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/raid1/www/Hosts/bankrupt/TCR_Public/020311.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, March 11, 2002, Vol. 6, No. 49 Headlines ANC RENTAL: Obtains Open-Ended Extension of Lease Decision Time ALLIED HOLDINGS: Names Dave Rawden to Lead Turnaround Programs ARMSTRONG HOLDINGS: Court Extends Removal Period Until July 29 BULL RUN CORP: Credit Facility Maturity Extended Until March 29 CARIBBEAN PETROLEUM: Panel Retains Pachulski Stang as Counsel CEDARA SOFTWARE: SNS Unit Completes Sale of Assets for CDN$2.7MM CHIQUITA BRANDS: Court Confirms Chapter 11 Reorganization Plan CLARION TECHNOLOGIES: Fails to Meet Nasdaq Listing Requirements COLONIAL COMM'L: Fails to Satisfy Nasdaq Listing Requirements CROWN RESOURCES: Files for Chapter 11 Reorganization in Colorado CROWN RESOURCES: Case Summary & Largest Unsecured Creditors ELEC COMMS: Expects to File Form 10-K with SEC by March 15, 2002 ESTATION NETWORK: Kim Oishi Resigns as Board Chairman and CEO EDISON INTERNATIONAL: Closes $1.6BB Syndicated Credit Facility ELECTRIC LIGHTWAVE: Violates Nasdaq Continued Listing Standards ENRON CORP: Court Appoints Examiner for North America Subsidiary FEDERAL-MOGUL: Court Appoints Prof. Francis McGovern as Mediator FINANCIAL ASSET: Fitch Junks 1997-NAMC Class B Certificates FLAG TELECOM: Taps Credit Suisse & Blackstone as Fin'l Advisors FLORSHEIM GROUP: Gains Access to $75 Million DIP Credit Facility FOAMEX LP: S&P Ratchets Corporate Credit Rating Up to 'B+' FRESH AMERICA: Currently Working on Credit Facility Refinancing GLOBAL CROSSING: Court Approves Stipulation with JP Morgan GLOBAL CROSSING: Will Downsize Operations & Cut Costs by $600MM GLOBIX CORP: Seeks Okay to Engage Innisfree as Noticing Agent GLOBIX CORP: Court Sets Plan Confirmation Hearing for April 8 GRANITE BROADCASTING: S&P Junks Rating over Possible Nonpayment GREATE BAY: Court Okays Sale of Advanced Casino to Bally Gaming HAYES LEMMERZ: Wants to Assume Management Severance Agreements HOULIHAN'S: Seeks Open-Ended Lease Decision Period IBS INTERACTIVE: Continues to Incur Neg. Operating Cash Flows ICH CORP: U.S. Trustee Appoints Official Creditors' Committee IMPERIAL METALS: Creditors & Shareholders Accept CCAA Plan INTEGRATED HEALTH: Selling "Kansas City at North Oak" to TI-1221 JOY GLOBAL: S&P Assigns B+ Rating to $200MM Senior Sub. Notes KAISER ALUMINUM: Look for Schedules & Statements in Mid-June KMART CORP: Wayerhaeuser Demands Prompt Decision on Contracts KMART CORPORATION: Intends to Close 284 Underperforming Stores LTV: DEP Asks Steel Unit to Remediate 7 Sites in Southwest PA LOEWS CINEPLEX: Secures Open-Ended Lease Decision Period MDC HOLDINGS: S&P Ratchets Corporate Credit Rating Up a Notch MESA AIR GROUP: Sets Annual Shareholders' Meeting for April 4 MUTUAL RISK: Looks to Greenhill for Help in Fin'l Restructuring NATIONAL STEEL: S&P Drops Ratings to D After Chapter 11 Filing NATIONAL STEEL: Secures Interim Approval of $230MM DIP Financing NETIA HOLDINGS: Lays-Out Information Re Debt Restructuring Terms NEVADA BOB'S: Fails to Meet TSE Continued Listing Requirements NORAMPAC: S&P Ups Ratings to BB+ over Good Operating Performance NTELOS INC: Revises Terms & Covenants Under Credit Agreement ORIUS CORPORATION: Lenders Agree to Forbear Until March 31, 2002 OWENS CORNING: CSFB Reports Resolution of Intercreditor Issues PNC Mortgage: Fitch Keeps Watch on Low-B Certificates Ratings PACIFICARE HEALTH: Refinancing Risks Force Fitch's Downgrade PACIFIC GAS: Resolves Discovery Issues in Grynberg Litigation PACIFIC GAS: Annual Shareholders' Meeting Set for April 17, 2002 PACIFIC GAS: Files Second Amended Plan and Disclosure Statement PHASE2MEDIA: SDNY Court Fixes March 19 as Claims Bar Date PHYCOR INC: US Trustee Appoints Unsecured Creditors Committee PRUDENTIAL SECURITIES: S&P Rates Series 1998-C1 Class J at BB- PSINET INC: Seeks to Expand Sidley Austin's Employment RYLAND GROUP: S&P Raises Ratings as Financial Profile Improves SAFETY-KLEEN CORP: Has Until April 30 to File Chapter 11 Plan SCAN-OPTICS INC: Commences Senior Executive Stock Option Plan SERVICE MERCHANDISE: Seeks OK to Pay KIMCO $2.5MM Break-Up Fee STRATUS SERVICES: Running Short of Working Capital Due to Losses TRISTAR: Inks Pact to Sell Certain Assets to Inter Parfums Unit US STEEL: Fitch Believes Steel Import Tariffs Beneficial to Firm VECTOUR: Proposes to Sell Tennessee Assets to LCL for $3MM VERADO HOLDINGS: Selling Englewood Data Center Assets to ViaWest W.R. GRACE: Court Extends Removal Period through July 2, 2002 WHEELING-PITTSBURGH: Seeks Sixth Extension of Exclusive Periods YOUBET.COM INC: Falls Short of Nasdaq Bid Price Requirement * BOND PRICING: For the week of March 11 - 15, 2002 ********* ANC RENTAL: Obtains Open-Ended Extension of Lease Decision Time --------------------------------------------------------------- ANC Rental Corporation, and its debtor-affiliates obtained a Court order granting an extension through confirmation of a plan or plans of reorganization in the Debtors' chapter 11 cases of the time within which the Debtors must elect to assume or reject the Leases. The Debtors additionally request that such extension of time be without prejudice to the right of any lessor to obtain an order requiring the Debtors to assume or reject a particular lease in a shorter time, upon a showing of good cause. (ANC Rental Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 609/392-0900) ALLIED HOLDINGS: Names Dave Rawden to Lead Turnaround Programs -------------------------------------------------------------- Allied Holdings, Inc., (NYSE: AHI) announced that Dave Rawden joined the Allied Holdings management team as Senior Vice President of Business Process Engineering reporting directly to Hugh Sawyer. Dave joined Allied from Jay Alix & Associates where he was a Principal in the Turnaround and Crisis Management business unit. Dave has been working at Allied since June 2001 as the day-to- day principle in charge of the Jay Alix & Associates turnaround engagement at Allied. He has over eleven years of experience in successful turnarounds in a wide variety of industries. His expertise includes improving profitability, reducing debt, improving cash flows and restructuring balance sheets. Dave is a CPA with a degree in accounting from Michigan State and an MBA from Northwestern. Commenting on the announcement, Hugh E. Sawyer, Allied's President and CEO, said, "We have already worked closely with Dave and I am highly confident that he will bring significant value to the Allied Holdings family. In his new role, Dave will continue to lead our turnaround initiatives and restructuring our business processes." Allied Holdings, Inc. is the parent company of several subsidiaries engaged in providing logistics, distribution and transportation services to the automotive industry. The services of Allied's subsidiaries span the entire finished vehicle distribution continuum, and include logistics, car- hauling, intramodal transport, inspection, accessorization, and dealer prep. Allied, through its subsidiaries, is the largest company in North America specializing in the delivery of new and used vehicles. For additional information about Allied, please visit our Web site at http://www.alliedholdings.comor http://www.streetevents.com DebtTraders reports that Allied Holdings Inc.'s 8.625% bonds due 2007 (HAUL07USR1) are trading between 48 and 51. See http://www.debttraders.com/price.cfm?dt_sec_ticker=HAUL07USR1 for real-time bond pricing. ARMSTRONG HOLDINGS: Court Extends Removal Period Until July 29 -------------------------------------------------------------- Armstrong Holdings, Inc., and its debtor-affiliates obtained a third extension of the time period within which the Debtors may file notices of removal of litigative and administrative matters which were pending on the Petition Date, through and including the later of (i) July 29, 2002, or (ii) 30 days after entry of an order terminating the automatic stay with respect to any particular action sought to be removed. DebtTraders reports that Armstrong Holdings Inc.'s 9% bonds due 2004 (ACK04USR1) are trading between 58 and 59.5. See http://www.debttraders.com/price.cfm?dt_sec_ticker=ACK04USR1for real-time bond pricing. BULL RUN CORP: Credit Facility Maturity Extended Until March 29 --------------------------------------------------------------- On February 28, 2002, Bull Run Corporation and its lenders amended the Company's bank credit facility in order to change the facility's maturity date from February 22, 2002 to March 29, 2002, and increase the maximum allowable borrowings through the maturity date under the Company's revolving credit facility from $15,500,000 to $20,000,000. In connection with this amendment, the Company's chairman agreed to increase his personal guarantee of the bank credit facility to a maximum amount of $91 million of the Company's indebtedness to the bank lenders, which is currently $89.4 million. As disclosed in the Company's Form 10-Q for the period ended December 31, 2001, the Company believes that it will be able to reach an acceptable agreement with its bank lenders on the terms of a long-term refinancing of the credit facility prior to the facility's new maturity date. A long-term refinancing of the credit facility may involve a significant reduction in the total amount of financing available from the bank lenders, and the Company believes it has the ability to successfully achieve such a reduction within a time frame acceptable to its bank lenders. The Company has reduced its bank term debt by over $20 million during the current fiscal year as a result of the sale of certain investment assets and the issuance of new equity to affiliated parties. Bull Run formerly relied on its Datasouth Computer subsidiary -- which makes heavy-duty dot matrix and thermal printers -- for nearly all of its sales. Bull Run sold Datasouth in late 2000 and now concentrates on its Host Communications sports and affinity marketing unit. It provides consulting; event hosting; member communication and recruitment; publishing; TV, radio, and Internet program production; and other services to college and high school sports teams, athletic conferences, and associations. Clients include the National Collegiate Athletic Association and the National Federation of State High School Associations. Chairman Mack Robinson owns 21% of Bull Run. CARIBBEAN PETROLEUM: Panel Retains Pachulski Stang as Counsel ------------------------------------------------------------- The Official Committee of Unsecured Creditors in the chapter 11 cases of Caribbean Petroleum wishes to tap the legal expertise of Pachulski, Stang, Ziehl, Young & Jones P.C. and asks the U.S. Bankruptcy Court for authority to retain the firm nunc pro tunc to January 8, 2002. The Committee points out that Pachulscki Stang has palyed significant roles in many largest and complex cases involving reorganization issues. As Counsel to the Committee, Pachulski Stang is expected to: a) provide legal advise with respect to its power and duties as the Official Committee; b) prepare in behalf of the Committee necessary applications, motions, objections, opposition, complaints, answers, orders, agreements and other legal papers; c) provide legal service with respect to any disclosure statement and plan filed in these cases, and with respect to the process for approving or disapproving disclosure statements and confirming or denying confirmation of plan; d) appearing in Court to present necessary motions, objections, applications and pleadings and to otherwise protect the interests of the Committee; and e) performing all other legal services for the Committee which may be necessary and proper in these cases. The Committee proposes to compensate Pachulski Stang at its customary hourly rates plus reimbursement of actual and necessary expenses incurred by the firm. The principal attorneys and paralegals presently designated to represent the Committee and their current standard hourly rates are: Bruce Grohsgal $395 per hour Hamid R. Rafatjoo $330 per hour Marlene S. Chappe $110 per hour Caribbean Petroleum L.P. distributes petroleum products and owns/leases real property on which service stations selling petroleum products are stored and sold to retail customers. The Company filed for chapter 11 protection on December 17, 2001. Michael Lastowski, Esq. and William Kevin Harrington, Esq. at Duane, Morris & Heckscher LLP represent the Debtors in their restructuring efforts. CEDARA SOFTWARE: SNS Unit Completes Sale of Assets for CDN$2.7MM ---------------------------------------------------------------- Cedara Software Corp., (Nasdaq:CDSW/TSE:CDE) announced today that Surgical Navigation Specialists, Inc., a wholly-owned subsidiary of Cedara which has been operating under an Order for protection pursuant to the Companies' Creditors Arrangement Act from the Ontario Superior Court of Justice since August 2001, has completed the sale of certain of its intellectual property assets to a third party for a total purchase price of CDN$2.7 million. The proceeds of the sale will be distributed amongst the creditors of SNS pursuant to a plan of compromise or arrangement. Michael Greenberg, Chairman & Chief Executive Officer of Cedara, said "The disposition of the principal assets of the SNS business represents a milestone for Cedara. As the largest creditor of SNS, Cedara anticipates realizing approximately Cdn.$2.5 million on the distribution." Arun Menawat, President and Chief Operating Officer of Cedara, added, "Cedara can now further build its core business with OEM customers, including the therapy sector." Cedara Software Corp., based in the greater Toronto area, is a leading medical imaging software developer. Cedara serves leading healthcare solution providers and has long-term relationships with companies such as Cerner, GE, Hitachi, Philips, Siemens, and Toshiba. Cedara offers its OEM customers a rich array of end-to-end imaging solutions. The Cedara Foundation Technology supports Windows and Unix. This continuously enhanced imaging software is embedded in 30% of MRIs sold today. Cedara offers components and applications that address all modalities and aspects of clinical workflow including: 3D imaging and advanced post-processing; volumetric rendering; disease-centric imaging solutions for cardiology; and streaming DICOM for web-enabled imaging. Cedara's picture archiving and communications systems (PACS) solutions, Cedara I- View(TM), Cedara I-Read(TM) and Cedara I-Report(TM) are sold via systems integrators and distributors around the world. Through its Dicomit Dicom Information Technologies Inc. subsidiary, Cedara provides an ultrasound and DICOM connectivity solutions to OEM customers. CHIQUITA BRANDS: Court Confirms Chapter 11 Reorganization Plan -------------------------------------------------------------- Chiquita Brands International, Inc., (NYSE: CQB) announced that the Honorable J. Vincent Aug, Jr., signed a confirmation order approving Chiquita's Pre-Arranged Chapter 11 Plan of Reorganization. Chiquita expects the Plan to become effective on March 19 and its new securities to begin trading on March 20. Chiquita also announced that its wholly owned subsidiary, Chiquita Brands, Inc., has entered into a multi-year, $130 million amended credit facility, consisting of a $60 million revolving credit facility and a $70 million term loan. The amended facility increases the maximum credit by $10 million and carries a significantly lower interest rate. Wells Fargo Bank is the lead arranger and syndication agent of the amended facility. "[Fri]day's Bankruptcy Court approval of our Chapter 11 Plan is a major step toward completion of our financial restructuring," said Steven G. Warshaw, President and Chief Executive Officer of Chiquita Brands International. "Our performance throughout this 14-month process is a testament to the strength and hard work of our employees worldwide, the power of our brand, and the quality of our relationships. Although the process of restructuring is always difficult, we believe that we have achieved the best possible balance among the interests of all of the Company's stakeholders." The Plan of Reorganization involves only the publicly held debt and equity securities of Chiquita Brands International, Inc., which is a holding company without any business operations of its own. The Company's other creditors and its assets, strategy and ongoing operations are unaffected by the Chapter 11 filing. The Company's subsidiaries, which are independent legal entities that generate their own cash flow and have access to their own credit facilities, have continued to operate normally. Further information concerning the Plan of Reorganization and the Chapter 11 process can be found on the Company's Web site at http://www.chiquita.comor at http://www.bmccorp.net Chiquita is a leading international marketer, producer and distributor of quality fresh fruits and vegetables and processed foods. Wells Fargo & Company is a $308 billion diversified financial services company providing banking, insurance, investments, mortgage and consumer finance from more than 5,400 stores, a leading Internet banking site (wellsfargo.com), and other distribution channels across North America and elsewhere internationally. DebtTraders reports that Chiquita Brands' 10.250% bonds due 2006 (CQB4) are trading between 84 and 87. See http://www.debttraders.com/price.cfm?dt_sec_ticker=CQB4for real-time bond pricing. CLARION TECHNOLOGIES: Fails to Meet Nasdaq Listing Requirements --------------------------------------------------------------- Clarion Technologies, Inc. (Nasdaq: CLAR) announced that on December 6, 2001, the Company closed on $3,400,000 of working capital loans, represented by subordinated secured notes, from an existing lender, a member of the board of directors, and an officer of the Company. The notes include an average 12.375% per annum deferred cash interest component and warrants to purchase 17,000,000 shares of common stock at a nominal exercise price. The Company received a Nasdaq Staff Determination letter on February 28, 2002 notifying the Company of a failure to comply with Nasdaq Marketplace Rules 4350(i)(1)(A) and 4350(i)(1)(D)(i), and that its securities are, therefore, subject to delisting from The Nasdaq SmallCap Market. These rules relate to the issuance of the warrants. The notification from the Nasdaq Staff provides an opportunity for Clarion to respond and propose a resolution to this issue. Clarion has had preliminary discussions with the Nasdaq Staff and will be providing the proposed resolution to the Nasdaq Staff within the timeline they have requested. Clarion Technologies, Inc. operates five manufacturing facilities with a total of approximately 600,000 square feet located in Michigan, Ohio and South Carolina. Clarion's manufacturing operations include approximately 155 injection molding machines ranging in size from 50 to 5000 tons of clamping force. The Company's headquarters are located in Grand Rapids, Michigan. Further information about Clarion Technologies can be obtained on the Web at http://www.clariontechnologies.com or by contacting James Hostetler, Vice President of Investor Relations, at 847-490-6063. COLONIAL COMM'L: Fails to Satisfy Nasdaq Listing Requirements ------------------------------------------------------------- Colonial Commercial Corp. (Nasdaq: "CCOM") announced that it has received notice from NASDAQ that it does not satisfy the following minimum requirements for continued listing on the Nasdaq SmallCap market; the market value of its publicly held shares of common stock is less than the required $1,000,000, and the closing bid price of its common stock is less than the required $1 per share. The Company has until June 3, 2002 to regain compliance with the requirement relating to the market value of its publicly held shares of common stock, and it has until August 13, 2002 to regain compliance with the closing bid price requirement if the closing bid price of the common stock is not less than $1 for at least 10 consecutive trading days. If the NASDAQ criteria are not met, the Company will receive written notification that its securities will be delisted, at which time the Company has the right to appeal the termination to a Listing Qualifications Panel. CROWN RESOURCES: Files for Chapter 11 Reorganization in Colorado ---------------------------------------------------------------- Crown Resources Corporation announced that it has filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code with the United States Bankruptcy Court for the District of Colorado. This action was taken after the Board of Directors authorized the filing of the Petition by unanimous vote. Crown intends to file a Plan of Reorganization and Disclosure Statement with the Court within the next week. The Plan was developed on a pre-negotiated basis in consultation with Crown's major creditors, including holders of its $15,000,000 -- 5.75% Convertible Subordinated Debentures, due August 2001 and holders of its $3,600,000 10% Convertible Secured Promissory Notes due October 2006. The Senior Notes are secured by all of the assets of Crown. The Plan contemplates a restructuring of the Debentures through an exchange of outstanding Debentures, including any accrued interest thereon for the following consideration to be proportionally distributed to each Debenture holder: (i) $1,000,000 in cash; (ii) $2,000,000 in 10% Secured Notes, due October 2006; (iii) $4,000,000 in 10% Unsecured Notes, due October 2006; (iv) warrants to purchase 5,714,285 shares at an exercise price of $0.75 per share, expiring October 2006. The Plan provides for a 5-for-1 reverse split of the currently outstanding common stock, while maintaining the conversion and exercise prices of the Senior Notes, the Secured Notes, the Unsecured Notes and the related warrants. Under the Plan the existing shareholders will still hold 100% of the outstanding shares of common stock. However, on a fully diluted basis, assuming conversion of all of the outstanding debt, and exercise of all warrants, Secured Note holders will own approximately 52% of the fully diluted common stock, the Debenture holders will own approximately 41% of the fully diluted common stock and current shareholders would own approximately 7% of the fully diluted common stock. The Plan also contemplates the cancellation and full impairment of Crown's preferred stock, currently held by a wholly owned subsidiary. After being filed with the Court, the Plan must be voted on by Crown's creditors and shareholders. If the Plan is approved by the Court, the Plan becomes a legally binding agreement between Crown and its creditors and shareholders. Under the Plan, Crown anticipates receiving approximately $2,065,000 in cash from the Senior Note financing, currently held in escrow. Mr. Christopher Herald, CEO of Crown, stated that, "The filing of this Plan which has incorporated the views of a majority of our Debenture holders, our Senior Note holders and discussions with shareholders, regulators, and others in industry, will remove a significant uncertainty for the survivability of Crown." Herald stated: "Crown expects to benefit from taking the time and effort to pre-negotiate the terms of the Plan by significantly reducing the time and costs associated with being in bankruptcy. Furthermore, we believe approval by the Court of the Plan will provide Crown with a strong balance sheet, with no required cash outlays for interest payments for the next four and a half years. If the Plan is approved, Crown intends to pursue the permitting of its Crown Jewel Project in Washington as a primarily underground mine." Mr. Herald went on to say that, "If the Crown Jewel Project is permitted, the Plan provides significant upside potential to our creditors as well as the ability of our shareholders to participate in that upside." Crown is a U.S.-domiciled gold exploration company whose major assets are the Crown Jewel Project located in north-central Washington State and a 41.2% interest in Solitario Resources Corporation (TSE:SLR). Crown is traded on the OTC Bulletin Board under the trading symbol CRRS. CROWN RESOURCES: Case Summary & Largest Unsecured Creditors ----------------------------------------------------------- Lead Debtor: Crown Resources Corporation 4251 Kipling St. Suite. 390 Wheat Ridge, CO 80033 Bankruptcy Case No.: 02-12949 Type of Business: The Debtor is a precious metals exploration company with interests in the western US (Nevada, Utah, and Washington) and Latin America. The company identifies, acquires, and explores properties, but it generally turns mining operations over to a joint venture partner. Chapter 11 Petition Date: March 8, 2002 Court: District of Colorado (Denver) Judge: Donald E. Cordova Debtors' Counsel: Joel Laufer, Esq. Rubner Padjen and Laufer LLC 1600 Broadway Suite 2600 303-830-3172 Total Assets: $18,326,000 (as per SEC 10-Q Filing for the quarterly period ended September 30, 2001) Total Debts: $15,921,000 (as per SEC 10-Q Filing for the quarterly period ended September 30, 2001) Debtor's Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Deutsche Bank AG Subordinated $15,901,000 Bankers Trust Company, Debenture plus Trustee accrued interest Attn: Tom Moskie Four Albany Street New York, NY 10006 Keystone Gold, Inc. Remaining Payment $220,000 for a Land Parcel Mineral Ventures, Inc. Remaining payment $220,000 for a Land parcel ELEC COMMS: Expects to File Form 10-K with SEC by March 15, 2002 ---------------------------------------------------------------- The preparation of eLEC Communications Corporation's Annual Report on Form 10-K for the fiscal year ended November 30, 2001 was delayed in filing with the SEC due to the Company's inability to obtain from third parties certain information necessary for it to determine the value of various of its assets, including the potential significant impairment thereof. The Company is engaged in discussions concerning material transactions that have not been completed. In light of the uncertainty over these potential transactions, and the impact these transactions have on the Company's valuation of long-lived assets and determination of impairment expense, the Company is unable to file such report within the prescribed time period. The Company expects to file such report no later than March 15, 2002. The Company's revenues in the fourth quarter of fiscal 2001 were approximately $4.7 million, a 20.7% increase from revenues of approximately $3.9 million in the same period of fiscal 2000. Such revenues do not include the revenues of the Company's former subsidiary, Airline Ventures Inc., which was sold on November 30, 2001 and will be reported as a discontinued operation. Total revenues for fiscal 2001 amounted to approximately $19.6 million, a 65.5% increase over revenues of approximately $11.9 million for fiscal 2000. The revenue growth is the result of increased marketing expenses in fiscal 2001. The Company's gross profit in the fourth quarter of 2001 amounted to approximately $1.4 million, a 51.3% increase from gross profit of approximately $0.9 million in the same period of fiscal 2000. Total gross profit for fiscal 2001 was approximately $7.2 million, or 36.4% of revenues, as compared to a gross profit in fiscal 2000 of approximately $3.1 million, or 25.7% of revenues in fiscal 2000. The higher gross profit percentages are the result of more of the Company's lines using the unbundled network elements platform instead of a resale platform. Loss from continuing operations, before considering impairment costs, was approximately $2.7 million for the fourth quarter of fiscal 2001, an 8.6% decrease from a loss of approximately $2.9 million in the same period of fiscal 2000. Loss from operations for fiscal 2001, before considering impairment costs, amounted to approximately $7.2 million, a 9.8% increase from approximately $6.6 million for fiscal 2000. The Company anticipates recording an impairment loss in the fourth quarter of fiscal 2001 of approximately $2.5 million. The Company is evaluating further impairment losses of up to approximately $2.3 million. Such additional losses may not be appropriate if the Company sells one or more of its operating subsidiaries upon the terms and conditions that are currently being discussed with a potential purchaser. Such purchase is a material transaction for the Company, if it occurs. The company has packed off its money-losing luggage business to concentrate on telecommunications, including Internet access and Web site design and hosting. eLEC has been certified to operate as a competitive local-exchange carrier (CLEC) in more than 35 states, and it is working to gain certification throughout the US (it has interconnection agreements in 48 states). The company also owns Airline Ventures, a specialty retailer that sells uniforms and travel-related products mostly to airline crewmembers. Formerly Sirco International, a maker and distributor of soft luggage, sports bags, and tote bags, eLEC sold those operations to Interbrand in 1999. At August 31, 2001, the company had a working deficit of about $1.3 million. ESTATION NETWORK: Kim Oishi Resigns as Board Chairman and CEO ------------------------------------------------------------- eStation Network Services, Inc. (CDNX:YST) is pleased to announce it has closed a private placement for total gross proceeds of $1,200,000 comprising 40,000,000 special warrants priced at $0.03 each, exercisable to acquire, for no additional consideration, units, each Unit consisting of one series C convertible preferred share and one series C preferred share purchase warrant of the Company. Each Warrant shall entitle the holder thereof to acquire, at any time prior to the date that is two years from the date of issuance thereof, one Series C Preferred Share at an exercise price of $0.04 per Series C Preferred Share subject to adjustment in certain events. The Private Placement replaces the financing previously announced on January 30, 2002 and updated on February 12, 2002. Pursuant to the Private Placement Kim Oishi will resign as Chairman and Chief Executive Officer of eStation. eStation has agreed to terms with a new Chairman and Chief Executive Officer who will commence full-time on or before April 2, 2002. The new Chief Executive Officer will join eStation's President and Chief Financial Officer, Peter Edwards to round out the Company's management team. Further details on the Company's new Chairman and Chief Executive Officer will be provided upon completion of existing commitments. "The Private Placement and new leadership complete the restructuring and refinancing we started in January 2001," said Kim Oishi, "Our new Chief Executive Officer has the experience and industry relationships to follow-through on our work-in- progress to date and bring new ideas and processes to eStation. I look forward to supporting the new Chief Executive Officer and eStation as a shareholder." In conjunction with the Private Placement, the Company is pleased to announce two new appointments to the Board of Directors of eStation. Gordon Flatt and Valentine Lee have been appointed to the Board of Directors of eStation, replacing Jonathon W. Blanshay and J.P. Solmes who resigned from the Company's board of Directors on February 27, 2002. Mr. Flatt is the President and Chief Executive Officer of The Coastal Group, a Winnipeg based, privately owned organization focused on providing equity capital and management services to Canadian Businesses. Mr. Flatt also serves on the Board of Directors of Derlan Industries Ltd. (DRL:TSE) and First Chicago Investment Corporation (FCH:TSE). Mr. Lee recently joined New Millennium Venture Partners Inc. as Managing Partner. New Millennium Venture Partners Inc. is the manager of the New Millennium Internet Venture Fund. Prior to Joining New Millennium Venture Partners Inc., Mr. Lee was a technology analyst with HSBC Securities where he was twice rated the Number 1 software analyst by Brendan Woods, a respected security analyst rating service. The Series C Preferred Shares shall have substantially the same rights and privileges as the 7.5% Series B convertible preferred shares offered for sale by the Company pursuant to the April 2001 private placement. The Company has obtained the consent of the holders of the previously issued and outstanding Subscription Receipts in respect of this financing, including the permanent waiver of anti-dilution rights attached to the Series B and existing Series C securities. In addition, the holders of the Series B securities have agreed to allow eStation to redeem the securities for cash or common shares at the Company's option at the maturity date. Each Series C Preferred Share will be convertible at the option of the holder, at any time on or prior to the date which is three years from the date of issuance of the Series C Preferred Shares, into one eStation common share for the first two years and 0.91 eStation common shares in the third and final year. Each Series C Preferred Share will have a right to an annual dividend equal to 7.5% of the issue price which will be payable semi-annually. eStation will have the option of satisfying any dividend payment on the Series C Preferred Shares by way of a cash payment or by the issuance of additional Series C Preferred Shares at a price equal to 95 per cent of the weighted average trading price of the eStation common shares for the 20-day trading period ending five trading days prior to any dividend payment date. The Series C Preferred Shares will mature on the Maturity Date, at which time eStation will be required to redeem the shares for cash at the redemption price or, at a holder's option but subject to the receipt of all regulatory approvals, to issue freely tradeable eStation common shares on the conversion terms set out above. Currently, the Company has 95,265,261 issued and outstanding common shares, 1,166,667 common shares awaiting CDNX approval, 34,656,750 issued and outstanding Subscription Receipts convertible into Series B Preferred Shares or common shares, and 73,333,333 Subscription Receipts convertible into Series C Preferred Shares or common shares, and 89,970,069 common share purchase warrants and options comprising 294,392,080 fully diluted common shares. eStation (CDNX:YST) offers turnkey ABM solutions to major retail and hospitality chains. eStation leverages innovative technology to generate multiple revenue streams through strategic corporate partnerships while providing consumers with convenient access to products and services by leveraging the Internet. Retailers and service providers of all kinds can utilize eStation's ABM solutions to target consumers with on-screen advertising and in- store coupons and promotions. Visit us online at http://www.estation.comfor more information. * * * As reported in the November 27, 2001 edition of the Troubled Company Reporter, eStation Network Services, Inc., (CDNX:YST) agreed to terms with regard to a private placement for total gross proceeds of $1,000,000, and a debt restructuring agreement with IBM Canada Inc., with regard to its lease financing that includes a lump sum payment by eStation to pay down outstanding obligations and principal, reduced monthly payments of the Company over a 42 month period and the funding of an additional $500,000 of computer equipment and ABM services by IBM. EDISON INTERNATIONAL: Closes $1.6BB Syndicated Credit Facility -------------------------------------------------------------- On March 1, 2002, Southern California Edison Company (SCE), the public utility subsidiary of Edison International, closed on a $1.6 billion syndicated senior secured credit facility providing for $600 million of one-year Tranche A Term Loans, $700 million of three-year Tranche B Term Loans, and $300 million of two-year Revolving Credit Loans. J. P. Morgan Securities Inc. and Salomon Smith Barney Inc. are sole advisors, lead arrangers, and bookrunners for the credit facility; Barclays Capital, TD Securities (USA) Inc., and Union Bank of California are documentation agents; and the participating lenders include banks, investment funds, and other financial institutions. The Revolving Credit Loans and Tranche A Term Loans bear interest either at a eurodollar rate plus a margin of 2.5 percent or at a bank prime or equivalent rate plus a margin of 1.5 percent, at SCE's election. The Tranche B Term Loans bear interest either at a eurodollar rate plus a margin of 3.0 percent or at a bank prime or equivalent rate plus a margin of 2.0 percent, at SCE's election. The credit facility is secured by three newly issued series of SCE's first mortgage bonds. On March 1, 2001, SCE sold to Lehman Brothers, as remarketing agent, approximately $195 million of pollution control bonds that SCE repurchased in late 2000. The pollution control bonds will be remarketed to the public at a three-year fixed interest rate. The net proceeds from the loans under the new credit facility and the sale of the pollution control bonds, plus cash on hand, have been or will be used for these purposes: * On March 1, 2002, SCE repaid all outstanding loans, aggregating $1.65 billion, under its previous credit facilities. Those credit facilities were then terminated. * On March 1, 2002, SCE deposited $531 million, plus accrued interest, with the paying agent for SCE's outstanding commercial paper for immediate payment through the Depository Trust Company (DTC) to holders of record as of February 28, 2002. As a result, SCE no longer has any commercial paper outstanding. * On March 1, 2002, SCE deposited $400 million, plus accrued interest, with the paying agent for SCE's senior unsecured notes, 5-7/8% Series Due January 2001 and 6-1/2% Series Due June 2001, for immediate payment through DTC, or directly for certificated holders, to holders of record as of February 28, 2002. As a result, the previously existing payment defaults under the note indenture have been cured. * On March 1, 2002, SCE gave irrevocable notice that the interest extension period on its outstanding 8-3/8% junior subordinated deferrable interest rate debentures (QUIDS) has ended. SCE deposited approximately $7 million with the trustee for the QUIDS for payment of the deferred interest, and interest thereon, due on April 1, 2002, to holders of record as of the regular record date, March 29, 2002. Under the QUIDS indenture, the deferred and accrued interest may be paid only on a regular quarterly interest payment date. * On February 21, 2002, the board of directors of SCE declared the past due dividends, aggregating about $23 million, on all series of SCE's outstanding cumulative preferred stock and $100 cumulative preferred stock for each of the quarters ending in the period from February 28, 2001, through February 28, 2002. The dividends will be paid on March 11, 2002, to holders of record as of March 4, 2002. * On March 1, 2002, SCE made payments of past due power purchase obligations in the following approximate amounts: $1.1 billion to qualifying facilities (QFs), $875 million to the California Power Exchange (PX), $99 million to the California Independent System Operator, and $96 million to energy service providers for PX energy credits. SCE also paid $7 million to municipal power suppliers in a settlement of former power supply arrangements. SCE also expects to pay an additional $97 million for PX energy credits to two Enron-affiliated energy service providers upon approval of the terms of an agreement in the Enron bankruptcy proceedings. After making the above-described payments, SCE will have no material, undisputed obligations that are past due or in default. SCE has entered into an agreement with the California Department of Water Resources to pay in installments through July 1, 2002, for $416 million of imbalance energy. ELECTRIC LIGHTWAVE: Violates Nasdaq Continued Listing Standards --------------------------------------------------------------- Electric Lightwave, Inc. (NASDAQ: ELIX) reported financial results for the fourth quarter and year ended December 31, 2001. The following information should be read in conjunction with the company's financial statements and footnotes contained in its Form 10-K to be filed with the Securities and Exchange Commission. Revenue for 2001 totaled $226.6 million compared to $244.0 million for 2000, a decrease of 7 percent. Fourth-quarter revenue for 2001 was $50.3 million compared to $63.0 million in the prior year's fourth quarter, a decrease of 20 percent. The net loss for 2001 was $171.7 million compared to a net loss of $136.5 million in 2000. Electric Lightwave, Inc. (ELI) EBITDA for 2001 was $5.8 million, a $4.0 million increase over $1.8 million EBITDA for 2000. ELI fourth-quarter 2001 EBITDA was $.6 million, a $4.5 million decrease from $5.1 million EBITDA for the 2000 fourth quarter. EBITDA is operating income plus depreciation and amortization. EBITDA is a measure commonly used to analyze companies on the basis of operating performance. EBITDA is not a measure of financial performance nor is it an alternative to cash flow as a measure of liquidity and may not be comparable to similarly titled measures of other companies. ELI's results for the year ended December 31, 2001 were affected by severance costs of $3.2 million and a restructuring related to exiting certain long-haul markets with an associated expense of $4.2 million and lower-than-anticipated revenue primarily due to a downturn in economic conditions that affected Internet service providers and related businesses; a decline in data services due to the expiration of a material contract; and a decrease in reciprocal compensation. ELI Class A Common Stock is currently traded on the Nasdaq National Market System, but the stock does not meet minimum bid price and market value of public float requirements for continued listing. If the stock is unable to regain compliance by May 15, 2002, the stock could be subject to delisting at that time. Guidance for 2002 for ELI is reaffirmed at: Revenue of $250.0 million; adjusted EBITDA of $22.0 million; and capital expenditures of $75.0 million, excluding the exercise of the purchase option of $110 million under the synthetic lease. Electric Lightwave, Inc. is a facilities-based competitive local exchange carrier providing Internet, data, voice and dedicated access services to communications-intensive businesses in the western United States. The company is 85 percent owned by Citizens Communications (NYSE: CZN, CZB). More information about Electric Lightwave, Inc. may be found at http://www.eli.net ENRON CORP: Court Appoints Examiner for North America Subsidiary ---------------------------------------------------------------- Judge Gonzalez finds that cause exists for the appointment of an examiner. Accordingly, Judge Gonzalez orders the United States Trustee to appoint, subject to the approval of the Court, an Examiner in Enron North America Corporation The Court further directs that the Examiner is to prepare a report regarding the issues concerning Enron North America's continued participation in the Cash Management System. "The Examiner is also directed to participate in both the Cash Approval and Risk Assessment Committees," Judge Gonzalez rules. Moreover, the Court emphasizes that the Examiner shall perform other tasks that may be agreed upon or recommended by the parties and approved by the Court. "The Examiner shall also engage in such other activities as the Court may authorize or direct," Judge Gonzalez adds. (Enron Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., 609/392-0900) * * * As previously reported, Continental Casualty Company, National Fire Insurance Company and Federal Insurance Company -- as well as certain other sureties -- issued various surety bonds to Enron North America Corporation and Enron Natural Gas Marketing Corporation prior to the Petition Date. David S. Tannenbaum, Esq., at Duane Morris LLP, in New York, told the Court that the face amount of the bonds issued by the Sureties on behalf of Enron Natural Gas is over $1,200,000,000. According to Mr. Tannenbaum, Enron Corporation guaranteed the obligations of Enron Natural Gas and Enron North America pursuant to certain General Agreements of Indemnity with the Sureties. Mr. Tannenbaum said that Enron Natural Gas and the American Public Energy Agency entered into a gas purchase agreement that calls for Enron Natural Gas to supply natural gas directly to various delivery points on behalf of American Public's customers from April 1999 to April 2011. American Public paid 100% of the contract price -- $300,000,000 -- to Enron Natural Gas. Accordingly, the Sureties issued bonds on behalf of Enron Natural Gas and in favor of American Public. But then, Mr. Tannenbaum noted, Enron Natural Gas defaulted on its obligations under the Gas Purchase Agreement. This led American Public to terminate the Gas Purchase Agreement and make a demand on the Sureties for a "Termination Payment" in the amount of $251,755,201 by January 16, 2002. Thus, Mr. Tannenbaum said, Federal Insurance paid $126,000,000 to American Public on January 16, 2002 -- representing its 50% allocation of the Termination Payment. The other half was paid by American Home Assurance Company, Mr. Tannenbaum explains. As a result of Federal Insurance's payment, Mr. Tannenbaum asserts that the Sureties hold fixed, liquidated and non- contingent claims against Enron Natural Gas in the corresponding amount of $126,000,000. Mr. Tannenbaum reminded the Court that the Sureties also previously issued bonds on behalf of Enron Natural Gas in favor of Mahonia Natural Gas Limited, which relate to certain oil and natural gas forward sales contracts. All in all, Mr. Tannenbaum informed Judge Gonzales, the Sureties currently hold: (i) fixed, liquidated and non-contingent claims against Enron Corporation in excess of $252,000,000 as a result of the payments on the American Public and other miscellaneous bonds; and (ii) contingent claims against Enron Corporation in excess of $2,000,000,000 as a result of the issuance of the Mahonia bonds. Mr. Tannenbaum pointed out that Enron Natural Gas allegedly has limited assets of $79,000 and limited creditors. All funds which Enron Natural Gas received pre-petition were allegedly "upstreamed" Enron North America, Mr. Tannenbaum reported. Considering the Sureties' fixed, liquidated, unsecured claims against Enron Natural Gas, Mr. Tannenbaum asserted that the Court should appoint an examiner. Mr. Tannenbaum added that the immense disparity between Enron Natural Gas' stated assets of $79,000 and its liabilities of $1,300,000,000 is in itself noteworthy. FEDERAL-MOGUL: Court Appoints Prof. Francis McGovern as Mediator ---------------------------------------------------------------- The United States Bankruptcy Court for the District of Delaware approves the joint motion of Federal-Mogul Corporation, its debtor-affiliates and the Official Committee of Asbestos Claimants to appoint Professor Francis McGovern as Mediator. The Court directs that Prof. McGovern report back to the Court on the status of the mediation process. At the movants' behest, the mediator will report to the District Court and Bankruptcy Court on the status of mediation but in no event will the mediator disclose the details of any settlement discussions. (Federal-Mogul Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 609/392-0900) FINANCIAL ASSET: Fitch Junks 1997-NAMC Class B Certificates ----------------------------------------------------------- Fitch Ratings lowers its ratings of the following Financial Asset Securitization Inc., mortgage pass-through certificates: --1997-NAMC2, class B5 ($519,842 outstanding), rated 'B' is downgraded to 'CCC'. In addition, Fitch places the following class on Rating Watch Negative: --1997-NAMC2, class B4 ($977,303 outstanding), rated 'BB'. The action is the result of a review of the level of losses incurred to date and the current high delinquencies relative to the applicable credit support levels. As of the Feb. 25, 2002 distribution, FASI 1997-NAMC2 remittance information indicates that 7.51% of the pool is over 90 days delinquent, and cumulative losses are $686,187 or 0.31% of the initial pool. class B4 currently has 1.69% of credit support, and class B5 currently has 0.05% of credit support remaining. FLAG TELECOM: Taps Credit Suisse & Blackstone as Fin'l Advisors --------------------------------------------------------------- FLAG Telecom (Nasdaq: FTHL; LSE: FTL), a leading global network services provider and independent carriers' carrier, announced that it has retained both Credit Suisse First Boston (CSFB), a leading global investment bank, and The Blackstone Group, a leading global investment and advisory firm, as strategic and financial advisors. Both firms will advise FLAG Telecom on financial and strategic alternatives for the long-term development of the company. Andres Bande, FLAG Telecom's Chairman and CEO said, "FLAG Telecom is bringing in these advisors to assist us in the review of our business and the evaluation of the most beneficial path for FLAG Telecom's future, including possible restructuring of our indebtedness, identifying funding opportunities and working with potential strategic partners. We believe the time is right for CSFB and Blackstone to work with us to facilitate the consideration of all alternatives for the future that best suit FLAG Telecom and it's stakeholders." FLAG Telecom is a leading global network services provider and independent carriers' carrier providing an innovative range of products and services to the international carrier community, ASPs and ISPs across an international network platform designed to support the next generation of IP over optical data networks. FLAG Telecom has the following cable systems in operation or under development: FLAG Europe-Asia, FLAG Atlantic-1 and FLAG North Asian Loop. Leveraging this unique network, FLAG Telecom's Network Services business markets a range of managed bandwidth and value added services targeted at carriers, ISPs, and ASPs worldwide. Principal shareholders are: Verizon Communications Inc., Dallah Albaraka Group (Saudi Arabia) and Tyco International Ltd. Recent news releases and information are on FLAG Telecom's Web site at http://www.flagtelecom.com FLORSHEIM GROUP: Gains Access to $75 Million DIP Credit Facility ---------------------------------------------------------------- Florsheim Group Inc., (OTCBB: FLSCOB) announced that it has received interim approval of the debtor-in-possession (DIP) credit facility from the U.S. Bankruptcy Court in connections with the Company's previously announced filing under Chapter 11 of the U.S. Bankruptcy Code. The new agreement provides for a $75 million revolving credit facility and was entered into with the Company's existing bank group, which is led by BT Commercial Corporation. The DIP credit facility will be used to maintain normal business operations, including payment of employee wages and payments to suppliers, vendors and other business partners for goods and services provided on or after March 4, 2002. Florsheim also announced that it has received notice from the New York Stock Exchange of the suspension of trading on the Exchange of the Company's 12.75% Senior Notes due 2002 (FLSC 02), as a result of the Company's filing. Florsheim Group Inc. designs, markets, and sources a diverse and extensive range of products in the middle to upper price range of the men's quality footwear market. Florsheim distributes its products in more than 6,000 department stores and specialty store locations worldwide, through company-operated specialty and outlet stores and through licensed stores worldwide. According to DebtTraders, Florsheim Group Inc.'s 12.750% bonds due 2002 (FLSC1) are trading between 21 and 22. See http://www.debttraders.com/price.cfm?dt_sec_ticker=FLSC1for real-time bond pricing. FOAMEX LP: S&P Ratchets Corporate Credit Rating Up to 'B+' ---------------------------------------------------------- Standard & Poor's on March 7, 2002, raised its corporate credit rating on Foamex L.P. to B+. At the same time, it assigned its 'BB-' rating to the company's proposed $125 million senior secured revolving credit facility and new term loan E, which are add-ons to the existing credit facility. The ratings on the company's existing bank loans were raised to 'BB-' from 'B'. In addition, Standard & Poor's assigned its 'B' rating to Foamex's proposed $200 million senior secured notes due 2009 and raised its rating on the existing senior subordinated notes to 'B-' from 'CCC+'. Foamex L.P., a wholly owned subsidiary of Foamex International, based in Linwood, Pa., is the leading domestic producer and distributor of polyurethane foam products and has about $660 million of debt outstanding (excluding capitalized leases). The proceeds from these financings will be used to repay a portion of the indebtedness under the existing senior credit facility. The ratings recognize Foamex's improved financial profile following the proposed transactions as well as ongoing efforts to strengthen operations and reduce debt during the past few years. The rating on the company's senior secured bank credit facilities is one notch higher than the corporate credit rating to reflect the strength of the proposed collateral package, which pro forma for the proposed notes issue, will support a reduced amount of outstanding loans. The security interest provides a first priority lien on materially all of the company's tangible and intangible assets, as well as stock in the company's domestic subsidiaries, and offers reasonable prospects for full recovery of principal. Considering the value of Foamex's foam manufacturing business, it is anticipated that the company would retain value as a business enterprise, even in the event of a bankruptcy. Foamex's enterprise value was determined using an assumed EBITDA multiple, reflective of its peer group, and severely discounted future cash flows to simulate a default scenario. Under this simulated scenario, the collateral value is sufficient to fully cover the bank facility if a payment default were to occur. The rating on the company's proposed senior secured notes, which are secured by a second priority lien on essentially the same assets, is rated one notch below the corporate credit rating to reflect the disadvantaged position of these creditors in the event of a bankruptcy. The ratings reflect Foamex's average business risk profile, as the largest North American producer of flexible polyurethane foam, and a very aggressive financial profile. The company ranks among the industry leaders in the production of auto trim foam, carpet cushion, and foam for furniture and bedding applications. Foamex also maintains a strong niche technical foams business that offers more attractive margins and growth due to higher value-added applications and technological innovation. Still, the business is vulnerable to consumer spending trends and the level of activity in the housing and automotive sectors. Foamex's production economics and profit margins also are heavily dependent on raw material costs, particularly toluene diisocyanate (TDI), a naphtha derivative used to make polyurethane foam. Feedstock costs will vary with oil prices and can affect near-term profit margins, although increases can typically be passed on to customers in a timely fashion. Despite a weaker economy, but aided by falling raw material costs, management has restored operating profit margins to the low double-digit area through a series of ongoing restructuring initiatives aimed at improving operating efficiencies and promoting better operating and financial discipline at the company. Foamex remains highly leveraged, with debt as a percentage of total capital at more than 100% and total debt (adjusted to capitalize operating leases) to EBITDA near 5 times. Management has indicated that free cash flow will continue to be applied to debt reduction until further improvement is achieved. EBITDA interest coverage is about 2x, an acceptable level for the ratings. The company's new financing transactions, if completed as proposed, will substantially improve financial flexibility through the extension of debt maturities and increased availability under the new revolver. Outlook Ratings are supported by an improving outlook for the domestic economy, recent initiatives to improve operating efficiency, and management's commitment to improve the financial profile. Additional debt reduction over the next few years, along with modest operating gains, could lead to a further strengthening of credit protection measures. FRESH AMERICA: Currently Working on Credit Facility Refinancing --------------------------------------------------------------- Fresh America Corp. (OTCBB:FRES), a food distribution management company, announced that it has received an extension to the maturity date of its senior credit facility to January 2, 2003 and extensions to the maturity dates of its unsecured senior term debt to January 3, 2003. The Company's balance of aggregate senior term debt is $7.3 million, as compared to $18.7 million at December 2000. The Company is currently working on refinancing the senior credit facility which has a current outstanding balance of $4.1 million. In addition to the 61% reduction in senior term debt over the last year, during September of 2001, North Texas Opportunity Fund invested $5 million of new capital in the Company for a 50% equity position on a fully-diluted basis and John Hancock and its related entities converted $20 million of subordinate debt, $5 million of preferred stock and approximately $2 million of accrued interest and fees for $2.7 million of preferred stock, which represents a 27% equity position in the Company on a fully-diluted basis. Darren Miles, President and CEO commented, "We are pleased to have finalized the extensions to the maturity dates of our senior term debt through 2003. This allows the Company to focus on the refinance of our senior credit facility and our 2002 initiatives designed to enhance profitability and build value for our shareholders." Fresh America is an integrated food distribution management company that operates facilities and offices located in Dallas and Houston, Texas; Atlanta, Georgia; Scranton and Wilkes-Barre, Pennsylvania; Richmond, Indiana; Chicago, Illinois; and Norwalk and Walnut Creek/Visalia, California. GLOBAL CROSSING: Court Approves Stipulation with JP Morgan ---------------------------------------------------------- Global Crossing Ltd., and its debtor-affiliates sought and obtained Court approval of a stipulation with JP Morgan Chase Bank -- administrative agent for the senior secured lenders. The terms of the stipulation are: A. Each Debtor grants to the Administrative Agent, on behalf of the Senior Secured Lenders, a priority claim against each such Debtor to the extent that the interest of the Senior Secured Lenders in any Collateral declines in value due to the commencement or continuation of the Debtors' chapter 11 cases, subject to the fees payable to the United States Trustee and fees and expenses of professionals of the Debtors and the statutory creditors committee appointed to represent unsecured creditors in these cases in an amount not to exceed prior to the commencement of liquidation, all amounts awarded or paid pursuant to the monthly fee order and from and after the commencement of liquidation, $4,000,000 plus accrued and unpaid amounts as of the commencement of liquidation. B. The Debtors stipulate and acknowledge that the IPC Proceeds are "cash collateral" and that the Debtors cannot use such cash collateral unless either the Administrative Agent and the Senior Secured Lenders consent to such use, or the Bankruptcy Court authorizes such use. Debtors further stipulate and agree that they shall not seek authority to use the IPC Proceeds until aggregate amount of funds in all other unrestricted bank and investment accounts of the Debtors and Non-Debtor Affiliates is less than $125,000,000 and only by motion on at least 20 days notice. C. Nothing in this Stipulation or in the Cash Management Order shall constitute a waiver by the Administrative Agent or the Senior Secured Lenders right to challenge the existence, validity, extent, priority, amount, or characterization of any of the prepetition intercompany claims and the Administrative Agent and the Senior Secured Lenders hereby reserve all rights to make any such objections or challenges. (Global Crossing Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392- 0900) GLOBAL CROSSING: Will Downsize Operations & Cut Costs by $600MM --------------------------------------------------------------- Global Crossing announced it is taking bold new measures to simplify operations of Global Crossing and align its cost structure with its projected revenues in order to accelerate its efforts to become a more lean and muscular competitor. These additional cost reductions will result from further cutbacks in personnel and consolidation of real estate holdings, as well as voluntary pay cuts by Global Crossing executives. These efforts do not affect Asia Global Crossing. Friday's announcements are part of the third phase of an effort to restructure the business, begun when John Legere was appointed Chief Executive Officer of Global Crossing in October, 2001. In order to respond to the crisis that has hit the telecommunications industry, Mr. Legere immediately ordered significant expense and staff reductions. In January 2002, Global Crossing sought Chapter 11 protection as part of a plan to restructure its balance sheet and arrange for new investment in the company. "We're taking these significant actions on top of the decisions already implemented, and in parallel with our ongoing restructuring process," Mr. Legere said. "Not only are we committed to delivering a healthy balance sheet, we are on a clear path to becoming the world's most cost efficient and globally competitive data communications service provider. We have the network, technology and customer base in place -- and now we will develop an athletic organization to leverage our existing strengths. At the end of the restructuring process, we will emerge a lean, tightly integrated organization with world-class productivity and an ability to quickly scale up as demand increases." Mr. Legere added, "As we continue to improve our cost structure and operating efficiencies, we become increasingly attractive to strategic investors, financial investors and to our customers -- who will benefit from this transformation as we become more efficient and service delivery improves." Mr. Legere stated that an important attribute of the new business model is to plan for slower growth in new revenues and customers. Resources will be focused on ensuring existing customers are satisfied. "Even during these challenging last few months, we have steadily continued to serve nearly 100,000 customers around the world. Those customers are our number one priority, and we're allocating our resources to satisfy their needs, even if that means sacrificing new customer growth." Efficiency Measures Global Crossing is implementing measures designed to improve its cost structure in a tough economic environment. These actions include: -- A previously announced voluntary staff reduction of approximately 800 employees, effective Friday (March 8, 2002); -- A further staff reduction of up to 1,600 employees, the majority of whom will come from administration and sales; -- Salary reductions among senior leadership and selected managers; -- Real estate consolidations rendering expected annual savings of approximately $150 million through the closure of 71 offices totaling more than 1.2 million square feet; -- A range of program cuts and narrowing of service offerings; and, -- Process improvements that both reduce costs and improve service through the ongoing deployment of automation systems and streamlined workflows. These measures are expected to reduce operating expenses from $1.5 billion in 2001 to an expected $900 million in 2002 with a projected year-end run rate of $720 million, excluding Asia Global Crossing. Capital expenditures are being dramatically reduced from $3.2 billion in 2001 to a budget of $200 million in 2002 (also for non-Asian operations). Headcount is being reduced from a high of approximately 15,000 employees at the beginning of 2001 to fewer than 6,000 employees by the end of March, when the vast majority of voluntary and involuntary separations are expected to have been completed. Mr. Legere said the staff reductions were especially difficult in the face of a vote of confidence by employees that became apparent when fewer than 10% opted for the voluntary severance program offered last week. "We deeply regret that we must make additional reductions in our staff," Mr. Legere commented. "In order to preserve as many jobs as possible, we are also reviewing salary adjustments. To start that process, and as an indication of my personal commitment to turn Global Crossing around, I have taken a 30% reduction in salary, effective immediately." Exploring Sale Of Non-Core Businesses Global Crossing also said it is considering the sale of its conferencing division and its non-core national network in the United Kingdom. These measures are designed to maximize cash and intensify focus on our core strategy of providing global data services to more than 200 of the world's top business cities. Mr. Legere said that the potential sale of the conferencing division and the non-core UK national network are the most recent in a series of initiatives related to Global Crossing's strategy to divest non-core assets. In December 2001, Global Crossing completed the $360 million sale of its IPC Trading Systems unit to an investment group led by Goldman Sachs Capital Partners 2000, an affiliate of The Goldman Sachs Group, Inc. Earlier in the year, Global Crossing announced that its Global Marine Systems division was also for sale. Global Marine is the world leader in providing submarine fiber optic cable installation and maintenance service. With a customer base that includes over 60% of the Fortune 100 companies, the conferencing unit is a leader in its market. Efforts to re-establish this division as an independent operating unit are already well underway, making the business fundamentally more flexible and efficient, as well as a more attractive prospect for either strategic or financial buyers. Global Crossing acquired the conferencing unit in 1999 as part of the acquisition of Frontier Corporation. The conferencing division offers a portfolio of state-of-the-art conferencing services including video, audio, and web conferencing. Mr. Legere said Global Crossing will also consider actively marketing the non-core portions of the national network services business it acquired as part of the acquisition of Racal Telecom in 1999. The UK network, which includes approximately 8,000 route kilometers of fiber and reaches more than 2,000 cities and towns, delivers managed data services to government and commercial customers. Global Crossing would retain all core UK assets essential to its strategy as a global data communications service provider. "In all cases, when talking with potential investors, we will encourage them to consider an ongoing relationship with our organization," Mr. Legere added. "When we sold IPC Trading Systems, we retained our relationship as a preferred global network services provider. We intend to do the same as part of possible negotiations in these two new cases. Our network reach, capacity and reliability are still integral to the success of these businesses, and while we believe both the UK national network and the conferencing division are attractive investments independently, our in-place network access will continue to add value." Organizational Realignments In concert with these efforts to further focus the organization, Mr. Legere also announced a redeployment of certain members of Global Crossing's senior leadership team. Anthony Christie, senior vice president of product management, will take on the additional responsibility for developing Global Crossing's conferencing offerings as a self-sufficient business, preparing the business to make a greater ongoing revenue contribution or for a potential sale. Mr. Christie will continue to report to Carl Grivner, COO. Chris Nash, senior vice president of corporate development, will continue to work with the growing number of potential investors interested in acquiring Global Crossing, as well as managing the potential sale of portions of Global Crossing's businesses. Jose Antonio Rios, currently the president of Latin America and the Caribbean operations, will also now manage all European operations. Joe Perrone, executive vice president of finance, will continue to focus on restructuring efforts. To enable him to do so, administrative responsibilities including administration of offices, travel, real estate and vendor management will be distributed to other executives. John Comparin, executive vice president of human resources, will add to his present duties office administration and travel. Dan Wagner, the former head of Global Crossing's European operations, will become senior vice president of information technology, real estate, procurement and vendor management. Mr. Wagner will report to Carl Grivner, COO. Global Crossing provides telecommunications solutions over the world's first integrated global IP-based network, which reaches 27 countries and more than 200 major cities around the globe. Global Crossing serves many of the world's largest corporations, providing a full range of managed data and voice products and services. Global Crossing operates throughout the Americas and Europe, and provides services in Asia through its subsidiary, Asia Global Crossing. On January 28, 2002, certain companies in the Global Crossing Group (excluding Asia Global Crossing and its subsidiaries) commenced Chapter 11 cases in the United States Bankruptcy Court for the Southern District of New York and coordinated proceedings in the Supreme Court of Bermuda. Please visit http://www.globalcrossing.comor http://www.asiaglobalcrossing.comfor more information about Global Crossing and Asia Global Crossing. DebtTraders reports that Global Crossing Holdings Ltd.'s 9.625% bonds due 2008 (GBLX3) are trading between 3 and 4. See http://www.debttraders.com/price.cfm?dt_sec_ticker=GBLX3for real-time bond pricing. GLOBIX CORP: Seeks Okay to Engage Innisfree as Noticing Agent ------------------------------------------------------------- Globix and its debtor-subsidiaries seek to appoint Innisfree M&A Incorporated as their Noticing Agent and ask the U.S. Bankruptcy Court to authorize the appointment. The Debtors have outstanding public securities and are not aware of the number of beneficial holders of the Notes. Many of these beneficial holders hold the Public Securities in "street name" through a bank, broker, agent, proxy or other nominee. The successful dissemination of notices to the beneficial owners of the Public Securities will require coordination with the Nominees, primarily to ensure that these entities properly forward notices and other material to their customers. The Debtors believe that Innisfree is well-suited to assist the Debtors with this task. Innisfree is a proxy solicitation and investor relations firm, whose employees have significant experience advising large, publicly-traded companies in matters relating to communications with, and notices to, security holders, assistance with plan solicitations, and the tabulation of ballots with respect to chapter 11 plans. As Noticing Agent, the Debtors expect Innisfree to: a) work with the Debtors to request appropriate information from indenture trustees, transfer agents, and the Depository Trust Company; b) mail various documents to creditors and holders of record of the Public Securities, including the disclosure statement; c) coordinate the distribution of documents to "street name" holders of the Public Securities by forwarding documents to the Nominee record holders of the Public Securities, who in turn will forward them to beneficial owners; d) provide soliciting and noticing advisory services, as needed, to the Debtors. The Debtors propose to pay Innisfree its customary and expenses fees. Innisfree's solicitation and noticing advisory services hourly fees are: Managing Director $325 per hour Practicing Director $250 per hour Account Executives $210 per hour Staff Assistants $150 per hour Globix Corporation, a leading full-service provider of Internet solutions to businesses, filed for chapter 11 protection on March 01, 2002. Jay Goffman, Esq. and Gregg M. Galardi, Esq. at Skadden, Arps, Slate, Meagher & Flom LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $524,149,000 in total assets and $715,681,000 in total debts. GLOBIX CORP: Court Sets Plan Confirmation Hearing for April 8 ------------------------------------------------------------- Globix Corporation (Nasdaq: GBIX) announced that the Bankruptcy Court scheduled a hearing on confirmation of its plan of reorganization for April 8, 2002. Globix also announced that the United States Bankruptcy Court for the District of Delaware approved "first day motions" that are intended to provide for the continuation of normal business operations. The court orders include several that allow Globix to continue to deal with its employees, customers, and vendors in the normal course of business. Peter Herzig, Chief Executive Officer, said, "We are very pleased with the results of [Thurs]day's proceedings. As planned, we will continue to operate in the ordinary course of business during these proceedings. Our clients will continue to receive the same superior level of quality and service they have come to expect from Globix. The filing, and rapid emergence from this proceeding, will allow us to set aside any questions regarding the financial viability of the Company and focus on developing Globix to its fullest potential as a leading provider of complex hosting services." Globix is a leading provider of advanced Internet hosting, network and applications solutions for business. Globix delivers services via its secure state-of-the-art Internet Data Centers, its high-performance global backbone and content delivery network, and its world-class technical professionals. Globix provides businesses with cutting-edge Internet resources and the ability to deploy, manage and scale mission-critical Internet operations for optimum performance and cost efficiency. GRANITE BROADCASTING: S&P Junks Rating over Possible Nonpayment --------------------------------------------------------------- On March 7, 2002, Standard & Poor's lowered its ratings on TV station owner Granite Broadcasting Corp. to 'CCC' and placed them on CreditWatch with negative implications. The actions followed the company's announcement that it may be unable to make May and June bond interest payments if the $230 million sale of San Jose, California TV station KNTV does not close in a timely fashion. The company had about $403 million in debt and $275 million of debt-like preferred stock outstanding as of December 31, 2001. Even after the station sale, Granite will still be under intense financial pressure from weak cash flow and very high debt levels. Financial risk will remain high even if Granite repays more debt with additional potential divestiture proceeds because the high-cost preferred stock turns cash-pay in October 2002. Standard & Poor's will likely resolve the CreditWatch listing either following completion of the pending station sale, or prior to the May interest payment, if the sale closing is delayed. GREATE BAY: Court Okays Sale of Advanced Casino to Bally Gaming --------------------------------------------------------------- Hollywood Casino(R) Corporation (Amex: HWD) announced that the United States Bankruptcy Court for the District of Delaware has approved the sale of Greate Bay Casino Corporation's primary asset, Advanced Casino Systems Corporation (ACSC), to Bally Gaming, Inc., a wholly owned subsidiary of Alliance Gaming Corporation (Nasdaq: ALLY). Greate Bay's sale of ACSC to Alliance Gaming is expected to close this month. Pursuant to Greate Bay's plan of reorganization, Hollywood expects to receive approximately $11 million - $13 million of the proceeds from such sale. As a result of the schedule established by the Bankruptcy Court at a hearing Wednesday last week, it is Hollywood's current expectation that the plan of reorganization will be consummated in May of 2002. The sale proceeds will be received directly by HWCC-Holdings, Inc., a subsidiary of Hollywood that is not restricted by any of Hollywood's outstanding debt agreements. As a result, these funds will be available to Hollywood for any corporate purpose, including making additional capital contributions to its Hollywood Casino Shreveport subsidiary. Hollywood Casino Corporation owns and operates distinctive Hollywood-themed casino entertainment facilities under the service mark Hollywood Casino(R) in Aurora, Illinois, Tunica, Mississippi and Shreveport, Louisiana. HAYES LEMMERZ: Wants to Assume Management Severance Agreements -------------------------------------------------------------- Hayes Lemmerz International, Inc., and its debtor-affiliates ask the Court for authorization to assume senior management severance agreements with: * John Salvette, Vice President - Business Development, * Giancarlo Dallera, Vice President - European Cast Wheels, and * Patrick B. Carey, the Debtors' General Counsel. According to Grenville R. Day, Esq., at Skadden, Arps, Slate, Meagher & Flom in Wilmington, Delaware, in June of 2000, the Debtors entered into prepetition severance agreements with these officers. The Agreements provide that, in the event of a change in control -- including (1) a change in ownership of more than 50% of the Debtors' common stock, (2) certain changes in the composition of the Debtors' board of Directors, or (3) a reorganization, merger or consolidation -- or if the Executive is terminated without cause or terminates the agreement for a Good Reason he is entitled to receive: A. a lump-sum payment equal to 210% to 320% of the employee's base salary; B. the continuation of benefit plans, programs, practices and policies for two years; C. a lump-sum payment equal to $100,000; D. outplacement services; and E. a "gross-up" payment for all tax liabilities. The Debtors believe that the terms and conditions of the Severance Agreements are well within industry standards, and that assumption of the Severance Agreements during the Debtors' chapter 11 cases represents an important ingredient in the Debtors' overall management and employee retention policy. The Debtors have reasonably exercised sound business judgment in determining to assume each of the agreements, and accordingly the Debtors request approval to assume the Severance Agreements. (Hayes Lemmerz Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-0900) HOULIHAN'S: Seeks Open-Ended Lease Decision Period -------------------------------------------------- Due to its significant number of unexpired leases, Houlihan's Restaurants, Inc. and its debtor-affiliates' are unable to review each Lease within the statutory time limits. The Debtors ask the U.S. Bankruptcy Court for the Western District of Missouri to stretch their lease decision period through the confirmation date of a plan of reorganization. The Debtors assure the Court that they will continue to honor their post-petition obligations under the applicable Lease Agreements through confirmation of a plan of reorganization in these proceedings. Houlihan's Restaurants, Inc. filed for chapter 11 protection together with affiliates on January 23, 2002. Cynthia Dillard Parres, Esq. and Laurence M. Frazen, Esq. at Bryan, Cave LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed estimated debts and assets of more than $100 million. IBS INTERACTIVE: Continues to Incur Neg. Operating Cash Flows ------------------------------------------------------------- Digital Fusion, Inc., and its subsidiaries are an information technology consulting company helping its customers use technology to access business information and enhance the performance of their human capital. The services DFI provides are IT Support and integration; IT consulting; business application development and sales force tune-up. DFI provides its services to businesses, organizations and public sector institutions primarily in the Eastern United States. The Company was incorporated in 1995 under the name Internet Broadcasting System, Inc. and changed its name to IBS Interactive, Inc. when it went public in May 1998. During the annual 2001 shareholders meeting, the shareholders approved a name change to Digital Fusion, Inc. DFI, a Delaware corporation, has its main administrative office in Tampa, Florida, along with regional offices in New Jersey, New York, Florida and Alabama. The Company has incurred losses of $11,412,000 and $18,062,000 in 2001 and 2000, respectively and cash flow deficiencies from operations of $513,000 and $6,837,000 in 2001 and 2000, respectively. The losses and cash flow deficiencies in 2000 and prior years caused the Company to receive an unqualified opinion with an explanatory paragraph for a going concern in its December 31, 2000 consolidated financial statements. During late 2000 and early 2001, the Company restructured its operations. This included selling or shutting down unprofitable business units/division, streamlining its continuing business units and settling its debts associated with business units/division that were shut down or sold. The Company has been cash flow positive from operations for the last three quarters of 2001. At December 31, 2001, the cash and cash equivalents totaled $1,350,000. Management settled an additional $1.8 million of Legacy Liabilities subsequent to December 31, 2001 for $456,000 in scheduled payments during 2002 and 250,000 of common stock warrants. Management is continuing to negotiate with certain of its vendors to restructure the remaining Legacy Liabilities. DFI's current business units are not capital intensive (the business divisions that were capital intensive were sold). The majority of the Company's costs are employee related which will vary based upon the revenue of the Company. The Company believes that, as a result of the actions it has taken during 2001 to restructure and streamline the Company, it currently has sufficient cash to meet its funding requirements over the next year; however, the Company has experienced negative cash flows from operations and incurred large net losses in the past. The Company's current growth has been funded through internally generated funds. In order for the Company to support substantial growth, the Company may need to fund this growth through externally generated funds. The Company is reviewing its options, which include a line of credit secured by receivables, raise equity or a combination of both. There can be no assurance as to the availability or terms upon which such financing and capital might be available. IBS Interactive has turned from Internet hosting to IT consulting. The information technology (IT) company operates as Digital Fusion, having recently merged with the IT enterprise of that name. It offers services including consulting, computer network design and optimization, programming and applications development, and content management. The company's largest customer, Aetna, accounts for 20% of sales; others include Deutsche Bank and the State of Tennessee. Facing increased competition and low profit margins, IBS Interactive -- which started in the mid-1990s as an Internet service provider -- has sold its telecom, infrastructure, and Internet hosting operations. ICH CORP: U.S. Trustee Appoints Official Creditors' Committee ------------------------------------------------------------- The U.S. Trustee for the Southern District of New York appoints these creditors to serve the Official Committee of Unsecured Creditors of I.C.H. Corporation: 1. Willow Run Foods, Inc. 1006 US Route 11, P.O. Box 1350 Binghamton, New York 13902 Attn: Terry Wood, CEO/President 2. Arby's Franchise Trust. 1000 Corporate Drive Fort Lauderdale, Florida 33334 Tel: (954) 351-5679 Counsel: Paul, Weiss, Rifkind, Wharton & Garrison 1285 Avenue of the Americas New York, New York 10019-6064 Tel: (212) 373-3000 3. Web Acquisition, LLC c/o William Brusslan 21243 Ventura Blvd, Ste. 228 Woodland Hills, CA 91364 Tel: (818) 710-5811 4. Dine Restaurant Group 270 Park Avenue South New York, New York 10017 Attn: Elliot Merberg, Senior Vice President Tel: (212) 474-4811 5. RTM Operating Company 5995 Barfield Road Atlanta, GA 30328 Attn: Douglas N. Bertiam, Senior Vice President Tel: (404) 256-4900 6. The Coca-Cola Company P.O. Box 105037 Atlanta, GA 30348-5037 Attn: James M. Koelemay, Jr., General Counsel Tel: (404) 676-4242 7. Meadowbrook Meat Company 2641 Meadowbrook Road Rocky Mount, NC 27801 Attn: Jeffrey M. Kowalk, Sr., Vice President Tel: (252) 985-7280 Counsel: Adam L. Rosen, Esq. Rosen & Slome, LLP 229 Seventh Street, Suite 303 Garden City, New York 11530 Tel: (516) 747-8800 8. GMAC Commercial Mortgage/Equipment Finance c/o John Hopkins 5730 Glenridge Drive, NE, Suite 103 Atlanta, GA 30328 Tel: (404) 705-7071 Counsel: Paul M. Rosenblatt, Esq. Kilpatrick Stockton LLP 1100 Peachtree Street, Suite 2800 Atlanta, GA 30309 Tel: (404) 815-6321 9. USRP (Finance) LLP c/o Harry Davis 12240 Inwood Road #300 Dallas, Texas 75244 ICH Corporation is a holding company with two principal operating subsidiaries, Sybra and Sybra Conn., currently operating 240 Arby's restaurants located primarily in Michigan, Texas, Pennsylvania, New Jersey, Florida and Connecticut. The Company filed for chapter 11 protection on February 5, 2002. Peter D. Wolfson, Esq., at Sonnenschein Nath & Rosenthal represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it estimated debts and assets of $50 million to $100 million. IMPERIAL METALS: Creditors & Shareholders Accept CCAA Plan ---------------------------------------------------------- Imperial Metals Corporation (TSE:IPM) announce that its creditors and shareholders have strongly approved the Company's Plan of Arrangement under the Company Act of British Columbia and the Companies' Creditors Arrangement Act. Voting results were: Unsecured Secured Creditors Creditors Shareholders --------- --------- ------------ % of total creditor claims/shareholders represented 87.23% 95.52% 42.18% % voting in favour 99.99% 100% 98.98% This completes a major step in the approval process for the Plan, which was presented to the Supreme Court of British Columbia for final approval on Friday March 8, 2002. INTEGRATED HEALTH: Selling "Kansas City at North Oak" to TI-1221 ---------------------------------------------------------------- Integrated Health Services, Inc., and its debtor-affiliates, including, Integrated Health Services of Kansas City at North Oak, Inc., move the Court pursuant to sections 105(a), 363(b), (f) and (m), 365(a), (b), (f), and (k), and 1146(c) of the Bankruptcy Code, and Rules 2002, 6004(a), (c), (f) and (g), 6006, 9007 and 9014 of the Bankruptcy Rules, for entry of an order: (1) authorizing the sale of substantially all of the assets by IHS-KC to TI-1221 115th Street L.L.C., free and clear of any and all Mechanics Liens and (2) authorizing the Operations Transfer of a facility operated by IHS-KC which is known as IHS of Bridgewood to Bridgewood Manor, L.L.C. (New Operator), pursuant to a certain Operations Transfer Agreement between IHS-KC and New Operator. (3) granting Buyer the protections of a good faith purchaser under section 363(m) of the Bankruptcy Code. In consideration, at Closing, Buyer will assume all of IHS-KC's obligations under or in connection with the Loan Documents. The Debtors believe that the proposed sale and transfer of the Facility represent exercises of sound business judgment for the following reasons: (1) The Facility is of no value to the estates because IHS-KC's indebtedness to Finova substantially exceeds the value of the Facility. Specifically, IHS-KC is bound by a certain Loan Agreement with FINOVA. In addition, the Facility is encumbered by an Assignment of Leases, Rents, Issues and Profits. Furthermore, the Facility is encumbered by a certain Deed of Trust and associated Security Agreement. The Deed of Trust secures an indebtedness in the principal sum of $4,200,000. The indebtedness secured by the Deed of Trust includes an indebtedness evidenced by a certain Promissory Note in favor of FINOVA, in the original principal sum of $3,953,521.38. The amount which is currently due and owing on the Note is $3,748,074, and is a lien in that amount on substantially all of the assets of IHS-KC. The facility is valued at $1,192,991.00 based upon the Debtors' valuation of the Facility utilizing a cash flow analysis. Therefore, the outstanding balance which is due on the Note exceeds the value of the Facility by $2,555,083.00. (2) The Facility is unprofitable. The Facility's earnings before taxes, depreciation and amortization (EBTDA), as of December, 2001, was negative $348,633. Moreover, its cash flow (EBTDA minus CapEx) for the same period was negative $461,133. In December 2001, of the Facility's 180 beds, only 103 were occupied, and the 66% census (or occupancy rate) was approximately 15% below the industry average for that period. (3) The Facility is suitable for use only as a skilled nursing facility. Accordingly, the Debtors believe that if the Facility was marketed, no offer exceeding the Facility's value as set forth above would be submitted. Based upon the Facility's dismal economic performance, the unlikelihood of a turnaround in the near term, IHS-KC's outstanding secured indebtedness, and the Facility's limited utility, IHS-KC agreed, in principle, to sell the Facility to Buyer. The Transfer Agreement The Transfer Agreement governs the transition of the Facility to New Operator in accordance with applicable state and federal law. The Transfer Agreement provides for: (1) the transfer to New Operator of all of Transferor's accounts receivable which have been generated from the operation of the Facility, all resident lists and records (to the extent transferable under applicable law), and originals or copies of all of Transferor's books and records; (2) the transfer of Resident Trust Funds; (3) the employment of Transferor's employees; (4) the disposition of unpaid accounts receivable; (5) access to the Transferor's records; (6) the assumption and assignment of vendor, service and other agreements to which Transferor or IHS is a party, and New Operator's exercise of the Transferor's right to purchase equipment located at the Facility which is subject to a lease; New Operator's use of leased computer or other equipment; and the preparation and filing by the Transferor of Medicare and Medicaid cost reports. The Transfer Agreement grants New Operator the option of assuming the Transferor's Medicare provider number and the Medicare Provider Agreement and the Medicaid Provider Agreement. The New Operator has elected to accept an assignment of the Transferor's Medicare Provider Agreement, and the United States has calculated that no Cure Payment is required. As of the date of this Motion, New Operator is considering its options with respect to the Medicaid Provider Agreement. New Operator assumes all risk arising out of failure to obtain new Medicare and/or Medicaid provider numbers or agreements with respect to the Facility. New Operator has agreed not to discharge or cause the discharge of any Medicare or Medicaid beneficiaries who are residents or patients of the Facility immediately prior to the Effective Time by reason of New Operator's inability to bill Medicare or Medicaid with respect to such residents or patients. New Operator further agrees to indemnify Transferor and IHS from and against all damages, claims, losses, etc. which arise out of New Operator's failure to accept assignment of the Medicare and/or Medicaid Provider numbers or agreements. Medicare Settlement Agreement The Medicare Stipulation provides for the Debtors' assumption and assignment of the Medicare Provider Agreement to the New Operator. No Cure Payment is required, and all claims under the Medicare Provider Agreement that CMS has against Debtors and/or New Operator for monetary liability arising under the Medicare Provider Agreement before the Effective Date are satisfied, discharged and released upon the Effective Date. The Debtors submit that an auction of the Facility is not required. The Debtors believe that if the Facility is auctioned, bids, if any, would not exceed the $1,192,991.00 value of the Facility. Furthermore, if IHS-KC sold the Facility for that price, its estate would be exposed to Finova's secured claim in that amount, and Finova's $2,555,083 general unsecured deficiency claim. Moreover, during the time required to notice and conduct an auction, the Facility's losses will continue to mount while its going value will continue to decrease. Accordingly, the Debtors submit that conducting a public auction is not only a waste of time and estate assets, but may reduce the distribution to the general unsecured creditors in the chapter 11 cases. Assumption and Assignment of Executory Contracts In accordance with the terms of the Transfer Agreement, New Operator must, within 10 days following the Execution Date, identify those Operating Contracts for which it seeks to take assignment. To the extent that the Debtor's assumption of any Operating Contract gives rise to a cure obligation pursuant to section 365(b) of the Bankruptcy Code, New Operator shall be responsible for the satisfaction of such cure obligation. (Integrated Health Bankruptcy News, Issue No. 30; Bankruptcy Creditors' Service, Inc., 609/392-0900) JOY GLOBAL: S&P Assigns B+ Rating to $200MM Senior Sub. Notes ------------------------------------------------------------- On March 4, 2002, Standard & Poor's assigned its 'B+' rating to Joy Global Inc.'s new $200 million senior subordinated notes due 2012, issued under Rule 144A. At the same time, Standard & Poor's affirmed its 'BB' long-term corporate credit rating on the Milwaukee, Wisconsin-based Joy, the world's leading producer of both underground and surface mining equipment. Proceeds from the new debt offering will be used to refinance existing debt. The ratings on Joy continue to reflect the company's entrenched position in the highly cyclical mining machinery market, offset by a moderately aggressive financial profile. Through its P&H Mining Equipment and Joy Mining Machinery divisions, the company manufactures electric mining shovels, draglines, blast hole drills, and complete longwall and continuous mining systems. Demand for new equipment can vary sharply; it is tied to capital expenditure programs for production of coal, copper, iron ore, and other metals and minerals. Demand for new surface mining equipment remains depressed, reflecting very soft commodity prices. Moreover, pricing on certain types of surface mining machines can be very intense, contributing to margin compression and volatile results. However, a significant portion of the company's revenues comes from the relatively stable aftermarket for parts and service, which somewhat improves cash flow stability. There are very few equipment suppliers and Joy enjoys substantial market shares for its products in the new machines and aftermarket parts side of the business. Joy's capital structure is moderately leveraged, with total debt to EBITDA around 2.3 times and interest coverage around 3.1x for the year ended Oct. 31, 2001. In the future, total debt to EBITDA is expected to average 2.5x-3.0x and interest coverage is expected to average 3.5x-4.0x. Funds from operations to total debt should average 25%. Although, Joy is expected to remain within expected credit protection levels, measures can be expected to vary widely due to very volatile end-market demand. To help offset wide swings in financial performance, management continues to focus on the more stable aftermarket parts business. Acquisition activity is expected to be modest in the near term, with possible small niche product line or parts and service purchases. Outlook Relatively stable aftermarket demand is expected to help mitigate cash flow declines during downturns in demand for new machines. An expected moderately aggressive financial profile will restrict upside ratings potential. * * * Joy Global is the Reorganized Debtor that emerged from Harnischfeger Industries, Inc., et al.'s chapter 11 restructuring. KAISER ALUMINUM: Look for Schedules & Statements in Mid-June ------------------------------------------------------------ Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger in Wilmington, Delaware, informs the Court that for numerous reasons, Kaiser Aluminum Corporation and its debtor-affiliates were not able to assemble, prior to the petition date, all of the information necessary to complete and file comprehensive Schedules of Assets and Liabilities and Statements of Financial Affairs as required by 11 U.S.C. Sec. 521(1). Some of the reasons are: A. the substantial size and scope of the Debtors' businesses; B. the complexity of the debtors' financial affairs; C. the limited staffing available to perform the required internal review of the Debtors' accounts and affairs, to make sure that information submitted by each of the remote locations is complete and is prepared on a consistent basis and to combine the separate information into a complete and cohesive form; D. the Debtors' utilization of decentralized accounting systems since the operation of the Debtors' four business units are unique from each other and use separate accounting information systems; E. the necessity of the Debtors' limited financial, accounting and legal staff also meet numerous, ongoing reporting obligations as public companies, including reporting requirements under applicable securities laws and regulations; and, F. the press of business incident to the commencement of these chapter 11 cases. Mr. DeFranceschi relates further that the Debtors have about 100,000 active vendors, 3,000 active employees and more than 100,000 other creditors. Ascertaining pertinent information, including addresses and claim amounts for each of these parties, to complete the Schedules and Statements on a Debtor-by-Debtor basis is a Herculean task. Mr. DeFranceschi indicates that the Debtors believe they can prepare and file their Schedules & Statements by June 14, 2002, and ask Judge Katz for an extension of the deadline imposed by Bankruptcy Rule 1007 and Local Rule 1007-1(d) through that date. (Kaiser Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392-0900) KMART CORP: Wayerhaeuser Demands Prompt Decision on Contracts ------------------------------------------------------------- Weyerhaeuser Company provides large-scale collection, transportation, and disposal of non-hazardous solid waste for Kmart Corporation in all fifty of the United States, Puerto Rico, Guam and the U.S. Virgin Islands -- a total of approximately 2,100 stores. Under the terms of the Contract, Richard B. Herzog Jr., at Nelson, Mullins, Riley & Scarborough LLP, relates that Weyerhaeuser has agreed to solicit and maintain contracts with waste haulers to: (a) haul away solid waste from Kmart locations at the lowest reasonable prices, (b) institute efficiency procedures for waste hauling, (c) review Hauler invoices for accuracy, (d) pay waste Haulers, and (e) provide regular accountings to Kmart regarding the Services. With respect to certain stores, Mr. Herzog states, Weyerhaeuser has also agreed to collect, haul, and deliver to a recycling site baled "old corrugated containers", which are essentially used cardboard boxes, when the area market rate provides Kmart with a credit after netting the cost of hauling, remit to Kmart all proceeds of OCC net of hauling, provide regular accountings to Kmart regarding OCC hauling and recycling, and train Kmart personnel regarding OCC. The Contract has yet to expire on January 31, 2003. According to Mr. Herzog, either Kmart or Weyerhaeuser has the option to terminate the Contract without cause and without penalty provided that a written notice will be sent to the other party. In addition, Mr. Herzog notes, either party may terminate the Contract at any time in the event of: (i) material breach by the other party, (ii) material failure of any covenant, representation, or warranty in the Contract, (iii) insolvency of either party of the institution of proceedings by or against the other party under any federal or state bankruptcy or insolvency laws, (iv) as assignment by the other party for the benefit of all or substantially all of its creditors, or (v) a cessation of operations by the other party. Mr. Herzog informs Judge Sonderby that the Contract allows Weyerhaeuser to contract with one or more subcontractors in order to fulfill its obligations related to the Services. Weyerhaeuser did just that by entering into a Solid Waste Management Services Agreement dated November 2000 with Waste Integrated Service Center Inc. Under the Subcontract, Waste Inc. assumed all of Weyerhaeuser's duties and obligations to Kmart in exchange for valuable consideration. Through Waste Inc., Mr. Herzog says, Weyerhaeuser has indirectly contracted over 200 Haulers to provide the Services. Each of the Haulers has a separate contract with Waste Inc. and the Haulers may terminate these contracts according to their terms without interference from the automatic stay. According to Mr. Herzog, Weyerhaeuser bills Kmart approximately 2,000,000 per month for the services. Mr. Herzog contends that the Court should lift the automatic stay to permit Weyerhaeuser to terminate the contract upon five days' notice based on a material breach of the Contract by Kmart. Weyerhaeuser complains that it has submitted to Kmart approximately $1,399,194 worth of pre-petition invoices for solid waste hauling services by Kmart has failed to make these payments within the 30 days required under the Contract. "This constitutes as a material breach of the Contract," Mr. Herzog asserts. In addition, Mr. Herzog tells the Court that an additional $5,000,000 related to pre-petition services has either been billed and is not yet due or has been earned but cannot be billed because of the automatic stay. "Weyerhaeuser has no reason to believe that Kmart intends to cure the existing breach and has every reason to believe that Kmart will be in breach in the amount of $6,400,000 within 60 days," Mr. Herzog says. Until Kmart's Schedules and Statements are filed, Mr. Herzog notes, Weyerhaeuser will have no idea whether Kmart is sufficiently sound to pay administrative expenses for post- petition services performed. According to Mr. Herzog, Weyerhaeuser has already suffered great harm as a result of Kmart's material breach of the Contract. "If Weyerhaeuser and its subcontractors are not allowed to terminate the Contract pursuant to the 90-day termination- without-cause provisions, Weyerhaeuser risks additional harm related to future solid waste hauling," Mr. Herzog explains. In addition, Mr. Herzog informs Judge Sonderby, that Weyerhaeuser has little or no control of Haulers who are sub- subcontractors. "Some of these Haulers have threatened to stop performing solid waste hauling for Kmart until they are paid for past services performed," Mr. Herzog reports. Furthermore, Mr. Herzog continues, if Weyerhaeuser is not allowed to terminate the Contract, it will likely be required to undertake the expensive and time-consuming task of soliciting new Haulers, negotiating with them, investigating them, and establishing new hauling services. Weyerhaeuser doubts these costs can be recouped. And because of Kmart's questionable financial strength, Mr. Herzog says, any new Haulers are likely to demand higher rates to compensate for the additional risk. "If Weyerhaeuser is obligated to compensate these new Haulers, Weyerhaeuser doubts it can pass this higher cost to Kmart," Mr. Herzog adds. But if the Court won't allow Weyerhaeuser to terminate the Contract for cause upon five days' written notice, then Weyerhaeuser asks Judge Sonderby for permission to terminate the Contract without cause upon 90 days' notice. This motion should serve as notice to Kmart of Weyerhaeuser's intent, Mr. Herzog says. In the alternative, Weyerhaeuser asserts that the Court should compel Kmart to assume or reject the Contract immediately. (Kmart Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-0900) KMART CORPORATION: Intends to Close 284 Underperforming Stores -------------------------------------------------------------- Kmart Corporation (NYSE: KM) earlier announced that it intends to close 284 under-performing stores as part of its initial Chapter 11 financial objectives review. Kmart has asked the Bankruptcy Court to give final approval of the closure of these stores at a hearing in Chicago on March 20, 2002. Kmart Corporation is a $37 billion company that serves America with more than 2,100 Kmart and Kmart Supercenter retail outlets and through its e-commerce shopping site, www.bluelight.com . DebtTraders reports that Kmart Corp.'s 9.875% bonds due 2008 (KMART18) are trading between 44.5 and 45.5. See http://www.debttraders.com/price.cfm?dt_sec_ticker=KMART18for real-time bond pricing. LTV: DEP Asks Steel Unit to Remediate 7 Sites in Southwest PA ------------------------------------------------------------- The Department of Environmental Protection (DEP) announced it has ordered LTV Steel Co. Inc. of Independence, Ohio, to address environmental liabilities at four coal mining facilities and three steel manufacturing facilities in Southwest Pennsylvania. The department's order was precipitated in part by a recent bankruptcy court order approving LTV's motion to liquidate its assets and terminate all of its business activities. "We hope LTV will address its environmental obligations at its Pennsylvania facilities to a greater extent than its liquidation plan proposes," said Charles A. Duritsa, DEP's Southwest Regional Director. "If the company chooses not to do so, DEP will petition the bankruptcy court to allocate a greater portion of LTV assets, which are not being used to address employee benefits, to satisfy the company's environmental liabilities. The department will make every effort to ensure that LTV's compliance with the orders does not interfere with LTV's funding of retiree benefits." The LTV facilities, now closed, include three underground coal mines, one coal refuse disposal area and three steel manufacturing facilities with related residual and hazardous waste disposal sites. The facilities are: Banning Mine, Rostraver and South Huntingdon townships, Westmoreland County; Clyde Mine, East Bethlehem Township, Washington County; Russellton Mine and coal refuse pile, West Deer Township, Allegheny County; Nemacolin coal refuse pile, Nemacolin, Greene County; Pittsburgh Works, Hazelwood, Allegheny County; Midland Steel Co. and East Mills Disposal Area, Midland, Beaver County; and Aliquippa Works/Black's Run and Crows Island disposal areas, Aliquippa, Beaver County. DEP's order concerning the mining sites addresses water treatment obligations at the Banning, Clyde and Russellton mines, and the Russellton and Nemacolin coal refuse piles. The order also addresses land reclamation obligations at the Nemacolin coal refuse pile. At each of the three underground mines, groundwater accumulates in the underground mine workings to form mine pools. The water is polluted with elevated acidity and dissolved metals and forms mine drainage. If allowed to rise unchecked, the pressure of these pools can cause sudden and intense breakouts of mine drainage where the pool elevation intersects the land surface and waterways. "We have come a long way in the treatment of this drainage and in cleaning up our rivers and their tributaries," DEP Director of District Mining Operations Jim Brahosky said. "Discontinuing the treatment of mine drainage at any of the mining sites would have serious, devastating effects on our waterways." In order to prevent such breakouts, LTV has continuously pumped mine water from each mine pool for several years. Collectively at the three mines, LTV pumps and treats approximately 13.5 million gallons of mine drainage daily at a cost of about $2 million a year. Under the approved liquidation plan, LTV would discontinue operating these pumping and treatment facilities after Sept. 30. It will take approximately six months following the cessation of pumping activities for the mine pools in each mine to reach the point where they will break out. DEP directed LTV to continue its pumping and treatment activities forever, or provide for the perpetual pumping and treatment of the mine pools. To achieve this, LTV needs to set aside enough money to pay for the continued operation of the pumping and treatment operations after it liquidates. The order also directs LTV to continue collection and treatment of the seeps on the Nemacolin site, to extinguish the fire in the refuse pile and to reclaim the pile. In addition to the mining sites, LTV operated three steel making facilities in the area. In November 2001, LTV submitted to DEP a cleanup plan for the Hazelwood Coke Plant and then withdrew it in order to make revisions. Consistent with LTV's liquidation plan, DEP's order directs LTV to submit a revised cleanup plan that complies with the standards set forth in the Pennsylvania Land Recycling and Remediation Standards Act (Act 2) and to implement the plan by December. The potential sale of the property is contingent upon LTV attaining an Act 2 cleanup standard. DEP's order also directs LTV to clean up its former Midland Steel and Aliquippa Works facilities and associated landfills and to meet Act 2 cleanup standards. Remediation of the LTV industrial sites is governed by Pennsylvania's Land Recycling Program. Created in 1995, Pennsylvania's Land Recycling Program has cleaned up 1,000 old industrial sites, areas where more than 25,000 Pennsylvanians now work. During Fiscal Year 2000-01 alone, 230 sites were cleaned up. Cleanups have taken place in 66 of the state's 67 counties. LOEWS CINEPLEX: Secures Open-Ended Lease Decision Period -------------------------------------------------------- After Crystal Run Company, L.P. and EklecCo, LLC, agreed to withdraw their objections, Judge Allan L. Gropper of the U.S. Bankruptcy Court for the Southern District of New York approves the motion of Loews Cineplex Entertainment Corporation and affiliated debtors to stretch their lease decision period. The Court gives the Debtors until confirmation of their chapter 11 plan to assume or reject the Unexpired Leases. Loews Cineplex Entertainment Corporation is a major motion picture theatre exhibition company with operations in North America and Europe. The Company filed for chapter 11 protection on February 15, 2001. Brad Eric Scheler, Esq., Janice MacAvoy, Esq. at Fried, Frank, Harris, Shriver & Jacobson represents the Debtors in their restructuring effort. MDC HOLDINGS: S&P Ratchets Corporate Credit Rating Up a Notch ------------------------------------------------------------- Standard & Poor's raised its corporate credit rating on MDC Holdings Inc. to double-'B'-plus from double-'B'. In addition, ratings on the company's senior notes and mixed shelf registration were raised. The outlook is revised to stable from positive. The ratings upgrade reflects the company's solid overall financial profile, including strong cash flow protection measures and modest leverage. The company's manageable inventory levels, healthy gross, and operating margins are offset by a geographic concentration in potentially weakening markets, including Colorado and California. Based in Denver, MDC Holdings primarily builds single-family detached homes for the entry-level and first time, move-up buyer under its primary brand name, Richmond American Homes. In 2001, MDC Holdings delivered 8,100 homes at an average price of $254,000 and ranked among the 10 largest builders in the U.S. The company also maintains a mortgage finance business, which captured 85% of MDC Holdings' homebuyers in 2001 (up 400 basis points from 2000). Currently the largest homebuilder in Colorado, MDC Holdings has focused on leveraging this strong competitive position in its core markets to expanding market share and increasing profitability in Phoenix, California, and northern Virginia markets. The improved market positions and management's emphasis on controlling costs during the recently strong housing cycle have helped boost gross and operating margins to above 20% and 10%, respectively. While the limited geographic diversity could result in more volatile deliveries (the Colorado and Arizona markets still represent 61% of deliveries), management's prudent land inventory strategy (the three-year supply is approximately two-thirds owned with the rest optioned) and historically solid operating margins are expected to buffer any potential negative impact to operating margins from slowing sales. MDC Holdings' financial profile has strengthened considerably over the past five years. The company has consistently improved debt protection measures and lowered leverage while profitably expanding its sales. Leverage, not considering cash balances, remains at a very modest level in the mid-30% range, and the debt maturity schedule is very manageable. Maturities include a mortgage warehouse facility maturing in 2003 ($100 million outstanding at year-end), an unsecured credit facility maturing in 2004 ($0 million outstanding with $450 million capacity), and a $175 million unsecured note maturing in 2008. Further, MDC Holdings doesn't engage in joint ventures, sale-leaseback financings, or other off-balance-sheet financings. The combined impact of lower leverage, favorable interest rates, and strong selling price improvement has resulted in solid debt coverage measures, with EBITDA interest coverage measures currently in excess of 10 times. These measures will undoubtedly contract as the housing market slows but should remain comfortably in excess of 5x. Outlook: Stable MDC Holdings' has achieved solid top- and bottom-line growth during the recent strong housing cycle, which has bolstered the company's healthy operating margins and solid financial profile. It is assumed that a softening in housing demand in 2002 will eventually weigh on currently robust operating margins and thus financial measures. However, Standard & Poor's expects MDC Holdings to maintain its solid financial profile while continuing to modestly diversify its geographic concentration. Ratings Raised MDC Holdings Inc. Ratings To From Corporate credit rating BB+ BB US$175 million 8.375% senior notes due 2008 BB+ BB *US$300 million mixed shelf registration BB+/BB- BB/B+ *Preliminary ratings MESA AIR GROUP: Sets Annual Shareholders' Meeting for April 4 ------------------------------------------------------------- The 2002 Annual Meeting of Shareholders of Mesa Air Group, Inc., a Nevada corporation, will be held at the Phoenix Airport Marriott, 1101 N. 44th Street, Phoenix, Arizona, on April 4, 2002, at 10:00 a.m., Arizona Time, for the following purposes: 1. To elect nine (9) directors to serve for a one-year term; 2. To consider a proposal introduced by a shareholder to adopt confidential shareholder voting; 3. To ratify the selection of Deloitte & Touche LLP as independent auditors for the Company; and 4. To transact such other business as may properly come before the meeting or any postponement(s) or adjournment(s) thereof. The Board of Directors has fixed the close of business on February 28, 2002, as the record date for the determination of shareholders entitled to notice of and to vote at the meeting or any postponement or adjournment thereof. Mesa Air Group is finally taxiing off into profitability after being grounded with three years of flat sales and losses. The company, which owns three US regional carriers, is adding regional jets to its fleet while cutting back on unprofitable turboprops. Mesa Air serves more than 140 North American cities in the US (in 36 states and the District of Columbia), Canada, and Mexico. One of the firm's regional carriers, Mesa Airlines, operates as America West Express in the US Southwest and as US Airways Express in the East and Midwest under code-sharing arrangements. Mesa Air Group's other carriers, Air Midwest and CCAIR, operate as US Airways Express. The group's code-sharing affiliations account for 95% of sales. At June 30, 2001, the company reported a working capital deficit of about $25 million. MUTUAL RISK: Looks to Greenhill for Help in Fin'l Restructuring --------------------------------------------------------------- Mutual Risk Management Ltd. (NYSE:MM) announced that it has signed a definitive agreement with The BISYS Group Inc., for the sale of its fund administration business, Hemisphere Management Ltd. Pursuant to the agreement the Company expects to receive cash proceeds from the sale of approximately $110 million and to report a gain on the sale of approximately $100 million after- tax. Completion of the transaction is subject to regulatory approval and other usual terms and conditions. The proceeds of the sale will be used to repay indebtedness and the Company's banks and debenture holders have approved the transaction. Mutual Risk also announced that it has retained Greenhill & Co., LLC, an independent global merchant banking firm, to assist in developing a restructuring of its balance sheet. Mutual Risk also announced that Mr. Welford Tabor, Mr. Michael Esposito, Ms. Fiona Luck and Mr. Bruce Connell, directors of the Company designated by holders of the Company's 9-3/8% Convertible Debentures, have resigned as directors. An additional director, Mr. William Galtney, also resigned. Mutual Risk Management Ltd. provides risk management services to clients in the United States, Canada and Europe seeking alternatives to traditional commercial insurance for certain of their risk exposures, as well as financial services to offshore mutual funds and other companies. Mutual Risk Management Ltd. (MM) Common Shares are listed on the New York and Bermuda stock exchanges. NATIONAL STEEL: S&P Drops Ratings to D After Chapter 11 Filing -------------------------------------------------------------- On March 6, 2002, Standard & Poor's lowered all of its ratings on National Steel Corp. to `D'. This action followed the company's announcement that it has filed a voluntary petition to reorganize under Chapter 11 of the U.S. Bankruptcy Code. National Steel, based in Mishawaka, Indiana is the nation's fifth-largest integrated steel manufacturer. National is the 32nd steel company to file for bankruptcy protection since 1997, highlighting the difficult industry conditions and the detrimental effect of these condition on steel company credit profiles. The recent announcement by the Bush administration of steel import tariffs of up to 30%, which are intended to help U.S. steelmakers like National, will likely take time before they produce benefits for the industry. In addition, the administration's plan does not address the retiree healthcare and pension benefits, or "legacy costs" that have rendered the cost structure of integrated steel producers noncompetitive. National has a secured $450 million debtor-in-possession credit facility to cover operating costs after the bankruptcy filing. National also plans to continue its merger discussions with U.S. Steel, as well as to seek other alternatives. DebtTraders reports that National Steel Corp.'s 8.375% bonds due 2006 (NATSTL1) are trading between 17.5 and 19.25. See http://www.debttraders.com/price.cfm?dt_sec_ticker=NATSTL1for real-time bond pricing. NATIONAL STEEL: Secures Interim Approval of $230MM DIP Financing ---------------------------------------------------------------- National Steel Corporation, Inc., (NYSE: NS) announced the court granted the Company approval to use up to $230 million of its $450 million debtor-in-possession financing on an interim basis to continue operations, pay employees, and purchase goods and services going forward during the restructuring period. National Steel had previously reached an agreement in principle for its DIP financing with the existing senior secured bank group. The final hearing on the DIP financing has been set for April 2, 2002. The Company also confirmed it had received court approval to, among other things, pay pre-petition and post-petition employee wages and salaries during its voluntary restructuring under Chapter 11. As announced March 6, 2002, to reduce its debt and to restructure its operations and balance sheet and ensure sufficient liquidity to continue to grow its business, National Steel and its wholly owned subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code. National Steel Chairman and Chief Executive Officer Hisashi Tanaka said he was pleased with the court's approval of its "first-day" orders and interim DIP financing. "We fully anticipate that the combination of DIP financing and cash flow from our businesses will provide adequate funding for our post-petition supplier and employee obligations and business investments," said Mr. Tanaka. "Our customers have expressed their support of our action and pledged their commitment to us as a valued supplier. Similarly, our major vendors have expressed a willingness to continue to do business with us on normal terms going forward," Mr. Tanaka said. Employee wages and salaries will continue as before. All suppliers will be paid on normal terms for goods furnished and services provided after the filing date. The Chapter 11 petitions were filed in the U.S. Bankruptcy Court for the Northern District of Illinois in Chicago. Headquartered in Mishawaka, Indiana, National Steel Corporation is one of the nation's largest producers of carbon flat-rolled steel products, with annual shipments of approximately six million tons. National Steel employs approximately 8,400 employees. For more information about the company, its products and its facilities, please visit the National Steel's Web site at http://www.nationalsteel.com NETIA HOLDINGS: Lays-Out Information Re Debt Restructuring Terms ---------------------------------------------------------------- In response to queries from investors, Netia Holdings S.A. (Nasdaq: NTIA, WSE: NET) announces further details of the economic terms of its debt restructuring reached on March 5, 2002. These details are attached hereto as Annex A. The debt restructuring is subject to certain conditions. As announced on March 5, the Extraordinary General Meeting of Netia's shareholders scheduled for March 5 was adjourned to March 12 in order to allow the Ad Hoc Committee of Noteholders and other Noteholders to sign the agreement. Netia is the leading alternative fixed-line telecommunications provider in Poland. Netia provides a broad range of telecommunications services including voice, data and Internet- access and commercial network services. Netia's American Depositary Shares are listed on the Nasdaq National Market (NTIA), and the Company's ordinary shares are listed on the Warsaw Stock Exchange. Netia owns, operates and continues to build a state-of-the-art fiber-optic network that, as at December 31, 2001, had connected 343,802 active subscriber lines, including 97,994 business lines. Netia currently provides voice telephone services in 24 territories throughout Poland, including in six of Poland's ten largest cities. Detailed Terms for the Restructuring The Company: Netia Holdings S.A. The Issuers: BVI and BVII The Guarantor: Netia Holdings S.A. Currency Swaps: Means the JPMorgan Swaps and any currency swap and related agreements between the Company and/or its subsidiaries, on the one hand, and Merrill Lynch, on the other hand, intended to hedge the Company's obligations with respect to the Notes. JPMorgan Swaps: Means (1) the ISDA Master Agreement dated 18th January 2001 between JPMorgan and BVIII as swap counter- parties and (2) the Letter dated 10th January 2002 between JPMorgan and BVIII relating to the close out of all swap transactions then outstanding under (1) above, and (3) all credit support documents relating thereto including the Deed of Undertaking and Guarantee dated 18th January 2001 provided by South, Telekom and BVIII in favor of JPMorgan, various subordination agreements made between JPMorgan, Telekom, South, BVII and the Company dated 28th February 2001 and the revocable guarantee given by the Company in favor of JPMorgan dated 20th February 2002. Swap Creditors: Means JPMorgan and Merrill Lynch. Restructuring: The Notes (including all accrued interest) and the JPMorgan Swaps will be cancelled, terminated, exchanged and/or setoff (as appropriate) and replaced with: (i) Debt: Euro 50 million of new Senior Secured Notes due 2008 with terms as set out in Appendix 1; and (ii) Equity: the Restructuring Shares. As part of the Financial Restructuring, the existing shareholders of the Company will retain 9% of the ordinary share capital of the Company immediately following the Financial Restructuring Consummation. The existing shareholders of the Company will also be issued two and three year freely transferable and assignable Warrants with each tranche covering 7.5% of the equity outstanding immediately following the Financial Restructuring Consummation (and after the provision of 5.0% of the issued ordinary share capital of the Company immediately following the Financial Restructuring Consummation for a management share option plan). The strike price applicable to Warrants in each tranche will correspond to the volume weighted average share price for the 30 trading days beginning 31 days following the Financial Restructuring Consummation in accordance with the terms and subject to the conditions of this Term Sheet and the Restructuring Agreement to which this Term Sheet is attached. The Company will use its commercial best efforts to list the Warrants on the Warsaw Stock Exchange. (iii) Cash: Cash on hand will be retained by the Company. The escrowed funds in respect of the 2000 Notes are presently subject to a TRO obtained by the Company under Section 304 U.S. Bankruptcy Code. It is agreed that the TRO will remain in force until the later of the Financial Restructuring Consummation and the ratification of the Polish Arrangement Proceedings by the U.S. Bankruptcy Court. Prior to the Financial Restructuring Consummation, the Escrowed Funds will remain on deposit with the 2000 Notes' Trustee, State Street Bank and Trust Company. Upon the Financial Restructuring Consummation it is agreed that the Escrowed Funds will be turned over to the Company. Should for any reason the Financial Restructuring Consummation fail to occur upon the terms and subject to the conditions of this Term Sheet and the Restructuring Agreement to which this Term Sheet is attached, then the legal and/or other rights of the Company, State Street and each Consenting Noteholder to seek to set aside the TRO and/or to seek to turn over of all or part of the Escrowed Funds either to the Company, or to each Consenting Noteholder, or to holders of the 2000 Notes, respectively, shall be expressly reserved. The Debt and Equity consideration due to the Noteholders and JPMorgan will be allocated (i) as to the 91% Equity, 9.2% to JPMorgan and 81.8% to the Noteholders and (ii) as to the New Notes, 9.2% to JPMorgan (being the amount of Euro 4,600,000) and 90.8% to the Noteholders (being the amount of Euro 45,400,000). General Unsecured Obligations: All general unsecured trade creditors of the Company will remain unaffected by the proposed Restructuring and will be paid in full as such claims become due and payable. The Noteholders and the Swap Creditors will waive any claims they may otherwise have in respect to the Company Group paying all general unsecured trade creditors in connection with the Restructuring Steps. Ordinary Shares: The Company's shareholders shall be required to consent to the increase of the Company's share capital (and to the exclusion of statutory pre- emption rights within the meaning of article 433 section 2 of the Polish Commercial Companies Code of 15 September 2000) necessary to create sufficient share capital of the Company to enable ordinary shares to be allotted (i) for the purpose of implementing the Financial Restructuring and (ii) to provide for the management share option plan to be established pursuant to the proposed Financial Restructuring. The Restructuring Shares will carry pre-emption rights. Additional anti-dilution rights; subject to further discussion. Following the issue of the Restructuring Shares it is intended that the number of shares will be reduced through a reverse stock split. Structure of Transaction: The cancellation of the Notes and termination of the JPMorgan Swaps in exchange for New Notes and the Restructuring Shares will be implemented through an exchange offer undertaken as part of the Dutch Composition Proceedings and the Polish Arrangement Proceedings. Noteholder Undertakings: The Noteholders shall agree to waive all defaults arising under the Indentures pertaining to the Notes. Noteholders representing at least 95% of the total value of the Notes and JPMorgan shall enter into formal undertakings committing them to support the Financial Restructuring upon the terms and subject to the conditions specified herein and upon the terms and subject to the conditions of the Restructuring Agreement to which this Term Sheet shall be attached. The Restructuring Agreement shall contain appropriate voting undertakings from Consenting Noteholders and JPMorgan which shall ensure that if any such holder sells, assigns or otherwise conveys its respective claim, the transferee's assumption of the undertakings shall be a condition of such a sale, assignment or conveyance of those claims. In the formal undertakings, the Consenting Noteholders shall disclose their identities and holdings of each series of Notes and shall agree to co-operate with the Company in connection with the Restructuring Steps. Management & Shareholder Undertakings: The Company and its management shall take all requisite actions as may be necessary to effect the Financial Restructuring and the Restructuring Steps. Registration Requirements: One or more registration exemptions for the New Notes and the Restructuring Shares will be availed of in the US and/or the UK, failing which registration will take place in the US and/or UK as required by applicable laws. In respect of Poland, registration of the share capital increase contemplated hereunder is subject to notification and/or consent of such increase to the Polish Securities and Exchange Commission (Komisja Papierow Wartosrowych I Gield) as well as the consent of the Warsaw Stock Exchange for listing of the new issue of equity and standard Court --- registration procedure. Senior Credit Facility: Upon the Financial Restructuring Consummation, the Company will use its commercial best efforts to enter into a revolving credit facility up to Euro 50 million (as may be required) on terms which are reasonably acceptable to the Committee or its successors. The revolving credit facility will have a first priority secured position over the assets and the undertakings of those companies within the Company's group and be senior to the New Notes. Dividends: Until the Financial Restructuring Consummation, the Company will use its commercial best efforts to have the shareholders cause the Company not to pay dividends. Listings: The Company will use its commercial best efforts to retain the listing of its ordinary shares on the WSE and of its ADSs on Nasdaq and to list the New Notes on the Luxembourg Stock Exchange. Information Rights: The Company will remain subject to the periodic reporting requirements imposed by the Securities Exchange Act of 1934 and the Polish Public Trading in Securities Law of 1997. In addition, the Company proposes to produce quarterly unaudited financial statements and annual audited financial statements, and make these available to the public and to the holders of New Notes in accordance with applicable law. Observation Rights: Consenting Noteholders shall have the observation and other rights at the Supervisory and Management Board meetings of the Company set forth in the Restructuring Agreement. Employee plans: The Company will provide for a management share option plan covering 5% of the Company's fully diluted ordinary share capital immediately following the Financial Restructuring Consummation but before issuance of Warrants to the shareholders of the Company. Options granted will be priced at fair market value at the several date(s) of issuance. The Company also will provide for an appropriate cash retention plan for key employees. Terms of the key employee retention plan, including amounts of cash awards and identities of recipients, will be agreed between the current Supervisory Board and the Committee. The specific identities of share recipients, amounts of share grants, and other terms of the management share option plan shall be as determined by the Company's Supervisory Board following the Financial Restructuring Consummation. Advisory fees: All fees to the professionals incurred as part of the Financial Restructuring shall be paid by the Company in accordance with the terms of engagement agreed in writing with them prior to the Financial Restructuring Consummation. Fee arrangements not previously agreed to by the Company and by the Committee must be reviewed and agreed to by the Company provided that such fee arrangements shall be disclosed to the Committee. Share Allocation - Hypothetical Illustration: Assuming 10,000,000 of the Company's ordinary shares were outstanding immediately following the Financial Restructuring Consummation, 9,100,000 shares (91.0%) would represent Restructuring Shares, and 900,000 shares (9%) would be retained by the existing shareholders as a group. An aggregate of 526,315 additional shares (i.e., 10,000,000 divided by 0.95 minus 10,000,000) would be made available for the management share option scheme. An aggregate additional 1,857,585 shares (i.e., 10,526,315 divided by 0.85 minus 10,526,315) would be made available for the Warrants. Term Sheet for New Notes Original Aggregate Principal Amount: EUR 50 million Currency Denomination: Euro Issuer: A Dutch company in the Company's group of companies. Interest: Payable semi-annually in cash or in kind at the Company's option for up to four interest payment periods at a rate of 10% per annum if paid in cash, and 12% per annum if paid in kind. Maturity: Six years from date of issuance. Security and Guarantee: Subject to the first priority secured position of the proposed revolving credit facility, the New Notes shall be secured to the extent permitted by applicable law over the assets and undertaking of the companies in the Company's group of companies, including, for the avoidance of doubt, each of the Company, Telekom and South. The Issuer's obligations under the New Notes will be cross-guaranteed by the significant subsidiaries of the Company. Inter-creditor Arrangements: The relationship between the New Notes and the Senior Credit Facility will be regulated by an intercreditor deed, which will contain usual provisions relating to priority and enforcement. Optional Redemption: The New Notes will be subject to redemption at the option of the Issuer upon such terms to be agreed between the Company and counsel for the Committee. Mandatory Redemption: The New Notes will be mandatorily redeemable at 101% of their principal amount plus accrued interest upon a change of control. The New Notes must be redeemed at par plus accrued interest with the proceeds of asset sales. Covenants: Substantially as set out in the Indentures for the Notes, with such amendments as may be agreed between the Company and counsel for the Committee. Events of Default: Substantially as set out in the Indentures for the Notes, with such amendments as may be agreed between the Company and counsel for the Committee. Listing: Luxembourg Stock Exchange Law: State of New York DebtTraders reports that Netia Holdings SA's 13.500% bonds due 2009 (NETH09PON2) are trading between 18 and 20. See http://www.debttraders.com/price.cfm?dt_sec_ticker=NETH09PON2 for real-time bond pricing. NEVADA BOB'S: Fails to Meet TSE Continued Listing Requirements -------------------------------------------------------------- The Toronto Stock Exchange is reviewing the common shares and the 8% Redeemable Convertible Subordinated Debentures of Nevada Bob's Golf Inc. (Symbol: NBC, NBC.DB) with respect to meeting the requirements for continued listing. The company is being reviewed on an expedited basis. NORAMPAC: S&P Ups Ratings to BB+ over Good Operating Performance ---------------------------------------------------------------- Standard & Poor's, March 5 Standard & Poor's raised its ratings on Norampac Inc. to 'BB+' on March 5, 2002. The ratings on Norampac reflect its sound financial profile characterized by moderate debt levels and healthy credit measures. The ratings also reflect a below-average, yet improving, business profile that includes a good cost and market position but limited geographic and product diversity. Although prices will remain under pressure in the near term, the company has demonstrated its ability to maintain reasonable earnings and steady credit measures in the wake of both price deterioration and production downtime. Furthermore, the recent acquisition of converting facilities improves Norampac's level of forward integration and increases penetration in the U.S. where the company is slowly expanding its small market share. Sharply weaker demand in containerboard markets in 2001 has prompted industry participants to reduce output, and the resulting price declines have been less than expected. Although the sustainability of current market conditions is questionable as prices remain under pressure, Norampac's low costs and strong market position should ensure that its operating margins average about 20% through the cycle, which are appropriate for the rating category. Norampac, a joint venture created in January 1998 from the amalgamation of the containerboard operations of Domtar Inc. and Cascades Inc., is Canada's largest box producer. The company has strong customer coverage across the country and, as a result, has leading market shares in all regions. Profitability improvements resulting from the integration of both firms' respective operations have exceeded expectations. Norampac's bank loan and credit facility are rated one notch higher than the corporate credit rating because of the reasonable prospect for full recovery in the event of default. Standard & Poor's does not attribute any direct credit support to Norampac from its ownership by Domtar and Cascades. Outlook Although prices for containerboard remain under pressure from weak demand, good supply discipline across the industry should continue to moderate price deterioration. During this period, management's commitment to a moderate capital structure should result in credit measures that are healthy for the rating category. Financial Statistics Norampac will continue to generate meaningful free cash flow, and total debt to EBITDA should remain below 2.0 times in 2002, down from an aggressive 5.0x in 1998. This, coupled with total debt to capital of 35%-45%, should result in financial parameters that are healthy for the rating category. The company's narrow focus on containerboard, a commodity product subject to volatile prices, will result in cyclical cash flow protection measures. Funds from operations to total debt should continue to average a strong 40% in the near term, despite potentially weaker prices for 2002, after averaging less than 20% in 1997-1998 because of poor market conditions and higher debt levels. NTELOS INC: Revises Terms & Covenants Under Credit Agreement ------------------------------------------------------------ NTELOS Inc. (Nasdaq: NTLO) announced that the Company's $325 million senior credit facility has been amended. Specifically, the covenants defining minimum EBITDA requirements for the year 2002 have been revised, as have certain other financial covenants and terms of the agreement. "We are pleased to have this amendment in place," said James S. Quarforth, chief executive officer of NTELOS. "We had remained in compliance with all covenants under the agreement and we projected continued compliance this year with all covenants except the minimum EBITDA requirement beginning with the quarter ended March 31, 2002. Transition of the acquired PrimeCo operations caused a shift of costs planned for 2000 into 2001, straining 2001 EBITDA. This amendment recognizes these timing issues and other market conditions with a revised EBITDA covenant." The amendment resets covenant levels for trailing 12-month EBITDA in 2002 to take into account the Company's current business plan. For 2003, debt to EBITDA leverage ratios have been modified to reflect levels in line with the Company's current business plan. Since the Company has regularly exceeded minimum PCS subscriber covenant levels, these requirements have been increased -- essentially accelerated by one quarter. The amendment also calls for the partial paydown of the credit facility if the Company were to sell certain excess PCS spectrum holdings or other non-strategic assets in excess of $50 million. An amendment fee of 0.375%, or $1.2 million, has been paid to consenting lenders. The credit agreement amendment will be filed as a public document. NTELOS Inc. (Nasdaq: NTLO) is an integrated communications provider with headquarters in Waynesboro, Virginia. NTELOS provides products and services to customers in Virginia, West Virginia, Kentucky, Tennessee and North Carolina, including wireless digital PCS, dial-up Internet access, high-speed DSL (high-speed Internet access), and local and long distance telephone services. Welsh, Carson, Anderson & Stowe, a New York investment firm with $12 billion in private capital, is a leading shareholder of NTELOS. Detailed information about NTELOS is available online at http://www.ntelos.com ORIUS CORPORATION: Lenders Agree to Forbear Until March 31, 2002 ---------------------------------------------------------------- Effective February 27, 2002, Orius Corp. entered into the Sixth Amendment to Amended and Restated Credit Agreement and Forbearance Agreement to the Amended and Restated Credit Agreement, dated July 5, 2000. The Amendment extends the terms and conditions of the Fifth Amendment to Amended and Restated Credit Agreement and Forbearance Agreement from February 28, 2002 to March 31, 2002 and includes the terms and conditions for which the lenders forbear from exercising their rights under the Credit Agreement and other loan documents with respect to certain disclosed defaults. Additionally, the lenders have agreed to increase the Company's maximum outstanding letters of credit by $10 million from $20 million to $30 million. On January 31, 2002, the Company received a payment blockage notice from its senior lenders prohibiting the Company from making its scheduled interest payment on its 12.75% senior subordinated notes due 2010, which was due on February 1, 2002. The failure to make the required interest payment constitutes an event of default under the indenture relating to the notes upon the expiration of a thirty-day grace period provided in the indenture. If an event of default occurs and is continuing, the trustee or the holders of at least 25% in principal amount of the notes then outstanding may declare the principal of and accrued interest on all of the notes to be due and payable. Orius is a holding company, headquartered in West Palm Beach, FL, with operating subsidiaries engaged in the provision of telecommunications and broadband network infrastructure on a national basis. Services include the design, engineering, and installation of central office telecom equipment, premise- wiring, and cable. Willis Stein and Partners, a private equity investor, is the company's majority equity owner. OWENS CORNING: CSFB Reports Resolution of Intercreditor Issues -------------------------------------------------------------- At the Court's behest, Credit Suisse First Boston, as Agent for the Lenders under the June 26, 1997 Credit Agreement, delivered a statement to Judge Fitzgerald regarding the resolution of the Intercreditor Issues in the chapter 11 cases of Owens Corning, and its debtor-affiliates. Mark D. Collins, Esq., at Richards Layton & Finger P.A. in Wilmington, Delaware, relates that over the past five months, as anticipated in the Intercreditor Stipulation, the parties have produced and inspected extensive documents, engaged in frequent discussions, and otherwise made significant progress toward understanding the Interereditor Issues. The Bank group believes this progress was achieved in large measure because the Court would be asked to extend the Debtors' Exclusive Periods. The Banks believe it is important for the Court now to put into place a mechanism to move the parties from merely examining these issues to actually resolving them. Mr. Collins points out that the dilemma for the parties and the Court is how to resolve any potential objections to the Banks' claims against the subsidiary guarantors without the cost and delay likely to follow from all-out litigation. This concern is heightened because the Intercreditor Issues themselves have been something of a moving target. While the issues all stem from expected efforts by other Owens Corning creditors to invalidate the Banks' separate guaranty-based claims against various OC subsidiaries, no formal challenges to those claims have yet been filed, and the issues raised in discussions continue to shift and evolve. Sometimes discussions have focused on a threatened attempt to set aside the entire Owens Corning corporate structure through substantive consolidation, which would pool all assets to the detriment of the Banks and the benefit of bondholders and asbestos claimants; at other times, the parties have floated theories based on fraudulent conveyance, successor liability, or constructive trust. The Banks believe that discovery to date has confirmed that these attempts to defeat their bargained-for rights against the subsidiaries will fail. Mr. Collins submits that Owens Corning is a world-class company with a typical, well-maintained corporate structure, and discovery has surfaced no hint of impropriety, abuse of the corporate form to thwart creditors, or any other facts that might justify radically altering either the company's structure or the relative rights of its creditors. But all-out litigation to resolve these issues -- while perhaps ultimately unavoidable -- would be expensive and time-consuming. The Bank Group believes that, in the short term, the Court should focus on a related issue that has emerged as perhaps the most significant point of disagreement between the Banks and the Debtors -- the relative values to be ascribed to the various companies that gave guaranties to the Banks in connection with the 1997 credit facility. The Bank Group believes, based on its review of the Debtors' books and records, that the value of the Owens Corning subsidiary guarantors is sufficient to pay a significant portion of the Banks' claims. The Debtors, in contrast, have suggested that the subsidiaries are far less valuable than the Bank Group has maintained. Mr. Collins states that resolving this valuation issue, at least as to the key Owens Corning subsidiaries, should be a more straightforward matter than full-scale litigation of every theory the other creditor groups might concoct to challenge the Banks' claims. Doing so now will also help focus the case for resolution by: A. providing a potential basis for settlement between the Debtors and the Bank Group, B. depending on which subsidiaries are found to have the most significant value, narrowing and framing the remaining Intercreditor Issues for resolution, and C. educating the Court and the parties on the facts that will inform the resolution of such further issues and, indeed, the crafting of a confirmable plan or plans of reorganization. The Bank Group proposes that a specific schedule be put into place now for the Court to resolve any legal and factual issues found to be standing in the way of a consensual valuation of the key subsidiaries. (Owens Corning Bankruptcy News, Issue No. 28; Bankruptcy Creditors' Service, Inc., 609/392-0900) PNC Mortgage: Fitch Keeps Watch on Low-B Certificates Ratings ------------------------------------------------------------- Fitch Ratings places the following PNC Mortgage Securities Corp. mortgage pass-through certificates on Rating Watch Negative: --Series 1998-3 Group I class IB-5 'B'; --Series 1998-3 Group II class CB-5 'B'; --Series 1999-9 Group II class CB-5 'B'; --Series 1999-10 class DB-5 'B'. These actions are taken due to the high level of delinquencies in relation to the applicable credit support levels as of the Feb. 25, 2002 distribution. PACIFICARE HEALTH: Refinancing Risks Force Fitch's Downgrade ------------------------------------------------------------ Fitch Ratings has lowered PacifiCare Health Systems, Inc.'s long-term issuer, senior debt and bank loan ratings to 'BB-' from 'BB+'. The Rating Outlook has been revised from Negative to Evolving. The rating action reflects Fitch's continuing concern regarding the refinance risk associated with PacifiCare's existing debt, and reflects an update to our review now that the company is within 12 months of a major maturity. PacifiCare has approximately $768 million in outstanding debt - $680 million in bank debt due January 2003 and $88 million in senior notes due September 2003. At December 31, 2001, PacifiCare reported a debt-to-EBITDA ratio of 2.3 times. Fitch notes that the environment for debt refinancing has grown more difficult over the past several months due to the downturn in the credit cycle. In August 2001, PacifiCare's bank group extended the maturity of the credit facility from January 2002 to January 2003. While the Company indicates those relations with its bank group is positive, Fitch is concerned about the lenders' willingness to further extend the maturity of the credit facility if the Company is unable to refinance the debt. PacifiCare has put in place an equity line, which allows the company to drawdown up to $150 million through the issuance of common shares. It is also actively exploring other potential capital-raising alternatives. While the equity line does not resolve PacifiCare's refinancing issue, it does provide the company additional financial flexibility and liquidity in the short-term. The Evolving Rating Outlook reflects Fitch's belief that the rating could be upgraded or downgraded in the next 12 months depending on the success of PacifiCare's recapitalization efforts. Fitch will continue to monitor the Company's performance and refinancing efforts. Appropriate rating actions will be initiated based on the results of those efforts. The ratings continue to reflect PacifiCare's large exposure to the troubled Medicare+Choice market and operational challenges associated with the Company's movement away from capitated contracting and towards shared-risk reimbursement arrangements. The ratings also consider the company's well-established competitive position in several major markets and positive steps taken over the past one to two years to strengthen the management team. While financial performance improved in the last half of 2001, overall results continue to be lower than historical levels. Looking ahead, Fitch does anticipate improvement in financial performance in 2002 driven by results in the commercial business. Santa Ana, California based PacifiCare is a leading US managed care holding company that is publicly traded on the NASDAQ. As of December 31, 2001, the Company reported total membership of 3.5 million, total assets of $5.1 billion, and shareholders' equity of $2.0 billion. Although ancillary health insurance- related products are offered, the core managed care product portfolio consists predominantly of traditional closed-model HMO offerings. These are offered mainly to commercial accounts and government beneficiaries in nine states, with a large concentration in California. PacifiCare Health Systems, Inc. -- Senior debt rating Downgrade To 'BB-' From 'BB+'/Evolving; -- Bank Loan rating Downgrade To 'BB-'From 'BB+'/Evolving; -- Long-term rating Downgrade To 'BB-' From 'BB+'/Evolving. PACIFIC GAS: Resolves Discovery Issues in Grynberg Litigation ------------------------------------------------------------- Jack J. Grynberg filed an unsecured claim in the amount of $2,480,000,000 against the estate of Pacific Gas and Electric Company based upon allegations contained in a qui tam action, filed July 30, 1997, entitled "United States of America ex rel. Jack J. Grynberg v. Pacific Gas & Electric Co. and Pacific Gas Transmission Co." No. Civ-F-97-5668-OWW-DLB. Grynberg asserted these claims as a relator, on behalf of the United States government against both the debtor and its affiliate Pacific Gas Transmission Co. which is not a party to the PG&E or any other bankruptcy proceeding. Under the qui tam provisions of the False Claims Act, 31 U.S.C. Sec. 3729 et seq., Grynberg complained that the defendants engaged in inaccurate and improper natural gas volume measurement and wrongful heating content analysis for gas produced from federal and Native American lands. These practices resulted in undervaluation of natural gas and caused significant underreporting and underpayment of natural gas royalties to the United States government in violation of the False Claims Act and other applicable law, Grynberg accuse. Grynberg requested the Judicial Panel on Multidistrict Litigation to transfer the cases for consolidated pretrial proceedings. In October 2000, the Panel transferred the Grynberg cases for consolidated treatment to the United States District Court for the District for Wyoming (the MDL Court) before Judge William F. Downes. Grynberg's claims are joined in the MDL Litigation with similar claims asserted in other litigation by third party relators against certain of the defendants. Currently, as all of the component cases in the Multi-District Litigation are being coordinated and administrative matters conducted, all discovery in the Grynberg cases, including voluntary disclosures pursuant to Fed. R. Civ. P. 26(a) and the corresponding local rule are stayed. Shortly after the cases were consolidated in Wyoming, a large group of defendants, approximately two-thirds of the over 300 named defendants including PG&E and Pacific Gas Transmission Co (described by themselves as the Coordinated Defendants) filed a motion to dismiss on Rule 9(b) and 12(b) grounds that Grynberg's complaints failed to allege fraud with particularity. The Court denied the Coordinated Defendants' motion to dismiss holding, inter alia, that the Grynberg complaints pleaded fraud with sufficient particularity. The Coordinated Defendants have continued to conduct litigation matters in a collective manner. PG&E filed its Ex Parte Application for Order Requiring Grynberg to Produce Documents Pursuant to Federal Bankruptcy Rule 2004 without requesting a hearing on its Application. The Clerk of the Bankruptcy Court granted the Application and entered the Order in the form submitted by PG&E. Grynberg then filed a motion requesting that the Court quash the Order. Grynberg complained that the document requests proposed by PG&E were too broad. According to Grynberg, the documents requested by the Application all relate to specific paragraphs of Grynberg's Complaint against PG&E and Pacific Gas Transmission Co. in the Multi-District Litigation. All of PG&E's document requests can and should be made in the Multi-District Litigation, Grynberg told the Court. The parties subsequently reached agreement by which Grynberg will withdraw the motion and seek the permission of the United States Department of Justice and the MDL Court to release those documents and materials contained in the Sealed Materials which are responsive to the Order. The parties also agree that the Sealed Materials which are releases and provided to PG&E are subject to restrictions on disclosure and use as set forth in the Stipulated Agreement. The Stipulated Agreement provides for the following, among other things: -- Discovery Material shall be used solely in connection with proceedings in the PG&E bankruptcy case, including, by way of example, for the purposes of determining the feasibility of PG&E's Plan of Reorganization, objecting to Grynberg's claim and undertaking proceedings to estimate Grynberg's claim, and not for any other purpose. -- Discovery Material may not be disclosed to or used by persons other than employees of PG&E, the attorneys engaged in representing PG&E in its bankruptcy case and persons assisting those attorneys in the conduct of this case (including consultants and experts), and then only to the extent necessary for the Permitted Purposes. -- Control and distribution of all Discovery Material covered by this Agreement shall be the responsibility of the attorneys of record for PG&E. Attorneys for PG&E shall advise any proper person given access to any Discovery Material of the requirements of this Agreement and shall furnish such person a copy of this Agreement prior to allowing such access. (Pacific Gas Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Service, Inc., 609/392-0900) PACIFIC GAS: Annual Shareholders' Meeting Set for April 17, 2002 ---------------------------------------------------------------- The annual meetings of shareholders of PG&E Corporation and Pacific Gas and Electric Company will be held concurrently on Wednesday, April 17, 2002, at 10:00 a.m., in the Masonic Auditorium, 1111 California Street, San Francisco, California, for the purpose of considering the following matters: For PG&E Corporation and Pacific Gas and Electric Company shareholders, to elect the following nine and ten directors, respectively, to each Board for the ensuing year: David R. Andrews, Robert D. Glynn, Jr., Carl E. Reichardt, David A. Coulter, David M. Lawrence, MD, Gordon R. Smith* C. Lee Cox, Mary S. Metz, Barry Lawson Williams, and William S. Davila * Gordon R. Smith is a nominee for director of Pacific Gas and Electric Company only. For PG&E Corporation and Pacific Gas and Electric Company shareholders, to ratify each Board of Directors' appointment of Deloitte & Touche LLP as independent public accountants for 2002 for PG&E Corporation and Pacific Gas and Electric Company, For PG&E Corporation shareholders only, to act upon two management proposals described in the Joint Proxy Statement, For Pacific Gas and Electric Company shareholders only, to act upon five management proposals described in the Joint Proxy Statement, For PG&E Corporation shareholders only, to act upon proposals submitted by PG&E Corporation shareholders and described in the Joint Proxy Statement, if such proposals are properly presented at the meeting, and For PG&E Corporation and Pacific Gas and Electric Company shareholders, to transact such other business as may properly come before the meetings and any adjournments or postponements thereof. The Boards of Directors have fixed the close of business on February 19, 2002, as the record date for the purpose of determining shareholders who are entitled to receive notice of and to vote at the annual meetings. PACIFIC GAS: Files Second Amended Plan and Disclosure Statement --------------------------------------------------------------- PG&E Corporation (NYSE: PCG) and Pacific Gas and Electric Company filed their second amended plan of reorganization and disclosure statement with the U.S. Bankruptcy Court. In its February 7 ruling, the Court allowed PG&E to proceed with its plan of reorganization if it modified the plan to show how it would demonstrate at the Confirmation Hearing the basis for preempting specific laws and statutes. Consistent with the Court's ruling, the amended plan and disclosure statement eliminates the request for express preemption, instead relying on implied preemption to preempt only those laws necessary to effectuate the plan. PG&E's amended plan and disclosure statement identifies the three main economic areas where it will seek preemption -- California Public Utilities Commission laws prohibiting sale of property and assets, CPUC laws governing the issuance of debt or equity securities and CPUC laws governing affiliate transactions. In Thursday's filing, PG&E reaffirmed that the reorganized utility and the three new companies will continue to be subject to all federal, state and local public health and safety laws. PG&E is not seeking to preempt ongoing environmental and public health and safety regulations. The reorganized utility will continue to retain the thousands of existing permits and licenses related to the distribution business. The new entities will inherit the permits and licenses for the respective businesses, comply with federal, state and local laws relating to permits and licenses, and operate under the current terms and conditions. At the Confirmation Hearing, PG&E will demonstrate the economic reasons why these limited number of CPUC laws and regulations need to be preempted for a successful reorganization. "PG&E continues to believe that its plan of reorganization is the only feasible solution for making these businesses investment grade and allowing the state to get out of the power buying business," said PG&E Corporation Chairman, CEO and President Robert D. Glynn, Jr. "The hallmarks of the plan of reorganization remain paying all valid claims in full without selling assets or asking the Bankruptcy Court to raise rates or the state for a bailout." In response to concerns expressed about regulatory oversight of lands under the plan of reorganization, the amended plan and disclosure statement provide that, of the approximately 132,000 acres of lands associated with PG&E's hydroelectric generating facilities, as much as 60 percent (or approximately 78,000 acres) will be retained or ultimately reside with the reorganized utility. Only the land directly related to operating the FERC-licensed hydroelectric generating facilities ultimately will be owned by the new generating company. PG&E also announced that its plan of reorganization has received support from dozens of organizations, including the California Chamber of Commerce, International Brotherhood of Electrical Workers Local 1245, California Retailers Association, NAACP (California State Conference), Council of Asian American Business Associations, The League of California Cities Latino Caucus and the Fresno County Office of Education. The Bankruptcy Court is scheduled to hold a hearing on the amended disclosure statement on March 26, 2002. PHASE2MEDIA: SDNY Court Fixes March 19 as Claims Bar Date --------------------------------------------------------- Judge Allan L. Groper of the U.S. Bankruptcy Court for the Southern District of New York fixes March 19, 2002, as the last day for filing of proofs of claim in the chapter 11 case of Phase2Media, Inc. Each and every entity that holds a prepetition claim against the Debtor must file a written proof of such claim and must be received on or before 5:00 p.m., New York City time, on the Claims Bar Date by: Clerk of the U.S. Bankruptcy Court for the Southern District of New York Phase2Media, Inc., Case No. 01-B-14020 (ALG) The Alexander Hamilton Custom House One Bowling Green, New York, New York 10004-1408 Any person or entity failing to file their proofs of claims on or before the Claims Bar Date will be forever barred from asserting such claim against the Debtor or voting on any plan of reorganization and participating in any distribution in the Debtor's chapter 11 case. Phase2Media, Inc., an online advertising, sales and marketing company, filed for Chapter 11 protection on July 18, 2001. Harold D. Jones, Esq., at Gersten Savage & Kaplowitz, represents the Debtors in their restructuring effort. When the Company filed for protection from its creditors, it listed $18,057,000 in assets and $19,672,000 in debts. PHYCOR INC: US Trustee Appoints Unsecured Creditors Committee ------------------------------------------------------------- Carolyn S. Schwartz, the United States Trustee for Region II, appoints these creditors to serve on the Official Committee of Unsecured Creditors in the chapter 11 case of Phycor, Inc.: A. SunTrust Bank 424 Church Street, 6th Floor Nashville, TN 37219 Attn: Faye McQuiston (615) 748-4559 B. Creedon Keller-Partners c/o Bob Moore & Fred Neufeld Milbank Tweed 601 S. Figueroa Steet, 30th Floor Los Angeles, CA 90017 (213) 892-4000 C. Pyramid Trading Ltd. Partnership 111 West Jackson Blvd, Suite 2000 Chicago, IL 60604 Attn: Andrew Redleaf (312) 692-5000 D. Scott Nieboer 217 Lynwood Terrace Nashville, TN 37205 (615) 467-3501 E. Liberty View Capital Management 101 Hudson Street, Suite 3700 Jersey City, NJ 07302 Attn: K.C. Klegar (201) 369-7320 F. HRT of Roanoke, Inc. 3310 West End Ave., Suite 1700 Nashville, TN 37203 Attn: Carter Steele (615) 269-8256 G. Derril W. Reeves 2000 Tyne Blvd Nashville, TN 37215 (615) 312-5566 Phycor Inc., a medical network management company, filed for chapter 11 protection on January 31, 2002 in the U.S. Bankruptcy Court for the Southern District of New York. Kayalyn A. Marafioti, Esq. at Skadden, Arps, Slate, Meagher & Flom LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed total assets of $28,851,499 and total debts of $338,443,734. PRUDENTIAL SECURITIES: S&P Rates Series 1998-C1 Class J at BB- -------------------------------------------------------------- Standard & Poor's assigned its double-'B'-minus rating to class J of Prudential Securities Secured Financing Corp.'s commercial mortgage pass-through certificates series 1998-C1 at the request of Prudential Securities. Standard & Poor's reviewed the transaction in December 2001, at which time its ratings on class B were raised to double-'A'-plus from double-'A', and its ratings on class C were raised to single-'A'-plus from single- 'A'. Concurrently, ratings were affirmed on the other classes in the same series. Since the December 2001 review, the pool has remained relatively the same. Standard & Poor's calculated the weighted average debt service coverage for the remaining loan pool (based on 96.8% of loan pool reporting interim 2001 and year-end 2000) to be 1.64 times, an increase from 1.52x at issuance. There are four delinquent loans ($6.7 million, 0.64% of the total loan pool), one REO loan ($6.0 million, 0.58%), and one specially serviced loan ($2.8 million, 0.27%) that is current with principal and interest payments. Based on conversations with Key Commercial Mortgage (Key Commercial), the master and special servicer, Standard & Poor's does not believe that anticipated losses on these loans will significantly affect the rated certificates. As of February 2002, there have been no losses to the trust. As of February 2002, Key Commercial placed 36 loans on its watchlist for various reasons ($157.3 million, 15.1%). All of the loans are current with debt service payments. Key Commercial does not anticipate any eminent defaults on the watchlist loans. Standard & Poor's stressed these loans in its analysis, and the current and stressed credit enhancement levels adequately support the assigned rating to class J. As of February 2002, the mortgage pool balance decreased to $1.044 billion with 259 loans from $1.148 billion with 271 loans at issuance. Retail, multifamily, and office are the three most common property types, representing 33%, 25%, and 15% of the outstanding pool balances, respectively. California and Texas are the two states that include more than a 10% concentration, with 16% and 12%, respectively. The top 10 loans represent 16.9% of the mortgage pool, and reported year-end 2000 DSC ratio of 1.71x. Rating Assigned Prudential Securities Secured Financing Corp. Commercial mortgage pass-thru certs series 1998-C1 Class Rating Credit support% J BB- 5.47 Current Ratings Prudential Securities Secured Financing Corp. Commercial mortgage pass-thru certs series 1998-C1 Class Rating Credit support% A-1A2 AAA 31.58 A-1A3 AAA 31.58 A-1B AAA 31.58 A-2MF AAA 31.58 B AA+ 26.09 C A+ 20.04 D BBB 14.27 E BBB- 12.62 F BB+ 10.14 G BB+ 7.39 H BB 6.57 K B+ 3.82 PSINET INC: Seeks to Expand Sidley Austin's Employment ------------------------------------------------------ PSINet, Inc., and its debtor-affiliates ask the Court for permission to expand the scope and authority of Sidley Austin Brown & Wood LLP as its special counsel, to include all inter- company matters between PSINet and PSINet Consulting Solutions Holdings, Inc. (Holdings) and any other inter-company matters that may arise in which PSINet's bankruptcy counsel may be conflicted from representing PSINet. The Application is supported by an affidavit and disclosure statement executed by Sidley partner David R. Kuney, Esq. Prior to the appointment of a chapter 11 trustee in the Holdings case, Wilmer Cutler & Pickering, bankruptcy counsel for the Debtors, and Nixon Peabody LLP, bankruptcy co-counsel and corporate counsel for the Debtors, served as counsel to Holdings. As represented to Judge Gerber at the hearing on the appointment of the Trustee, WCP and Nixon provided transition services to the Holdings Trustee so as to enable the Holdings Trustee to familiarize himself with Holdings and its operations. On February 13, 2002, WCP and Nixon received from counsel to the Holdings Trustee a letter containing over 80 separate requests for information, seeking both documents and information relating to a variety of matters involving PSINet and Holdings. Because of the nature of these requests (some of which seek information and interrogatory-style answers relating to events that occurred prior to PSINet's acquisition of Holdings), and WCP's and Nixon's prior dual representations of both PSINet and Holdings, WCP and Nixon have determined, consistent with the standards of professional responsibility, that neither firm can represent PSINet in its dealings with the Holdings Trustee or Holdings. By this motion, the Debtors seek to expand the scope and authority of Sidley, to represent PSINet in its dealings with the Holdings Trustee or Holdings in the Inter-Company Matters, pursuant to section 327(e) of the Bankruptcy Code, effective as of February 20, 2002. Sidley has been the Debtors' special counsel with regard to matters involving securities law and the pending Securities Actions as authorized by the Court in July, 2001 (First Retention Order). During this period, Sidley has developed an extensive knowledge of PSINet's business operations. PSINet believes that Sidley is both well-qualified and uniquely able to continue to represent PSINet as special counsel in the Inter-Company Matters in an efficient and timely manner. Sidley will accrue fees for services in connection with the Inter-Company Matters at hourly rates currently ranging from $155 per hour for new associates to $550 per hour for senior partners. Time devoted by legal assistants is charged at billing rates currently ranging from $80 to $150 per hour. The hourly rates set forth above are subject to periodic adjustments to reflect economic and other conditions. Sidley will also seek reimbursement of reasonable out-of-pocket expenses. While the the First Retention Order, it was anticipated that Sidley would seek compensation for its services from National Union Fire Insurance Company of Pittsburgh, PA such that Sidley was not required to seek Court approval for such payment, with respect to the Inter-Company Matters, any compensation for services and reimbursement of charges payable to Sidley by the Debtors and their estates will be subject to Court approval in accordance with sections 330 and 331 of the Bankruptcy Code, the Bankruptcy Rules, the Local Rules and the orders of the Court. Pursuant to the First Retention Order, Sidley has been paid $ 200,000 by PSINet, satisfying the retention amount set forth in the National Union policy, and $1,947,086.79 from National Union. It is expected that National Union will continue to advance the fees and costs related to defense of all Securities Actions. Other than for work completed and billed prior to the Petition Date, Sidley has not billed PSINet or any of the Debtors or their estates for any fees or costs in connection with the Securities Actions, but has the right under the First Retention Order to seek reimbursement from the estates in the event National Union does not cover its fees and expenses. Mr. Kuney reveals that certain of Sidley's partners, counsel, associates or other employees may hold or in the past have held publicly traded stock of PSINet, Inc. or of creditors of one or more of the Debtors, including Holdings. Mr. Kuney submits that Sidley has not represented and will not represent entities in relation to the PSINet chapter 11 cases or have any relationship with entities which would be adverse to the Debtors or their estates. Mr. Kuney also assures that, insofar as he is able to ascertain, neither he personally, nor Sidley, nor any partner, counsel or associates, represents any entity having an interest adverse to the Debtors and their estates in the matters for which Sidley is to be retained. Mr. Kuney believes that Sidley is eligible for employement and retention by PSINet with respect to the Inter-Company matters pursuant to sections 327(e) and 328 of the Bankruptcy Code and Bankruptcy Rule 2014(a). The Debtors submit that the employment of Sidley by PSINet is necessary and in the best interests of their estates, their creditors and parties in interest. (PSINet Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 609/392-0900) RYLAND GROUP: S&P Raises Ratings as Financial Profile Improves -------------------------------------------------------------- Standard & Poor's raised its corporate credit rating on The Ryland Group Inc. to double-'B'-plus from double-'B'. In addition, ratings on the company's senior unsecured and senior subordinate notes were raised. The outlook is stable. The raised ratings reflect Ryland's well-diversified homebuilding operations and a much-improved financial risk profile. Efforts by the company's management team during the last five years to realign its homebuilding operations, grow market share within existing markets, and realize efficiencies have yielded measurable benefits. Particularly, these improvements are evidenced by significantly improved homebuilding and operating margins. Southern California-based Ryland has consistently ranked among the top homebuilders in the country. In 2001, the company sold almost 12,700 single-family homes in 17 markets across the U.S. Today, Ryland's wholly-owned mortgage banking subsidiary focuses almost exclusively on providing mortgage financing for its own homebuyers and should continue to make a modest contribution to overall earnings due to a steadily improving capture rate (81% of Ryland sales in 2001). Management's efforts over the last five years to aggressively reposition land inventory and increase penetration of existing markets (versus pursuing acquisitions or expansions in new markets) has resulted in a shift in geographic concentration away from the highly competitive mid-Atlantic region to southern and western U.S. markets. This intentional shift has resulted in a better balance to the overall geographic delivery mix and strong inventory turns of 2.2 times. Today the company's revenues are relatively evenly balanced amongst many of the nation's fastest growing housing markets, and it appears that the company's five largest markets account for just 42% of total deliveries and 40% of total homebuilding revenues. Profitability improvements have been driven by tighter cost controls and increased operating efficiencies, rather than through aggressive pricing. During the last five years, gross margins have improved by 530 basis points to 18.7%. During this period deliveries grew 13% per year while the average sales price increased less than 3% annually. Overhead as a percentage of homebuilding revenues has remained flat at about 11%, allowing a similar improvement in homebuilding operating margins (now at 7.8%). While these measures remain somewhat below average, they should be much less volatile than those of a number of similarly rated peers (should the housing market slow). Additionally, as margins have improved and the company has reduced its debt levels, its return on permanent capital has grown four-fold to 22.7%. Ryland has a conservative capital structure characterized by modest debt levels and a well-balanced maturity schedule. Presently, a total of $580 million of debt equates to 49% of total capital and consists mainly of $250 million of senior unsecured notes (double-'B'-plus) and $250 million of senior subordinated notes (double-'B'-minus). In 2001, the company refinanced $200 million of long-term debt, lowering weighted average interest costs of all long-term debt to 8.9% and extending the weighted average maturity to seven years. EBITDA/interest coverage is solid at about 5.6x and is significantly higher than the 2.3x figure recorded in 1996. Financial flexibility is strong as the company has $295 million in cash available and access to a $400 million unsecured line of credit. Ryland does have a $21 million investment in eight joint ventures. Those ventures have a total of about $23 million of debt, which is nonrecourse to Ryland. Outlook: Stable Ryland's focus on lower-priced homes, manageable exposure to any single market, and conservative internal growth strategy should help to minimize the impact of regional softening in housing demand upon the improved financial position. Furthermore, given the company's substantial cash position, it is assumed that the company will continue to pursue an active share repurchase program. Standard & Poor's anticipates that future share repurchases will be funded in a leverage neutral manner, thereby preserving solid debt protection measures. Ratings Raised Rating The Ryland Group Inc. To From Corporate credit rating BB+ BB $150 mil 9.75% Sr Unsecd Nts due 2010 BB+ BB $100 mil 8.0% Sr Unsecd Nts due 2006 BB+ BB $100 mil 8.25% Sr Sub Nts due 2008 BB- B+ $150 mil 9.125% Sr Sub Nts due 2011 BB- B+ SAFETY-KLEEN CORP: Has Until April 30 to File Chapter 11 Plan ------------------------------------------------------------- Judge Peter Walsh entered an order further extending Safety- Kleen Corp., and its subsidiaries and affiliates' exclusive periods during which they may file a plan of reorganization and solicit acceptances of that plan. The Debtors' Exclusive Plan Proposal Period is extended through and including April 30, 2002, and their Exclusive Solicitation Period runs through June 30, 2002. SCAN-OPTICS INC: Commences Senior Executive Stock Option Plan ------------------------------------------------------------- Scan-Optics, Inc. has filed a registration statement with the SEC in regard to its Senior Executive Stock Option Plan. The Company is registering shares of common stock, par value $.02 per share, to be issued upon exercise of options granted on December 31, 2001 pursuant to the Company's Senior Executive Stock Option Plan, to senior executive officers of the Company. An aggregate of up to 1,115,000 shares of common stock may be issued upon the exercise of the options granted pursuant to the Plan, subject to adjustment in case of stock dividends or changes in the common stock. The aggregate number of shares that may be issued under the Plan is subject to adjustment in the event of a stock dividend, stock split or similar change in the outstanding shares of common stock. Scan-Optics, Inc., with headquarters in Manchester, Connecticut, is recognized internationally as an innovator and solution provider in the information management and imaging business. It designs, manufactures and services products and systems for character recognition, image processing and display, data capture, and data entry. Scan-Optics systems and software are marketed worldwide to commercial and government customers directly and through distributors. At June 30, 2001, the company had a working capital deficit of about $10 million. SERVICE MERCHANDISE: Seeks OK to Pay KIMCO $2.5MM Break-Up Fee -------------------------------------------------------------- Service Merchandise Company, Inc., and its debtor-affiliates ask the Court to allow the payment of Termination Fee to Kimco Realty Corporation, SB Capital Group, LLC and Simon Property Group, Inc., if the Designation Rights are sold to other bidder. Paul G. Jennings, Esq., at Bass, Berry & Sims PLC, in Nashville, Tennessee, explains to Judge Paine that Kimco has expended, and will likely to expend more considerable time, money and energy in pursuing the Proposed Sale. Knowing this, the Debtors have agreed to provide two important bidding protections to Kimco: (a) If the Designation Rights are sold to another bidder, the Debtors will pay Kimco a $2,500,000 termination fee and reimburse Kimco's reasonable legal fees and out- of-pocket expenses up to a maximum of $500,000. The Termination Payment will constitute an administrative expense; (b) Any overbid must be for $2,000,000 plus the Termination Payment, thus, the initial overbid value must be at least $105,000,000. Mr. Jennings says that the Termination Payment and Overbid Protection are material inducements for, and a condition of, Kimco's entry into the Term Sheet and Agreement. Mr. Jennings add that it is the Debtors' belief that the Termination Payment and Overbid Protection are fair and reasonable because: (a) the intensive analysis, due diligence investigation, and negotiation undertaken by Kimco in connection with the Proposed Sale and (b) if the Termination Payment and Overbid Protection are triggered, Kimco's efforts will have increased the chances that the Debtors will receive the highest or otherwise best offer for the Designation Rights of Properties, to the benefit of the Debtors' creditors. Mr. Jennings assures the Court that the payment of the Termination Payment and Overbid Protection will not diminish the Debtors' estates. The Debtors have no plans of terminating the Term Sheet and Agreement if it will not get a sufficiently higher bid, Mr. Jennings adds. (Service Merchandise Bankruptcy News, Issue No. 27; Bankruptcy Creditors' Service, Inc., 609/392-0900) STRATUS SERVICES: Running Short of Working Capital Due to Losses ---------------------------------------------------------------- Stratus Services Group, Inc. provides a wide range of staffing, engineering and productivity consulting services nationally through a network of offices located throughout the United States. The Company recognizes revenues based on hours worked by assigned personnel. Generally, it bills customers a pre- negotiated, fixed rate per hour for the hours worked by its temporary employees. The Company is responsible for workers' compensation, unemployment compensation insurance, Medicare and Social Security taxes and other general payroll related expenses for all of the temporary employees it places. These expenses are included in the cost of revenue. Because the Company pays its temporary employees only for the hours they actually work, wages for its temporary personnel are a variable cost that increases or decreases in proportion to revenues. Gross profit margin varies depending on the type of services offered. The Engineering Services Division typically generates higher margins while Staffing Services division typically generates lower margins. In some instances, temporary employees placed by it may decide to accept an offer of permanent employment from the customer and thereby "convert" the temporary position to a permanent position. Fees received from such conversions are included in revenues. Selling, general and administrative expenses include payroll for management and administrative employees, office occupancy costs, sales and marketing expenses and other general and administrative costs. Results Of Operations Revenues decreased 13.1% to $14,793,224 for the three months ended December 31, 2001 from $17,024,807 for the three months ended December 31, 2000. Stratus experienced a reduction in revenue due primarily to a general economic slowdown. Gross profit decreased 30.3% to $2,673,902 for the three months ended December 31, 2001 from $3,837,116 for the three months ended December 31, 2000. Gross profit as a percentage of revenues decreased to 18.1% for the three months ended December 31, 2001 from 22.5% for the three months ended December 31, 2000. This decrease was a result to increased pricing competition of staffing services. The Company also saw a deterioration in margins as a result of the downturn in the economy. As a result of the foregoing, Stratus had a net loss attributable to common stockholders of $857,943 for the three months ended December 31, 2001 compared to net earnings attributable to common stockholders of $313,499 for the three months ended December 31, 2000. At December 31, 2001, the Company had limited liquid resources. Current liabilities were $14,522,116 and current assets were $13,197,722. The difference of $1,324,394 is a working capital deficit which is primarily the result of losses incurred during each of the four quarters ended December 31, 2001. Management believes that the liquidity position is currently manageable, but the working capital deficit will remain until additional capital is raised. On January 24, 2002 the Company entered into an agreement to sell the assets of its Engineering Division. Approximately $1,796,000 of working capital will be received by the Company from this transaction. Effective January 1, 2002, the Company purchased substantially all of the tangible and intangible assets, excluding accounts receivable, of seven offices of Provisional Employment Solutions, Inc. The initial purchase price was $1,480,000, represented by a $1,100,000 promissory note and 400,000 shares of the Company's common stock. In addition, Provisional Employment Solutions is entitled to earnout payments of 15% of pretax profit of the acquired business up to a total of $1.25 million or the expiration of ten years, whichever occurs first. The note bears interest at 6% a year and is payable over a ten- year period in equal quarterly payments. On January 17, 2002, the Company received a Nasdaq Staff Determination, due to its failure to file its Form 10-K for the fiscal period ended September 30, 2001, indicating the Company's noncompliance with the requirement for continued listing set forth in Nasdaq's Marketplace Rule 4310(c)(14), and that its securities are, therefore subject to delisting. On January 24, 2002 the Company submitted a request for a hearing to review the Staff Determination, staying the delisting. There is no assurance the Panel will grant Stratus' request for continued listing. On January 29, 2002, $250,000 of convertible debt was converted into 520,800 shares of the Company's common stock. TRISTAR: Inks Pact to Sell Certain Assets to Inter Parfums Unit --------------------------------------------------------------- Inter Parfums, Inc. (NASDAQ National Market: IPAR) announced that its wholly-owned subsidiary, Jean Philippe Fragrances, LLC, has signed a letter of intent with Tristar Corporation, a Debtor-in-Possession in the Chapter 11 proceeding, Case no. 01- 53706, U.S. Bankruptcy Court, Western District of Texas, San Antonio Division, to purchase certain of its mass market fragrance brands and certain inventories. This letter of intent is in competition with another offer which has also been submitted to the Bankruptcy Court. Tristar is one of the Jean Philippe's major competitors in mass market fragrances. The brands contemplated to be purchased are distributed in the same channels of distribution as that of Jean Philippe's current product lines. The letter of intent provides for Jean Philippe to purchase certain assets for approximately $10 million with the remaining assets to be purchased by a new company to be formed by existing management of Tristar together with its unsecured creditors. Jean Philippe's ultimate purchase price depends upon the results of a due diligence investigation of Tristar. In addition, the letter of intent contemplates a manufacturing agreement with this new company together with a non-competition agreement for mass market fragrances and cosmetics. The proposed acquisition by Jean Philippe Fragrances is subject to a number of factors which could prevent the acquisition from occurring. These factors include: acceptance of the letter of intent by Tristar's creditors, approval of the Bankruptcy Court, negotiation, execution and delivery of a definitive acquisition agreement and a due diligence investigation. Inter Parfums, Inc. develops, manufactures and distributes prestige perfumes such as Burberry, S.T. Dupont, Paul Smith, Christian Lacroix, Celine and FUBU, as well as mass market fragrances, cosmetics and personal care products in over 100 countries worldwide. US STEEL: Fitch Believes Steel Import Tariffs Beneficial to Firm ---------------------------------------------------------------- Fitch Ratings believes that the impact of President Bush's decision to enact tariffs of 8%-30% on steel imports will have a positive impact on U.S. Steel. The question is when and how much. Order rates have healthily outperformed 2001's book since the beginning of the year, yet it remains to be seen how much of these orders is new business activity as opposed to buying in advance of the long-anticipated tariffs. Once the new import quotas are reached, any real increases in the demand for steel should cause prices to rise automatically after producers have raised their collective tonnage to 85% or so of capacity. Scrap prices should follow which will build support for a higher price deck. In turn this means that U.S. Steel could return to breakeven sometime this year. Fitch currently rates the senior unsecured debt of U.S. Steel 'BB'. The Rating Outlook is Stable. VECTOUR: Proposes to Sell Tennessee Assets to LCL for $3MM ---------------------------------------------------------- VecTour Inc. and its affiliated debtors is selling substantially all assets of VecTour of Tennessee, Inc. free and clear of liens, encumbrances, and interests to LCL, Inc. or any other party to propose a better and higher offer. The Debtors are asking the U.S. Bankruptcy Court for the District of Delaware to authorize and approve the sale. The Debtor is willing to sell substantially all the assets and business operations for approximately $3 million cash, subject to an adjustment based on working capital at closing, and the assumption certain obligations, including the Seller's accounts payable arising after the Petition Date, and the cost of curing defaults in connection with executory contracts assumed by the Seller and assigned to the Purchaser. The Asset Purchase Agreement with LCL, Inc. dated March 15, 2002 provides these are the assets included in the sale: (a) vehicles; (b) inventory, permits, licenses, and other personal property; (c) leases and executory contracts; (d) miscellaneous assets, including telephone and fax numbers, e-mail addresses, and books and records, customer lists, trademarks, trade names, service marks, prepaid expenses and deposits. (e) accounts receivable, except for intercompany receivables, and Seller's pre-paid expenses and security deposits. The principal purchase price to be paid by Purchaser for the Purchased Assets is $3 million, including a $100,000 deposit. The Purchaser is entitled to a $50,000 break up fee, in the event that the Purchased Assets are sold to a third party, or if the Debtor withdraws or adversely modifies the proposed sale to Purchaser. All competing bids must exceed Purchaser's price by at least $150,000 to qualify. The Debtors are convinced that the Debtor will benefit the contemplated sale being carefully negotiated at arms-length. The Debtor believes that it has negotiated the strongest possible transaction and selling its business assets as a going concern will yield the best price. An Auction is currently scheduled to take place on March 13, 2002 at 10:00 a.m. EST and the Sale Motion hearing is on March 14. VecTour, Inc. is a leading nationwide provider of ground transportation for sightseeing, tour, transit, specialized transportation, entertainers on tour, airport transportation and charter services. The Company filed for chapter 11 protection on October 16, 2001. David B. Stratton, Esq. and David M. Fournier, Esq. at Pepper Hamilton LLP represent the Debtors in their restructuring effort. VERADO HOLDINGS: Selling Englewood Data Center Assets to ViaWest ---------------------------------------------------------------- ViaWest Internet Services, Inc. a regional provider of hosting, Internet infrastructure and access to businesses, announced it has reached an agreement to acquire the physical and customer assets of Verado Holdings Inc.'s (OTC Bulletin Board: VRDO) 23,850 square foot Englewood Data Center. This announcement follows Verado's February 15 filing for Chapter 11 bankruptcy protection, in which the company stated it had sold its Irvine, California data center, and was looking to sell its Denver data center as a going concern. The agreement is subject to bankruptcy court approval pursuant to a section 363 motion filed by Verado on March 1, 2002 in case number 02- 10510 in the US Bankruptcy Court in the District of Delaware. ViaWest has agreed to purchase the data center assets in a deal that provides ViaWest with a Class A south Denver colocation facility that has been operational since 1999. As part of the purchase agreement, Verado has agreed to operate the data center through March. ViaWest anticipates taking over operations as of April 1, 2002, pending bankruptcy court approval of the agreement. "Verado's bankruptcy filing presented us with an opportunity to increase our market presence with a high caliber facility in a prime location," said Roy Dimoff, CEO of ViaWest. "It also provided us with additional data center capacity for a fraction of what it would cost to build it ourselves." ViaWest plans to use its new data center as an adjunct to its existing downtown Denver data center that is currently at 90% capacity. ViaWest estimates the Verado purchase will curb the company's immediate need for an expansion at its downtown location, and provide it with enough space to meet its needs for the next eight to twelve months. "It's a testament to ViaWest's success that we were in the financial position to make this purchase," said Dimoff. "Few, if any, suppliers in this market are currently looking for additional space -- most are looking to reduce their current square footage." ViaWest offers broadband access, web hosting, colocation and managed services to small- and medium-sized businesses in the western United States. ViaWest combines the technical strength of a national Internet provider with a personal service of a local business to deliver reliable, customized Internet solutions. For additional information about ViaWest visit http://www.viawest.net W.R. GRACE: Court Extends Removal Period through July 2, 2002 ------------------------------------------------------------- U.S. Bankruptcy Judge Fitzgerald further extends W. R. Grace & Co., and its affiliated Debtors' time period within which they may remove actions pending as of the Petition Date from their respective situ to federal court through and including July 2, 2002. WHEELING-PITTSBURGH: Seeks Sixth Extension of Exclusive Periods --------------------------------------------------------------- Pittsburgh-Canfield Corporation and its affiliated debtors ask Judge William T. Bodoh to again further extend the time periods during which only the Debtors may file a plan of reorganization and solicit acceptances of that plan. The Debtors ask that their Exclusive Plan Filing Period be extended through Monday, June 24, 2002, and the period during which acceptances of that plan may be solicited run through August 23, 2002. Since the Petition Date, Michael E. Wiles, Esq., at Debevoise & Plimpton tells Judge Bodoh, the Debtors have been dealing with a multitude of complex supply, employee and contract issues that typically arise in large and complicated chapter 11 cases. Simultaneously, the Debtors have been stabilizing operations and working towards the ultimate goal of constructing a plan of reorganization by: (a) working diligently to determine whether any third parties have an interest in acquiring all or a part of the Debtors or their facilities, and (b) investigating thoroughly various possible reconfigurations of the Debtors' business that would support continued operation as a stand-alone business. The Debtors continue to investigate a number of options for the reorganization of their businesses and have kept the Committees apprised of these options. In the interim, the Debtors have negotiated substantial wage concessions and other relief from their unions, have obtained substantial cost reductions from salaried workers, have negotiated concessions from numerous suppliers and taken other cost-cutting measures. These are part of the Debtors' continuing efforts to eliminate ongoing operating losses and to support the Debtors' continued business until such time as the Debtors may file a plan of reorganization and emerge from bankruptcy. Although the Debtors have made significant progress, the Debtors require additional time to stabilize their operations and to work out the details of a plan of reorganization with all affected constituents. In addition, a termination of the Debtors' exclusivity periods is a triggering event under the MLA that the Debtors negotiated with the USWA which would entitle the USWA to terminate that agreement and the many cost-savings concessions in it. It is therefore in the best interests of the Debtors and these estates to avoid that risk and continue the exclusivity periods without interruption. In addition, the Debtors are in the process of reviewing and analyzing proofs of claim which have been filed since the bar date for filing claims. Furthermore, the Debtors have not had sufficient time to negotiate and prepare an acceptable plan, but are making good faith efforts toward reorganization and are paying their postpetition debts as they become due. The Debtors continue to negotiate in good faith with their creditors and have kept the Official Committees fully apprised of their work and progress towards reorganization. In no case are the Debtors seeking these extensions to pressure creditors into accepting an unsatisfactory plan. Furthermore, the Debtors have not had sufficient time to negotiate and prepare an acceptable plan, but are making a good faith effort towards reorganization and are paying their postpetition debts as they become due. Ms. Robertson assures Judge Bodoh that the debtors are negotiating in good faith with their creditors and have kept the Official Committees fully apprised of their work and progress towards reorganization, and are not seeking the extension to pressure creditors into accepting an unsatisfactory plan. (Wheeling- Pittsburgh Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service, Inc., 609/392-0900) YOUBET.COM INC: Falls Short of Nasdaq Bid Price Requirement ----------------------------------------------------------- Youbet.com, Inc. (Nasdaq:UBET), the leading online live event and wagering company for the horse racing industry, announced that it received notification from The Nasdaq Stock Market that it is not in compliance with the National Market's listing maintenance standard regarding minimum bid prices. This standard requires that the Company's common stock maintain a minimum bid price of at least $1.00 per share. In order to comply with this standard the Company's common stock must have a minimum bid price of at least $1.00 for ten consecutive trading days prior to May 15, 2002. If the Company is unable to demonstrate compliance with this standard on or before May 15, 2002, the Nasdaq Stock Market will seek to delist the Company's common stock from The Nasdaq National Market. At that time the Company may appeal the delisting to the Listing Qualifications Panel of The Nasdaq Stock Market. If the Company is not in compliance by May 15, 2002 the Company may apply to transfer its securities to the Nasdaq SmallCap Market. If the transfer application is approved, the Company will have until August 13, 2002, to comply with the minimum bid price requirement. In addition, the Company may be eligible to transfer back to the Nasdaq National Market, if it achieves compliance with the minimum bid price and other continued listing requirements of the Nasdaq National Market. In the United States, Youbet.com provides network members the ability to watch and, in most states, the ability to wager on a wide selection of coast-to-coast thoroughbred and harness horse races via its exclusive closed-loop network. Members have 24-hour access to the network's features, including live racing from a choice of all major racetracks in the U.S., Canada and Australia, commingled track pools, live audio/video, up-to-the-minute track information, real-time wagering information and value-added handicapping products. Youbet Network subscribers enjoy live coverage from and wagering accessibility to all major racetracks in 40 states, representing virtually 100% of horse racing content. Youbet.com maintains a strategic relationship with TVG, a wholly owned subsidiary of Gemstar-TV Guide International, Inc. (Nasdaq: GMST). TVG is the 24-hour interactive horse racing network available nationwide on cable and satellite systems with exclusive simulcast and interactive wagering rights to live racing from leading racetracks in the U.S. including Churchill Downs (owned by Churchill Downs Incorporated, Nasdaq: CHDN), Del Mar, Belmont Park, Aqueduct and Saratoga. Through the agreement, Youbet.com is licensed to utilize TVG's patented wagering technology for online and automated telephone applications and utilizes a right to video stream and accept online pari-mutuel wagers on horse racing from virtually all of TVG's exclusive partner racetracks. Youbet.com operates Youbet.com TotalAccess(TM), an Oregon-based hub for the acceptance and placement of wagers. The Company also maintains a relationship with another state-licensed wagering entity, MEC Pennsylvania Racing, part of Magna Entertainment Corp. (Nasdaq: MIEC) which owns and/or operates 7 racetracks in the U.S. including Santa Anita Park, Gulfstream Park, Golden Gate Fields, Thistledown, Remington Park, Great Lakes Downs and The Meadows. For further information about Youbet.com, visit http://www.youbet.com * BOND PRICING: For the week of March 11 - 15, 2002 --------------------------------------------------- Following are indicated prices for selected issues: Amresco 9 7/8 '05 25 - 27(f) AES 9 1/2 '09 73 - 75 AMR 9 '12 94 - 96 Asia Pulp & Paper 11 3/4 '05 22 - 25(f) Bethlehem Steel 10 3/8 '03 12 - 14(f) Chiquita 9 5/8 '04 95 - 97(f) Enron 9 5/8 '03 12 - 14(f) Global Crossing 9 1/8 '04 3 - 4(f) Level III 9 1/8 '04 43 - 45 Kmart 9 3/8 '06 44 - 46(f) McLeod 11 3/8 '09 22 - 24(f) NWA 8.70 '07 90 - 92 Owens Cornig 7 1/2 '05 41 - 43(f) Trump AC 11 1/4 '06 68 - 70 USG 9 1/4 '01 82 - 84(f) Westpoint 7 3/4 '05 32 - 35 Xerox 5 1/4 '03 91 - 93 ********* Bond pricing, appearing in each Monday's edition of the TCR, is provided by DLS Capital Partners in Dallas, Texas. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com. Bond pricing, appearing in each Thursday's edition of the TCR, is provided by DebtTraders in New York. DebtTraders is a specialist in global high yield securities, providing clients unparalleled services in the identification, assessment, and sourcing of attractive high yield debt investments. For more information on institutional services, contact Scott Johnson at 1-212-247-5300. To view our research and find out about private client accounts, contact Peter Fitzpatrick at 1-212-247-3800. Real-time pricing available at http://www.debttraders.com/ Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette C. de Roda, Donnabel C. Salcedo, Ronald P. Villavelez and Peter A. Chapman, Editors. Copyright 2002. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $625 for 6 months delivered via e- mail. 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