal & Manges LLP 700 Louisiana, Suite 1600 Houston, Texas 77002 Telephone: (713) 546-5000 -and- Brian S. Rosen, Esq. Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, New York 10153 Telephone: (212) 310-8000 Total Assets: $ 79,042 Total Debts: $ 1,359,666,044 Debtor's Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ American Public Energy Gas contract $419,305,386 Agency P.O. Box 98928 Lincoln, NE 68509-8928 Eban Ward Tel: (402) 474-4759 Fax: (402) 474-0473 Mahonia Ltd. Gas contract $846,954,473 22 Greenville Street St. Helier, Jersey Channel Islands JE4 8PX Ian James Tel: 44 1534 609000 Fax: 44 1534 609333 Stoneville Aegean Limited Gas contract $70,919,563 22 Greenville Street St. Helier, Jersey Channel Islands JE4 8PX Ian James Tel: 44 1534 609000 Fax: 44 1534 609333 State of Louisiana Taxes $2,486,622 Department of Revenue and Taxation P.O. Box 91011 Baton Rouge, LA 70821-9011 ENRON: Gottesdiener Says E-mail Reveals Mishandling of Lockdown --------------------------------------------------------------- Two e-mails that Enron sent workers this past Fall concerning the "lockdown" of the company's 401(k) Plan were released yesterday by The Gottesdiener Law Firm ( http://www.gottesdienerlaw.com). Gottesdiener, the head of the Washington, D.C. 401(k) and pension class action law firm that filed suit in November against Enron Corporation, top Enron officials, Arthur Andersen and other defendants in federal court in Houston to recover some $1 billion in Enron employees' retirement savings ( http://www.enronsuit.com), believes the e-mails show the company's "callous disregard" for its employees. According to Gottesdiener, many of Enron's employees were in the midst of losing their life savings and their jobs during the "lockdown," which prevented them from selling their shares of Enron stock between October 26, 2001 and November 13, 2001, while the Company spiraled into bankruptcy. According to Enron, the lockdown was administratively necessary for the company to proceed with a desired change of the 401(k) Plan's trustee and record keeper. However, the suit filed by Gottesdiener on behalf some 15,000 current and former Enron employees disputes that any lockdown was necessary to change service providers. He further alleges that, even if necessary, it should have been postponed to allow employees, who had more than 60% of their account savings in Enron stock, to sell their stock and salvage some of their investment. The just-released e-mails, according to Gottesdiener, reveal two fundamental problems with the way Company executives handled the lockdown. First, Gottesdiener said, the e-mails show that the Company "arrogantly dismissed the concerns of employees who had been imploring them to delay the lockdown." Second, Gottesdiener said, they also show that the Company issued false information about the lockdown, leading many workers to believe that the lockdown began a week earlier than it did and causing them to miss the opportunity to sell their stock when it was still selling for around $30 a share. According to Gottesdiener, by the time the lockdown was finally lifted, on November 13, 2001, the price of Enron stock had plummeted to under $10 a share. The first e-mail was issued the night of October 25, 2001, just before the imposition of the lockdown the next day. Gottesdiener explained that the Company issued the email because it had been besieged by workers who were begging the Company to postpone the lockdown to allow them to sell their shares. The e-mail twice acknowledged workers' complaints, saying: "We understand that you are concerned about the timing" of the lockdown and "We understand your concerns." But, the Company said, it was going ahead with the lockdown as planned anyway for its own administrative convenience, saying, "We have been working with Hewitt (the new recordkeeper) and Northern Trust (the old record keeper) since July." According to Gottesdiener, "In translation, this says: ``We know that many of you have all of your savings in Company stock and want to sell it to salvage what you can, but we simply can't be bothered - we've been working on this transition since July and it would be too much trouble to postpone it.'" The second e-mail was issued on September 27, 2001 and was the Company's initial announcement to employees about the lockdown. The problem here, according to Gottesdiener, was that the information contained in the e-mail was "simply false." The e- mail told employees that the lockdown - which Enron euphemistically termed a "transition" - would begin on October 19th, and not October 26th. "To ensure that records and individual accounts are converted accurately," the e-mail said, "a transition period of approximately one-month will begin Oct. 19." "During the transition period," the e-mail continued," participants "are not able to transfer funds among investment options" or "request a withdrawal." According to Gottesdiener, that last statement was false: "In fact, workers could have sold their Enron stock between October 19th and October 26th. During just that week, right after the Company issued its dramatic 3rd Quarter statement and the SEC opened its investigation, the stock lost half of its value." Gottesdiener said that many workers did not sell during that week based on the Company's statement that they could not do so. "Where were Ken Lay and other top Company officials all while this was going on? The answer seems to be: On the phone to the Bush administration asking for a bailout," Gottesdiener said. Gottesdiener's reference was to the fact that while the Company was refusing workers' calls to postpone the lockdown, Enron's Chairman Kenneth L. Lay and other top officials, who personally made tens of millions of dollars from selling off their Enron stock, were telling Bush administration officials that without some form of government assistance, Enron was looking at bankruptcy. "Enron's arrogance in refusing to delay the lockdown, knowing what it knew, is simply stunning. From the beginning to the end of the lockdown, October 26th-November 13th, the stock lost another third of its value," Gottesdiener explained. "We are obviously pursuing all this in court but the pension laws have to be strengthened to prevent this type of victimization of workers in the future." NOTE: The e-mails are available at http://www.enronsuit.com Based in Washington, D.C., the Gottesdiener Law Firm and its principal attorney, Eli Gottesdiener, specialize in complex civil and criminal litigation on behalf of plaintiffs and defendants in federal and state courts. Mr. Gottesdiener has prosecuted some of the leading pension and 401(k) plaintiffs' class action cases in the country, including Mehling v. New York Life Ins. Co., a pending pension and 401(k) class action case against New York Life Insurance Company; Gottlieb v. SBC Communications, Inc., a 401(k) class action against SBC; and Franklin (I and II) v. First Union Corp., two 401(k) class actions against First Union Corporation that were recently successfully settled for $26 million. ENRON CORPORATION: Begins Trading Under New Stock Symbol "ENRNQ" ---------------------------------------------------------------- Enron Corporation announced that its common stock will now be traded as an over-the-counter equity security under the symbol "ENRNQ." Quotation service will be provided by the National Quotation Bureau, LLC "Pink Sheets." Investors should call their brokers for daily pricing and volume information. In addition, other Enron securities will trade under the following new symbols: Enron Capital LLC 8% Cumulative Guaranteed Monthly Income Preferred Shares (ECTPQ), Enron Capital Resources LP 9% Cumulative Series A (ECSPQ), Enron Capital Trust I 8.30% Trust Originated Preferred Securities (EONNQ), Enron Capital Trust II 8.125% Trust Originated Preferred Securities (ENRPQ), Enron Capital LLC (ERNCF), and Enron Corp. 7% Exchangeable Notes for common stock due July 31, 2002 (EONPQ). The company's announcement follows a decision by the New York Stock Exchange to file an application to delist Enron's common stock. Enron markets electricity and natural gas, delivers energy and other physical commodities, and provides financial and risk management services to customers around the world. Enron's Internet address is http://www.enron.com DebtTraders reports that Enron Corp.'s 7.375% bonds due 2019 (ENRON7) are trading between 19 and 21. See http://www.debttraders.com/price.cfm?dt_sec_ticker=ENRON7for real-time bond pricing. EXODUS COMMS: Eden Calling for Performance of Lease Obligations --------------------------------------------------------------- Eden Ventures LLC seeks a Court order compelling Exodus Communications, Inc., and its debtor-affiliates to immediately perform their obligations under an unexpired non-residential real property lease and continue performing post-petition obligations. Gregory A. Taylor, Esq., at Ashby & Geddes in Wilmington, Delaware, relates that on July 21, 2000, relates that on July 21, 2000, Eden and Debtors executed a lease for non-residential real property in Ashburn Corporate Center, Loudoun County, Virginia. The Debtors contracted Turner Construction Company to provide labor, equipment, materials and services for construction of leasehold improvement in the premises. Mr. Taylor states that Debtors failed to pay Turner for work performed in constructing the improvements. As a result, on October 9, 2001, Turner filed a Memorandum of Mechanic's Lien in the amount of $3,604,456 plus interest against Debtors' leasehold interest and Eden's ownership interest in the premises. Turner's subcontractors in the project also filed and docketed a mechanic's lien in the premises, including: Subcontractor Amount of Claim ------------- --------------- Prospect $ 95,707 Firewatch 45,115 S/H Datasite 167,708 On October 19, 2001, Eden notified Debtors that it was in material post-petition default under the lease because by failing to pay Turner the amount owed, it caused Turner to file the fee lien against the premises contrary to its obligations under the lease. Mr. Taylor tells the Court that the filing of the liens against the premises caused Eden's lender, which holds a deed of trust against the premises, to notify Eden that it was in default of its loan obligations. Eden's lender has agreed to temporarily forbear from exercising its remedies under the loan documents but Eden faces an actual threat of foreclosure or other adverse action by its lender. (Exodus Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 609/392-0900) FANSTEEL INC: Files for Chapter 11 Reorganization in Delaware ------------------------------------------------------------- Fansteel Inc., (OTC Bulletin Board: FNST) announced that the Company and most of its U.S. subsidiaries filed voluntary petitions for reorganization under chapter 11 of the U.S. Bankruptcy Code today in Federal Court in Delaware. Fansteel and its subsidiaries continue to operate their businesses in the U.S. and abroad. Fansteel's non-U.S. subsidiaries, including those in Mexico and the Caribbean, are not part of the filing. Fansteel intends to continue to manufacture, market and distribute its core products and to provide customer service and support for these products. Fansteel has entered into an agreement with The CIT Group/Commercial Services Inc., whereby CITCS has agreed to purchase receivables of the Company for a purchase price of up to $10 million. The agreement with CITCS is subject to bankruptcy court approval and the results of a public auction anticipated to be held in late February 2002. The Company has also entered into an agreement with HBD Industries to provide interim debtor in-possession financing of up to $3 million, which would be repaid from the proceeds of the sale of receivables to CITCS or the winning bidder at the auction. HBD Industries is controlled by certain members of Fansteel's board of directors, E.P. Evans, R.S. Evans and T.M. Evans, Jr., who collectively also own approximately 46.56 % of Fansteel's outstanding common stock. Upon court approval, which is expected shortly, the proceeds of the DIP Financing will be available to supplement the Company's cash flow. Management is also considering the sale of one or more of its businesses and additional long term debtor in possession financing as methods to obtain additional funding. However, there can be no assurance that any asset sales (which will require 20 days notice and an auction in bankruptcy court) or further debtor in possession financing will occur. In conjunction with the court proceedings, Fansteel expects to file a variety of "first day motions" including motions seeking approval of the DIP Financing and court permission to: continue payments for employee payroll and health benefits; honor existing warranties; maintain cash management programs, retain legal, financial, and other professionals to support Fansteel's reorganization and to set dates for hearings related to the proposed CITCS receivables sale. In accordance with applicable law and court orders, pre- petition claims against Fansteel and its U.S. subsidiaries will be frozen pending court authorization of payment or consummation of a plan of reorganization. FANSTEEL INC: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Lead Debtor: Fansteel Inc. One Tantalum Place North Chicago, IL 60064 aka Hydro Carbide aka VR/Wesson aka California Drop Forge Bankruptcy Case No.: 02-10109 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Fansteel Holdings, Inc. 02-10110 Custom Technologies Corp. 02-10111 Escast, Inc. 02-10112 Wellman Dynamics Corp. 02-10113 Phoenix Aerospace Corp. 02-10114 American Sintered Technologies, Inc. 02-10115 Fansteel Schulz Products, Inc. 02-10116 Washington Mfg. Co. 02-10117 Type of Business: Fansteel is a specialty metal manufacturer of engineered metal components and tungsten carbide products. Chapter 11 Petition Date: January 15, 2002 Court: District of Delaware Debtors' Counsel: Laura Davis Jones, Esq. Pachulski, Stang, Ziehl Young & Jones 919 N. Market Street 16th Floor Wilmington, DE 19899-8705 Tel: 302 652-4100 Fax: 302-652-4400 Total Assets: $64,805,176 Total Debts: $91,585,665 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Nuclear Regulatory Environmental Issue $57,000,000 Commission Ellen Poteat License Fee & Accounts Receivable Branch PO Box 954514 St. Louis, MO 63195-4514 Fax: 301 415 5387 Northern Trust Bank Line of Credit $8,507,181 Michelle Loftus Letters of Credit $6,438,424 Fax: 312 557 9330 American National Bank Letters of Credit $1,800,104 Susan Kruesi Fax: 312 661 5733 H.C. Starck Trade $980,511 Jean Mazolic PO Box 371229 Pittsburgh, PA 15251 Fax: 617 630 5908 Pennsylvania Economic Loan for Capital $926,420 Development Finance Equipment in Building Authority Expansion Kelly Stephens Finance Manager Department of Community and Economic Development 466 Forum Building Harrisburg, PA 17120 Fax: 717 787 0879 Mississippi Business Loan for Equipment $835,000 Finance Corporate Bill Barry 1306 Walter Siller Bldg. 550 High Street PO Box 849 Jackson, MI 39205 OMG Americas Trade $645,294 Tony Kaszarsky PO Box 6066N Cleveland, OH 44193 Fax: 440 808 7291 Allvac Trade $618,726 Mac King Dept. LA 21001 Pasadena, CA 91185 Fax: 704 282 1511 Alldyne Powder Trade $566,986 Technologies Accounts Payable 7300 Highway 20 West Hunsville, AL 35806 Fax: 888 777 9624 TTI Metals Trade $411,245 Clay hardin 290 King of Prussia Rd. Radnor, PA 19087 Fax: 610 688 9257 Saegertown Trade $402,666 Clint Moreland PO Box 64L484P Pittsburgh, PA 15264 Fax: 814 763 2069 NF&M International, Inc. Trade $394,787 Mel Green 125 Jericho Turnpike Jericho, NY 11753 Fax: 516 997 4599 Tel: 516 997 4212 Sogem-Afrimet Trade $355,020 Joe Ransom Magnolia Bldg. Ste. 110 3120 Highwoods Blvd. Raleigh, NC 27604 AON Risk Service, of PA Trade $300,929 Richard G. Scherdner PO Box 7247-7389 Philadelphia, PA 19170 Fax: 412 562 9606 Johnson Lift/Hyster Lease $290,000- Jeff Solen $300,000 PO Box 60007 city of Industry, CA 90706 Fax: 562 692 6306 Tel: 562 692 9311 Alldyne Trade $262,260 Vennie Krutz Lock Box 360281M Pittsburgh, PA 15251 Fax: 724 532 6439 Tel: 724 532 6393 UMICORE Trade $163,250 Precision Rolled Trade $149,674 REMET Trade $130,188 FEDERAL-MOGUL: Claimants' Committee Hires Legal Analysis Systems ---------------------------------------------------------------- The Official Committee of Asbestos Claimants of Federal-Mogul Corporation and its debtor-affiliates ask the court for an entry of an order authorizing the employment of Legal Analysis Systems nunc pro tunc as of December 1, 2001 as its asbestos-related bodily injury consultant. Colette Margaret Platt, executrix of the asbestos claimants committee, tells the court that the Committee's choice of Legal Analysis Systems was based upon the firm's extensive experience and knowledge with respect to analyzing and solving complex problems associated with asbestos-related bodily injury matters. Also considered is the experience of its principal, Mark A. Peterson, in extensive analytical support in estimating the number and time of potential asbestos-related bodily injury claims by disease, development of alternative methods of providing compensation for asbestos-related diseases, estimation of the costs of such compensation and consulting with asbestos trusts on claims, procedures and estimations. It is thus believed that the services of LAS are both necessary and appropriate and will assist the Committee in the negotiation, formulation, development and implementation of the plan of reorganization. Mark A. Peterson, principal of Legal Analysis Systems, informs the court he has served as an expert or consultant to the asbestos-related bodily injury creditors' committee of The Babcock & Wilcox Company, Owens Corning Corporation, Pittsburgh Corning Corporation, Armstrong World Industries Inc., Burns & Roe Enterprises Inc., G-1 Holdings Inc., W.R. Grace & Company, United States Gypsum Corporation, Dow Corning, Raytech Corporation, Fuller Austin Insulation Company Inc., H.K. Porter Company Inc., and six other Chapter 11 restructurings. In addition, he has also rendered consultancy services to the Manville Personal Injury, Eagle Picher, Celotex and H.K. Porter Asbestos Trusts and other claims resolution settlement trusts. The services expected to be rendered by Legal Analysis Systems include to: A. Estimation of the number and value of present and future asbestos personal injury claims; B. Development of claims procedures to be used in the development of financial models of payments and assets of a claims resolution trust; C. Analyzing and responding to issue relating to the settling of a bar date regarding the filing of personal injury claims; D. Analyzing and responding to issues relating to providing notice to personal injury claimants and assisting in the development of such notice procedures. Mr. Peterson submits that no retainer has been received by Legal Analysis Systems. Compensation of its professionals will be in accordance with the firm's current professional hourly rates plus reimbursement of actual necessary expenses. The current hourly rates of Legal Analysis Systems' professionals are: Mark A. Peterson $500 Daniele Relles (statistician) $330 Patricia Ebener (data collection expert) $240 Mary Gail Brauner (statistician) $185 Gregory Ridgeway (statistician) $150 Mr. Peterson assures the Court that Legal Analysis Systems in itself is a disinterested person, as defined in the Bankruptcy Code, and that neither he nor any employee has any relationship with the Debtors and their estates that may be adversarial to the creditors or to the Committee. (Federal-Mogul Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 609/392- 0900) GARDENBURGER INC: Completes Refinancing of Debt Obligations ----------------------------------------------------------- Gardenburger, Inc., (OTC Bulletin Board: GBUR) announced it had completed a comprehensive refinancing of its debt obligations and extension of the maturities of its existing convertible senior subordinated notes and convertible preferred stock. As a result of the refinancing, the Company now has no significant debt maturing prior to December 2004. As part of the refinancing, the Company obtained an $8 million term loan and $7 million line of credit from CapitalSource Finance LLC, a national commercial finance company. The proceeds of the term loan were used to purchase the Company's manufacturing equipment, which it had been leasing under operating leases. The line of credit replaces prior lines with Wells Fargo Bank. As a condition to obtaining new financing, the Company also negotiated extensions to the maturities of its convertible notes and its convertible preferred stock. "This is a significant event in our turnaround plan," said Scott Wallace, Gardenburger's Chief Executive Officer. "The terms of the purchase of the manufacturing equipment and resulting debt allow for significant cash flow improvement over the operating leases. In addition, with the extension of the maturities of our existing obligations, we can now devote our energy to improving the Company's operating results. The extensions of the maturities of our indebtedness required certain concessions on our part; however, we felt the terms were acceptable in order to achieve the necessary extensions." The Company's new term loan and line of credit are secured by the Company's assets, including the purchased manufacturing equipment and its accounts receivable and inventory. The new obligations mature in December 2004. The maturity date under the Company's convertible notes was extended to March 2005, while the earliest mandatory redemption date under the Company's preferred stock was extended to March 2006. In order to obtain the extension of the convertible notes, the Company agreed to increase the interest rate of the notes from 7 to 10 percent, pay a twenty percent premium at repayment or maturity, issue the noteholder a warrant to purchase 557,981 shares of common stock at a price of $0.28 per share, and negotiate an extension of the redemption date of its preferred stock. To achieve the preferred stock redemption date extension, the Company agreed to a ten percent premium on the preferred shareholders' accumulated liquidation preference and redemption price, payable upon redemption or any liquidation, and to issue to preferred shareholders warrants to purchase a total of 557,981 shares of common stock, also at a price of $0.28 per share. Gardenburger also announced that its board of directors today appointed Tim Burke to fill a vacancy created by the resignation of Jason Fish. Mr. Burke is a principal of Rosewood Capital, an affiliate of one of the Company's preferred shareholders. Founded in 1985 by GardenChef Paul Wenner, Gardenburger, Inc. is an innovator in meatless, low-fat products. The Company distributes its flagship Gardenburger veggie patty to more than 35,000 food service outlets throughout the United States and Canada. Retail customers include more than 30,000 grocery, natural food and club stores. Based in Portland, Oregon, the Company currently employs approximately 180 people. GENERAL BINDING: S&P Places Low-B Ratings on Watch Negative ----------------------------------------------------------- Standard & Poor's placed its ratings for General Binding Corp. on CreditWatch with negative implications. The CreditWatch placement reflects the firm's challenging operating environment, which is exacerbated by its high debt leverage. Industry sales of office products are under pressure, particularly in the office superstore channel. Although General Binding has responded by cutting costs and focusing on profitable products, its core markets remain highly competitive. Higher interest rates from its new bank agreement could lower credit protection ratios. Standard & Poor's will meet with General Binding's management to discuss business and financial strategies. Ratings Placed on CreditWatch with Negative Implications General Binding Corp. Corporate credit rating B+ Senior secured debt B+ Subordinated debt B- GUILFORD MILLS: Current Waiver under Credit Pact Expires Friday --------------------------------------------------------------- Guilford Mills, Inc., (NYSE: GFD) announced operating results for the Company's fourth quarter and fiscal year ended September 30, 2001. Fiscal 2001 sales were $643,519,000 as compared to fiscal 2000 sales of $814,226,000. Net loss for fiscal 2001 was $160,757,000 and included restructuring and impaired asset and investment charges, net of tax of $82,826,000 and an extraordinary loss, net of tax, of $2,856,000. Net loss for fiscal 2000 was $20,974,000 and included restructuring and impaired asset charges, net of tax, of $17,329,000. Fourth quarter sales of $145,520,000 were lower than the $184,957,000 reported for the fourth quarter of the prior year. The Company incurred a net loss of $112,995,000, which included $70,110,000 of additional after-tax restructuring and impaired asset and investment charges. This compared to the prior year's fourth quarter net loss of $24,178,000 which included after-tax restructuring charges of $17,329,000. Sales for the fourth fiscal quarter declined 21% from the comparable quarter of the prior fiscal year and reflected the challenging industry and economic conditions as well as the Company's exit from numerous domestic market sectors within its Apparel segment. Sales in the Apparel segment for the fourth quarter declined 47% from the prior year's quarter as a result of sector exits, low-priced imports and depressed retail sales. Guilford's worldwide Automotive segment sales fell 6%. Despite the North-American car build decline of 15%, Guilford's U.S. automotive sales declined by less than 8% as year over year headliner market share increased. Home Fashions segment sales for the quarter were 5% lower than last year's comparable period. Direct-to-retail sales increased by more than 9% as bedding product sales continued to grow. The improvement was more than offset by a decline in Home Fashions fabric sales. The Other segment sales were flat versus last year. The fiscal year sales also declined 21% as compared to fiscal 2000. Sales declined in the Apparel segment by 36%, in the Automotive segment by 12%, in the Home Fashions segment by 17% and in the Other segment by 4%. The Automotive segment comprised 52% of consolidated sales for the fiscal year. The Company's fourth quarter operating margin decreased $45,123,000 from last year's comparable period. Included in the operating loss of $79,896,000 was a restructuring and impaired asset charge of $58,659,000 substantially related to the Company's previously announced closure of its Cobleskill, NY Apparel and Home Fashions facility and the downsizing of its Pine Grove, PA facility to an industrial plant. The fourth quarter, excluding these one-time restructuring charges, as well as related inventory write-downs and the new Mexican facility start up costs aggregating $17,800,000, reflected an operating loss of $3,437,000 as compared to the prior year's loss of $6,130,000 before restructuring charges of $28,643,000. Sales volume declines and related capacity underutilization in all segments were more than offset by fixed cost reductions and other operating performance improvements. Fiscal 2001 operating margin was a loss of $122,837,000 versus a loss of $20,422,000 for fiscal 2000. The single most significant impact to margin was the Company's continued strategic realignment of its Apparel and Home Fashions segments which resulted in incremental restructuring and impaired asset charges of $42,732,000 and related expenses of $29,486,000 for run-out inefficiencies, new plant start-up and inventory write- downs. Sales volume decline and corresponding capacity underutilization totaled approximately $60,000,000. The declines were partially offset by fixed cost reductions of approximately $50,000,000. The Company's strategic realignment plan, which began in the fourth quarter of fiscal 2000, was designed to match capacity to demand and reduce costs by moving production from old, inefficient facilities to newer cost- efficient focused factories. The actions resulted in the elimination of all four domestic apparel dyeing and finishing facilities, the downsizing of another facility, a headcount reduction of approximately 1,725 associates or 29% of the Company's employees, fixed cost savings, and the start-up of a state-of-the-art facility in Altamira, Mexico. Guilford has continued to experience tightened lending practices from traditional financial institutions due principally to precipitous earnings declines and uncertainty within the industry. The industry has likewise been generally unable to obtain additional capital from appropriate financial markets. The absence of a long-term commitment by Guilford's domestic lenders has exacerbated the Company's poor performance due to increased concerns by both trade credit and customer constituencies. On September 30, 2001 (and for the second and third quarters of fiscal 2001), the Company was not in compliance with certain terms of its senior loan agreements. The Company received waivers of such non-compliance from its lenders. Since October 2001, the Company has continued to receive waivers while negotiating with its senior lenders toward a mutually satisfactory restructuring of the Company's indebtedness owed to such lenders. The Company remains in active negotiations with its lenders over the terms of such a restructuring. There can be no assurances, however, that a satisfactory debt restructuring will be consummated. In addition, if the Company's lender negotiations are not successfully concluded or the current waiver is not extended beyond its expiration date of January 18, 2002, then the Company would be in default under its senior loan agreements. The occurrence of an event of default under the Company's senior loan agreements entitles the lenders to exercise certain rights, including the right to declare all amounts outstanding immediately due and payable, and the right to liquidate the collateral securing such loans. The Company's senior debt is secured by substantially all of the Company's domestic assets as well as by 65% of the stock the Company holds in its foreign subsidiaries. If the lenders were to exercise the above-described rights upon the occurrence of an event of default, then the Company would be forced to seek protection from its creditors under the bankruptcy laws, as the Company lacks sufficient liquidity to repay the outstanding amounts owed to the lenders and the Company does not expect to be able to obtain satisfactory alternate financing arrangements on a timely basis. The Company's independent public accountants, in their report for the Company's 2001 fiscal year, noted that in light of the foregoing, substantial doubt exists concerning the Company's ability to continue as a going concern. John Emrich, President and Chief Executive Officer, said, "The U.S. textile industry has suffered significant declines in the past four years beginning with the Asian financial crisis, a situation exacerbated by the shrinking apparel and home fashions markets, the domestic economic slowdown and the U.S. government's unwillingness to assist. Guilford has effected dramatic and difficult operational changes over the past 18 months and continues to face harsh market and financial conditions as it attempts to position itself for the future. Executing our business plan is dependent upon the Company's ability to restructure its debt." The Company Tuesday filed with the Securities and Exchange Commission its Annual Report on Form 10-K for fiscal year 2001. The Company does not intend to schedule a conference call for the fourth quarter. Guilford Mills is an integrated designer and producer of value- added fabrics using a broad range of technologies. The Company is one of the largest warp knitters in the world and is a leader in technological advances in textiles, including microdenier warp knits and wide width circular knits of cotton blended with LYCRAr. Guilford Mills serves a diversified customer base in the home furnishings, apparel, automotive and industrial markets. Through its Guilford Home Fashions subsidiary, the company produces bedding products, window treatments and shower curtains for the retail market. HAYES LEMMERZ: Court Okays Bankruptcy Services as Claims Agent -------------------------------------------------------------- Hayes Lemmerz International, Inc., and its debtor-affiliates sought and obtained entry of an order authorizing them to retain and employ Bankruptcy Services LLC (BSI) as their claims, noticing and balloting agent to, among other things: A. serve as the Court's noticing agent to mail notices to the estates' creditors and parties in interest, B. provide computerized claims, objection and balloting database services, and C. provide expertise, consultation and assistance in claim and ballot processing and other administrative information with respect to the Debtors' bankruptcy cases. Kenneth A. Hiltz, the Debtors' Chief Financial Officer and Chief Restructuring Officer, tells the Court that the Debtors have thousands of creditors, potential creditors and parties in interest to whom certain notices, including notice of these chapter 11 cases, will be sent. The size of the Debtors' creditor body makes it impracticable for the Debtors to, without assistance, undertake the task of sending notices to creditors and other parties in interest. The Debtors submit that the most effective and efficient manner by which to provide notice and solicitation in these cases is to engage an independent third party to act as an agent of the Court. Mr. Hiltz submits that BSI is a data processing firm that specializes in chapter 11 administration, consulting and analysis, including noticing, claims processing, voting and other administrative tasks in chapter 11 cases. The Debtors wish to engage BSI to send out certain designated notices and to maintain claims files and a claims and voting register. The Debtors believe that such assistance will expedite service of notices, streamline the claims administration process and permit the Debtors to focus on their reorganization efforts. The Debtors believe that BSI is well-qualified to provide such services, expertise, consultation and assistance as BSI has assisted and advised numerous chapter 11 debtors in connection with noticing, claims administration and reconciliation and administration of plan votes, including Access Beyond Technologies, Inc.; Apex One, Inc.; Carmike Cinemas, Inc.; BMI Transportation, Inc.; Discovery Zone, Inc.; Eagle Geophysical, Inc.; Global Ocean Carriers Limited; Heilig-Meyers Company; Wireless One, Inc.; and 360networks (USA) Inc. Under the BSI Agreement, BSI will perform the following services, if necessary, as the Claims, Noticing and Balloting Agent, at the request of the Debtors or the Clerk's Office: A. Prepare and serve required notices in these chapter 11 cases, including: a. A notice of commencement of these chapter 11 cases and the initial meeting of creditors under section 341(a) of the Bankruptcy Code; b. A notice of the claims bar date; c. Notices of objections to claims; d. Notices of any hearings on a disclosure statement and confirmation of a plan of reorganization; and e. Such other miscellaneous notices as the Debtors or the Court may deem necessary or appropriate for an orderly administration of these chapter 11 cases; B. Within five business days after the service of a particular notice, file with the Clerk's Office an affidavit of service that includes a copy of the notice served, an alphabetical list of persons on whom the notice was served, along with their addresses, and the date and manner of service; C. Maintain copies of all proofs of claim and proofs of interest filed in these cases; D. Maintain official claims registers in these cases by docketing all proofs of claim and proofs of interest in a claims database that includes the following information for each such claim or interest asserted: a. The name and address of the claimant or interest holder and any agent thereof, if the proof of claim or proof of interest was filed by an agent; b. The date the proof of claim or proof of interest was received by BSI and/or the Court; c. The claim number assigned to the proof of claim or proof of interest; and d. The asserted amount and classification of the claim; E. Implement necessary security measures to ensure the completeness and integrity of the claims registers; F. Transmit to the Clerk's Office a copy of the claims registers on a weekly basis, unless requested by the Clerk's Office on a more or less frequent basis; G. Maintain a current mailing list for all entities that have filed proofs of claim or proofs of interest and make such list available to the Clerk's Office or any party in interest upon request; H. Provide access to the public for examination of copies of the proofs of claim or proofs of interest filed in these cases without charge during regular business hours; I. Record all transfers of claims pursuant to Bankruptcy Rule 3001(e) and provide notice of such transfers as required by Bankruptcy Rule 3001(e); J. Comply with applicable federal, state, municipal and local statutes, ordinances, rules, regulations, orders and other requirements; K. Provide temporary employees to process claims, as necessary; L. Promptly comply with such further conditions and requirements as the Clerk's Office or the Court may at any time prescribe; M. Provide balloting and solicitation services, including preparing ballots, producing personalized ballots and tabulating creditor ballots on a daily basis; and N. Provide such other claims processing, noticing, balloting and related administrative services as may be requested from time to time by the Debtors. The Debtors request that the fees and expenses of BSI incurred in the performance of the above services be treated as an administrative expense of the Debtors' chapter 11 estates and be paid by the Debtors in the ordinary course of business. Mr. Hiltz asserts that to the best of their knowledge, neither BSI nor any employee thereof has any connection with the Debtors, their creditors or any other party in interest herein; they are "disinterested persons," as that term is defined in section 101(14) of the Bankruptcy Code, as modified by section 1107(b) of the Bankruptcy Code; and they do not hold or represent any interest adverse to the Debtors' estates. (Hayes Lemmerz Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392-0900) IT GROUP: Files Chapter 11 Petition in DE to Sell Assets to Shaw ---------------------------------------------------------------- The IT Group, Inc., announced that it has signed a letter of intent with The Shaw Group Inc., (NYSE: SGR) regarding a proposed transaction in which Shaw would acquire substantially all of The IT Group's assets in exchange for approximately $105 million and the assumption of certain liabilities. The Company estimates the transaction to have a value of approximately $160 million to $200 million. In addition, The IT Group announced that the Company and certain of its subsidiaries have filed voluntary petitions for relief under chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court in Wilmington, Delaware. In connection with these filings and the proposed transaction with Shaw, Shaw has agreed in principle to provide The IT Group with a debtor-in- possession (DIP) credit facility of up to $75 million, $25 million of which will be available to The IT Group upon initial bankruptcy court approval. The remaining $50 million will be available to the Company at Shaw's discretion upon final bankruptcy court approval. The chapter 11 filings and the agreement in principle to provide DIP financing from Shaw will allow The IT Group to provide for an orderly sale of the Company, which will be subject to higher or otherwise better bids in the bankruptcy court process, while enabling the Company to take steps to address its liquidity issues and stabilize operations. The Company's joint ventures and its Canadian subsidiary, Roche Limited Consulting Group, are not included in the chapter 11 reorganization cases, but are included in the proposed asset sale to Shaw and are continuing normal business operations. Dr. Francis J. Harvey, acting president and chief executive officer of The IT Group, said, "We are very pleased to have reached this agreement with The Shaw Group, particularly since it will provide an excellent opportunity for many of our employees to be part of a stronger, world-class company with a large engineering, consulting and construction group. Likewise, we expect that this transaction will ensure a continuation of outstanding service and support to our customers." "As a result of our comprehensive business review, which we commenced upon my appointment as acting president and CEO two months ago, we concluded that the sale of the Company was in the best interest of The IT Group and our stakeholders," Dr. Harvey continued. "We believe The Shaw Group meets the criteria we established for selecting the most appropriate buyer: expertise and experience in the environmental, infrastructure and engineering industries; a reputation for outstanding customer service; a culture that values people and the development of their employees; and the resources to profitably grow The IT Group's businesses." Dr. Harvey said, "We appreciate the continuing support of our customers, subcontractors and vendors, as well as the dedication of our employees. Today's court filings present new challenges for the Company and its stakeholders. However, we firmly believe that a court-supervised reorganization process represents the best means of resolving the Company's severe liquidity issues and stabilizing operations while we move aggressively to finalize the sale of the Company." The proposed transactions with Shaw are subject to, among other things, execution of definitive documentation, higher or otherwise better offers, court approval and receipt of other regulatory required approvals. It is currently contemplated that the transaction with Shaw will be completed before the end of the first quarter. The Shaw Group Inc. is the world's only vertically integrated provider of complete piping systems and comprehensive engineering, procurement and construction services to the power generation industry. Shaw is the largest supplier of fabricated piping systems in the United States and a leading supplier worldwide, having installed piping systems in power plants with an aggregate generation capacity in excess of 200,000 megawatts. While the majority of Shaw's backlog is attributable to the power generation industry, the company also does work in the process industries, including petrochemical, chemical and refining, and the environmental and infrastructure sector. The company currently has offices and operations in North America, South America, Europe, the Middle East and Asia-Pacific; and has more than 13,000 employees. For additional information on The Shaw Group, please visit the company's web site at http://www.shawgrp.com The IT Group addresses the infrastructure and environmental needs of both private and public sector clients as a leading provider of diversified services, including environmental, engineering, facilities management, water, construction, emergency response, remediation, liability transfer and information management. Additional information about The IT Group can be found on the Internet at http://www.theitgroup.com The IT Group's common stock and depositary shares have been suspended from trading by the New York Stock Exchange. Information about the status of the common stock will be posted on the Company's web site as events warrant. IT GROUP: Case Summary & 50 Largest Unsecured Creditors ------------------------------------------------------- Lead Debtor: The IT Group 2790 Mosside Blvd. Monroeville, PA 15146-2792 Bankruptcy Case No.: 02-10118-MFW Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- 37-02 College Point Boulevard, LLC 02-10119-MFW Advanced Analytical Solutions, Inc. 02-10120-MFW E-Com Solutions, Inc. &n