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         T R O U B L E D   C O M P A N Y   R E P O R T E R

              Monday, July 1, 2002, Vol. 6, No. 128     

                          Headlines

AMC ENTERTAINMENT: S&P Ups Credit Rating to B Over Policy Dev't.
ANC RENTAL: Wants to Further Extend Removal Deadline to Oct. 15
ADELPHIA BUSINESS: Asks For Open-Ended R. 9027 Removal Period
ADELPHIA COMMS: Ad Hoc Pref. Shareholders Hire Saybrook Capital
AEROFREIGHTER: Fitch Downgrades Class B Fixed Rate Notes to B

ANGEION CORPORATION: Trustee Names Unsecured Creditors Committee
APPLIED EXTRUSION: S&P Changes Outlook on B+ Rating to Negative
BIG V SUPERMARKETS: Court Confirms Joint Plan of Reorganization
BORDEN CHEMICALS: Wants Until Oct. 26 to Make Leases Decisions
BURNHAM PACIFIC: Board Gives Go Ahead For Dissolution

CALL-NET: Slows Down Expansion Plans Over Unfavorable Conditions
CANADIAN FIDELITY: Gildan Activewear Buys Yarn-Spinning Facility
CHELL GROUP: Balks At Nasdaq Delisting Determination
CONDOR SYSTEMS: EDO Corp. Acquires Bankrupt Company For $112M+
COVANTA ENERGY: Settles Issues With Alfa Alfa Holdings

ENERGY VISIONS: Nova Scotia Gov't OKs Pure Energy's Debt Workout
ENVOY COMM: Shareholders Endorse Resolution Consolidating Shares
ENVIROPAVE: TSX Knocks Off Shares For Violating Requirements
EVANS SYSTEMS: Firms-Up Restructuring With Focus Capital
EXODUS: C&W Seeks Court Nod To Tap Accountant To Settle Disputes

FEDERAL-MOGUL: Trustee Appoints Equity Security Holders' Comm.
FLAG TELECOM: Gets Court Approval To Form & Fund Telecom Taiwan
FRONTLINE CAPITAL: Engages Westerman Ball as Bankruptcy Counsel
GT GROUP TELECOM: U.S. Court Grants Section 304 Protection
GENERAL DATACOMM: Hiring M.F. DiScala As Real Estate Broker

GEOWORKS CORP: Appoints Frank Fischer & David Domeier to Board
GENSCI: March Quarter Balance Sheet Upside Down by CDN$16.5MM
GLOBAL CROSSING: Signs-Up Ernst & Young as Litigation Advisor
GOLDEN NORTHWEST: S&P Places CC Rating on Watch Negative
GRISTEDE'S FOODS: S&P Rates Planned $175MM Sr Unsec Notes at B+

HARTMARX CORP: Cuts Debt By About 15% In Second Quarter 2002
HASBRO INC: Will Conduct Q2 Conference Call on July 22, 2002
HORIZON PCS: S&P Puts B- Rating On Watch With Neg. Implications
HORIZON PCS: Lenders Agree to Amend Sr. Secured Credit Facility
JP MORGAN: Fitch Gives Low-B Rating to Class F, G & H Mtg. Notes

JACOBSON STORES: Will Pursue Dual Path in Bankruptcy Proceedings
LBI MEDIA INC: S&P Assigns B+ Corporate Credit Rating
LAIDLAW INC: Seeking Third Exclusivity Extension through Oct. 31
LERNOUT & HAUSPIE: Court Fixes June 28 Admin. Claims Bar Date
MAGELLAN HEALTH: S&P Lowers Counterparty Credit Rating to B

METROCALL INC.: Bankr. Court Restricts Sale & Transfer of Shares  
METROMEDIA FIBER: PAIX Sets-Up European Unit In Dublin, Ireland
MORGAN STANLEY: Fitch Rates Several Certificates at Low-B Level
NASH FINCH: Fitch Affirms Low-B Ratings for Bank & Senior Debt
NATIONAL RAILROAD: Railroad Group Urges Congressional Action Now

NATIONAL STEEL: Lenders Agree to Amend Final DIP Order Provision
NATIONSRENT: Gets Okay to Hire Quiktrak as Equipment Auditor
NEON COMMS: Wants Court to Appoint BSI as Notice Agent
PACIFIC GAS: Taps D.F. King To Conduct Plan Solicitation
PENN SPECIALTY: Delaware Court Fixes July 30 Claims Bar Date

PEREGRINE SYSTEMS: Nasdaq Intends to Delist Shares By Friday
PIONEER-STANDARD: S&P Ratchets Corporate Credit Rating to BB-
PLAINS EXPLORATION: S&P Assigns BB- Corporate Credit Rating
PRECISION SPECIALTY: Wants Until August 29 to Propose a Plan
PRINTING ARTS: Seeks Approval to Engage Hilco as Liquidator

PROPRIETARY INDUSTRIES: Will Discontinue Funds Advance to SCC
OLYMPUS HEALTHCARE: Court Confirms Amended Joint Chapter 11 Plan
RESIDENTIAL ASSET: Fitch Downgrades Class B1 Certificates to D
RIVERWOOD INT'L: Receives Consents to Amend Bond Indentures
SAFETY-KLEEN: Sues Allied Waste to Recover $484K Preference

SONO-TEK CORP: Total Shareholders' Equity Deficit Drops to $750K
TRIDENT ROWAN: Retains Investec Inc to Explore M&A Opportunities
VERSATEL TELECOM: Taps Shearman & Sterling as Bankruptcy Counsel
WORLDCOM INC: Yankee Group Says Prompt Bankruptcy Filing Needed
WORLDCOM INC: American Express Discloses $90 Million Exposure

WORLDCOM INC: Fitch Exploring Fallout in Other Sectors
WORLDCOM INC: Principal Financial Discloses $61 Million Exposure
XETEL CORP: Independent Accountants Express Going Concern Doubt
XO COMMS: Honoring $8MM of Prepetition Critical Vendor Claims

* BOND PRICING: For the week of July 1 - July 5, 2002

                          *********

AMC ENTERTAINMENT: S&P Ups Credit Rating to B Over Policy Dev't.
----------------------------------------------------------------
Standard & Poor's raised its corporate credit rating on AMC
Entertainment Inc. to single-'B' from single-'B'-minus based on
positive financial policy developments at the company.

At the same time, Standard & Poor's raised its subordinated debt
ratings on AMC to triple-'C'-plus from triple-'C' and removed
all of the ratings from CreditWatch. The current outlook is
positive.

AMC is the second-largest movie theater operator in the U.S.
with 3,540 screens in 250 theaters and is headquartered in
Kansas City, Missouri The company has approximately $726 million
in debt outstanding.

"AMC continues to take steps to improve its financial profile,"
according to Standard & Poor's analyst Steve Wilkinson. "The
company's capital structure has improved as a result of its
recent equity offering, which raised $100 million in net
proceeds, and its use of equity to partially fund its purchase
of GC Cos. Inc.--the owner of General Cinemas. In addition, the
company has substantially slowed its pace of theater
construction, which should permit positive discretionary cash
flow compared with approximately breakeven discretionary cash
flow in the fiscal year ended March 2002."

Standard & Poor's noted that its ratings on the company could be
raised again in the intermediate term if AMC shows continued
improvement in its key credit measures and discretionary cash
flow.

Standard & Poor's current ratings on the company reflect AMC's
modern theater circuit and a moderation of its aggressive
financial policies. In addition, the ratings recognize the
company's still high financial risk and high fixed cost
structure resulting from its heavy reliance on lease financing.


ANC RENTAL: Wants to Further Extend Removal Deadline to Oct. 15
---------------------------------------------------------------
ANC Rental Corporation and their debtor-affiliates ask the Court
to extend until October 15, 2002 the deadline within which they
must remove actions to which they are parties to, including
numerous judicial and administrative proceedings currently
pending in various courts and administrative agencies throughout
the United States.

William J. Burnett, Esq., at Blank Rome Comisky & McCauley LLP
in Wilmington, Delaware, submits that since the Debtors have
been focused primarily on stabilizing and maximizing the value
of their businesses, they have not reviewed all the actions to
determine whether any actions should be removed under
Fed.R.Bankr.9027(a).

Mr. Burnett states that the requested extension is in the best
interests of the Debtors' estates and creditors because it will
afford them sufficient opportunity to assess whether actions can
and should be removed, protecting the Debtors' valuable right to
adjudicate lawsuits pursuant to 28 U.S.C. Section 1452(b).  The
Debtors' adversaries will not be prejudiced by that extension
since they will not prevented from pursuing remand pursuant to
28 U.S.C. Section 1452(b).

A hearing on the motion is scheduled on July 27, 2002, and
pursuant to Local Rule 9006-2, the Debtors' deadline to make
removal decisions is automatically extended through the
conclusion of that hearing. (ANC Rental Bankruptcy News, Issue
No. 15; Bankruptcy Creditors' Service, Inc., 609/392-0900)


ADELPHIA BUSINESS: Asks For Open-Ended R. 9027 Removal Period
-------------------------------------------------------------
Adelphia Business Solutions, Inc. and its debtor-affiliates
seeks an extension of its time to file notices of removal to
transfer prepetition lawsuits and other Civil Actions pending in
courts outside the Southern District of New York to the Southern
District for continued litigation.  ABIZ wants to keep its
transfer option, available to it under Bankruptcy Rule 9027(a),
open until the confirmation of a Chapter 11 plan.

Judy G.Z. Liu, Esq., at Weil Gotshal & Manges LLP in
New York, says that ABIZ management has not made it a priority
to thoroughly examine each individual Civil Action to determine
the feasibility or benefit of removal.  In short, other matters
took priority.

Ms. Liu relates that, as of the Commencement Date, the ABIZ
Debtors were parties to approximately 15 civil actions and
proceedings in a variety of state and federal courts.  These
Civil Actions assert employment discrimination, commercial
litigation, and breach of contract claims.

Ms. Liu points out that the ABIZ Debtors require adequate time
to review their records to determine whether they should remove
any of the Civil Actions.  Because they are parties to
approximately 15 lawsuits, and because their key personnel who
will have input in assessing these lawsuits are also actively
involved in their reorganization, the ABIZ Debtors require
additional time to consider any benefit that may result from
filing notices of removal in the Civil Actions.  The ABIZ
Debtors believe the proposed time extension will provide
sufficient additional time to allow them to exercise sound
business judgment.  Without the extension, the ABIZ Debtors
believe they will not have enough time to consider the removal
of the Civil Actions adequately.

A hearing of the motion is scheduled on July 2, 2002, and Judge
Gerber grants a short-term extension through the conclusion of
that hearing. (Adelphia Bankruptcy News, Issue No. 8; Bankruptcy
Creditors' Service, Inc., 609/392-0900)


ADELPHIA COMMS: Ad Hoc Pref. Shareholders Hire Saybrook Capital
---------------------------------------------------------------
A number of significant institutional and individual holders of
Preferred Shares issued by Adelphia Communications Corporation
have formed an Ad Hoc Committee to represent their interests in
connection with Adelphia's recent filing under the Chapter 11
Bankruptcy Code.

"Based on our analysis, we believe the Preferred Shares of
Adelphia have substantial value and we expect to play a
constructive role in the reorganization," said Jonathan
Rosenthal, a partner of Saybrook Capital LLC, the financial
advisor assisting the Ad Hoc Committee. The bankruptcy petition
filed by Adelphia lists total assets of more than $24.4 billion
and total liabilities of $18.6 billion, showing a book solvency
of approximately $5.8 billion.

In cases of Adelphia's size, complexity and apparent solvency,
it is not uncommon for the equity holders to participate in the
process of reorganization, according to Rosenthal. Adelphia's
preferred shareholders are owed approximately $1.6 billion.
James Conlan, a bankruptcy partner with Sidley, Austin, Brown
and Wood, who has also been retained by the Ad Hoc Committee,
indicated, "We plan on submitting a request on behalf of the Ad
Hoc members to the U.S. Trustee to appoint an Official Equity
Committee in the case."

Saybrook Capital, LLC is an investment bank with expertise in
real estate and tax-exempt finance, financial advisory services,
fund management and corporate restructurings. Saybrook is
currently advising the Official Committee of Unsecured Creditors
in the Pacific Gas & Electric Company bankruptcy, the largest
utility bankruptcy in history. Saybrook also represented the
Official Creditor Committee of the Orange County Investment Pool
in Orange County bankruptcy, the largest Chapter 9 bankruptcy in
history.

DebtTraders reports that Adelphia Communications' 7.875% bonds
due 2009 (ADEL09USR1) are trading between 73 and 75. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ADEL09USR1
for some real-time bond pricing.


AEROFREIGHTER: Fitch Downgrades Class B Fixed Rate Notes to B
-------------------------------------------------------------
Fitch Ratings downgrades Aerofreighter Finance Trust as follows:
class A fixed rate notes to 'BBB' from 'A' and class B fixed
rate notes to 'B' from 'BB'. The ratings are also removed from
Rating Watch Negative.

The original issuance amount was $130 million compared to $73.6
million outstanding as of June 2002. Aerofreighter is an
aircraft lease securitization whose notes are primarily
supported by lease payments from DC-8 freighter aircraft (8 DC-
8-60F series and 6 DC-8-70F series). The aircraft are being
serviced by Aerolease International, a private U.S. based
aircraft operating lessor specializing in airfreight services.

The rating actions reflect the decreased value and cash flow
generating ability of all of the DC-8 freighter aircraft. The
DC-8-60F aircraft appear to be permanently impaired while the
DC-8-70F aircraft could show some improvement if the global
freight markets and the economy post a strong recovery. All of
the aircraft are expected to come off their current leases
between now and 2005. Fitch expects some of the aircraft will
continue to be leased either through extensions or new leases,
but at heavily discounted rates, while some aircraft will
generate no lease cash flow.

Depending on the success of the release process, Aerofreighter
could be required to use its liquidity reserves to ensure
continued payment of timely interest. Currently $15 million of
liquidity is available, $10 million of cash to pay minimum
principal and interest on both the class A and B and $5 million
of cash to pay interest on the class A. The class B notes are
most at risk to use the liquidity reserve. A sale of the
aircraft may be necessary to repay the fixed rate notes.


ANGEION CORPORATION: Trustee Names Unsecured Creditors Committee
----------------------------------------------------------------
The United States Trustee for Region 12 appoints three creditors
to serve on an Official Unsecured Creditors' Committee in the
chapter 11 case involving Angeion Corporation:

     1) U.S. Bank National Association
        180 East Fifth Street
        St. Paul, MN 55101
        Contact Person: Patricia J. Kapsch
        Tel: 651 244-8341

     2) Loews Corporation
        667 Madison Avenue
        New York, NY 10021
        Contact Person: John J. Kenny
        Tel: 212 521-2000

     3) Deephaven Capital Management
        130 Cheshire Lane, Suite 102
        Minnetonka, MN 55305
        Contact Person: Shawn Bergenson
        Tel: 952 249-5500

Pending selection of a permanent Chairperson, Ms. Kapsch is
designated as Acting Chairperson of the Committee.

Angeion Corporation conducts all of its operating activities
through its Medical Graphics, Inc. subsidiary. Medical Graphics
Corporation designs and markets cardiopulmonary diagnostic
systems along with related software. The Debtor filed for
chapter 11 protection on June 17, 2002 at the U.S. Bankruptcy
Court for the District of Minnesota. Michael F. McGrath, Esq. at
Ravich Meyer Kirkman McGrath & Nauman PA represents the Debtor
in its restructuring efforts. When the Company filed for
protection from its creditors, it listed $20,547,745 in assets
and $21,265,525 in debts.


APPLIED EXTRUSION: S&P Changes Outlook on B+ Rating to Negative
---------------------------------------------------------------
Standard & Poor's revised its outlook on Applied Extrusion
Technologies Inc. to negative from stable due to the company's
significantly weaker-than-expected financial performance and
subpar credit measures, caused by lower volumes related to the
sluggish economy, competitive pressures, and inventory de-
stocking by customers.

At the same time, Standard & Poor's affirmed its single-'B'-plus
corporate credit rating on the company. Peabody, Massachusetts-
based Applied Extrusion is the leading oriented polypropylene
(OPP) films producer in North America, with total debt
outstanding of $278 million as at March 31, 2002.

"If oversupply conditions, competitive pressures, and increasing
raw material prices continue to dampen operating results, and
the company is unable to maintain acceptable liquidity and
mitigate its near-term refinancing risk, the ratings could be
lowered in the near term," said Standard & Poor's analyst Liley
Mehta.

The company enjoys a leading share of the market (estimated at
25%), and benefits from a low-cost position. Still, the market
is highly competitive and subject to swings in raw material
costs, namely polypropylene resins. Although OPP films are used
mostly in relatively recession-resistant applications,
overcapacity significantly weakened pricing flexibility during
the past few years. The company's narrow product mix is a
limiting factor, and customer concentration is high.

The company is very aggressively leveraged and has been unable
to meet its working capital and capital expenditure needs
through internal cash generation for several years. Despite the
benefits from lower raw material prices in 2001, competitive
pressures are likely to constrain the company's ability to pass
through increasing raw material costs (mainly polypropylene
resins) to customers in the near term. Gradually improving
market fundamentals should boost Applied Extrusion's
profitability and cash flow levels in the intermediate term.

Liquidity is supported by cash and equivalents of about $30
million and almost full availability under the company's $80
million revolving credit facility. However, the company has
obtained waivers from certain bank covenant requirements in the
past few quarters and may need additional relief. In addition,
the revolving credit facility matures in January 2003, posing a
near-term refinancing risk.

Applied Extrusion recently announced that it has received
unsolicited expressions of interest to acquire the company, and
that it will evaluate all available options to maximize
shareholder value. It is unclear whether these initiatives could
result in a strategic action in the near term.


BIG V SUPERMARKETS: Court Confirms Joint Plan of Reorganization
---------------------------------------------------------------
Big V Supermarkets, Inc. and Wakefern Food Corp. announced that
the U.S. Bankruptcy Court for the District of Delaware has
confirmed their joint plan of reorganization, paving the way for
the end of Big V's Chapter 11 case.  Under the plan,
substantially all of Big V's assets, including 27 stores in the
Hudson Valley of New York and central New Jersey, will be
acquired by a subsidiary of Wakefern.

Wakefern is a retailer-owned cooperative and the wholesale
merchandising and distribution arm for ShopRite supermarkets.
The 41 Wakefern members operate approximately 200 stores under
the ShopRite name and are located throughout New Jersey, New
York, Pennsylvania, Connecticut and Delaware. A Wakefern
subsidiary, ShopRite Supermarkets, Inc., which currently
operates eight stores in New York and New Jersey, will acquire
the Big V stores and continue to operate them as ShopRite
stores.

Big V's plan of reorganization, which was filed jointly with
Wakefern, was confirmed at a hearing held today in Trenton, New
Jersey, by Judge Raymond T. Lyons. It is currently anticipated
that the confirmation order will be entered and the plan will
become effective by mid-July 2002. Big V filed for Chapter 11 on
November 22, 2000.

Jim Toopes, President and Chief Executive Officer of Big V
Supermarkets, said, "We are pleased to have reached this
important milestone. Throughout its chapter 11 case, Big V's
primary objective has been to develop and implement a plan of
reorganization that provides superior value to our creditors and
is in the best interest of our associates, customers, suppliers
and other stakeholders. We believe the plan confirmed today
achieves that objective. We are grateful for the continuing
support of our associates and customers and are eager to
complete an orderly transition with Wakefern as soon as
possible."

Thomas P. Infusino, Chairman and Chief Executive Officer of
Wakefern Food Corp., said, "All of us at Wakefern look forward
to working with Big V associates to grow the business and
provide ShopRite customers with an exceptional shopping
experience."

Based in Florida, N.Y., privately held Big V Supermarkets, Inc.
owns and operates 30 supermarkets in New York and New Jersey.
Big V is the market share leader in the Hudson Valley region of
New York and also has a significant market presence in the
Trenton, New Jersey area. It is the largest shareholder of the
Wakefern cooperative.


BORDEN CHEMICALS: Wants Until Oct. 26 to Make Leases Decisions
--------------------------------------------------------------
Borden Chemicals and Plastics Operating Limited Partnership and
its debtor-affiliates ask the U.S. Bankruptcy Court for the
District of Delaware for a fourth extension of their lease
decision period.  The Debtors tell the Court that they will need
until October 26, 2002 to elect whether to assume, assume and
assign, or reject unexpired nonresidential real property leases.

The Debtors relate that they have been considering various
strategic alternatives, including sales of substantially all of
their assets.  With respect to the sale of the Debtors'
remaining assets, the Debtors and potential purchasers explain
that they require additional time in which to coordinate their
separate and cooperative analyses of these issues and negotiate
a mutually acceptable strategy.  The Debtors assert that the
opportunity for potential purchasers of the Debtors' assets to
express interest in assignment of the leases is imperative to
obtain the best and highest offers for these estate assets.

The Debtors contend that under the circumstances, the most
practical and appropriate solution is to extend the deadline for
making determinations about unexpired leases.

Borden Chemicals and Plastics Operating Limited Partnership,
producer PVC resins, filed for chapter 11 petition on April 3,
2001 in the U.S. Bankruptcy Court for the District of Delaware.
Michael Lastowski, Esq. at Duane, Morris, & Hecksher represents
the Debtors in their restructuring efforts.

DebtTraders reports that Borden Chemical's 9.500% bonds due 2005
(BCPU05USR1) are trading between 5 and 8.25. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=BCPU05USR1
for more real-time bond pricing.


BURNHAM PACIFIC: Board Gives Go Ahead For Dissolution
-----------------------------------------------------
Burnham Pacific Properties, Inc. (NYSE: BPP) announced that its
Board of Directors has approved the transfer of Burnham's
remaining assets to (and the assumption of its remaining
liabilities by) the co-trustees of the BPP Liquidating Trust,
Scott C. Verges and Douglas Wilson, and the dissolution of
Burnham on June 28, 2002, in accordance with Burnham's Plan of
Complete Liquidation and Dissolution. As previously announced by
Burnham, June 27, 2002 was the last day of trading of Burnham
common stock on the New York Stock Exchange, and Burnham's stock
transfer books were closed as of the close of business on such
date.

Burnham also announced that on June 28, 2002, it will file a
Form 15 with the Securities and Exchange Commission to terminate
the registration of Burnham common stock under the Securities
Exchange Act of 1934 and that it will cease filing reports under
that act. However, the Trustees will issue to beneficiaries of
the BPP Liquidating Trust and file with the Commission annual
reports on Form 10-K and current reports on Form 8-K.

As previously announced, under the terms of the Liquidating
Trust Agreement to be entered into by Burnham, Scott C. Verges
and Douglas Wilson on June 28, 2002, each stockholder of Burnham
on the Record Date, automatically will become the holder of one
unit of beneficial interest in the BPP Liquidating Trust for
each share of Burnham common stock then held of record by such
stockholder. All outstanding shares of Burnham common stock will
be automatically deemed cancelled, and the rights of
beneficiaries in their Units will not be represented by any form
of certificate or other instrument. Stockholders of Burnham on
the Record Date will not be required to take any action to
receive their Units. The Trustees will maintain a record of the
name and address of each beneficiary and such beneficiary's
aggregate Units in the BPP Liquidating Trust. Subject to certain
exceptions related to transfer by will, intestate succession or
operation of law, the Units will not be transferable, nor will a
beneficiary have authority or power to sell or in any other
manner dispose of any Units.


CALL-NET: Slows Down Expansion Plans Over Unfavorable Conditions
----------------------------------------------------------------
Call-Net Enterprises Inc., (TSX: FON, FON.B) a national provider
of residential and business telecommunications services through
its operating company Sprint Canada Inc., confirmed that as a
result of the CRTC's price cap decision (CRTC 2002-234) released
on May 30, 2002, the Company will be slowing the introduction of
competitive residential telephone service in certain markets and
delaying the introduction of other competitive services.

"Our detailed analysis of the complex CRTC ruling shows that the
immediate savings amount to only seven per cent of our
annualized charges from incumbent telephone companies, far less
than the 15 to 20 per cent indicated by the CRTC. Although the
savings may increase as a result of a number of follow up CRTC
proceedings flowing from the price cap decision, significant
uncertainty remains as to their timing and magnitude," said Bill
Linton, president and chief executive officer, Call-Net
Enterprises. "A regulatory decision that should have heralded a
new era of competition for telecommunications in this country
has had the opposite effect. The consumer and ultimately the
Canadian economy are the real losers. True competition will
come with less regulation not more."

Based on the financial impacts of the CRTC decision and the
continuing deteriorating state of the telecommunications
industry, the Company has decided not to expand its local phone
service to Quebec City and Edmonton and other communities it
does not already serve. In addition, it will delay the launch of
several new services including its high-speed Internet access
product (aDSL) for residential customers. The Company is also
restructuring its internal organization to further streamline
and focus its operation in order to achieve its goal of being
cash flow positive. These actions will result in the reduction
of approximately 350 positions, or 15 per cent of the
Company's total workforce. Related capital expenditures will
also be reduced.

"While we remain committed to offering Canadians the only
competitive choice when it comes to residential telephone
service in this country, our success continues to be gated by
the regulatory environment. These actions, while difficult, are
necessary in order for us to achieve our business goals of
improved profitability and consistently being cash flow
positive. We will continue to grow albeit at a more limited
pace, and to work with the CRTC to encourage a more sustainable
competitive environment," said Linton. "The April
recapitalization of our balance sheet significantly improved our
financial position, however to sustain this improvement we will
only invest in growth within our own cash generating
capabilities."

To date, the company has invested over $2 billion in Canada
establishing its own telecommunications network and facilities.
The Company provides local phone service to over 110,000
consumers in 10 metropolitan markets and voice, IP and data
services to over 4,500 business customers.

Call-Net will have an estimated $150 million of cash and short
term investments at June 30, 2002. These financial resources,
combined with projected cash flow from operations, are expected
to be adequate to fund its revised slower growth business plan
without the need for external financing.

One time restructuring costs are yet to be determined but will
be reflected in the Company's second quarter results, which will
be reported on July 31. Additional financial guidance will be
provided at that time.

Call-Net Enterprises Inc. is a leading Canadian integrated
communications solutions provider of local and long distance
voice services as well as data, networking solutions and online
services to businesses and households primarily through its
wholly-owned subsidiary Sprint Canada Inc. Call-Net,
headquartered in Toronto, owns and operates an extensive
national fibre network and has over 100 co-locations in ten
Canadian metropolitan markets. For more information, visit the
Company's web sites at http://www.callnet.caand  
http://www.sprint.ca.

DebtTraders reports that Call-Net Enterprises Inc.'s 9.375%
bonds due 2009 (CN09CAR1) are trading between 26.5 and 28.5. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=CN09CAR1for  
more real-time bond pricing.


CANADIAN FIDELITY: Gildan Activewear Buys Yarn-Spinning Facility
----------------------------------------------------------------
Gildan Activewear Inc. (NYSE: GIL; TSX: GIL.A) announced that it
had further strengthened its position as a vertically-integrated
manufacturer with the acquisition of essentially all of the
fixed assets of the yarn-spinning facility formerly operated by
Canadian Fidelity Mills Ltd. The assets were purchased from
Fidelity's secured creditors following its recent bankruptcy
filing for approximately $6.5 million, a substantial discount
from book value. Gildan will initially lease the property where
Fidelity operated its yarn manufacturing business, and has an
option to acquire this property, which is located in Montreal
close to Gildan's knitting facility, for $6.25 million.

This acquisition, combined with the previous acquisition of the
Cavalier Specialty Yarn operation in June 2001, will ensure
that, for a relatively low capital cost, close to 100% of
Gildan's cotton and polyester yarn requirements for its Canadian
textile operations can be fulfilled from vertically- integrated
Company-owned operations. The Company's existing long-term yarn
supply contract with Frontier Spinning Mills Inc. will be
utilized to meet the requirements of Gildan's major new
greenfield textile manufacturing facility currently being
started up in Rio Nance, Honduras. The acquisition of the
Fidelity assets is expected to yield initial annual after-tax
cost savings of at least $5.0 million after interest and
depreciation, or in excess of $0.15 per share on a diluted
basis, starting in fiscal 2003.

The assets acquired include specialized air-jet technology for
the manufacture of polyester yarn, in addition to cotton yarn,
so that this acquisition will enhance Gildan's recent
introduction of its 50% cotton/50% polyester fleece product-
line.

H. Greg Chamandy, Chairman and Chief Executive Officer of Gildan
Activewear, commented that "the acquisition of these yarn-
spinning assets further reinforces our focus on being a
vertically-integrated manufacturing company, in order to
continuously drive down our cost structure and further reinforce
our position as low-cost producer in our industry." Mr. Chamandy
added that "approximately 120 jobs will be created as a result
of this investment."

Including the impact of the additional cash outlay for the
acquisition of the Canadian Fidelity assets, Gildan anticipates
that free cash flow after capital expenditures for the current
fiscal quarter will exceed the Company's most recent estimate,
primarily due to further reductions in working capital.

Gildan Activewear is a vertically-integrated manufacturer and
marketer of premium quality branded basic activewear for sale
principally in the wholesale imprinted activewear segment of the
Canadian, U.S., European and other international apparel
markets. The Company manufactures and sells premium quality T-
shirts, placket collar golf shirts and sweatshirts in a variety
of weights, sizes, colours and styles. The company sells its
products as blanks, which are ultimately decorated with designs
and logos for sale to consumers.


CHELL GROUP: Balks At Nasdaq Delisting Determination
----------------------------------------------------
Chell Group Corporation, a technology holding company in
business to acquire and grow undervalued technology companies,
announced that pursuant to an April 18, 2002 oral hearing before
a Nasdaq Listing Qualifications Panel, a determination has been
made to delist the Company's securities from The Nasdaq Stock
Market effective with the open of business June 27, 2002.

The Company vehemently disagrees with the Determination and
intends to appeal the Determination to the extent available by
law. The Company has chosen not to seek another listing at this
time, and its securities will remain halted while the Company
pursues the appeal process.

Chell Group Corporation is a holding company in business to
acquire and grow undervalued technology companies. Chell Group's
portfolio includes Logicorp www.logicorp.ca , NTN Interactive
Network Inc. http://www.ntnc.com GalaVu Entertainment Network  
Inc. http://www.galavu.com Engyro Inc. (investment subsidiary)  
http://www.engyro.comand cDemo Inc. (investment subsidiary)  
http://www.cdemo.com For more information on Chell Group,  
please visit http://www.chell.com


CONDOR SYSTEMS: EDO Corp. Acquires Bankrupt Company For $112M+
--------------------------------------------------------------
The United States Bankruptcy Court for Northern California
approved the sale of Condor Systems Inc., a leading supplier of
electronic intelligence equipment to the military and private
industry, to EDO Corporation of New York.

The court's approval clears the way for EDO to acquire the
Morgan Hill-based company in July. Condor, more than $140
million in debt, filed for bankruptcy protection in November
2001.

Under terms of the proposal, EDO will acquire nearly all of
Condor's assets and businesses for approximately $112.3 million
in cash and assumption of certain liabilities, including
selected accounts payable, certain obligations relating to
employees and standby letters of credit. In a conference call
with analysts, EDO announced that it expects to combine its ANC
Division into Condor's division based in Simi Valley.
Additionally, EDO has entered into discussions with Condor's
Morgan Hill location landlord to renegotiate certain terms of
Condor's lease. No layoffs are expected as a result of the
acquisition.

Condor was progressing with its own reorganization plans when
EDO approached the company with its offer this spring.

The boards and senior management of both companies previously
approved the proposed acquisition, although other companies were
invited to bid for Condor's assets. Ultimately there were no
other bidders and the court's approval was the last hurdle for
the deal.

Under terms of the acquisition agreement senior secured lenders
will be paid off. An amended reorganization plan will be
developed to distribute any remaining sale proceeds to remaining
creditors.

Condor, founded in 1980, is privately held and employs about 420
employees. EDO is publicly traded (NYSE:EDO) with 2001 annual
revenues of $260 million and about 1,400 employees. The defense
electronics company supplies highly advanced electronic,
electromechanical and information systems, and engineered
materials to governments and private industry customers
worldwide.

Nightingale & Associates LLC, based in Stamford, Conn., served
as financial advisor to Condor.  Leading the Nightingale team
were Michael D'Appolonia, principal, Timothy Hassenger and Reece
Fulgham, managing directors, and Larry Perkins, associate.

Patrick A. Murphy and Eric E. Sagerman, shareholders of Murphy
Sheneman Julian & Rogers, with offices in San Francisco and Los
Angeles, represent Condor.  Jean B. LeBlanc, shareholder, and
Justin Rawlins, associate, assisted in the sale.


COVANTA ENERGY: Settles Issues With Alfa Alfa Holdings
------------------------------------------------------
Deborah M. Buell, Esq., at Cleary, Gottlieb, Steen & Hamilton,
in New York, informs the Court that the Debtor -- Covanta Energy
Corporation -- sold all of the issued and outstanding shares of
capital stock in its theme and water park business to Alfa Alfa
Holdings, S.A., a Greek conglomerate, for $148,000,000.  Covanta
sold the stock under the Ogden Parks & Theme Attractions
Acquisition Agreement, dated as of March 8, 2000.  The Purchase
Price consisted of cash and assumption of associated debt.  The
sale closed in May 2000. However, Ms. Buell says, certain
related agreements are still executory between the parties.  
Each of Covanta and Alfa has asserted claims against the other
in connection with the Executory Contracts.  In particular:

   (a) Included in the Sale was the transfer of a Las Vegas
       waterpark located on leased land that was subject to a
       right of termination exercisable on short notice by the
       landlord.  Given the risk that this park could be forced
       to close at any time, Covanta and Alfa agreed to a
       deferred payment scheme that required Alfa to make four
       payments of $2,500,000 annually, starting in January 2002
       and going through 2005.  The Payments would be made
       unless the landlord exercised its right to terminate the
       lease, in which case the prior year's Payment would be
       pro-rated to the date of termination, and no further
       Payment would be due;

   (b) Covanta has various obligations to Alfa in connection
       with the Sale, including obligations to indemnify Alfa
       for damages arising out of a claim for $1,000,000
       relating to events that occurred before the Sale and to
       pay certain costs related to the construction of a
       Jazzland theme park in New Orleans;

   (c) Alfa failed to make the first Payment that was due in
       January 2002.  Alfa asserted a $2,100,000 set-off against
       Covanta, claiming that Covanta failed to pay certain
       Jazzland construction costs - the Set-off.  Covanta
       disputed Alfa's right to Set-off.

Ms. Buell notes that Alfa's failure to make the first of the
Payments and the subsequent Set-off claim present complicated
legal and practical issues that cannot easily be resolved by
reference to the Bankruptcy Code and existing case law.
Accordingly, the Debtors and Alfa engaged in extensive
discussion in hope of resolving the dispute.

The Parties have finally agreed on the terms of the Settlement
Agreement.  Thus, the Debtors seek the Court's authority to
allow the Debtors to settle with Alfa under these terms:

   (a) Alfa will pay Covanta $3,800,000 to settle all claims
       between Alfa and Covanta;

   (b) Alfa and Covanta will provide a mutual release of any
       further obligations under the Acquisition Agreement;

   (c) The Executory Contracts will be terminated and Covanta
       will move for rejection of any and all such Executory
       Contracts without any claim by Alfa, provided, however,
       that Covanta will seek authority to assume and assign to
       Smart Parks-Riverside, Inc., an Executory Contract with
       Xerox Corporation related to the theme and water park
       business;

Pursuant to the Settlement Agreement, the Debtors also seek the
Court's authority to assume the Xerox Contract and reject the
Executory Contracts.

Ms. Buell contends that, pursuant to the criteria in the Second
Circuit, the settlement should be approved under Rule 9019
because:

   (a) the dispute involves complex legal issues that are not
       easily resolved by reference to the Bankruptcy Code,
       relevant case law or the agreements between the Parties;

   (b) the complexity of the legal issues involved in this
       dispute, the projected expenses of litigation and the
       likely duration of any proceedings militate in favor of
       the Settlement Agreement;

   (c) while the Debtors believe that their position regarding
       Alfa's duty to make the Payments is correct, they
       recognize that, because of the complex legal issues at
       state and the uncertainty of landlord action under the
       Las Vegas lease, their probability of success on the
       merits is uncertain;

   (d) the Settlement Agreement will ensure that Covanta will
       not be held liable for the Set-off;

   (e) the Settlement Agreement provides for full resolution of
       the dispute between the Parties;

   (f) the parties all affirmatively support the Settlement
       Agreement, including the rejection, assumption and
       assignment of Executory Contracts;

   (g) the Settlement Agreement is the product of a vigorous
       arm's length bargaining that took place over a three
       months time span;

   (h) payment will be made soon instead of waiting until 2005
       which would be considered contingent on the future action
       of third parties;

   (i) the Settlement Agreement eliminates the risk to Covanta
       that the Las Vegas lease could be cancelled between now
       and 2005;

   (j) the Settlement eliminates Covanta's litigation and
       enforcement costs;

   (k) the Settlement will mean that Alfa will renounce its
       claim to the Set-off and its right to seek any indemnity
       in connection with the Sale;

The Debtors believe that rejection of the executory contracts is
in the best interest of their estate because it will release
Covanta from any remaining indemnification of payment
obligations.

The Xerox contract however will be assumed and assigned to one
of its affiliates pursuant to Section 365(b) of the Bankruptcy
Code. Ms. Buell assures the Court that the Debtors have no
outstanding defaults under the Contract.  Moreover, Alfa's
commercial standing provides adequate assurance of its ability
to perform under the Contract. (Covanta Bankruptcy News, Issue
No. 8; Bankruptcy Creditors' Service, Inc., 609/392-0900)   


ENERGY VISIONS: Nova Scotia Gov't OKs Pure Energy's Debt Workout
----------------------------------------------------------------
Energy Visions Inc. (TSXV:EVI.S)(NASD OTCBB:EGYV) is pleased to
announce that through an Order in Council, the Province of Nova
Scotia has approved a debt restructuring package for Pure Energy
Battery Inc. which will enable EVI to acquire an effective
controlling interest in PEBI through Pure Energy Inc.

Through the restructuring, Nova Scotia Business Inc. has agreed
it will convert C$3 million of the C$8.5 million PEBI debt owing
to it to EVI stock at a price based on the TSXV market price at
the time of closing the transaction. The conversion of the C$3
million debt acquired by EVI to PEI shares combined with a
proposed EVI investment in PEI of a total of C$3 million in EVI
shares and cash will bring EVI's ownership interest in PEI to
approximately 49%. Those shares plus existing shares of PEI
controlled indirectly by Mr. Wayne Hartford, will effectively
give EVI control of PEBI.

NSBI has also agreed to sell to EVI an additional C$3.5 million
in PEBI debt for a total of 1,750,000 EVI shares, based on the
future market performance of the EVI stock. In order to acquire
this debt, certain share price milestones from C$1 to C$3 per
share must be achieved by EVI during the next five years. In the
event that any of the milestones are not achieved, the portion
of this C$3.5 million of debt which is not acquired by EVI will
remain outstanding and will be repaid by PEI to NSBI with
interest over the following five years.

The remaining C$2 million payable by PEBI to NSBI will remain
outstanding for three years and will thereafter be repaid with
interest over five years.

Wayne Hartford, President of EVI stated: "EVI has long
contemplated the need for a battery manufacturing plant similar
to PEBI's Amherst, Nova Scotia facility and recognizes that it
would cost several times more to start up an equivalent
facility. We look forward to the opportunity to apply our
extensive knowledge and experience in the battery industry to
grow PEBI's existing business and to use their facilities to
both manufacture our NiZn battery technology and assemble our
Hybrid Fuel Cell systems. We are greatly encouraged by the
support that Nova Scotia and our partners have demonstrated."

Mr. Stephen Lund, President and CEO of Nova Scotia Business
Inc., the corporation responsible for business financing
activity for the province, said the restructuring is based on
significant due diligence which demonstrated a strong business
case for the product and industry. "We believe that this package
works to the benefit of all parties while giving Pure Energy an
opportunity to continue to establish itself in the marketplace
and focus on its growth plans," said Mr. Lund.

Mr. Pat Terrio, Vice President of PEBI in Amherst said, "I am
excited by the possibilities of working with EVI to rapidly grow
the business in Amherst, Nova Scotia. Our world class
manufacturing equipment, our dedication to ISO-9001 quality
standards and our available manufacturing capacity will provide
all the support necessary for EVI to successfully launch its new
products. The sales growth for our rechargeable 'Pure Energy'
product with our largest customers is well over 50% so far this
year. I am confident that this explosive growth combined with
EVI's fresh investment and new products based on EVI's battery
technology will make the future extremely bright for Pure
Energy."

The completion of the foregoing transactions is subject to a
number of conditions, including TSXV approval, settling the
necessary documentation with NSBI, PEI and PEBI, the completion
of an equity financing by EVI in an amount and on terms
satisfactory to both NSBI and PEI as well as settling agreements
with Nova Scotia and other governmental agencies related to
environmental, procurement and labor policies.

                           *   *   *

As reported in the Troubled Company Reporter on February 15,
2002, EVI approved in principle a proposal by Rabih Holdings
Ltd. to acquire a controlling interest in Pure Energy Inc.,
which owns 100% of the issued and outstanding shares in Pure
Energy Battery Inc., located in Amherst, Nova Scotia. The
proposal was subject to approval from the NSBI (Nova Scotia
Business Inc.) board on a debt-restructuring package as well as
various regulatory agencies. The ability of EVI to complete the
proposed transaction involves a number of risks and
uncertainties and there is no assurance that the proposed
transaction will be completed. At September 30, 2001, the
company had a working capital deficiency of $310,000.


ENVOY COMM: Shareholders Endorse Resolution Consolidating Shares
----------------------------------------------------------------
Envoy Communications Group Inc. (NASDAQ: ECGI; TSE: ECG),
reported that the shareholders had approved, at the special
meeting held on June 27, an amended special resolution
consolidating the Company's common shares on the basis of one
new common share for each three common shares presently issued
and outstanding. At the meeting, the shareholders also approved
an amendment to the form of special resolution that appeared in
the Company's Management Information Circular accompanying the
Notice of the special meeting, which authorized the directors to
revoke the special resolution consolidating the common shares
before it is acted upon. Mr. Geoff Genovese, the President of
the Company, advised the shareholders, at the special meeting,
that the directors of the Company felt that it may not be
necessary to consolidate the Company's common shares in order to
maintain its listing on NASDAQ. However, the special resolution,
as amended, would allow the directors to consolidate the common
shares, if the NASDAQ listing were at risk.

At the special meeting, the shareholders also approved a
resolution authorizing the issuance by the Company of a number
of shares by private placement that exceeds 25% of the Company's
issued and outstanding share capital. This resolution also
appeared in the Company's Management Information Circular
accompanying the Notice of the special meeting. Both matters are
also subject to regulatory approval.

Envoy Communications Group (NASDAQ: ECGI / TSE: ECG) is an
international design, marketing and technology company with
offices throughout North America and Europe. Combining strategy,
creativity and innovation, Envoy's interconnected network of
companies delivers business-building solutions to over 200
leading global brands and has successfully completed assignments
in more than 40 countries around the world. Envoy clients
include adidas-Salomon, Armstrong, BASF, FedEx, Honda, JPMorgan
Chase, Lexus, Microsoft, Nissan, Panasonic, Safeway, Sprint
Canada, Steelcase, TD Securities, Toshiba and Wal-Mart. For more
information on Envoy visit http://www.envoy.to.


ENVIROPAVE: TSX Knocks Off Shares For Violating Requirements
------------------------------------------------------------
Effective at the close of business June 26, 2002, the common
shares of Enviropave International Ltd. ("EVP") were delisted
from TSX Venture Exchange for failing to complete Exchange
Listing Requirements by not being able to complete a qualifying
transaction within 18 months of listing. The securities of the
Company have been suspended in excess of twelve months.


EVANS SYSTEMS: Firms-Up Restructuring With Focus Capital
--------------------------------------------------------
Led by Focus Capital Group, LLC (www.focuscap.com), an
international turnaround and buyout firm, Evans Systems Inc.
(Nasdaq:EVSI.OB), a distributor of motor fuels and lubricants in
Texas, has executed a restructuring and refinancing of the
company and will be doing business as MC Star.

Mauritz and Couey, in a private placement transaction, purchased
3,085,000 shares of common stock for $150,000 and is now the
largest shareholder of the company with 31% of the outstanding
shares. The company entered into an agreement with Mauritz and
Couey of El Campo, Texas, a distributor of motor fuels and
lubricants, to operate the company for cost reimbursement and
performance fees.

In a complete change of management and most directors, the
company appointed Mr. Blair Couey as president, Lee Anne Cooper
as secretary/treasurer and Thomas E. Cain as chairman of the
board. New directors include Blair Couey, Randy Clapp, Leah
Jagot Kelley and Randal Dean Lewis, with director compensation
changed to performance-based. Ms. Kelley and Mr. Lewis will form
the audit committee.

On June 20, 2002, the company executed an agreement for a new
revolving line of credit with Victoria Bank secured by accounts
receivable, inventory and real property in Bay City. Total
liabilities of $11.4 million were reduced to approximately $7.6
million, with net income of negative $1.1 million, reported in
the March 2002 10-QSB, projected to become positive. Past due
secured and unsecured creditors representing $9 million were
renegotiated and refinanced to approximately $5 million, of
which $4.5 million is a single 5-year note of interest only at
10% until maturity with no payments for six months. The
discounts were obtained through conveyance of the company's
vacant or idle properties, having a $2.3 million book value, to
the private investment group, Cain, Smith & Strong II, LP.

A gain of approximately $1.3 million on a negative $2.263
million in shareholders' equity is achieved.

Warrants to purchase an aggregate of 4,268,000 shares of common
stock exercisable at $0.05 per share were issued by the company
to settle outstanding creditors, conversion of options and
refinancing transaction fees. JPMorgan Chase has become a 10%
shareholder and a holder of a $2 million zero coupon contingent
note, payment of which, if ever, is triggered by the stock
reaching $5.00 per share for 180 consecutive days within the
next 10 years as part of the restructuring. Restructuring costs
were approximately $110,000.

Blair Couey, the company's newly appointed president, stated,
"These actions are intended to reestablish the company's
financial and operating stability. A new star is born: MC Star."


EXODUS: C&W Seeks Court Nod To Tap Accountant To Settle Disputes
----------------------------------------------------------------
Cable & Wireless PLC asks the Court to intervene in its impasse
with Exodus Communications, Inc. for the appointment of an
Independent Accountant to settle post-Closing disputes.

Victoria W. Counihan, Esq., at Greenberg Traurig LLP in
Wilmington, Delaware, contends that EXDS has lapsed in settling
the Closing Disputes and has repeatedly failed in complying with
the agreed to methods for doing so. She indicates that the Court
must intervene in the matter by appointing an Independent
Accountant.  This is true in light of the Purchase Agreement,
New York law and the FAA.

Ms. Counihan claims that the appointment of an independent
accountant is made pursuant to the governing New York
arbitration law found in New York Civil Practice Law and Rules
(CPLR) Sections 7504 and 7601 as well as the Federal Arbitration
Act (FAA).  The New York CPLR Section 7601 provides that:

     "(a) special proceeding may be commenced to specifically
     enforce an agreement . . . that a question of valuation,
     appraisal or other issue or controversy be determined by a
     person named or to be selected. The court may enforce such
     an agreement as if it were an arbitration agreement . . ."

Ms. Counihan relates that, pursuant to the Asset Purchase
Agreement, on April 3, 2002, Cable & Wireless submitted to the
Debtors Closing Statements including:

A. a statement of the Accounts Receivable value as of the  
   closing date or the Closing Receivables Statement; and,

B. a statement of the Pre-Paid Accounts value as of the closing
   date or the Closing Accounts Statement.

Cable & Wireless determined that the accounts receivable value
is approximately $57,000,000 and the pre-paid accounts value is
approximately $11,000,000.  However, EXDS objected to numerous
items contained in the Closing Statements and sent a notice of
disagreement that specified its objections on April 29, 2002.
According to EXDS, the accounts receivable value was
$139,000,000 and the pre-paid accounts value is approximately
$15,000,000. Given that, there is approximately $86,000,000
worth of Closing Disputed items to be resolved by the
Independent Accountant.

Ms. Counihan alleges that, in its Notice of Disagreement, EXDS
also claimed that there was an error in the Asset Purchase
Agreement.  EXDS stated that the purchase price adjustment with
respect to receivables should be determined by comparing the
finalized accounts receivable balance to $170,918,733 and not
$180,599,000 as the Asset Purchase Agreement indicates.

Ms. Counihan states that the dispute was attempted to be
resolved but the parties soon agreed that they would not be able
to resolve all of the Closing Disputed Matters within the 30-day
negotiation period and that they should submit the Closing
Disputed Items to an Independent Accountant.  EXDS and Cable &
Wireless agreed to exchange a list of three nominees for an
Independent Accountant.  The nominees of Cable & Wireless
included the accounting firms Ernst & Young LLP, Deloitte &
Touche LLP, and Rowbotham & Company.  Instead of submitting its
nominees, EXDS sent an Arbitration Agreement that contained a
new mechanism for selecting the Independent Accountant.  EXDS
then nominated William Brandt from Development Specialists, Inc.
after Cable & Wireless demanded the list of nominees.  Cable &
Wireless ultimately concluded that neither William Brandt nor
Development Specialists was an appropriate choice because
Development Specialists is not an accounting firm and that its
bankruptcy expertise was irrelevant to the parties' purchase
price dispute.

Consequently, continues Ms. Counihan, Cable & Wireless sent EXDS
a draft letter that proposed that they send the letter to Cable
& Wireless' three nominees in order to solicit the names of
individuals to oversee the resolution proceeding, to clear any
conflicts and to request each firm's proposed engagement letter.
EXDS responded by saying that it was unlikely that the parties
could agree on an arbitrator.  EXDS did, however, admit that it
was prepared to consider Rowbotham because it had no direct
conflicts of interest with the firm, unlike Deloitte & Touche
and Ernst & Young.  Cable & Wireless responded by expressing
regret at EXDS's position.  Cable & Wireless advised EXDS that,
given the impasse, it would seek the Court's assistance.

At this juncture, EXDS contacted Cable & Wireless indicating
that EXDS was agreeable to sending a joint solicitation letter
to Rowbotham, provided that the same solicitations letter would
be sent to Development Specialists.  Cable and Wireless
reiterated its objection to Development Specialists.  EXDS
finally nominated two additional firms - Peterson Consulting
Inc. and Tucker Alan Inc. but neither is an accounting firm as
required by the Purchase Agreement.  EXDS also still insisted
that a solicitation letter be sent to Development Specialists.

Ms. Counihan thus, urges the Court to permit it to send a
solicitation letter to Rowbotham & Co. and for the Court to
continue to oversee the appointment of an Independent Accountant
to resolve its post-Closing disputes with EXDS.  She further
requests that that Court in the same Order decree that, as
prescribed by the Asset Purchase Agreement for the sale of
substantially all of the Debtors' assets, the Independent
Accountant shall consider only Closing Disputed Matters and not
EXDS' purported claim for reformation of the Purchase Agreement.

Ms. Counihan wants to stop EXDS from allegedly improperly
seeking to expand the scope of the Independent Accountant's
jurisdiction. EXDS had insisted that the Independent Accountant
should decide EXDS's contract reformation claim, i.e., EXDS'
claim that the purchase price adjustment with respect to
receivables should be determined by comparing the finalized
accounts receivable balance to $170,918,733 and not
$180,599,000.  EXDS' claim does not constitute a Closing
Disputed Matter and, therefore, should not be submitted to the
Independent Accountant. (Exodus Bankruptcy News, Issue No. 20;
Bankruptcy Creditors' Service, Inc., 609/392-0900)

DebtTraders reports that Exodus Communications Inc.'s 11.625%
bonds due 2010 (EXDS3) are trading between 17.75 and 18.5. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=EXDS3for  
more real-time bond pricing.


FEDERAL-MOGUL: Trustee Appoints Equity Security Holders' Comm.
--------------------------------------------------------------
Pursuant to Section 1102(a)(1) of the Bankruptcy Code, the
United States Trustee appoints these Federal-Mogul shareholders
to serve on an Official Committee of Equity Security Holders in
the Chapter 11 cases of Federal-Mogul Corporation and its
debtor-affiliates:

          A. Dimensional Fund Advisors
             Attn: Lawrence Spieth
             10 S. Wacker Drive, #2275, Chicago, IL 60606
             Phone: (312) 382-5370, Fax: (312) 382-5375

          B. Gabelli Asset Fund
             c/o Gabelli Asset Management, Inc.
             Attn: James E. McKee
             One Corporate Center, Rye, NY 10573
             Phone: (914) 921-5294, Fax: (914) 921-5384

          C. John R. Russ
             6359 Everwood Court North, East Amherst, NY 14051
             Phone: (716) 741-2284, Fax: (716) 741-2284
(Federal-Mogul Bankruptcy News, Issue No. 19; Bankruptcy
Creditors' Service, Inc., 609/392-0900)


FLAG TELECOM: Gets Court Approval To Form & Fund Telecom Taiwan
---------------------------------------------------------------
FLAG Telecom Holdings Limited and its debtor-affiliates move the
Court for authority to tap into funds held by FLAG Telecom
Holdings Ltd. to infuse startup capital into Telecom Taiwan, the
corporate entity that will be the vehicle for the Debtors'
operations in Taipei.

China laws require 800,000,000 New Taiwan Dollars, or TWD,
(about $23,500,000) in minimum paid-up capital for a newly
organized corporation.

Non-Debtor FLAG Holdings (Taiwan), which is 50 percent-owned by
FLAG Asia Ltd., commits to providing up to 80 percent of Telecom
Taiwan's capital requirements. The remaining 20 percent balance
will be funded by FLAG Asia. Already, Holdings (Taiwan) has
assigned TWD 80,000,000 worth of negotiable certificates of
deposit to Telecom Taiwan.

FLAG Asia intends to provide the cash by obtaining a loan from
FTHL for TWD 600,000,000 (about $17,400,000 at current exchange
rates). FLAG Asia is one of the borrowers under a Court-approved
post-petition financing provided by parent FTHL.

Up to TWD 440,000,000 of the loan proceeds will then be relent
to Holdings (Taiwan) in the form of a one-year non-interest
bearing loan, secured by its shares in Telecom Taiwan. That,
along with the TWD 80,000,000 worth of CDs and TWD 120,000,000
cash on hand, will form as its capital contribution to Telecom
Taiwan for an 80 percent stake.

The remaining TWD 160,000,000 that FLAG Asia will obtain from
FTHL will also be funneled to Telecom Taiwan for its 20 percent
ownership interest.

Having made a 20 percent capital contribution and as 50 percent
owner of Holdings Taiwan, FLAG Asia will therefore have a 60
percent direct and indirect ownership stake in Telecom Taiwan.

When the transaction is complete, Holdings Taiwan will owe TWD
440,000,000 to FLAG Asia. On its part, FLAG Asia will owe TWD
600,000,000 to FTHL.

Conor D. Reilly, Esq., at Gibson, Dunn & Crutcher LLP, says the
incorporation process will likely run from three weeks to three
months.

Immediately after the incorporation process, FLAG Asia will sell
to Telecom Taiwan certain assets at a price equal to the loan it
sought to obtain from FTHL.

Before the bankruptcy filing, FLAG Asia purchased assets to
support its Taiwan operations. The assets include:

    (a) an undivided half-interest in the Taiwan cable landing
        station;

    (b) the right of use and other interests in the Point of
        Presence facility owned by Chief Telecom Inc.;

    (c) the right of use interests in the Backhaul Capacity
        provided by Eastern Broadband Telecom Co. Ltd.; and

    (d) title to the equipment which is owned and has been
        purchased by FLAG Asia from Ciena Communications Inc.
        and the other contractual interests in Taiwan equipment
        which are to be delivered by Ciena Communications Inc.

The Debtors valued the assets at about TWD 600,000,000, equal to
the amount that it sought to obtain from FTHL. FLAG Asia takes
pride that the transaction will allow it to have a valuable
investment in what is thought to be a viable telecommunications
business of Telecom Taiwan.

The creation of a Taiwan affiliate is part of the operation of
the FLAG North Asia Loop system, for which the Debtors have
spent about $548,000,000 so far.

The Debtors believe that, once operational, the FNAL system will
support the strong growth in inter-Asia Internet traffic by
providing city-to-city linkage between Hong Kong, Seoul, Tokyo,
and Taipei. Potential prospective customers of the FNAL system
include WorldCom, Sprint, France Telecom, Equant, Deutsche
Telekom, British Telecom, and AT&T. Their potential contract
value is about $12,400,000. Two other prospective customers, EBT
and Chief Telecom, have agreed contracts aggregating
$10,000,000.

Judge Gropper grants the Motion. (Flag Telecom Bankruptcy News,
Issue No. 10; Bankruptcy Creditors' Service, Inc., 609/392-0900)


FRONTLINE CAPITAL: Engages Westerman Ball as Bankruptcy Counsel
---------------------------------------------------------------
FrontLine Capital Group sought and obtained authority from the
U.S. Bankruptcy Court for the Southern District of New York to
employ the law firm of Westerman Ball Ederer Miller &
Sharfstein, LLP as its counsel.  

The Debtor anticipates restructuring its debts and filing a plan
of reorganization.  As Counsel, Westerman Ball will render legal
services relating to the day-to-day administration of this
Chapter 11 case, including:

     a) advising the Debtor of its powers and duties as debtor-
        in-possession;

     b) providing assistance, advice and representation
        concerning the Debtor's affairs and the confirmation of
        any proposed plan and solicitation of any acceptances or
        rejections of such plan;

     c) providing assistance, advice and representation
        concerning any further investigation of the assets,
        liabilities and financial condition of the Debtor that
        may be required;

     d) representing the Debtor at all hearings or matters
        pertaining to its affairs;

     e) prosecuting and defending litigated matters and such
        others that might arise during this Chapter 11 case;

     f) counseling and providing representation with respect to
        any executory contracts and leases and other bankruptcy-
        related matters arising from this case; and

     g) performance of such other legal services as may be
        necessary and appropriate for the efficient and
        economical administration of this case.

Westerman Ball will seek compensation at its normal hourly
billing rates:

          partners and counsel      $260 to $340 per hour
          associates                $130 to $250 per hour
          paralegals                $100 per hour

FrontLine Capital Group, a holding company that manages its
interests in a group of companies that provide, or were to
provide, a range of office related services, filed for chapter
11 protection on June 12, 2002. John Edward Westerman, Esq. at
Westerman Ball Ederer & Miller, LLP represents the Debtor in its
restructuring efforts. As of March 31, 2002, the Company listed
$264,374,000 in assets and $781,374,000 in debts.


GT GROUP TELECOM: U.S. Court Grants Section 304 Protection
----------------------------------------------------------
GT Group Telecom Inc. and its affiliates have been granted an
order under section 304 of the US Bankruptcy Code. The order
recognizes Group Telecom's proceedings under the Companies'
Creditors Arrangement Act of Canada and grants the Company
injunctive relief in the United States until July 8, 2002.
Creditor proceedings against Group Telecom or its assets are
barred during the effective period of the order. On July 8, the
Company will reappear before a US Court for an extension of the
relief.

Group Telecom is Canada's largest independent, facilities-based
telecommunications provider, with a national fibre-optic network
linked by 454,125 strand kilometres of fibre-optics, at March
31, 2002. Group Telecom's unique backbone architecture is built
with technologies such as Gigabit Ethernet for delivery of
enhanced network performance and Synchronous Optical Network
(SONET) for the highest level of network reliability. Group
Telecom offers next-generation high-speed data, Internet,
application and voice services, delivering enhanced
communication solutions to Canadian businesses. Group Telecom
operates with local offices in 17 markets across nine provinces
in Canada. Group Telecom's national office is in Toronto.

For more information about Group Telecom, visit its Web site at
http://www.gt.ca.

DebtTraders reports that GT Group Telecom's 13.250% bonds due
2010 (GTGR10CAR1) are trading between 6 and 9. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=GTGR10CAR1
for more real-time bond pricing.


GENERAL DATACOMM: Hiring M.F. DiScala As Real Estate Broker
-----------------------------------------------------------
General Datacomm Industries and its debtor-affiliates ask for
permission from the U.S. Bankruptcy Court for the District of
Delaware to retain M.F. DiScala & Company, Inc., as their real
estate broker to sell their Middlebury Property.

M.F. DiScala will assist the Debtors in marketing, brokering,
and otherwise disposing of, the Middlebury Property.  As
compensation, M.F. DiScala will receive a flat fee of $200,000
out of any sale proceeds, the Debtors propose.

The Debtors believe that M.F. DiScala's services are necessary
to efficiently and effectively consummate the sale of the
Middlebury Property.  Based upon M.F. DiScala's experience and
ability to locate buyers for large commercial buildings and
arrange sale transactions for commercial real estate, M.F.
DiScala is both well qualified and uniquely able to serve the
Debtors in an efficient, cost-effective and timely manner, the
Debtors assert.

Inasmuch as M.F. DiScala's services are transactional and will
not be billed by the hour, the Debtors further propose that M.F.
DiScala not be required to maintain time records or be subject
to the requirements of the Bankruptcy Code regarding
professional fees.

General DataComm Industries, Inc., a worldwide provider of wide
area networking and telecommunications products and services,
filed for Chapter 11 protection on November 2, 2001. James L.
Patton, Esq., Joel A. Walte, Esq. and Michael R. Nestor, Esq.,
represent the Debtors in their restructuring effort. When the
Company filed for protection from its creditors, it listed
$64,000,000 in assets and $94,000,000 in debts.


GEOWORKS CORP: Appoints Frank Fischer & David Domeier to Board
--------------------------------------------------------------
Geoworks Corporation (Nasdaq: GWRX) announced the addition of
two new members to its Board of Directors. Frank S. Fischer and
David J. Domeier are joining the Board effective June 6, 2002
and July 5, 2002, respectively.

Mr. Fischer is the President, CEO and founder of Breadbox
Computer Company, LLC, a developer of applications for GEOS and
Nokia EPOC, and brings an understanding of Geoworks historical
operating system as well as the contract software development
market.  Mr. Domeier is the former Senior Vice President and
Chief Financial Officer of Aureal Inc. and has significant
financial management experience in a public company environment.

"Geoworks is fortunate to have two extremely qualified
candidates joining the Board," said Steve Mitchell, President
and CEO. "Frank has a long history with Geoworks and is the
current keeper of the GEOS flame. His understanding of our
current and past projects will be invaluable as we look to the
future.

"Having personally worked with Dave Domeier, I have been
impressed with his leadership and his straightforward approach
to business. Dave has earned my highest degree of trust and will
be a great fit on the board and on the Audit committee in
particular."

Mr. Fischer and Mr. Domeier will both be members of the Audit
Committee of the Geoworks Board of Directors and these
appointments put the Company back in compliance with the
Nasdaq's audit committee requirements.

Geoworks Corporation is a provider of leading-edge software
design and engineering services to the mobile and handheld
device industry. With nearly two decades of experience
developing operating systems, related applications and wireless
server technology, Geoworks has worked with industry leaders in
mobile phones and mobile data applications including Mitsubishi
Electric Corporation and Nokia. Based in Emeryville, California,
the Company also has a European development center in the United
Kingdom. Additional information can be found on the World Wide
Web at http://www.geoworks.com  

                         *    *    *

As reported in Troubled Company Reporter's May 31, 2002 edition,
Geoworks Corporation announced that its future capital needs
remain highly dependent on the success of its efforts to realize
the value of the professional services business by, among other
things, adding customers, increasing revenues and adding the
personnel necessary to support those customers.  As the
Company's projections of future cash needs and cash flows are
subject to substantial uncertainty, the Company expects that the
opinion of its independent auditors, with respect to the
consolidated financials statements for the year ended March 31,
2002, will express uncertainty about the Company's ability to
continue as a going concern.


GENSCI: March Quarter Balance Sheet Upside Down by CDN$16.5MM
-------------------------------------------------------------
GenSci Regeneration Sciences Inc. (Toronto: GNS), The
Orthobiologics Technology Company(TM), announced cash, cash
equivalents and short-term investments at March 31, 2002
increased to $4.8 million compared to $4.2 million at
March 31, 2001.  This also compares to $1.2 million in cash and
cash equivalents at December 31, 2001.

The Company announced a loss of $544,435 (US $343,772), or $0.01
per share, for the first quarter of 2002 compared to a loss of
$2.0 million (US $1.3 million), or $0.04 per share, for the
first quarter of 2001.  Revenues for the first quarter ended
March 31, 2002 were $9.7 million (US $6.1 million) compared to
$10.6 million (US $6.9 million) for the same quarter in 2001.

"We are different in many ways in 2002 because we have developed
an excellent independent sales network, expanded our
international presence to ten countries in Europe, Asia and
Latin America, significantly reduced payroll and operating
expenses and improved our product pipeline," said Douglass
Watson, President and CEO.  "We are poised in 2002 and 2003 to
introduce several new products important to our future success,
and expect to emerge from ongoing legal proceedings as a much
stronger, more focused company."

Mr. Watson said he is pleased that the May 2002 launch of
DBM100, the new Accell(TM) family of osteobiologic formulations
made from demineralized bone matrix, is being well accepted by
surgeons.  "We expect to see a positive impact from this product
in the very short-term," GenSci's CEO said.

GenSci expects that its interim financial statements for the
period ended March 31, 2002 and its Annual Information Form will
be filed on or by July 2, 2002 and at which time they can be
found at http://www.gensciinc.comand http://www.sedar.com.
    
GenSci Regeneration Sciences Inc. has established itself as a
leader in the rapidly growing orthobiologics market, providing
surgeons with biologically focused products for bone repair and
regeneration.  Its products can either replace or augment
traditional autograft surgical procedures.  This permits less
invasive procedures, reduces hospital stays, and improves
patient recovery.  Through its subsidiaries, the Company
designs, manufactures and markets biotechnology-based surgical
products for orthopedics, neurosurgery and oral maxillofacial
surgery.
    
For additional information please visit GenSci's new web site:
http://www.gensciinc.com
     
As of March 31, 2002, Gensci has posted a total shareholders'
equity deficiency of about CDN$16.5 million.


GLOBAL CROSSING: Signs-Up Ernst & Young as Litigation Advisor
-------------------------------------------------------------
Global Crossing Ltd. and its debtor-affiliates obtains court
approval to employ and retain Ernst and Young LLP to assist
Debevoise & Plimpton in its representation of the Debtors and
certain current and former officers and directors of the
Debtors.  The representation will be in connection with
governmental investigations and inquiries conducted by the
Securities and Exchange Commission, the Department of Justice
and in connection any other similar or related investigations or
inquiries.  This representation will also be in connection  with
other related civil and shareholder litigation which has been or
may be initiated against the Debtors or Officers and Directors.

                          *  *  *  *

It is previously reported in the May 30, 2002 edition of the
Troubled Company Reporter that, pursuant to the terms and
conditions set forth in the agreements between Global Crossing
and E&Y LLP and Debevoise, Mr. Sussis relates that E&Y LLP was
engaged, effective as of February 26, 2002 and subject to the
ultimate approval of this Court, to assist Debevoise in its
representation of the Debtors and the Officers and Directors.
Since this time, E&Y LLP has developed a great deal of
institutional knowledge regarding the Debtors' practices and
records. Such experience and knowledge will be valuable to the
Debtors in its efforts to defend against various litigation
matters.

E&Y LLP's duties under this retention will include the
following:

A. Assist Debevoise in the identification, organization,
   production and presentation of the documents, data and other
   information currently requested in the Proceedings. This may
   include using electronic discovery techniques to review the
   information systems of the Debtors for documents, emails, and
   other records and information, including taking possession of
   the images of the servers and PC hard drives to search emails
   and files for messages and documents relevant to issues in
   the Proceedings. E&Y LLP will assist in the organization and
   production of the information so identified and captured.

B. Assist Debevoise in its analysis of the facts and
   circumstances related to the transactions that are the
   subject of the Proceedings.

C. Assist Debevoise in its analysis of the Debtors' accounting
   and other business processes in connection with Debevoise's
   representation of the Debtors and the Officers and Directors
   in the Proceedings.

The customary hourly rates, subject to periodic adjustments,
charged by E&Y LLP's personnel anticipated to be assigned to
this case are as follows:

      Partners/Principals                      $500-625
      Senior Managers/Managers                 $350-500
      Associates/Senior Associates             $175-325
      Administration/Paraprofessionals         $ 85-150

E&Y LLP may, from time to time, find it necessary to use the
services of specialists in varied practice groups within E&Y LLP
in the course of this engagement. In the event that specialized
services are called for, the rates charged may be higher than
those listed above. (Global Crossing Bankruptcy News, Issue No.
13; Bankruptcy Creditors' Service, Inc., 609/392-0900)


GOLDEN NORTHWEST: S&P Places CC Rating on Watch Negative
--------------------------------------------------------
Standard & Poor's has lowered its ratings on aluminium producer
Golden Northwest Aluminium Inc. (GNA) to double-'C' from single-
'B'-minus and placed them on CreditWatch with developing
implications after the company missed its June 15, $9 million
interest payment on its $150 million first mortgage notes.

"The $108 million of power remarketing proceeds made available
to GNA to meet 'qualified expenditures' to date have been
utilized to meet these expenditures", said Standard & Poor's
credit analyst Eugene Williams. He added, "Under terms of the
indenture agreement, GNA has thirty days to meet the interest
payment. Failure to do so will result in the rating being
lowered to 'D'". Standard & Poor's noted that GNA, based in The
Dalles, Oregon, is currently negotiating a line of credit and is
also seeking to sell some power assets, which the company
expects to complete soon. In the event the payment is made
within the thirty-day grace period, ratings could be raised to
the triple-'C' category.


GRISTEDE'S FOODS: S&P Rates Planned $175MM Sr Unsec Notes at B+
---------------------------------------------------------------
Standard & Poor's assigned its single-'B'-plus rating to
regional supermarket operator Gristede's Foods Inc.'s planned
$175 million senior unsecured note offering due in 2012. The
notes will be used to finance the acquisition of Kings Super
Markets Inc. and repay a portion of existing debt.

A single-'B'-plus corporate credit rating was also assigned to
the New York, New York-based company. The outlook is negative.

"Gristede's plans to use the majority of the proceeds from the
note offering to purchase Kings Super Markets from Marks &
Spencer PLC for $155 million in cash," Standard & Poor's credit
analyst Patrick Jeffrey said. "The acquisition will expand the
company's markets to northern New Jersey from New York City, and
provide opportunities for Gristede's to leverage Kings'
expertise in perishable and prepared food offerings."

"As part of the transaction, Di Giorgio Corp. will contribute
$10 million in exchange for a 15-year supply agreement with
Gristede's," Mr. Jeffrey added.

Standard & Poor's said Gristede's acquisition of Kings expands
its markets into northern New Jersey and provides the
opportunity to leverage costs and best practices with Kings.
There is little store overlap between the two chains, so store
closings are expected to be minimal. In addition, Gristede's
expects to achieve $7.6 million in cost savings from the
elimination of duplicate corporate overhead. Further
efficiencies could be achieved through better purchasing power,
as the company's sales will increase to about $675 million from
about $230 million, and through merchandising initiatives in
both chains.

Pro forma lease-adjusted EBITDA coverage of interest is 2.2
times for the transaction, and could improve to the mid-2x area
over the next two years if the company is able to realize
improved sales and cost efficiencies through its planned
initiatives. Operating margins of 10% include the expected $7.6
million in corporate overhead savings.

Lease-adjusted total debt to EBITDA is high at 4.8x. Standard &
Poor's expects debt levels to remain at current levels over the
next three years, as free cash flow will most likely be used to
fund store growth through fill-in acquisitions. Financial
flexibility is marginal as the company will have a $20 million
revolving credit facility. However, debt maturities are minimal
over the next few years.


HARTMARX CORP: Cuts Debt By About 15% In Second Quarter 2002
------------------------------------------------------------
Hartmarx Corporation (NYSE: HMX) reported operating results for
its second quarter ended May 31, 2002. Revenues were $130.6
million in 2002 compared to $146.1 million in 2001. Earnings
before interest and taxes ("EBIT") improved to $3.6 million
compared to a loss of $3.5 million in 2001. After consideration
of interest expense and income taxes, the net loss was $.5
million in 2002 compared to a loss of $4.2 million in 2001.
Working capital requirements were reduced significantly from the
year earlier levels with May 31 inventories $57.5 million or
32.4% lower, and total debt declining $21.4 million or 14.7%.

Homi B. Patel, president and chief executive officer of
Hartmarx, commented, "As anticipated and previously
communicated, second quarter revenues reflected the lower Spring
'02 advance orders placed by retailers last year. EBIT has been
favorably impacted this year from our lower cost structure and
proceeds received from the previously announced settlement of
litigation."

"We continue to anticipate that Hartmarx will be profitable for
its second half and full year ending November 30, 2002. Despite
the generally lackluster retail environment, in-stock reorder
activity for our products has been higher throughout the first
half, and Fall '02 advance orders are ahead in the better and
luxury price point tailored clothing categories. Early
indications are that this favorable trend will continue into the
Spring '03 selling season. We are pleased with the significant
progress made in reducing working capital and debt and remain on
track to achieve or exceed our publicly stated year-end
objectives of $25 million reductions," Mr. Patel concluded.

The $7.1 million improvement in second quarter EBIT to $3.6
million in 2002 from last year's loss of $3.5 million on 11%
lower sales, reflected the $4.5 million litigation settlement
proceeds received this year; the current period also included
$.9 million of restructuring charges principally related to the
closing of a manufacturing facility and other staff reductions,
while last year's second quarter included restructuring charges
of $2.0 million.

For the six months, revenues were $270.2 million compared to
$287.2 million in 2001. EBIT was $6.8 million this year compared
to a loss of $1.7 million in 2001. Restructuring charges
included in year-to-date EBIT were $.9 million in 2002 compared
to $2.6 million in 2001. After consideration of interest expense
and taxes, the net loss was $1.0 million in 2002 compared to a
loss of $5.1 million in 2001. The prior year also included a
nominal second quarter loss related to repurchases of the
Company's then outstanding senior subordinated notes.

Total debt at May 31 of $124.7 million declined $21.4 million
from the year earlier level, after beginning the fiscal year $46
million higher. Interest expense of $8.6 million for the six
months this year compared to $6.6 million for the first half of
2001 reflected $1.9 million of non-cash interest expense this
year compared to $.2 million in 2001.

Hartmarx produces and markets business, casual and golf apparel
under its own brands including Hart Schaffner & Marx, Hickey-
Freeman, Palm Beach, Coppley, Cambridge, Keithmoor, Racquet
Club, Pusser's of the West Indies, Royal, Brannoch, Riserva,
Sansabelt, Barrie Pace and Hawksley & Wight. In addition, the
Company has certain exclusive rights under licensing agreements
to market selected products under a number of premier brands
such as Austin Reed, Tommy Hilfiger, Kenneth Cole, Burberrys
men's tailored clothing, Bobby Jones, Jack Nicklaus, Claiborne,
Evan-Picone, Pierre Cardin, Perry Ellis, KM by Krizia, and
Daniel Hechter. The Company's broad range of distribution
channels includes fine specialty and leading department stores,
value-oriented retailers and direct mail catalogs.

                         *    *    *

As previously reported by the Troubled Company Reporter,
Standard & Poor's lowered its corporate credit rating
on Hartmarx Corp., to 'SD' (selective default) from double-'C'
and the senior subordinated debt rating to single-'D' from
single-'C'. The ratings were removed from CreditWatch, where
they were placed on October 4, 2001.

Subsequently, the single-'D' rating on Hartmarx' senior
subordinated 10.875% notes due January 15, 2002 was withdrawn.

The downgrade reflects the completion of an exchange offer on
the 10.875% notes due January 15, 2002 with bonds maturing in
2003 plus an amount of cash and common stock. In December 2001,
Hartmarx claimed in an 8-K filing that, if the company is
unsuccessful in completing the exchange or obtaining additional
financing, it would need to restructure its debt. Standard &
Poor's considers the completion of the exchange to be tantamount
to a default, given the coercive nature of the offer.


HASBRO INC: Will Conduct Q2 Conference Call on July 22, 2002
------------------------------------------------------------
Hasbro, Inc. (NYSE:HAS) will webcast its second quarter
conference call via the Internet. The call will take place on
Monday, July 22, 2002, at 9:00 a.m. EST, following the release
of Hasbro's quarterly financial results. The call will be
available to investors and the media on Hasbro's investor
relations home page, at http://www.hasbro.comclick on  
"Corporate Info," click on "Investor Information," then click on
the webcast microphone.

The audio webcast platform is Microsoft's Windows Media
Player.(TM)  To install Windows Media Player prior to the
webcast, log on to

   http://www.microsoft.com/windows/windowsmedia/en/download/default.asp

and follow the directions.

Hasbro is a worldwide leader in children's and family leisure
time entertainment products and services, including the design,
manufacture and marketing of games and toys ranging from
traditional to high-tech. Both internationally and in the U.S.,
its PLAYSKOOL, TONKA, MILTON BRADLEY, PARKER BROTHERS, TIGER,
and WIZARDS OF THE COAST brands and products provide the highest
quality and most recognizable play experiences in the world.

                         *   *   *

As previously reported, Fitch Ratings affirmed Hasbro, Inc.'s
'BB' senior unsecured debt rating. In addition, the company's
new $380 million secured bank credit facility is rated 'BB+'.
The new facility, which replaces its previous 'BB+' rated
$650 million facility, continues to be secured by receivables,
inventories and intellectual property. As of December 31, 2001,
Hasbro had total debt outstanding of approximately $1.2 billion.
The Rating Outlook remains Negative.

The ratings reflect the company's strong market presence and its
diverse portfolio of brands balanced against the cyclical and
shifting nature of the toy industry. The ratings also consider
the challenges the company continues to face in refocusing its
strategy on its core brands and its weak financial profile. The
Negative Outlook reflects uncertainty as to the company's
ability to successfully execute its strategy and its ability to
achieve revenue targets for its core brands as well as Star Wars
in 2002.


HORIZON PCS: S&P Puts B- Rating On Watch With Neg. Implications
---------------------------------------------------------------
Standard & Poor's placed its single-'B'-minus corporate credit
rating on wireless services provider Horizon PCS Inc. on
CreditWatch with negative implications due to Standard & Poor's
concerns over the outcome of Horizon's negotiations with its
bank creditors over covenant amendments.

Chillicothe, Ohio-based Horizon is a Sprint PCS affiliate that
provides wireless services in markets in 12 states with a
combined covered population of about 7.2 million. At the end of
the first quarter of 2002, the company had about 222,700
subscribers and total debt of about $495 million.

"Horizon has until June 28, 2002, to resolve a waiver from its
lending group for failing to comply with the EBITDA covenant for
the first quarter of 2002," Standard & Poor's credit analyst
Michael Tsao said. "Horizon said the covenant violation was due
to the company incurring greater expenses due to higher than
anticipated subscriber additions."

Resolution of the CreditWatch listing is dependent on Horizon
obtaining amendments to its bank covenants and Standard & Poor's
assessment of the company's longer-term prospects in light of
recent industry volatility.


HORIZON PCS: Lenders Agree to Amend Sr. Secured Credit Facility
---------------------------------------------------------------
Horizon PCS, Inc., a Sprint PCS (NYSE:PCS) Network Partner,
announced that its lending group has agreed to amend the
Company's senior secured credit facility. "We are pleased to
have the support of our bank group in reaching agreement on this
amendment during difficult capital market conditions," said Bill
McKell, Horizon CEO.

Horizon PCS's secured credit facility includes financial
covenants that must be met each quarter; however, the Company
did not meet the EBITDA requirement for the first quarter of
2002. The Company's lending group agreed to waive this non-
compliance with the covenant through June 28, 2002, while the
amended facility was being negotiated. For amendment details,
please refer to the Company's Form 8-K to be filed today, which
will include the text of the amendment as an exhibit.

Horizon PCS is one of the largest Sprint PCS Network Partners,
based on its exclusive right to market Sprint PCS wireless
mobility communications network products and services to a total
population of over 10.2 million in portions of 12 contiguous
states. Its markets are located between Sprint's Chicago, New
York and Raleigh/Durham markets and connect or are adjacent to
15 major Sprint markets that have a total population of over 59
million. As a Sprint PCS Network Partner, Horizon markets
wireless mobile communications network products and services
under the Sprint PCS brand name. For more information, visit the
Horizon PCS Web site at http://www.horizonpcs.com     


JP MORGAN: Fitch Gives Low-B Rating to Class F, G & H Mtg. Notes
----------------------------------------------------------------
J.P. Morgan Commercial Mortgage Finance Corp.'s mortgage pass-
through certificates, series 1999-C7, $167.2 million class A-1,
$357 million class A-2 and interest-only class X are affirmed at
'AAA' by Fitch Ratings. In addition, Fitch affirms the $40.1
million class B certificates at 'AA', $40.1 million class C at
'A+', $52.1 million class D at 'BBB', $12 million class E at
'BBB-', $38.1 million class F at 'BB', $26 million class G at
'B' and $4 million class H at 'B-'. The $24 million class NR
certificates are not rated by Fitch. The rating affirmations
follow Fitch's review of the transaction, which closed in April
1999. As of the June 2002 distribution date, the pool's
aggregate principal balance has been reduced by 5%, from $801.4
million at closing to $760.5 million.

The certificates are collateralized by 144 fixed-rate mortgage
loans, consisting primarily of multifamily (31%), retail (22%),
office (18%) properties, with significant concentrations in
California (21%), Florida (11%), and Michigan (8%). No loans are
delinquent or specially serviced, and none have realized losses.
Midland Loan Services, Inc. (Midland) provided 2001 financials
for 95% of the pool (138 loans), including 4% of the pool with
year-to-date (as of September 2002) financials. According to the
information provided, the pool's weighted average debt service
coverage ratio (WADSCR) increased to 1.80 times (x) from 1.55x
at closing (for the same loans). The 2001 DSCR for each of the
top 5 loans was up from closing, with the WADSCR for these loans
increasing from 1.63x to 2.03x.

Of the 11 hotels in the pool (10% by balance), Midland collected
year-end 2001 financials for nine (87% of hotel loans). The 2001
WADSCR for these loans was 1.87x, slightly up from closing
(1.85x), although down from 2.16x in 2000, due to the weakened
economy and the events of Sept. 11. The top three hotel loans
(62% of hotels) reported increases in DSCRs from closing, with
the WADSCR increasing from 1.86x to 2.24x. Meanwhile, the four
smallest hotel loans (13% of hotels, 1.4% of the pool) reported
DSCRs below 1.00x and are currently on Midland's Watchlist
Review Pending.

Three loans (3.3%) are currently on Midland's watchlist. The
largest of these loans (2.4%) is secured by an office property
in the Baltimore central business district. The building is
currently 54% occupied, after one of the major tenants vacated,
and the borrower is trying to lease up the remaining vacant
space.

One loan (1.3%) is secured by a retail center in Kauai (Hawaii),
84% occupied by Big Kmart. To date, Kmart has not rejected the
lease. Although Kmart's sales figures were not available, this
is the only Kmart on the island and the property is part of the
largest shopping center on the island.

Fitch reviewed the exception report and found that 15% of the
pool were missing material loan documents.

Fitch identified several loans of concern and applied various
hypothetical stress scenarios. Even under these stress
scenarios, subordination levels remain sufficient to affirm the
ratings. Fitch will continue to monitor this transaction, as
surveillance is ongoing.


JACOBSON STORES: Will Pursue Dual Path in Bankruptcy Proceedings
----------------------------------------------------------------
Jacobson Stores Inc. plans to file a motion to pursue a dual
path in its bankruptcy proceedings.

The motion to be filed in the next several days with the United
States Bankruptcy Court for the Eastern District of Michigan,
Southern Division, in Detroit, if approved, would permit the
Company to solicit bids to either sell the business as a going
concern or to liquidate it.

The announcement comes after several months of the Company and
its financial advisors identifying and evaluating restructuring
alternatives, without receiving a proposal to purchase the
business as a going concern. As a result of defaults under the
Company's Debtor-in-Possession Loan and Security Agreement, the
Company and its D.I.P. lenders have agreed on this dual-path
procedure to raise the money necessary to repay the Company's
obligations under the D.I.P. facility. The Company currently
expects that its outstanding common shares will be cancelled and
that holders of its common shares will receive no distributions
in its bankruptcy proceedings. The Company also currently
expects that the proceeds of any sales resulting from the bids
will not be sufficient to repay unsecured creditors in full.

Carol Williams, Jacobson's President and CEO, said, "We
carefully explored and considered every option available to the
Company."

Williams added, "After extensive analysis, Jacobson's has
concluded that it is necessary to simultaneously pursue two
paths. We of course would prefer to sell Jacobson's to a buyer
whose financial resources would enable our Company to emerge
from bankruptcy. If this alternative is not feasible, the
Company will be compelled to liquidate its assets," she said.

Williams added, "Our intent has been to find a way to move
forward as a specialty retailer with the Jacobson's identity
intact, continuing with our high service standards, distinctive
merchandise assortments and reputation for fine gifts. Given the
current unsettled state of the specialty retail sector, however,
that might prove to be an unworkable option."

Jacobson's said the D.I.P. lenders, the Creditors' Committee and
other interested parties will have about four weeks to study any
offers that are received. The Company's motion will request that
the Bankruptcy Court schedule a hearing to accept offers during
the week of July 22, 2002.

Jacobson's currently operates 18 specialty stores in Michigan,
Indiana, Kentucky, Kansas and Florida. The Company's Web site is
located at http://www.jacobsons.com


LBI MEDIA INC: S&P Assigns B+ Corporate Credit Rating
-----------------------------------------------------
Standard & Poor's has assigned its single-'B'-plus corporate
credit rating to Spanish-language radio and television station
owner LBI Media Inc. The outlook is stable.

Standard & Poor's said it has also assigned its single-'B'-plus
bank loan rating to the company's $125 million senior secured
credit facility and its single-'B'-minus rating to the company's
proposed $200 million senior subordinated notes. Proceeds will
be used for debt repayment and to finance almost $33 million in
radio station purchases.

Burbank, California-based LBI will have $294 million
consolidated debt, including $30 million in holding company
notes, outstanding on completion of the financing and
acquisition transactions.

"LBI Media's low cost emphasis, local market focus, and Hispanic
population growth have fueled rapid growth and high margins,"
said Standard & Poor's credit analyst Eric Geil. "However, the
company's significant cash flow concentration and small size
relative to competitors are areas of concern. LBI is also likely
to continue to acquire stations, which could limit financial
profile improvement, depending on debt use and startup losses."

Standard & Poor's noted that maintenance of the company's
station positions within their markets in the face of rising
competition is important to rating stability. Operating weakness
or acquisition activity that undermines key credit measures
could destabilize the ratings.

LBI is a Spanish-language broadcaster with 12 radio stations and
3 television stations in Los Angeles, Houston, and San Diego.
The company has grown through a series of acquisitions of radio
and television properties and focuses on large U.S. Hispanic
markets.

Standard & Poor's said that its rating reflects LBI's position
as an operator of Spanish-language radio and television
stations, healthy margins and increasing Spanish-language
advertising. Offsetting factors include heavy cash flow
concentration in Los Angeles, increasing competition for
audiences and advertisers from much larger rivals, high
financial risk from debt financed acquisitions, and the
likelihood of additional station purchases that could slow the
pace of potential debt reduction.


LAIDLAW INC: Seeking Third Exclusivity Extension through Oct. 31
----------------------------------------------------------------
For the third time, Laidlaw Inc. and its debtor-affiliates ask
the Court to extend their exclusive periods to file a Plan of
Reorganization and to solicit acceptances thereof through and
including October 31, 2002.

According to Joseph M. Witalec, Esq., at Jones, Day, Reavis &
Pogue, in Columbus, Ohio, the Debtors have made a lot of
progress since the Second Extension Period to ultimately emerge
from bankruptcy as soon as possible.  Some of the achievements
are:

   (a) continued progress in resolving the major obstacles to
       their successful reorganization;

   (b) the liquidation of several significant disputed claims by
       and against the Debtors' estates;

   (c) the continued mediation of the claims between the Debtors
       and Safety-Kleen Corporation and its affiliates;

   (d) finalization of documentation necessary to settle the
       securities class action brought against them by certain
       of the Debtors' bondholders to which they have agreed in
       principle;

   (e) the objection to the IRS Claim resulting in IRS amending
       its claim to eliminate the amount to which the Debtors
       objected;

   (f) obtaining the Court approval of certain bonding
       facilities necessary for the operation of their non-
       debtors affiliates;

   (g) filing of the first omnibus objection to claims composed
       of about 642 claims filed by shareholders based on their
       equity interests, accounting for over half of the proofs
       of claims filed in these cases;

   (h) progress in their search for a new Chief Executive
       Officer to lead the Debtors upon their emergence from
       bankruptcy;

Section 1121(d) of the Bankruptcy Code provides that the Court
may "for cause," extend these periods.  With this, Mr. Witalec
contends that cause exist because:

   (a) the Debtors' Chapter 11 cases are large and complex;

   (b) the Debtors have made major progress; and

   (c) the creditors and other parties-in-interest will not
       be harmed by the extension.

The extension will be used to resolve the remaining two major
litigation issues that are obstacles to the Debtors' emergence
from bankruptcy, Safety-Kleen's claims and the Securities
Lawsuits.  Mr. Witalec explains that the settlement with the two
cases is taking a longer time than expected because the
substantive settlement negotiations are quite complex. (Laidlaw
Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service,
Inc., 609/392-0900)  


LERNOUT & HAUSPIE: Court Fixes June 28 Admin. Claims Bar Date
-------------------------------------------------------------
Lernout & Hauspie Speech Products N.V. and L&H Holdings USA,
Inc., ask Judge Wizmur to set a bar date by which all
administrative claims must be filed in these cases.

Mr. Gregory W. Werkheiser of Morris Nichols Arsht & Tunnell
reminds Judge Wizmur that Holdings has filed a liquidating plan
which is moving toward confirmation, and assures her that L&H NV
will soon be bringing its own liquidating plan to the fore.  It
is necessary to fix the total amount of administrative expenses
in order to make distributions under these plans.

Neither the Bankruptcy Code nor Rules, nor the Local Rules of
Court, establishes a time by which requests for administrative
payments must be made.  The Court is empowered to set a date,
however, depending on the circumstances of the case.

The L&H entities ask that all persons, entities and government
units asserting administrative claims file their requests for
payment on or before June 28, 2002, citing the service of the
motion as supporting this short deadline.  This deadline should
apply to all administrative claims arising from after the
Petition Date through the Administrative Claims Bar Date.

However, the L&H entities ask that certain creditors be exempted
from compliance with this bar date.  These are:

      (i) Any entity that has already filed a request for
          payment as an administrative claimant;

     (ii) Any entity whose administrative claim has been allowed
          by Judge Wizmur's Order entered on or before the
          Administrative Claims Bar Date;

    (iii) Any person currently employed by either of the L&H
          entities who asserts an administrative claim for
          unpaid wages or benefits;

     (iv) Any professional person retained by court order in
          these cases;

     (v) Any debtor or debtor-in-possession in these cases, or a
         wholly-owned subsidiary of any debtor or debtor-in-
         possession, having a claim or claims against any other
         debtor or debtor-in-possession in these cases; and

    (vi) The United States Trustee.

Judge Wizmur promptly grants this Order, setting the date as
requested. (L&H/Dictaphone Bankruptcy News, Issue No. 25;
Bankruptcy Creditors' Service, Inc., 609/392-0900)  


MAGELLAN HEALTH: S&P Lowers Counterparty Credit Rating to B
-----------------------------------------------------------
Standard & Poor's lowered its counterparty credit rating on
Magellan Health Services, Inc. to single-'B' from single-'B'-
plus. It also said it lowered other ratings on the company's
debt issues and placed all ratings on CreditWatch with negative
implications because of declining operating performance, high
leverage and problematical liquidity.

"Loans under the bank credit agreement are guaranteed by all of
Magellan's important subsidiaries and, in addition, are secured
by Magellan's stock in those subsidiaries. The senior notes do
not enjoy this protection," observed credit analyst Charles
Titterton. "Nevertheless," he explained, "Standard & Poor's
rates both issues the same because it gauges the probability of
default to be identical in both instruments and believes that,
in case of default, the banks' ability to recover all their
principal (the criterion for differentiated ratings) is
uncertain."

Management has embarked on initiatives designed to improve
Magellan's liquidity position. Standard & Poor's will monitor
these initiatives. If, in a reasonably short period of time, it
becomes apparent that they will be implemented in a way Standard
& Poor's believes will make the company's current position more
stable, and if results of operations warrant, the ratings will
be removed from CreditWatch. If, however, they are not
implemented, or if Standard & Poor's believes that they do not
address the liquidity concern sufficiently, the ratings will be
lowered further.


METROCALL INC.: Bankr. Court Restricts Sale & Transfer of Shares  
----------------------------------------------------------------
           IN THE UNITED STATES BANKRUPTCY COURT FOR THE
                     DISTRICT OF DELAWARE

In re:                        )     Chapter 11
                              )     Case No. 02-11579 (RB)
METROCALL, INC., et al.,*     )    (Jointly Administered)
            Debtors.          )    

                NOTICE OF INTERIM ORDER LIMITING
             THE SALE OR TRANSFER OF COMMON STOCK,
           PREFERRED STOCK AND INTERESTS THEREIN OF
                      METROCALL, INC.                    
                PURSUANT TO THE AUTOMATIC STAY

      TO ALL PERSONS OR ENTITIES HOLDING COMMON STOCK OR
PREFERRED STOCK OF METROCALL, INC., INCLUDING BUT NOT LIMITED TO
ANY WARRANTS, OPTIONS OR OTHER RIGHTS TO ACQUIRE SUCH STOCK
(COLLECTIVELY, THE "STOCK")

      PLEASE TAKE NOTICE that on June 3, 2002 (the "Commencement
Date"), Metrocall, Inc. and its direct and indirect wholly-owned
subsidiaries (collectively "Metrocall" or the "Debtors")
commenced a case under chapter 11 of title 11, United States
Code (the "Bankruptcy Code").  Section 362(a) of the Bankruptcy
Code operates as a stay of any act to obtain possession of
property of the Debtors' estates or of property from the
Debtors' estates or to exercise control over property of the
Debtors' estates.

      PLEASE TAKE FURTHER NOTICE that on June 4, 2002, the
Debtors filed and the Court held a preliminary hearing (the
"Hearing") on the Motion of Debtors Pursuant to Sections 362 and
105(a) of the Bankruptcy Code Establishing Notification
Procedures Regarding Applicability of the Automatic Stay
Limiting Certain Transfers of Common Stock, Preferred Stock and
Interests Therein (the Motion").

      PLEASE TAKE FURTHER NOTICE that objections or other
responses, if any, to entry of a final order on the Motion must
be filed with the United States Bankruptcy Court for the
District of Delaware, 824 Market Street, Wilmington, DE 19801
(the "Bankruptcy Court") and served upon the Debtors, with
copies served upon (i) Schulte Roth & Zabel LLP, 919 Third
Avenue, New York, NY 10022, Attn: Jeffrey S. Sabin, Counsel to
the Debtors, (ii) Pachulski, Stang, Ziehl, Young & Jones, P.C.,
919 North Market Street, 16th Floor, Wilmington, DE 19899, Attn:
Laura Davis Jones, Co-counsel to the Debtors, (iii) Mayer Brown
Rowe & Maw, 1627 Broadway, New York, NY 10019, Attn: Ken Noble,
Esquire, Counsel for the Secured Lenders, (iv) the Office of the
United States Trustee, 844 King Street, Suite 2313 Wilmington,
DE 19801, Attn.: Joseph J. McMahon, Jr., Esquire, no later than
July 1, 2002 at 12:00 p.m. (EST).

      PLEASE TAKE FURTHER NOTICE that if objections or other
responses are timely filed in accordance with this Notice, a
final hearing on the Motion will be held on July 8, 2002 at 2:30
p.m. before the Honorable Ronald Barliant, United States
Bankruptcy Court for the District of Delaware by designation,
844 N. King St., Second Floor, Wilmington, Delaware. If you fail
to respond or object in accordance with this notice, the court
may grant the final relief requested in the Motion without
further notice or hearing.

      PLEASE TAKE FURTHER NOTICE that on June 4, 2002, the
United States Bankruptcy Court for the District of Delaware (the
"Bankruptcy Court") having jurisdiction over these chapter 11
cases approved entry of an interim order on the Motion (i)
finding that the Debtors' tax attributes may be property of the
Debtors' estates and are may be protected by section 362(a) of
the Bankruptcy Code; (ii) finding that unrestricted trading of
certain interests in the Debtors could limit the Debtors'
ability to utilize their tax attributes for U.S. federal income
tax purposes, and (iii) approving the procedures set forth below
in order to preserve the Debtors' tax attributes pursuant to
sections 362(a) and 105(a) of the Bankruptcy Code (the "Interim
Order"). Any sale or other transfer in violation of the
procedures set forth below may be null and void ab initio as an
act in violation of the automatic stay under sections 362 and
105a) of the Bankruptcy Code upon further hearing.

      PLEASE TAKE FURTHER NOTICE that the following persons and
entities (within the meaning of Section 382 of the Internal
Revenue Code) that intend to sell, purchase, trade, assign,
acquire, gift or transfer by other means (collectively, a
"Transfer") any Metrocall, Inc. common stock or preferred stock,
or options, warrants, or other rights therein (the "Stock") must
provide notice to the Debtors of any intended Transfer at least
five business days prior to such Transfer and must (i) represent
in such notice that the proposed Transfer will not and shall not
result in an "ownership change" with respect to Metrocall, Inc.
within the meaning of section 382 of the Internal Revenue Code
and (ii) must set forth with specificity the explanation or
details in support of any such representation (a "Transfer
Notification"):

      (a) any person or entity (within the meaning of Section
382) who does not Own (as defined below) any Stock, or who Owns
less than 5% of each class of the Stock, that intends to
Transfer or otherwise obtain Ownership of an amount which, when
added to such person's or entity's total Ownership, if any,
equals or exceeds 4.99% of any such class of the Stock,

      (b) any person or entity (within the meaning of Section
382) that Owns at least 5% of any class of the Stock, and

      (c) any person or entity (within the meaning of Section
382) who Owns less than 5% of each class of the Stock, that
intends to Transfer (i) Ownership of an amount which, when
added to the acquiring or purchasing person's or entity's total
Ownership, if any, would equal or exceed 4.99% of any such class
of the Stock held by that acquiring or purchasing party or
entity (within the meaning of Section 382) or (ii) to any party
set fort in paragraph (b) above (the proposed Transfers within
paragraphs (a), (b) and (c) above are "Restricted Transfers")
and (the persons and entities identified in sub-paragraphs (a),
(b) and (c) above are the "Restricted Classes").

      PLEASE TAKE FURTHER NOTICE THAT THE RESTRICTIONS
ESTABLISHED IN THE IMMEDIATELY PRECEDING ORDERED PARAGRAPH (AND
SUB-PARAGRAPHS) SHALL APPLY ONLY TO THE RESTRICTED TRANSFERS AND
THE RESTRICTED CLASSES.

      For purposes of this Notice, (i) "Ownership" of a claim
against the Debtors shall be determined in accordance with
applicable rules under Section 382 of the Internal Revenue Code
and, thus, shall include, but not be limited to, direct and
indirect ownership (e.g. a holding company would be considered
to beneficially own all shares owned or acquired by its
subsidiaries), ownership by members of such person's family and
persons acting in concert, and in certain cases, the creation or
issuance of an option (in any form), and (ii) any variation of
the term "Ownership" (e.g. Own) shall have the same meaning.

      For the purpose of this Notice "ownership change" pursuant
to section 382 of the Internal Revenue Code occurs, if
"immediately after an owner shift involving a 5-percent
shareholder or any equity structure shift (A) the percentage of
the stock of the loss corporation owned by one or more 5-percent
shareholders has increased by more than fifty (50) percentage
points, over (B) the lowest percentage of stock of the loss
corporation (or any predecessor corporation) owned by such
shareholders at any time during the testing period". (The
testing period is the 3 year period preceding the taxable year
in which the ownership change occurs.)  26 U.S.C. Sec. 382(g).
There is an owner shift involving a 5-percent shareholder if
"there is any change in the respective ownership of stock of a
corporation, and . . . such change affects the percentage of
stock of such corporation owned by any person who is a 5-percent
shareholder before or after such change."

      PLEASE TAKE FURTHER NOTICE that pursuant to the Interim
Order, Equiserve Trust, N.A., the "Transfer Agent" for
Metrocall, Inc. shall be directed not to give effect to any
Restricted Transfer of Stock other than in accordance with the
procedures set forth in this Notice and the Interim Order.

      PLEASE TAKE FURTHER NOTICE that absent receipt of a
written objection by Metrocall, Inc. issued no later than five
business days following Metrocall, Inc.'s receipt of any such
Transfer Notification, such person or entity issuing the
Transfer Notification may then give written notice to the
Transfer Agent that no objection to the Transfer Notification
was made by Metrocall, Inc. and, in such an event, the Transfer
Agent shall be authorized to give effect to and implement the
Restricted Transfer.

      PLEASE TAKE FURTHER NOTICE that any Transfer Notification
set forth herein shall in the case of Metrocall, Inc. and the
Debtors be delivered to:

   Metrocall, Inc.               And In the case of the Transfer
   6910 Richmond Highway          Agent be delivered to:
   Alexandria, Virginia 22306    Equiserve Trust, N.A.
   Attn: George Moratis          525 Washington Blvd.
   Vice President of Finance     Jersey City, New Jersey 07310
   Phone: 703-660-6677           Attn: John Piskadlo
   Fax: 703-721-3088             Phone: 201-324-0498
                                 Fax: 201-222-4679

      FAILURE TO FOLLOW THE PROCEDURES SET FORTH IN THIS NOTICE
MAY CONSTITUTE A VIOLATION OF THE AUTOMATIC STAY PRESCRIBED BY
SECTION 362 OF THE BANKRUPTCY CODE.

      ANY RESTRICTED TRANSFER OF THE METROCALL, INC. STOCK, IN
VIOLATION OF THE BANKRUPTCY COURT'S ORDER MAY BE FOUND TO BE
NULL AND VOID AB INITIO AND MAY BE PUNISHED BY CONTEMPT OR OTHER
SANCTIONS IMPOSED BY THE BANKRUPTCY COURT UPON FURTHER HEARING.

      PLEASE TAKE FURTHER NOTICE that the requirements set forth
in this Notice are in addition to the requirements of Rule
3001(e) of the Federal Rules of Bankruptcy Procedure and
applicable securities, corporate, and other laws, and do not
excuse compliance therewith.

      PLEASE TAKE FURTHER NOTICE that, subject to certain
exceptions, the automatic stay prescribed by section 362 of the
Bankruptcy Code also prohibits (i) the commencement or
continuation, including the issuance or employment of process,
of a judicial, administrative, or other action or proceeding
against the Debtors that was or could have been commenced before
the Commencement Date, or to recover a claim against the Debtors
that arose before the Commencement Date, (ii) the enforcement,
against the Debtors or against property of their estates, of a
judgment obtained before the Commencement Date, (iii) any act to
obtain possession of property of the Debtors' estates or of
property from their estates or to exercise control over properly
of their estates, (iv) any act to create, perfect, or enforce
any lien against property of the Debtors' estates, (v) any act
to create, perfect, or enforce against property of the Debtors
any lien to the extent that such lien secures a claim that arose
before the Commencement Date, (vi) any act to collect, assess,
or recover a claim against the Debtors that arose before the
Commencement Date, (vii) the setoff of any debt owing to the
Debtors that arose before the Commencement Date against any
claim against the Debtors and (viii) the commencement or
continuation of a proceeding before the United States Tax Court
concerning the Debtors. Parties are directed to review the text
of the Bankruptcy Code to understand their rights and
obligations.

SCHULTE ROTH & ZABEL LLP   and  PACHULSKI, STANG, ZIEHL, YOUNG
Jeffrey S. Sabin                 & JONES PC.
919 Third Avenue                /s/ Laura Davis Jones
New York, New York 10022        Laura Davis Jones (Bar No. 2436)
Telephone: (212) 756-2000       919 North Market Street, 16th Fl
Facsimile: (212) 593-5955       PO. Box, 8705
                                Wilmington, Delaware 19899-8705      
                                 (Courier 19801)
                                Telephone: (302)652-4100
                                Facsimile: (302) 652-4400

  [proposed] Attorneys for the Debtors and Debtors in Possession

     * The Debtors are Metrocall, Inc. and its direct and
       indirect wholly-owned subsidiaries, Metrocall USA, Inc.,
       Advanced Nationwide Messaging Corporation, MSI, Inc.,
       McCaw RCC Communications, Inc. and Mobilfone Service,
       L.P.


METROMEDIA FIBER: PAIX Sets-Up European Unit In Dublin, Ireland
---------------------------------------------------------------
PAIX.net, Inc. (PAIX), a leading carrier neutral Internet
exchange, and a subsidiary of Metromedia Fiber Network, Inc.
(MFN), announced the formation of PAIX Europe to be
headquartered in Dublin, Ireland. PAIX Europe will operate as a
separate business unit, overseeing the licensing of PAIX's
unique ISO Layer 2 switching fabric throughout Europe, Africa
and the Middle East.

In addition, PAIX Europe announced the initial licensee, the
newly formed PAIX Ireland. PAIX Ireland is the first neutral,
commercial-grade Internet exchange in Dublin, Ireland.

PAIX Europe will primarily focus on the aggressive licensing and
marketing of "Peering by PAIX" to the operators of neutral
third-party co-location providers. By having direct access to
the European, African and Middle Eastern markets, PAIX Europe
will actively develop new opportunities to deploy "Peering by
PAIX." This endeavor gives both regional and international ISP's
and content providers' access to a proven peering infrastructure
with an unequalled level of technical leadership, reliability
and efficiency.

PAIX Ireland will provide Class A co-location, "Peering by PAIX"
and valuable technical support services. This exchange point
will offer 24x7 access, operational support and the highest
commercial-grade levels of security and environmental control
systems. Dublin Internet traffic will now have a local
connectivity to international routes and content without the
need for expensive backhaul to access congested international
peering hubs and network access points.

"The formation of PAIX Europe will allow us to expand PAIX's
presence and brand overseas without the extensive capital
associated with operating wholly-owned facilities," said Sheldon
Fishman, VP of Sales, Marketing and Business Development for
PAIX.net, Inc. "By allowing the European exchange points that
serve these markets to license and implement our advanced
technology, we are enabling European businesses to take
advantage of the same cost-effective level of reliability,
security, choice, technical advancement and commitment to
marketplace agility that PAIX customers have enjoyed since 1996
in the United States."

"With the continued growth of internet traffic and the
increasing requirement for peering, it is essential that
European Telecommunications Companies, ISPs and Enterprise
organizations have access to high grade commercial Internet
exchanges to sustain their businesses into the future," said
Robert Booth, PAIX Europe's Chief Executive Officer. "PAIX is
unquestionably the leading commercial Internet exchange brand in
the US. It is synonymous with quality, expertise and
consistency. European ISPs and content providers have been very
clear with us about their need for high quality open
marketplaces where they can exchange traffic and negotiate the
best deals among themselves, without interference from the site
provider. We think the opportunity is now!"

PAIX.net, Inc., headquartered in Palo Alto, California, began
operations in 1996 as Digital Equipment Corporation's Palo Alto
Internet Exchange. Having proven itself as a vital part of the
Internet infrastructure, PAIX serves as a packet switching
center for ISP's and other Internet-centric customers. PAIX also
offers secure, fault-tolerant co-location services to ISP's.
PAIX enables its participants to form public and private peering
relationships with each other and choose from multiple
telecommunications carriers for circuits, all within the same
facility. PAIX is a subsidiary of Metromedia Fiber Network, Inc.
To ensure its neutrality, it operates as a separate entity with
its own management. For additional information about PAIX call
877-PAIXnet (877-724-9638) or visit its Web site at
http://www.paix.net

On May 20, 2002, PAIX's parent company, Metromedia Fiber
Network, Inc., and most of PAIX's parent's domestic subsidiaries
commenced voluntary Chapter 11 cases in the United States
Bankruptcy Court for the Southern District of New York.

MFN is the leading provider of digital communications
infrastructure solutions. The Company combines the most
extensive metropolitan area fiber network with a global optical
IP network, state-of-the-art data centers and award-winning
managed services to deliver fully integrated, outsourced
communications solutions to Global 2000 companies. The all-fiber
infrastructure enables MFN customers to share vast amounts of
information internally and externally over private networks and
a global IP backbone, creating collaborative businesses that
communicate at the speed of light.

For more information on MFN, please visit its Web site at
http://www.mfn.com  


MORGAN STANLEY: Fitch Rates Several Certificates at Low-B Level
---------------------------------------------------------------
Morgan Stanley Dean Witter Capital I Trust 2002-IQ2, series
2002-IQ2, commercial mortgage pass-through certificates are
rated by Fitch Ratings as follows:

              --$118,000,000 class A-1 'AAA';
              --$131,500,000 class A-2 'AAA';
              --$151,000,000 class A-3 'AAA';
              --$262,260,000 class A-4 'AAA';
              --$778,574,565 class X-1 * 'AAA';
              --$691,924,000 class X-2 * 'AAA';
              --$25,305,000 class B 'AA';
              --$24,330,000 class C 'A';
              --$7,786,000 class D 'A-';
              --$7,786,000 class E 'BBB+';
              --$7,785,000 class F 'BBB';
              --$5,840,000 class G 'BBB-';
              --$9,732,000 class H 'BB+';
              --$5,839,000 class J 'BB';
              --$3,893,000 class K 'BB-';
              --$3,893,000 class L 'B+';
              --$2,920,000 class M 'B';
              --$2,919,000 class N 'B-';
              --$7,786,565 class O 'NR'.

                   *interest-only

Class O is not rated by Fitch. Classes A-1, A-2, A-3, A-4, B, C,
and D are offered publicly, while classes X-1, X-2, E, F, G, H,
J, K, L, M, N, and O, are privately placed pursuant to rule 144A
of the Securities Act of 1933. The certificates represent
beneficial ownership interest in the trust, primary assets of
which are 105 fixed-rate loans having an aggregate principal
balance of approximately $778,574,565 as of the cutoff date.


NASH FINCH: Fitch Affirms Low-B Ratings for Bank & Senior Debt
--------------------------------------------------------------
Fitch Ratings has affirmed Nash Finch's (NAFC) bank credit
facility rating of 'BB' and its senior subordinated debt rating
of 'B+'. Approximately $380 million of debt is affected. The
company's Rating Outlook is Stable.

NAFC's ratings reflect a steady financial profile and position
as a niche operator in the food wholesale industry. The ratings
also consider that NAFC operates in a highly competitive
industry that has experienced significant consolidation both at
the wholesale and retail level. Going forward, the company must
maintain above average operating execution as it faces
competition from larger, better capitalized operators.

NAFC continues to enhance both its retail and wholesale retail
businesses in its core market of the Upper Midwest, by making
select acquisitions of its wholesale customers as well as its
competitors which increases its retail store base and improving
operating efficiencies in order to attain new wholesale
customers. In addition, the company is developing niche retail
concepts such as Avanza and Buy n Save to differentiate
themselves from some of their larger competitors. The ratings
factor in an intensifying competitive operating environment -
particularly reflecting supercenter expansion. The company's
retail division (approximately 25% of revenues), focuses on
improving customer service and selection, updating stores,
maintaining price control, passing on manufacturer savings to
customers as well as working capital management. The company's
food wholesale division (approximately 50% of revenues) has
improved in recent years as NAFC has focused on improving the
utilization of its warehouses (backhaul, labor scheduling,
etc.), category management/sku reduction and improving vendor
allowances. The remaining 25% of revenues is generated by its
wholesale service to the military.

As a result of some of the initiatives mentioned above the
company has achieved gradual improvement in its financial
profile. EBITDA increased during LTM 2002 ended 3/23/02 to
$118.5 million from $106.7 million in FY 2000 and margins
improved to 2.9% from 2.7% during the same period. This
improvement is due mainly to an increase in revenues from
company-owned stores and new wholesale accounts, improved
utilization of its warehouses and better product management.
Total adjusted debt/EBITDAR and EBITDAR/interest + rents have
remained relatively flat since fiscal 2000 with trailing 12
months results of 4.1 times and 2.4x vs. 4.2x and 2.2x,
respectively for FY 2000.

Nash Finch is a food wholesale company supplying products to
independent supermarkets and military bases in approximately 30
states. The company owns and operates approximately 111 retail
supermarkets throughout the Midwest.


NATIONAL RAILROAD: Railroad Group Urges Congressional Action Now
----------------------------------------------------------------
The American Short Line and Regional Railroad Association called
for the Administration and Congress to end the National Railroad
Passenger Corporation, also known as Amtrak, passenger crisis
and to come up with a long term solution that will permit a
stable world-class passenger network in America.

Frank Turner, President of ASLRRA, in a letter to Secretary of
Transportation Norman Mineta said, "Our members do not have as
large an operating relationship with Amtrak as the Class 1
railroads. However, such companies as the Louisville & Indiana,
Florida East Coast, and the Morristown and Erie see Amtrak as a
very important partner. Further, passenger and freight rail
achieve a common public interest. We both save energy, improve
safety, and relieve congestion. It is a tragedy that our
intercity passenger network has been allowed to deteriorate to
its present nearly bankrupt status." Turner pledged to work
cooperatively with Mineta and other stakeholders in crafting a
"workable long term solution" to the passenger crisis.

Turner said the ASLRRA agrees with the proposal of House
Transportation Chairman Don Young that Amtrak should receive a
federal grant to meet the short term crisis, and not a Railroad
Rehabilitation and Improvement Financing (RRIF) loan. "As
Chairman Young has pointed out, regulations hamstring the RRIF
program to such an extent it has proved almost unworkable for
short line and regional railroads. Only 3 loans have been
approved in five years. We are working in Congress to streamline
these troublesome regulations. We would object strenuously to
waiving the regulations and statutory requirements to which we
are held to address a structural problem greater in scope than
anticipated by the RRIF statute. This would subvert the original
purpose of the program. We would have no objection to Amtrak, or
any passenger carrier applying for a RRIF loan if it meets the
existing statutory requirements. As Chairman Young has
suggested, the proper solution is to provide Amtrak with a grant
to meet its crisis."


NATIONAL STEEL: Lenders Agree to Amend Final DIP Order Provision
----------------------------------------------------------------
Dean C. Gramlich, Esq., at McDermott, Will & Emery, in Chicago,
Illinois, relates that National Steel Corporation, along with
its debtor-affiliates owe substantial sums to a range of
unsecured creditors including trade creditors.  The Debtors are
liable for more than $900,000,000 in unfunded pension fund
liabilities and more than over $500,000,000 in underfunded
"legacy costs" under a collective bargaining agreement with the
United Steelworkers of America.

Mr. Gramlich tells the Court that prior to the Petition Date,
various lending institutions -- the "Prepetition Lenders" --
made loans and advanced credit to the Debtors and certain of
their affiliates as the "Guarantors" under a Credit Agreement
between the Debtors, as Borrower, the Guarantors, Citicorp USA,
Inc., as administrative agent for the Prepetition Lenders and
the Prepetition Lenders.

According to Mr. Gramlich, under the Prepetition Credit
Agreement, the Debtors and the Guarantors granted to the
Administrative Agent security interests and liens on
substantially all of their personal property.

Mr. Gramlich reminds the Court of the Final Order they entered
authorizing Debtors In Possession To Enter Into Postpetition
Credit Agreement And Obtain Postpetition Financing.  The order
also provided that the Committee has the right to assert Claims
and Defenses against the Prepetition Lenders and Prepetition
Agents.

In a Court-approved stipulation, the Official Committee of
Unsecured Creditors and the Administrative Agent, on behalf of
the Prepetition Lenders, have agreed to amend the Final DIP
Order to provide that:

  "Notwithstanding anything to the contrary in the Final DIP
  Order, the date on or before which the Committee must commence
  an action in this Court to assert Claims and Defenses is
  extended from June 17, 2002 until August 16, 2002:

  This holds true for Claims and Defenses that are based on:

  (a) facts and events that occurred prior to the Petition Date;
      and

  (b) either:

         (i) on the receipt by the Prepetition Lenders or the
             Prepetition Agents of transfers found to be or
             constitute preferential transfers, fraudulent
             conveyances or fraudulent transfers; or

        (ii) any lender liability cause of action.

   The Committee agrees that the liens of the Administrative
   Agent on the Prepetition Revolver Collateral are attached and
   are properly perfected.

"The bar date for filing proofs of claim in the Debtors'
bankruptcy cases is extended until October 15, 2002 for the
Prepetition Agents and the Prepetition Lenders," Mr. Gramlich
says.

This stipulation is effective as of June 17, 2002. (National
Steel Bankruptcy News, Issue No. 10; Bankruptcy Creditors'
Service, Inc., 609/392-0900)


NATIONSRENT: Gets Okay to Hire Quiktrak as Equipment Auditor
------------------------------------------------------------
NationsRent Inc. and its debtor-affiliates sought and obtained
Court approval to retain and employ Quiktrak, Inc, as equipment
auditors in the Chapter 11 cases, in accordance with a letter of
intent for equipment auditing services between the Debtors and
Quiktrak, dated as of May 1, 2002. Quiktrak shall perform the
inventory audit of NationsRent's 13,275 financed rental units at
the 231 locations.

                          *    *    *

As previously reported, Quiktrak will:

A. assist the Debtors with preparations for the proper
   completion of a Leased Equipment audit, including developing
   training manuals to train inspectors and converting the
   Debtors' location and audit information data to a layout
   specifically developed to assist field inspectors;

B. assist the Debtors with the Leased Equipment audit, including
   the physical verification and missing unit settlement of the
   Leased Equipment; and,

C. assist the Debtors develop individual reports for each of
   the Debtors' equipment lessors summarizing the final audit
   results.

NationsRents agrees to pay Quiktrak's:

A. A first payment of $30,000 as initial retainer will be
   submitted to Quiktrak prior to performing pre-auditing
   preparations;

B. A second payment of $30,000 as second retainer will be
   submitted to Quiktrak prior to performing the physical audit;

C. a final payment, which represents the balance for all
   services rendered will be submitted to Quiktrak within 14
   days after the completion of the audit and submission of the
   final report.

Quiktrak will charge a $53 per location base fee, a $1.95 per
unit charge and a $45 hourly rate charge for its professional
services and upon completion of the audit. Per unit charge
includes verification of unit by serial number, hour meter
reading, and general condition information.

Quiktrak Vice-Chairman, Don Froomer, anticipates that Quiktrak
will complete performance of its services within approximately
30 days from the date work commences. However, upon the request
of the Debtors, Quiktrak may render additional equipment
auditing services as required throughout the course of these
Chapter 11 cases. The estimated total cost to complete
Quiktrak's services will be approximately $93,963, broken down
as:

                 Category                  Total Cost
       ------------------------------      ----------
                 Base Rate                  $ 12,296
       Physical Verification of units         12,940
        Accounting for missing units           9,954
             Phone Verification               22,386
            On-site Verification              29,410
         Electronic return of Audit            9,977

Mr. Froomer continues that, to the extent the Debtors request
Quiktrak to perform additional services beyond what is
contemplated in the initial engagement, Quiktrak will employ the
same Fee Structure minus the additional retainers. Quiktrak will
submit an estimate of the cost of any additional services to the
Debtors for prior approval before it is authorized to perform
any additional services. (NationsRent Bankruptcy News, Issue No.
14; Bankruptcy Creditors' Service, Inc., 609/392-0900)


NEON COMMS: Wants Court to Appoint BSI as Notice Agent
------------------------------------------------------
NEON Communications, Inc., and its debtor-affiliate, NEON
Optica, Inc., move the Court to appoint Bankruptcy Services LLC
as the official claims, noticing and balloting agent in the
Company's chapter 11 cases.

The Debtors have identified hundreds of creditors and other
parties in interest to whom certain notices and voting documents
must be sent. The magnitude of the Debtors' creditor body makes
it infeasible for the Clerk's Office to undertake that task and
send notices to the creditors and other parties in interest.

Pursuant to the Agreement, the Debtors anticipate that BSI will:

     a. prepare and serve required notices in these chapter 11
        cases;

     b. within five business days after the service of a
        particular notice, file with the Clerk's Office a
        certificate or affidavit of service;

     c. maintain copies of all proofs of claim and proofs of
        interest filed in these cases;

     d. maintain an official claims register in this case by
        docketing all proofs of claim and proofs of interest in
        a claims database that includes the following
        information for each such claim or interest asserted;

     e. name and address of the claimant or interest holder and
        any agent thereof, if the proof of claim or proof of
        interest was filed by an agent;

     f. date the proof of claim or proof of interest was
        received by BSI and/or the Court;

     g. claim number assigned to the proof of claim or proof of
        interest; and

     h. asserted amount and classification of the claim;

     i. implement necessary security measures to ensure the
        completeness and integrity of the claims register;

     j. transmit to the Clerk's Office a copy of the claims
        register on a weekly basis, unless requested by the      
        Clerk's Office on a more or less frequent basis;

     k. maintain an up-to-date mailing list for all entities
        that have filed proofs of claim or proofs of interest
        and make such list available upon request to the Clerk's
        Office or any party in interest;

     l. provide access to the public for examination of copies
        of the proofs of claim or proofs of interest filed in
        this case without charge during regular business hours;

     m. record all transfers of claims and provide notice of
        such transfers as required if directed to do so by the
        Court;

     n. comply with applicable federal, state, municipal and
        local statutes, ordinances, rules, regulations, orders
        and other requirements;

     o. provide temporary employees to process claims, as
        necessary;

     p. promptly comply with such further conditions and
        requirements as the Clerk's Office or the Court may at
        any time prescribe; and

     q. provide such other claims processing, noticing,
        balloting, and related administrative services as may be
        requested from time to time by the Debtors.

The customary rates charged by BSI in similar retention are:

          Kathy Gerber          $195 per hour
          Senior consultants    $175 per hour
          Programmer            $125 - $150 per hour
          Associate             $125 per hour
          Data Entry/Clerical   $40 - 60 per hour

NEON Communications, Inc. owns certain rights to fiber and all
of the outstanding stock of NEON Optica, Inc., which owns and
operates a fiber optic network services. The Company filed for
chapter 11 protection on June 25, 2002. David B. Stratton, Esq.,
at Pepper Hamilton LLP represents the Debtors in their
restructuring efforts.  When the Debtors filed for protection
from their creditors, they listed $55,398,648 in assets
$19,664,234 in debts.


PACIFIC GAS: Taps D.F. King To Conduct Plan Solicitation
--------------------------------------------------------
Pursuant to Section 327(a) of the Bankruptcy Code and Bankruptcy
Rule 2014(a), Pacific Gas and Electric Company and its debtor-
affiliates requests authority to employ D.F. King & Co.,
Inc. to conduct various Plan solicitation-related services,
including beneficial holder research and the mailing of
solicitation materials.

PG&E estimates that, in terms of the numbers of creditors and
equity holders who will be entitled to receive Plan documents,
there are approximately: (i) 60,000 creditors, (ii) 1200
registered holders of publicly-traded debt securities and
approximately 27,000 debt security holders in "street" name, and
(iii) 13,000 registered equity security holders and
approximately 37,000 equity security holders in street name.

PG&E anticipates that, in the coming months, it will need to
identify all its major institutional note-holders and
stockholders, disseminate a large array of information to its
creditors and beneficial claim holders in order to solicit their
acceptance of the PG&E Plan. PG&E notes that it must also
establish a means by which creditors and equity holders may
obtain additional information or resolve pending questions or
concerns.

PG&E believes it requires the assistance of professionals
qualified to offer advice with regard to an effective and
efficient solicitation strategy. Subject to the Court's
approval, PG&E has entered into a contract with King, a leading
proxy solicitation firm, to:

1. Provide advice to PG&E regarding the development and
   implementation of a comprehensive solicitation program.

2. Identify and profile all major institutional note-holders and
   stockholders.

3. Work with PG&E to request appropriate information from the
   trustee(s) of its financial instruments, the Company's
   transfer agent for its preferred stock, and the Depository
   Trust Company.

4. Mail solicitation-related advocacy materials to creditors and
   equity holders.

5. Coordinate the distribution of solicitation-related advocacy
   materials to street name holders of bonds and common stock by
   forwarding these materials to the banks, brokerage firms and
   agents holding such securities, who, in turn will forward
   them to beneficial owners of securities.

6. Solicit votes from all claimants.

7. Provide call center operations including responding to
   substantive and procedural telephone inquiries from parties
   in interest regarding the disclosure statement, voting
   procedures, election procedures and making outgoing contact
   with solicitees.

King's areas of expertise include advising and acting as a proxy
agent to other public companies and acting as a solicitation
agent in bankruptcy proceedings. King has substantial experience
in managing security-holder and bankruptcy solicitations, and in
providing in-depth analysis of security-holder profiles. King
also maintains a state-of-the-art call center capable of
contacting and receiving calls from thousands of creditors,
equity holders and others.

PG&E is familiar with King's expertise through its prior work
for PG&E Corporation. Debtor tells the Court King currently acts
as PG&E Corporation's proxy solicitor. In this role, King
advises PG&E Corporation on corporate governance issues, proxy
solicitation and related issues, and provides profile and vote
projection analysis on institutional holders. King also assisted
PG&E Corporation in its holding company restructuring and acted
as information agent for PG&E Corporation in tender offer
transactions, the Debtor relates. King has also previously
performed for PG&E annual report and proxy statement delivery
services both pre and post-petition, the Debtor advises.

            Compensation and Procedures for Payment

PG&E has agreed to a $325,000 total fee for King's services.
$162,500 of this fee is payable upon the first mailing of PG&E's
solicitation materials, and $162,500 is payable on the earlier
to occur of (i) the first date of the confirmation hearing, or
(ii) August 31, 2002. PG&E will also pay King $4.50, plus
related telecommunications charges, for each incoming or
outgoing claimant telephone contact. Should any additional
services be required, PG&E will provide King with reasonable and
customary compensation in an amount to be mutually agreed upon.
In addition, PG&E will reimburse King for all out-of-pocket
expenses. For each expense over $100, supporting documentation
will be provided.

PG&E requests authority to make Interim Payments to King,
subject to final allowance by the Court, the two staggered
amounts of $162,500 each as described above, plus payment for
calls to claimants, if neither the Committee nor the UST
provides PG&E with a written objection to the invoice within
seven days of transmittal. In the event that the UST or the
Committee timely objects, and the objection is not resolved
consensually, then counsel for PG&E will obtain a hearing date
on the objection as promptly as the Court's calendar may permit.

All fees and expenses incurred by King will be subject to Final
Allowance by order of the Court at the conclusion of the case,
in accordance with Section 330 of the Bankruptcy Code, the
Court's Guidelines and any applicable rules or orders, after
notice and a hearing.

PG&E tells the Court that, due to the nature of King's business,
King does not maintain contemporaneous billing and time records
for its employees. Rather, fees are calculated on a project
basis and are not dependent on time-based billing. In addition,
discreet tasks such as telephone calls or meetings are neither
described nor divided into separate time entries on a single
day. Therefore, King's billing records do not comply with the
Guidelines with respect to the level of specificity required and
clumping of time. PG&E and King request approval of such
Variances from the Guidelines.

                    Professional Disclosure

Edward T. McCarthy, Senior Vice President of King, reveals that
King has been employed by PG&E Corporation as its proxy
solicitor and by PG&E to distribute its annual report and proxy
statement. Moreover, King provides (or has provided) services to
certain of PG&E's creditors, as follows:

In the ordinary course of conducting its business, King may, as
principal or agent for its clients:

(1) Purchase (or have purchased) services from US Bank, US Trust
    Company of California, Investors Bank and Trust Company,
    Bank of NY, Merrill Lynch, Bank One, Bank of American NT&SA,
    UBS AG, Morgan Guaranty, Toronto Dominion Bank, and Deutsche
    Bank; and,

(2) Provide (or have provided), directly or indirectly
    services to: Bank of NY, Sempra Energy, Southern California
    Gas Company, Gaylord Container Corp., Merrill Lynch and
    Banque Nationale de Paris.

Further, King, in the ordinary course of its business, may have
purchased services from, or provided services to, affiliates of
secured and unsecured creditors of PG&E.

King's work with these parties is not related to PG&E or its
bankruptcy, McCarthy and PG&E represent. PG&E and McCarthy
believe that King is a disinterested person under Section
101(14) of the Bankruptcy Code.

                The United States Trustee Objects

Linda Ekstrom Stanley, United States Trustee, notes that the
Application seeks Bankruptcy Court approval for an extra-
judicial solicitation effort for the Plan proposed by the PG&E
Proponents.

The UST tells the Court that the work D.F. King proposes to do
must be distinguished from Innisfree, the other solicitation
agent. Innisfree is responsible for mailing the solicitation
package to creditors and other parties in interest, including
the "street names" which are beneficial holders. D.F. King, on
the other hand, will conduct the heavy-lifting of the
solicitation effort, the UST notes.

The Application, the UST says, should not be approved because:

(1) The Court would authorize distribution of materials and
    argument the Proponents have not presented to the Court.

    D.F. King will contact plan voters by "telephone, facsimile,
    email, in person and by mail," to solicit approval of the
    Plan. Neither the firm nor the Plan Proponents disclose any
    specifics about the kind of information they intend to
    supply plan voters. The Engagement Letter makes clear there
    are supplemental materials: "solicitation materials other
    than the initial voting packet," "handling document requests
    from requesting parties," "telephonic solicitation scripts,"
    and "scripts for frequently asked questions." Debtor should
    not be authorized to employ a firm like D.F. King to solicit
    votes using unapproved material and telephone "scripts."

    D.F. King undoubtedly will refer to itself as a "court-
    approved" solicitation agent in an effort to cast a
    favorable light on its efforts. D.F. King's materials and
    its telephone, fax and e-mail pitches, none of which were
    submitted to the Court, let alone approved, will bear the
    supposed imprimatur of the Court, and the material will be
    presented as a supplement in aid of understanding the Court-
    approved disclosure statement. Any attempt to cloak D.F.  
    King or the Plan Proponents' solicitation effort with Court
    approval should be prevented.

    A few cases agree it may be permissible for a party to
    solicit votes on a plan using information outside the scope
    of the approved solicitation materials may be permissible,
    but the cases say it had better be accurate. In In re
    Kellogg Square Partnership, 160 B.R. 336 (Bankr. D. Minn.
    1993), the court approved the use of extra-judicial material
    for plan solicitation but cautioned the material could not
    "contradict the court-approved disclosure statement, or
    contain mis-characterizations or mis-statements of material
    fact that might unfairly influence solicitees . . . ."
    Likewise, the bankruptcy court in In re Media Central, Inc.,
    89 B.R. 685 (Bankr. E.D. Tenn. 1988), stated: "The
    disclosure statement hearing gives interested parties the
    opportunity to challenge whether certain statements or
    information contained in the disclosure statement should be
    sent out to those who will vote on a plan. Failure to obtain
    beforehand a judicial ruling on the propriety of statements
    or information sent in conjunction with a vote solicitation
    may lead to a vote disqualification after the fact if it is
    later determined that the statements or information were
    improper and the solicitation in bad faith."

    The employment of D.F. King should not be authorized because
    the proposed employment does not appear to be consistent
    with the Court's supervision of this reorganization to date
    and because it would confer an air of respectability on the
    Plan Proponent's solicitation effort the Bankruptcy Court
    does not authorize.

(2) D.F. King is not disinterested because it has been employed
    by PG&E Corporation.

    D.F. King did not disclose among its connections that it has
    represented PG&E Corporation as recently as March 2002: a
    Joint Proxy Statement, mailed beginning March 13, 2002
    stated that it was hired by PG&E Corporation and PG&E to
    assist in the distribution of proxy materials and
    solicitation of votes. D.F. King is disqualified from
    representing debtor in the solicitation effort.

    PG&E Corporation holds an interest adverse to the estate: it
    is debtor's principal stockholder and shares the same board
    of directors save one member. 11 U.S.C. Sec. 327(a). D.F.
    King is not disinterested because it has an interest
    "materially adverse to the estate" as its principal work is
    for PG&E Corporation, the parent and publicly traded entity.
    11 U.S.C. Sec. 101(14). D.F. King's has been engaged to
    ensure interested parties approve the plan; this effort
    takes little or no proven account of the individual
    interests of debtor.

(3) D.F. King's Engagement Letter contains impermissible terms.

    A.  D.F. King's Engagement contains a classic indemnity
        provision.

        It requires the estate to  'indemnify' it for losses and
        liabilities etc. in connection with the services
        provided that the company will not be liable for
        indemnification of action that results from gross
        negligence or willful misconduct.

        However, Indemnity Provisions do not comply with
        Bankruptcy Law.

        The United States Trustee objects to such indemnity
        provisions because they are unjustified. The terms are
        not in the best interests of the estate. The terms
        provide no value to the estate. An indemnity is
        particularly inappropriate here because the plan has two
        proponents, debtor and PG&E Corporation, yet the
        proposed employment would impose the entire burden of
        indemnity on the estate and none on PG&E Corporation.
        The indemnity provisions would immunize D.F. King from
        its own professional malpractice, gross negligence,
        fraud, or other intentional misconduct and shift the
        risk of any third party claims arising therefrom
        completely to the estate. The great weight of authority
        rejects indemnity and other liability protections as an
        inappropriate and unacceptable terms of employment for a
        bankruptcy estate professional. See In re Gillett
        Holdings, Inc., 137 B.R. 452, 458; In re Drexel
        Burnham Lambert Group, 133 B.R. 13, 27 (Bankr. S.D.N.Y.
        1991); In re Mortgage & Realty Trust, 123 B.R. 626, 631
        (Bankr. C.D. Cal. 1991); In re Allegheny Int'l, Inc.,
        100 B.R. 244, 247 (Bankr. W.D. Pa. 1989); In re United
        Companies Financial Corp., 241 B.R. 521, 524 (Bankr. D.
        Del. 1999).

     B. The Engagement Letter also contains a "choice of law
        provision" (New York) and a provision requiring the use
        of New York courts.

        Professionals employed under the authority of a
        California bankruptcy court must rely on federal law and
        the United States Bankruptcy Court for protection in the
        first instance. Choice of law terms are inconsistent
        with Bankruptcy Code Secs. 327 through 330, which give
        this court exclusive control of employment terms and
        fees in bankruptcy cases.

For these reasons, the United States Trustee objects to an order
of employment for D.F. King. (Pacific Gas Bankruptcy News, Issue
No. 39; Bankruptcy Creditors' Service, Inc., 609/392-0900)   


PENN SPECIALTY: Delaware Court Fixes July 30 Claims Bar Date
------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware sets July
30, 2002 as the Claims Bar Date for the creditors of Penn
Specialty Chemicals, Inc., to file their proofs of claim against
the Debtor's estates or be forever barred from asserting that
claim.

Proofs of Claim are deemed timely filed only if actually
received by the Penn Specialty Claims Processing Center on or
before 4:00 p.m. of the Claims Bar Date.

The Court's Bar Date Order does not apply to:

     a) claims already properly filed with the Court;

     b) claims not listed as "disputed," "contingent" or
        "unliquidated" in the Schedules; where a creditor agrees
        with the nature, classification and amount of such claim
        set forth in the Schedules;

     c) claims or interests previously allowed by, or
        paid pursuant to, an order of the Bankruptcy Court; or

     d) claims arising out of the rejection of an executory
        contract or unexpired lease.

Penn Specialty, one of the world's largest suppliers of
specialty chemicals THF and PTMEG, filed for chapter 11
protection on July 9, 2001, in the U.S. Bankruptcy Court for the
District of Delaware.  Deborah E. Spivack, Esq., at Richards,
Layton & Finger, in Wilmington, Delaware, represents the company
in its restructuring effort.


PEREGRINE SYSTEMS: Nasdaq Intends to Delist Shares By Friday
------------------------------------------------------------
Peregrine Systems, Inc. (Nasdaq: PRGNE) announced that Nasdaq
has informed the company of its intention to delist Peregrine's
stock at the opening of business on July 5, 2002, unless the
company requests a hearing.

Peregrine currently is out of compliance with Nasdaq Marketplace
Rule 4310(C)(14) as a result of its previous announcement that
Arthur Andersen LLP had notified the company's board of
directors that the financial statements of the company and
related audit reports for fiscal 2000 and 2001, and the
unaudited financial statements for the first three quarters of
fiscal 2002, should not be relied upon. Arthur Andersen's
notification to Peregrine was in response to Peregrine's
announcement that it would restate its financial results for the
same periods.

Marketplace Rule 4310(C)(14) requires that all SEC reports be
filed with Nasdaq on a timely basis. Nasdaq has initiated
proceedings to delist the company's stock pursuant to this rule.
The company has the right to stay the delisting process by
requesting a hearing before a Nasdaq Listing Qualifications
Panel.

"Peregrine intends to avail itself of the prescribed appeal
process with Nasdaq to retain its listing during the audit
process being undertaken by our new independent accountants,
PricewaterhouseCoopers," said Gary Greenfield, Peregrine CEO.

As a result of the company's filing delinquency, the character
"E" was appended to the company's trading symbol at the opening
of business on Thursday.

Founded in 1981 and headquartered in San Diego, Peregrine is the
leading provider of Infrastructure Management software. Its
solutions reduce costs, improve profitability and release
capital, generating a lasting and measurable impact on the
productivity of assets and people. Peregrine's software manages
the entire lifecycle of an organization's assets. In addition,
its Employee Self Service solutions empower employees with
anytime, anywhere access to enterprise resources, services and
knowledge -- resulting in improved productivity and asset
utilization. For more information, visit Peregrine's Web site at
http://www.peregrine.com


PIONEER-STANDARD: S&P Ratchets Corporate Credit Rating to BB-
-------------------------------------------------------------
Standard & Poor's lowered its corporate credit rating on
Pioneer-Standard Electronics Inc. to double-'B'-minus from
double-'B' and removed it from CreditWatch, where it was placed
on October 5, 2001, with negative implications.

The downgrade of the Cleveland, Ohio-based IT distributor
reflects weakened profitability and debt protection measures,
despite significant debt reductions over the past year. Pioneer
has about $179 million of long-term debt outstanding. The
outlook is negative.

"The negative outlook reflects Pioneer's limited liquidity and
weak profitability. Deterioration in financial flexibility could
lead to lower ratings," said Standard & Poor's credit analyst
Martha Toll-Reed.

Although Pioneer has a good position in the North American
region, the company faces significantly larger competitors in an
increasingly global IT distribution industry. In addition,
economic and IT spending weakness will continue to pressure
near-term revenues and operating profitability. The company
reported revenues of $2.3 billion and a net loss of $7 million
(including special charges of $12.4 million) in fiscal 2002,
ended March, down from revenues of $2.9 billion and net income
of $34.6 million the prior year.

Pioneer has responded to contracting revenues with cost cutting
and restructuring actions, most recently in its Industrial
Electronics segment. In addition, contracting working capital
levels generated free operating cash flow in excess of $200
million over the past 18 months, which was largely used to
reduce debt. Despite significant debt reductions, total debt to
EBITDA in excess of 4 times remains weak for the rating level.
Pioneer's access to credit facilities is constrained by
borrowing base limitations. Although Pioneer's credit facilities
do not contain credit triggers, existing covenant requirement
levels may further constrain credit-facility access if financial
performance deteriorates.


PLAINS EXPLORATION: S&P Assigns BB- Corporate Credit Rating
-----------------------------------------------------------
Standard & Poor's affirmed its ratings on independent oil
company Plains Resources Inc. and at the same time assigned its
double-'B'-minus corporate credit rating to Plains Exploration &
Production Co. L.P. The rating actions follow Plains Resources
announcement that it will spin-off about 90% of its oil and gas
exploration and production (E&P) business into a new entity,
Plains E&P. The outlook on Plains Resources is stable. The
rating on Plains E&P is being initiated on CreditWatch with
negative implications.

Houston, Texas-based Plains Resources has about $300 million in
outstanding debt.

"The negative CreditWatch listing on Plains E&P reflects the
likelihood of a downgrade to a single-'B'-plus corporate credit
rating if an equity issuance yielding proceeds of at least $60
million is not completed by October 31, 2002," said Standard &
Poor's credit analyst John Thieroff.

Under the proposed spin-off, Plains Resources will distribute
substantially all of its E&P assets (but not its 29% ownership
interest in Plains All American Pipeline L.P.) on a tax-free
basis through the distribution of Plains E&P common stock. In
conjunction with this spin-off, Plains E&P intends to undertake
a common stock IPO that will float slightly less than 20% of the
company. Proceeds from the issuance are expected to repay debt
anticipated to be outstanding at Plains E&P. When the spin-off
is complete, Standard & Poor's will withdraw its ratings on
Plains Resources.

The rating on Plains E&P reflects significant debt leverage, the
challenging economics associated with the company's reserve
base, and its position as a midsize, independent oil and gas
company in the volatile E&P sector. The rating also reflects
Plains E&P's fair business position, characterized by a low-risk
development drilling business strategy and ownership of
extremely long-lived reserves.

Standard & Poor's does not expect total debt to be reduced
materially from its initial capitalization following the equity
issuance because internally generated cash flow will likely be
directed toward reserve replacement and growth. Financial
flexibility is expected to be adequate for the rating, with the
company's anticipated $300 million senior secured credit
facility ($225 million initial borrowing base), which will
mature in 2006, expected to remain largely undrawn.


PRECISION SPECIALTY: Wants Until August 29 to Propose a Plan
------------------------------------------------------------
Precision Specialty Metals, Inc., asks the U.S. Bankruptcy Court
for the District of Delaware to maintain its exclusive rights to
propose and file a chapter 11 plan of reorganization and solicit
acceptances of that plan.  The Debtor wants the Court to extend
its exclusive plan filing period through August 29, 2002 and
until October 27, 2002 to solicit acceptances of that plan.

Subsequent to the Debtor's asset sale to Brady Investment
Company, Inc., the Debtor is no longer operating its business
and its remaining assets are in the process of being liquidated.

Having already made substantial progress in this bankruptcy case
by completing the Brady Transaction, the Debtor says it needs a
reasonable amount of additional time to evaluate the prospects
of confirming a plan of liquidation and, if appropriate, prepare
the Plan and seek confirmation of the Plan.

Precision Specialty Metals is a specialty steel conversion mill
engaged in re-rolling, slitting, cutting and polishing stainless
steel and high- performance alloy hot band into standard or
customized finished thin-gauge strip and sheet product. The
Company filed for Chapter 11 petition on June 16, 2001 in the
U.S. Bankruptcy Court for the District of Delaware. Laura Davis
Jones, Esq. at Pachulski, Stang, Ziebl, Young & Jones P.C.
represents the Debtor on its restructuring efforts.


PRINTING ARTS: Seeks Approval to Engage Hilco as Liquidator
-----------------------------------------------------------
Printing Arts America, Inc. and its debtor-affiliates ask the
U.S. Bankruptcy Court for permission to engage the joint venture
of Hilco Receivables LLC, Hilco Industrial LLC and Hilco Real
Estate, LLC, to provide professional services in the area of
liquidating certain assets of the Debtors' estates.

Pursuant to a written Agreement delivered to the Bankruptcy
Court, Hilco will:

   -- review the Debtors' assets, and in connection with this
      review, Hilco will develop its own bids for the assets
      located at each division on a guaranteed return or
      purchases basis,

   -- assist the Company in evaluating bids received at an
      Auction, and

   -- following the auction, assist the Debtors in disposing of
      unsold assets.

Additionally Hilco will:

     a) Meet with the Company to ascertain the Debtors' goals,
        objectives and financial parameters for the sale of the
        Assets in an orderly fashion to maximize their value;

     b) Develop, design and implement a marketing program for
        the sale of the Assets;

     c) Coordinate and organize the bidding procedures and sale
        process for the sale of the Assts;

     d) At the Debtors' direction and on its behalf, negotiate
        the terms of agreements with any prospective purchaser
        of the Assets in whole or in part;

     e) Conduct any auctions necessary for the disposition of
        the Assets;

     f) Report to the Debtors regarding the status of the
        marketing and sale of the Assets on a weekly basis;

     g) Liquidate and collect the accounts receivable of the
        Debtors; and

     h) Provide such other services as agreed to with the
        Debtors to implement the orderly liquidation of the      
        Assets.

The Debtors explain that Hilco is only authorized to negotiate
the terms of the sale of the Assets at the direction and on the
behalf of the Debtors, but not to commit to any agreement
without the Debtors' express consent. Hilco has agreed to accept
a flat fee of $35,000 as compensation for its Due Diligence
Services, plus reasonable out of pocket expenses.  As
compensation for other services, Hilco will receive:

     a) 5% of the Gross Proceeds from the disposition of assets
        plus any industry standard buyer's premium not to exceed
        10% of the sale prices of any asset; plus

     b) For the liquidation of accounts receivable, 7% of the
        Gross Cash Receipts with such amounts to be retained by
        Hilco Receivables out of collections or paid to Hilco on
        a weekly basis.

Printing Arts America, Inc. filed for chapter 11 protection on
November 1, 2001 in the U.S. Bankruptcy Court for the District
of Delaware. Teresa K.D. Currier, Esq. and William H. Schorling,
Esq. at Klett Rooney Lieber & Schorling represent the Debtors in
their restructuring efforts. When the Company filed for
protection from its creditors, it listed estimated assets and
debts of over $100 million.


PROPRIETARY INDUSTRIES: Will Discontinue Funds Advance to SCC
-------------------------------------------------------------
Proprietary Industries Inc. has been unable to come to terms
with Ridley Terminals Inc. with respect to the operations of
Sulphur Corporation of Canada Ltd. ("SCC") and Proprietary will,
effective the close of business on June 26, 2002, no longer
advance funds to SCC either directly or through Debtor-in-
Possession financing.

As reported in the April 23 edition of the Troubled Company
Reporter, Sulphur Corporation -- approximately 79% owned by
Proprietary -- has filed for voluntary protection under the
Companies Creditors Arrangement Act. Arthur Andersen Inc. has
agreed to act as monitor under the CCAA Stay Order. The Order
has the effect of staying the rights of all creditors, allowing
SCC time to restructure its financial affairs.

Proprietary is based in Calgary, Alberta and listed on the
Toronto and Swiss Stock Exchanges trading under the symbol PPI.
Proprietary is a principal merchant bank that owns, manages and
deals in a portfolio of financial, natural resource and real
estate interests. Proprietary's management strives to maintain a
balance between generating profits, sustaining growth and
realizing capital appreciation, having targeted 20% as its
minimum operating margin, annual asset and revenue growth rates.
Proprietary has paid dividends for the last two of its nine
years of operations. Proprietary has been named in the Profit
100 list of Canada's fastest growing companies for the past
three years, and has had a five-year revenue growth of 6,116%.


OLYMPUS HEALTHCARE: Court Confirms Amended Joint Chapter 11 Plan
----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware confirmed
the Second Amended Joint Plan of Reorganization proposed by
Olympus Healthcare Group, Inc. and its debtor-affiliates.

On the Effective Date or as soon as practicable, the Debtors
shall:

     i) pay the full amount of all allowed Administrative
        Claims, or if a Final Order allowing an Administrative
        Claims is entered after the Effective Date, within 30
        days of the date of such Final Order;

    ii) provide for the payment in full of all allowed Priority
        Tax Claims;

   iii) pay the full amount of all allowed Priority Claims as
        provided in the Plan.

Pursuant to the Plan, a Liquidating Supervisor will be appointed
and shall have the authority to investigate, prosecute and, if
necessary, litigate, any Cause of Action on behalf of the
Debtors and shall have standing as an Estate representative to
pursue any Cause of Action and objection to Claims.  The Debtor
or the Liquidating Supervisor is given authority to take actions
and execute documents, which is necessary or appropriate to
carry out the purpose and intent of the Plan.

Olympus Healthcare Group, Inc. filed for chapter 11 protection
on May 25, 2001. Michael Lastorwki, Esq. at Duane, Morris &
Hecksher represents the Debtors in their restructuring efforts.
When the Company filed for protection from its creditors, it
listed estimated assets of not more than $50,000 and estimated
debts of $10 million to $50 million.


RESIDENTIAL ASSET: Fitch Downgrades Class B1 Certificates to D
--------------------------------------------------------------
Fitch Ratings lowers its rating of the following Residential
Asset Securities Corporation's (RASC) home equity loan pass-
through certificate:

    -- RASC 1998-KS2, class B1 ($10,207,013 outstanding), rated
       'BB' and on Rating Watch Negative, is downgraded to 'D'.

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 June 25, 2002
distribution:

RASC 1998-KS2 remittance information indicates that 14.92% of
the pool is over 90 days delinquent and cumulative losses are
$10,903,561 or 2.71% of the initial pool. Class B1 currently has
no credit support remaining.


RIVERWOOD INT'L: Receives Consents to Amend Bond Indentures
-----------------------------------------------------------
Riverwood International Corporation announced that as of the
close of business on June 26, 2002, it had received the
requisite consents in the consent solicitations to proposed
amendments to each of the indentures governing its outstanding
10-7/8% Senior Subordinated Notes due 2008 (CUSIP No.
769507AJ3), 10-5/8% Senior Notes due 2007 issued in July 1997
(CUSIP No. 769507AM6) and 10-5/8% Senior Notes due 2007 issued
in June 2001 (CUSIP No. 769507AQ7).

Riverwood also announced that by the terms of the consent
solicitations, each consent solicitation expired at 5:00 p.m.,
New York City Time, on Friday, June 28, 2002. Each holder of
Notes who validly consented to the proposed amendments with
respect to such issue of Notes at or prior to 5:00 p.m., New
York City Time, on Friday, June 28, 2002, will be entitled to a
consent payment in the amount of $2.50 per $1,000 principal
amount of Notes with respect to which consents are delivered.
Holders who tender their Notes after such time and date will not
be entitled to receive the consent payment. Tendered Notes may
be withdrawn and related consents may be revoked at any time on
or prior to the consent expiration date for the related offer
and consent solicitation, but not thereafter. The purpose of
each of the consent solicitations is to amend the applicable
indenture to eliminate substantially all of the restrictive
covenants, certain repurchase rights and certain events of
default and related provisions contained in such indenture.
Riverwood and the trustee under each indenture intend to execute
a supplemental indenture with respect to such indenture promptly
after the applicable consent expiration date.

On May 30, 2002, Riverwood commenced the cash tender offers to
purchase any and all of its outstanding Notes of each issue, as
well as the related consent solicitations, from holders. Each
tender offer will expire at 5:00 p.m., New York City time, on
Friday, July 12, 2002, unless extended by Riverwood. As of the
close of business on June 26, 2002, the following principal
amount of Notes had been tendered: approximately $225.7 million
of the $400.0 million outstanding principal amount of the 10-
7/8% Senior Subordinated Notes due 2008; approximately $162.1
million of the $250.0 million outstanding principal amount of
the 10-5/8% Senior Notes due 2007 issued in July 1997; and
approximately $128.6 million of the $250.0 million outstanding
principal amount of the 10-5/8% Senior Notes due 2007 issued in
June 2001.

Riverwood is making a separate offer with respect to each issue
of Notes, and no offer is conditioned on the consummation of any
other offer. Consummation of each offer is subject to certain
conditions, including the consummation of the proposed initial
public offering of common stock by Riverwood's parent, Riverwood
Holding, Inc., and the consummation of certain other anticipated
financing transactions, in each case on terms satisfactory to
Riverwood. Subject to applicable law, Riverwood may, in its sole
discretion, waive or amend any condition to any offer or
solicitation, or extend, terminate or otherwise amend any offer
or solicitation.

Deutsche Bank Securities Inc. and J.P. Morgan Securities Inc.
are the dealer managers for the offers and solicitation agents
for the solicitations. MacKenzie Partners, Inc. is the
information agent and State Street Bank and Trust Company is the
depositary in connection with the offers and solicitations. The
offers and solicitations are being made pursuant to an Offer to
Purchase and Consent Solicitation Statement, dated May 30, 2002,
and the related Consent and Letter of Transmittal (as each may
be amended from time to time), which together set forth the
complete terms of the offers and solicitations. Copies of the
Offer to Purchase and Consent Solicitation Statement and related
documents may be obtained from MacKenzie Partners, Inc. at (800)
322-2885. Additional information concerning the terms of the
offers and the solicitations may be obtained by contacting
Deutsche Bank at (212) 469-7772 or JPMorgan at (800) 831-2035.

Riverwood, headquartered in Atlanta, Georgia, is a leading
provider of paperboard packaging solutions and paperboard to
multinational beverage and consumer products companies.

                         *    *    *

As previously reported, Standard & Poor's said that its ratings
on paperboard producer Riverwood International Corp., including
its single-'B' corporate credit rating, remain on CreditWatch
with positive implications where they were placed on May 9,
2002, following the company's announcement of a planned initial
public offering (IPO) of $350 million of common stock.

Following a review of Riverwood's refinancing plans, Standard &
Poor's has determined that it would raise Riverwood's corporate
credit rating to single-'B'-plus and assign a stable outlook
following the IPO and related debt refinancing if they are
completed as currently structured.

Standard and Poor's said that it also expects to assign its
single-'B'-plus bank loan rating to Riverwood's proposed $250
million term loan C due 2008, and its single-'B'-minus rating to
the proposed $400 million senior unsecured notes due 2012. These
transactions are expected to be completed at the same time as
the IPO. Proceeds from the new term loan and senior notes, in
addition to the equity proceeds, are expected to be used to
redeem the company's $500 million senior notes due 2007, its
$400 million subordinated notes due 2008, and a portion of the
amount outstanding under the company's revolving credit
facility.


SAFETY-KLEEN: Sues Allied Waste to Recover $484K Preference
-----------------------------------------------------------
Safety-Kleen Services, represented by Jeffrey C. Wisler of
Connolly Bove Lodge & Hutz of Wilmington, brings suit against
Allied Waste Industries Inc., part of Browning & Ferris
Industries, Inc., to avoid and recover transfers of money and
property alleged to be preferential under the Bankruptcy Code.

The Debtors say money and property was transferred to Allied
Waste on multiple dates in March, April, May and June, 2000,
within 90 days of the Petition Date, in at least amounts
totaling $484,268.  These transfers were on account of an
antecedent debt owed by one or more of the Debtors to Allied
Waste, and the transferring Debtors were insolvent at the times
of the transfers.  As a result of these transfers, Allied Waste
received more than it would have received if these cases were
liquidating proceedings under chapter 7 of the Bankruptcy Code,
the transfers had not been made, and Allied Waste received a
distribution from the resulting bankruptcy estate.

In the alternative, the Debtors say that Services received less
than a reasonably equivalent value in exchange for the
transfers, and was insolvent at the time of the transfers, or
became insolvent as a result of the transfers.

In either event, the Debtors want to recover the transfers and
ask for judgment against Allied Waste in the amount of
$1,216,718, plus pre-and post-judgment interest, and their
costs.  Further, the Debtors want Allied Waste's claims against
these estates disallowed if Allied Waste refuses to return the
transfers. (Safety-Kleen Bankruptcy News, Issue No. 40;
Bankruptcy Creditors' Service, Inc., 609/392-0900)    


SONO-TEK CORP: Total Shareholders' Equity Deficit Drops to $750K
----------------------------------------------------------------
Sono-Tek Corporation (OTC Bulletin Board: SOTK) announced sales
of $780,858 for the three months ended May 31, 2002, an increase
of 11% or $76,573 compared to sales of $704,285 for the same
period of last year. Operating income for the first three months
of the year was $66,814 or 9% of sales compared to a loss for
the prior year period. For the three months ended May 31, 2002,
the Company had net income of $33,426 compared to a loss of
$68,749 from continuing operations and an additional $781,324
from discontinued operations.

The company's balance sheet is much improved from last year at
this time with working capital at $335,471 at May 31, 2002 from
a deficiency of $313,606 last year, liabilities have been
reduced from $3,031,682 at May 31, 2001 to $2,269,590 at May 31,
2002, and shareholders' deficiency reduced from $1,455,437 at
May 31, 2001 to $749,128 at May 31, 2002.

The Company experienced a turn-around during the last four
quarters as a result of changes in management, discontinuance of
unprofitable business segments, reductions in the cost
structure, and settlements with creditors. The Company returned
its focus to its core business, ultrasonic nozzles and systems,
and offset the downturn in the electronics industry by
developing new uses for its products in the growing medical
products field, as well as in the rejuvenated defense industry.
As part of its strategy to focus on its core business, Sono-Tek
has introduced new products into the marketplace including the
MicroFlux XL selective fluxing system used for precise flux
deposition, particularly in the semiconductor industry; the
SonoFlux XL spray fluxing system for printed circuit board
assemblies, the successor to the industry-proven SonoFlux 9500
series; the Medisonic polymer/pharmaceutical coating system,
designed specifically for use by medical device manufacturers to
coat stents and other implant devices; and the Thinsonic
chemical vapor deposition system used to apply very thin films
in industrial applications and homeland defense systems, such as
toxic gas sensors.

During June the company exhibited its Medisonic coating system
at the Medical Device Show at the Jacob Javitz Center in New
York, where it was well received by most of the major stent and
other implantable device manufacturers. During this quarter, the
company shipped its first system to a major stent and
pharmaceutical manufacturer, and based on the extremely high
level of interest shown at the MDS show, the company is very
optimistic about the positive impact of future sales on the
growth of the Company. Earlier this quarter the company had
announced the filing of a patent for the technology related to
its proprietary thin-film coating systems, the Medisonic and
Thinsonic systems.

"We continue to be extremely pleased with the acceptance of our
new products and the turn-around in our business, and we look
forward to adding new applications as we pursue our goal of
diversifying our product line based on Sono-Tek's core
ultrasonic nozzle business," stated Dr. Christopher Coccio,
Sono-Tek's CEO and President.

For further information, contact Dr. Christopher L. Coccio, at
845-795-2020, or visit its Web site at http://www.sono-tek.com  

Sono-Tek Corporation is a leading developer and manufacturer of
liquid spray products based on its proprietary ultrasonic nozzle
technology. Founded in 1975, the Company's products have long
been recognized for their performance, quality, and reliability.


TRIDENT ROWAN: Retains Investec Inc to Explore M&A Opportunities
----------------------------------------------------------------
Trident Rowan Group, Inc. (OTC Bulletin Board: TRGI): announced
that Investec, Inc. has been retained by Trident to identify and
negotiate a transaction that would have the aim of maximizing
shareholder value.  Investec will be examining a number of
merger and acquisition opportunities over the coming months.
Since the sale of Trident's main operating business, Moto Guzzi,
to Aprilia SpA in September 2000, Trident has focused on
increasing its cash flow through the sale of its remaining real
estate and financial assets as well as in the management of
several outstanding disputes.

Trident sold all its shares in Lita SpA, and also sold its
remaining real estate in Sardinia.  With these sales, Trident
has no active operations and its assets currently comprise cash,
liquid securities and receivables.

In January 2002, Trident, in lieu of exercising its liquidation
right, approved a transaction between Centerpoint Corporation
and Bion Environmental Technologies.  As a result of this
transaction, Trident sold all but 300,000 shares in Centerpoint
to Bion for a package of securities including cash, Bion shares
and warrants, cancellation of debt and an interest in the IMI
and Aprilia claims.

Additional management effort was required to deal with two
litigations, both of which arose from businesses conducted by
Trident over 20 years ago. The first case, involving a product
liability lawsuit filed against Trident and other defendants,
was settled with the plaintiff for a payment by Trident of
$2,050,000.  Trident is seeking to recover this amount plus
attorney's fees from Travelers Insurance Company.  Trident has
received a favorable judgment in this case against Travelers but
proceedings in this matter are continuing. The second litigation
involved a claim that Trident was partially responsible for
pollution on land which the Company owned many years ago.  This
litigation, with Rawlings Sporting Goods Inc. was settled for a
payment to Rawlings of 160,000 Centerpoint shares formerly owned
by Trident.

The sale of Moto Guzzi resulted in two disputes.  First, Trident
filed a law suit against its former investment banker, IMI SpA,
in which Trident is claiming that IMI misappropriated a portion
of the proceeds of the sale in contravention of the Company's
agreement with IMI.  This litigation is currently proceeding in
the Italian court system.  Second, Trident is disputing
Aprilia's claim over the escrow account established upon the
sale of Moto Guzzi.  As required by the sale documents, this
claim is in the midst of arbitration proceedings.  Trident is
vigorously pursuing both claims and is hopeful of significant
recoveries in both actions.

With the above actions having been completed, and while Investec
searches for opportunities, Trident is seeking to conserve its
assets, work with its accountants to bring its filings up to
date, liquidate non-essential Italian subsidiaries, and look to
reposition the company in a sound business that can generate
positive returns for shareholders.


VERSATEL TELECOM: Taps Shearman & Sterling as Bankruptcy Counsel
----------------------------------------------------------------
Versatel Telecom International N.V., asks for authority from the
U.S. Bankruptcy Court for the Southern District of New York to
retain and employ the law firm of Shearman & Sterling on a
general retainer as its counsel.

Shearman & Sterling received a $250,000 retainer for services to
be rendered and expenses to be incurred in this representation.
The Debtor agrees to pay Shearman & Sterling for professional
services at the Firm's customary hourly rates:


          partners and counsel      $500 to $700 per hour
          associates                $195 to $495
          paralegals and clerks     $90 to $190 per hour

Versatel expects Shearman & Sterling:

     a) to provide legal advice with respect to the Debtor's
        powers and duties as debtor in possession in the
        continued operation of its business and management of
        its properties;

     b) to pursue the confirmation of a chapter 11 plan of
        reorganization for the Debtor;

     c) to prepare on behalf of the Debtor necessary motions,
        applications, objections, responses, answers, orders,
        reports, and other legal papers;

     d) to appear in Court and to protect the interests of the
        Debtor before the Court; and

     e) to perform all other legal services for the Debtor which
        may be necessary and proper in these proceedings.

The Debtor assures the Court that Shearman & Sterling is a
"disinterested person" as that phrase is defined at 11 U.S.C.
Sec. 101(14).

Versatel Telecom International, N.V. provides broadband Internet
and telecommunications services including voice and data
services, dedicated Internet access services, customized
telecommunication solutions and Internet-enabled applications in
The Netherlands, Belgium and northwest Germany. The Debtor filed
for chapter 11 protection on June 19, 2002. Douglas P. Bartner,
Esq. at Shearman & Sterling represents the Debtor in its
restructuring efforts. When the Company filed for protection
from its creditors, it listed $2,017,758,399 in total assets and
$1,605,897,821 in total debts.


WORLDCOM INC: Yankee Group Says Prompt Bankruptcy Filing Needed
---------------------------------------------------------------
WorldCom stunned the telecom industry on June 25 with the
announcement that it had "inappropriately" booked $3.8 billion
of expenses as capital during fiscal year 2001 and the first
quarter of 2002. The accounting scandal erupts as newly
appointed CEO John Sidgmore labors to restore the confidence of
investors, customers, and employees, and develop a strategic
plan for the company. Burdened with slower growth, weak
financial performance, scandal, as well as continuing SEC
investigations and the resultant loss of confidence, will
WorldCom survive? In its new Report, "WorldCom: On the Verge of
Collapse?," the Yankee Group examines four possible scenarios
for the company--continuing to operate, filing for bankruptcy,
being acquired, and ceasing operations--and the impact each
would have on customers and employees. While a Chapter 11
bankruptcy filing is the most likely immediate outcome, the
WorldCom that emerges from bankruptcy is likely to be a
substantially different company.

"WorldCom must act swiftly to uncover the full extent of its
financial issues and realistically assess whether it can
reasonably overcome its current difficulties. Bankruptcy would
protect the company's assets while this assessment is completed,
but this must be done quickly or there will be few customers or
employees left when it is done," according to Eileen Eastman,
vice president, business communications strategies for the
Yankee Group.

Unlike other telecommunications business failures, WorldCom is a
major player in all customer segments and a major infrastructure
provider to other carriers. The company's UUNET Internet
backbone is arguably the largest Internet network worldwide. If
the company is forced to shut down operations, it will not only
have serious ramifications for the telecom sector, but will also
delay the economic recovery in the technology sector.

The Yankee Group is a global leader in technology research and
consulting. Our customers, which include technology vendors and
users, benefit from our accurate, reliable, and trusted
research, consulting, and personalized one-to-one client
interaction covering communications and IT products and
services. Now in our fourth decade, the company is headquartered
in Boston and maintains offices throughout North America,
Europe, Latin America, and the Pacific Rim. Visit
http://www.yankeegroup.comfor more information about the  
company.


WORLDCOM INC: American Express Discloses $90 Million Exposure
-------------------------------------------------------------
American Express Company said it will write down the WorldCom
debt it holds, largely in the investment portfolio of its
subsidiary, American Express Financial Advisors.

American Express' credit exposure to WorldCom is approximately
$90 million, representing directly owned bonds and other
securities held within various structured investments. The
company expects to recognize a second quarter investment loss on
these securities of $75 million to $80 million (pre-tax).

After recognizing these investment losses, American Express said
that it expects to report consolidated earnings per share for
the second quarter that are in line with Wall Street consensus
estimates of $.50 per share. This would compare to $.13 per
share a year ago.

American Express Company -- http://www.americanexpress.com--  
founded in 1850, is a global travel, financial and network
services provider.


WORLDCOM INC: Fitch Exploring Fallout in Other Sectors
------------------------------------------------------
Wednesday morning Fitch Ratings downgraded the senior unsecured
ratings of WorldCom to 'CC' from 'B' following WorldCom's
announcement of accounting irregularities which overstated net
income and cash flow. The 'CC' rating category is defined as
high risk with some kind of default probable. As a frame of
reference, telecom companies have not fared well vis-a-vis
recovery. Over the past year, the average recovery for a
defaulted telecom has been 11 cents on the dollar. Fitch Ratings
believes the potential fallout from this morning's downgrade,
already reflected in a sharp drop in WorldCom bond prices, may
be widespread, affecting a diverse group of investors and
creditors.

With a reported $32 billion debt burden on its books, WorldCom
exposure is actively traded and held widely throughout the
market. As such, Fitch Ratings is engaging in a coordinated
analytical effort, covering banks, insurance companies,
suppliers and vendors, financial guarantee providers, structured
investments vehicles, collateralized debt obligations, asset-
backed commercial paper, asset managers, commercial mortgage
backed securities, local government investment pools, and active
participants in the credit default swap market. Fitch Ratings
has already identified $10bln of WorldCom debt held by insurance
companies and pension funds. Fitch Ratings will release its
findings regarding the credit and rating implications, if any,
as it gathers and processes the relevant information.


WORLDCOM INC: Principal Financial Discloses $61 Million Exposure
----------------------------------------------------------------
Principal Financial Group, Inc. (NYSE:PFG) announced that it has
reviewed its exposure to WorldCom and expects to take a second
quarter 2002 write-down. The amount of exposure to WorldCom held
by The Principal(R) is currently $61 million. The Principal does
not have any exposure to WorldCom credit default swaps.

To date, The Principal has realized an after-tax capital loss of
approximately $11 million associated with periodic sales of
WorldCom holdings throughout the second quarter.

The Principal Financial Group(R)(1) is a leader in offering
businesses, individuals and institutional clients a wide range
of financial products and services, including retirement and
investment services, life and health insurance and mortgage
banking through its diverse family of financial services
companies. More employers choose the Principal Financial Group
for their 401(k) plans than any other bank, mutual fund, or
insurance company in the United States(2). A member of the
Fortune 500, the Principal Financial Group has $120.2 billion in
assets under management(3) and serves some 13 million customers
worldwide from offices in Asia, Australia, Europe, Latin America
and the United States. Principal Financial Group, Inc. is traded
on the New York Stock Exchange under the ticker symbol PFG. For
more information, visit http://www.principal.com    


XETEL CORP: Independent Accountants Express Going Concern Doubt
---------------------------------------------------------------
XeTel Corporation (Nasdaq:XTEL), a comprehensive electronics,
manufacturing and engineering solution provider, reported
results for its fiscal year ended March 30, 2002.

Net sales for FY2002 were $79.8 million, a 58.6% decrease from
the $192.9 million reported for FY2001. Net loss for FY2002 was
$23.6 million and included approximately $6.2 million of
inventory write-downs purchased for customers that have since
become insolvent and costs associated with the resolution of
inventory and related issues with Tellabs and Ericsson under
settlement agreements. This compares to net income of $5.5
million recorded in FY2001, which included $1.7 million (net of
taxes) of recovery income. Basic and diluted net loss per share
for FY2002 was $2.35, as compared to diluted earnings per share
of $0.54 in FY2001.

Gross margin for FY2002 was negative 16.1% compared to positive
8.6% in FY2001. The decline in gross margin was primarily the
result of the significant reduction in sales and the write-
downs. Selling, general and administrative, or SG&A, expenses
were 25.6% of net sales in FY 2002 compared to 4.4% in the prior
year. The increase in SG&A as a percentage of net sales was
primarily due to the decline in sales. SG&A expense for the
current quarter also included an increase in provisions for bad
debt.

Net sales for the three months ended March 30, 2002 were $12.0
million, a 76.7% decrease from the $51.4 million reported for
the three months ended March 31, 2001. Net loss for the three-
month period was $8.7 million as compared to net income of $0.3
million recorded in the three months ended March 31, 2001.
Diluted loss per share for the three months ended March 30, 2002
was $0.87, compared to diluted net income of $0.03 in the three
months ended March 31, 2001.

The Company is planning to file on June 28, 2002, its Annual
Report on Form 10-K for FY2002 with the Securities and Exchange
Commission. The audit opinion included in the Form 10-K will
contain an explanatory paragraph noting the independent
accountant's substantial doubt that the Company can sustain its
operations as a going concern.

"We continue to focus our efforts on returning to profitable
operations; however, we have also retained an investment banking
firm to help us review our strategic alternatives including the
sale or merger of the Company. Our immediate attention is to
improve our liquidity and capital resources to position the
Company for renewed growth," said Angelo DeCaro, President and
CEO of XeTel.

Founded in 1984, XeTel Corporation is ranked among the top 50
electronics manufacturing services industry providers in North
America. The company provides highly customized and
comprehensive electronics manufacturing, engineering and supply
chain solutions to Fortune 500 and emerging original equipment
manufacturers primarily in the networking, computer and
telecommunications industries. XeTel provides advanced design
and prototype services, manufactures sophisticated surface mount
assemblies and supplies turnkey solutions to original equipment
manufacturers. Incorporating its design and prototype services,
assembly capabilities, together with materials and supply base
management, advanced testing, systems integration and order
fulfillment services; XeTel provides total solutions for its
customers. XeTel employs over 300 people and is headquartered in
Austin, Texas with manufacturing services operations in Austin
and Irving, Texas.

For more information, visit XeTel's Web site at
http://www.xetel.com  


XO COMMS: Honoring $8MM of Prepetition Critical Vendor Claims
-------------------------------------------------------------
Approximately 30 vendors are critical to XO Communications,
Inc.'s continued operations because they supply specialized
products and services.  Moreover, the goods and services that
the Debtor purchases from these Critical Trade Creditors can't
be easily or timely replaced. These Critical Trade Creditors
predominantly include:

     (a) suppliers of telecommunications equipment including
         computer hardware and software used in the Company's
         operations, and related maintenance and monitoring
         services;

     (b) other telephone and telecommunication service
         providers;

     (c) providers of billing and related service; and

     (d) financial and insurance companies.

The Debtor wants to pay these Critical Trade Creditors their
prepetition claims to ensure that they deal with the Debtor on
Customary Trade Terms going forward.  Some vendors provide goods
or services for a reduced cost due to long-term relationships
with the Debtor or negotiated transactions.  The Debtor may
consider it prudent to pay the selected Critical Trade Creditors
their prepetition claims provided that such vendors will sell
their goods or services at the reduced cost going forward.

By this motion, the Debtor sought and obtained an order from the
Court, pursuant to section 105(a) of the Bankruptcy Code,
authorizing, but not directing it to pay the prepetition claims
of Critical Trade Creditors up to a maximum amount of
$8,000,000.

According to Wayne M. Rehberger, XO's Chief Financial Officer,
the total amount owed to the Critical Trade Creditors is
approximately $7.6 million as of the Petition Date, and no one
Critical Trade Creditor is owed in excess of $4.83 million.  
There is more than adequate liquidity to pay the Critical Trade
Creditors' Claims, given the cash position of the Company as of
April 30, 2002, of approximately $555 million (net of
outstanding checks), Mr. Rehberger points out.

Judge Gonzalez authorizes the Debtor to condition payments of
any prepetition Critical Trade Claims upon:

(1) agreement by the Critical Trade Creditors to continue to
    supply goods or services to the Debtor on Customary Trade
    Terms, that is, the trade terms and practices (including
    allowances) in effect prior to the Petition Date, or as
    favorable or better to the Debtor, or as agreed by the
    Debtor and the Critical Trade Creditor; and

(2) communication to the Critical Trade Creditor or requiring
    the Critical Trade Creditor to acknowledge that by accepting
    the payment, the Creditor accepts the terms in the Court's
    order granting the motion and submits to the jurisdiction of
    the Court for enforcement of the terms.  Each check payable
    to a Critical Vendor will contain a restrictive endorsement
    stating:

    "By accepting this payment, the payee agrees to the terms of
    the Court's 'Order Authorizing Debtor's Payment of
    Prepetition Critical Trade Claims of Critical Trade
    Creditors,' and shall continue to provide the payor with
    credit terms as provided in such order, and submits to the
    jurisdiction of the Court for enforcement thereof."

Further:

-- If any Critical Trade Creditor that receives conditional
   payment of its prepetition Critical Trade Claims ceases to
   provide the Debtor with Customary Trade Terms during this
   chapter 11 case for any reason other than due to the Debtor's
   postpetition breach of the agreement with such Critical Trade
   Creditor, such payments shall be fully recoverable by the
   Debtor's estate as unauthorized postpetition transfers;
   provided, however, that nothing in the order shall permit any
   other party in interest at any time in the future to seek any
   avoidance action or otherwise challenge such payments.

   In such event, any such payment shall be deemed to have been
   in payment of then outstanding postpetition Critical Trade
   Claims without further order of the Court or action by any
   person or entity. To the extent that prepetition Critical
   Trade Claim payments exceed the postpetition Critical Trade
   Claims then outstanding, the Critical Trade Creditor shall
   immediately repay to the Debtor any payments made to it on
   account of its prepetition Critical Trade Claims without the
   right of any setoffs, claims, provision for payment of
   reclamation or trust fund claims

   The express intention of the Court is to return a Critical
   Trade Creditor that breaches the terms of any conditional
   payment to the status quo in effect as of the date of entry
   of the Order with respect to all prepetition payments.
  
-- The Debtor may omit from its schedules filed pursuant to
   Federal Rule of Bankruptcy Procedure 1007(a) any claim of a
   Critical Trade Creditor that is paid in accordance with terms
   of this Order.

-- The relief granted is not and shall not be deemed an approval
   or assumption of any agreement, contract or lease.

-- The authorization granted to pay certain Critical Trade
   Claims shall not create any obligation on the part of the
   Debtor or its officers, directors, attorneys or agents to pay
   the Critical Trade Claims, and nothing in the order shall be
   deemed to increase, reclassify, elevate to an administrative
   expense status or otherwise affect the Critical Trade Claims
   to the extent they are not paid.

-- The Court shall retain jurisdiction over all issues relating
   to or arising from the implementation of the Order.
   
The Debtor is authorized to identify, in its sole and sound
business judgment, the Critical Trade Creditors. The Debtor
believes that identifying the Critical Trade Creditors in this
Motion would likely cause all such creditors to demand payment
in full.

XO advises that, in determining whether a vendor is a Critical
Trade Creditor to be paid its prepetition claims, the Debtor has
and will continue to consider, among other things:

(a) whether the supplier of specific goods or services is a
    unique vendor that is critical to the Debtor's business
    operations;

(b) whether the failure to pay Critical Trade Claims to such
    vendor would require the Debtor to incur higher costs for
    such goods and services postpetition;

(c) whether the initiation of service with a new supplier and/or
    delayed delivery time would cause supply and service
    interruption;

(d) whether failure to pay the Critical Trade Claim would cause
    the Debtor to lose future revenues in excess of the amount
    of such claim, disrupt the Debtor's operations or otherwise
    potentially harm the Debtor's reorganization efforts.

In cases where there is no likely risk of, or problem attendant
with, discontinued services by a  vendor detected, such vendor
will not be considered to be a Critical Trade Creditor.

The Debtor will maintain a record summarizing for the period
after the Petition Date (a) the name of each Critical Trade
Creditor paid on account of prepetition Critical Trade Claims,
(b) the amount paid to each Critical Trade Creditor, and (c) the
goods or services provided by such Critical Trade Creditor. (XO
Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service,
Inc., 609/392-0900)  


* BOND PRICING: For the week of July 1 - July 5, 2002
-----------------------------------------------------

Issuer                                Coupon  Maturity  Price
------                                ------  --------  -----
ABGenix Inc.                           3.500%  03/15/07    70
AES Corporation                        4.500%  08/15/05    57
AES Corporation                        8.000%  12/31/08    70
AES Corporation                        8.750%  06/15/08    74
AES Corporation                        8.875%  02/15/11    68
AES Corporation                        9.375%  09/15/10    71
AES Corporation                        9.500%  06/01/09    70
Alternative Living Services (Alterra)  5.250%  12/15/02     4
American Tower Corp.                   9.375%  02/01/09    64
American & Foreign Power               5.000%  03/01/30    61
Armstrong World Industries             9.750%  04/15/08    53
Atlas Air Inc.                         9.250%  04/15/08    51
AT&T Corp.                             6.500%  03/15/29    71
Bethlehem Steel                        8.450%  03/01/05    14
Borden Inc.                            7.875%  02/15/23    60
Borden Inc.                            9.250%  06/15/19    61
Boston Celtics                         6.000%  06/30/38    63
Burlington Northern                    3.200%  01/01/45    44
Burlington Northern                    3.800%  01/01/20    63
Calpine Corp.                          4.000%  12/26/06    74
Case Corp.                             7.250%  01/15/16    74
Centennial Cell                       10.750%  12/15/08    57
Century Communications                 8.875%  01/15/07    34
Charter Communications, Inc.           5.750%  10/15/05    58
Cincinnati Bell Telephone (Broadwing)  6.300%  12/01/28    70
CIT Group Holdings                     5.875%  10/15/08    74
Comcast Corp.                          2.000%  10/15/29    20
Comforce Operating                    12.000%  12/01/07    61
Cox Communications Inc.                0.426%  04/19/20    40
Cox Communications Inc.                3.000%  03/14/30    27
Cox Communications Inc.                7.750%  11/15/29    26
Critical Path                          5.750%  04/01/05    63
Critical Path                          5.750%  04/01/05    63
Crown Castle International             9.000%  05/15/11    67
Crown Castle International             9.375%  08/01/11    69
Crown Castle International             9.500%  08/01/11    73
Crown Cork & Seal                      7.375%  12/15/26    61
Cubist Pharmacy                        5.500%  11/01/08    52
Dana Corp.                             7.000%  03/01/29    72
Dana Corp.                             7.000%  03/15/28    73
Dobson/Sygnet                         12.250%  12/15/08    74
EOTT Energy Partner                   11.000%  10/01/09    69
Equistar Chemicals                     7.550%  02/15/26    67
Finisar Corp.                          5.250%  10/15/08    55
Foster Wheeler                         6.750%  11/15/05    54
Gulf Mobile Ohio                       5.000%  12/01/56    61
Hasbro Inc.                            6.600%  07/15/28    71
Human Genome                           3.750%  03/15/07    67
Huntsman Polymer                      11.750%  12/01/04    67
Inland Steel Co.                       7.900%  01/15/07    50
Level 3 Communications                11.250%  03/15/10    48
Level 3 Communications                 9.125%  05/01/08    45
Lucent Technologies                    6.450%  03/15/29    56
Lucent Technologies                    6.500%  01/15/28    58
Missouri Pacific Railroad              4.750%  01/01/20    67
Missouri Pacific Railroad              4.750%  01/01/30    62
Missouri Pacific Railroad              5.000%  01/01/45    58
MSX International                     11.375%  01/15/08    71
Nextel Communications                  9.375%  11/15/09    63
Nextel Partners                       11.000%  03/15/10    59
Noram Energy                           6.000%  03/15/12    58
Northern Pacific Railway               3.000%  01/01/47    46
Northern Pacific Railway               3.000%  01/01/47    46
OSI Pharmaceuticals                    4.000%  02/01/09    75
Pegasus Satellite                     12.375%  08/01/06    49
Primedia Inc.                          7.625%  04/01/08    68
Public Service Electric & Gas          5.000%  07/01/37    72
Qwest Capital                          7.625%  08/03/21    69
Qwest Capital                          7.750%  02/15/31    70
Royster-Clark                         10.250%  04/01/09    75
Rural Cellular                         9.625%  05/15/08    58
SBA Communications                    10.250%  02/01/09    68
Silicon Graphics                       5.250%  09/01/04    68
Solutia Inc.                           7.375%  10/15/27    70
Sprint Capital Corp.                   6.875%  11/15/28    72
Time Warner Telecom                    9.750%  07/15/08    54
Tribune Company                        2.000%  05/15/29    66
Ugly Duckling                         11.000%  04/15/07    60
United Air Lines                       9.125%  01/15/12    60
United Air Lines                      10.250%  07/15/21    60
Universal Health Services              0.426%  06/23/20    62
US Timberlands                         9.625%  11/15/07    63
US West Capital                        6.875%  07/15/28    67
Vesta Insurance Group                  8.750%  07/15/25    74
Viropharma Inc.                        6.000%  03/01/07    36
Weirton Steel                         10.750%  06/01/05    53
Weirton Steel                         11.375%  07/01/04    58
Westpoint Stevens                      7.875%  06/15/08    58
Wind River System                      3.750%  12/15/06    73
Worldcom Inc.                          6.400%  08/15/05    58
XO Communications                      5.750%  01/15/09     1

                          *********

Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par.  Prices
are obtained by TCR editors from a variety of outside sources
during the prior week we think are reliable.  Those sources may
not, however, be complete or accurate.  The Monday Bond Pricing
table is compiled on the Friday prior to publication.  Prices
reported are not intended to reflect actual trades.  Prices for
actual trades are probably different.  Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy
or sell any security of any kind.  It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.

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
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re-mailing and photocopying) is strictly prohibited without
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