/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/020718.mbx T R O U B L E D C O M P A N Y R E P O R T E R Thursday, July 18, 2002, Vol. 6, No. 141 Headlines 360NETWORKS: Maintains Plan Filing Exclusivity Until Sept. 30 ANC RENTAL: Seeks Okay to Supplant 10-Year Contract with AT&T ADELPHIA COMMS: Continuing Prepetition Insurance Policies AMCAST INDUSTRIAL: Negotiates Credit Facilities' Restructuring AMERALIA INC: Shareholders Re-Elect Board of Directors AMERALIA INC: Wins Suit against Ex-Employee Marvin H. Hudson APPLE CAPITOL: Files Voluntary Chapter 11 Petition in Florida AQUA VIE BEVERAGE: Seeks Okay to Amend Articles of Incorporation BALANCED CARE: Preparing for Shareholder Vote on IPC Transaction BRIMINGHAM STEEL: Delaware Court Fixes August 12 Claims Bar Date BRIDGE INFORMATION: Resolves Claim Dispute with Hughes Network CD WAREHOUSE: Must Raise New Funds to Meet Current Obligations CENTRAL GARDEN: S&P Affirms BB- Corporate Credit Rating CHIVOR SA: Look for Schedules and Statements on October 21, 2002 COMDISCO: Secures Okay to Sell Certain Assets to CLIX Network CONTOUR ENERGY: Directors Conklin and Davidson Resign from Board CONTOUR ENERGY: Signs-Up Porter & Hedges as Bankruptcy Counsel COVANTA ENERGY: CIBC Asks Court to Enforce Final DIP Order DESA HOLDINGS: US Trustee Appoints Unsecured Creditors Committee ELCOM INT'L: Applying for Transfer to Nasdaq SmallCap Market ENRON CORP: Settles Turbine Purchase Dispute with Mitsubishi ENRON CORP: Asks Court to Reconsider Swidler Payment Order ETHYL CORP: S&P Withdraws B+ Corporate Credit Rating EXIDE TECH: U.S. Trustee Balks at Blackstone Engagement Terms EXODUS: Says Customers Not Affected by Latest Akamai Maneuver FAIRFIELD MANUFACTURING: S&P Withdraws B- Corporate Rating FEDERAL-MOGUL: Receives Rights to Market TRW Chassis Products FLAG TELECOM: Court Okays Arthur Andersen-UK as Accountants GLOBAL CROSSING: Turning to KPMG for Specific Tax Services GRAND COURT: Court to Consider Plan of Reorganization Today HARBISON-WALKER: Halliburton Stay Extended to September 18, 2002 IMP INC: Fiscal 2002 Revenues Plummet 25% to $23.4 Million INSCI CORP: Files Tardy & Unaudited Form 10-K with SEC ION NETWORKS: Deloitte & Touche Expresses Going Concern Doubt INTELLISEC: Auctioning-Off Ariz. & N. Carolina Units on July 30 JAGGED EDGE MOUNTAIN: Auditors Raise Going Concern Doubt KEY TRONIC: Obtains Waiver of Default Under Financing Agreement KMART: S&P Drops Credit Lease Series 1995-K3 & -K4 Ratings to D KMART CORP: S&P Drops Ratings on Series 1995-K1 & -K2 to D KMART FUNDING: S&P Gives Default Ratings on Series F & G Bonds KNOLOGY: Prepares Prepackaged Chapter 11 to Effect Debt Workout LTV CORP: Dofasco Inc. to Acquire Ohio Automotive Tubular Assets LAIDLAW INC: Expects to Release Fiscal 2001 Results by July 29 MALDEN MILLS: Maintains Plan Exclusivity through August 14 MOBILE SERVICES: S&P Assigns B+ Corporate Credit Rating NATIONAL STEEL: Wants to Retain MB Valuation as Appraiser NATIONSRENT: John Hancock Seeks Sanctions for Noncompliance NETWORK ACCESS: Committee Signing-Up Fox Rothschild as Counsel NEXTEL COMMS: Posts Improved Results for Second Quarter 2002 PANACO INC: Files for Chapter 11 Reorganization in Texas PANACO INC: Voluntary Chapter 11 Case Summary POPE & TALBOT: S&P Rates $50 Mill. Senior Unsecured Notes at BB PRESIDENT CASINOS: First Quarter Net Loss Slides-Up to $2.7MM PREVIO INC: Board Approves Plan of Liquidation and Dissolution PSINET INC: GECC Pressing for Adequate Protection Payments R&S TRUCK BODY: Gets Nod to Use Cash Collateral Until July 25 RESOURCE AMERICA: S&P Ups Corp. Credit & Sr. Unsec. Ratings to B SVI SOLUTIONS: Obtains Bank Loan Extension Until August 31, 2002 STARBAND COMMS: US Trustee Appoints Official Creditors Committee SUN HEALTHCARE: Obtains Final Decree Closing Subsidiary Cases THOMSON KERNAGHAN: Canadian Court Names Ernst & Young as Trustee TIMCO AVIATION: Completes Outstanding Senior Debt Refinancing TRI-UNION: S&P Junks $130MM Senior Notes Following Agreement U.S. CELLULAR: June 30 Working Capital Deficit Tops $7 Million VELOCITA INC: U.S. Trustee Names Creditors to Official Committee VISKASE: Executes Debt Workout Agreement with Ad Hoc Committee WILLIAMS COMM: Wants to Enjoin Claim Transfers to Preserve NOLs WILLIAMS CONTROLS: Inks New Credit Agreement with Wells Fargo WILLIAMS CONTROLS: Reaches Pact to Amend 7.5% Conv. Debentures WORLDCOM INC: Misses Payment of $74 Million Interest Due Monday WORLDCOM INC: Fitch Further Junks Senior Unsecured Debt Rating WORLDCOM INC: Suit Filed by Banks Transferred to Federal Court WORLDCOM: Where, Oh Where, Will WorldCom File for Bankruptcy? WORLDWIDE WIRELESS: Jury Awards 1st Universe $330,000 in Suit XO COMMS: Court Approves Ernst & Young for Accounting Services * Alvarez & Marsal Strategically Expands National Reach * DebtTraders' Real-Time Bond Pricing ********* 360NETWORKS: Maintains Plan Filing Exclusivity Until Sept. 30 ------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York awarded 360networks inc., and its debtor-affiliates an extension of their Exclusive Periods. The period within which the Debtors have the exclusive right to file a plan of reorganization is extended through September 30, 2002, and the Company's time to solicit and obtain acceptances of that plan is extended through November 30, 2002. ANC RENTAL: Seeks Okay to Supplant 10-Year Contract with AT&T ------------------------------------------------------------- ANC Rental Corporation and its debtor-affiliates ask the Court to consider supplanting an existing ten-year contract for voice and data services between AT&T and ANC Rental Corporation with a more favorable three-year agreement. According to Mark J. Packel, Esq., at Blank Rome Comisky & McCauley LLP in Wilmington, Delaware, the implementation of the new agreement is part of the Debtors' plan of shrinking the communications vendor base to reduce the overall support costs and the management overhead associated with governing additional vendors and contracts. The old agreement expires in 2005 and requires AT&T to pay a minimum annual revenue commitment of $11,000,000 or 90% of the previous year's billings. The new agreement pegs ANC's commitment at $9,000,000 annually. Mr. Packel explains that the new agreement would place the Debtors on a more favorable keel because AT&T would be waiving all of its pre-petition claims against ANC. These include any claim for rejection damages, claims arising from the rejection of the Old Agreement, as well as any claim for any pre-petition amounts owing pursuant to the agreement. AT&T would also be adjusting ANC's minimum annual revenue commitment if the volume of traffic is reduced. ANC, meanwhile, will be required to subscribe to AT&T's telecommunications services for at least 95% of its inter-exchange telecommunications requirements. However, ANC shall not breach any contract existing as of the date that ANC orders services under the New Agreement and will not be prevented from obtaining from other inter-exchange carriers the same telecommunications services ANC requires at a specified location but are not available from AT&T. Mr. Packel estimates the annual cost of the New Agreement at $11,000,000 to $12,000,000, depending on ANC communications traffic and the projected annual savings of the New Agreement over the Old Agreement at $4,700,000. An additional $1,000,000 in savings is expected if the Alamo Local Communications traffic is transferred to the new agreement. Mr. Packel points out that the million dollar savings that the new agreement will provide the Debtors is sound enough to merit approval of a new agreement. Besides, entering into an agreement with AT&T as opposed to another service provider minimizes potential rejection damages claims and would prevent changes to over 10,000 communications lines and 200 web addresses. (ANC Rental Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 609/392-0900) ADELPHIA COMMS: Continuing Prepetition Insurance Policies --------------------------------------------------------- Adelphia Communications sought and obtained authority to maintain all of its Insurance Policies, continue all prepetition insurance-related practices, and to pay all prepetition Insurance obligations, including premiums, fees and retroactive adjustments. According to Myron Trepper, Esq., at Willkie Farr & Gallagher in New York, the ACOM Debtors maintains certain property and liability insurance policies with respect to, inter alia, property, fire, general liability, products liability, automobile and physical damage, aircraft, boiler and machinery liability, earthquake, flood, foreign liability, excess liability, umbrella liability, media professional liability, fiduciary liability, and directors' and officers' liability. Mr. Trepper informs the Court that the Debtors' Insurance Policies are managed by several insurance brokers, including Wharton/ Lyon & Lyon and Aon Risk Services. In the ordinary course of the Debtors' business, when premiums are due, the Debtors will remit payment to the applicable insurance broker, who in turn will pay the applicable insurance carriers. To the extent a premium relating to a period prior to the Petition Date is outstanding with respect to any Insurance Policy, the Debtors seek the authority to make the payment. As most, if not all, premiums under the Insurance Policies are paid in advance, the Debtors estimate that no prepetition obligations, with the exception of periodic adjustments, will be outstanding on the Petition Date. ACOM's most substantial Insurance Policies are: A. General Liability And Automobile Policies: The Debtors maintain several liability and casualty policies with Royal Insurance Company. The Debtors pay premiums in respect of the Casualty Program in five 20% installment payments (each in the amount of $6,029,533) which are due to be paid on May 16, 2002, May 30, 2002, June 16, 2002, July 16, 2002 and August 16, 2002. Except for workers' compensation, a description of the most substantial policies included in the Casualty Program is set forth below: 1. General Liability: The Casualty Program includes a commercial general liability policy. The Policy insures the Debtors against personal and advertising injury, fire damage, employee benefits liability and medical expenses. The annual premium under the Policy is $5,894,427. 2. Automobile: In addition to the general liability Policy, the Casualty Program includes three automobile liability insurance policies with Royal Insurance Company. The Automobile Policies provide the Debtors with insurance coverage in all fifty states for bodily injury, property damage, collision and medical payments. Under the Automobile Policies, the Debtors pay aggregate annual premiums of $9,207,426. B. Property Insurance: The Debtors maintain a property insurance policy with Royal Indemnity Company, which provides the Debtors with insurance coverage for claims relating to, among other things, property damage. Under the Property Policy, the Debtors' aggregate annual premium is $2,112,218. On May 28, 2002, the Debtors paid the premium in respect of the Property Policy for the term commencing May 16, 2002 through May 16, 2003. Accordingly, except for any retroactive premium adjustments that may arise, the Debtors have satisfied all prepetition obligations associated with the Property Policy. C. Umbrella Policy: In addition to the foregoing policies, the Debtors maintain an umbrella policy with Liberty Mutual, which provides excess liability coverage. The $1,400,000 annual premium under this policy was paid by the Debtors on May 28, 2002. D. Difference In Conditions: In the ordinary course of their business, the Debtors maintain two difference in condition casualty policies to insure against, among other things, earthquakes and floods. One policy is with Essex Insurance Company and the other is with Lloyd's of London. The annual premiums for those policies were paid on May 28, 2002 and equal $185,000 and $103,400, respectively. Thus, other than retroactive adjustments that may arise, the Debtors do not owe any premiums with respect to these policies. E. Media Professional Liability: In addition to the foregoing policies, the Debtors maintain a media professional liability policy with Executive Risk Indemnity Inc., which insures against claims for invasion of privacy, copyright infringement, libel, slander, infliction of emotional distress, product disparagement, trade libel and trademark infringement. The Debtors prepaid the 3-year $97,674 premium under the Policy in November of 1999. Thus, subject to any retroactive adjustments that may arise, the Debtors do not owe any prepetition premiums under the MP Policy. F. Directors' And Officers' Liability Policies: The Debtors maintain a primary directors' and officers' liability policy with Associated Electric & Gas Insurance Services Limited (AEGIS). Under the D&O Policy, the Debtors have paid an aggregate annual premium of $650,000. As of the Petition Date, aside from any retroactive adjustments that may arise, the Debtors estimate that no amounts will be owing under the D&O Policy. In addition to the D&O Policy, the Debtors maintain two excess D&O policies. One policy is through the Federal Insurance Company and the annual premium required to be paid thereunder is $300,000. The other excess policy is with Greenwich Insurance Company and the annual premium required to be paid thereunder is $157,220. As of the Petition Date, aside from the need for retroactive adjustments, the Debtors do not owe any premiums under the Excess Policies. Mr. Trepper fears that if these policies were allowed to lapse, the Debtors would be exposed to substantial liability. In particular, maintenance of the directors' and officers' liability policies is necessary to retain the Debtors' senior management who are critical to the success of the Debtors' business and reorganization. The U.S. Trustee's Guidelines also require that the Debtors maintain the Insurance Policies. When compared with the size of the Debtors' estates and the potential liability exposure that would ensue absent insurance coverage, the amount of any premium adjustment that may be assessed militates strongly in favor of the relief requested. To the extent that any Insurance Policy or any other agreement, policy or contract is deemed an executory contract within the meaning of section 365 of the Bankruptcy Code, the Debtors do not at this time intend to assume them. "Court authorization of payments will not be deemed to constitute postpetition assumption or adoption of any Insurance Policy or any other agreement, policy or contract described herein as an executory contract pursuant to section 365 of the Bankruptcy Code," Mr. Trepper says. The Debtors will review the Insurance Policies and other agreements, policies or contracts described herein at a later date, and reserve all of their rights under the Bankruptcy Code with respect thereto. (Adelphia Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 609/392-0900) Adelphia Communications' 10.875% bonds due 2010 (ADEL10USR1) are quoted at 38 cents-on-the-dollar, DebtTraders reports. See http://www.debttraders.com/price.cfm?dt_sec_ticker=ADEL10USR1 for real-time bond pricing. AMCAST INDUSTRIAL: Negotiates Credit Facilities' Restructuring -------------------------------------------------------------- Amcast Industrial Corporation, (NYSE:AIZ) announced that the Company has successfully negotiated a restructuring of its credit facilities with its bank-lending group and senior note holders. As restructured, the bank credit facilities have been continued through September 14, 2003, and a required $12.5 million prepayment under the senior notes has been deferred until maturity in November 2003. Byron O. Pond, Chairman of the Board and Chief Executive Officer, said, "We are extremely pleased with the confidence and support expressed by our bank-lending group and senior note holders. The restructuring of our credit facilities is an important step in allowing the Company to continue implementing its world class initiatives and return to profitability." After restructuring, long-term debt at the end of the fiscal third quarter was $160.4 million. This reduced short-term debt to $25.4 million, or 13.7% of total obligations. Mr. Pond added, "I would like to reiterate our appreciation for the understanding and patience shown by Amcast's shareholders, customers, suppliers, lenders, and other stakeholders. Completing this important process permits a stronger focus on the operational improvements we envision for Amcast." Amcast Industrial Corporation is a leading manufacturer of technology-intensive metal products. Its two business segments are brand name Flow Control Products marketed through national distribution channels, and Engineered Components for original equipment manufacturers. The company serves the automotive, construction, and industrial sectors of the economy. AMERALIA INC: Shareholders Re-Elect Board of Directors ------------------------------------------------------ AmerAlia, Inc., held its annual meeting of shareholders on June 18, 2002. At the annual meeting the shareholders only considered the election of directors. At the meeting, the following seven persons were nominated as directors of AmerAlia for a term of one year and until the election and qualification of their successors. At the annual meeting of shareholders, 10,239,281 shares were represented in person or by proxy (being approximately 73.3% of the total number of shares outstanding), and Bill H. Gunn, Robert van Mourik, John F. Woolard, Neil E. Summerson, Robert A. Cameron, Geoffrey C. Murphy, and James V. Riley were each re-elected to the Board of Directors. As a result of their election and their service on the board of directors as of July 1, 2002, each of Neil E. Summerson, Robert A. Cameron, Geoffrey C. Murphy, and James V. Riley will receive options to acquire 37,500 shares of AmerAlia pursuant to its 2001 Directors' Incentive Plan which the shareholders had approved at the 2000 annual meeting held in June 2001. The options are exercisable pursuant to the terms of that plan at an exercise price equal to the average market price of the AmerAlia common stock during June 2002, and will be exercisable through June 30, 2005. The purpose of the Directors' Incentive Plan is to provide incentives to attract, retain and motivate persons whose present and potential contributions as members of the Board of AmerAlia, Inc. are important to AmerAlia's success and the success of its subsidiaries, by offering them an opportunity to participate in AmerAlia's future performance through awards of options. AmerAlia, through subsidiary Natural Soda, Inc., is developing a sodium bicarbonate deposit on 1,320 acres of federal land in Colorado's Piceance Creek Basin. The land, leased through 2011, is estimated to contain about 300 million tons of the mineral per square mile. AmerAlia has made a bid to acquire White River Nahcolite Minerals, which holds an adjoining lease covering more than 8,000 acres. Sodium bicarbonate (baking soda) is used in animal feed, food, and pharmaceuticals. Its production byproducts (soda ash and caustic soda) are used to make glass, detergents, and chemicals. At March 31, 2002, AmerAlia's balance sheet showed that its total current liabilities exceeded its total current assets by about $13 million. AMERALIA INC: Wins Suit against Ex-Employee Marvin H. Hudson ------------------------------------------------------------ In July 1999, AmerAlia filed a complaint against Mr. Hudson in the Colorado District Court for Arapahoe County, Colorado (civ. act. no. 99-CV-2207). As claims for relief against Marvin H. Hudson, a former officer and employee, AmerAlia alleged: * that an employment contract that Mr. Hudson alleged AmerAlia entered into with him were forgeries or procured by fraud or duress and, therefore, not enforceable; and * that Mr. Hudson had converted to his own use funds, documents, personal property, and equipment belonging to AmerAlia. In the State Action, AmerAlia sought damages and exemplary damages against Mr. Hudson, as well as an injunction and an accounting. Mr. Hudson sought to remove this action to the federal court, but the federal court remanded it back to the Arapahoe County District Court. In November 1999 the Arapahoe County District Court granted Mr. Hudson's motion to change venue of the State Action to El Paso County, Colorado where it was assigned case no. 99-CV-3050 in Division 5. In December 1999 Mr. Hudson filed an answer with counterclaims in the State Action in which he denied the material allegations of AmerAlia's complaint and alleged against AmerAlia: * "Breach of Contract" in which Mr. Hudson alleged that he had been employed by AmerAlia pursuant to an employment contract executed by Mr. Gunn in 1996 on behalf of AmerAlia which AmerAlia breached when it allegedly terminated Mr. Hudson's employment in June 1998. Mr. Hudson alleged that this employment contract provided for a salary of $80,000 per year, options to purchase 30,000 shares of common stock per year, and 200,000 stock appreciation rights; * damages for alleged "Willful and Wanton Breach of Contract" and "Wrongful Termination"; and * alleged violation of the Colorado Wage Claim Act (Section 8-4-101 et seq.) and common law fraud. Mr. Hudson also named Messrs. Gunn, van Mourik and Summerson individually and as officers and directors of AmerAlia although only AmerAlia and Mr. Gunn were served and were involved in this action. AmerAlia and Mr. Gunn replied to Mr. Hudson's counterclaims denying all of Mr. Hudson's material allegations. The action was transferred to the El Paso County (Colorado) district court. Trial was held on the matter from April 30 through May 10, 2002. Before submitting the case to the jury, the Court directed a verdict: * In favor of Bill Gunn by dismissing Mr. Hudson's claims for breach of contract, wrongful termination in violation of public policy, wage claim act, extreme and outrageous conduct, and defamation. * In favor of AmerAlia, by dismissing Mr. Hudson's claims against AmerAlia, the court (by directed verdict) dismissed Mr. Hudson's claims against AmerAlia for defamation, extreme and outrageous conduct, and under the Colorado wage claim act. Jury Verdict In its deliberations, the jury considered the remaining claims and reached conclusions on the claims against Hudson, AmerAlia and Mr. Gunn as follows: * In favor of Mr. Hudson by dismissing AmerAlia's claims against Mr. Hudson for conversion of AmerAlia's assets. * The only remaining claims against AmerAlia were for breach of contract, wrongful termination in violation of public policy, and common law fraud. - The jury found in favor of AmerAlia in the claim for wrongful termination in violation of public policy. - The jury found in favor of Mr. Hudson on the breach of contract claim and awarded damages to Mr. Hudson from AmerAlia in the amount of $322,900. There were two remaining claims: common law fraud against Mr. Gunn and common law fraud against AmerAlia. The jury would have only considered those claims had they found that there was no valid contract. Since the jury found that there was a valid contract, they did not need to consider the common law fraud claims. In conclusion, the jury assessed damages against AmerAlia for $322,900 because it found that the contract that Mr. Hudson presented was valid and AmerAlia had breached that contract. Following the jury's verdict, both parties filed certain post- trial motions in which the court denied Mr. Hudson's motion for attorneys' fees and accepted AmerAlia's calculation of interest. As a result, AmerAlia anticipates that the court will enter judgment for Mr. Hudson in an amount less than $400,000. Judgment has not yet been entered. After the entry of judgment, the parties have ten days to file post-trial motions if any party desires. These could include a motion for judgment notwithstanding the verdict, interest, attorneys' fees, reduction of the award, and other possible actions. Either party can appeal the judgment. Were AmerAlia to appeal the judgment, it would have to post a bond. AmerAlia has made no decision whether to appeal the judgment. AmerAlia, through subsidiary Natural Soda, Inc., is developing a sodium bicarbonate deposit on 1,320 acres of federal land in Colorado's Piceance Creek Basin. The land, leased through 2011, is estimated to contain about 300 million tons of the mineral per square mile. AmerAlia has made a bid to acquire White River Nahcolite Minerals, which holds an adjoining lease covering more than 8,000 acres. Sodium bicarbonate (baking soda) is used in animal feed, food, and pharmaceuticals. Its production byproducts (soda ash and caustic soda) are used to make glass, detergents, and chemicals. At March 31, 2002, AmerAlia's balance sheet showed that its total current liabilities exceeded its total current assets by about $13 million. APPLE CAPITOL: Files Voluntary Chapter 11 Petition in Florida ------------------------------------------------------------- Applebee's International, Inc. (Nasdaq: APPB), announced that it has reached an agreement with Apple Capitol Group, LLC, an existing Applebee's franchisee, to acquire the assets of 21 Applebee's restaurants located in the Washington, D.C. area for $32.8 million in cash at closing, subject to adjustment. The agreement also provides for additional payments if the restaurants achieve cash flow in excess of historical levels. The 21 restaurants are located in Maryland, Virginia, Delaware, Pennsylvania and West Virginia. Lloyd L. Hill, chairman and chief executive officer, said: "As we announced in May, part of our growth strategy is to use our strong balance sheet and substantial free cash flow for franchise acquisitions. We believe the territory in which the Apple Capitol restaurants are located will ultimately support a total of approximately 40 Applebee's restaurants. These restaurants are contiguous to the Virginia market that we acquired in 1998. Year-to date comparable sales for these restaurants are positive and average weekly sales are in excess of $41,000. We look forward to welcoming this team of associates to Applebee's International. The addition of these restaurants will complement and provide increased depth to our company operations and will bring our company ownership to approximately 24% of the system total." As a condition of this agreement, Apple Capitol has filed a voluntary Chapter 11 petition in the United States Bankruptcy Court for the Southern District of Florida. The acquisition of the restaurants is anticipated to close in the fourth quarter of 2002, subject to normal bankruptcy court bidding procedures, obtaining operating licenses and other third-party consents. Depending upon the ultimate closing date, the company expects the addition of these restaurants to have a neutral impact on fiscal year 2002 earnings and to be accretive to fiscal year 2003 earnings. Apple Capitol acquired these restaurants from Avado Brands, Inc. (formerly Apple South, Inc.) in May 1999 in the final transaction relating to that franchisee's exit from the Applebee's system. Applebee's International has been working in coordination with Apple Capitol and its lender for several months to facilitate the sale of these restaurants through a voluntary bankruptcy process. The agreement commits Apple Capitol to operate the restaurants in accordance with historical operating standards until they are sold. Upon completion of the sale, Apple Capitol will cease to be an Applebee's franchisee. Applebee's International, Inc., headquartered in Overland Park, Kan., develops, franchises and operates restaurants under the Applebee's Neighborhood Grill and Bar brand, the largest casual dining concept in the world. There are currently 1,427 Applebee's restaurants operating system-wide in 49 states and seven international countries. Additional information on Applebee's International can be found at the company's Web site http://www.applebees.com AQUA VIE BEVERAGE: Seeks Okay to Amend Articles of Incorporation ---------------------------------------------------------------- Under date of July 8, 2002, Aqua Vie Beverage Corporation has sent an Information Statement to its shareholders informing them of the following proposed actions by consent, which the Company is proposing to provide Management with flexibility to effect future financing for the Company. 1. Approve amendments to the Articles which would combine the common shares in the alternative as provided below, with the Directors to have the discretion as to which amendment to file, or whether to file any such amendment subject to the requirement that any such amendment to effect a combination must be made on or before April 30, 2003, after which this approval would be withdrawn and the amendment would not be considered approved by the shareholders: a. At the rate of one share of common for every 20 common shares outstanding at the time of the Board's action or, b. At the rate of one share of common for every 50 common shares outstanding at the time of the Board's action or, c. At the rate of one share of common for every 75 common shares outstanding at the time of the Board's action or, d. At the rate of one share of common for every 100 common shares outstanding at the time of the Board's action. e. At the rate of one share of common for every 1,000 common shares Outstanding at the time of the Board's action. The Company is not asking shareholders for a proxy and shareholders are being asked not to send a proxy. Aqua Vie Beverage Corporation develops and markets all-natural, lightly flavored, still (non-carbonated) bottled spring water. The company's low-calorie alternative beverages are bacteria- free and contain no preservatives. Aqua Vie produces and markets the Hydrator(TM) line of beverages in the United States and Europe. This beverage line, comprised of seven low-calorie, all- natural beverages that are lightly flavored and packaged in half-liter bottles, is designed to increase one's personal consumption of water, naturally. The underlying technology also serves as the delivery system for Aqua Vie's new line of children's Hydrators(TM), PurePlay(TM), and Eau Vin(TM), Aqua Vie's line of nonalcoholic wine and champagnes made from spring water. Aqua Vie Beverage's January 31, 2002, balance sheet shows a total shareholders' equity deficit of about $618,000. BALANCED CARE: Preparing for Shareholder Vote on IPC Transaction ---------------------------------------------------------------- Balanced Care Corporation will be sending the following to its stockholders: "A special meeting of the stockholders of Balanced Care Corporation will be held on August __, 2002, at _____, local time, at _______, to consider and vote upon a proposal to adopt the Agreement and Plan of Merger, dated as of May 15, 2002, by and among the Company, IPC Advisors S.a.r.l. ("IPC") and IPBC Acquisition Corp. ("Acquisition Corp."), under which Acquisition Corp. will be merged with and into the Company, with the Company surviving the merger as a subsidiary of IPC, and to approve the transactions it contemplates, including the merger. In the merger, each outstanding share of the Company's common stock, other than shares held by IPC or Acquisition Corp., or held by stockholders who perfect their appraisal rights under Delaware law, will be converted into the right to receive $0.25 in cash, without interest, less any applicable withholding taxes. Our board of directors has fixed the close of business on July 17, 2002, as the record date for determining which of our stockholders are entitled to notice of, and to vote at, the special meeting and at any adjournment or postponement thereof." The Company has not yet advised specifics about the date, time and place of the special meeting. The company operates about 65 assisted living and skilled nursing facilities for middle and upper income seniors in 10 states. Its Outlook Pointe assisted living facilities offer 24- hour personal and health care services, including help with bathing, eating, and dressing. The Balanced Gold program provides services aimed at improving residents' cognitive, emotional, and physical well-being. Like many assisted-living providers, Balanced Care is having trouble paying its rent, due in part to an increase in supply that grew faster than demand. A Luxembourg-based investment firm owns more than 50% of the company. According to its SEC filing, Balanced Care's March 31, 2002 balance sheet shows a total shareholders' equity deficit of about $22 million. BRIMINGHAM STEEL: Delaware Court Fixes August 12 Claims Bar Date ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware fixed August 12, 2002 as the Claims Bar Date for creditors of Birmingham Steel and its debtor affiliates to file their proofs of claim or be forever barred from asserting that claim. To be considered timely filed, all claims must be received by Bankruptcy Services LLC on or before 4:00 p.m. on August 12. Certain types of claims are excluded from the claim-filing deadline: a) claims that are not listed on the Debtors' Schedules of Liabilities as disputed, contingent or unliquidated; b) claims that are properly filed with the Clerk of the Court or BSI against the correct Debtor; c) claims that are allowable as an expense of administration in these cases; d) claims allowed by this Court arising from the rejection of an executory contract or unexpired lease; e) claims on account of common stock r other equity interest in the Debtors; and f) employees' claims for unpaid wages, salaries, commissions, severance or benefits. The Debtors will publish notice of the Bar Date in the national edition of The Wall Street Journal and The Birmingham News. Birmingham Steel Corporation manufacture and distribute steel. Without limitation, the Debtors produce steel reinforcing bar (rebar) for construction industry and merchant steel products for fabricators and distributors across North America. The Company filed for chapter 11 protection on June 3, 2002. James L. Patton, Esq., Michael R. Nestor, Esq., Sharon M Zieg, Esq. at Young Conaway Stargatt & Taylor, LLP and John Whittington, Esq., Patrick Darby, Esq., Lloyd C. Peeples III, Esq. at Bradley Arant Rose & White LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $487,485,834 in assets and $681,860,489 in total debts. BRIDGE INFORMATION: Resolves Claim Dispute with Hughes Network -------------------------------------------------------------- Scott Greenberg, Esq., at Sandberg, Phoenix & von Gontard, in St. Louis, Missouri, relates that Hughes Network Systems is a provider of broadband satellite network solutions for businesses and consumers. Bridge Information Systems, Inc., and its debtor- affiliates, and Hughes entered into a DirecPC Professional Services Data Network Agreement. Under the DirecPC Agreement, Mr. Greenberg states that Hughes agreed to provide the Debtors with satellite services and the Debtors agreed to pay for it. The Satellite Services included the delivery of stock ticker updates in a continuous multicast data stream to the Debtors' remote end-user clients and the Debtors' data center in St. Louis, Missouri. Mr. Greenberg tells the Court that despite Hughes' postpetition provision of Satellite Services under the DirecPC Agreement, the Debtors failed and refused to pay for the postpetition services rendered. "The Debtors owe Hughes a total of $701,406 plus interest, late charges, attorneys' fees and costs for postpetition Satellite Services provided," Mr. Greenberg says. Mr. Greenberg asserts that the administrative expense claim should be recognized as actual and necessary costs of preserving the Debtors' estate. "All postpetition Satellite Services provided for the Debtors and their estate benefited them by preserving the value of their estate, supporting efforts to sell and dispose of the assets of their estate in the context of a going concern and in generating postpetition accounts receivables," Mr. Greenberg points out. Settlement Agreement In order to resolve the dispute between Hughes and the Debtors, the Plan Administrator, Scott P. Peltz, and Hughes have agreed to a Settlement Agreement And Mutual Release. The salient terms of the agreement are: (i) the Plan Administrator will allow Hughes' $526,058 administrative expense claim without offset, defense or counter-claim, and the Plan Administrator will pay Hughes in immediately available funds on or before July 13, 2002; (ii) the Plan Administrator will allow Hughes' $2,040,643 unsecured claim without offset, defense or counter-claim, and the Plan Administrator will pay the unsecured claim according to the terms of the Second Amended Joint Plan of Liquidation; (iii) in consideration of the payment and the mutual covenants and agreements, Hughes releases and acquits the Debtors from all claims, demands, causes of action, obligations, expenses, costs, and liabilities, related to the DirecPC Agreement or the Motion; (iv) the Plan Administrator releases and acquits Hughes from all claims, demands, causes of action, obligations, expenses, costs, and liabilities, related to the DirecPC Agreement or the Motion; and (v) the parties agree to fully cooperate to effect the agreement and to execute all additional documents, and to undertake any additional actions that may be necessary in order to effectuate the terms, conditions and intent of this Agreement. (Bridge Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service, Inc., 609/392-0900) CD WAREHOUSE: Must Raise New Funds to Meet Current Obligations -------------------------------------------------------------- Tuesday, CD Warehouse (OTC Bulletin Board: CDWI) issued a financial update. Two elements or forces have combined since November 2001 that threaten the longevity of the Company. First, the Company's lender, GE Capital Corporation, amended the loan agreement covenants and reappraised the Company's inventory. As a result of the covenant modifications and inventory reappraisal, borrowing availability under the loan was reduced by an aggregate of $1,000,000.00. Second, a number of the Company's franchisees have commenced legal proceedings seeking termination of their franchise agreements. In conjunction with these proceedings these franchisees have ceased making royalty payments. In addition, a number of franchisees are awaiting royalty payments pending resolution of this litigation. As of June 30, 2002 the unpaid royalties were $460,000.00. As of June 30, 2002, the Company did not have any borrowing availability under the loan. Furthermore, last week, an additional $175,000.00 was unexpectedly garnished in satisfaction of an outstanding judgment. The combination of these events has intensified the need for a substantial capital injection to meet the Company's current debts and obligations. The Company does not have any arrangements to obtain additional capital funding. Various financing alternatives are being pursued. However, there is no assurance that any capital funding will become available to the Company on a timely basis or on favorable terms. CD Warehouse, Inc. franchises and operates retail music stores in 35 states, the District of Columbia, England, Thailand, Guatemala, Canada and Venezuela under the names "CD Warehouse, "Disc Go Round", "CD Exchange" and "Music Trader". CD Warehouse stores buy, sell and trade pre-owned CDs, DVDs and games with their customers, as well as sell a full complement of new release CDs. Company information is available at http://www.cdwarehouse.com CENTRAL GARDEN: S&P Affirms BB- Corporate Credit Rating ------------------------------------------------------- Standard & Poor's revised its outlook on Central Garden & Pet Co., a manufacturer and distributor of lawn and garden and pet supply products, to stable from negative after the company's extension of its primary credit facility through July 2004 and its progress toward transitioning to higher-margin branded product sales from distribution sales. At the same time, Standard & Poor's affirmed its double-'B'- minus corporate credit rating. The Lafayette, California-based company had $293 million of debt outstanding as of March 30, 2002. "Since the termination of its distribution agreement with the Scotts Company, the company has increased its focus on branded name products. The transition has resulted in better operating performance and credit measures," said Standard & Poor's analyst Robert Lichtenstein. Operating margins for the 12 months ended March 30, 2002, rose to 9.9% from 7.0% in the comparable period of 2001, while EBITDA coverage of interest expense improved to 3.6 times, from 2.5x. Liquidity is provided by a $125 million revolving credit facility (which has been reduced from $200 million due to lower borrowing requirements) and $105 million of lines of credit through the company's subsidiaries. Although the company holds good market positions in certain product lines, competitors such as The Scotts Co. and The Hartz Mountain Corp. have much better brand name recognition than Central Garden & Pet. This is significant because customer choice is based on brand name recognition as well as quality, value, and price. Central's improved profitability and credit measures resulting from its progress toward transitioning to higher-margin brand product sales from distribution sales provide support for the rating. However, the company is challenged by the intense level of competition in the brand lawn, garden, and pet products businesses and is vulnerable to its seasonality. The outlook also considers acquisition risk as the company expands its brand product portfolio. CHIVOR SA: Look for Schedules and Statements on October 21, 2002 ---------------------------------------------------------------- Chivor S.A. E.S.P., sought and obtained approval from the U.S. Bankruptcy Court for the Southern District of New York to extend its time period to file comprehensive Schedules of Assets and Liabilities, and its Statements of Financial Affairs. The Court gives the Debtor until October 21, 2002 to file its Schedules and Statement and otherwise comply with 11 U.S.C. Sec. 521(1) and Rule 1007 of the Federal Rules of Bankruptcy Procedure. In the event that the Debtor's Prepackaged Plan is confirmed before October 21, 2002, the Court rules that the requirement to files Schedules and Statement will be waived permanently. The Debtor is a corporation (sociedad anonima) and public services enterprise organized and existing under the laws of the Republic of Colombia and is the fourth largest electric power generator in Colombia. The Company, which owns the third largest hydroelectric power generator station, located in east central Colombia filed for chapter 11 protection on July 6, 2002. Howard Seife, Esq., and N. Theodore Zink, Jr., Esq., at Chadbourne & Parke LLP represent the Debtor in its restructuring efforts. As of May 30, 2002, the Debtor listed $588,624,000 in assets and $349,376,000 in debts. COMDISCO: Secures Okay to Sell Certain Assets to CLIX Network ------------------------------------------------------------- Comdisco, Inc., and its debtor-affiliates obtained the Court's authority to sell their interest in certain assets to CLIX Network, Inc. Felicia Gerber Perlman, Esq., at Skadden, Arps, Slate, Meagher & Flom, in Chicago, Illinois, informed the Court that the Debtors entered into an agreement with Clickradio, Inc., wherein the Debtors: (i) lend Clickradio $3,000,000 in subordinated debt; and (ii) extend a credit line of $1,500,000 for equipment lease financing. The Debtors and CLIX Network entered into an agreement wherein the Debtors will sell to CLIX the assets for more than twice the amount of their credit bid. Ms. Perlman provides the salient terms of the agreement as: (i) the Purchase Price at the closing date for the assets would be equal to: (a) $1,980,000 by wire transfers of immediately available United States funds; plus (b) $500,000 in the form of 3-year subordinated, secured promissory note; plus (c) warrants exercisable for $500,000 of capital stock of CLIX. (ii) the proposed sale will include all of the Debtors' right, title and interest in the assets. (Comdisco Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service, Inc., 609/392-0900) CONTOUR ENERGY: Directors Conklin and Davidson Resign from Board ---------------------------------------------------------------- Contour Energy Co., announced that its two outside directors, John J. Conklin, Jr., and Ralph P. Davidson, have tendered their resignations from the Company's Board of Directors. Prior to the two resignations, the Company's four member Board unanimously approved the resolution authorizing yesterday's filing of the Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code. The Company has been diligently working with the majority holders of both its senior secured notes and its senior subordinated notes to restructure and substantially reduce its debt load. The outcome of that effort is the Plan of Reorganization filed with the court yesterday. The Company has strived to negotiate a plan fair to all its stakeholders and hopes the bankruptcy process will proceed without major obstacles. Kenneth R. Sanders, President and CEO, commented, "We greatly appreciate Bud's and Ralph's unwavering support for management during this arduous process, and thank them for their many years of tireless dedication to serving the Company and its Board." The Company has eliminated the vacancies created by these two resignations and no longer has any outside directors. The Company does not expect any outside directors to be added to the Board at this time, and, as debtors and debtors in possession, will continue to manage and operate its assets and businesses subject to the supervision and orders of the bankruptcy court. Contour Energy Co., is engaged in the exploration, development, acquisition and production of natural gas and oil. Contour Energy Co., common stock is traded on the OTC Bulletin Board under the symbol CONC.OB. CONTOUR ENERGY: Signs-Up Porter & Hedges as Bankruptcy Counsel -------------------------------------------------------------- Contour Energy Co., and its debtor-affiliates ask the United States Bankruptcy Court Southern District of Texas to approve their retention of Porter & Hedges, LLP as Legal Counsel. John F. Higgins, Esq., will act as attorney in charge of Contour's chapter 11 cases. The Debtors first retained Porter & Hedges in April of 2001. Porter & Hedges has rendered legal services to Contour and its affiliates in connection with, among other things, general corporate matters, securities offerings and securities law filings, property acquisitions, contractual relationships, litigation, employment, ERISA and benefits matters, the restructuring of senior and subordinate debt, pending disputes with third parties, and general legal advice. The Debtors believe that Porter & Hedges' continued retention is in the best interests of the Debtors, their estates and creditors. Porter & Hedges is expected to: a) render legal advice with respect to Debtors' rights and duties as debtors in possession and continued business operations; b) assist, advise and represent the Debtors in analyzing Contour's capital structure, investigating the extent and validity of liens, cash collateral stipulations or contested matters; c) assist, advise and represent the Debtors in postpetition financing transactions; d) assist, advise and represent the Debtors in the formulation of a joint disclosure statement and plan of reorganization and to assist the Debtors in obtaining confirmation and consummation of a joint plan of reorganization; e) assist, advise and represent the Debtors in any manner relevant to preserving and protecting the Debtors' estates; f) investigate and prosecute preference, fraudulent transfer and other actions arising under the Debtors' bankruptcy avoiding powers; g) prepare on behalf of the Debtors all necessary applications, motions, answers, orders, reports, and other legal papers; h) appear in Court and to protect the interests of the Debtors before the Court; i) assist the Debtors in administrative matters; j) perform all other legal services for the Debtors which may be necessary and proper in these proceedings; k) assist, advise and represent the Debtors in any litigation matter; l) continue to assist and advise the Debtors in general corporate and other matters previously described in this Application; and m) provide other legal advice and services, as requested by the Debtors, from time to time. Porter & Hedges' customary hourly rates are: Partners $300 - $420 Associates/Staff Attorneys $180 - $230 Legal Assistants/Law Clerks $ 90 - $105 Contour Energy Co., a company engaged in the exploration, development acquisition and production of oil and natural gas, filed for chapter 11 protection on July 15, 2002. John F. Higgins, IV, Esq., and Porter & Hedges, LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $153,634,032 in assets and $272,097,004 in debts. COVANTA ENERGY: CIBC Asks Court to Enforce Final DIP Order ---------------------------------------------------------- Canadian Imperial Bank of Commerce is the agent for the Canadian Loss Sharing Lenders, all of whom are parties to the prepetition credit agreement titled, "Revolving Credit and Participation Agreement" dated March 14, 2001, among Covanta Energy Corporation, certain of its Subsidiaries, Bank of America, N.A., as administrative agent, co-arranger and co-book runner, and Deutsche Bank AG, New York Branch, as documentation agent, co- arranger and co-book runner. The parties also executed the Intercreditor Agreement. Kathrine A. McLendon, Esq., at Simpson Thatcher & Bartlett, in New York, relates that Prepetition Credit Agreement provides that: (a) the Revolving Lenders agreed to extend certain credit facilities to the Borrowers for the purpose of, among other things, providing financing for working capital and general corporate purposes, including the provision of letters of credit and the funding of permitted investments; (b) the Pooled Facility Lenders agreed to purchase participations in the credit exposures of each of the Pooled Facility Lenders under the Pooled Facilities; (c) the Pooled Facility Lenders and the Opt-Out Facility Lenders agreed to cause the maturities of each of the Facilities to occur on may 31, 2002; (d) the Lenders agreed to adopt certain common covenants under the Pooled Facilities and the Opt-Out Facilities; and (e) an intercreditor arrangement would be established among the various groups of Lenders. Pursuant to the terms of the Intercreditor Agreement, on April 29, 2002, Canadian Imperial sent a loss sharing payment notice to the Collateral Agent, directing them to take into account, inter alia, the conversion of the Designated Letters of Credit to Tranche B Letters of Credit in calculating the Repayment Shortfall. The Loss Sharing Payment Notice also directed the Collateral Agent to calculate the Repayment Shortfall as of the date of the Final DIP Order was entered by the Court. Mr. McLendon recalls that under the Final DIP Order, the Tranche C Facility provides the funding mechanism for the loss sharing arrangements among the lenders under the Intercreditor Agreement. The Final DIP Order also provides that all obligations under the Tranche C Facility are Prepetition Secured Obligations owing to the Prepetition Lenders and have the same priority as the reimbursement obligation in respect to the loss sharing payments required to be made under the Intercreditor Agreement. Accordingly, Canadian Imperial asks the Court to: (a) enforce and interpret the provisions of the Final DIP Order that the roll-up and conversion of the Designated Letters of Credit under the Prepetition Credit Agreement to Tranche B Letters of Credit under the DIP Agreement constitute a reduction in the unfunded exposure of the Pooled Facility Lenders under the Pooled Facilities by the same amount and thus entitle the Canadian Loss Sharing Lenders to a loss sharing payment based on the roll-up and conversion in accordance with the formula provided in the Intercreditor Agreement; and (b) confirm that the resulting amount of the Tranche C Loan to the Debtors is the same as the amount of the loss sharing payment to the Canadian Loss Sharing Lenders in respect thereof. Mr. McLendon states that confirmation of the treatment of the Designated Letters of Credit as rolled-up Tranche B Letters of Credit, with rights and priorities not shared by the prepetition letters of credit is necessary to initiate the process that will result in the calculation of the Tranche C Loans owed by the Debtors. "For the amount of the Tranche C Loans to be made to the Debtors under the DIP Agreement to be quantified, the correct amount of the loss sharing payment to the Canadian Loss Sharing Lenders under the Intercreditor Agreement must first be determined," Mr. McLendon says. Moreover, Mr. McLendon adds, determining the correct amount of the Tranche C Loans is consistent with the establishment of an early bar date to formulate a Plan and commence negotiations with their constituencies. Mr. McLendon explains that the roll-up of the Designated Letters of Credit under the Prepetition Credit Agreement to Tranche B Letters of Credit under the DIP Agreement caused a reduction in the unfunded exposure of the Pooled Facility Lenders under the Pooled Facilities. Accordingly, the converted Tranche B Letters of Credit: (a) give rise to the right to a loss sharing payment in favor of the Canadian Loss Sharing Lenders based upon the corresponding reduction in exposure of the Pooled Facility Lenders, and (b) result in the creation of a Tranche C Loan to the Debtors in the same amount. "The Collateral Agent has advanced an interpretation of the Tranche B Facility that is antithetical to what the DIP Agreement, the Interim Order and the Final Order unequivocally provide," Mr. McLendon reports. The Collateral Agent asserts that the Tranche B Letters of Credit are mere continuations of the prepetition letters of credit while the DIP Agreement and the Final DIP Order describe the prepetition letters of credit as terminated and converted to letters of credit having the benefits of postpetition liens and claims. Mr. McLendon believes that the Collateral Agent's position is prejudicial to the rights of the Canadian Loss Sharing Lenders under the Intercreditor Agreement and the Prepetition Credit Agreement. Mr. McLendon adds that the Debtors are also prejudiced because the amount of the Tranche C Loans cannot be accurately quantified if the loss sharing payment the Canadian Loss Sharing Lenders do not properly give effect to the bargained-for rights of all the parties. (Covanta Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 609/392- 0900) DESA HOLDINGS: US Trustee Appoints Unsecured Creditors Committee ---------------------------------------------------------------- The United States Trustee appoints a 5-member Official Unsecured Creditors Committee in DESA Holdings Corp.'s chapter 11 cases. The creditors appointed to the Committee are: 1. HSBC Bank 10 E. 40th Street, 14th Floor New York, NY 10016 Attn: Russ Paladino Tel: 212-525-1324, Fax: 212-525-1366; 2. Barclays Bank PLC/Barclay Capital, Inc. 222 Broadway, New York, NY 10038 Attn: Jason Koh Tel: 212-412-2653, Fax: 212-412-1706; 3. HYI Investments, LLC 2 N. Riverside Plaza, Suite 600 Chicago, IL 60606 Attn: Marc D. Hauser Tel: 312-466-3556, Fax: 312-454-0335; 4. Shinn Fu Company of America, Inc. 10939 N. Pomona Avenue Kansas City, MO 64153 Attn: Stephen B. Sutton, Esq. Lathrop & Gage Tel: 816-460-5526, Fax: 816-292-2001; and 5. SIT USA 8100 G Arrowridge Blvd. Charlotte, NC 28273 Attn: Rudy Lee Blank Tel: 704-522-6325, Fax: 704-522-7945. DESA, a leading manufacturer, distributor and marketer of vent- free heating appliances, outdoor heaters, motion sensor lighting, wireless doorbells, lawn and garden electrical products and consumer fastening systems in the United States, filed for chapter 11 protection on June 8, 2002. Laura Davis Jones, Esq. at Pachulski, Stang, Ziehl Young & Jones represents the Debtors in their restructuring efforts. ELCOM INT'L: Applying for Transfer to Nasdaq SmallCap Market ------------------------------------------------------------ Elcom International, Inc. (Nasdaq: ELCO), a leading international provider of remotely-hosted eProcurement Marketplace solutions, intends to apply to transfer its current stock listing from the Nasdaq National Market to the Nasdaq SmallCap Market. Under the procedures to apply for such transfer, Elcom has until August 12, 2002 to initiate such request and will have approximately three months thereafter to meet the minimum listing requirements. Elcom has decided that it is in its best interest to apply for this transfer. Robert J. Crowell, Elcom International's Chairman and CEO, stated, "We have reduced our expenses and cash outlays significantly, and even with no revenues from any new clients, we can now expect to fund our operations through 2002 without a capital infusion. During this time, the Company believes it will be better served by extending its participation in Nasdaq by applying to transfer its public listing to the Nasdaq's SmallCap Market." Mr. Crowell further stated, "I believe that Elcom is better positioned for a strategic partner/investor now than it was three or four months ago and I am confident that the revenues and cash flow from our existing client base, which is expected to exceed $5 million this year, creates a basic value foundation for the Company. We are currently in discussions with multiple potential strategic partners and/or investors and although the economic environment is difficult, our prospective sales pipeline is significant and can only be accelerated by a capital infusion." The Company's common stock currently trades on the Nasdaq National Market. The closing bid price of the Company's common stock has been below $1.00 per share since April 1, 2002, and on May 14, 2002, the Company received notice from Nasdaq that, for continued listing on the Nasdaq National Market, the Company is required to comply with the $1.00 minimum bid requirement for ten consecutive trading days by August 12, 2002 or be subject to delisting from the Nasdaq National Market. Alternatively, the Company may apply to transfer its common stock to the Nasdaq SmallCap Market, assuming approval of its transfer application to the SmallCap Market. The Company believes that it currently meets all of the listing requirements of the Nasdaq SmallCap Market, with the exception of the $1.00 minimum bid price requirement. If the Company's stock listing is transitioned to the Nasdaq SmallCap Market, the Company will have 180 calendar days from May 14, 2002 to satisfy the minimum bid requirement for ten consecutive trading days. For detailed information on elcom's PECOS(TM) technology and optional Dynamic Trading functionality, please visit its Web site at http://www.elcominternational.com/products.htm Elcom International, Inc. (Nasdaq: ELCO), operates two wholly- owned subsidiaries: elcom, inc., a leading international provider of remotely-hosted eProcurement and Private eMarketplace solutions and Elcom Services Group, Inc., which is managing the transition of the recent sale of certain of its assets and customer base. elcom, inc.'s innovative remotely- hosted technology establishes the next standard of value and enables enterprises of all sizes to realize the many benefits of eProcurement without the burden of significant infrastructure investment and ongoing content and system management. PECOS Internet Procurement Manager, elcom, inc.'s remotely-hosted eProcurement and eMarketplace enabling platform was the first "live" remotely-hosted eProcurement system in the world. Additional information can be found at http://www.elcominternational.com ENRON CORP: Settles Turbine Purchase Dispute with Mitsubishi ------------------------------------------------------------ Enron Brazil Power Holding XVIII Ltd., a Cayman corporation is an indirect wholly owned subsidiary of Enron Corporation. It is not a debtor in these cases. In December 2000, Enron Brazil entered into an Amended and Restated Purchase Agreement with Mitsubishi Heavy Industries Ltd., a Japanese corporation for the purchase of two M501F gas turbines and associated auxiliaries. At the same time, Martin A. Sosland, Esq., at Weil, Gotshal & Manges LLP, in New York, tells the Court, Enron Brazil and Mitsubishi also entered into a second Amended and Restated Purchase Agreement for the purchase of two additional M501F gas turbines and associated auxiliaries. Mr. Sosland relates that Enron Brazil was identified as the purchaser of the Units and was responsible to Mitsubishi for purposes of performing all obligations. However, Mr. Sosland notes that each Purchase Agreement referred to an unidentified entity as the "Owner" to mean the special purpose project company that was to own the power station(s) in which the Units were to be installed. According to Mr. Sosland, the "Owners" referred to in the Purchase Agreements are Enron Brazil Turbines I Ltd. for Units 1 & 2, and Enron Brazil Turbines II Ltd. for Units 3 & 4. Mr. Sosland explains that Turbines I and Turbines II are off-balance sheet vehicles wholly owned by Enron Brazilian Power Development Trust, a Delaware business trust indirectly owned by certain third-party investors unaffiliated with Enron. Enron Brazil secured financing of its turbine purchases through an Amended and Restated Credit Agreement dated December 20, 2000 among the Owner Trust, Westdeutsche Landesbank Girozentrale, New York Branch, as lender agent, and various lenders. "In addition to liens against Enron Brazil's interest in the Units and in the Purchase Agreements, the Lenders are cross- collateralized by certain power development projects in South America in which other Enron-related non-debtor entities have interests," Mr. Sosland says. The non-debtor Enron-affiliated entities' obligations under the Related Projects are supported by Enron guarantees. Mr. Sosland points out that the Related Projects are currently financially viable, and represent a valuable ongoing asset of certain affiliates of the Debtors. All components of Units 1 & 2 delivered prior to December 2, 2001 have been physically delivered to Westdeutsche on behalf of the Lenders, as a result of Enron's Chapter 11 petition and default under the Credit Agreement. To secure the performance of Enron Brazil's obligations under the Units 1 & 2 Purchase Agreement and the Units 3 & 4 Purchase Agreement, Enron executed two Parent Guarantees in favor of Mitsubishi. Pursuant to the Units 1 & 2 Purchase Agreement, Enron Brazil has paid $59,472,288 prior to the Petition Date, with a $20,000,312 balance remaining. On the other hand, Enron Brazil has paid $27,048,320, with a remaining balance of $45,474,720. As a special purpose vehicle, Mr. Sosland says, Enron Brazil has relied entirely on the Lenders' funding to make the payments. When Enron filed for bankruptcy, Mitsubishi sought assurances of payment from Enron Brazil for the remaining balances. But Enron Brazil never did. As a result, Mitsubishi sent a notice of cancellation of the Purchase Agreements on January 16, 2002 to Enron Brazil. Now, Enron, Mitsubishi, Enron Brazil, Westdeutsche, the Lenders and certain other related parties wish to bury the hatchet by entering into a Settlement Agreement. The principal terms of the Settlement Agreement are: a. Promptly after the Effective Date, the Lenders shall pay Mitsubishi $6,000,000 which will be applied against the remaining purchase price for Units 1 & 2; b. The parties will acknowledge that the Purchase Agreements were validly cancelled pursuant to Mitsubishi's notice of cancellation; c. Mitsubishi shall deliver the remaining components of Units 1 & 2 to Turbines I; d. Mitsubishi shall credit from amounts previously paid under the Units 3 & 4 Agreement, the sum of $14,000,312 as payment for the balance of the purchase price owing under the Units 1 & 2 Agreement; e. Turbines I and Mitsubishi shall enter into a Turbines Purchase Agreement (Units 1 & 2) and a Spare Parts Supply Agreement relating to Units 1 & 2, covering all prospective obligations, rights and performances with respect to Units 1 & 2; f. Mitsubishi shall retain all payments made with respect to Units 3 & 4, which have not been otherwise applied to Units 1 & 2, and shall retain all work in progress (including any completed component parts) with respect to Units 3 & 4, without further claim from any party to the Settlement Agreement; g. The Parent Guarantees shall be terminated; h. Mitsubishi will have a right to a sliding sales commission to the extent it assists in marketing Units 1 & 2; and i. All parties will grant mutual releases in favor of the other parties to the Settlement Agreement. Mr. Sosland notes that the Settlement Agreement will extinguish any obligations related to the Parent Guarantees, thereby benefiting Enron's estate and its creditors. "Due to certain cross-collateralization rights of the Lenders against the Related Projects, the Settlement Agreement will also indirectly benefit the non-debtor affiliates of Enron having an interest in the Related Projects," Mr. Sosland adds. By this Motion, the Debtors ask the Court for an order pursuant to Bankruptcy Rule 9019 approving the Settlement Agreement. The Debtors further ask the Court to determine that: (i) the Additional Payment shall be deemed made for value received under the Settlement Agreement and not as a payment on account of antecedent debt; (ii) the payments and all other consideration received and to be received by Mitsubishi under the Settlement Agreement shall be deemed received for fair consideration and reasonably equivalent value; (iii) in the event of a sale or other disposition of Units 1 or 2, Turbines I shall be authorized to distribute and shall distribute any sale proceeds up to and including $6,000,000 to Westdeutsche and the Lenders upon the closing of any sale or disposition, as reimbursement for the Additional Payment made by the Lenders; and (iv) the entry of an order is without prejudice to the right of Westdeutsche and the Lenders to demand immediate payment of any and all proceeds from the sale or other disposition of Units 1 or 2. (Enron Bankruptcy News, Issue No. 36; Bankruptcy Creditors' Service, Inc., 609/392-0900) Enron Corp.'s 9.125% bonds due 2003 (ENRN03USR1), DebtTraders says, are trading around 11.5. For real-time bond pricing, see http://www.debttraders.com/price.cfm?dt_sec_ticker=ENRN03USR1 ENRON CORP: Asks Court to Reconsider Swidler Payment Order ---------------------------------------------------------- Enron Corporation, and its debtor-affiliates contend that reconsideration of the Order denying payment for Swidler's representation of the Debtors' present and former employees in connection with the Enron Corp.'s Examiner's investigation and court-ordered civil discovery is warranted. Martin J. Bienenstock, Esq., at Weil, Gotshal & Manges LLP, in New York, asserts that the Order created a negative impact. For example, Mr. Bienenstock notes, the Examiner has expressed concern that Swidler's absence will terminate his ability to have informal discovery, will compel a compulsory process, and will increase the cost and expense of his investigation. According to Mr. Bienenstock, the examiner's investigation implicates the same concerns as the governmental investigations. "Any witness, including one who has not committed and is not accused of wrongdoing, needs counsel in a governmental investigation," Mr. Bienenstock says. Indeed, Mr. Bienenstock believes that a witness who speaks to an investigator without counsel present is at a greater risk of being charged with false statements, perjury, or obstruction of justice, even if innocent of these or any other crimes and substantive wrongdoings. Mr. Bienenstock illustrates that a simple, innocent mistake, like forgetting a detail or recalling something incorrectly, can lead to a charge. Even if an investigator ultimately decides not to charge a witness with obstruction, perjury, or false statement, Mr. Bienenstock says, the mere possibility that it could investigate that witness to consider a charge, which happens with some frequency, is reason enough for innocent witnesses to proceed with caution. Mr. Bienenstock points out that the government has made abundantly clear through its prosecution of Arthur Andersen that it takes obstruction of justice and related crimes seriously. Mr. Bienenstock emphasizes that representation by counsel can protect a witness against the danger of being charged with any wrongdoing. Mr. Bienenstock explains that counsel can properly prepare a witness to speak in interviews or investigations. For example: (a) counsel can review relevant documents and help the witness refresh his or her recollection; (b) counsel can force the witness to think about transactions and events in the context of applicable legal issues and statements made by others, thereby helping to focus the witness and facilitate accurate, detailed, comprehensive, comprehensible, and relevant responses to the investigator's questions; (c) counsel can advise a witness not to speculate, which is often misinterpreted, and can lead investigators to consider false statement, perjury, or obstruction charges. Furthermore, Mr. Bienenstock continues, the presence of counsel at an interview with an investigator can: (1) protect a witness against misinterpretations, (2) clarify speculation versus fact, (3) provide yet another written record of the interview (especially if not transcribed or under oath), (4) clarify often confusing questions, and (5) identify and prompt the correcting of misstatements. Mr. Bienenstock adds that counsel can help promote the candid and accurate provision of information by the witness by alleviating the witness's concerns about the potential ramifications of discussing these topics with the investigators or of being incorrect and by ensuring that the witness's statements are adequately explained and understood in context. Mr. Bienenstock observes that these issues have been at the forefront of U.S. current events. "Innocent, mere witnesses in this case have been confronted, for months, with clear indications that anyone associated with Enron will be subjected by investigators to the highest scrutiny," Mr. Bienenstock notes. For example, Mr. Bienenstock says, the government prosecuted and obtained a conviction against Arthur Andersen for obstruction of justice, although that case did not involve any allegations of "substantive" improprieties. Two weeks ago, Mr. Bienenstock recounts, the government charged three individuals with crimes relating to Enron. It is clear that the government's investigations are both active and very public, Mr. Bienenstock remarks. "Innocent witnesses recognize appropriately that they must have counsel to protect their interests," Mr. Bienenstock says. According to Mr. Bienenstock, the Examiner's investigation is significantly impeded due to the Employees' refusal to meet with the Examiner and his representatives, and the Debtors have not yet been able to produce a witness in response to the May 15 Order. "It is clear that without the authorization to pay Swidler for representing current and former employees in connection with these two matters, at the very least, the situation will not improve," Mr. Bienenstock contends. Thus, the Debtors urge Judge Gonzalez to reconsider his decision and approve the payment of Swidler's subsequently approved applications for representing Enron employees in connection with the Enron Corp.'s Examiner's investigation and court-ordered civil discovery. (Enron Bankruptcy News, Issue No. 36; Bankruptcy Creditors' Service, Inc., 609/392-0900) ETHYL CORP: S&P Withdraws B+ Corporate Credit Rating ---------------------------------------------------- Standard & Poor's withdrew its single-'B'-plus corporate credit rating on Ethyl Corp. at the company's request. Richmond, Virginia-based Ethyl is a manufacturer and marketer of fuel and lubricant additives products. Rating Withdrawn Ethyl Corporation To From Corporate credit rating N.R. B+ EXIDE TECH: U.S. Trustee Balks at Blackstone Engagement Terms ------------------------------------------------------------- Based on Exide Technologies's Application and the accompanying Affidavit of Arthur B. Newman in support of the Application, Mark S. Kenney, Esq., informs the Court that the UST does not object per se to the employment of Blackstone Group. However, the UST objects to specific terms and conditions of the proposed engagement. The UST complains that: A. The Application seeks approval of an agreement with Blackstone which provides for a flat monthly advisory fee of $200,000. The fee is payable regardless of actual benefit provided to the Debtors, together with a contingent, declining scale "Transaction Fee" which starts at 1% of the first $500,000,000 of Consideration received from the sale or disposition of the Debtors' core assets or the Debtors' stock, plus a flat Restructuring Fee of $10,000,000 upon the effective date of a plan of reorganization supported by the Debtors. * If a sale or all or substantially all of the Debtors' assets or stock occurs in a single transaction in connection with a Restructuring, Blackstone will receive a Restructuring Fee but not a Transaction Fee. * Under all other circumstances involving both asset or stock sales and a Restructuring, Blackstone will be entitled to both Transaction Fees and the Restructuring Fee. B. As presently structured, no portion of the Monthly Fees paid will be credited against the Transaction or Restructuring Fees. The full amount of any Monthly Fees should be credited against any Transaction or Restructuring Fees payable to Blackstone. C. The Blackstone engagement is terminable on 30 days' notice by either the Debtors or Blackstone. However, the Blackstone engagement letter contains a "tail" provision whereby Blackstone will be entitled to receive Transaction Fees and a Restructuring Fee for any Transaction or Restructuring consummated within 12 months after termination unless the engagement has been terminated because of Blackstone's gross negligence or willful misconduct. * The tail provision appears to make the Transaction and Restructuring Fees payable to Blackstone regardless of that firm's contribution in causing or procuring any Transaction or Restructuring, regardless of whether it was the Debtors or Blackstone that terminated the engagement, and regardless of whether the Debtors are required to compensate any other professional persons for their role in causing or procuring a Transaction or Restructuring after termination of the Blackstone engagement. * While the potential for payment under a tail provision is not out of the question, such a payment should not be made if a post-termination Transaction or Restructuring is caused or procured by a professional other than Blackstone, especially if the other professional is or may be entitled to compensation in connection with the Transaction or Restructuring. The estate should not be exposed to the risk of having to pay multiple fees for a single result. D. The Transaction and Restructuring Fees would be payable to Blackstone regardless of the actual benefit, if any, provided to the estates. Under the terms of the proposed engagement, an asset sale that produces a worse result than an immediate Chapter 7 liquidation, or a plan of reorganization that produces one dollar more than creditors would receive in a piecemeal Chapter 7 liquidation, would entitle Blackstone to its "contingent" Transaction and/or Restructuring Fees. Indeed, it appears that Blackstone would be entitled to collect these fees even if the payment of those fees would result in creditors receiving less than they would receive in an immediate Chapter 7 liquidation. * No success fee of any kind should be payable to Blackstone except upon demonstration of value added to the estates, and the fee should not under any circumstances exceed the demonstrable added value. The estates should be enriched, not impoverished, by the engagement of Blackstone. E. The Application seeks pre-approval, subject to review only under the improvidence standards of 11 U.S.C. Section 328(a), of the entire proposed fee arrangement. Indeed, the engagement letter specifically requires the Debtors to use their best efforts to obtain a retention order from this Court that is "subject to the standard of review provided in Section 328(a) of the Bankruptcy Code and not subject to any other standard of review under Section 330 of the Bankruptcy Code. * Such pre-approval is premature. Review, consideration and approval of Blackstone's fees should be deferred until the conclusion of these cases when the efficacy of Blackstone's services can be evaluated upon application to the Court for payment, with opportunity for all parties in interest to comment on or object to the application. * Limiting review of Blackstone's fees to the standard provided by Section 328(a) improperly shifts the burden of proof to any party in interest who might object to Blackstone's fees. In addition to developments which are not presently capable of being anticipated but which would render the terms of Blackstone's engagement improvident, there a number of developments which are presently capable of being anticipated. * The Court should not deprive itself of future discretion by entering what is in essence a final compensation order at the commencement of Blackstone's engagement. Blackstone should be required to satisfy its burden of proof under 11 U.S.C. Section 330 when it applies for compensation, and should not be permitted to use 11 U.S.C. Section 328(a) to circumvent that burden. F. The engagement letter annexed to the Application requires the Debtors to indemnify Blackstone for any claims made against Blackstone excepting only those claims which are finally judicially determined to have resulted directly from Blackstone's bad faith, gross negligence or willful misconduct. * Blackstone's request for indemnification appears inconsistent with the Bankruptcy Code, applicable notions of bankruptcy professionalism, and public policy. Indeed, such a request is inconsistent with Blackstone's obligation to be and to remain disinterested. Even the threat of a claim against Blackstone for which it might seek indemnity directly pits Blackstone's interests against the interests of the estate. * The indemnification provisions should be stricken in their entirety and no indemnification should be approved by the Court for Blackstone's benefit at any time during this proceeding. (Exide Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-0900) Exide Technologies' 10% bonds due 2005 (EXDT05USR1) are quoted at a price of 15 cents-on-the-dollar, DebtTraders says. See http://www.debttraders.com/price.cfm?dt_sec_ticker=EXDT05USR1 for real-time bond pricing. EXODUS: Says Customers Not Affected by Latest Akamai Maneuver ------------------------------------------------------------- Customers of the Cable & Wireless (NYSE: CWP) business formerly known as Digital Island, are not affected by U.S. District Court Judge Rya W. Zobel's action to grant Akamai Technologies Inc., an injunction against Cable & Wireless' defunct, original version of its content-delivery-network (CDN) technology. "The injunction ruling is a legal technicality about a legacy part of the CDN that was abandoned some time ago and our customers will not be impacted," said Chris Albinson, chief strategy officer for Exodus, a Cable & Wireless Service, the organization formed with the integration of Digital Island with the Exodus business. "Exodus will continue business as usual delivering fast, secure, guaranteed and global services without interruption." A month ago, the judge upheld a Dec. 21 jury verdict invalidating all key claims of U.S. Patent 6,108,703, which the Massachusetts Institute of Technology (MIT) licenses to Akamai as the basis for its content-delivery products. Both the judge and jury have found the Cable & Wireless business formerly known as Digital Island first invented Internet CDN technology. The judge also ruled that Akamai must pay Cable & Wireless the cost of some attorney fees. This trial is one aspect of what is expected to be a multi-year effort to protect Cable & Wireless' intellectual property and defend its status as the first inventor of CDN technology. The company expects to appeal any adverse decisions affecting its intellectual property to the Federal Circuit Court of Appeals and to continue to pursue patent protection covering its CDN technology with the PTO. (Exodus Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service, Inc., 609/392-0900) DebtTraders says that Exodus Communications Inc.'s 11.625% bonds due 2010 (EXDS10USR1) are trading at about 5.75. See http://www.debttraders.com/price.cfm?dt_sec_ticker=EXDS10USR1 for real-time bond pricing. FAIRFIELD MANUFACTURING: S&P Withdraws B- Corporate Rating ---------------------------------------------------------- Standard & Poor's withdrew its single-'B'-minus corporate credit rating on gears and gear systems producer Fairfield Manufacturing Co., Inc., at the company's request. As of March 31, 2002, Lafayette, Indiana-based Fairfield had about $176 million in debt securities and preferred stock outstanding. FEDERAL-MOGUL: Receives Rights to Market TRW Chassis Products ------------------------------------------------------------- Federal-Mogul Corporation (OTC Bulletin Board: FDMLQ) and TRW Inc., announced a strategic agreement through which Federal- Mogul will retain exclusive rights to market, package and distribute TRW branded chassis products within the North American replacement parts industry. Subject to approval by the U.S. Bankruptcy Court in Wilmington, Delaware, the agreement represents an extension of a long-term supply and license arrangement for TRW branded chassis parts dating to 1992. Among the existing customers to be serviced under the new agreement will be TRW Autospecialty, part of TRW Automotive's aftermarket business. The TRW branded chassis program will be launched with TRW Autospecialty as soon as possible, according to Jay Burkhart, vice president, marketing, Federal-Mogul. "TRW is a very well known and respected brand of OE-replacement chassis components," Burkhart said. "We are excited to relaunch the TRW chassis program within the North American aftermarket and look forward to developing a wide range of new strategic market opportunities for this strong brand." Peter Lake, vice president and general manager, planning and business development and parts and service for TRW Automotive, said: "We are confident Federal Mogul will do an excellent job in servicing the replacement market with the TRW branded product line. Our TRW Autospecialty unit looks forward to offering an expanded and aggressive TRW chassis program." Federal-Mogul is a global supplier of automotive components and sub- systems serving the world's original equipment manufacturers and the aftermarket. The company utilizes its engineering and materials expertise, proprietary technology, manufacturing skill, distribution flexibility and marketing power to deliver products, brands and services of value to its customers. Federal-Mogul is focused on the globalization of its teams, products and processes to bring greater opportunities for its customers and employees, and value to its constituents. Headquartered in Southfield, Michigan, Federal-Mogul was founded in Detroit in 1899 and today employs 49,000 people in 24 countries. For more information on Federal-Mogul, visit the company's Web site at http://www.federal-mogul.com TRW Autospecialty is part of TRW Automotive's aftermarket business, which delivers a comprehensive range of replacement parts for braking, steering and suspension and clutch systems covering passenger car, sport utility vehicle and light truck applications. TRW Automotive is a world leader in braking, steering and suspension systems, automotive electronics, fastening systems, occupant safety systems, commercial steering systems and engine components for the global automotive industry. Federal-Mogul Corporation's 8.8% bonds due 2007 (FEDMOG6), DebtTraders says, are quoted at 19 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=FEDMOG6for real-time bond pricing. FLAG TELECOM: Court Okays Arthur Andersen-UK as Accountants ----------------------------------------------------------- FLAG Telecom Holdings Limited, and its debtor-affiliates sought and obtained authority from Judge Gropper to employ Arthur Andersen UK to perform on-going accounting, auditing, tax counseling and consulting services. Richard M. Williams, a partner at AA UK, says the Firm has audited the Debtors' financial statements since fiscal 1996 and has performed the most substantial parts of the audits of the FLAG Ltd. and FLAG Telecom Holdings Ltd. consolidated financial statements since 1998. AA UK is to merge into Deloitte & Touche under an agreement that is still awaiting regulatory approval. Scope of Services The Debtors want to retain AA UK to: a. audit financial statements and assist in preparing and filing financial statements and disclosure documents required by the SEC and statutory and/or other regulatory authorities around the world; b. review unaudited quarterly financial statements of the Debtors as required by applicable law or regulations, or as requested by the Debtors; c. provide tax consulting and preparation services (including transfer pricing studies); d. assist in preparing financial disclosures required by the Court, including the schedules of assets and liabilities, the statement of financial affairs and monthly operating reports; e. assist the Debtors and other financial professionals, retained by the Debtors, with the preparation of its business plan on a collaborative basis so as not to be duplicative in efforts or expense; f. assist the Debtors by analyzing operations and identifying areas of potential cost savings and operating efficiencies; g. assist in the coordination of responses to creditor information requests and interfacing with creditors and their financial advisors; h. assist Debtors' legal counsel, to the extent necessary, with the analysis and revision of the Debtors' plan or plans of reorganization; i. attend meetings and assist in discussions with the creditors' committee, the U.S. Trustee, and other interested parties, to the extent requested by the Debtors; j. consult with the Debtors' management on other business matters relating to its chapter 11 reorganization efforts; and k. assist with such matters as the Debtors' management or legal counsel and AA UK may agree from time-to-time. Compensation Kees van Ophem, Secretary and General Counsel of FLAG Telecom Holdings Ltd., says the Debtors agree to pay AA UK its customary hourly rates: Actual Illustrative Pound Rates USD equivalents ----------- --------------- Partners/Principals 435 - 604 $620 - 860 Managers/Directors 283 - 498 $400 - 710 Seniors/Associates/Consultants 147 - 276 $210 - 390 Staff/Analysts 81 - 130 $115 - 185 Within the one-year period before the Debtors' Chapter 11 cases were filed, Andersen Worldwide received compensation of approximately Pound 920,000 ($1,300,000) from the Debtors, Mr. Williams says. Disinterestedness Mr. Williams says AA UK does not hold interest adverse to the Debtors or their estates for the matters for which AA UK is to be employed. He assures the Court that the Firm will conduct an ongoing review of its files to ensure that no conflicts or other disqualifying circumstances exist or arise. If any new facts or relationships are discovered, AA UK will supplement its disclosure to the Court. (Flag Telecom Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 609/392-0900) GLOBAL CROSSING: Turning to KPMG for Specific Tax Services ---------------------------------------------------------- Global Crossing Ltd., and its debtor-affiliates request that the Court approve the retention and employment KPMG LLP to provide specific and limited tax services, nunc pro tunc to May 20, 2002. The Debtors want to retain and employ a discrete group of individuals from KPMG LLP to perform a specific and narrow set of tasks for a limited period of time. In particular, the Debtors seek to retain and employ Carol Conjura, partner in the Washington D.C. office; Mark Hutchison, partner in the Woodland Hills office; David Madden, principal in the Washington D.C. office; and Andrew Gantman, senior manager in the Washington D.C. office. Mitchell C. Sussis, the Debtors' Corporate Secretary, relates that prior to the Commencement Date, the Tax Advisors performed a number of important tax-related services for the Debtors including federal tax research and planning for the years 2000 and 2001. Based on their work, the Tax Advisors became familiar with the Debtors' complex tax structure and past transactions. The Tax Advisors have also developed a unique insight into the Debtors' tax planning and tax-related strategies and objectives. Mr. Sussis believes that a taxpayer must obtain a tax opinion on more complex transactions, particularly when the tax authorities may disagree with its interpretation of the tax law, or when available legal precedents are not entirely clear. In addition, obtaining a tax opinion supporting the position a taxpayer take vis a vis its taxes will insulate the taxpayer from penalties for any underpayment of taxes. Prior to the Commencement Date, Mr. Sussis recounts that the Tax Advisors advised the Debtors about providing several tax opinions to the Debtors, related to the their 2001 federal tax return. In mid-May 2002, the Tax Advisors began drafting the Tax Opinions for the Debtors. The Debtors estimate that the tax deductions supported by these Tax Opinions could result in several million dollars in tax refunds from federal and state governments. The services of the Tax Advisors are thus necessary to enable the Debtors to execute their duties as debtors and maximize the value of their estates. Mr. Sussis tells the Court that the Tax Opinions must be drafted and reviewed by the Debtors before they file their 2001 Federal Income Tax returns in July 2002. Because the Tax Advisors possess a unique familiarity with the Debtors' complex tax structure and their tax planning goals, the Tax Advisors are in the singular position to offer the Debtors these services by the applicable deadline. The Debtors represent that it would be impracticable to retain other professionals to draft these tax opinions, because there is not adequate time for other professionals to familiarize themselves with the Debtors' complex tax structure, tax history, and tax-related objectives. Mr. Sussis assures the Court that the principals of KPMG International serving as JPLs are members of KPMG-UK and KPMG- Bermuda, and it is highly unlikely that there will be any interaction between the KPMG LLP Tax Advisors and the JPLs. To further ensure that the Tax Advisors are isolated from the JPLs or any KPMG LLP personnel performing work for the JPLs, KPMG LLP has created ethical walls. These walls will prevent any communication or exchange of information related to these Chapter 11 cases between the Tax Advisors and the JPLs and any KPMG LLP personnel working with the JPLS. Mark Hutchison, a partner of KPMG LLP, ascertains that the Firm is a "disinterested person," as defined in Section 101(14) of the Bankruptcy Code and that the partners, principal, manager, and other employees of KPMG LLP do not have any connection with the Debtors, their creditors, or any other party in interest, or their respective attorneys. However, KPMG LLP currently performs or has previously performed accounting, tax advisory or consulting services in matters unrelated to this Chapter 11 case for these entities: A. Professionals: Arthur Andersen, Blackstone Group LP, Debevoise & Plimpton, Ernst & Young LLP, Jaffe Raitt Heuer & Weiss, Nixon Peabody LLP, Weil Gotshal & Manges LLP, Willkie Farr & Gallagher, Shearman & Sterling, Milbank Tweed Hadley & McCloy LLP, PricewaterhouseCoopers LLP, Deloitte & Touche LLP, and Chanin Capital Partners L.P.; B. Indenture Trustee: Manufacturers Hanover Trust Company; C. Top Unsecured Creditors: Accenture, Aegon USA Investment Management LLC, Alcatel, Alltel, Anixter, AT&T, Bank of New York, Bell Atlantic, Bell South Corporation, Century Telephone, Chase Manhattan Bank, Cincinnati Bell Telephone, Cisco, Citizens Communications, Comp USA, Encompass, Frontier Communications, Frontline, Gotham Incorporated, Hartford Investment Management Corporation, Hartford Investment Services Inc., Hitachi Telecom USA Inc., JP Morgan Chase Bank, Juniper Networks, Kajima, Knights of Columbus, Level 3, Lucent Technologies Inc., Mastec North America Inc., MCI Telecommunications, MCSI, Media Partnership/Gotham, Mercer Consulting, Morgan Stanley Investment Management, Nationwide Insurance, Nortel Networks, Northwestern Mutual Life Insurance Company, Polycom, PPM America, Primus Telecommunications, Qwest, SBC Communications, Sonus Networks Limited, Sprint, Teachers Insurance and Annuity Association of America, Tekelec, Telcobuy.com, Tycom US Inc., U.S. Trust Company, United Telephone, Verizon Communications Inc., Wilmington Trust Company, and Z Tel; D. Strategic Partners: CISCO Systems Inc., EMC Corporation, Exodus Communications, Financial Fusion Inc., Hitachi Telecom (USA) Inc., Juniper Networks Inc., Lucent Technologies, Nortel Networks, PRC, Sonus Networks, Inc., and Swift; E. Other Creditors: Banc One, Chase Manhattan Bank, Credit Suisse First Boston, PB Capital Corp., Wachovia Bank, Washington Mutual, Westdeutsche Landesbank, and Zurich Scudder Investments; F. Underwriters and Agents: Deutsche Bank AG, CIBC Inc., Canadian Imperial Bank of Commerce, Goldman Sachs Credit Partners L.P., Citicorp USA Inc., Merrill Lynch Capital Corporation, Salomon Smith Barney Inc., CIBC World Markets Corp., Deutsche Bank Securities Inc., Chase Securities Inc., and West LB; G. Significant Stockholders: Gary Winnick, Lodwrick M. Cook, Microsoft Corp., and Softbank Corp.; H. Secured Creditors: ABN Amro Bank N.V., Aegon USA Inc., Alliance Capital Management, Allstate Insurance, American Express Asset Management, Apollo Advisors, Bain Capital Inc., Bank Leumi, Bank of America, Bank of China, Bank of Hawaii, Bank of Montreal, Bank of New York, Bank of Nova Scotia, Bank of Scotland, Bank of Tokyo Mitsubishi, Bank One, Bank United, Barclays, Bayerische Landesbank Giro, BHF, Chang Hwa Commercial Bank, CIBC Oppenheimer, Citibank, City National Bank, CoBank, Credit Lyonnais, Credit Suisse Asset Management, Cypress Tree Investment Management Inc., Dai Ichi Kangyo Bank Ltd., Deutsche Bank, Dresdner Kleinwort Wasserstein, Equitable Life Insurance, Erste Bank, First Union, Fleet BankBoston, Fuji Bank Ltd., General Electric Capital Corporation, General Reinsurance - New England Asset Management, Goldman Sachs & Co., Gulf International Bank, Hypo Vereinsbank, IBM Credit Corporation, IKB Capital Corporation, Imperial Credit Industries, Indosuez, Industrial Bank of Japan, ING Capital Advisors, Invesco, JP Morgan Chase, Katonah Capital, KBC Bank, Key Bank, LB Series Inc., Lutheran Brotherhood High Yield, Merrill Lynch, Merrill Lynch Asset Management, Mitsubishi Trust & Banking Corp., Monument, Morgan Stanley Dean Witter, Oppenheimer Funds, Pacific Investment Management Company, Rabobank Nederland, Royal Bank of Canada, Scotia Capital, Scudder Investments, Stein Roe Farnham Inc., Sumitomo Trust & Banking Co., TCW, Textron Financial Corporation, Toronto Dominion Inc., UBS Warburg, Van Kampen, and West LB. Mr. Hutchison accords that KPMG LLP will bill the Debtors on an hourly-billing rate subject to a fee cap of $250,000 plus applicable expenses for the Tax Opinions. The customary hourly rates for advisory services to be rendered by KPMG LLP are: Partners $500 - $750 Directors/Senior Managers/Managers $375 - $475 Senior/Staff Accountants $300 - $450 Paraprofessionals $170 - $275 As of the filing date, Mr. Hutchison informs the Court that the Debtors owed KPMG LLP $44,000 for work performed on behalf of the Debtors. If this Application is approved, KPMG LLP will waive its claim against the Debtors' estates for these services. KPMG LLP also received $2,358,543 within the 90-day period preceding the filing of the Debtors' Chapter 11 cases. (Global Crossing Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., 609/392-0900) Global Crossing Holdings Ltd.'s 9.625% bonds due 2008 (GBLX3) are trading at about 1.25, DebtTraders reports. See http://www.debttraders.com/price.cfm?dt_sec_ticker=GBLX3for real-time bond pricing. GRAND COURT: Court to Consider Plan of Reorganization Today ----------------------------------------------------------- UNITED STATES BANKRUPTCY COURT DISTRICT OF NEW JERSEY In re: : Chapter 11 : Case No. 00-32578 (NLW) GRAND COURT LIFESTYLES, INC., : NOTICE OF CONFIRMATION HEARING : AND OBJECTION DEADLINE Debtor. : Hearing Date: July 18, 2002 : Hearing Time: 10:00 a.m. TO: ALL INTERESTED PARTIES PLEASE TAKE NOTICE that on or about April 23, 2002, this Court entered an Order (i) determining treatment of certain claims for notice and voting purposes, (ii) establishing a record date and procedures for filing objections to the Plan, and temporary allowance of claims, and (iii) approving solicitation procedures for confirmation of. PLEASE TAKE FURTHER NOTICE that in the Solicitation Procedures Order, the Court set a hearing on confirmation of the Debtors' First Amended Joint Plan of Reorganization of Grand Court Lifestyles, Inc., for July 18, 2002 at 10 a.m. (Eastern Standard Time). PLEASE TAKE FURTHER NOTICE that the Confirmation Hearing may be continued from time to time by announcing such continuance in open court and the Plan may be further modified, if necessary, pursuant to 11 U.S.C. Sec. 1127 prior to, during, or as a result of the Confirmation Hearing, without further notice to parties in interest. SILLS CUMMIS RADIN TISCHMAN EPSTEIN & GROSS Attorneys for the Debtor-in-Possession One Riverfront Plaza Newark, New Jersey 07102 (973) 643-7000 HARBISON-WALKER: Halliburton Stay Extended to September 18, 2002 ---------------------------------------------------------------- Halliburton (NYSE: HAL) has reached agreement with Harbison- Walker Refractories Company and the Official Committee of Asbestos Creditors in the Harbison-Walker bankruptcy to consensually extend the period of the stay contained in the Bankruptcy Court's temporary restraining order until September 18, 2002. The Committee has informed the Court that further extensions are anticipated as long as negotiations proceed in a constructive manner. The Court's temporary restraining order, which was originally entered on February 14, 2002, stays more than 200,000 pending asbestos claims against Halliburton's subsidiary Dresser Industries, Inc. For more details on the stay, Halliburton refers to its earlier press releases of June 4, 2002, May 20, 2002, February 22, 2002 and February 14, 2002. Halliburton, founded in 1919, is one of the world's largest providers of products and services to the petroleum and energy industries. The company serves its customers with a broad range of products and services through its Energy Services Group and Engineering and Construction Group business segments. The company's World Wide Web site can be accessed at http://www.halliburton.com IMP INC: Fiscal 2002 Revenues Plummet 25% to $23.4 Million ---------------------------------------------------------- IMP Inc., (Nasdaq:IMPXC) announced financial results for the fiscal year ended March 31, 2002. Revenues in fiscal 2002 decreased 25% to $23.4 million, from $31.5 million in fiscal 2001. However, the Company reported a net profit of $131,000 for the fiscal year ended March 31, 2002, an earning of 3 cents per share, compared to a loss of $6.55 per share for the previous fiscal year. A decrease in revenue from foundry sales was the primary cause for the fiscal 2002 decline in revenue. Mr. Subbarao Pinamaneni, Chairman and CEO of IMP Inc., stated "IMP Inc., was able to withstand the turbulent economic downturn, the many internal financial pressures and inadequate cash flow this past fiscal year, and despite the decline in revenues, we are happy to report a financially sound report card." Mr. Pinamaneni was optimistic about the future noting, "the restructuring and cost-cutting measures that we instituted have certainly worked this past year and we will remain focused on providing quality on-time delivery to our customers while expanding our standard product portfolio. This will strengthen our financial stability and growth." IMP Inc., provides analog semiconductor solutions that power the portable, wireless, and Internet driven computer and communications revolution. From its ISO 9001 qualified wafer fabrication plant in San Jose, California, IMP supplies standard-setting power-management integrated circuit products and wafer foundry services to communications and control manufacturers worldwide. For further information on the Company, please visit our Web site at http://www.impweb.com Company headquarters are located at 2830 North First Street, San Jose, California 95134-2071. Telephone 408-432-9100, Fax 408- 434-5904. * * * As previously reported, IMP, Inc., dismissed KPMG LLP as the Company's independent accountants, effective June 12, 2002, by choosing not to extend KPMG LLP's engagement as the Company's independent accountants. The report of KPMG LLP, dated August 6, 2001, on the Company's financial statements for the fiscal year ended March 31, 2001 contained an explanatory paragraph that stated that "the Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern." The Company's financial statements for the fiscal year ended March 26, 2000 were audited by PriceWaterhouseCoopers LLP. The audit of the Company's financial statements for the fiscal year ended March 31, 2002 has not yet been completed, and the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2002 has not been filed yet. The decision to change independent auditors was approved by the Board of Directors and the Audit Committee. INSCI CORP: Files Tardy & Unaudited Form 10-K with SEC ------------------------------------------------------ INSCI Corp. (OTC Bulletin Board: INSS), a leading supplier of Electronic Statement Presentment (ESP), Integrated Document Archive and Retrieval Systems (IDARS) and Enterprise Report Management (ERM) software, announced a profit for the 2002 fiscal year and its third consecutive profitable quarter with the release of results for the fiscal year and fourth quarter ended March 31, 2002. The Company's returned focus on its core operations and cost cutting measures resulted in significant bottom line growth over the year-earlier periods. President and CEO Henry F. Nelson commented, "Although fiscal year 2002 was a challenging year not only for the Company, but for technology-based companies in general, INSCI has emerged as a stronger entity, both financially and operationally. Through our revised operating plan, we formalized product development methodology, substantially reduced open customer support calls, reduced the days sales outstanding and engaged our client base which included the hosting of our first customer forum since 1998." "During the year, we released several products to support the Windows 2000 environment and increased the dependability and scalability of our product offerings and are now positioned to actively pursue additional strategic alliances," Nelson added. "For fiscal year 2003, we will focus on growth through business alliances, the implementation of a direct sales model and continued investments in programs that will increase revenues and enhance shareholder value." Revenues for the 2002 fiscal year's fourth quarter were $1.8 million with net income applicable to common shareholders of $246,000. This compares to revenues of $1.9 million with a net loss of $2.7 million for the prior year period. Product revenues declined year-over-year as a result of operations that have been discontinued or sold as the Company refocused on its core competencies and as a result of the slowdown of the general economy. For the fiscal year ended March 31, 2002, revenues were $8.5 million with net income applicable to common shareholders of $155,000. Prior to preferred stock dividends, net income for the 2002 fiscal year was $368,000. This compares to revenues of $10.0 million with a net loss applicable to common shareholders of $17.8 million for the year-earlier period. The fiscal year 2001 results include a non-recurring restructuring charge of $8.9 million related to the Company's portal services strategy and the closure of the InfiniteSpace.com subsidiary. Gross margin as a percentage of sales improved for both the fourth quarter and fiscal year as a result of the Company's focus on its core products to 78.9 percent and 78.5 percent, respectively, as compared to 54.7 percent and 58.4 percent for the prior year periods. During the fourth quarter and fiscal year, operating expenses declined significantly to $1.0 million and $5.8 million, respectively, as compared to $3.4 million and $13.9 million for the year earlier periods. The 2001 fiscal year operating expenses exclude a non-recurring restructuring charge of $8.9 million. In May, INSCI changed its independent auditor to New York City- based Goldstein and Morris. As a result, the Company received an automatic a 60-day extension to report audited year-end results. The Company filed an unaudited Form 10K Monday with the Securities and Exchange Commission. INSCI Corp., is a leading-provider of highly scalable digital document repository solutions that provide high-volume document presentment, preservation, and delivery functions via networks or the Internet. Its award-winning products bridge value documents with front-office mission critical and customer- centric applications by web-enabling legacy-generated reports, bills, statements and other documents. The Company has strategic partnerships and relationships with such companies as Xerox and Unisys. For more information about INSCI, visit http://www.insci.com For additional investor relations information, visit the Allen & Caron Inc Web site at http://www.allencaron.com * * * According to INSCI's Form 10KSB filing dated July 15, 2002, INSCI had $412,000 of cash and working capital deficit of $6.2 million, at March 31, 2002, in comparison to $460,000 of cash and working capital deficit of $6.9 million at March 31, 2001. Accounts receivable were $1.3 million as of March 31, 2002 compared to receivables of $1.5 million as of March 31, 2001. The Company has a deficiency in its financial statements in that it has $8.0 million in liabilities and $2.2 million in assets. This deficiency, unless remedied, can result in the Company not being able to continue its business operations. The Company believes that its current business plan, if successfully implemented, may provide the opportunity for the Company to continue as a going concern. However, in the event that satisfactory arrangements cannot be made with creditors, the Company may be required to seek protection under the Federal Bankruptcy law. ION NETWORKS: Deloitte & Touche Expresses Going Concern Doubt ------------------------------------------------------------- ION Networks, Inc., designs, develops, manufactures and sells infrastructure security and management products to corporations, service providers and government agencies. The Company's hardware and software products are designed to form a secure auditable portal to protect IT and network infrastructure from internal and external security threats. ION's infrastructure security solution operates in the IP, data center, telecommunications and transport, and telephony environments and is sold by a direct sales force and indirect channel partners mainly throughout North America and Europe. Revenues for the year ended March 31, 2002 were $7,312,235 as compared with revenues of $11,676,547 for the year ended March 31, 2001, a decrease of approximately 37%. This decrease is attributable mainly to the reduction in the number of units sold in fiscal 2002. The Company sold mostly the ION Secure 3000 series security appliances (formerly called the Sentinel 2000) in both periods so there was no impact on revenue from a change in product mix. The overall downturn impacting the information technology and the telecommunications industry caused companies to severely cut capital expenditures during fiscal 2002. The Company's business historically has been dependent upon the expansion of these company's networks and therefore the decrease in revenues is a direct reflection of the environment in the industries. The Company's unit sales volumes decreased by approximately 1,100 units which contributed to approximately $2.5 million of the revenue decrease year over year. The Company's prices remained relatively consistent throughout most of fiscal 2002 as compared to fiscal 2001. The Company's cost of goods sold decreased to $3,484,132 for the year ended March 31, 2002 compared to $7,184,666 for the year ended March 31, 2001. Cost of goods sold as a percentage of sales decreased from 61.5% for the previous comparable fiscal period to 47.6% for this fiscal period. The decrease is due to the impact of additional provisions of approximately $1,549,099 that were established at various points during fiscal 2001, to recognize slow moving inventory. Without these reserves, cost of goods sold would have been 48.3% of sales in fiscal 2001. As a result of the Company's operating performance during the first six months of FY2002, the Company, during the third quarter of FY2002, announced the layoff of 17 employees to reduce its overhead expenses. The Company recorded approximately $217,467 of severance and termination related costs. Termination benefits of approximately $214,000 were paid during the third and fourth quarters of FY2002. All of the affected employees have left the Company as of March 31, 2002. As of April 30, 2002 the remaining termination benefits of $3,467 were paid. The Company had a loss before taxes of $6,905,015 for the year ended March 31, 2002 compared to a loss before taxes of $16,669,098 for the year ended March 31, 2001. The loss before taxes improved primarily as a result of the Company's cost reduction efforts and management's decision during year ended March 31, 2001 to abandon certain products and technology associated with the SolCom acquisition. At March 31, 2002 and March 31, 2001 the Company had federal and state net operating loss carryforwards of approximately $35.5 million and $27.4 million respectively. The expiration dates for its net operating losses range from the years 2011 through 2022. The net loss for the year ended March 31, 2002 was $6,929,379 compared to a net loss of $16,676,666 for the prior fiscal year. The Company's working capital balance as of March 31, 2002 was $5,040,922 as compared to $6,918,057 at March 31, 2001. This decline in working capital was due to continued operating losses generated throughout fiscal 2002, which was partially offset by $3,480,000 raised through the issuance of new shares in a private placement of 4,000,000 shares of common stock at a price of $0.87 per share. The Company's consolidated financial statements were prepared on the basis that it would continue as a going concern, which contemplates the realization and satisfaction of liabilities and commitments in the normal course of business. At March 31, 2002, the Company had an accumulated deficit of $37,094,424 and working capital of $5,040,922. It also realized net losses of $6,929,379 for the year ended March 31, 2002 and $16,676,666 for the year ended March 31, 2001. There is concer that its existing working capital might not be sufficient to sustain its operations. Deloitte & Touche LLP, in its Report dated June 21, 2002, says that "the Company's recurring losses from operations and its difficulty in generating sufficient cash flow to meet its obligations and sustain its operations raise substantial doubt about its ability to continue as a going concern." INTELLISEC: Auctioning-Off Ariz. & N. Carolina Units on July 30 --------------------------------------------------------------- Intellisec, a California based security integration firm, will sell its Arizona and North Carolina divisions at bankruptcy court auction on July 30, 2002 before Bankruptcy Judge John Ryan, of the United States Bankruptcy Court for the Central District of California. Intellisec is in the business of installing, servicing, and monitoring fire, life safety, and security systems and sought Chapter 11 protection on April 18, 2002. The Arizona division, based in Phoenix, provides products and services offered by Intellisec including fire alarm systems, access control systems for parking garages and office buildings, commercial security systems, 24-hour centralized monitoring of fire and security systems, electronic video recording services, police and emergency services dispatching, and maintenance and repair of fire and security systems. The North Carolina division, based in Charlotte, provides central station electronic video monitoring services. Subsequent to the sales, Intellisec will have divisions in Northern and Southern California. Balfour Capital Advisors, LLC has been engaged by Intellisec as financial advisors and Chief Restructuring Officer. As part of its engagement, Balfour is responsible for selling the Arizona and North Carolina operations. Balfour Capital Advisors, LLC provides advisory services to parties involved with highly leveraged companies and special situations. Balfour is able to provide unique capabilities, including financial and operational restructuring and flexible compensation structures that focus on success-fee formulas. The firm has seasoned professionals that specialize in turnaround and financial advisory services, crisis management, capital raising and investments, investment banking / M&A advice, fairness and valuation opinions, accounts receivables collections, and liquidations. This expertise spans across various sectors including telecom, media, technology, food service, aerospace, and general manufacturing. For more information about the sale of the Arizona and North Carolina operations, contact Joseph E. Sarachek at Balfour Capital Advisors, LLC, 620 Fifth Avenue, 7th Floor, New York, NY 10020. Phone: (212) 489-6342, Fax: (212) 265-8049, or email: jsarachek@balfournyc.com or eblum@balfournyc.com . Visit the Balfour Capital Web site at http://www.balfournyc.com JAGGED EDGE MOUNTAIN: Auditors Raise Going Concern Doubt -------------------------------------------------------- Jagged Edge Mountain Gear Inc., has incurred significant recurring losses since inception. This, coupled with a shortage of liquidity at April 30, 2002, raises substantial doubt about its ability to continue as a going concern. On May 24, 2002 the Company filed a voluntary petition for reorganization under Chapter 11 of the federal bankruptcy laws in the United States Bankruptcy Court for the District of Colorado under case number 02-17894-ABC. The Company's Management is currently operating their business as debtors-in-possession pursuant to the Bankruptcy Code. The Company decided to seek judicial reorganization based upon a rapid decline in liquidity resulting from below-plan catalog and wholesale sales and earnings performance in the second and third quarters. Management cites contributing factors included the economic recession, the September 11, 2001 tragedy, anthrax mailings and resultant mail slowdown, and difficulties in implementing a new catalog mail order and warehousing distribution facility. Each of the preceding, in Management's opinion had severe adverse effects upon Company sales performance. As a debtor-in- possession, the Company is authorized to continue to operate as an ongoing business, but may not engage in transactions outside the ordinary course of business without the approval of the Court, after notice and an opportunity for a hearing. The Company still requires significant additional financing to satisfy outstanding obligations and continue operations. Unless the Company successfully obtains suitable significant additional financing there is substantial doubt about the Company's ability to continue as a going concern. Company operations for the three-month period ended April 30, 2002 as compared to the three months ended April 30, 2001 resulted in a net loss of approximately $314,659 as compared to a net loss of $73,358 respectively for the comparative period. Net loss per share for the comparative three-month periods was $0.02 and $0.00, based upon weighted average shares outstanding of 17,765,236 and 16,745,078 respectively. Net sales were approximately $687,295 for the current three-month period ended April 30, 2002 versus $689,962 for the three-month period ended April 30, 2001. Net sales for the nine-months ended April 30, 2002 were approximately $1,787,053 versus sales of $2,948,241 for the comparative period of 2001. A decrease in sales of $1,161,188. Company operations for the nine-month period ended April 30, 2002 as compared to the nine-months ended April 30, 2001 resulted in a net loss of approximately $861,424 as compared to a net loss of $360,900 respectively. Net loss per share for the comparative nine-month periods ended April 30, 2002 and 2001 was $0.05 and $0.02 respectively, based upon weighted average shares outstanding of 17,692,685 and 16,743,039, respectively. Management attributes the decreased sales over the nine-month period to disappointing mail order sales results, significantly reduced emphasis on wholesale customer sales, and reduced retail store sales. Liquidity and Capital Resources During the nine months ended April 30, 2002, the Company's current ratio declined to .53 as compared to .91 at July 31, 2001. Net working capital decreased $768,933 to a deficit of $821,914 at April 30, 2002 from a deficit of $52,981 at July 31, 2001. KEY TRONIC: Obtains Waiver of Default Under Financing Agreement --------------------------------------------------------------- Key Tronic Corporation (Nasdaq:KTCC), announced that the Company's lender, CIT Group/Business Credit, Inc., has signed an amendment to its financing agreement that waives the Events of Default occurring as a result of the Judgment Lien of $19.2 million in the matter of F&G Scrolling Mouse, LLC et. al. v. Key Tronic Corporation. The waiver is conditioned upon the continuation of the stay of execution of the Judgment granted by the court on June 6, 2002, pending the outcome of Key Tronic's appeal. The waiver enables Key Tronic to remain in compliance with its financing agreement and draw on its credit facility, while it continues to fulfill its current business obligations, pursue new business opportunities and appeal the Judgment. Key Tronic is a leading contract manufacturer offering value- added design and manufacturing services from its facilities in the United States, Mexico, Ireland and China. The Company provides its customers full engineering services, materials management, worldwide manufacturing facilities, assembly services, in-house testing, and worldwide distribution. Its customers include some of the world's leading original equipment manufacturers. For more information about Key Tronic visit http://www.keytronic.com KMART: S&P Drops Credit Lease Series 1995-K3 & -K4 Ratings to D --------------------------------------------------------------- Standard & Poor's lowered its ratings on two Kmart Corp.-related credit lease series to 'D' from triple-'C'-minus and removed them from CreditWatch negative, where they were placed on January 15, 2002. Kmart Corp. net leased 18 properties that secure the mortgage notes that collateralized the transaction. Eight of the 18 leases were rejected in conjunction with Kmart Corp.'s bankruptcy filing. This resulted in a shortfall of interest payments to the certificateholders on the July 2002 distribution. The series 1995-K3 was shorted approximately $2.8 million, while series 1995-K4 was shorted approximately $1.6 million. Ratings Lowered and Removed From Creditwatch Kmart Corp. Rating Series To From 1995-K3 D CCC-/Watch Neg 1995-K4 D CCC-/Watch Neg Kmart Corp.'s 9.875% bonds due 2008 (KMART18), an issue in default, are quoted at 39 cents-on-the-dollar, DebtTraders says. See http://www.debttraders.com/price.cfm?dt_sec_ticker=KMART18 for real-time bond pricing. KMART CORP: S&P Drops Ratings on Series 1995-K1 & -K2 to D ---------------------------------------------------------- Standard & Poor's lowered its ratings on two Kmart Corp.-related credit lease series to 'D' from triple-'C'-minus and removed them from CreditWatch negative, where they were placed on January 15, 2002. At issuance, Kmart Corp. net leased 16 properties that secure the mortgage notes that collateralized the transaction. Six of the 16 leases were rejected in conjunction with Kmart Corp.'s bankruptcy filing. This resulted in payment shortfalls to the certificateholders on the July 2002 distribution. Series 1995-K1 was shorted approximately $1 million, while series 1995-K2 was shorted approximately $1.5 million. Ratings Lowered and Removed From Creditwatch Kmart Corp. Rating Series To From 1995-K1 D CCC-/Watch Neg 1995-K2 D CCC-/Watch Neg KMART FUNDING: S&P Gives Default Ratings on Series F & G Bonds -------------------------------------------------------------- Standard & Poor's lowered its ratings on Kmart Funding Corp.'s series F and G to 'D' from triple-'C'-minus and removed them from CreditWatch negative, where they were placed on Jan. 15, 2002. At issuance, the bonds were secured by 24 mortgage notes. Kmart Corp. net leased 24 of the properties that secured the mortgage notes. Nine of the 24 leases were rejected in conjunction with Kmart Corp.'s bankruptcy filing; another lease was assumed and assigned, thus terminating Kmart Corp.'s obligation to make rental payments on 10 leases. This resulted in interest payment shortfalls to the certificateholders on the July 2002 distribution. Series F was shorted approximately $977,448, while series G was shorted approximately $327,423. Ratings Lowered and Removed From Creditwatch Kmart Funding Corp. Rating Series To From F D CCC-/Watch Neg G D CCC-/Watch Neg KNOLOGY: Prepares Prepackaged Chapter 11 to Effect Debt Workout --------------------------------------------------------------- Knology, Inc., a facilities-based provider of bundled broadband communications services to residential and business customers in the southeastern United States, has reached an agreement in principle with an informal committee of holders of notes issued by Knology's subsidiary, Knology Broadband, Inc., on a restructuring plan that would significantly reduce the Company's debt. Broadband currently has outstanding $444.1 million aggregate principal amount at maturity of 11-7/8% Senior Discount Notes due 2007, of which Valley Telephone Co., Inc., a wholly owned subsidiary of Knology, owns $64.2 million. Including Valley, bondholders representing 79.4% of the outstanding Old Notes have agreed to the terms of the restructuring plan and to tender their Old Notes as part of the restructuring. In addition, both of the Company's senior secured lenders have agreed to the terms of the restructuring plan, and certain existing stockholders have committed to invest $39.0 million in new equity of Knology contingent upon a successful restructuring. The Company anticipates commencing an exchange offer to effect the restructuring as soon as practicable. Although Broadband is not required to make any cash interest payments on the Old Notes until April 2003, the Company's board of directors and management initiated discussions with the informal noteholders committee with the goal of restructuring the Company's debt on the most favorable terms possible. The restructuring plan embodies Knology's commitment to the future and will give the Company a stronger liquidity position and an improved capital structure. During the restructuring, the Company's operations will continue uninterrupted, customer service will be unaffected, suppliers will be paid in the ordinary course of business, and the Company's current management team and employees will remain in place. With respect to reaching the agreement in principle, Rob Mills, the Company's CFO, stated, "We are very pleased to announce our restructuring plan which is intended to strengthen the consolidated balance sheet and liquidity position of Knology. When the plan is successfully implemented, Knology will be well- positioned to continue adding customers and revenue as well as maintain its focus on profitability." The terms of the restructuring plan include the following: * Holders of Old Notes, other than Valley, with an aggregate principal amount at maturity of Old Notes of $379.9 million, will be offered in exchange for their Old Notes an aggregate of $193.5 million in principal amount of new 12% Senior Notes due 2009 of Knology and shares of newly issued convertible preferred stock representing approximately 19.3% of Knology's outstanding shares of common stock, on an as-converted basis, after giving effect to the restructuring plan. Of these amounts, holders of Old Notes who are also existing stockholders of Knology and who collectively own approximately $130.6 million of Old Notes will be offered an aggregate of $47.3 million of New Notes and approximately 14.4% of Knology's stock, and all other holders of Old Notes (other than Valley), who collectively own approximately $249.3 million of Old Notes, will be offered an aggregate of $146.2 million of New Notes and approximately 4.9% of Knology's stock. Old Notes held by Valley will be canceled contingent upon a successful restructuring. * Certain existing Knology stockholders will, subject to completion of the restructuring, contribute approximately $39.0 million in cash in exchange for shares of Series C preferred stock of Knology representing approximately 7.8% of the outstanding shares of common stock, on an as-converted basis, after giving effect to the restructuring plan. * All existing common and preferred stock of Knology would remain outstanding and will represent approximately 72.9% of the outstanding shares of common stock, on an as-converted basis, after giving effect to the restructuring plan. Knology's certificate of incorporation will be amended to authorize the new preferred stock to be issued in the restructuring plan and to modify the terms of the existing preferred stock in certain respects. * The Company's senior secured lenders, Wachovia and CoBank, have agreed, subject to the completion of the restructuring, to modify their existing senior secured credit facilities. Among other things, the modifications to the CoBank facility will allow the borrowers under that facility to pay dividends to Knology, which will provide additional capital to help fund Knology's and Broadband's operations. Each of the terms of the restructuring described above is a condition of the restructuring and must be completed for the restructuring to be effective. In addition, completion of the Exchange Offer is subject to certain conditions, including the exchange of 100% of the outstanding Old Notes (other than those held by non-accredited investors), which condition may be waived under certain circumstances. As an alternative means of effecting the restructuring in the event the conditions to completion of the Exchange Offer are not met, Knology and Broadband also intend to solicit votes in favor of a "prepackaged" plan of reorganization under the Bankruptcy Code. Should this possibility occur, any such filing would include only Broadband. Knology and the operating subsidiaries of Knology and Broadband, including Interstate Telephone Company and Valley, would not be debtors in the proceeding. The implementation of this plan would be dependent on a number of conditions typical of such transactions. It is expected that Knology's business would continue to operate as usual, suppliers would be paid in full, and employees would remain in place. Credit Suisse First Boston Corporation acted as exclusive financial advisor to Knology on the restructuring. Houlihan Lokey Howard & Zukin Capital acted as exclusive financial advisor to the informal committee of holders of Old Notes. The securities discussed in this news release as issuable pursuant to the proposed restructuring plan will not be and have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. Knology and Broadband, headquartered in West Point, Georgia, are leading providers of interactive voice, video and data services in the Southeast. Their interactive broadband networks are some of the most technologically advanced in the country. Knology and Broadband provide residential and business customers over 200 channels of digital cable TV, local and long distance digital telephone service featuring the latest enhanced voice messaging services, and high speed Internet service, which enables consumers to download video, audio and graphic files at fast speeds via a cable modem. Broadband was initially formed in 1995 by ITC Holding Company, Inc., a telecommunications holding company in West Point, Georgia, and South Atlantic Venture Funds, and Knology was formed in 1998. For more information, please visit our Internet site at http://www.knology.com Knology will file with the SEC a proxy statement on Schedule 14A with respect to the solicitation of consents from holders of its Series A preferred stock to approve the Charter Amendment. Holders of Knology's Series A preferred stock are urged to read the proxy statement and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, when they become available, because they will contain important information. When a proxy statement becomes available, copies can be obtained, without charge, by directing a request to: Knology, Inc., 1241 O.G. Skinner Drive, West Point, Georgia 31833 ((706) 645-8553). Holders will also be able to obtain a free copy of the proxy statement when it is filed with the SEC, as well as other filings containing information about Knology and Broadband, at the SEC's Internet site at http://www.sec.gov. Approval by Knology's stockholders of the proposed Charter Amendment is a condition to completion of the restructuring plan. Knology and its executive officers and directors may be deemed to be participants in the solicitation of consents from holders of Knology's Series A preferred stock with respect to the approval of the proposed Charter Amendment. Information regarding the executive officers and directors of Knology, including their identity and a description of their direct and indirect interests in Knology, are set forth in Knology's Annual Report on Form 10-K, as amended, for the fiscal year ended December 31, 2001, which is available at the SEC's Internet site at http://www.sec.gov LTV CORP: Dofasco Inc. to Acquire Ohio Automotive Tubular Assets ---------------------------------------------------------------- Dofasco Inc., is pleased to announce it has signed a Letter of Intent to acquire an advanced automotive tubular manufacturing and processing facility located in Marion, Ohio. Dofasco will acquire the assets, formerly operated by LTV/Copperweld, from a consortium of banks that own the assets. The facility was constructed in 1999 at a cost of US $52 million. Dofasco will invest an undisclosed price reflecting the nature of the situation to acquire 100 per cent of the assets from creditors and LTV. There are a number of conditions that must be met prior to closing, including bankruptcy court approval and the satisfactory negotiation of a labour agreement. Upon closing, the facility will be integrated with Dofasco's existing tubular steel business. "This is a targeted investment in the high value-added segment of the automotive steel supply chain, and provides excellent opportunity to expand our portfolio of innovations-based solutions in automotive and other niche tubular markets," said John Mayberry, Chair and CEO of Dofasco Inc. "This investment will create strong value for Dofasco shareholders by integrating this world-class facility into our leading strategy." Dofasco currently has three tube mills: two in Hamilton, Ontario, and one in Monterrey, Mexico, focused on the growing market for tubing for hydroformed automotive applications. "This facility will be highly complementary to our existing tubular business. The addition of the Marion facility will mean we can now provide value-added tubular products to customers in key North American markets in Ontario, the US mid-west, and the growing Mexican market," said Mayberry. The Marion facility is QS9000 certified, includes two mills (large diameter and small diameter), slitting operations, storage, material testing labs and plant offices. The facility also possesses bright annealing and dry film lube technologies. The facility is capable of producing up to 150,000 tons of tube per year and is strategically located in central Ohio, near customers and sources of supply, as well as major transportation routes. Dofasco has grown its tubular business quickly since beginning construction of its first facility five years ago, which helped pioneer the large-scale production of large-diameter tubing for hydroforming, working closely with key automotive customers. With this acquisition, Dofasco will be capable of manufacturing approximately 550,000 tons per year of value-added tubular product. The Hamilton and Mexico mills produce large-diameter tubes suitable for use in the manufacture of hydroformed automotive parts. Hydroformed automotive parts are manufactured by forming lengths of steel tube into complex shapes by injecting fluid into the tube under very high pressures. Such tubing is required to have precise metallurgical characteristics. Hydroformed tubing is used to replace several welded parts in the traditional auto chassis and frame, reducing weight and costs, while increasing strength and safety. The Marion facility has the capability of manufacturing tubes suitable for hydroforming and also produces additional, high value-added automotive and non-automotive products, such as small-diameter tubing, tubing for crossmembers, axles, prop shafts, door intrusion beams, stabilizer bars, conveyor tubes and tubes for other mechanical uses. "The market for hydroformed tubing is growing rapidly," said Mayberry. "We anticipate the North American market for tubes for automotive applications will more than double by 2010. Currently, Dofasco has a significant position in this market, and we see great potential to capitalize on emerging growth opportunities." The Marion tube mill ceased operations on July 12, in accordance with the process previously laid out by its creditors. Dofasco expects to have the facility staffed and running by early fall 2002, provided the conditions for purchase can be satisfied. "This is a modern facility that was run by good people. The former employees are dedicated and capable," said Mayberry. "People are the most important part of any company. Dofasco has a history of employee relations based on mutual respect, shared goals, shared rewards, and providing opportunity for growth. We intend to bring this positive culture to the Marion plant." Dofasco is a leading North American steel solutions provider. Product lines include hot rolled, cold rolled, galvanized, Extragal(TM), Galvalume(TM) and tinplate flat rolled steels, as well as tubular products and laser welded blanks. Dofasco's wide range of steel products is sold to customers in the automotive, construction, energy, manufacturing, pipe and tube, appliance, packaging and steel distribution industries. DebtTraders says that LTV Corporation's 11.75% bonds due 2009 (LTV2) are quoted at 0.5 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=LTV2for real-time bond pricing. LAIDLAW INC: Expects to Release Fiscal 2001 Results by July 29 -------------------------------------------------------------- Laidlaw Inc., announced it currently expects to release its audited results for the fiscal year ended August 31, 2001 by July 29, 2002. The announcement revises its prior expectation regarding release of this information prior to July 15, 2002. This delay is due to the time required to complete and audit the financial statements. In June 2001, Laidlaw Inc., and five of its subsidiary holding companies - Laidlaw Investments Ltd., Laidlaw International Finance Corporation, Laidlaw One, Inc., Laidlaw Transportation, Inc., and Laidlaw U.S.A., Inc., filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Western District of New York. At the same time, Laidlaw Inc., and Laidlaw Investments Ltd., filed cases under the Canada Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice in Toronto, Ontario. Laidlaw's plan of reorganization, as filed, contemplates no distribution of value to holders of Laidlaw's equity. Consistent with its January 2002 announcement, in accordance with OSC Policy 57-603, Laidlaw will continue to abide by the provisions of the alternate information guidelines until it has satisfied its financial statement filing requirements by making required filings with the relevant securities regulatory authorities throughout the period in which it is not in compliance with such requirements. Laidlaw Inc., is a holding company for North America's largest providers of school and intercity bus transportation, municipal transit, patient transportation and emergency department management services. MALDEN MILLS: Maintains Plan Exclusivity through August 14 ---------------------------------------------------------- The U.S. Bankruptcy Court for the District of Massachusetts granted Malden Mills Industries, Inc., and its debtor- affiliates' motion to extend their exclusive periods. The Court grants the Debtors, through August 14, 2002, the exclusive right to file their plan of reorganization and, until October 14, 2002, the exclusive right to solicit acceptances of that Plan. Malden Mills Industries, Inc., a worldwide producer of high- quality branded fabric for apparel, footwear and home furnishings, filed for chapter 11 protection on November 29, 2001. Richard E. Mikels, Esq. and John T. Morrier, Esq. at Mintz, Levin, Cohn, Ferris represent the Debtors in their restructuring efforts. MOBILE SERVICES: S&P Assigns B+ Corporate Credit Rating ------------------------------------------------------- Standard & Poor's assigned its single-'B'-plus corporate credit rating to Los Angeles, California-based Mobile Services Group Inc., parent of Mobile Storage Group Inc. Standard & Poor's also assigned its double-'B'-minus rating to Mobile Storage's $150 million secured revolving credit facility, maturing 2007 and guaranteed by Mobile Services; and its single- 'B' rating to Mobile Storage's $160 million senior unsecured notes due 2009. These ratings replace those (including a double- 'B' corporate credit rating) assigned on May 2, 2002, in anticipation of an intended IPO, which have been withdrawn. The IPO, whose proceeds were to be used to reduce debt, was postponed over the near to intermediate term. The outlook is stable. "Ratings on Mobile Services reflect its modest scale of operations, small equity base, and relatively weak credit measures" said Standard & Poor's credit analyst Betsy Snyder. "However, a respectable market share and efficient operations are positive features," the analyst noted. Mobile Services provides portable storage solutions through the rental and sale of portable storage containers, over-the-road trailers, and portable office units in the U.S. and U.K. The new bank facility rating is double-'B'-minus, one notch higher than the corporate credit rating. The $160 million senior secured facility matures in 2007. The revolving credit facility is secured by first-priority liens on all property of the company and its subsidiaries and all of the stock of Mobile Storage and its subsidiaries. The borrowing base limits borrowings to 85% of eligible accounts receivable, 90% of the net orderly liquidation value of eligible container assets and mobile office units, 70% of the orderly liquidation value of eligible trailer assets, and 80% of the value of eligible machinery and equipment. Financial covenants include a minimum interest coverage ratio (to be determined); minimum fleet utilization of 70%; a maximum leverage ratio of 5.75 times until December 31, 2002, and 5.5x for each quarter thereafter; and maximum capital expenditures of $20 million a year over the 2002-2004 period and $25 million a year over the 2005-2006 period. Standard & Poor's stressed the value of the collateral to simulate a default scenario, and concluded that even under such conditions the collateral value would be more than sufficient to fully cover the bank facility. Therefore, Standard & Poor's believes there is a strong likelihood of full recovery of principal in the event of default or bankruptcy. Privately held Mobile Services had intended to complete an IPO, utilizing proceeds to reduce debt. However, due to weak market conditions, the IPO was postponed for the near term. Instead, the company will replace its existing bank facility with a new one and issue public debt. As a result, the company's credit profile is expected to remain constrained over the near to intermediate term. Mobile Services is expected to increase its cash flow over the next several years. However, further acquisitions will likely result in continued high debt levels, impeding any significant improvement in its credit ratios. If the company were to successfully complete an IPO, ratings would be reevaluated at that time. NATIONAL STEEL: Wants to Retain MB Valuation as Appraiser --------------------------------------------------------- National Steel Corporation and its debtor-affiliates seek the Court's authority to employ MB Valuation Services Inc. as their real and personal property appraiser consultant effective nunc pro tunc to April 10, 2002. Mark A. Berkoff, Esq., at Piper Marbury Rudnick & Wolfe, in Chicago, Illinois, relates that the professionals at MB Valuation with primary responsibility for rendering appraisal services to the Debtors include Allen Bealmear, Karen Milan, David Collins, Jay Tonubbee and Willis Choate. MB Valuation's services are critical to the prosecution of these Chapter 11 cases, and MB Valuation has substantial expertise in this type of work. In addition, Mr. Berkoff states that other professionals at MB Valuation may render services to the Debtors, on an as-needed basis. The Debtors may terminate the engagement letter at any time. MB Valuation is expected to provide these services: (i) Appraisal of real property under the Market Value concept including site inspection, research, data analysis and correlation for the Debtors' facilities located in: (a) Mishawaka, Indiana; (b) Ecorse, including the Michigan Steel Property and the Stinson Training Center and River Rouge, Michigan; (c) Granite City, Illinois, including the corporate office; (d) Portage, Indiana; (e) Canton, Michigan; and (f) Keewatin, Minnesota. (ii) Appraisal of personal property located at the Facilities under various valuation methods; (iii) Appraisal of Major Spares Inventory; and (iv) Appraisal of certain additional real estate and personal property that the Debtors' deem necessary from time-to-time. Mr. Berkoff tells the Court that MB Valuation shall be compensated for their services: (i) For the appraisal of personal property, MB Valuation estimates a fee of $180,000 for four valuations, based on various valuation concepts; (ii) For the appraisal of real property, MB Valuation estimates a fee of $120,000; (iii) For the valuation of Major Spares Inventory, MB Valuation estimates a fee of $30,000; and (iv) MB Valuation will be reimbursed for reasonable documented out-of-pocket expenses incurred in connection with providing the appraisals services including travel related expenses, computer processing, report preparation and miscellaneous costs including long distance, parking and delivery costs. The Debtors believe that the fee structure is both fair and reasonable in light of the types of services being provided. Accordingly, MB Valuation will file applications for allowance of their fees and expenses in respect of their services. Allen Bealmear, the President of MB Valuation Services Inc., in Dallas, Texas, asserts that the officers and employees of MB Valuation do not have any connection with the Debtors, their creditors or any other party in interest, or their respective attorneys or accountants and do not hold or represent an interest adverse to the estates. Mr. Bealmear states that MB Valuation is a "disinterested person" as defined under Section 101(14) of bankruptcy law. (National Steel Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 609/392-0900) National Steel Corp.'s 9.875% bonds due 2009 (NSUS09USR1) are trading at about 36, DebtTraders reports. See http://www.debttraders.com/price.cfm?dt_sec_ticker=NSUS09USR1 for real-time bond pricing. NATIONSRENT: John Hancock Seeks Sanctions for Noncompliance ----------------------------------------------------------- John Hancock Leasing Corporation asks the Court to impose sanctions based on NationsRent Inc.'s failure to comply with Court Order compelling Discovery Responses. In particular, John Hancock requests the Court to prohibit the Debtors from offering any evidence, testimonial or otherwise, about any maintenance performed on John Hancock's Equipment above and beyond the maintenance described in the records that the Debtors have already produced as of July 3, 2002. "Instead of providing an answer to Interrogatory No. 3, the Debtors produced 176 pages of maintenance records, which the Debtors represented to be all of the maintenance records for the period covered by Interrogatory No. 3," complains Michelle McMahon, Esq., at Connolly Bove Lodge & Hutz LLP in Wilmington, Delaware. Interrogatory No. 3 requires the Debtors to provide information regarding the maintenance history of the Equipment since Petition Date. Ms. McMahon continues to say that, in many instances, these maintenance records did not contain any information that would permit John Hancock to determine the type of maintenance performed and others merely stated "No history in Genysis." The maintenance account should include: a. The date and nature of any maintenance performed on the Equipment; and, b. Any repairs to the Equipment. Ms. McMahon tells the Court that, instead of complying with the initial Court Order to provide a full and complete response to Interrogatory No. 3, the Debtors produced an additional 184 pages of maintenance records. These additional maintenance records were the same type of the 176-page documents previously produced. Ms. McMahon says that the Debtors did not explain where these documents came from even though the Debtors earlier had represented that they had produced all of their maintenance records to John Hancock. The Debtors, however, supplemented their response to the interrogatory by stating that when the maintenance records contained no specific information regarding the type of maintenance performed, the maintenance "may include, but [is] not limited to, in detail: * fueling; * greasing; * checking all fluid levels and other instruments and gauges; * oil and filter change; * air filter service; * fuel filter replacement; * replacement of missing or loose bolts; * check to ensure fire extinguisher is present and fully charged; * wash equipment; * lubricate all fittings; and, * engine and body repairs. According to Ms. McMahon, as explained by the Debtors' counsel, when the Debtors performed maintenance on the rented equipment, they recorded those actions in paper work orders. Information would then be entered on the work orders into a computer system known as the Genysis system. A "No history in Genysis" entry meant "generally" that no repair and or maintenance was performed on the equipment during the relevant time period. The Debtors' counsel also warned the possibility that the Debtors may have performed routine maintenance and inadvertently failed to enter the maintenance into the system. Ms. McMahon further claims that the Debtors' counsel stated that Debtors would not produce the "paper" work orders regarding maintenance for John Hancock 's Equipment, but would permit John Hancock to go to each of the Debtors' 200 rental facilities and search through the work orders itself. Ms. McMahon finds the Debtors' response to Interrogatory No. 3 unacceptable and does not comply with the Court's Order requiring a full and complete answer. The Genysis computer system also reflects that the Debtors have not performed any maintenance on many pieces of John Hancock's Equipment. "But the Debtors refuse to stipulate to this fact," Ms. McMahon says. "Instead, the Debtors intend to testify that maintenance may have been done, despite the information contained in their Genysis system." (NationsRent Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., 609/392-0900) NETWORK ACCESS: Committee Signing-Up Fox Rothschild as Counsel -------------------------------------------------------------- The Official Committee of Unsecured Creditors in the chapter 11 cases involving Network Access Solutions Corporation and NASOP, Inc., want to retain Fox, Rothschild, O'Brien & Frankel, LLP as its counsel. The Committee tells the Court that Fox Rothschild has considerable experience in matters of this nature and believes that the firm is well qualified to perform the services required. Fox Rothschild will represent the Committee on: a) the Committee's investigation of the acts, conducts, assets, liabilities and financial condition of the Debtors and the operation of the Debtors' business, the desirability of the continuance of such business; and any other related matters; b) consultation with and supervision of the debtors-in- possession regarding administration of the cases; c) the Committee's participation in the formulation of a Plan of Reorganization; and d) the performance of such other services necessary or are in the interest of the Debtors' unsecured creditors. Fox Rothschild's customary hourly rates are: Partners $150 to $500 per hour Associates and Counsel $70 to $135 per hour The attorneys principally designated to render services to the Committee are: Hal L. Baume $380 per hour Michael J. Viscount, Jr. $315 per hour Francis G.X. Pileggi $310 per hour Allison M. Berger $280 per hour Teresa M. Dorr $245 per hour Sheldon K. Rennie $240 per hour Network Access Solutions Corporation, provider of broadband network solutions and internet service to business customers, filed for chapter 11 protection on June 4, 2002. Bradford J. Sandler, Esq. at Adelman Lavine Gold and Levin, PC represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $58,221,000 in assets and $84,946,000 in debts. NEXTEL COMMS: Posts Improved Results for Second Quarter 2002 ------------------------------------------------------------ Nextel Communications, Inc. (NASDAQ:NXTL), announced record financial results for the second quarter of 2002 including the company's first-ever achievement of positive net income. Domestic revenues increased 25% to approximately $2.2 billion and domestic operating cash flow increased 69% to a record $816 million over the same period last year. During the second quarter, Nextel completed transactions that resulted in the retirement of approximately $1.1 billion in debt and preferred stock, and since June 30, Nextel has entered into agreements with investors to repurchase an additional $400 million of its indebtedness. Nextel added approximately 471,000 domestic subscribers during the second quarter finishing the quarter with approximately 9.64 million domestic subscribers. "Strong customer demand for our unique and differentiated services and a keen focus on operational and capital efficiencies helped make this a breakthrough quarter for Nextel," said Tim Donahue, Nextel's president and CEO. "We're growing market share, attracting high value subscribers and exceeding all expectations for incremental cash flow. This great progress gave us the confidence to prudently invest our cash and opportunistically reduce our indebtedness and preferred securities by $1.5 billion in face amount. This significant reduction will save Nextel about $2.5 billion over the next nine years in foregone interest, principal and dividends. The combination of accelerated cash flow, reduced expenditures and the gain from our significant debt reduction activities generated our first-ever positive quarterly net income. Nextel's iDEN-based advantages are starting to pay off - and with the help of Motorola - we are improving our network efficiency and we have solid plans to further expand our Direct Connectr service." "Our operating strategies are working," said Jim Mooney, Nextel's executive vice president and COO. "Customer revenue remains strong due largely to enhanced usage and customer retention is among the best in this competitive industry. More importantly, we grew domestic quarterly cash flow by $333 million over last year. We are driving these results by increasing revenue, scaling operating costs and reducing equipment subsidies. These factors combined to produce a second quarter cash flow margin of 40% - our best ever - and a ten point improvement over last year. As we approach 10 million customers on our domestic network, and our 10th anniversary of Direct Connect, we expect to continue to benefit from our clear differentiation and produce industry leading financial results." Domestic revenue for the second quarter of 2002 grew by 25% to $2.2 billion compared with $1.7 billion generated during the second quarter of 2001. Nextel's average monthly service revenue per domestic subscriber increased to $71, significantly higher than other national wireless carriers, driven largely by greater customer usage and changes in pricing plans. Nextel's customer retention rate remained among the best in the industry with customer churn holding flat at 2.1%. Domestic operating cash flow (earnings before interest, taxes, depreciation and amortization) was up 69% to $816 million in the second quarter 2002, compared with $483 million for the second quarter of last year. Nextel's consolidated net income attributable to common stockholders during the second quarter was $325 million, or $0.39 per share. Nextel's second quarter domestic operations produced positive net income even when the results of NII Holdings, the effect of the write-down of our investment in the tower company SpectraSite Holdings, Inc., and the gain related to debt and preferred stock exchange transactions are excluded. Revised Guidance "During the second quarter Nextel continued to build on our track record of meeting or exceeding expectations," said Paul Saleh, Nextel's executive vice president and CFO. "We are realizing the benefits of our operational and financial strategies earlier than expected and we have solid plans to build on this progress and sustain this momentum. Assuming these trends continue, we would expect operating cash flow for 2002 to be at least $3 billion. We also expect our capital spending for 2002 to be $2 billion or less. Our confidence in the future coupled with our strong liquidity position allowed Nextel to take advantage of market opportunities and reduce our indebtedness while enhancing financial flexibility for the future." As of June 30, 2002, Nextel retired nearly $1.1 billion in debt and mandatorily redeemable preferred stock in exchange for approximately 61 million newly issued shares of Class A common stock and approximately $295 million in cash. Additionally, since June 30, Nextel has entered into agreements to repurchase approximately $400 million of debt in exchange for about $205 million in cash. This further reduction will result in a gain to be reflected in the third quarter results. Taken together, these negotiated transactions, totaling $1.5 billion in face amount, will allow Nextel to avoid about $2.5 billion in total future principal, interest, and dividend payments. Nextel may, from time to time, as it deems appropriate, enter into similar transactions which in the aggregate may be material. Domestic capital expenditures were $448 million in the second quarter of 2002, a decrease of 27% from the $616 million in the second quarter of 2001. Total domestic system minutes of use on the Nextel National Network increased 41% during the quarter when compared with the same period in 2001 to approximately 18.2 billion total system minutes of use. Capital expenditures per minute of use declined 48% over the second quarter last year. During the second quarter, NII Holdings, Inc., currently a substantially wholly-owned subsidiary, filed a voluntary plan to restructure its obligations under Chapter 11 of the U.S. Bankruptcy Code in the State of Delaware under an agreement in principle with its main creditors. As result of the bankruptcy filing, NII Holdings' financial results, unlike prior presentations, are reflected in a single line item in accordance with the equity method of accounting. Nextel Communications, Inc., based in Reston, Virginia, is a leading provider of fully integrated wireless communications services and has built the largest guaranteed all-digital wireless network in the country covering thousands of communities across the United States. Nextel and Nextel Partners, Inc., currently serve 197 of the top 200 U.S. markets. Through recent market launches, Nextel and Nextel Partners service is available today in areas of the U.S. where approximately 230 million people live or work. * * * As reported in the March 21, 2002 edition of Troubled Company Reporter, Fitch Ratings changed the Rating Outlook on Nextel Communications Inc. to Negative from Stable. The Negative Rating Outlook applies to Nextel's senior unsecured note rating of 'B+', the senior secured bank facility of 'BB' and the preferred stock rating of 'B-'. The Negative Rating Outlook reflects Fitch's concern of Nextel fully executing its strategic objectives in 2002/2003 and accelerating its operational performance improvement to meet several challenges. While current financial and operating performance is encouraging, the company must make steady progress toward free cash flow positive by early 2004. This is especially important due to a rapidly increasing debt service beginning in 2003 that could put pressure on liquidity absent strong cash flow progress. The company should also consider debt pay-down as a priority as a means to enhance cash flow and improve overall credit quality. Additional challenges for the company include capital expenditure reductions without affecting service quality, the competitive wireless pricing environment and quarterly EBITDA requirements associated with its bank covenants. These concerns are partially mitigated by Nextel's adequate near-term liquidity position, which reflects $3.5 billion in cash at the end of 2001 and $1.5 billion remaining on its bank facility, a unique and differentiated offering to moderate pressure on ARPU and a high quality subscriber base. Nextel Communications' 12% bonds due 2008 (NEXCOM4) are quoted at about 50 cents-on-the-dollar, DebtTraders reports. See http://www.debttraders.com/price.cfm?dt_sec_ticker=NEXCOM4for real-time bond pricing. PANACO INC: Files for Chapter 11 Reorganization in Texas -------------------------------------------------------- PANACO, Inc. (Amex: PNO), an oil and gas exploration and production company, has filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code. Company President and Chief Executive Officer Ted Stautberg said, "This action [is] taken to offer PANACO the most efficient way to restructure its balance sheet and access new working capital while continuing to operate in the ordinary course of business. This action will also enable PANACO to pursue its previously announced strategic alternatives, including a possible sale or merger." PANACO is an independent exploration and production company with operations focused primarily offshore in the Gulf of Mexico and onshore in the Gulf Coast Region. PANACO operates approximately 75% of its offshore and onshore wells as well as operates 12 offshore platforms and owns interests in 109 miles of offshore oil and natural gas pipelines greater than 10" diameter. The Company's daily production is currently averaging 32 MMCFE. PANACO, Inc., is an independent oil and gas exploration and production company focused primarily on the Gulf of Mexico and the Gulf Coast Region. The Company acquires producing properties with a view toward further exploitation and development, capitalizing on state-of-the-art 3-D seismic and advanced directional drilling technology to recover reserves that were bypassed or previously overlooked. Emphasis is also placed on pipeline and other infrastructure to provide transportation, processing and tieback services to neighboring operators. PANACO's strategy is to systematically grow reserves, production, cash flow and earnings through acquisitions and mergers, exploitation and development of acquired properties, marketing of existing infrastructure, and a selective exploration program. PANACO INC: Voluntary Chapter 11 Case Summary --------------------------------------------- Debtor: Panaco, Inc. 1100 Louisiana Suite 5100 Houston, Texas 77002 713-970-3100 Bankruptcy Case No.: 02-37811 Type of Business: The Debtor is engaged in the exploration and production of crude oil and natural gas. Chapter 11 Petition Date: July 16, 2002 Court: Southern District of Texas (Houston) Judge: Letitia Z. Clark Debtor's Counsel: Monica Susan Blacker, Esq. Neligan Stricklin LLP 1700 Pacific Ave Suite 2600 Dallas, Texas 75201 214-840-5317 Fax : 214-840-5301 Total Assets: $130,189,000 Total Debts: $170,245,000 POPE & TALBOT: S&P Rates $50 Mill. Senior Unsecured Notes at BB --------------------------------------------------------------- Standard & Poor's has assigned its double-'B' rating to pulp and lumber producer Pope & Talbot Inc.'s $50 million senior unsecured notes due 2013. Standard & Poor's said that it has also affirmed its existing ratings on the company, including its double-'B' corporate credit rating. The outlook remains stable. Debt outstanding at the company at March 31, 2002, totaled $230 million. "Proceeds from the debt issue are expected to be used to repay a portion of the amounts outstanding under the company's bank credit facilities", said Standard & Poor's credit analyst Pamela Rice. "The amount of secured debt and other priority liabilities are expected to be low enough so as not to require a notching- down of the rating on the company's senior unsecured debt". Standard & Poor's said that the ratings reflect Portland, Oregon-based Pope & Talbot's below-average business position as a moderate size pulp and lumber producer and an aggressive financial profile. Standard & Poor's noted that despite industry cyclicality, commitment by Pope & Talbot's management to reducing debt should enable the company to maintain a financial profile that supports the ratings. PRESIDENT CASINOS: First Quarter Net Loss Slides-Up to $2.7MM ------------------------------------------------------------- President Casinos, Inc. (OTC:PREZ), announced results of operations for the first quarter ended May 31, 2002. For the quarter ended May 31, 2002, President Casinos reported a net loss of $2.7 million, compared to a net loss of $2.5 million for the quarter ended May 31, 2001. Revenues for the quarter ended May 31, 2002 were $33.4 million, compared to revenues of $33.1 million for the quarter ended May 31, 2001. The Company had earnings before interest, taxes, depreciation and amortization ("EBITDA") and before reorganization costs, impairment of long-lived assets and gain/loss on disposal of property and equipment of $3.9 million for the quarter ended May 31, 2002, compared to $3.5 million for the quarter ended May 31, 2001. Combined EBITDA from the Company's gaming and ancillary operations was $5.4 million for the quarter ended May 31, 2002, compared to EBITDA of $4.5 million for the quarter ended May 31, 2001. As previously reported, the Company's St. Louis operations were temporarily suspended from May 13, 2002, to May 20, 2002, as a result of flood conditions on the Mississippi River. Despite the suspension of operations in St. Louis, results for the quarter ended May 31, 2002, included an increase of approximately $0.5 million in operating income in St. Louis compared to the quarter ended May 31, 2001. Additionally, results for the first quarter ended May 31, 2002, included an increase of approximately $0.3 million in operating income in Biloxi compared to the same period in the prior year. Also as previously reported, the Company and certain of its wholly-owned subsidiaries, including its two casino operations, President Riverboat Casino-Missouri, Inc. and President Riverboat Casino-Mississippi, Inc., filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Mississippi. The Company anticipates that it will reorganize and has targeted emergence from Chapter 11 in 2003. The Company indicated its decision to seek judicial reorganization was primarily based upon the need to restructure the Company's debt obligations under its senior and secured notes and was accelerated by recent collection efforts initiated by its noteholders, including an action filed on June 18, 2002 to foreclose a mortgage on collateral securing a portion of the notes. As the Company's two casino properties continue to produce positive EBITDA, the Company does not anticipate that any interim financing will be necessary to continue its operations during the reorganization period. The bankruptcy filing is not expected to have any significant negative impact on the Company's ability to continue its day-to-day gaming and other operations or to meet its payment obligations to its employees and vendors. President Casinos, Inc., owns and operates riverboat and dockside gaming facilities in Biloxi, Mississippi and downtown St. Louis, Missouri adjoining Laclede's Landing. PREVIO INC: Board Approves Plan of Liquidation and Dissolution -------------------------------------------------------------- Previo, Inc. (Nasdaq: PRVO), announced a series of actions related to the previously announced divesture of its product lines and other assets. Previo has entered into a definitive agreement with Altiris, Inc., whereby the Company will sell its core technology and related non-cash assets to Altiris. The Company had previously granted to Altiris a license to all of its product lines and intellectual property and entered into a development and support services agreement through Previo's development subsidiary in Tallin, Estonia. Previo received $500,000 in connection with the license and services agreement and will receive an additional approximately $500,000 upon the consummation of the asset sale. This series of transactions with Altiris is the most attractive overall divesture option Previo, in concert with its financial advisors, identified after an extensive effort. "We are delighted with the agreements with Altiris as they represent what we believe to be the best value to our stockholders at this time," said Tom Dilatush, Previo's CEO. After disappointing sales of Previo's existing products and after an extensive consideration of other strategic alternatives, including mergers or asset sales with potential business partners, Previo's Board of Directors approved the dissolution and liquidation of the Company and have directed the Company to prepare a proxy for stockholder approval of these actions. Additional details regarding the plan of dissolution and the timing for the distribution of cash to shareholders will be forthcoming in the proxy statement to be filed with the Securities and Exchange Commission and future press releases. Previo has terminated all of its U.S. employees except for a minimal staff that will handle matters related to the expected dissolution. The entire ongoing cost of the Company's Estonian subsidiary is being reimbursed by Altiris as part of the transactions described above. The Company expects to publish its quarterly earnings release and to issue the proxy statement for the proposed dissolution prior to August 15, 2002. As a planned part of Previo's strategic changes, Tom Dilatush has resigned as Chief Executive Officer. Mr. Dilatush has also resigned as a member of Previo's Board of Directors. PSINET INC: GECC Pressing for Adequate Protection Payments ---------------------------------------------------------- GECC asks the Court to order: A. Adequate protection payments [by PSINet, Inc., and its debtor-affiliates] to GECC in the amount of the decline of the value of its collateral from the Petition Date, and the release of the escrowed funds to GECC; and B. An administrative claim for GECC for the value of any collateral that was lost, or transferred by the Debtors to third parties without GECC's knowledge or consent. As previously reported, General Electric Capital Corporation (GECC), filed in November, 2001, GECC a Motion for relief from the automatic stay, or in the alternative, for adequate protection of its interest in the collateral. In its Motion, GECC asserted that it was entitled to adequate protection payments because the collateral was declining in value. The Motion was continued, and was eventually resolved by the entry of a Stipulation and Order establishing a provisional lien on the Debtor's cash for $1,685,826.00 in favor of GECC, plus an additional $187,314 per month thereafter. GECC previously objected to the Debtors' Joint Liquidating Plan of Reorganization on the grounds that it did not provide for the establishment of a separate escrow for GECC's adequate protection provisional lien. The Plan was modified so that a separate escrow was established in the amounts of GECC's provisional lien. GECC reiterates that it is entitled to adequate protection in the amount of the provisional lien/segregated escrow account, for the decline in value of its collateral during this case. The general rule, GECC avers, is that, for adequate protection purposes, a secured creditor's position as of the petition date is entitled to adequate protection against deterioration. GECC points out that its request for adequate protection was made about seven months before confirmation of the Debtors' Plan, while the Debtor still had possession, control and use of the collateral. GECC tells the Court that the Creditors Committee could have chosen to return the collateral, or a substantial portion of that collateral, to GECC. Instead, the Debtors and the Creditors Committee decided to hold on to the GECC collateral. This was presumably on the theory that the Debtor needed the GECC collateral in place to make the Debtors' businesses more attractive to potential purchasers, GECC continues. Having made that decision, and having received the benefits of the use of the GECC collateral during the course of the case, the Debtors and the Committee do not like to hear that the GECC collateral was of no benefit to them, GECC argues. Based on this, GECC asserts that it is entitled to an additional administrative claim for the value of any collateral lost, destroyed or unknowingly transferred to third parties during the course of this case. Also, the Debtor's Plan calls for the return of the GECC collateral in satisfaction of its secured claim, GECC reminds the Court. Some of the collateral has been abandoned by the Debtor. This abandonment process is continuing. Some of the GECC collateral cannot be found, and may have been lost by the Debtor or sold to various parties, GECC notes. GECC maintains that, if its collateral was lost during the course of the case, or unwittingly or unknowingly transferred by the Debtor to third-party purchasers without GECC's knowledge or consent, then GECC should be entitled to an administrative claim for the value of the lost/transferred collateral. At this point, GECC does not know how much of its collateral has been lost. To the extent that the adequate protection granted to GECC proved inadequate, GECC asserts that, pursuant to 11 U.S.C. 507(b), it is entitled to an administrative expense claim for the loss of its collateral. (PSINet Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service, Inc., 609/392-0900) R&S TRUCK BODY: Gets Nod to Use Cash Collateral Until July 25 ------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York granted R&S Truck Body Company authority to continue using its prepetition secured lenders' cash collateral until July 25, 2002. The Lenders agree to let the Debtor use their Cash Collateral in the ordinary course of business. R&S' Pre-Petition Lenders are: i) PNC Bank, National Association, ii) ING Capital LLC, fka ING (U.S.) Capital LLC, iii) Fleet Bank, iv) KeyBank National Association, v) Sovereign Bank, vi) OceanFirst Bank, vii) The Bank of New York, and viii) U.S. Bank, N.A., d/b/a FirstStar Bank, N.A. As a condition to the Lenders' consent, and to provide adequate protection to the Agent and the Lenders for the use of the Pre- Petition Collateral, the Debtor agree to: i) conduct a sale hearing of all its assets no later than July 12, 2002, ii) conduct a closing of the sale of the Debtor's assets no later than August 2, 2002; and iii) consent to a Monitor on-site to monitor the use of cash collateral and the sale of assets as set forth herein. With the Debtors' consent and the Court's blessing, the Lenders retained Policano & Manzo as the fiscal monitor for the Debtor. The Lenders agree to pay all of the Monitor's fees and expenses. The Monitor's role, responsibilities, and powers are: (a) To review and monitor all bank accounts of the Debtor including, but not limited to, (i) the review of check runs and (ii) confirmation that total checks cut equal the total check run; (b) To analyze all bank account transfers of the Debtor to confirm that only approved disbursements (payroll and accounts payable) have taken place; (c) To analyze each payroll run of the Debtor against recent actual for changes; (d) To report actual disbursements made by the Debtor by category against the Budget; (e) To have free and open access to review all bank accounts of the Debtor, its direct and indirect subsidiaries, and all related entities, wherever located, for purposes of monitoring the disbursements, withdrawals and deposits into such accounts; (f) To review all books, records and bank accounts of the Debtor and to monitor its accounts; (g) To approve, in advance (i) payment or disbursements of the Debtor in excess of $5,000 to any individual officer, director or employee, and (ii) any payment, disbursement or distribution to Standard. As further adequate protection to the Agent and the Lenders, the Debtor grants the Lenders a continuing, additional, first priority replacement lien and security interest in and to all of the now-existing or hereafter-arising or hereinafter-acquired assets of the Debtor as adequate protection of the Lenders' interest. R&S is a wholly-owned subsidiary of Barclay Investments, Inc., which is a wholly owned subsidiary of Standard Automotive Corporation, both of which filed for Chapter 11 relief on March 19, 2002. R&S designs, manufactures and sells customized, high end, steel and aluminum dump truck bodies, platform bodies, custom large dump trailers, specialized truck suspension systems and related products and parts. The Company filed for chapter 11 protection on June 3, 2002. J. Andrew Rahl Jr., Esq. at Anderson Kill & Olick, P.C. represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $27,093,513 in assets and $6,999,464 in debts. RESOURCE AMERICA: S&P Ups Corp. Credit & Sr. Unsec. Ratings to B ---------------------------------------------------------------- Standard & Poor's raised its corporate credit rating and senior unsecured ratings on Resource America, Inc. to single-'B' from single-'B'-minus. The outlook is stable. Resource America currently has approximately $138 million of debt outstanding. The ratings of Philadelphia, Pennsylvania-based Resource America reflect the earnings support provided by recurring earnings and a commitment to maintain a strong cash position. Resource America is a proprietary asset management company with interests in Appalachian natural gas and oil fields, real estate, and leasing. Of these, the most important is the oil and gas operations, which contributed roughly 77% of EBITDA for fiscal year-end 2001. Resource America's oil and gas operations are conducted through investment partnerships, which typically reduce Resource America's portion of drilling costs to an average 25% interest. Once drilling is completed, Resource America receives the benefit of an extra 7% interest in the partnership (33% in total), which yields a 29% interest in the well's production. Resource America's drilling program features low risk wells (98% success rate) and reliably producing properties with an average reserve life of 17.5 years. At 129 billion cubic feet equivalent (bcfe), its reserve pool is small; but good success rates plus slow and steady production, averaging 6.6 bcfe per year, should help maintain reserve and production levels. Finding and development costs net to Resource America are a low, $0.48 per million cubic feet equivalent (mcfe), reflecting the partnership structure of its drilling program, fees received for drilling the well, and reimbursements for general and administrative expenses. However, prior to these adjustments, gross finding and development costs would have averaged a very high $1.49 per mcfe. The stable outlook reflects the moderate debt leverage and the support of recurring income, dividends and service fees, to be maintained by the company. This is offset by high debt relative to earnings that limits future improvements in the rating. SVI SOLUTIONS: Obtains Bank Loan Extension Until August 31, 2002 ---------------------------------------------------------------- SVI Solutions, Inc. (Amex: SVI), a leading global provider of multi-channel application software technology and services for the retail industry, announced financial results for the fourth quarter and fiscal year ended March 31, 2002. For the quarter, the Company reported revenue of $6.6 million, an increase of 18 percent compared to the $5.6 million reported in the fourth fiscal quarter of last year. The Company reported income from continuing operations before stock-based compensation, depreciation, amortization, and impairment charges of $1.3 million compared to a loss of $5.2 million for the quarter ended March 31, 2001. The company reported a net loss of $4.6 million, a 76 percent reduction from the $18.8 million reported last year. For the fiscal year, the Company reported revenue of $27.1 million, compared to $27.7 million for the year ended March 31, 2001. The Company reported income from continuing operations before stock-based compensation, depreciation, amortization and impairment charges of $305,000 compared to a loss of $4.7 million for the year ended March 31, 2001. The Company reported a net loss of $14.7 million, approximately 50 percent reduction from the $28.9 million reported last year. The narrowing of the loss was primarily attributable to a 27 percent reduction in selling, general and administrative costs and a 21 percent reduction in application development expenses as the Company completed the soon-to-be-released upgrade of its retail software application, InFocus 2.0. The net loss included $4.6 million from discontinued operations. Last year, the Company reported a net loss of $3.7 million from discontinued operations. Barry Schechter, chief executive officer of SVI Solutions, Inc., commented, "The current economic challenges in the retail sector are challenges SVI addressed last year. SVI now finds itself well positioned for improved operating results for the balance of calendar 2002, both financially and technologically. When released during our current second quarter, we believe our new software applications will set the standard for functionality and value within the retail market segment. Moreover, the cost reductions and corporate belt-tightening others are now facing are steps SVI has already completed, leaving our organization leaner and more responsive to our customers' needs going forward. With our newfound focus, improved financial situation, and upgraded technology, I am optimistic about the coming year for SVI." SVI is currently launching InVision 1.5, an integrated application for the underserved smaller retailer. This solution will provide the entrepreneurial retailer with mission critical applications currently used by their larger competitors. Since the return of Mr. Schechter to the chief executive officer position in October 2001, SVI has restructured total debt from $21.7 million to $8.9 million. The Company expects to realize a decrease in interest expense in the coming quarters from the restructuring. Additionally, SVI has renegotiated an extension on its bank loan to August 31, 2003. The Company has also renegotiated a $1.25 million interest bearing note and warrants associated with a previous equity offering. The note was extended by two years and the interest rate reduced from 17 percent to 8 percent. In return the conversion price was reduced and warrants were reduced from 3.0 million to 1.6 million. Mr. Schechter continued, "We are pleased with the progress accomplished in the past number of months. While we are aware that there is still a good deal more to be accomplished, we are optimistic that the fundamentals of the Company position SVI to become the market leader in the fastest growing segment of the retail technology market." SVI's retail divisions provide multi-channel technology solutions to retail market segments. The company's suite of offerings includes store systems as well as enterprise management, merchandising and direct-to-consumer solutions. Complementing these offerings, the Company provides an expansive menu of professional services including consulting and implementation services, as well as technical and project management services. SVI's subsidiary, SVI Training Products, is a leading provider of state-of-the-art PC courseware, customization tools and skills assessment software for educational institutions and government entities. Headquartered in Carlsbad, CA, SVI maintains offices in the United States and the United Kingdom. Its worldwide customer base includes major retailers such as American Eagle Outfitters, Charming Shoppes, Pacific Sunwear, Signet, Limited, Vans and Nike. More information about SVI can be obtained on their Web site at http://www.svisolutions.com SVI's December 31, 2001, balance sheet shows that the company's total current liabilities exceeded its total current assets by about $13 million. STARBAND COMMS: US Trustee Appoints Official Creditors Committee ---------------------------------------------------------------- Donald F. Walton, the Acting United States Trustee for Region III, appoints a three-member Official Committee of Unsecured Creditors in Starband Communications, Inc.'s on-going chapter 11 case. The three Committee members are: 1. Clicksoftware, Inc. 655 Campbell Technology Parkway Suite 250, Campbell, CA 95008 Attn: Trevor Scott Seethaler Tel: 408-377-6088 Fax: 208-330-2249; 2. Channel Master 1315 Industrial Park Drive Smithfield, NC 27577 Attn: John G. Barry Tel: 919-989-1717 Fax: 919-989-2204; and 3. The Sutherland Group 1160 Pittsford Victor Road Pittsford, NY 14534 Attn: Jeffrey Fasoldt Tel: 716-586-5757 x 2453 Fax: 716-784-2212. StarBand Communications Inc., currently provides two-way, always-on, high-speed Internet access via satellite to residential and small office customers nationwide. The Company filed for chapter 11 protection on May 31, 2002. Thomas G. Macauley, Esq., at Zuckerman and Spaeder LLP represents the Debtor in its restructuring efforts. When the Company filed for protection form its creditors, it listed $58,072,000 in assets and $229,537,000 in debts. SUN HEALTHCARE: Obtains Final Decree Closing Subsidiary Cases ------------------------------------------------------------- Judge Walrath authorizes the closing of the Reorganized Sun Healthcare Group, Inc.'s subsidiary cases effective June 26, 2002 while the lead case, Case No. 99-3657 of Sun Healthcare Group, Inc. will remain open until further order of the Court. Judge Walrath also states: (a) The Reorganized Debtors in the Subsidiary Cases and the Lead Case will pay the United States Trustee $61,000 for the 2002 first quarter fees in both the Lead and Subsidiary Cases, and $51,000 for the second quarter fees in the Subsidiary Cases. The payment of the fees will be without prejudice to the position of the U.S. Trustee that additional fees are due in the Subsidiary Cases, which is the subject of a dispute to be resolved by the Court at a later date; (b) the Reorganized Debtors will deposit the additional sum of $899,250 into the segregated account established in the Confirmation Order, representing the disputed amount of quarterly fees for the Subsidiary Cases for the first and second quarters of 2002. This is provided, however, that the deposit of these funds are without prejudice to either the position of the U.S. Trustee that additional fees may be due in the Subsidiary Cases or the position of the Reorganized Debtors that no additional fees are owed; (c) The Reorganized Debtors must file a quarterly report with the U.S. Trustee for the first quarter of 2002 on or before July 10, 2002; (d) No quarterly fees will accrue in the Subsidiary Cases after June 26, 2002; and (e) This Court will retain jurisdiction over all matters relating to the Subsidiary Cases under the caption of the Lead Case, including, without limitation, the determination of the amount of quarterly U.S. Trustee fees due in all cases, all adversary proceedings and all matters described in Section 11.1 of the Plan of Reorganization. (Sun Healthcare Bankruptcy News, Issue No. 40; Bankruptcy Creditors' Service, Inc., 609/392-0900) THOMSON KERNAGHAN: Canadian Court Names Ernst & Young as Trustee ---------------------------------------------------------------- The Honourable Mr. Justice Cameron of the Ontario Superior of Justice issued a Court Order on July 12, 2002 adjudging Thomson Kernaghan bankrupt and appointing Ernst & Young Inc., as Thomson Kernaghan's Trustee in Bankruptcy. Pursuant to the Court Order, Ernst & Young Inc. has taken control of Thomson Kernaghan's property and operations, including customer accounts, and is working with the Canadian Investor Protection Fund to determine the extent to which CIPF funding will be required to facilitate the transfer of Thomson Kernaghan's customer accounts to other investment dealers. The Trustee confirmed that prior to the bankruptcy Thomson Kernaghan's management team had developed a plan to voluntarily wind up Thomson Kernaghan's retail operations. The plan included the transfer of the customer accounts to other securities firms. Thomson Kernaghan had taken the initial steps to implement this plan but determined late last week that it did not have sufficient short-term cash to cover all client credit balances. As a result, the Investment Dealers Association suspended Thomson Kernaghan from dealing with the public and asked CIPF to safeguard Thomson Kernaghan's customers. Accordingly, CIPF sought and obtained a Court Order appointing the Trustee, which activated CIPF's ability to provide emergency funding to cover asset deficiencies in customer accounts. With financial assistance from CIPF, the Trustee intends to resume the transfer of customer accounts to other stockbrokers later this week with a view to completing the transfer of most customer accounts within the next two to three weeks. The Trustee confirms that its top priority is moving customer assets and accounts to solvent dealers as quickly as possible so that Thomson Kernaghan's customers can regain control over their accounts. In the meantime, although no withdrawals can be made from a Thomson Kernaghan account until it has been transferred, customers may request emergency liquidating trades (for example, sell orders) to convert securities in their accounts to cash. Customers wishing to request a liquidating trade may call (416) 860-6109 to reach an authorized representative. General customer inquiries should be directed to (416) 943-2156. A procedure is also in place to respond to urgent requests for compassionate payments necessary for immediate living expenses or specific events, such as closing the purchase of a home or other major asset. These requests should be made through the general customer inquiry number, above. Requests for compassionate payments must be accompanied by appropriate documentation so that the request can be evaluated. Clients who normally receive RRIF payments do not need to make a specific request for compassionate payment; these will be paid automatically by the Trustee. TIMCO AVIATION: Completes Outstanding Senior Debt Refinancing ------------------------------------------------------------- TIMCO Aviation Services, Inc. (OTC Bulletin Board: TMAS), has completed the refinancing of all of its outstanding senior debt. As part of the refinancing, a group of lenders led by Citicorp USA, Inc. and UPS Capital as co-agents provided the Company with a $30 million revolving credit facility and a $7.0 million term loan, both due on January 31, 2004. The new facilities were used to repay a previously outstanding $12 million senior term loan. As part of the refinancing, the Company also restructured its tax operating retention lease (TROL) financing with Bank of America. The restructured TROL loan, which is a $25.2 million capital lease liability, is now a three-year facility. The Company further refinanced its outstanding $10 million senior loan due to Bank of America as to which four of its stockholders had previously provided credit support. With respect to this loan, $6.0 million of the loan was extended until January 31, 2004, $1.5 million was repaid through a transfer of real estate to one of the guarantors and the remaining $2.5 million remains due on August 14, 2002. C. Robert Campbell, the Company's Chief Financial Officer, stated: "We are pleased to complete the refinancing of all of our senior debt. This senior debt refinancing extends our short-term senior debt to long term. The senior debt refinancing, along with the February bond exchange and equity rights offering, completes the financial restructuring of TIMCO. We are very pleased to continue our relationship with Citicorp USA, Inc. and we welcome UPS Capital to our senior lending group." TIMCO Aviation Services, Inc., (formerly known as Aviation Sales Company) is among the largest providers of fully integrated aviation maintenance, repair and overhaul (MR&O) services for major commercial airlines and maintenance and repair facilities in the world. The Company currently operates four MR&O businesses: TIMCO, which, with its three active locations, is one of the largest independent providers of heavy aircraft maintenance services in North America; Aerocell Structures, which specializes in the MR&O of airframe components, including flight surfaces; Aircraft Interior Design, which specializes in the refurbishment of aircraft interior components; TIMCO Engineered Systems, which provides engineering services to our MR&O operations and our customers; and TIMCO Engine Center, which refurbishes JT8D engines. TRI-UNION: S&P Junks $130MM Senior Notes Following Agreement ------------------------------------------------------------ Standard & Poor's assigned its double-'C' rating to independent oil company Tri-Union Development Corp., and assigned its triple-'C'-minus rating to Tri-Union's $130 million senior secured notes due 2006, following an agreement with note holders to accept additional promissory notes in lieu of payment of $8.1 million of interest due June 1, 2002. The outlook is negative. Houston, Texas-based Tri-Union has about $118 million in outstanding debt. Tri-Union was forced to defer the June 1st interest payment of $8.1 million on its senior secured notes due to insufficient funds on hand. At that time a 'D' rating was assigned to the notes and the company. Concerns remain about Tri-Union's ability to meet future debt and interest payments given its large debt load and dependence on asset sales to meet financial commitments. Standard & Poor's believes that there is a high probability that Tri-Union will be unable to honor its current obligations on a timely basis. The negative outlook reflects the need for asset sales to meet debt obligations, and the uncertainty of the outcome of these sales. Upon the completion of the company's on- going asset restructuring, or a portion thereof, the ratings on Tri-Union will largely depend on its very weak ability to meet near and intermediate-term debt amortization and financial charges. U.S. CELLULAR: June 30 Working Capital Deficit Tops $7 Million -------------------------------------------------------------- United States Cellular Corporation (Amex: USM) reported service revenues of $501.2 million for the second quarter of 2002, up 9% from $461.2 million in the comparable period a year ago. Operating cash flow (operating income plus depreciation and amortization expense) increased 6% to $176.5 million from $166.6 million in the second quarter of 2001. Basic earnings per share determined under Generally Accepted Accounting Principles (GAAP) was a loss of $1.04 compared to income of $.66 in the second quarter a year ago. Basic earnings per share from operations, excluding after-tax losses from the writedown in value of marketable equity securities of $145.6 million in 2002, was $.66 compared to $.66 in the second quarter a year ago. Also, the Company's June 30, 2002, balance sheet shows that the company total current liabilities eclipsed its total current assets by around $7 million. John E. Rooney, President and Chief Executive Officer, commented: "Our second quarter performance was very close to plan, despite a tough economy and a very competitive wireless marketplace. As in the first quarter, we saw an encouraging upward trend in both net customer additions and revenues as we moved through the quarter. Monthly retail revenue per customer continued to increase year over year, leading to an increase in overall monthly revenue per customer. Our strategy of focusing on customer satisfaction and profitable growth continued to pay off. Postpay churn for the quarter remained low at 1.7%, which is very favorable to industry averages. "At the end of the first quarter, we rolled out a new inventory management system. Among its benefits are better control over handset quality and roaming preferences and the ability to pass along quantity discounts to customers and third-party agents. These changes resulted in an increase in equipment sales revenue and cost of equipment sold during the quarter. We anticipate that these increases will continue going forward." As previously disclosed, U.S. Cellular recognized an "other than temporary" investment loss of $244.7 million ($145.6 million net of tax) on its marketable equity securities. The recognition of this loss had no impact on cash flows. U.S. Cellular adjusts the value of its marketable equity securities on a regular basis to ensure that its balance sheet always reflects the current market value of those securities. Management continues to review the valuation of these investments periodically. U.S. Cellular adopted Statement of Financial Accounting Standards ("SFAS") No. 142 effective January 1, 2002, and ceased the amortization of license costs and goodwill on that date. For the three months ended June 30, 2001, amortization of license costs and goodwill included in U.S. Cellular's amortization of intangibles caption totaled $8.8 million. The aggregate effect of ceasing amortization increased net income and earnings per basic share for such period by $6.2 million and $.07, respectively. The amounts reported for "operating cash flow" do not represent cash flows from operations as defined by GAAP and amounts reported for "basic earnings per share from operations" do not represent earnings per share determined in accordance with GAAP. U.S. Cellular believes that these are useful measures of its performance but they should not be construed as alternatives to performance measures determined under GAAP. Based in Chicago, U.S. Cellular manages and invests in wireless systems throughout the United States. As of June 30, 2002, U.S. Cellular included operational systems serving 148 cellular and PCS markets in its consolidated operations. VELOCITA INC: U.S. Trustee Names Creditors to Official Committee ---------------------------------------------------------------- Donald F. Walton, the Acting United States trustee for Region 3, names three creditors to an Official Unsecured Creditors Committee in the Chapter 11 cases involving Velocita, Inc., and its debtor-affiliates. Pursuant to Section 1102(a)(1), the U.S. Trustee appoints: a) Kurt Pletcher Equinix, Inc. 2450 Bayshore Parkway Mt. View, CA 94043 Tel: 650 316 6000 Fax: 650 316 6909 b) Ken Trawick Northern Line Layers, Inc. 6780 Trade Center Avenue Billings, MT 59101 Tel: 406 652 1759 Fax: 406 656 5172 c) Deborah J. Clark C&B Associates Ltd. PO Box 310 Mineral Wells, TX 76068 Tel: 940 682 4213 ext. 224 Fax: 940 682 7309 to serve on the Official Committee. Robert E. Nies, Esq. at Wolff & Samson represents the Creditors' Committee in these proceedings. Velocita Corp., is in the business of building a nationwide broadband fiber-optic network aimed at serving communications carriers, internet service providers, data providers, television and video providers, as well as corporate and government customers. The Company filed for chapter 11 protection on May 30, 2002 in the U.S. Bankruptcy Court for the District of New Jersey. Howard S. Greenberg, Esq., Morris S. Bauer, Esq., at Ravin Greenberg PC and Gary T. Holtzer, Esq., at Weil, Gotshal & Manges LLP represent the Debtors in their restructuring efforts. As of March 31, 2002, the Company listed $482,807,000 in total assets and $827,000,000 in total debts. VISKASE: Executes Debt Workout Agreement with Ad Hoc Committee -------------------------------------------------------------- Viskase Companies, Inc. (Nasdaq: VCIC), has executed a restructuring agreement with an Ad Hoc Committee of the Company's 10.25% Senior Notes due December 1, 2001 for the restructuring of the Senior Notes. Under the terms of the proposed restructuring, the Company's wholly owned operating subsidiary, Viskase Corporation, will be merged with and into the Company with the Company being the surviving corporation. The outstanding Senior Notes would be exchanged for new Senior Secured Notes and shares of Series A Preferred Stock to be issued by the Company on a basis of $367.96271 principal amount of New Notes (i.e., $60,000,000) and 126.82448 shares of Preferred Stock (i.e., 20,680,000 shares or 94% of the preferred stock) for each $1,000 principal amount of Senior Notes. Under the proposed restructuring, the Company will continue to provide an uninterrupted supply of products and services to customers worldwide. Trade creditors and vendors will be totally unaffected and will continue to be paid in the ordinary course of business, and the Company's employees will be paid all wages, salaries and benefits on a timely basis. The New Notes would bear interest at a rate of 8% per year, payable semi-annually (except annually with respect to year four and quarterly with respect to year five), with interest payable in principal amount of New Notes for the first three years (pay- in-kind). Interest for years four and five will be payable in cash to the extent of available cash flow, as defined, and the balance in principal amount of New Notes (pay-in-kind). Thereafter, interest will be payable in cash. The New Notes would mature on December 1, 2008. The New Notes would be secured by a first lien in the assets of the Company, post-merger. The New Notes will be subject to subordination of up to $25 million for a secured working capital credit facility for the Company. The Preferred Stock will pay a 6% cumulative dividend. Its holders will vote on an as-converted basis on all matters together with the Company's common stockholders. The Preferred Stock will have a liquidation preference of $5.00 per share and will be convertible into common stock at any time at a price of $.20 per share. Upon conversion, the Preferred Stock would represent about 97% of the common stock. Accrued but unpaid dividends, at time of conversion, will be convertible into common stock upon the same basis. At the Company's option, the Preferred Stock would be automatically converted into common stock on the same basis in connection with a public offering of securities by the Company of not less than $50 million. Dividends on the Preferred Stock would be payable in cash to the extent the Company is legally, contractually and financially able to pay dividends. Under the proposed restructuring, 1.32 million shares of Preferred Stock (or upon the request of Company management, options to purchase 1.32 million shares of Preferred Stock), representing 6% of the Preferred Stock, will be reserved for Company management. Such shares or options will be subject to a vesting schedule with acceleration upon the occurrence of certain events. The proposed exchange offer would be subject to acceptance by holders of 100% of the outstanding Senior Notes, unless waived by the Company and approved by the Ad Hoc Committee. The Ad Hoc Committee members, holding in the aggregate approximately 54% of the Senior Notes, have agreed to accept the proposed exchange offer. The exchange offer would include a solicitation for a Chapter 11 plan for the Company. If less than 100% of the outstanding Senior Notes accept the exchange offer but sufficient Senior Notes are exchanged to satisfy the voting requirements for acceptance of a Chapter 11 plan, the Company will commence a voluntary Chapter 11 proceeding and submit a Chapter 11 plan containing substantially the terms set forth in the exchange offer. In the event the exchange offer is consummated through a bankruptcy proceeding, the Company's common stock will be canceled and new common stock will be issued, 94% to the holders of Senior Notes and 6% to the Company's management. Holders of old common stock would receive warrants to purchase shares of new common stock equal to 2.7% of the Company's common stock. Assuming all warrants are exercised, holders of the Senior Notes would receive approximately 91.5% of the new common stock and approximately 5.8% would go to the Company's management. Thus, the consideration received by all noteholders would be substantially the same regardless of whether the proposed restructuring occurs pursuant to an exchange offer or prepackaged Chapter 11 plan. Upon completion of the proposed restructuring the Board of Directors of the Company would be reconstituted to consist of five members, including the Company's Chief Executive Officer and four other persons designated by the Ad Hoc Committee. The members of the Ad Hoc Committee have agreed to support the proposed restructuring, including exchanging their Senior Notes and take such other reasonable actions as necessary to consummate the proposed restructuring. In addition, the members of the Ad Hoc Committee have agreed not to transfer (other than to another member of the Ad Hoc Committee or an affiliate of a member) their shares of Preferred Stock for a period of two years after the exchange offer is completed. For a period of one year thereafter, the Company would have a right of first refusal to either purchase or designate a purchaser for shares of Preferred Stock to be transferred by a member of the Ad Hoc Committee to a person other than another member of the Ad Hoc Committee or their affiliates. Viskase Companies, Inc., has its major interests in food packaging. Principal products manufactured are cellulosic and nylon casings used in the preparation and packaging of processed meat products. WILLIAMS COMM: Wants to Enjoin Claim Transfers to Preserve NOLs --------------------------------------------------------------- Williams Communications Group, Inc., its debtor-affiliates and the Official Unsecured Creditors' Committee ask for authorization, pursuant to Sections 362 and 105(a) of the Bankruptcy Code, to notify holders of claims against the Debtors that certain transfers of their claims are enjoined by virtue of the automatic stay. They also want to notify the Claimants of the procedures that must be satisfied before certain sales or transfers may be deemed effective. Specifically, the notice procedures will advise Claimants of the following: * Any person or entity who does not own any Company Claims, or who owns less than $200,000,000 in the aggregate face amount of Company Claims, is stayed, prohibited, and enjoined, from purchasing, acquiring, or otherwise obtaining Ownership of an amount which, when added to that person's or entity's total Ownership, equals or exceeds $200,000,000 in the aggregate face amount of claims; * Except as otherwise specifically provided by an authorized resolution of the Company's Board of Directors, any person or entity who owns Company Claims equal to or exceeding $200,000,000 in the aggregate face amount, and proposes or intends to sell, acquire, trade, or otherwise transfer or effectuate any claims, must file with this Court and serve on the Debtor, counsel to the Debtor, and Counsel to the Committee, a Claims Trading Notice at least 30 days prior to the transaction. After receipt of the Trading Notice, the Debtors will have 30 days to object to the transaction. If the Debtors file an objection, then the transaction will not be effective unless approved by the Court. If the Debtors do not object during the Waiting Period, then the transaction may proceed as set forth in the Claims Trading Notice. * For purposes of this motion, "Ownership" of a claim against the Debtor will include, direct and indirect ownership, ownership by members of the person's family and persons acting in concert, and in certain cases, the creation or issuance of an option, and any variation of the term "Ownership" shall have the same meaning. According to Fordham E. Huffman, Esq., at Jones Day Reavis & Pogue in New York, the Debtors currently estimate that, upon emergence from Chapter 11, it will have tax net operating losses (NOLs) of $1,300,000,000 and built-in losses of $2,800,000,000. Under the Plan, the reorganized entity will succeed to these NOLs. The NOLs are a valuable asset of the Debtors estate, which they intend to utilize to offset future income and thereby significantly reduce New WCG's federal income tax liability, under applicable rules of the Internal Revenue Code. Under the IRC, the ability of a reorganized debtor to use its NOLs to offset taxable income is significantly limited unless the bankruptcy exception under IRC Section 382(l)(5) applies. Under the Bankruptcy Exception, Mr. Huffman explains that if at least 50% of the stock of the debtor after reorganization is received by existing shareholders or "qualified creditors," a debtor's ability to utilize its NOLs without restriction is preserved. "Qualified creditors" are creditors who have held their claims against the debtor for more than 18 months before the petition date or who acquired claims in the ordinary course of the debtor's business and have held those claims since they arose. In determining whether the Bankruptcy Exception is satisfied, Mr. Huffman submits that creditors who directly or indirectly own less than 5% of the stock of the reorganized entity pursuant to a plan of reorganization, and who have received their interests as a result of holding claims arising more than 18 months prepetition or in the ordinary course of the debtor's business, are generally presumed to be "qualified creditors." In order to preserve the benefit of this presumption, the Debtors need to restrict transfers that would create new 5% holders or add to the holdings of existing 5% holders. Specifically, in the Debtors' case, it is anticipated that the smallest claim that could be reasonably anticipated to lead to a distribution of 5% of the reorganized entity would be $200,000,000. In addition, proposed amendments to the Plan will provide for the disallowance of claims to the extent that they would entitle the holder to a distribution of 5% or more of the value of the reorganized entity. To preserve the benefit of its NOLs through the Bankruptcy Exception, therefore, and to give fair notice to potential purchasers of claims about the risk of disqualification, transfers of claims that would result in the transferee holding claims equal to or exceeding $200,000,000 in the aggregate face amount must be made subject to the Approval Procedures. With respect to existing creditors who already hold at least $200,000,000 in the aggregate face amount of the Debtors' claims, Mr. Huffman states that they must be identified and their trades must also be monitored, to ensure that the holdings of, and transfers in the aggregate by holders do not trigger the disqualification. WCG's claims are widely held. Unless the Court authorizes the trading restrictions set forth herein to assure that the conditions of the Bankruptcy Exception are observed, WCG may substantially lose the benefits of its NOLs as a result of claims trading by creditors. Mr. Huffman contends that the proposed injunction and notice and approval procedures are necessary to preserve the Debtors' NOLs, which are a valuable asset of the Debtor's estate. The Debtors' ability to meet the requirements of the tax laws in order to preserve its NOLs may be seriously jeopardized unless procedures are established to ensure that trading in certain claims against the Debtor is precluded, and trading in other claims against the Debtor is closely monitored. Using current projections, the Debtor estimates that New WCG can use the NOLs to offset future income and eliminate significant income tax liability. Thus, Mr. Huffman concludes that the NOLs are clearly a valuable asset of the Debtor's estate and are entitled to the protection of the automatic stay. Furthermore, because maintenance of the NOLs is critical to the Debtors' prospects for a successful emergence from Chapter 11, the exercise of this Court's equitable powers under Section 105(a) is appropriate. Mr. Huffman assures the Court that the Debtors and the Committee are not seeking to bar the trading of all claims. Rather, the relief requested is narrowly tailored to permit certain claims trading to continue, subject only to Rule 3001(e) of the Federal Rules of Bankruptcy Procedure and applicable securities, corporate, and other laws. Furthermore, the Debtors and the Committee are only seeking to enforce the provisions of the automatic stay with respect to certain types of claims which pose serious risk under the ownership change tests, and to monitor other types of unsecured claims trading which could pose serious risk so the Debtor can preserve its ability to seek relief at the appropriate time if its appears that the proposed trade will jeopardize the unrestricted use of the NOLs. (Williams Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-0900) Williams Communications Group Inc.'s 10.875% bonds due 2009 (WCG2), DebtTraders says, are quoted at a price of 8.5. See http://www.debttraders.com/price.cfm?dt_sec_ticker=WCG2for real-time bond pricing. WILLIAMS CONTROLS: Inks New Credit Agreement with Wells Fargo ------------------------------------------------------------- Williams Controls, Inc., has entered into a new five-year revolving credit and term loan agreement with its existing primary lender, Wells Fargo Credit, Inc. The Company's prior loan agreement with Wells Fargo expired in July 2001 and the Company had been operating under a series of forbearance agreements with Wells Fargo since that time. Under the terms of the new loan agreement, Wells Fargo has agreed to loan the Company an aggregate principal amount of up to $12,200,000, consisting of a revolving credit line of up to $10,000,000 and two term loans in the aggregate principal amount of $2,200,000. This does not represent any increase in the amounts available under the Company's prior loan agreement with Wells Fargo. The proceeds from the revolving credit line may be used for ongoing working capital purposes. The proceeds from the term loans are to be used to restructure existing loans with Wells Fargo. The Company's obligations to Wells Fargo under the Loan Agreement are secured by a first priority lien on all of its business assets. Williams Controls' biggest business is making electronic throttles, exhaust brakes, and pneumatic controls for trucks and other heavy equipment. Other operations include microcircuits, cable assemblies (Aptek Williams), and global positioning systems (GeoFocus -- which Williams Controls is selling). The company also makes plastic parts (Premier Plastic Technologies, which is being sold) and compressed natural gas conversion kits for cars (NESC Williams). Major customers include Freightliner, Navistar, and Volvo. Former CEO Thomas Itin owns 30% of Williams Controls, which has put itself up for sale. WILLIAMS CONTROLS: Reaches Pact to Amend 7.5% Conv. Debentures -------------------------------------------------------------- On July 1, 2002, Williams Controls, Inc., and the holders of the Company's outstanding 7.5% Convertible Subordinated Debentures Due March 31, 2003 agreed to certain amendments to the Debentures. The material amendments to the Debentures included an increase in the interest rate from 7.5% to 12% per annum for the first year following the Effective Date and 15% after the first anniversary of the Effective Date, an extension of the maturity date from March 31, 2003 to July 1, 2004, the elimination of the conversion provisions and the elimination of certain registration rights related to the shares previously issuable upon conversion of the Debentures. Williams Controls' biggest business is making electronic throttles, exhaust brakes, and pneumatic controls for trucks and other heavy equipment. Other operations include microcircuits, cable assemblies (Aptek Williams), and global positioning systems (GeoFocus -- which Williams Controls is selling). The company also makes plastic parts (Premier Plastic Technologies, which is being sold) and compressed natural gas conversion kits for cars (NESC Williams). Major customers include Freightliner, Navistar, and Volvo. Former CEO Thomas Itin owns 30% of Williams Controls, which has put itself up for sale. WORLDCOM INC: Misses Payment of $74 Million Interest Due Monday --------------------------------------------------------------- Dow Jones has reported that WorldCom Inc., didn't make a total of about $74 million in interest payments due Monday, July 15, 2002, on two bond issues, said an official for JP Morgan - the trustee on the issues. According to the newswire, the telecommunications company had about $36.9 million each in interest due on its 7-3/8 percent notes due January 15, 2003 and the 7-3/8 percent notes due on January 15, 2006. WorldCom now has a 30-day grace period after missing the payments to make good on them or be found in default, reported the newswire. Dow Jones reported that many market observers had expected the company to miss the payments as it faces possibly the largest chapter 11 filing in U.S. history. WorldCom values its assets at $104 billion. (ABI World, July 16, 2002) WORLDCOM INC: Fitch Further Junks Senior Unsecured Debt Rating -------------------------------------------------------------- Fitch Ratings has downgraded the senior unsecured debt ratings for WorldCom, Inc. to 'C' from 'CC'. The rating on its preferred securities has been downgraded to 'C' from 'CC'. The quarterly income preferred securities (QUIPS), currently under an interest deferral, remain at 'C'. The rating action also applies to Intermedia Communications senior unsecured debt, which has been downgraded to 'C' from 'CC'. The ratings on Intermedia's preferred securities have been lowered to 'C' from 'CC'. All of the company's ratings remain on Rating Watch Negative. This rating action follows the company's failure to make a scheduled interest payment on approximately $2.1 billion of debt reflecting Fitch Ratings' policy. The company has a 30-day grace period to make the interest payment before Fitch considers it an event of default. WORLDCOM INC: Suit Filed by Banks Transferred to Federal Court -------------------------------------------------------------- DebtTraders reports that the suit filed against WorldCom by 25 of the 27 banks representing $2.5 billion of a $2.65 billion loan was transferred Tuesday from the New York State Supreme Court to the US District Court Southern District of New York. As previously reported, WorldCom's banks filed a temporary restraining order in an attempt to prohibit the Company from using its cash. This most likely marks a breakdown in talks with the banks for new credit facility and increases the likelihood that the Company will file for bankruptcy protection in the near term. We believe that a new secured bank loan would be detrimental to bondholder value and therefore view the breakdown in talks as a positive credit event. According to DebtTraders analysts Daniel Fan, CFA, and Blythe Berselli, CFA, WorldCom Inc.'s 6.95% Bond due 2006 was last quoted at a price of 37.5. For real-time bond pricing, see http://www.debttraders.com/price.cfm?dt_sec_ticker=WCOM06USR1 WORLDCOM: Where, Oh Where, Will WorldCom File for Bankruptcy? ------------------------------------------------------------- With $104 billion of assets on its balance sheet, WorldCom will rank as the largest chapter 11 filing in U.S. history if it tumbles into bankruptcy court. Enron and Texaco will vie for the No. 2 slot, depending on the yardstick used to measure. Where would WorldCom file for bankruptcy? WorldCom is based in Mississippi, incorporated in Georgia, and has affiliates in scores of other jurisdictions. They're qualified under 28 U.S.C. Sec. 1408 to file almost anywhere. If they follow Judge Gonzalez's logic, when asked to opine about the propriety of Texas-headquartered Enron filing for bankruptcy in Manhattan, New York is the most convenient city in the world. WorldCom and its affiliated companies, like the Enron debtors, has a global presence. The Southern District of New York makes the most sense. WorldCom is being advised by a team -- army, perhaps -- of lawyers led by Marcia Goldstein, Esq., at Weil, Gotshal & Manges LLP. Goldman Sachs is providing WorldCom with financial advisory services at this time. WorldCom has reportedly secured a proposal for up to $2 billion debtor-in-possession super-priority financing facility backed by J.P. Morgan Chase & Co., Citigroup Inc., and General Electric Capital Corp. There's no indication to what extent, if any, the new DIP financing facility contemplates a roll-up of any existing bank debt. Currently, WorldCom's bank lenders are general unsecured creditors. DIP financing, of course, is accorded superpriority secured status under 11 U.S.C. Sec. 364 and recovers the estate's first fruits in a bankruptcy proceeding. As reported in Monday's edition of the Troubled Company Reporter, 25 of WorldCom's 27 lenders under the $2.65 billion loan facility filed suit in the New York Supreme Court. That suit asks the Court to impose a constructive trust on all traceable funds and send those funds back to the Lenders. The Lenders say they were defrauded. The case has been transferred to the U.S. District Court for the Southern District of New York, the Honorable Jed Rakoff presiding. If Judge Rakoff grants the Bank's request or freezes funds on a temporary basis, WorldCom would probably be forced to file for chapter 11 protection in a matter of hours or days, based on reports about WorldCom's cash position circulating last month. Eleventh-hour reports suggest that a deal is in the works under which WorldCom will agree to restrict spending the loan proceeds. Semi-annual interest payments were payable on July 15 to holders of the Company's: * $1 billion of 7.375% Notes due 2003 and * $1 billion of 7.735% Notes due 2006, for which J.P. Morgan serves as Indenture Trustee; and * $124 million of 8.500% Notes due 2008 for which Sun Trust Bank serves as Indenture Trustee. WorldCom didn't make those payments, triggering 30-day grace periods that would expire August 14. Another payment is due on July 20 to holders of $200 million of 8.25% Notes due 2023. Various bondholders have filed securities fraud lawsuits against the Company. WorldCom common stock now trades at less than one cent per share. Scads of shareholder securities fraud lawsuits are pending against the Company, Bernard J. Ebbers, Scott D. Sullivan, other officers and directors, Arthur Andersen, and everybody else the plaintiffs' lawyers think might contribute a dime to a settlement fund. WORLDWIDE WIRELESS: Jury Awards 1st Universe $330,000 in Suit ------------------------------------------------------------- Worldwide Wireless Networks Inc. (OTCBB: WWWN), provided an update on the progress of a lawsuit involving a former reseller, 1st Universe. As previously announced, WWWN has been defending a court case filed February 6, 2001 in the Orange County Superior Court, Santa Ana, California by Bidna and Keys on behalf of 1st Universe and is pursuing a counter suit by WWWN against 1st Universe. Avila and Peros are defending WWWN in the 1st Universe suit as well as representing them in the counter suit that was filed in the same Court on May 30th, 2001. The initial trial date had been delayed due to numerous issues and did not begin until June 24th. The first phase of the proceedings were recently completed with a jury finding in favor of 1st Universe on several counts and WWWN on one. The current jury verdict awards 1st Universe approximately $330,000 and there are three additional causes of action filed by WWWN against 1st Universe that have yet to be heard. The judge, as opposed to a jury, will be determining the remainder of the case. "Unfortunately, we were unsuccessful in presenting our evidence to the jury," stated Mr. Jerry Collazo, President and acting CEO of Worldwide Wireless Networks. "Once the outcome of all the causes of action are known, we will determine the most appropriate action to ensure that any potentially negative impact will be minimized and have the least possible effect on on-going operations. It is important to note that the current level of judgment represents only about 5% of our total debt. While the final amount of this new debt represents a small portion of our total debt, it reinforces our previously stated need to restructure. As the Company is generating positive cash flows on unencumbered ongoing operations, we expect to remain fully operational. But, the need to restructure the total debt load of the Company will put at risk equity value for all shareholders. Whatever decision is finally made, it is the intent of the Company's management to preserve as much shareholder equity as possible throughout any debt restructuring process." Worldwide Wireless Networks is a data-centric wireless communications company headquartered in Orange, California. The Company specializes in high-speed, broadband Internet access using an owned wireless network. Other products and services include frame relay, collocation services and network consulting. The Company serves all sizes of private and public sector accounts. For more information, visit them on the Web at http://www.wwwn.com * * * As reported in Troubled Company Reporter's June 14, 2002, edition, Worldwide Wireless said that while the Company has been able to fund current recurring operations without the support of outside investment, much of the old debt carried forward has not been serviced. This past debt amounts to more than $5 million and the majority of this old debt is either overdue or in default. Even though the Company has been able to manage it's creditor relationships and has not been forced into any extreme actions, the old debt continues to place the Company in a vulnerable position as creditors could change their positions without notice. As previously reported, the Company is evaluating various options to restructure this debt but the choices are limited and this situation continues to require the Company to use the "going concern" designation. XO COMMS: Court Approves Ernst & Young for Accounting Services -------------------------------------------------------------- XO Communications, Inc., sought and obtained authority to retain and employ Ernst & Young LLP, pursuant to sections 327(a), 328 and 330 of the Bankruptcy Code, to provide certain audit, accounting, tax, and related services as of the petition date. The Debtor has selected E&Y because of its extensive expertise and knowledge in the fields of auditing, accounting, and tax. In connection with the Debtor's retention of E&Y, G. Anthony Hahn will serve as Audit Partner, G. Ross Kearney will serve as Tax Partner, Sam T. Block will serve as Audit Manager, and Cynthia Jefferson will serve as Tax Manager. The primary E&Y professionals assigned to the Debtor have provided professional services to the Debtor since 1998, and have audited the financial statements of the Debtor since fiscal 1998. The primary E&Y professionals assigned to the Debtor have also performed tax compliance and advisory services in connection with the preparation of the Company's income tax returns. The Debtor expects E&Y to: (1) attest and audit services, including, but not limited to, the rendering of an audit of the Company's consolidated balance sheet and related consolidated statements of operations and cash flows for the year ending December 31, 2002; (2) render tax return preparation and other tax compliance and tax consulting services; (3) render accounting assistance in connection with reports required by the Court; (4) assist the Debtor's legal counsel with the analysis and revision of the Debtor's plan or plans of reorganization; (5) provide expert testimony as required; (6) work with accountants and other financial consultants for committees and other creditor groups; and (7) perform other audit, accounting, and tax services as may be requested by XO. The Debtor intends that E&Y, in concert with the other professionals retained by the Debtor, will undertake every reasonable effort to avoid any duplication of their respective services. Subject to Court approval, E&Y will be compensated on a fixed- fee or an hourly basis, plus reimbursement of actual and necessary expenses incurred by E&Y, in accordance with E&Y's customary billing practices. To the extent E&Y's services relates to the Operating Subsidiaries, appropriate inter-company accounting will be recorded for these services. In connection with services relating to interim quarterly reviews of the Debtor's financial statements, E&Y's fixed fee would be $22,500 for each quarterly review. For other professional audit and accounting services billed on an hourly basis, E&Y's hourly rates are $166 for staff professionals, $226 for senior professionals, $326 for Managers, $360 for Senior Managers, and $478 for Partners. Payments to E&Y for tax services will be based upon E&Y's hourly rates of $169 for staff professionals, $266 for senior professionals, $434 for Managers, and $492 for Partners. In light of the nature of the services to be performed, E&Y will be required to maintain time records on an hourly basis, not the tenths of an hour basis set forth in the United States Trustee Guidelines. Prior to the Petition Date, E&Y received a retainer in the total amount of $25,000 from the Debtor in connection with future services to be rendered. As part of their practices, E&Y LLP and EYCF appear in cases, proceedings and transactions involving many different attorneys, financial advisors and creditors, some of which may represent or be claimants and/or parties in interest in the XO Chapter 11 case. G. Anthony Hahn, Jr. represents that, after reasonable inquiry, he believes that none of the services rendered by E&Y LLP or Ernst & Young Corporate Finance LLC (EYCF) to the interested parties have been in connection with the Debtor or its Chapter 11 case. E&Y will not accept any new engagement that would require E&Y LLP to represent an interest adverse to the Debtor, Mr. Hahn assures. Because the Debtor is a large enterprise with over a thousand creditors and other relationships, E&Y LLP is unable to state with certainty that every client representation or other connection of E&Y LLP and EYCF has been disclosed. In addition, E&Y LLP and EYCF together have thousands of professional employees. It is possible that certain employees of E&Y LLP and EYCF have business associations with parties in interest. Mr. Hahn covenants that, if E&Y LLP discovers additional information that requires disclosure, E&Y LLP will file supplemental disclosures with the Court as promptly as possible. The Court is satisfied that E&Y and each of its members and associates is a "disinterested person" as this term is defined in section 101(14) of the Bankruptcy Code. (XO Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392-0900) * Alvarez & Marsal Strategically Expands National Reach ------------------------------------------------------- Alvarez & Marsal (A&M), a leading corporate restructuring, crisis management and creditor advisory firm, has strategically expanded its national and regional reach to meet the growing demands for its core services. Toward this end, the company has opened five new offices, reinforcing the firm's already strong regional presence within the United States. The new offices comprise Atlanta, Chicago, Houston, Austin, and San Francisco, bringing the total number of A&M offices in the U.S. to 9. The firm also has a base of operations in London, Paris and Hong Kong. A&M's full roster of professionals and employees now stands at 140 worldwide. Alvarez & Marsal provides financial and operational services to troubled companies and those entities in need of performance improvement. "Our growth has been deliberate and intended to enhance A&M's ability to serve and respond to market and company needs across the U.S.," said Bryan Marsal, Founding Partner of Alvarez & Marsal. "Furthermore, these new offices -- as well as the infusion of additional senior talent -- leave us extremely well positioned to provide the type of on-the-ground senior support that our clients demand within markets throughout the US." The expansion organizes Alvarez & Marsal's U.S. business into six regions, each complementing Alvarez & Marsal's New York- based headquarters. The regions consist of Northeast, Southeast, Midwest, Southwest, West and Northwest. "While our clients will continue to enjoy the support and counsel of our entire network of professionals, we are confident that our expanded regional structure will provide even greater service levels and efficiencies. Our goal has always been to help solve the issues and problems facing companies today in multiple industries, and to unlock value for a variety of stakeholders," said Tony Alvarez II, founding partner of Alvarez & Marsal." Alvarez & Marsal's Atlanta office is headed by William H. Runge and Lawrence Hirsh. Messieurs Runge and Hirsh serve as Managing Directors in the Southeastern United States which also encompasses A&M's Charlotte operations. Runge has over 25 years of combined experience working in operations, financial, administrative management and turnaround consulting in the manufacturing, distribution and service industries. Hirsh has over 16 years of experience providing financial advisory, corporate restructuring, valuation consulting and transaction advisory services to clients in industries ranging from healthcare, steel, technology, communications, to financial services. Thomas Hill is the Managing Director for A&M's Midwest region with an office in Chicago. Mr. Hill has over 15 years of experience in corporate turnaround, loan workout and bankruptcy situations for the manufacturing, transportation, agriculture, retail and distribution industries. In A&M's Southwest Region, Dean Swick is the Managing Director of the firm's Houston office. He joins Sam Pyland, Managing Director, who is responsible for overseeing the firm's regional offices in Dallas and Austin, and will work closely with Swick to serve companies in Houston. Swick has over 25 years of experience in corporate restructuring across multiple industries. Pyland draws on more than 30 years of experience with underperforming and distressed companies in a broad range of industry settings. Richard Williamson heads up the Los Angeles and Phoenix offices, serving as Managing Director for A&M's West Region. Williamson has over 23 years of business experience, working with both healthy and distressed companies in numerous roles, including management and financial advisor roles in the electronics, transportation, and retail industries. A&M's San Francisco office is headed by William Kosturos, Managing Director of the Northwest Region. Kosturos has in excess of 17 years experience in high-profile turnaround consulting, restructuring and reorganization situations. He brings hands-on experience in corporate acquisitions, divestitures and refinancing in a diverse set of industry sectors including telecommunications, energy, and retail. Founded in 1983, Alvarez & Marsal (A&M) is one of the world's premier corporate restructuring, crisis management and creditor advisory firms. A&M's senior consultants are dedicated to solving complex business, financial and operational problems in order to unlock and realize maximum value for stakeholders and shareholders alike. Through 12 offices and 140 employees worldwide, A&M provides unparalleled financial and operational services to troubled and under performing companies through its core services which include, Turnaround Consulting: Crisis and Interim Management: Creditor and Financial Advisory Services: Performance Improvement and Renewal: Business Plan Assessments, and Trustee and Examiner Services. For more information please contact Rebecca Baker, Director of Marketing and Communications at rbaker@alvarezandmarsal.com * DebtTraders' Real-Time Bond Pricing ------------------------------------- Issuer Coupon Maturity Bid - Ask Weekly change ------ ------ -------- --------- ------------- Crown Cork & Seal 7.125% due 2002 96 - 98 +1.5 Freeport-McMoran 7.5% due 2006 90.5 - 91.5 +.5 Global Crossing Hldgs 9.5% due 2009 1.13 - 1.63 -.37 K-Mart 9.375% due 2006 39.50 - 40.50 n/a Levi Strauss 6.8% due 2003 89 - 91 n/a Lucent Technologies 6.45% due 2029 47 - 49 -11 MCI Worldcom 6.5% due 2010 45.5 - 47 n/a Terra Industries 10.5% due 2005 86 - 89 +1 Westpoint Stevens 7.875% due 2008 59 - 62 -3 Worldcom 7.5% due 2011 17.5-18.5 n/a Xerox Corporation 8.0% due 2027 43 - 45 -6 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 ********* 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 publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $625 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***