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/raid1/www/Hosts/bankrupt/TCR_Public/020826.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, August 26, 2002, Vol. 6, No. 168 Headlines ACME METALS: Packaging Unit's Exclusivity Continues to Oct. 14 ADELPHIA COMMS: Court Approves Access to $1.5BB DIP Financing AETNA COMMERCIAL: Fitch Upgrades Ratings of Classes F Through J AIMGLOBAL TECHNOLOGIES: Revenues Plunge 20% to $123MM in FY 2002 AIR CANADA: Union President Calls Layoffs a Bullying Tactic AMES DEPT: Court Okays Stipulation with KRT re Lease Rejection ANC RENTAL: Info. Tech Unit Seeks Approval of IT Pact with Perot AT&T WIRELESS: Names Marilyn Wasser as EVP & Corp. Secretary BIG 5 CORP: S&P Ups Rating to B+ Over Strengthened Fin'l Profile BUDGET GROUP: Gets Nod for Insurance Financing Arrangements BUDGET GROUP: Canada Unit Airs Approval of Cendant's Acquisition BURLINGTON: Fabrics Selling Assets to Investment II for $4.5MM CLASSIC COMMUNICATIONS: Has Until October 8 to Decide on Leases COHO ENERGY: Denbury Offers $50M for Gulf Coast Assets COMDISCO: Books $57 Million for Total Direct Bankruptcy Costs CONSOLIDATED FREIGHTWAYS: Violates Nasdaq Listing Requirements CORAM HEALTHCARE: Trustee Wants Reed Smith to Continue Services CONTOUR ENERGY: Shareholder Proofs of Interest Due October 1 COUER d'ALENE: First Quarter Net Loss Slides-Up to $12 Million CREDIT SUISSE: Fitch Affirms Low-B Ratings on 5 Cert. Classes DENBURY RESOURCES: Presents Plans to $50M of COHO's Assets eB2B COMMERCE: Will Delay Filing Form 10-QSB for June Quarter ELIZABETH ARDEN: Inks Pact with QRS to Provide Elec. Services ENCOMPASS SERVICES: Selling Underperforming Units to Raise Cash ENRON CORP: LNG Unit Wants to Sell Contracts to El Paso for $31M ENTRADA NETWORKS: Reports Improved Second Quarter Results ENVOY COMMS: Plans $2.5M Private Placement of Secured Debentures EVERCOM: Delays SEC Filings While Exploring Alternatives EXIDE TECH: Wants to Create SPV to Finance Unit's Receivables EXODUS COMMS: C&W Asks Court to Bring-In PwC to Settle Impasse EZENIA! INC: Working Capital Deficit Tops $2 Million at June 30 GADZOOX NETWORKS: Files for Chapter 11 Reorganization in Calif. GADZOOX NETWORKS: Voluntary Chapter 11 Case Summary GLOBAL CROSSING: Enters Pact Continuing Value Plan Participation GRANT GEOPHYSICAL: S&P Hatchets Credit Rating to Default Level IEC ELECTRONICS: June 28 Balance Sheet Upside-Down by $1 Million INTERNATIONAL WIRE: S&P Lowers Credit Rating One Notch to B KAISER: Court Imposes Limitations on Retiree Panel's Appointment KAISER ALUMINUM: Wants to Reject BPA Power Subscription Contract LENNOX INT'L: Reaffirms Previous Guidance for Full Year 2002 LLS CORP: Inks Pact to Sell 100% of Shares to Precise Technology METROCALL INC: Committee Wants to Bring-In Wachtell as Counsel MILINX GROUP: Case Summary & 20 Largest Unsecured Creditors MORTGAGE CAPITAL: Fitch Ups Ratings on Class G, H & J Certs. NATIONAL STEEL: Enters Pact Allowing $463K Setoff with AMROX NATIONSRENT: Committee Wants Court to End Exclusive Periods NCS HEALTHCARE: Sues Omnicare to Block Tender Offer NII HOLDINGS: Committee Taps Saul Ewing as Bankruptcy Co-Counsel ONESOURCE TECHNOLOGIES: Equity Deficit Tops $623K at June 30 OPSWARE INC: July 31 Working Capital Deficit Tops $20 Million O'SULLIVAN INDUSTRIES: June 30 Balance Sheet Upside-Down by $55M OWENS CORNING: Prof. Francis McGovern Serving as Mediator PACIFIC GAS: Will Continue Battle to Recoup $8 Bill. Power Costs PACIFIC GAS: Maintains Stand that Its Plan is Most Feasible PENTON MEDIA: Falls Short of NYSE Continued Listing Standards PG&E NATIONAL: Lenders Extend Credit Facility Until October 21 PHOENIX GROUP: Taps Provost & Umphrey to Prosecute Claims vs DVI qSERVE COMMS: Trustee Wants to Employ Mary Roach as Accountant QWEST: Baylock Recommends Purchase of Bonds at Current Levels RAILWORKS: Will Not Be Able to File June Quarter Report on Time RUSHMORE FINANCIAL: Commences Trading on OTCBB Effective Aug. 23 SERVICE MERCHANDISE: Baltimore Co. Balks at Tax Exemption Order SLI INC: Considering Chapter 11 Filing to Restructure Debts SOURCINGLINK.NET: Nasdaq Knocks Off Shares from SmallCap Market TELESPECTRUM: Search for New Auditors Delays Filing SEC Reports THOMSON KERNAGHAN: IDA Permanently Suspends Company's Rights VERTEL CORPORATION: Commences Trading on OTC Bulletin Board WEIRTON STEEL: Says Exclusions Have Less Effect on Current Ops. WIDECOM: Auditor Zafar Husain Doubts Ability to Meet Obligations WILLIAMS COMMS: Committee Brings-In Houlihan Lokey as Advisor WILLIAMS CONTROLS: Recapitalization Deals Delay SEC Filings WORLDCOM: Billing Concepts Wants Stay Relief to Withhold Payment WORLD HEART: June Quarter Balance Sheet Upside Down by C$21 Mil. WORLD WIRELESS: Lancer Entities Extend Debt Maturity to Sept 30 * Leonard Berliner Joins Hilco Merchant Resources as Senior VP * Kasen & Shahon Join Clear Thinking Group Board of Advisors * BOND PRICING: For the week of August 26 - August 30, 2002 ********* ACME METALS: Packaging Unit's Exclusivity Continues to Oct. 14 -------------------------------------------------------------- By order of the U.S. Bankruptcy Court for the District of Delaware, Acme Packaging Corporation obtained an extension of its exclusive periods. The Court gives the Debtor, until October 14, 2002, the exclusive right to file its plan of reorganization and until December 16, 2002 to solicit acceptances of that Plan from creditors. Acme Metals and its debtor-affiliates are engaged in the business of steel manufacturing and fabricating. The Company filed for chapter 11 bankruptcy protection on September 28, 1998. Brendan Linehan Shannon, Esq., and James L. Patton, Esq., at Young, Conaway, Stargatt & Taylor represent the Debtors in their restructuring efforts. When the Debtors sought protection from its creditors, it listed assets of $813 million and liabilities of $541 million. ADELPHIA COMMS: Court Approves Access to $1.5BB DIP Financing ------------------------------------------------------------- Adelphia Communications Corporation (OTC: ADELQ) announced that the U.S. Bankruptcy Court for the Southern District of New York has approved Adelphia's $1.5 billion debtor in possession credit facility provided by a consortium of bank lenders, led by JPMorgan Chase Bank and Citigroup USA, Inc. As previously announced on June 28, 2002, the Court approved an initial advance under the facility of up to $500 million. Adelphia and more than 200 of its subsidiaries filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code on June 25, 2002. The financing enables Adelphia to continue to operate smoothly and provide quality cable services and advanced services throughout the reorganization process. In addition, it will be available to fund the Company's continued maintenance and upgrading of its cable systems, enabling Adelphia to offer its customers digital cable, high-speed Internet access and other enhanced services. Adelphia is functioning without interruption in all of its markets, serving more than 3,500 communities in 32 states and Puerto Rico. Adelphia Communications Corporation, with headquarters in Coudersport, Pennsylvania, is the sixth-largest cable television company in the country. It serves 3,500 communities in 32 states and Puerto Rico. It offers analog and digital cable services, high-speed Internet access (Adelphia Power Link), and other advanced services. AETNA COMMERCIAL: Fitch Upgrades Ratings of Classes F Through J --------------------------------------------------------------- Aetna Commercial Mortgage Trust's multiclass pass-through certificates, series 1997-ALIC are upgraded by Fitch Ratings as follows: $44.1 million class F to 'BBB' from 'BB+', $8 million class G to 'BBB-' from 'BB', $14 million class H to 'BB-' from 'B+' and $26.1 million class J to 'B+' from 'B'. Fitch also affirms the following certificates: $66 million class A-2, interest-only class IO and $64.2 million class B certificates at 'AAA', $68.2 million class C at 'AA+', $48.2 million class D at 'A+' and 20.1 million class E at 'A-'. The $20.1 million class K and $28.9 million class L certificates were not rated by Fitch. The rating actions follow Fitch's annual review of the transaction, which closed in December 1997. The upgrades reflect increases in credit enhancement levels due to amortization and loan payoffs. As of the August 2002 distribution date, the pool's collateral balance has been reduced by 49%, from $802.7 million at closing to $408 million. No loans are currently delinquent. Twenty loans have paid off since closing. Midland Loan Services, L.P. (Midland), the master servicer, collected 94% (by balance) of the year-end (YE) 2001 property financial statements. The YE-2001 weighted average debt service coverage ratio (WADSCR) for these loans was 1.59 times compared to 1.36x (for the same loans) at closing. Meanwhile, the WADSCR for the top five loans increased to 1.25x from 1.21x during the same period. The certificates are currently collateralized by 20 fixed-rate mortgage loans, with significant concentrations in New York (20%), New Jersey (18%), and California (16%). Of concern is increased office (61% of the pool from 50% at closing) and retail (27% from 16% closing) exposure. The largest loan in the pool (20%) is secured by a super-regional shopping center in Poughkeepsie, NY. The property's performance has been stable, with the YE-2001 DSCR of 1.20x vs. 1.22x at closing. Two loans (6.7%) are currently being specially serviced. The largest of these loans (5.23%) is secured by an office property in Birmingham, AL. Since the borrower was unable to refinance the loan at maturity (January 2002), a one-year extension has been negotiated. Current occupancy at the property is 82%. The second loan (1.5%) is secured by a retail property in Chesapeake, Virginia. The loan matured in 2000 but the borrower has been unable to refinance the loan due to occupancy issues. Farm Fresh, a supermarket occupying 49% of the net rentable area (NRA), vacated in 1998, but continues to make lease payments; their lease expires in 2005. The property is currently 85% leased and 35% occupied. The loan maturity date has been extended until 2003 and is likely to be extended several more times. As of the August 2002 distribution date, five loans representing 13.4% of pool were on Midland's watchlist, including three loans (2.6%) with upcoming maturities. The largest loan on the watchlist (8.2%) is secured by an office property in Hackensack, New Jersey. The property's occupancy remains very low, at 51%, after the County of Bergen, occupying 49% of the NRA, vacated in 2001. The loan terms have been modified and the borrower had to deposit additional funds into an escrow account to lease the property and as additional collateral. Realized losses total $3.2 million, due to a loan, secured by a retail property in Plaistaw, New Hampshire in the process of foreclosure, which was sold to a new buyer in July 2002. Service Merchandise, which had occupied 44% of the property, announced that they were liquidating and vacated recently. Fitch applied various hypothetical stress scenarios taking into consideration all of the above concerns. Even under these stress scenarios, subordination levels remain sufficient to upgrade ratings. Fitch will continue to monitor this transaction, as surveillance is ongoing. AIMGLOBAL TECHNOLOGIES: Revenues Plunge 20% to $123MM in FY 2002 ---------------------------------------------------------------- AimGlobal Technologies Company, Inc., announced its financial results for the fiscal year ended March 31, 2002. This information was filed as part of the Company's Annual Report, which is available on the Web at http://www.sedar.com The filing includes the consolidated financial statements for the fiscal year ended March 31, 2002 and the accompanying notes, and the accompanying management discussion and analysis. This information will be also be filed as part of the Company's Form 20F with the United States Securities and Exchange Commission, no later than September 30, 2002. The Company anticipates calling the annual general meeting of shareholders shortly following the filing of the Form 20F. The Company provided the following summary of highlights of the information reflected in the Consolidated Financial Statements and MD&A. This summary is qualified in its entirety by the material contained in those documents. The Company faced significant financial and operational challenges during fiscal 2002. Most of the Company's difficulties arose as a result of the default of a major customer, Cell-Loc, Inc., under a manufacturing services agreement and by the general slowdown in the electronics manufacturing services industry. The Company is currently engaged in legal proceedings against Cell-Loc and its principal shareholder for damages resulting from its breach of the manufacturing agreement. In anticipation of the expected Cell- Loc production volume, the Company made substantial investment in production, inventory and staffing which serve as the basis for $46 million in damages claimed in the lawsuit. During fiscal 2002, the Company expended significant resources and management time in dealing with the adverse consequences of the slowing market conditions and the Cell-Loc situation. Among the significant operational restructuring efforts undertaken during fiscal 2002, were the sale of the Company's Mississauga operations, reallocation of production among plants to maximize efficiency and other personnel and overhead reductions. Despite these difficult conditions and the ongoing restructuring, the Company was able to record sales of approximately $123 million in fiscal 2002. This figure represents a decline of approximately 20% from sales of $154.2 million in fiscal 2001. The sale of the Mississauga division accounted for approximately $12 million of the decline in sales while the absence of business from Cell-Loc accounted for approximately $14 million of the decline. The cost of sales for fiscal 2002 was $122.3 million, or 99.1% of sales, compared to cost of sales of $185.6 million, or 120% of sales for fiscal 2001. The decrease in cost of sales is attributable to the decline in sales and a lower level of inventory write-downs during fiscal 2002. Selling, general and administrative expenses were reduced by more than $10 million from fiscal 2001 and negative cash flows from operations were reduced to approximately $1 million for fiscal 2002 compared to negative cash flows of approximately $27 million and $26 million from operations in fiscal years 2001 and 2000 respectively. The Company's fiscal 2002 restructuring efforts resulted in a workforce reduction of 120 employees. Charges related to the reduction in workforce totaled approximately $1.5 million. As a result of the financial challenges shown above, during fiscal 2002, the Company defaulted on its obligations to its bank lender, the Canadian Imperial Bank of Commerce. As a result, the CIBC required the Company to make significant payments in interest, fees and reduction of principal, thereby further adversely affecting the Company's cash position. The Company's default in its loan to the CIBC also resulted in a default of approximately $3 million with respect to capital lease obligations. A waiver was not obtained from the lessor but the lessor has not acted on its rights under the default provisions. The Company has made all of its payments under these obligations. The CIBC appointed PriceWaterhouseCoopers as monitor and the Company otherwise engaged several restructuring firms during fiscal 2002, resulting in significant extraordinary costs. The Company also incurred significant legal and other costs in dealing with supplier and creditor related issues. Total restructuring and reorganization costs of the Company for fiscal 2002 amounted to approximately $4.3 million. The Company's ongoing efforts to execute an operational and financial restructuring resulted in significant developments after the fiscal year end with respect to the Company's operational and financial situation. Some of these significant developments include the following: On May 14, 2002, a private merchant bank, Valtec Capital Corporation, acquired the CIBC bank debt, which had an approximate balance of $8 million upon closing. Since that time, Valtec has advanced additional sums of approximately $1.5 million to the Company for working capital purposes. Valtec's agreements with the Company provide for conversion of its loan into common shares of the Company on terms previously disclosed and subject to TSE and shareholder approval. In addition, on May 22, 2002 the Company closed on the sale of its unprofitable Delta operations and moved all of its administrative and executive offices from Delta to its facilities in Kanata and Brockville, Ontario and Ogdensburg, New York in a bid to further reduce overhead and increase efficiency. Despite the challenges of fiscal 2002 and the continued strain on the Company as it completes its restructuring in the current year, management remains optimistic as to the long term prospects for the Company. The Company has reached agreements with creditors representing in excess of $11 million of liabilities to compromise their claims against the Company. The Company expects that these agreements should be finalized in the near future relieving significant financial pressures and operational challenges. Finally, the Company continues to aggressively pursue new sales opportunities from both current and new customers to be serviced by its North American facilities and recently added China factory. AimGlobal Technologies Company, Inc., a company incorporated under the laws of British Columbia, operates in the electronics manufacturing services business providing contract manufacturing for original equipment manufacturers in the medical, aerospace, wireless, communications, industrial, military and emergency response markets in Canada and the United States. The Company offers a full range of services including product development and design, material procurement and management, prototyping, manufacturing and assembly, functional and in-circuit testing, final system box build and distribution. AIR CANADA: Union President Calls Layoffs a Bullying Tactic ----------------------------------------------------------- Air Canada's announced layoff of 900 flight attendants is an unconscionable and transparent attempt to bully its way to bargaining concessions, says Pamela Sachs, president of the Air Canada Component. What is particularly illuminating is the fact that the only two unions hit with layoffs - the Air Canada Component representing 8,500 cabin crewmembers, and the International Association of Machinists - are the only two in bargaining with Air Canada, says Ms. Sachs. "Enough is enough," says Ms. Sachs. "Our members are tired of being treated like chattel. They're angry at Air Canada's constant attempt to demean and belittle their profession. And they're fed up with this Company's seeming unwillingness to sit down at the bargaining table and negotiate a contract." Ms. Sachs said Air Canada is playing a shell game - announcing layoffs at the mainline while hiring flight attendants to work for ZIP. "Make no mistake about it, ZIP will be flying Air Canada routes, using Air Canada planes and pilots, carrying Air Canada passengers and taking away Air Canada jobs," she says. "Air Canada talks of the need to work together but their idea of cooperation is to do as they please and demand compliance at the risk of job loss." The Air Canada Component has filed a common employer application for ZIP with the Canada Industrial Relations Board. The application will be heard beginning September 16 in Toronto. "This is a fight and we will not back down from this fight," Ms. Sachs says. Ms. Sachs said layoffs could mean less staff for each flight. "We saw during last year's layoff. Flights were regularly short staffed, cabin personnel were routinely flown over their maximum monthly schedules and forced to work on their days off," she says. "That is going to put even more pressure on our members and service to our passengers could suffer." Ms. Sachs says Robert Milton has told employees that he is counting on them to do their part and wants everyone in the airline to treat "each other right." "We have and will continue to do our part and we will continue to treat each other right," she says. "And we call on management to do their part and treat us with the respect we have earned. It's time for this partnership to be reciprocal." DebtTraders reports that Air Canada's 10.250% bonds due 2011 (AIRC11CAN1) are quoted between 72 and 74. See http://www.debttraders.com/price.cfm?dt_sec_ticker=AIRC11CAN1 for more real-time bond pricing. AMES DEPT: Court Okays Stipulation with KRT re Lease Rejection -------------------------------------------------------------- Ames Department Stores, Inc., with its debtor-affiliates and KRT Property Holdings, LLC are parties to an October 25, 1999 lease of nonresidential real property located at Bristol Square Shopping Center in Bristol, Pennsylvania. The Debtors utilize the leased premises for their Store No. 745. After their extensive reviews of store locations to determine which locations are integral to the rehabilitation of their business, the Debtors decided to close Store No. 745. As a result, the Debtors and KRT Property reached an agreement to terminate the Bristol Store Lease. The Court-approved Stipulation provides that: A. The Lease will be terminated as of March 20, 2002 and the Debtors will no longer have any obligations with respect to the Lease; B. The terms and conditions of the Lease Termination are: (a) The Landlord will promptly pay the Debtors $36,299; (b) The Landlord will have a rejection damage claim for $1,456,979 under the Lease; (c) Otherwise, as of the Termination Date, all obligations of the Debtors and the Landlord, and all claims and causes of action by the parties against one another, arising under or pursuant to the Lease as well as any damage claims arising as a result of the termination of the Lease, are forever released and waived by the parties; and (d) To the extent the Landlord -- or any of its successors, affiliates, or assigns -- has filed any proofs of claim in any of the Debtors' Chapter 11 cases with respect to the Lease or the Bristol Store, other than in respect of the Rejection Damage Claim, that proof of claim will be expunged with prejudice, effective as of the Termination Date, without further order of the Court. (AMES Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service, Inc., 609/392-0900) ANC RENTAL: Info. Tech Unit Seeks Approval of IT Pact with Perot ---------------------------------------------------------------- ANC Rental Corporation and its debtor-affiliates ask the Court to authorize Debtor, ANC Information Technology LP to enter into a new Information Technology Services Agreement with Perot Systems Corporation. Bonnie Glantz Fatell, Esq., at Blank Rome Comisky & McCauley LLP, in Wilmington, Delaware, relates that under a prior Master Agreement with Perot, effective as of September 30, 2000, ANC supports I.T. services on separate systems to operate reservations, rental operations, fleet management, sales and marketing, and billing for Alamo and National. National Car Rental System operates using the I.T. service known as Odyssey while Alamo Rent-A-Car LLC operates using Legacy. Ms. Fatell admits the use of the two separate systems creates cost redundancies and inefficiencies in the way the Debtors manage their fleet and their business in general. The Debtors, Ms. Fatell continues, now want to terminate the old IT agreement with Perot and replace it with the new I.T. Services Agreement, which is for a 7-year term. Under the new agreement, the Odyssey system will be decommissioned and the National I.T. operations will be converted to Legacy, which already has been named One-System. Annual fees under the prior agreement are pegged at $40,000,000 to support both the Odyssey and Legacy Systems. Under the I.T. Services Agreement, the annual fees will be reduced to $33,000,000 as a result of operating under One-System. ANC will be paying an additional fixed fee at $12,000,000 in 2002 to perform the One-System programming and conversion. Under the I.T. Services Agreement, Ms. Fatell explains that Perot is to limit its claim against the Debtors under the prior agreement to $8,900,000, which consists of: $3,550,000 operating charges September 2001 $3,750,000 operating charges October 2001 $1,450,000 operating charges November 2001 $150,000 miscellaneous charges pre-September 2001 Under the One-System operations, the Debtors reduce operating costs for I.T. and associated telecommunications by at least $45,000,000. The savings would come from reduced support costs of $20,000,000 due to One-System, reduced amortization of $18,000,000 due to the write off of the Odyssey system, and the remainder due to reduced equipment costs and telecommunications rates. Ms. Fatell asserts that the new I.T. agreement will pave the way for an increase in the Debtors' operating efficiency. One- System will require fewer employees and will require less time to train reservation and rental agents. Fewer keystrokes will be required to rent or make a reservation and will be easier for the Debtors to track automobiles and financing. In addition, the Debtors will be able to eliminate redundant maintenance and support for two separate systems. (ANC Rental Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service, Inc., 609/392-0900) AT&T WIRELESS: Names Marilyn Wasser as EVP & Corp. Secretary ------------------------------------------------------------ AT&T Wireless named Marilyn Wasser as executive vice president, corporate secretary and associate general counsel - Corporate. She will join the company on September 3, 2002. As corporate secretary, Wasser will be responsible for all legal and administrative support for the Board of Directors, board committees, the annual shareholder meeting as well as for all corporate governance activities. As associate general counsel - Corporate, Wasser will lead Legal support for the company's U.S. and international acquisitions, divestitures, ventures, partnerships, affiliations, and alliances. She will also provide direct Legal support for all compliance activity related to the company's finance, treasury and investor relations functions. This includes compliance with both the Securities and Exchange Commission and New York Stock Exchange. Most recently, Wasser, 47, served as corporate secretary and vice president - Law for corporate matters at AT&T. She has been AT&T's corporate secretary for eight years, working closely with chairman and CEO C. Michael Armstrong and former chairman and CEO Robert E. Allen on regulatory, corporate governance and investor activities. She has played a key role in AT&T's major corporate restructurings, divestitures and acquisitions, including the $11 billion acquisition of McCaw Cellular in 1994, which formed the core of the AT&T Wireless company, the 1996 spin off of Lucent Technologies, the 1999 $48 billion merger with TCI and the acquisition of MediaOne, and the 2000 announcement of the AT&T's restructuring into four separate companies. Most recently, she played a lead role in the sale of AT&T Broadband to Comcast as well as securing shareholder approval of creating AT&T Consumer as a tracking stock. "Marilyn is one of the nation's top corporate lawyers and an expert in matters of corporate governance," said John D. Zeglis, chairman and CEO. "She has a proven record of execution and achievement in the telecom industry and she is no stranger to AT&T Wireless. She was AT&T's principal lawyer in arranging the merger with McCaw Cellular in 1994 and she was at the center of the work that crafted our split-off from AT&T last summer. I know that we will benefit from her deep experience, wise counsel, and dedication to excellence." Wasser earned her A.B. degree in government from Smith College and received her law degree with honors from Case Western Reserve University School of Law. She and her husband, Eric, live in New Jersey with their three children. AT&T Wireless (NYSE:AWE) is the largest independently traded wireless carrier in the United States, following our split from AT&T on July 9, 2001. We operate one of the largest digital wireless networks in North America. With more than 19.95 million subscribers, and full-year 2001 revenues exceeding $13.6 billion, AT&T Wireless is committed to being among the first to deliver the next generation of wireless products and services. Today, we offer customers high-quality mobile wireless communications services, voice or data, to businesses or consumers, in the U.S. and internationally. AT&T Wireless Customer Advantage is our commitment to ensure that customers have the right equipment, the right calling plan, and the right customer services options -- today and tomorrow. For more information, please visit http://www.attwireless.com BIG 5 CORP: S&P Ups Rating to B+ Over Strengthened Fin'l Profile ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on regional sporting goods retailer Big 5 Corp., to single-'B'-plus from single-'B' based on Big 5's strengthened financial profile due to its consistent operating performance, and Standard & Poor's expectations that the solid operating performance will be sustained. The outlook is stable. El Segundo, California-based Big 5 had about $156 million total debt outstanding as of June 30, 2002. Big 5 is the leading sporting goods retailer in the western U.S., with about 260 stores averaging about 11,000 square feet each. "The rating on Big 5 reflects its regional concentration, the intense competition in the sporting goods retailing industry, and high debt leverage," Standard & Poor's credit analyst Ana Lai said. "These risks are partially offset by the company's leading position in its core markets and its consistent operating performance." Standard & Poor's said the company's financial profile has strengthened as cash flow increased while debt levels declined modestly. Following a leveraged recapitalization in 1997, EBITDA coverage of interest increased to 2.5 times for the 12 months ended June 30, 2002, from 1.6x in 1998, and total debt to EBITDA declined to 4.2x from 6.1x over the same period. Proceeds from Big 5's recent IPO of common equity were used to retire non-cash paying holding company debt and preferred stock, improving its capital structure and alleviating future refinancing needs. Financial flexibility is adequate given the lack of near-term maturities and availability under the company's revolving credit facility, which matures in March 2003. The revolving credit facility provides maximum borrowing of $125 million and is subject to a borrowing base. Big 5's leading position in its core markets and consistent operating performance provide rating stability. However, continued improvement in its financial profile could result in an outlook revision to positive over the next two years. BUDGET GROUP: Gets Nod for Insurance Financing Arrangements ----------------------------------------------------------- Edward J. Kosmowski, Esq., at Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware, tells the Court that in connection with their day-to-day operations, Budget Group Inc., and its debtor-affiliates are either required by law or compelled by sound business judgment to maintain various forms of insurance, including, among others, coverage for general liability, employment practice liability insurance, workers' compensation, criminal loss, property, casualty and excess liability. To maintain the insurance coverage, the Debtors in many cases are required to prepay the full premiums for the applicable coverage period. Mr. Kosmowski relates that with respect to some insurance coverage, prepaying the full premiums imposes a significant financial burden on the Debtors. To lessen this burden, prior to the Petition Date, the Debtors financed the premiums for certain insurance coverage for claims relating to: -- fiduciary liability in connection with the Debtors' retirement policies, -- losses resulting from criminal activity and property losses, and -- the Debtors' lead umbrella policy. As of the Petition Date, the Debtors financed the premiums for certain of its insurance coverage under three Premium Finance Arrangements. Under each of the Debtors' Premium Finance Arrangements, certain premium finance companies pay the initial deposit premium due under the Financed Insurance Policies. The Debtors are then obligated to repay the amount financed under the Premium Finance Arrangements through periodic installments over the term of the Premium Finance Arrangements. The Debtors seek the Court's authority to pay, at their sole discretion, all postpetition installment payments under certain prepetition insurance premium finance arrangements as they become due. UPAC Premium Finance Arrangement The Debtors executed a Premium Finance Arrangement with UPAC effective from April 24, 2002 through April 24, 2003, to finance the premiums required to obtain insurance for claims relating to fiduciary liability in connection with the Debtors' retirement policies and losses resulting from criminal activity. Pursuant to the terms of the UPAC Premium Finance Arrangement, the Premium Finance Company paid $253,339 in insurance premiums to the issuers of the applicable Financed Insurance Policies. In return, the Debtors were obligated to repay UPAC with a $51,872 downpayment and nine monthly installments $23,313.69 at an annual interest rate of 8.99%. As of the Petition Date, the Debtors were current on all of their obligations to the Premium Finance Company under the UPAC Premium Finance Arrangement. The next installment payment of $23,313.69 under the UPAC Premium Finance Arrangement is due on August 24, 2002 and the final installment payment will be due on January 23, 2003. A.I. Credit Corporation Premium Finance Arrangement To finance the premiums required to obtain insurance for claims resulting from property losses, the Debtors executed a Premium Finance Arrangement with A.I. Credit Corporation effective from June 20, 2002 through February 20, 2003. Pursuant to its the Premium Finance Company paid $3,295,301.35 in insurance premiums to the applicable Insurers. In return, the Debtors were obligated to repay the Premium Finance Company with a $988,590.41 downpayment and eight monthly installments of $294,508.04 at an annual interest rate of 4.75%. As of the Petition Date, the Debtors were current on all of their obligations to the Premium Finance Company under the A.I. Credit Corporation Premium Finance Arrangement. The next installment payment of $294,508.04 under the A.I Credit Corporation Premium Finance Arrangement is due on August 20, 2002 and the final installment payment will be due on February 20, 2003. Mr. Kosmowski narrates that the UPAC and A.I. Credit Corporation Premium Finance Arrangements contain provisions that permit the Premium Finance Companies to cancel the Financed Insurance Policies if the Debtors default on their payment obligations under the Premium Finance Arrangements. Upon cancellation, the Premium Finance Companies are entitled to collect any unearned premiums or other amounts payable under the Financed Insurance Policies and apply these amounts to reduce the Debtors' outstanding obligations under the Premium Finance Arrangements. Commercial Umbrella Premium Finance Arrangement The Debtors entered into a Premium Finance Arrangement with Continental Casualty Company to finance the premiums required to obtain the Debtors' lead umbrella policy, whereby the Premium Finance Company, in this case A.I. Credit Corporation, paid Continental Casualty Company an initial estimated deposit insurance premium of $5,230,113 and the Debtors are obligated to repay the premium installment payments directly to Continental Casualty Company. As of the Petition Date, the Debtors were current on all of their obligations to the Continental Casualty Company under the Commercial Umbrella Premium Finance Arrangement. The next installment payment of $1,780,240 under the Commercial Umbrella Premium Finance Arrangement is due on September 1, 2002. The Commercial Umbrella Premium Finance Arrangement policy will not take effect until the September 1, 2002 premium installment is: -- paid in full, and -- deposited in the account of Continental Casualty Company or its designated collection agent. If the September 1, 2002 premium installment is timely made in full, the policy provided under the Commercial Umbrella Premium Finance Arrangement will be effective from September 1, 2002 through June 1, 2003, with the final installment payment due on February 1, 2003. Necessity of the Insurance Premiums If the postpetition installment payments under the Premium Finance Arrangements are not paid as they come due, Mr. Kosmowski fears that the Premium Finance Companies or Insurers could seek relief from the automatic stay to terminate the Financed Insurance Policies. If the Premium Finance Companies succeed in their request, Mr. Kosmowski says, the Debtors would be forced to seek replacement insurance coverage. And even if the Debtors were able to purchase replacement insurance coverage, Mr. Kosmowski relates, it is doubtful that the Debtors would be able to do so on terms and conditions as favorable as those presently in place under the Financed Insurance Policies. Given the current circumstances, Mr. Kosmowski observes, there is no assurance that the Debtors would be able to obtain replacement insurance quickly enough to prevent a lapse in coverage. Any interruption in the insurance coverage would expose the Debtors to serious risks, including: * the possible incurrence of direct liability for the payment of claims that otherwise would have been payable by the Insurers under the Financed Insurance Policies, * the possible incurrence of material costs and other losses that otherwise would have been reimbursed by the Insurers under the Financed Insurance Policies, * the possible loss of good-standing certification to conduct business in states that require companies like the Debtors to maintain certain types and levels of insurance coverage, * the possible inability to obtain similar types and levels of insurance coverage, and * the possible incurrence of higher costs for reestablishing lapsed policies or obtaining new insurance coverage. Mr. Kosmowski assures the Court that the Debtors have sufficient cash to pay all of the postpetition installment payments under the Premium Finance Arrangements as the amounts become due in the ordinary course of their businesses. * * * Judge Walrath grants the Debtors' motion and authorizes them to pay all amounts due to continue the Company's insurance coverage. (Budget Group Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-0900) DebtTraders reports that Budget Group Inc.'s 9.125% bonds due 2006 (BD06USR1) are quoted between 18.5 and 20.5 . See http://www.debttraders.com/price.cfm?dt_sec_ticker=BD06USR1for more real-time bond pricing. BUDGET GROUP: Canada Unit Airs Approval of Cendant's Acquisition ---------------------------------------------------------------- Our U.S. franchisor, Budget Group Inc., including certain of its operating subsidiaries in the United States, has entered into a definitive agreement with Cendant Corporation that will see Cendant acquire substantially all of the assets of Budget Group Inc. While Budget Rent a Car (Canada) operates independently from Budget Group, we view this as very positive news for the overall corporation. Cendant Corporation is one of the foremost providers of travel and real estate services in the world. The company owns and operates a number of highly respected international brands, including Avis North America, Ramada, Days Inn and Century 21. We believe Cendant's acquisition of Budget Group offers the best solution to provide the capital and financing necessary to ensure the long-term success of the Budget brand. In Canada, Budget Rent a Car continues to be a system of Canadian owned and operated franchises. We currently have more than three hundred and sixty five operating locations throughout Canada and employ over 3,000 people with a fleet of 26,000 cars and light trucks - the largest in Canada in all of these categories. Budget Canada enjoys a diverse car and truck rental business both on-airport and in neighbourhood markets. Even with its prominent on-airport presence, 65% of locations in Canada are off-airport, servicing local neighborhoods. Through its diversity and financial independence, Budget Rent a Car of Canada continues to grow and prosper. The Company is and will continue to be in a position to meet and exceed our customers' and clients' vehicle rental needs. BURLINGTON: Fabrics Selling Assets to Investment II for $4.5MM -------------------------------------------------------------- Burlington Industries, Inc., has a tax basis of an estimated $300,000,000 in stock of Burlington Fabrics Inc. Burlington owns 100% of the stock of Burlington Fabrics, Inc. However, during the current tax year, Burlington Fabrics has ceased all operations, has become insolvent, and its stock has become worthless. Therefore, Rebecca L. Booth, Esq., at Richards, Layton & Finger, in Wilmington, Delaware, asserts, Burlington will be entitled to an ordinary income tax deduction in the current tax year of an estimated $300,000,000 for its loss resulting from worthless stock as long as Burlington Fabrics has, during the tax year, disposed of substantially all of its assets and transferred all of the proceeds to its creditors in payment or partial payment of its debt obligations. By this motion, Burlington Fabrics and Burlington Investment II, Inc. seek the Court's authority: (a) for Burlington Fabrics to sell its assets to Burlington Investment II for $4,500,000 free and clear of all liens, encumbrances or other interests and in accordance with the parties' Term Sheet; and (b) for Burlington Fabrics to transfer the Purchase Price and the Remaining Assets to an irrevocable trust for the sole benefit of its creditors. Ms. Booth contends that the only way to obtain the maximum benefit of the Deduction is for Burlington Fabrics to complete the disposition of its assets before the end of the Debtors' fiscal year -- September 28, 2002. This will allow Burlington to take the Deduction for the 2002 fiscal year. Ms. Booth explains that the current benefit of using tax deduction in 2002 would result from an additional tax refund -- cash flow -- due to a 5-year tax loss carryback provision that is not available by law after 2002. Besides the cash flow advantages, the use of a tax loss carryback is not subject to other limitations that are generally applicable tax loss carryforwards in bankruptcy cases. Ms. Booth assures the Court that the proposed Intercompany Transaction is in the best interest of the Debtors and their estates. Besides the dramatic increase in tax refund, should the Transaction be consummated prior to the conclusion of the Debtors' fiscal year, the Intercompany Transaction allows the Debtors to reduce their U.S. manufacturing base for apparel fabrics in response to slowing economic conditions and continued import competition. As a result, the Burlington Fabrics' operations have been closed and discontinued and are not to be consolidated or continued by any of the other Debtors. "The sale of the Assets will allow Burlington Fabrics to complete the closure process and relieve it of the ongoing costs associated with its administration," according to Ms. Booth. Ms. Booth contends that the Purchase Price is fair and reasonable because Burlington Fabrics commissioned appraisals to provide an independent professional analysis and valuation of the fixed assets in connection with the Intercompany Transaction. The salient terms under the Intercompany Transaction are: A. Burlington Fabrics Assets All of Burlington Fabrics' interest in real property; personal property; contract rights; permits; intangible assets; books and records; all claims, choses in action and lawsuits against third parties including avoidance actions under the Bankruptcy Code; and all pending litigation, other than remaining assets; B. Purchase Price: $4,500,000 Burlington Investment II will pay in cash or with a promissory note at the closing of the Intercompany Transaction; C. Transfer of Assets for benefit of Creditors (i) Burlington Fabrics will retain these assets: -- the proceeds of certain court-approved transactions, totaling $9,500,000; and -- intercompany receivables from Burlington having a face amount of $78,000,000 and a fair market value of $15,000,000; (ii) Burlington Fabrics will transfer the Purchase Price and the Remaining Assets to an irrevocable trust for the sole benefit of Burlington Fabrics' creditors. Burlington Fabrics will not retain any reversionary interest in these proceeds. The assets will remain in this trust until a distribution to Burlington Fabrics' creditors is authorized by the Court; (iii) Burlington Fabrics may elect to sell the Intercompany Receivables to Burlington Investment II. If the Intercompany Receivables are included in the Assets to be sold, the Purchase Price will be increased by the fair market value of the Intercompany Receivables and the proceeds of the sale, instead, if the Intercompany Receivables themselves, will be transferred to the irrevocable trust; and (iv) Burlington Fabrics' obligations include: -- $75,688,000 owed to Debtor Burlington Investment Inc. of which: (a) $62,774,000 is evidenced by unsecured bonds issued by the Mississippi Business Finance Corporation and held by Burlington Investment; and (b) $12,894,000 is evidenced by an unsecured note issued by Burlington Fabrics to Burlington Investment; -- an unresolved amount owed to various taxing authorities on an unsecured priority basis; -- various amounts to certain trade creditors on an unsecured non-priority basis; and -- a joint and several guarantee of borrowings outstanding and accrued interest thereon and other amounts due with respect to the borrowings under: (a) the September 30, 1998 Credit Agreement as amended and restated as of December 5, 2000; (b) the November 15, 2001 Revolving Credit and Guarantee Agreement; and D. Tax Deduction (i) Upon completion of the Intercompany Transaction, Burlington will claim a "worthless stock deduction" of an estimated $300,000,000 under Section 165(g)(3) of the Internal Revenue Code with respect to the common stock of Burlington Fabrics in its fiscal year 2002 consolidated tax return. Burlington expects that the Deduction will generate an additional tax refund of between $25,000,000 and $40,000,000; and (iv) Burlington also expects that the Deduction will create a tax loss carry forward ranging from $100,000,000 to $200,000,000, which can be utilized in fiscal year 2003 and subsequent years to the extent of taxable income in those years. Clarke County Reacts The Clarke County in Mississippi wants the Debtors to first satisfy its tax liens, including accrued statutory interest, before the sale of the Mississippi assets is consummated. Rafael X. Zahralddin-Aravena, Esq., at Ashby & Geddes, in Wilmington, Delaware, informs Judge Newsome that Burlington Fabrics owes $460,991 to the Clarke County for unpaid taxes on certain real and personal property located in Clarke County, Mississippi. Interest continues to accrue on the taxes. Thus, Clarke County holds a first priority lien on the Mississippi Assets. (Burlington Bankruptcy News, Issue No. 17; Bankruptcy Creditors' Service, Inc., 609/392-0900) CLASSIC COMMUNICATIONS: Has Until October 8 to Decide on Leases --------------------------------------------------------------- Classic Communications, Inc., and its debtor-affiliates sought and obtained approval from the U.S. Bankruptcy Court for the District of Delaware to further extend their time to assume, assume and assign, or reject unexpired nonresidential real property leases. The Court gives the Debtors until October 8, 2002 to make decisions about how to treat each of their unexpired leases. Classic Communications, Inc., a cable operator focused on non- metropolitan markets in the United States, filed for Chapter 11 petition on November 13, 2001 along with its subsidiaries. Brendan Linehan Shannon, Esq., at Young, Conaway, Stargatt & Taylor represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $711,346,000 in total assets and $641,869,000 in total debts. COHO ENERGY: Denbury Offers $50M for Gulf Coast Assets ------------------------------------------------------ Denbury Resources Inc. (NYSE:DNR), in conjunction with Denbury President and CEO Gareth Roberts' presentation at a New York luncheon sponsored by the Company, discussed its long-term plans for development of the previously announced pending purchase of the Coho Energy Inc. Gulf Coast properties for $50.3 million. Consummation of the purchase through the U.S. Bankruptcy Court is currently scheduled for August 29th, subject to the resolution of title and environmental issues and other normal closing adjustments. As previously announced, Denbury estimates that the proven reserves for this acquisition will be approximately 14.4 million barrels of oil. Included in the acquisition is Brookhaven Field, a possible tertiary carbon dioxide ("CO2") injection candidate located close to the Company's 183-mile CO2 pipeline. Initial tertiary recovery development may not be undertaken at this field for two to three years, as the field is currently producing approximately 750 barrels of oil per day and is still undergoing waterflood operations. Once tertiary operations commence, the Company anticipates spending $6 to $10 million per year for the first several years, with a total of approximately $75 to $85 million projected to be invested there over the field's predicted life. Currently, Denbury estimates the total proved reserves of the Brookhaven Field to be 2.9 million barrels of oil. The Company also has preliminary estimates that indicate around 20 million net barrels of additional oil may be recoverable from Brookhaven Field using CO2 injection, based on its success at Little Creek and Mallalieu Fields. Since a pilot project has not been performed to date at this field, the Company is not expected to immediately classify or record any of this additional potential as proved reserves. The Company expects to convert this potential to proved reserves as tertiary development of this field occurs, with the initial proved reserves expected to be recognized in two to three years. The acquisition of Brookhaven field is part of Denbury's strategy to expand its CO2 recovery operations throughout the Lower Tuscaloosa oil fields of Southwest Mississippi. Denbury is strategically positioned to develop the potential tertiary reserves in these fields because of its ownership of CO2 reserves and associated pipeline. Denbury operates the only active CO2 tertiary recovery operations in the basin at Little Creek, Lazy Creek and Mallalieu Fields and has expertise in installing and managing such an operation. Including some fields which Denbury does not currently own and the potential at Brookhaven Field, the Company estimates that approximately 60-75 million barrels of additional net oil reserves (over and above the 19.7 million barrels of proved reserves currently booked at Little Creek and Mallalieu Fields), may be available to Denbury in the vicinity of its pipeline through tertiary recovery operations. With the addition of Brookhaven field, McComb field (another previously announced acquisition expected to close during August) and other smaller fields where leasing is still in progress (all of which are over 65% leased), the Company estimates that it would then control 75% to 85% of the aforementioned future potential in this area. Denbury Resources Inc. -- http://www.denbury.com is a growing independent oil and gas company. The Company is the largest oil and natural gas operator in Mississippi, holds key operating acreage onshore Louisiana and has a growing presence in the offshore Gulf of Mexico areas. The Company increases the value of acquired properties in its core areas through a combination of exploitation drilling and proven engineering extraction practices. * * * As previously reported, an auction was held in the U.S. Bankruptcy Court in Dallas, Texas on June 27, 2002 for the sale of all of Coho Energy's oil and gas properties. Citation Oil & Gas Corp., made the winning bid of $165.5 million for Coho Energy's oil and gas properties located in Oklahoma and Red River County, Texas. Denbury Resources, Inc., was the winning bidder for Coho Energy's oil and gas properties located in Mississippi and Navarro County, Texas with a bid price of $50.3 million. The property sales are scheduled to be completed in late August 2002, subject to completion of title and environmental reviews and final approval by the court. Since the estimated claims of Coho Energy's creditors in its bankruptcy proceedings aggregate in excess of $335 million, it is unlikely that Coho Energy's shareholders will receive any distribution upon liquidation of the company. Coho Energy, Inc., Coho Resources, Inc., and Coho Oil & Gas, Inc., filed for chapter 11 protection on February 6, 2002, in the U.S. Bankruptcy Court for the Northern District of Texas. Judge Barbara J. Houser presides over the cases. Michael W. Anglin, Esq., at Fulbright & Jaworski in Dallas represents the Debtors. COMDISCO: Books $57 Million for Total Direct Bankruptcy Costs ------------------------------------------------------------- On August 12, 2002, Comdisco, Inc., emerged from bankruptcy with a new board of directors and a new audit committee. The Company needs an extra five days to enable the audit committee to do the appropriate due diligence with the Company, management and the Company's outside accountants necessary to complete the Form 10-Q financial information to be filed with the SEC. Comdisco expects to report that net revenues decreased $259 million, or 44%, in the three months ended June 30, 2002 compared to the three months ended June 30, 2001. The Company expects to report a loss in excess of $68 million in the three months ended June 30, 2002 compared to a loss of $164 million in the three months ended June 30, 2001. As a result of the bankruptcy filing the Company expects to record in excess of $57 million of reorganization costs directly related to the bankruptcy. CONSOLIDATED FREIGHTWAYS: Violates Nasdaq Listing Requirements -------------------------------------------------------------- Consolidated Freightways Corporation (Nasdaq:CFWYE) has been notified by The Nasdaq Stock Market (Nasdaq) that, because of NASD Marketplace Rule 4310(c)(14) requiring timely filing of the company's Form 10-Q, and because of previously announced company delays in filing its second quarter Form 10-Q, the company's ticker symbol has been changed from CFWY to CFWYE. In addition, for the same reasons stated above, the company was notified through a letter from Nasdaq that its common stock is subject to Nasdaq de-listing. The company will request an appeal hearing, which will stay a de-listing. The company stated in a press release on August 19 that, because Chief Executive Officer John Brincko recently joined the company on May 28, 2002 and Chief Financial Officer Steve Sokol was appointed on July 1, 2002, the company has not had sufficient time to complete second quarter financial statements and the related management's discussion and analysis of financial condition and results of operations. As previously reported, the company continues to work on the Form 10-Q and expects to file within approximately two weeks. The company said that its expected 10-Q filing will cure what is the only alleged deficiency and will allow the company's securities to remain listed on Nasdaq. Consolidated Freightways Corporation is comprised of national less-than-truckload carrier Consolidated Freightways, third- party logistics provider Redwood Systems, Canadian Freightways LTD, Grupo Consolidated Freightways, the company's subsidiary in Mexico, and CF AirFreight, an air freight forwarder. CORAM HEALTHCARE: Trustee Wants Reed Smith to Continue Services --------------------------------------------------------------- Arlin M. Adams, the Chapter 11 Trustee of the bankruptcy estates of Coram Healthcare Corp., and its debtor-affiliates, seeks authority from the U.S. Bankruptcy Court for the District of Delaware to continue the employment of Reed Smith Shaw & McClay LLP. Reed Smith represented the Debtors in healthcare regulatory and general corporate matters before the Petition Date and continued to do so after the Petition Date. Reed Smith is very familiar with the Debtors' businesses. The Trustee believes that Reed Smith is uniquely qualified to continue providing its professional services to the Trustee. The Trustee needs Reed Smith to: a. render assistance and advice, and represent the Trustee with respect to, healthcare regulatory issues arising from or impacting the Estates or these Chapter 11 cases, including compliance with Stark II regulations; b. render legal advice concerning general healthcare regulatory matters, including the Debtors' Medicaid acceptance policies, prompt pay guidelines, and FDA regulations; c. prepare on behalf of the Trustee necessary regulatory motions, reports and related legal papers; d. appear in court and before administrative bodies to represent the Trustee on subjects relating to healthcare regulation; and e. all other related legal services and general corporate matters which are appropriate, necessary and proper in these Chapter 11 cases. The principal attorneys designated to represent the Trustee and their current hourly rates are: Eugene Tillman $400 per hour Steven C. Robbins $325 per hour Carol C. Loepere $350 per hour Thomas J. Duman $380 per hour Coram Healthcare, a provider of home infusion-therapy services filed for Chapter 11 bankruptcy protection on August 8, 2000. Goldman Sachs and Cerberus Partners each own about 30% of the firm. Christopher James Lhuiler, Esq., at Pachulski Stang Ziehl Young & Jones PC represents the Debtors in their restructuring efforts. CONTOUR ENERGY: Shareholder Proofs of Interest Due October 1 ------------------------------------------------------------ The United States Bankruptcy Court for the Southern District of Texas, Houston Division requires all persons and entities that assert an equity Interest in Contour Energy Co., and its debtor- affiliates to file a proof of such interest or be forever barred from asserting it by either: a) filing an original proof of interest with the Clerk of the United States Bankruptcy Court, 515 Rusk Street, Room 1217, Houston, Texas, 77002, b) mailing an original proof of interest to Donlin, Recano & Company, Inc., as Agent for the United States Bankruptcy Court, Re: Contour Energy Co., et al ., P.O. Box 2075, Murray Hill Station, New York, New York 10156, or c) delivering an original proof of interest by messenger or overnight mail to Donlin, Recano & Company, Inc., as Agent for the United States Bankruptcy Court, Re: Contour Energy Co., et al., 419 Park Avenue South, Suite 1206, New York, New York 10016, not later than 4:30 p.m. (Prevailing Central Time) on or before October 1, 2002. "Interest" means an equity security interest in: a) shares of a corporation, whether or not transferable or denominated "stock" or similar security; b) interest of a limited partner in a limited partnership; or c) warrant or right, other than the right to convert, to purchase sell or subscribe to a share, security, or interest of a kind specified in (a) or (b). Contour Energy Co., a company engaged in the exploration, development acquisition and production of oil and natural gas primarily in south and north Louisiana, the Gulf of Mexico and South Texas, filed for chapter 11 protection on July 15, 2002. John F. Higgins, IV, Esq., at 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. COUER d'ALENE: First Quarter Net Loss Slides-Up to $12 Million -------------------------------------------------------------- Couer d'Alene Mines' product sales in the first quarter of 2002 decreased by $1.5 million, or 9%, from the first quarter of 2001 to $16.5 million. The decrease in sales is primarily attributable to the shutdown of the Petorca mine in August 2001. In the first quarter of 2002, the Company produced a total of 2,889,309 ounces of silver and 16,423 ounces of gold compared to 2,631,717 ounces of silver and 26,678 ounces of gold in the first quarter of 2001. In the first quarter of 2002, the Company realized average silver and gold prices of $4.45 and $291, respectively, compared with realized average prices of $4.52 and $270, respectively, in the prior year's first quarter. The decline in gold production was primarily due to lower production from Petorca, which was shutdown in June of last year. This was partially offset by higher gold prices realized and higher silver production at the Rochester and Galena mines. Interest and other income in the first quarter of 2002 increased by $0.5 million compared with the first quarter of 2001. The increase is primarily due to a $0.4 million increase in gains recorded on the sale of short-term investments. Costs and Expenses Production costs in the first quarter of 2002 decreased by $0.2 million, or 1%, from the first quarter of 2001 to $18.0 million. Depreciation and amortization decreased in the first quarter of 2002 by $1.0 million, or 33%, from the prior year's first quarter, primarily due to reduced depletion at the Rochester mine and none taken at the Petorca mine due to suspension of operations. Administrative and general expenses decreased $0.2 million in the first quarter of 2002 compared to 2001, due to continued cost reduction measures in 2002. Exploration expenses decreased by $0.8 million in the first quarter of 2002 compared to 2001, due to the Company's decision to limit the amount of exploration in 2002. Pre-feasibility expenses increased by $0.8 million due to increased spending on the San Bartolome silver project. Interest expense increased $0.7 million primarily due to make whole interest paid to holders of the 13-3/8% notes that converted their holdings to common stock. Other expenses increased $0.8 million primarily due to additional mine care and maintenance expenditures at both the Petorca and Cerro Bayo mines, and the additional expense recorded in connection with the repurchase of 6% debentures in the first quarter of 2002. As a result of the above mentioned factors, as well as debt retirement, the Company's net loss amounted to $11.9 million in the first quarter of 2002 compared to a net loss of $8.1 million in the first quarter of 2001. The Company's working capital at March 31, 2002 was approximately $26.3 million compared to $28.6 million at December 31, 2001. The ratio of current assets to current liabilities was 1.7 to 1.7 at March 31, 2002 compared to 1.7 to 1.0 at December 31, 2001. Net cash used in operating activities in the three months ended March 31, 2002 was $5.5 million compared to $6.0 million in the three months ended March 31, 2001. Net cash used in investing activities in the 2002 period was $0.4 million compared to net cash provided in investing activities of $16.5 million in the prior year's comparable period. The cash provided in the 2001 period was attributable to net proceeds of $14.7 million received from the sale of the Company's interest in Gasgoyne. Net cash used in financing activities was $0.1 million in the first three months of 2002, compared to $0.3 million used in the first three months of 2001. As a result of the above, cash and cash equivalents decreased by $6.0 million in the first three months of 2002 compared to an increase of $10.2 million for the comparable period in 2001. * * * As previously reported, Coeur d'Alene Mines Corporation dismissed Arthur Andersen LLP as the Company's independent accounting firm. Arthur Andersen LLP had served in that capacity since October 1999. The Company's determination reflected the fact that on June 15, 2002, the Securities and Exchange Commission announced that Arthur Andersen LLP had informed the Commission that it will cease practicing before the Commission by August 31, 2002. Arthur Andersen's report dated February 15, 2002, stated that the financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2001, had been prepared assuming that the Company will continue as a going concern. CREDIT SUISSE: Fitch Affirms Low-B Ratings on 5 Cert. Classes ------------------------------------------------------------- Credit Suisse First Boston Mortgage Securities Corp.'s commercial mortgage pass-through certificates, series 2001-CK3, $38.8 million class A-1, $105.5 million class A-2, $127 million class A-3, $582.4 million class A-4 and interest-only class A-X are affirmed at 'AAA' by Fitch Ratings. In addition, Fitch affirms the: -- $42.3 million class B at 'AA', -- $56.3 million class C at 'A', -- $11.3 million class D at 'A-', -- $14.1 million class E at 'BBB+', -- $25.4 million class F at 'BBB', -- $8.0 million class G-1 at 'BBB-', -- $11.7 million class G-2 at 'BBB-', -- $14.1 million class H at 'BB+', -- $24.8 million class J at 'BB', -- $9.0 million class K at 'BB-', -- $12.7 million class L at 'B+' and -- $9.9 million class M at 'B'. Fitch does not rate the $6.8 million class N nor $15.8 million class O certificates. The affirmations follow Fitch's annual review of the transaction, which closed in June 2001. The rating affirmations reflect the consistent loan performance and minimal reduction of the pool collateral balance since closing. No loans have been delinquent or specially serviced since closing. As of the August 2002 distribution date, the pool's aggregate certificate balance has decreased by 1% since closing to $1.12 billion from $1.13 billion. The certificates are collateralized by 169 fixed-rate mortgage loans, consisting primarily of multifamily (31% by balance), retail (30%), and office (27%) properties, with significant concentrations in California (25%), New York (12%), and Texas (9%). Key Commercial Mortgage, the master servicer, provided year-end (YE) 2001 borrower operating statements for 93% of the pool's outstanding balance. The weighted average debt service coverage ratio (DSCR) for YE 2001 increased to 1.54 times from 1.50x at closing. Three loans (0.77%) reported YE 2001 DSCRs below 1.00x. Fitch reviewed the performance and underlying collateral of the deal's two shadow-rated loans, 888 Seventh Avenue (9.4%) and Atrium Mall (4.3%), which are both considered investment grade. DSCRs for these loans are calculated using borrower-reported net operating income less required reserves and debt service payments based on the original balance and a stressed refinance constant of 9.23%. The 888 Seventh Avenue (9.4%) is an office property located in New York, NY. The property contains 874,000 sq. ft. and was built in 1971 (renovated in 1998). Occupancy as of Dec. 31, 2001 was 93%, which is unchanged from closing. The trailing-twelve month Dec. 31, 2001 DSCR has increased to 1.77x from 1.36x at closing. The Atrium Mall (4.3%) is a 215,000 sq. ft. retail center located in Chestnut Hill, MA. Occupancy was 92% as of Dec. 31, 2001, which is unchanged from closing. Major tenants include Borders Books (13% of net rentable area), The Gap/Gap Kids (9%) and Pottery Barn (7%). Sales at closing were in excess of $600 per square foot. and recent store sales were not made available. The TTM March 31, 2002 DSCR increased to 1.64x from 1.49x at closing. Fitch will continue to monitor this transaction, as surveillance is ongoing. DENBURY RESOURCES: Presents Plans to $50M of COHO's Assets ---------------------------------------------------------- Denbury Resources Inc. (NYSE:DNR), in conjunction with Denbury President and CEO Gareth Roberts' presentation at a New York luncheon sponsored by the Company, discussed its long-term plans for development of the previously announced pending purchase of the Coho Energy Inc. Gulf Coast properties for $50.3 million. Consummation of the purchase through the U.S. Bankruptcy Court is currently scheduled for August 29th, subject to the resolution of title and environmental issues and other normal closing adjustments. As previously announced, Denbury estimates that the proven reserves for this acquisition will be approximately 14.4 million barrels of oil. Included in the acquisition is Brookhaven Field, a possible tertiary carbon dioxide ("CO2") injection candidate located close to the Company's 183-mile CO2 pipeline. Initial tertiary recovery development may not be undertaken at this field for two to three years, as the field is currently producing approximately 750 barrels of oil per day and is still undergoing waterflood operations. Once tertiary operations commence, the Company anticipates spending $6 to $10 million per year for the first several years, with a total of approximately $75 to $85 million projected to be invested there over the field's predicted life. Currently, Denbury estimates the total proved reserves of the Brookhaven Field to be 2.9 million barrels of oil. The Company also has preliminary estimates that indicate around 20 million net barrels of additional oil may be recoverable from Brookhaven Field using CO2 injection, based on its success at Little Creek and Mallalieu Fields. Since a pilot project has not been performed to date at this field, the Company is not expected to immediately classify or record any of this additional potential as proved reserves. The Company expects to convert this potential to proved reserves as tertiary development of this field occurs, with the initial proved reserves expected to be recognized in two to three years. The acquisition of Brookhaven field is part of Denbury's strategy to expand its CO2 recovery operations throughout the Lower Tuscaloosa oil fields of Southwest Mississippi. Denbury is strategically positioned to develop the potential tertiary reserves in these fields because of its ownership of CO2 reserves and associated pipeline. Denbury operates the only active CO2 tertiary recovery operations in the basin at Little Creek, Lazy Creek and Mallalieu Fields and has expertise in installing and managing such an operation. Including some fields which Denbury does not currently own and the potential at Brookhaven Field, the Company estimates that approximately 60-75 million barrels of additional net oil reserves (over and above the 19.7 million barrels of proved reserves currently booked at Little Creek and Mallalieu Fields), may be available to Denbury in the vicinity of its pipeline through tertiary recovery operations. With the addition of Brookhaven field, McComb field (another previously announced acquisition expected to close during August) and other smaller fields where leasing is still in progress (all of which are over 65% leased), the Company estimates that it would then control 75% to 85% of the aforementioned future potential in this area. Denbury Resources Inc. -- http://www.denbury.com is a growing independent oil and gas company. The Company is the largest oil and natural gas operator in Mississippi, holds key operating acreage onshore Louisiana and has a growing presence in the offshore Gulf of Mexico areas. The Company increases the value of acquired properties in its core areas through a combination of exploitation drilling and proven engineering extraction practices. * * * As previously reported in the May 23, 2002 issue of the Troubled Company Reporter, Standard & Poor's raised the corporate credit rating on Denbury Resources Inc. to double-'B'-minus from single-'B'-plus and revised its outlook to stable from positive. The upgrade on Denbury's corporate credit rating reflects: -- Management's continuing maintenance of leverage that is consistent with the double-'B' rating category; since the severe industry downturn of 1998-1999 when Denbury's financial resources were strained, the company has operated with a more disciplined financial philosophy, including protecting cash flows with commodity price hedges, when appropriate. --Expected improvement in the company's financial profile resulting from likely elevated oil prices in 2002. --Expectations for prudent reinvestment of upcycle cash flows. --Good production growth during the next two years from Denbury's long lead-time development projects in Mississippi, which will further enhance the company's debt-service capacity. eB2B COMMERCE: Will Delay Filing Form 10-QSB for June Quarter ------------------------------------------------------------- eB2B Commerce Inc. is delaying the filing of its period ending June 30, 2002, financial information with the SEC since the Company has replaced its former auditors. As a result, the new auditors' review of the Form 10-QSB for the quarterly period ended June 30, 2002 will take an extended period of time as such firm becomes knowledgeable about the Company and its finances. As a result, additional time is required to file. The Company's operating results for the second quarter of 2002 compared to the second quarter of 2001 are as follows: Revenues for the second quarter of 2002 were approximately $1.0 million compared to $1.7 million in the second quarter of 2001. Revenues for the six months ended June 30, 2002 were approximately $2.6 million compared to $3.5 million for the six months ended June 30, 2001. The Company's net loss for the three month and six month periods ended June 30, 2002 was approximately $1.6 million and $3.2 million, respectively, compared to $10.1 million and $18.2 million for the similar periods in the prior year. ELIZABETH ARDEN: Inks Pact with QRS to Provide Elec. Services ------------------------------------------------------------- QRS Corporation (Nasdaq: QRSI), a leading provider of adaptive commerce solutions for the extended supply chain, announced that Elizabeth Arden (Nasdaq: RDEN), a leading global marketer and manufacturer of beauty products, has extended its agreement with QRS to be the provider of choice for electronic communication and catalogue services for Elizabeth Arden's global trading community. With this agreement, Elizabeth Arden will expand the use of QRS Data Exchange and QRS Catalogue(TM) beyond its U.S. divisions to the entire company worldwide. By extending QRS solutions across the extended supply chain, Elizabeth Arden will streamline business processes with hundreds of retail trading partners to speed purchases, minimize errors and enhance business relationships that drive revenue growth. QRS Data Exchange is part of the QRS Exchange(TM) suite of solutions, which supports all of the essential computing environments and data formats to achieve a rapid return on electronic commerce initiatives. Whether hosted, IP-based or fully managed, QRS Exchange offerings -- including Internet Transaction Exchange, Enterprise Business Exchange, Data Exchange, Web Forms and Managed EC -- help vendors electronically collaborate and transact with retailers to optimize business operations. QRS Catalogue, the retail industry's most comprehensive product content synchronization and management application will continue to allow Elizabeth Arden to maximize efficiencies throughout its extended supply chain. QRS Catalogue, the retail industry's largest product database, centralizes the communication of detailed product attribute information for over 88 million current and unique items from more than 3,500 vendors, manufacturers, distributors and their retail customers. Synchronization features allow Elizabeth Arden to publish its product information one time, controlling distribution access by retailers, items and attributes. This saves time, preserves data accuracy and establishes unique trading relationships. "With QRS, every single trading partner benefits by gaining access quickly to a global, open-commerce community in the most secure and reliable way," said Dave Lathan, director of information technology for Elizabeth Arden. "The retail industry depth of QRS Catalogue and the extensive data connectivity readily available with QRS Exchange mean better access to precise beauty product details for more retail partners worldwide." "We are pleased that Elizabeth Arden, one of the world's most respected beauty product manufacturers, decided to extend the use of QRS software and services to further drive business growth," said Liz Fetter, president and CEO of QRS. "Renewed business from global retail leaders like Elizabeth Arden is proof that our adaptive commerce solutions deliver effective retail results today." Elizabeth Arden is a leading global marketer and manufacturer of prestige beauty products. The Company's portfolio of leading brands includes, among others, the fragrance brands Red Door, Elizabeth Arden Green Tea, 5th Avenue, Elizabeth Taylor's White Diamonds and Passion, White Shoulders, Geoffrey Beene's Grey Flannel, Halston, Halston Z-14, PS Fine Cologne for Men, Design and Wings by Giorgio Beverly Hills; the Elizabeth Arden skincare line including Ceramide and Millenium; and the Elizabeth Arden color cosmetics line. QRS has been building, automating and managing retail trading relationships through innovative software applications and services since 1988. QRS is an established leader in providing adaptive commerce solutions for the extended supply chain. QRS offers scalable trading community connectivity; reliable product content management; real-time, synchronized transaction delivery; and Web-enabled sourcing and procurement. QRS solutions are used by more than 8,000 retail industry customers* representing the world's top retailers, vendors and manufacturers, including Federated Department Stores Inc., Selfridges plc, Sears, Roebuck and Co., LVMH LLC, Group Clarins USA and Jones Apparel Group Inc. With QRS adaptive commerce solutions, retail industry customers can transform their extended supply chain in response to marketplace dynamics, drive process efficiency and achieve superior profit. Learn more about QRS Corporation at http://www.qrs.com (*Based on total, unique QRS corporate customers that purchased or licensed QRS products and services between April 2001 and May 2002.) As reported in the April 15, 2002 edition of Troubled Company Reporter, Standard & Poor's downgraded Elizabeth Arden's Senior Unsecured Rating to CCC+. ENCOMPASS SERVICES: Selling Underperforming Units to Raise Cash --------------------------------------------------------------- Encompass Services Corporation is one of the largest providers of facilities services in the United States. The Company provides electrical and mechanical contracting services and cleaning and maintenance management services to commercial, industrial and residential customers nationwide, including construction, installation and maintenance. Encompass operates in three reportable segments: Commercial/Industrial Services, Residential Services and Cleaning Systems. Revenues decreased $129.7 million, or 13%, to $866.9 million for the three months ended June 30, 2002 from $996.6 million for the three months ended June 30, 2001. The decrease is primarily attributable to decreases in revenues from technology and telecommunications customers in the West and Southwest regions of the Company's Commercial/Industrial Services Group and the general deterioration in the overall economic environment. The U.S. Department of Commerce construction reports indicate that private non-residential construction declined approximately 20% (seasonally adjusted annual rate) from June 2001 to June 2002. Gross profit decreased $68.5 million, or 39%, to $107.5 million for the three months ended June 30, 2002 from $176.0 million for the three months ended June 30, 2001. This decrease in gross profit is primarily due to increased pricing pressures on projects as a result of weaker economic conditions, reduced levels of work done for customers in the higher margin technology and telecommunications sector, and job losses totaling $13.3 million on two specific large jobs. Gross profit margin decreased to 12.4% for the three months ended June 30, 2002 compared to 17.7% for the three months ended June 30, 2001 for the same reasons. During the three months ended June 30, 2002, the Company recorded a loss, net of tax, of $0.6 million related to the transition and wind-down of the three business units sold during the first quarter of 2002, compared to a loss, net of tax, from these discontinued operations as well as those of the discontinued Global Technologies segment of $7.1 million for the three months ended June 30, 2001. Revenues decreased $259.6 million, or 13%, to $1,729.9 million for the six months ended June 30, 2002 from $1,989.5 million for the six months ended June 30, 2001. The decrease is primarily attributable to the factors noted above. Gross profit decreased $124.9 million, or 35%, to $227.8 million for the six months ended June 30, 2002 from $352.7 million for the six months ended June 30, 2001. Again, the decrease in gross profit is primarily due to the factors as noted above. Gross profit margin decreased to 13.2% for the six months ended June 30, 2002 compared to 17.7% for the six months ended June 30, 2001, for the reasons mentioned above. The Company finances its operations and growth primarily with internally generated funds and borrowings from commercial banks and other lenders. During the second quarter of 2002, management anticipated that the Company might not be able to remain in compliance with the financial covenants contained in its primary bank credit facility as of June 30, 2002. Accordingly, the Company entered into negotiations with its senior bank lenders to amend the financial covenants to avoid a possible default as of the end of the second quarter. Effective June 26, 2002, the Company entered into an amended credit facility, which provides financial covenant modifications through February 2005. Management anticipates that the Company's cash flow from operations and existing borrowing capacity under the Amended Facility will be adequate to fund the Company's normal working capital needs, debt service requirements and planned capital expenditures for 2002. The Company intends to sell certain under-performing or non- strategic business units, provided that the Company is able to secure prices, terms and conditions deemed acceptable by it. Including the anticipated tax benefits associated with the sales of some of these businesses, the Company believes that the aggregate cash benefit to be realized from sales of businesses will exceed $50 million. Pursuant to the Amended Facility, the proceeds of any such sales will be used to permanently reduce balances outstanding under the Term Loans and the Revolving Credit Facility, on a pro-rata basis. There can be no assurance that the Company will secure satisfactory offers for any business unit or that some business units will not be sold at a loss. ENRON CORP: LNG Unit Wants to Sell Contracts to El Paso for $31M ---------------------------------------------------------------- Enron LNG Marketing LLC ask the Court to approve its Purchase and Sale Agreement with El Paso LNG Elba Island LLC for the assumption and assignment of all of its right, title and interest in these two Agreements: (a) the LNG Sale and Purchase Letter Agreement dated October 13, 1999 by and between Enron LNG, as successor to Enron Americas LNG Company, and EL Paso Merchant Energy, LP, as successor to El Paso Merchant Energy Gas LP, successor to Sonat Energy Services Company; and (b) the related Quality Letter Agreement dated October 13, 1999 by and among El Paso Merchant Energy LP, Southern LNG Inc. and Enron LNG. The sale will be free and clear of all liens, claims, encumbrances and other interests, and subject to higher and better offers. Martin A. Sosland, Esq., at Weil, Gotshal & Manges, LLP, in New York, outlines the terms and conditions of the Purchase Agreement: (a) Initial Purchase Price: $31,000,000, subject to adjustment; (b) Purchase Price: The Initial Purchase Price will be reduced by $100,000 for each calendar day a Sale Order is not entered by the Court from September 10 to 29, 2002; (c) Escrow Arrangements: El Paso LNG will wire transfer 10% of the Initial Purchase Price, to be deposited in escrow with JPMorgan Chase Bank, Houston Office; (d) Closing Date Payment: El Paso will wire transfer the remaining portion of the Purchase Price on or prior to the Business Day immediately preceding the Closing; (e) El Paso LNG's Parent Guaranty: El Paso Corporation, a Delaware corporation, will execute and deliver to Enron LNG a guaranty in favor of Enron LNG; (f) Assumption of Liabilities: El Paso LNG agrees, effective upon the Closing Date, to assume and to pay, perform and fully discharge and fully satisfy promptly when due all liabilities, duties, obligations and claims of Enron LNG under the Assumed Contracts; (g) Non-Recourse Sale: The assignment, sale, transfer, setting over, and delivery of the Contracts -- "Assets" -- will be "as is, where is" and "with all faults", and El Paso LNG will have no recourse to, and will waive, effective as of the Closing, all claims against Enron LNG and its affiliates in connection with the Assets and the Assumed Liabilities. Further, El Paso LNG will have no recourse to, and waives all claims against Enron LNG and its Affiliates in connection with the Purchase Agreement. It is the explicit intent of each party that Enron LNG will not make any representation or warranty whatsoever as to the condition, merchantability, usage, suitability or fitness of the Assets or the Assumed Liabilities; (h) Waiver of Set-off Rights: El Paso LNG will unconditionally waive any rights of setoff, netting, offset, recoupment or similar rights it may have with respect to the payment of the Purchase Price and the payment or other performance of the Assumed Liabilities or any other document or instrument it delivers at the Closing; (i) Enron LNG's Closing Conditions: The Enron LNG's obligations to proceed with the Closing is subject to the satisfaction or waiver prior to the Closing Date of these conditions: (i) Representations, Warranties and Covenants of the parties will be true and correct in all material respect on as of the Closing Date; (ii) No Action will be pending before any Governmental Authority of competent jurisdiction seeking to enjoin or restrain the consummation of the Closing; (iii) No Law issued by any court preventing the consummation of the transactions will be in effect or exist or entered, enforced, promulgated or deemed applicable to the transaction; (iv) The Bankruptcy Court has entered the Sale Order and the Sale Order will be subsisting and in full force and effect; (v) El Paso LNG has delivered the Closing Payment to Enron LNG; (vi) El Paso have duly executed and delivered to Enron LNG the Assignment and Assumption Agreement; (vii) The El Paso Parent Guaranty will be in full force and effect; (viii) All of the parties to the General Release will have executed the General Release and delivered the General Release to Enron LNG; (ix) El Paso Marketing will have duly executed and delivered to Enron LNG the Arbitration Release; and (x) El Paso Marketing has duly executed and delivered the Notice to Dismiss; (j) El Paso LNG's Closing Conditions: The El Paso LNG's obligations to proceed with the Closing is subject to the satisfaction or waiver of these conditions: (i) The representations, warranties and covenants of Enron LNG are true and correct in all material respects on and as of the Closing Date and the covenants and agreements of Enron LNG have been duly performed in all material respects; (ii) No Action will be pending before any Governmental Authority of competent jurisdiction seeking to enjoin or restrain the consummation of the Closing; (iii) No Law issued by any court preventing the consummation of the transactions will be in effect or exist or entered, enforced, promulgated or deemed applicable to the transaction; (iv) The Bankruptcy Court has entered the Sale Order and the Sale Order will be subsisting and in full force and effect; (v) Enron LNG has duly executed and delivered to El Paso LNG the Assignment and Assumption Agreement; (vi) Enron LNG has duly executed and delivered to El Paso the Arbitration Release; and (vii) Enron LNG has executed and delivered to El Paso LNG the Notice to Dismiss; (k) Closing: Once all conditions are fulfilled or waived, the closing and consummation of the transactions contemplated in the Purchase Agreement will be held on the Closing Date at 10:00 a.m. Houston, Texas time, at the offices of Andrews & Kurth LLP at 600 Travis Street in Houston, Texas; (l) Termination of Agreement: The Purchase Agreement may be terminated at any time prior to the Closing; and (m) Break-Up Fee and Buyer Expense Amount: If the Purchase Agreement is Terminated in favor of a higher and better bid, Enron LNG will pay to El Paso $387,500 as the Break-Up Fee and the reimbursement of its actual expenses of not more than $400,000 by wire transfer. Mr. Sosland asserts that assumption and assignment of the Agreements is supported by Section 365(a) of the Bankruptcy Code, especially since Enron LNG does not have any monetary default under the Agreements. Pursuant to Section 363 of the Bankruptcy Code, Mr. Sosland contends that the relief requested should be afforded to Enron LNG because: (a) the parties acted in good faith and at arm's length; (b) Enron LNG believes it has realized the best price obtainable for the Contracts; and (c) the sale will result in maximizing the value of the Assets for the estate and will potentially result in a greater return to creditors. Pursuant to Sections 105(a) and 1146(c) of the Bankruptcy Code, Enron LNG also ask Judge Gonzalez to declare the sale of the Assets to be exempt from any and all stamp taxes, transfer taxes or similar taxes. (Enron Bankruptcy News, Issue No. 40; Bankruptcy Creditors' Service, Inc., 609/392-0900) DebtTraders reports that Enron Corp.'s 9.125% bonds due 2003 (ENRN03USR1) are trading between 11.5 and 12.5 . See http://www.debttraders.com/price.cfm?dt_sec_ticker=ENRN03USR1 for more real-time bond pricing. ENTRADA NETWORKS: Reports Improved Second Quarter Results --------------------------------------------------------- Entrada Networks, Inc., (Nasdaq:ESAN) announced results for the second quarter of fiscal year 2003 ended July 31, 2002. The Company reported total net revenues from its adapter card and the frame relay businesses of $3.4 million for the second quarter, compared with $4.1 million reported in the same period last year. For the second quarter the Company reported a net income of $0.3 million, compared to a net loss of $2.8 million for the same period last year. For the six months ended July 31, 2002, the Company reported net revenues of $6.6 million compared to $6.8 million reported in the same period last year. For the six months ended July 31, 2002 the Company's net income increased to $0.5 million from a net loss of $6.2 million for the same period last year. Dr. Kanwar J.S. Chadha, Chairman & Chief Executive Officer of Entrada commented, "The Company is going through a metamorphosis. These potential changes are evident in our recent merger announcement as well as our notice of delisting from Nasdaq and our subsequent appeal. Our core business was profitable once again last quarter, and our execution of our path to profitability strategy remains on course." Entrada Networks currently has three wholly owned subsidiaries that focus on developing and marketing products in the storage networking and network connectivity industries. Rixon Networks manufactures and sells a line of fast and gigabit Ethernet adapter cards that are purchased by large networking original equipment manufacturers as original equipment for servers, and other computer and telecommunications products. Rixon's focus is on two- and four-port cards and drivers for highly specialized applications. Sync Research manufactures and services frame relay products for some of the major financial institutions in the U.S. and abroad. The Torrey Pines subsidiary specializes in the design & development of SAN transport switching products. Entrada Networks is headquartered in Irvine, CA., Web site: http://www.entradanetworks.com ENVOY COMMS: Plans $2.5M Private Placement of Secured Debentures ---------------------------------------------------------------- Envoy Communications Group Inc. (NASDAQ: ECGI; TSE: ECG), announced its intention to privately place up to $2,500,000 in principal of 10% Convertible Secured Debentures due 2007. The Debentures will have a maturity of five years and will be convertible into a total of 7,352,941 units at the conversion price of $0.34 per unit, each unit consisting of one common share and one warrant. Each warrant will be convertible into one common share at a price of $0.34 per share for a period expiring on the earlier of (i) 12 months from issuance of the warrant upon conversion of the Debentures, and (ii) the expiry date of the Debentures. Envoy proposes to close the private placement on or before September 30, 2002. The transaction is currently subject to regulatory approval. Envoy Communications Group (NASDAQ: ECGI / TSE: ECG) is an international design, marketing and technology company with offices throughout North America and Europe. Combining strategy, creativity and innovation, Envoy's interconnected network of companies delivers business-building solutions to over 200 leading global brands and has successfully completed assignments in more than 40 countries around the world. Envoy clients include adidas-Salomon, Armstrong, BASF, FedEx, Honda, JPMorgan Chase, Lexus, Microsoft, Nissan, Panasonic, Safeway, Sprint Canada, Steelcase, TD Securities, Toshiba and Wal-Mart. For more information on Envoy visit http://www.envoy.to At March 31, 2002, Envoy Communications' total current liabilities exceeded its total current assets by over $7 million. EVERCOM: Delays SEC Filings While Exploring Alternatives -------------------------------------------------------- Evercom Inc., is in the process of exploring strategic and financial alternatives. These explorations include discussions with potential investors, the Company's investors and creditors, and potential strategic partners. Management of the Evercom believes that the outcome of this process is material to the disclosures contained in the Company's Quarterly Report for the period ended June 30, 2002, to be filed with the SEC. For this reason Evercom is delaying such filing. Evercom has yet to file its Annual Report for the period ended December 31, 2001 and its Quarterly Report for the period ended March 31, 2002. The Company anticipates that it will report a loss for the quarter ended June 30, 2002, that is significantly larger than the loss reported for the same period in the previous fiscal year. Management of Evercom believes that much of the increase in loss will be attributable to an increase in uncollectible accounts primarily attributable to the deterioration in the economy. Because the actual amount of such loss will not be determined until the filing of Evercom's Quarterly Report, the actual amount of the loss will be specifically quantified upon that filing. EXIDE TECH: Wants to Create SPV to Finance Unit's Receivables ------------------------------------------------------------- James E. O'Neill, Esq., at Pachulski Stang Ziehl Young & Jones, P.C. in Wilmington, Delaware, recounts that effective as of the Petition Date, Exide Technologies, and its debtor-affiliates entered into the Secured Super-Priority Debtor-in-Possession Credit Agreement with Citicorp USA, Inc., as Administrative and Collateral Monitoring Agent to provide up to $250,000,000 in secured financing to the Debtors and their non-debtor affiliates. On May 10, 2002, the Court entered a final order approving the DIP Credit Agreement. Mr. O'Neill relates that the facility is the primary source of working capital for the Debtors' global operations. The Debtors borrow under the DIP Facility, not only to support its own working capital needs, but also re-lends loan proceeds to non-debtor affiliates. Pursuant to the DIP Credit Agreement, certain assets of those affiliates may be pledged to the DIP Lenders on the Debtors' behalf as collateral to secure the Debtors' borrowings under the DIP Facility. Indeed, the Debtors' ability to borrow sufficient funds under the DIP Facility to be able to lend DIP proceeds to certain non-debtor affiliates is dependent on a sufficient borrowing base of collateral from these affiliates. Mr. O'Neill tells the Court that the Debtors have been unable to effectuate a pledge of the receivables of its non-debtor Australian subsidiary because the DIP Lenders believe that they would be required to establish substantial reserves in Australia to cover priority employee entitlement claims. As a consequence, the Debtors' borrowing base has been negatively impacted, thereby constraining the Debtors' ability to borrow under the DIP Facility. By this motion, the Debtors seek the Court's authority to create a new "special purpose vehicle" to facilitate the financing of the receivables of its Australian and its New Zealand subsidiary and to obtain greater liquidity under the DIP Facility. While the Debtors believe that this action is in furtherance of authority already contemplated under the DIP Credit Agreement and that it may constitute an action within the ordinary course of business for a corporation of its size and scope, the Debtors nevertheless seek the relief requested in an abundance of caution. Specifically, the Debtors want to create a special purpose vehicle organized under the laws of the State of Delaware to which the Debtors' non-debtor Australian and New Zealand subsidiary may transfer the Australian Receivables and which will be authorized to pledge these assets on the Debtors' behalf to secure additional borrowings under the DIP Facility. In order to effectuate the purchase of the Australian Receivables from its Australian and New Zealand subsidiaries and in consideration of the pledge granted by the SPV to the DIP lenders on Debtors' behalf, Mr. O'Neill informs the Court that the Debtors would lend sufficient funds to the special purpose vehicle to purchase the Australian Receivables. The Debtors' authority to lend DIP proceeds to affiliates is already set forth in the Final DIP Order, so no further relief is required. Mr. O'Neill assures the Court that the Debtors' estates will not be negatively impacted by the formation of the special purpose vehicle. None of the Debtors' assets are to be transferred to the special purpose vehicle, and the loan to the special purpose vehicle is offset by the increased liquidity afforded by the pledge of the Australian Receivables. The entire purpose of the creation of the special purpose vehicle is to implement financing of Australian Receivables already contemplated under the existing DIP Credit Agreement. In addition, the Debtors' Australian and New Zealand subsidiaries will benefit from the transaction due to their greater access to liquidity. (Exide Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 609/392-0900) DebtTraders reports that Exide Technologies' 10.000% bonds due 2005 (EXDT05FRR1) are trading between 15 and 18. See http://www.debttraders.com/price.cfm?dt_sec_ticker=EXDT05FRR1 for more real-time bond pricing. EXODUS COMMS: C&W Asks Court to Bring-In PwC to Settle Impasse -------------------------------------------------------------- Cable & Wireless PLC asks the Court to intervene in its impasse with EXDS Inc., and its debtor-affiliates for the appointment of an Independent Accountant to settle post-Closing disputes Cable & Wireless asks the Court to: -- appoint PricewaterhouseCoopers as the Independent Accountant in accordance with the terms of the Engagement Letter to which the parties already have pledged to sign, and -- limit the scope of the dispute submitted to the Independent Accountant since EXDS improperly seeks to have the Independent Accountant resolve a $10,000,000 dispute relating to EXDS' desire to change a figure in Section 2.2(d) of the Asset Purchase Agreement. Pursuant to the PwC Selection Agreement, the parties sent a joint solicitation letter to PwC: (a) requesting information regarding its availability to resolve the Closing Disputed Matters, (b) asking for a draft engagement letter, and (c) requesting PwC to identify the person who would manage the engagement and conduct the proceeding. Victoria Watson Counihan, Esq., at Greenberg Traurig LLP, in Wilmington, Delaware, relates that EXDS and Cable & Wireless have agreed on PwC to be the Independent Accountant and that the parties have agreed that all conflicts are waived, provided that this person cannot be from PwC's Chicago or New York offices and that this person selected by PwC has had no involvement in work for: -- the EXDS Creditor's Committee, -- Alvarez & Marsal Inc., -- Cleary, Gottlieb, Steen & Hamilton, -- Jenner & Block LLC, -- Cable and Wireless, -- EXDS, or -- the Zell organization. PwC had selected Lawrence F. Ranallo. Mr. Ranallo executed an engagement letter on July 22, 2002. However, Ms. Counihan tells the Court that EXDS reneged on proceeding with the Mr. Ranallo's engagement. On July 29, 2002, EXDS' counsel sent Cable & Wireless' counsel an e-mail claiming that EXDS needed a statement "describing all ongoing relationships between PwC and Cable and Wireless, including a listing of all projects presently contemplated or under discussion". The message further provided that depending on information contained in the statement, the parties would need to "discuss with Mr. Ranallo, appropriate screening devices to insure that no future conflict could impact the proceedings". Although Cable & Wireless would not mind re-confirming with Mr. Ranallo that neither he nor anyone who would participate in the resolution of the disputed matter had done any work for the listed parties, Ms. Counihan argues that EXDS' demand is improper in light of the PwC Selection Agreement. (Exodus Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service, Inc., 609/392-0900) EZENIA! INC: Working Capital Deficit Tops $2 Million at June 30 --------------------------------------------------------------- Ezenia! Inc. (Nasdaq: EZEN), a provider of real-time collaboration solutions for corporate and government networks and eBusiness, reported revenues of $3.2 million for the second quarter of 2002 compared to $2.7 million reported for the first quarter of 2002 and $3.4 million for the corresponding period of the previous year. Operating results for the quarter showed a net loss of $8.5 million including the effect of a write-down of inventory of approximately $2.3 million and provision for impairment of long-lived assets of approximately $2.1 million. Net loss for the corresponding period of the prior year was $9.9 million including the effect of costs of $2.0 million associated with the Company's May 2001 restructuring and cost reduction plan. Net loss for the six months ended June 30, 2002 was $9.7 million including the inventory write-off and provision for impairment of long-lived assets mentioned above. Net loss for the corresponding period of the prior year was $16.8 million including the restructuring charges mentioned above. At June 30, 2002, the Company's balance sheet shows that its total current liabilities exceeded its total current assets by about $2 million. Ezenia! Inc. (Nasdaq: EZEN), founded in 1991, is a leading provider of real-time collaboration solutions, bringing new and valuable levels of interaction and collaboration to corporate networks and the Internet. By integrating voice, video and data collaboration, the Company's award-winning products enable groups to interact through a natural meeting experience regardless of geographic distance. Ezenia! products allow dispersed groups to work together in real-time using powerful capabilities such as instant messaging, whiteboarding, screen sharing and text chat. The ability to discuss projects, share information and modify documents allows users to significantly improve team communication and accelerate the decision-making process. More information about Ezenia! Inc. and its product offerings can be found at the Company's Web site, http://www.ezenia.com GADZOOX NETWORKS: Files for Chapter 11 Reorganization in Calif. --------------------------------------------------------------- Gadzoox Networks, Inc. (OTC Bulletin Board: ZOOX), a global supplier of innovative Storage Area Network (SAN) products, took significant steps towards reorganization while continuing day- to-day business operations without interruption. The Company's initial steps include the filing of a voluntary petition under Chapter 11 of the Bankruptcy Code. "Filing for Chapter 11 alleviates some business distractions while giving us the opportunity to close new business deals with our FabriCore Engines' customers and continue to focus on supporting our new and existing OEM customers," said Steve Dalton, Gadzoox Networks' President and CEO. "This also gives us the ability to continue our day-to-day operations, without interruption, including our commitments to our dedicated employees and world-class suppliers, all of whom recognize Gadzoox Networks has a unique technology to offer this industry." Chapter 11 enables a company to get relief from its creditors while it restructures its business and improves its financial stability. Once in Chapter 11, the Company will continue to operate its day-to-day business as a "Debtor-in-Possession" under the supervision of the Bankruptcy Court. In connection with the Chapter 11 filing, the Company is exploring the possibility of obtaining additional or replacement financing. However, the Company believes that the relief the bankruptcy process provides, with respect to existing obligations, and assuming that sufficient transactions close with respect to our FabriCore Engine products and services, the Company will be able to continue to operate, pay all post-petition obligations and service all of their customers. New Revenue Streams: During the past quarter Gadzoox Networks announced the availability of FabriCore Engines, the industry's only intellectual property Fibre Channel cores. Based on discussions with potential FabriCore Engine customers, the Company believes that the new FabriCore Engines products have been well received in the industry. There are currently over 25 companies engaged in FabriCore Engines' discussions with Gadzoox Networks. Additionally, Gadzoox Networks' Slingshot switches were selected by another large OEM as the 2Gb fabric switch for their soon to be announced storage networking solution. Cost Reduction and Actions: According to the Company, the current economic environment has created excess availability of properties in the area, and one of the Company's first actions to remove debt, will be to relocate its headquarters to a location with more attractive pricing. The Company expects to announce details on the move soon. "Gadzoox Networks is emerging as a new company; we have added a new OEM partner and launched a new product line, FabriCore Engines, which has already yielded new customers for the Company," stated Barbara Velline, Gadzoox Networks' Chief Financial Officer. "Over the last couple of quarters we have undertaken extensive cost cutting measures and engaged in daily operations reviews to monitor our financial position. However, while we have been making progress with our new strategic direction, we have been dealing with liquidity issues resulting from carrying a balance sheet that reflects the former infrastructure of the company. Gadzoox Networks is in a position to succeed and this filing enables us to capitalize on those opportunities that we have been developing over the last 10 weeks. We are now taking action to build financial strength as we move forward," Velline added. The Company filed its Chapter 11 Bankruptcy petition with the United States Bankruptcy Court for the Northern District of California (San Jose Division). The Company's petition listed assets of approximately $10 million and liabilities of approximately $14 million. For more information Customers, Investors and Suppliers can call, toll free, 888-391-7362 or visit the Gadzoox Networks Web site at http://www.gadzoox.com/reorgwhich is a separate web page that is devoted to answering questions and providing up-to-date information on the status of the Company's reorganization. Gadzoox Networks is represented by Levene, Neale, Bender, Rankin & Brill L.L.P., Los Angeles, CA. Since 1996 Gadzoox Networks has led the industry in market "firsts" and continues to drive the Storage Area Network edge market with innovative Fibre Channel switching technology. The company has consistently delivered a time to market advantage to major OEM customers enabling them to create clear business value for their customer base. Gadzoox Networks is a voting member of the Storage Networking Industry Association, with corporate headquarters located in San Jose, California. For more information about Gadzoox Networks' products and technology advancements in the SAN industry, visit the company's Web site at http://www.gadzoox.com GADZOOX NETWORKS: Voluntary Chapter 11 Case Summary --------------------------------------------------- Debtor: Gadzoox Networks, Inc. 5850 Hellyer Ave. San Jose, CA 95138 Bankruptcy Case No.: 02-54667 Chapter 11 Petition Date: August 22, 2002 Court: Northern District of California (San Jose) Judge: Marilyn Morgan Debtor's Counsel: Ron Bender, Esq. Levine, Neale and Bender 1801 Avenue of the Stars #1120 Los Angeles, CA 90067 310-551-1010 GLOBAL CROSSING: Enters Pact Continuing Value Plan Participation ---------------------------------------------------------------- Pursuant to certain interconnection agreements, wholesale and retail agreements, service agreements, contracts and applicable tariffs, Southwestern Bell Telephone Company affiliates furnish a variety of telecommunications services to certain of Global Crossing Ltd. and its debtor-affiliates. Prior to the Petition Date, the Debtors participated in a volume discount plan, known as the Managed Value Plan. The Managed Value Plan is a qualified access discount plan that provides customers with billing discounts for a commitment to maintain a predetermined annual recurring billing amount for five years. It is only available to those customers of the SBC Affiliates that maintain at least $10,000,000 in annual billing and remain current in their payment of monthly access charges. In a Court-approved stipulation, the Debtors, Southwestern Bell Telephone Company, Pacific Bell Telephone Company, The Southern New England Telephone Company And Ameritech and certain of its affiliates of SBC Communications, Inc. agree that the Debtors will be allowed to participate in the Managed Value Plan under these terms and conditions: 1. The SBC Affiliates will agree to provide all Managed Value Plan credits that the Debtors are entitled to since the Petition Date and these credits will be deemed granted as of July 29, 2002 and the SBC Affiliates will post the credits as soon as practicable thereafter; 2. The SBC Affiliates will be entitled to, and are authorized, to offset those credits attributable to prepetition services to the outstanding prepetition balance that the Debtors owed the SBC Affiliates on the Petition Date, thereby reducing any outstanding amounts owed by the Debtors to the SBC Affiliates as of the Petition Date; 3. Each month, provided that the Debtors are in compliance with the terms and conditions of this stipulation, the SBC Affiliates will post the applicable credit to the Debtors' monthly invoice; 4. The SBC Affiliates reserve their rights to terminate the Debtors participation in Managed Value Plan and re-bill all postpetition credits in the event that the Debtors fail to make any of the monthly payments due. The Debtors expressly reserve their rights to object to any termination or re-billing of credits; 5. The Debtors will have a right to cure any of the defaults within five business days after the SBC Affiliates provides written notice of a default to the Debtors. The notice is deemed received when transmitted by facsimile by the SBC Affiliates to the Debtors, or any one of them and their undersigned counsel; 6. The SBC Affiliates expressly reserve any and all of their rights, to re-bill any credits and assert an administrative claim for any credits provided in the postpetition period with respect to the rejected services, in the event that: * the Debtors ultimately reject the Managed Value Plan program, * the Debtors seek to terminate any part of the Debtors participation in the program, or * the SBC Affiliates have the right to terminate the Debtors' participation in the program; 7. The terms of this Stipulation and Order will expire automatically upon the occurrence of: * The Debtors' cases or any one of them to which SBC provides services, is converted to a chapter 7 liquidation and consensual arrangements for continued services are not made between the SBC Affiliates and Debtors' chapter 7 trustee; * The Debtors' cases, or any one of them to which SBC provides services, are dismissed; or * The Debtors, or any one of them to which SBC provides services, confirm a chapter 11 plan of reorganization in these cases; 8. In the event the Stipulation and Order expires, the SBC Affiliates, in their sole and exclusive discretion, will retain all rights with respect to the Debtors participation in the Managed Value Plan; and 9. Except as expressly provided, the SBC Affiliates and the Debtors reserve and preserve all their respective rights under any applicable agreements between the parties, the Bankruptcy Code and applicable law, including any tariffs, and any orders issued by any applicable regulatory authorities. (Global Crossing Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 609/392-0900) GRANT GEOPHYSICAL: S&P Hatchets Credit Rating to Default Level -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit and senior unsecured debt ratings on Grant Geophysical Inc. to single-'D' from double-'C' and removed the company ratings from CreditWatch with developing implications. "The rating action follows the company's announcement that it did not make its August 15, 2002, $2.1 million interest payment on its senior unsecured notes due 2008," noted Standard & Poor's credit analyst Steven K. Nocar. "If Grant makes the interest payment within the grace period, Standard & Poor's would reevaluate the ratings and outlook on the company at that time," he continued. IEC ELECTRONICS: June 28 Balance Sheet Upside-Down by $1 Million ---------------------------------------------------------------- IEC Electronics Corp., (Nasdaq-SCM: IECE)- reported results for the company's third quarter and first nine months of fiscal 2002. For the three-month period ending June 28, 2002, IEC reported a net loss of $6.9 million, compared to a net loss for the third quarter of fiscal 2001 of $3.2 million. The net loss for continuing operations (Newark, NY) for the third quarter of fiscal 2002 was $1.7 million. This included a one-time restructuring charge of $448,000 related to a workforce reduction in May and a $500,000 write-down of the company's Alabama building, which is up for sale. This compares to a net loss from continuing operations for the third quarter of fiscal 2001 of $237,000. There was a net loss of $5.2 million from discontinued operations in the third quarter of fiscal 2002, which included loss from operations and loss on disposal of IEC's facility in Reynosa, Mexico. In June, the Mexican assets were sold and the plant was closed. This compares to a net loss from discontinued operations of $3.0 million for the third quarter of fiscal 2001. For the first nine months of fiscal 2002, the net loss was $12.9 million. This compared to a net loss of $5.7 million for the first nine months of fiscal 2001. The net loss for continuing operations for the first nine months of fiscal 2002 was $5.2 million, which included a one-time charge for restructuring of $448,000 and a $900,000 writedown of the company's Alabama building being held for sale. This compared to net income for the first nine months of fiscal 2001 from continuing operations of $1.3 million. The net loss from discontinued operations for the first nine months of fiscal 2002 was $7.7 million, compared to a net loss from discontinued operations in the first nine months of fiscal 2001 of $7.0 million. Revenue from continuing operations in the third quarter of fiscal 2002 was $6.0 million, compared to $28.2 million in the same period of fiscal 2001. Revenue from continuing operations for the first nine months of fiscal 2002 was $30.7 million compared to $104.0 million for the first nine months of fiscal 2001. At June 28, 2002, the Company's balance sheet shows a working capital deficiency of about $8 million, and a total shareholders' equity deficit of about $1 million. IEC's Chairman and acting Chief Executive Officer Barry Gilbert said, "Stabilizing the business has warranted some difficult decisions including the restructuring of continuing operations in Newark and the shutdown of Mexico. Our short-term goals have not changed, and that is to restore positive cash flow and return to profitability in that order. We believe we are headed in the right direction, the majority of our losses for the third quarter were in April and May and since that time we have been moving steadily forward. Without the continuing losses in Mexico, we expect to see improvement to our bottom line in the 4th quarter." Gilbert continued, "We are nearing a settlement with Acterna. We are also negotiating with our lenders to balance the application of the funds to support their requirements and those of our suppliers who have been most supportive during our restructuring efforts." IEC is a full service, ISO-9001 registered EMS provider. The Company offers its customers a wide range of services including design engineering, prototype and volume printed circuit board assembly, material procurement and control, manufacturing and test engineering support, systems build, final packaging and distribution. Information regarding IEC can be found on its Web site http://www.iec-electronics.com INTERNATIONAL WIRE: S&P Lowers Credit Rating One Notch to B ----------------------------------------------------------- Standard & Poor's Ratings Services has lowered its ratings on International Wire Group Inc., based on concerns about the company's continued weak financial performance and the heightened concerns for further declines. Standard & Poor's lowered the corporate credit rating on the company to single-'B' from single-'B'-plus. The current outlook is negative. International Wire, based in St. Louis, Missouri, has debt of $337 million. "Standard & Poor's expects that the weakness in many of the company's key end markets will continue", said Standard & Poor's credit analyst Thomas Watters. "Furthermore", he continued, "automotive demand, which has remained relatively strong despite the soft economy, is unlikely to remain at current levels. This is likely to have also have a negative impact on the company's already weak financial performance". Auto demand accounts for 41% of the company's revenues. Mr. Watters added, "The downgrade also reflects concerns that a nominal decline in financial performance could lead to a covenant violation under the company's bank credit facility, restricting borrowing availability". Standard & Poor's said that its ratings on International Wire, a subsidiary of International Wire Holding Co., reflect its material market share in copper wire products, its current weak end markets, aggressive debt leverage and restrictive covenants. International Wire's copper wire products are used primarily to transmit electricity in automotive, appliance, computer, and data communication applications. Over the years, the company has made a number of small scale acquisitions focusing overseas. KAISER: Court Imposes Limitations on Retiree Panel's Appointment ---------------------------------------------------------------- As previously reported, Kaiser Aluminum Corporation's and its debtor-affiliates' retired employees obtained Court approval to appoint an Official Committee of Retired Employees to serve as the authorized representative of, and protect the rights of, the Retirees in the debtors' bankruptcy cases pursuant to Section 1114(D) of the Bankruptcy Code. However, Judge Fitzgerald makes it clear that the appointment of the Retiree's Committee as an Official Committee of Retired Salaried Employees is only for a limited time and is subject to certain limitations. The role of the Retirees' Committee will be limited to assisting the Debtors' salaried retirees with benefits they may be entitled to under COBRA and any elections thereunder required to obtain those benefits. With respect to any work done or fees incurred in connection with any organizational and appointment matters or preliminary analysis of issues that predated the hearing on the Motion, Judge Fitzgerald preserves the rights of all parties' rights as to whether that work should be compensated. Any work by the Committee's counsels will be subject to review and objection upon submission of a counsel's fee application. Since the deadline for salaried retirees to exercise their COBRA rights have been extended by the Debtors to August 31, 2002, Judge Fitzgerald rules that the term of the Retirees' Committee appointment and the concurrent appointment of counsel will cease on October 30, 2002 -- 30 days after the expiration of the COBRA deadline. The Retirees' Committee, as presently comprised, may seek by notice to reactivate its appointment. That notice, which will state the issues to be addressed upon reappointment, will be subject to a 20-day objection period. The notice will be served to the Core Group List. Upon filing of a certificate of no objection to the notice, the Retirees' Committee will be deemed reappointed. If, however, an objection is filed, the Court will set a hearing on the objection. The scope of the Retirees' Committee services and date of reappointment will be determined by the Court. Upon reactivation, and if the Retirees' Committee desires to continue to retain Brobeck, it may retain the firm without filing a retention application and without further order from the Court, provided that Brobeck files an updated affidavit disclosing its connections with parties-in-interest, and subject to any objection by a party-in-interest based on the additional disclosures. (Kaiser Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 609/392-0900) DebtTraders reports that Kaiser Aluminum & Chemicals' 12.750% bonds due 2003 (KLU03USR1) are trading between 17 and 21. See http://www.debttraders.com/price.cfm?dt_sec_ticker=KLU03USR1for more real-time bond pricing. KAISER ALUMINUM: Wants to Reject BPA Power Subscription Contract ---------------------------------------------------------------- Kaiser Aluminum said that, in conjunction with a shift to market-based power purchases for its operations in the Pacific Northwest, has filed a motion with the U.S. Bankruptcy Court for the District of Delaware to reject the 2001-2006 Subscription Contract with the Bonneville Power Administration. The rejection of the BPA contract could take effect as early as October 1, 2002, depending on Court approval of the motion and on the timing of Kaiser's execution of new power contracts with other providers for the ongoing normal operation of the Trentwood, Wash., rolling mill. These new contracts would also provide power for the present minimal requirements of Kaiser's smelters in Tacoma and Mead, Wash., which both remain curtailed because of depressed prices for aluminum and unattractive BPA and forward-market prices for power. Kaiser President and Chief Executive Officer Jack A. Hockema, said, "We believe that market-based power prices and availability in the Pacific Northwest, on average over time, are likely to be comparable to or more favorable than the prices and availability offered under the current BPA contract, especially when we see BPA rate projections of well above $30 per megawatt hour for the balance of the contract. Having said that, we also acknowledge that even market-based power prices in the region may still pose a long-term challenge for aluminum smelters." In Chapter 11, a company has the right to assume or reject certain contracts that existed prior to the filing date, subject to Court approval and certain other limitations. The Court is expected to rule on the motion at a regularly scheduled hearing on September 23, 2002. By seeking to reject the BPA contract, Kaiser expects to avoid "take or pay" penalties that it would incur beginning October 1, 2002. BPA can impose such penalties if the company is not using the full amount of power called for in the contract and the market price of electricity is below the BPA contract power price. Kaiser currently is using less than 40 megawatts of the 291 megawatts contemplated in the BPA contract. Based on recent market prices for electricity, the company estimates that "take or pay" penalties could amount to as much as $1 million to $2 million per month. The company has a separate power transmission agreement with the BPA that permits, and will continue to permit, Kaiser to transmit third-party power to its facilities. Kaiser Aluminum Corporation (OTCBB:KLUCQ) is a leading producer of alumina, primary aluminum, and fabricated aluminum products. LENNOX INT'L: Reaffirms Previous Guidance for Full Year 2002 ------------------------------------------------------------ In response to inquiries from stockholders, Lennox International Inc., (NYSE: LII) announced it knows of no corporate activity or developments that would account for the unusual volatility in its stock price today. LII further reaffirmed its guidance for full year 2002 of $0.90 to $1.00 diluted earnings per share, excluding restructuring and goodwill impairment charges and approximately $75 million in free cash flow. The company had recently raised the outlook for both EPS and free cash flow when it reported second quarter results on July 23. LII continues to be committed to full and fair disclosure of material information. The company will announce financial results for the third quarter on October 22 and will hold a conference call the following morning to discuss the company's performance. Specific access information for this conference call will be released approximately two weeks prior to the call. A Fortune 500 company operating in over 70 countries, Lennox International Inc. is a global leader in the heating, ventilation, air conditioning, and refrigeration markets. Lennox International stock is traded on the New York Stock Exchange under the symbol "LII". Additional information is available at http://www.lennoxinternational.comor by contacting Bill Moltner, vice president, investor relations, at 972-497- 6670. * * * As reported in Troubled Company Reporter's July 16, 2002, edition, Standard & Poor's assigned its double-'B'-minus corporate credit rating to air conditioning and heating equipment manufacturer Lennox International Inc. The outlook is stable. At the same time, Standard & Poor's said that it assigned its single-'B' rating to the company's $143.8 million convertible subordinated notes. Proceeds from the notes were used to partially repay amounts on the company's revolving credit facility. Total debt is about $820 million. "The ratings reflect the company's leading positions in air conditioning and heating equipment markets for residential and light commercial applications, offset by a challenging residential retail business and an aggressive financial profile", said Standard & Poor's credit analyst Pamela Rice. She added, "The company's leading market positions and the fact that a substantial portion of its sales are derived from less volatile repair and replacement markets support rating stability. However, weak retail business performance limits upside ratings potential". LLS CORP: Inks Pact to Sell 100% of Shares to Precise Technology ---------------------------------------------------------------- LLS Corp. -- http://www.precisetech.com-- has signed an agreement to sell 100% of its stock to Precise Technology, Inc. The transaction is expected to close on or before September 30, 2002. LLS Corp., through its operating subsidiaries Courtesy Corporation, Creative Packaging Corp., and Courtesy Sales Corp., is a leading designer and manufacturer of precision injection- molded plastic components, closures, and dispensing systems used in the healthcare, packaging, and consumer products market segments. Precise Technology, Inc., headquartered in North Versailles, PA, is likewise, a manufacturer of precision injection molds and molded plastic components, serving similar market segments with complementary manufacturing disciplines. Precise Technology is majority owned by Code Hennessy & Simmons LLC -- http://www.chsonline.com-- a Chicago-based private investment firm. Code Hennessy & Simmons LLC manages approximately $1.5 billion in capital and makes controlling equity investments in manufacturing, distribution and service companies. Completion of the sale will require approval of the U.S. Bankruptcy Court in St. Louis. LLS Corp., filed a Chapter 11 bankruptcy petition on January 16, 2002. In April the court approved LLS Corp.'s request that the Company be allowed to seek a buyer through an auction process. Lenders holding approximately 85% of the LLS Corp.'s senior secured debt have entered into a binding lock-up agreement to vote in support of the sale. LLS subsidiaries Courtesy Corporation and Creative Packaging Corp. generate sales of approximately $140 million, and are well known as a one-stop provider of concept development, tooling engineering and construction, product manufacturing, assembly, and just-in-time distribution. Its facilities are some of the most advanced in the world and include clean room environments for molding and automated assembly. The company's closure and dispensing systems are used to cap or dispense well-known products such as Gatorade, Heinz Ketchup, Kraft Parmesan Cheese, Hershey's Chocolate Syrup, and Mennen Speed Stick Deodorant. The Company's medical and pharmaceutical components are used by companies such as Abbott Laboratories, Schering-Plough, Johnson & Johnson, Baxter International, and Eli Lilly in many medical devices, including asthma inhalers, insulin pens, medical trays, and test packs for pregnancy, hepatitis, and strep throat. "[Thurs]day's announcement is an important step for the customers, suppliers and employees of LLS Corp.'s operating subsidiaries Courtesy Corporation and Creative Packaging," said David M. Sindelar, Chief Executive Officer. "The sale to Precise Technology will end the uncertainty regarding their future." John R. Weeks, CEO of Precise Technology, stated, "The business combination of Precise and Courtesy presents exciting opportunities for customers, suppliers and employees at both companies. This acquisition will leverage the vast manufacturing resources, facilities and technologies of both companies, enabling Precise - Courtesy to advance its commitment to be the best value global producer of sophisticated plastic packaging and healthcare components." Brian P. Simmons, a Partner at Code Hennessy & Simmons LLC, said, "We are excited to be able to support Precise's outstanding management team with a substantial additional equity investment. We believe in their strategy, focus, and talents, and are confident of their ability to deliver results." LLS Corp., retained the investment banking firm of Goldsmith Agio Helms to handle the sale transaction, and utilized the law firm of Lewis, Rice & Fingersh for all legal matters relating to the bankruptcy restructuring and sale. Chanin Capital Partners served as financial advisor to LLS Corp. Precise Technology was advised by the law firm of Kirkland & Ellis. METROCALL INC: Committee Wants to Bring-In Wachtell as Counsel -------------------------------------------------------------- The Official Committee of Unsecured Creditors appointed in the chapter 11 cases involving Metrocall, Inc. and its debtor- affiliates seeks authority from the U.S. Bankruptcy Court for the District of Delaware to engage Wachtell, Lipton, Rosen & Katz as its Counsel, nunc pro tunc to June 18, 2002. The Committee tells the Court that it choose Wachtell Lipton as counsel because of the firm's extensive experience and knowledge in the field of bankruptcy and creditors' rights and in the other fields of law that are expected to be involved in these cases. Wachtell Lipton's hourly rates currently range from: Paralegals $ 90 - $125 Associates $130 - $395 Members $400 - $875 Presently, the attorneys responsible for the representation of the Committee are: Richard G. Mason $600 per hour Eric Rosof $275 per hour Beth M. Polebaum $250 per hour Wachtell Lipton will: i) advise the Committee and represent it with respect to proposals and pleadings submitted by the Debtors or other Court or the Committee; ii) represent the Committee with respect to any plans of reorganization or disposition of assets proposed in these cases; iii) attend hearings, draft pleading and generally advocate positions which further the interests of the creditors represented by the Committee; iv) assist in the examination of the Debtors' affairs and review of the Debtors' operations; v) advise the Committee as to the progress of the chapter 11 proceedings; and vi) perform other professional services in the interest of those represented by the Committee. Metrocall, Inc., is a nationwide provider of one-way and two-way paging and advanced wireless data and messaging services. The Company filed for chapter 11 protection on June 3, 2002. Laura Davis Jones, Esq., at Pachulski Stang Ziehl Young & Jones represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $189,297,000 in total assets and $936,980,000 in total debts. MILINX GROUP: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Milinx Business Group Inc 1001 4th Ave Ste 3226 Seattle, WA 98154 aka Milinx aka 580880BC Ltd aka Milinx Business Services Inc aka Milinx Wireless Inc aka ASP Technology One Inc Bankruptcy Case No.: 02-19941 Type of Business: Debtor and subsidiaries were developing and marketing business application products including unified messaging and virtual office systems. Chapter 11 Petition Date: August 16, 2002 Court: Western District of Washington (Seattle) Judge: Samuel J. Steiner Debtor's Counsel: Craig S Sternberg, Esq. 500 Union St Ste 500 Seattle, WA 98101 206-386-5438 Fax : 206-374-2868 Total Assets: $0 Total Debts: $1,099,444 Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Sun MicroSystems $2,200,000 P O Box 3268 Collateral FMV Main Post Office $1,000,000 Vancouver BC V6B 5X3 Cisco Systems $500,000 170 West Tasman Drive San Jose, CA 95134-1619 Millenium III Trust $444,444 Attn: David Mullen c/o Royal Bank of Canada Cayman P O Box 1586 Grand Cayman, Cayman Islands British West Indies Collaborative Business Management $250,000 c/o Michael Shiffman Lanahan & Reilley, LLP 1100 Larkspur Landing Suite 340 Larkspur, CA 94939 Bruce Butcher $225,000 Bennett Jones $120,000 David Hook $100,000 James Young $40,000 Michael A. Shiffman $32,000 Great American Insurance Co. $30,000 James Summers $30,000 Dell Financial $50,000 Collateral FMV $35,000 Taylor Ray $15,000 Frank Birkholtz $15,000 Mark Ferbers $10,000 Shawn Wooton $10,000 James Medley $9,000 Paul Smith $5,000 MORTGAGE CAPITAL: Fitch Ups Ratings on Class G, H & J Certs. ------------------------------------------------------------ Mortgage Capital Funding, Inc.'s commercial mortgage pass- through certificates, series 1996-MC1, $31.4 million class C is upgraded to 'AAA' from 'AA+' by Fitch Ratings. In addition, Fitch upgrades the $19.3 million class D to 'AA-' from 'A+', $16.9 million class E to 'A-' from 'BBB+' and the $7.2 million class F to 'BBB+' from 'BBB'. Fitch also affirms the following classes: $20.9 million class A-2A, $145.6 million class A-2B, $14.5 million class B and interest-only class X-2 at 'AAA', $32.6 million class G at 'BB+', $18.1 million class H at 'B' and $3.6 million class J at 'B-'. Fitch does not rate the $12.4 million class K certificates. The rating actions follow Fitch's annual review of the transaction, which closed in July 1996. The upgrades reflect the increased subordination levels as a result of amortization and loan payoffs. As of the August 2002 distribution date, the pool's aggregate collateral balance has been reduced by approximately 33%, to $322.5 million from $482.4 million at closing. Thirty seven of the original 162 loans have paid off, including nine since last year's review. GMAC Commercial Mortgage Corp., the master servicer, collected year-end (YE) 2001 financials for 85% of the pool. According to this information, the YE 2001 weighted average debt service coverage ratio (WADSCR) is 1.63 times, compared to 1.46x at underwriting for the same loans. There are currently two specially serviced loans (0.85% by outstanding balance). Both loans in special servicing are also the only delinquent loans in the transaction. Realized losses total $838,748, with a weighted average loss of approximately 28%. Three loans representing 6.3% of the outstanding balance have exposure to Kmart, two of which are stand-alone properties. None of the leases have been rejected by Kmart so far and the YE 2001 WADSCR for these loans is 1.44x. Fitch applied various hypothetical stress scenarios taking into consideration all of the above concerns. Even under these stress scenarios, the resulting subordination levels were sufficient to upgrade the designated classes. Fitch will continue to monitor this transaction, as surveillance is ongoing. NATIONAL STEEL: Enters Pact Allowing $463K Setoff with AMROX ------------------------------------------------------------ AMROX owes National Steel Corporation $604,037 for its prepetition purchase of natural gas from National Steel. National Steel is also obligated to cash-out $463,954 for AMROX's prepetition services to reprocess hydrochloric acid. Pursuant to a Court-approved stipulation, National Steel and AMROX agree to modify the automatic stay to effectuate a setoff of the parties' respective claims. With this setoff, AMROX's prepetition obligation reduces to $140,086. Immediately, AMROX will pay National Steel the remaining obligation. However, except as stipulated, the automatic stay remains in full force and effect and will not be deemed modified, lifted or waived. (National Steel Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 609/392-0900) NATIONSRENT: Committee Wants Court to End Exclusive Periods ----------------------------------------------------------- The Official Committee of Unsecured Creditors wants the Court to terminate, for cause, NationsRent Inc.'s and its debtor- affiliates' exclusive periods to file a reorganization plan and to solicit acceptances of that plan. The Committee wants to be afforded the opportunity to file a competing reorganization plan that accounts for the rights of unsecured creditors. The Debtors' exclusive filing period currently runs through September 5, 2002, while the exclusive solicitation period expires October 16, 2002. The Debtors are seeking another extension of the Exclusive Periods. Although the Debtors filed a plan on June 17, 2002 to satisfy a plan-filing deadline imposed by the Debtors' DIP Lenders, the Creditors Committee believes there's cause to terminate the Exclusive Periods to allow them an opportunity to file a competing plan. According to the Committee: A. The Debtors Are Using The Exclusive Periods To Force Creditors To Accept An Unsatisfactory Plan: The Debtors have filed a pro forma plan, which simply satisfies the DIP Lenders and offers the unsecured creditors little, to no return. When the Committee objected the Debtors' first motion to extend their Exclusivity Periods on April 22, 2002, the Debtors indicated that they were beginning negotiations with the equipment lessors and the Business Plan had been prepared, but acknowledged that a CEO had not been selected. Between then and now, the Debtors have not made any meaningful progress with respect to these issues. The Debtors are missing the projections set forth in the Business Plan, and their financial condition is deteriorating. The Debtors have even acknowledged that they must revise the Business Plan. This decadence is not surprising, considering that the Debtors have yet to select a CEO or formulate a plan of action regarding the Equipment Leases; B. The Debtors Just Hired A CEO: The Debtors created the Business Plan: 1. before selecting a CEO; 2. prior to negotiating any settlement with equipment lessors; and 3. before arranging exit financing. The Debtors then prematurely filed a plan of reorganization and disclosure statement to satisfy the DIP Lenders, who have refused to negotiate with the Committee. Any new CEO would need 60-90 days to evaluate the Business Plan, management, and operations before going forward with a plan of reorganization. "The ship has left the port, without anyone to guide it"; and C. The Debtors Are Effectively Thwarting The Goals Of Bankruptcy Code Section 1121 Through The Use Of Exclusivity: More than one month has passed since the Debtors filed the Plan, and meaningful negotiations with the DIP Lenders and Debtors have not yet occurred. "The Committee has been extremely patient during the first months of these cases and has fully cooperated with the Debtors' efforts to reorganize. Conversely, the Debtors and the DIP Lenders have, to date, failed to demonstrate that they are prepared to engage in fair and meaningful plan negotiations with the Committee," Daniel Astin, Esq., at The Bayard Firm, in Wilmington, Delaware, asserts. The DIP Lenders, through the leverage they assert under the DIP Facility, are unfairly dictating the course of these cases to the detriment of the Debtors' estates and creditors. (NationsRent Bankruptcy News, Issue No. 17; Bankruptcy Creditors' Service, Inc., 609/392-0900) NCS HEALTHCARE: Sues Omnicare to Block Tender Offer --------------------------------------------------- NCS HealthCare, Inc., (NCSS.OB) has filed a lawsuit against Omnicare, Inc., (NYSE: OCR) in the United States District Court for the Northern District of Ohio, alleging that Omnicare's tender offer for all of the outstanding common stock of NCS HealthCare contains materially false and misleading disclosure in violation of Section 14(e) of the Securities Exchange Act of 1934. Specifically, the lawsuit alleges, among other things, that Omnicare misrepresented the course of dealing between NCS HealthCare and Omnicare, and that Omnicare failed to disclose that its tender offer was conditioned upon further due diligence. From February 2002 until receipt of a letter on the afternoon of July 26, 2002, NCS had no direct contact from Omnicare. Prior to receipt of that letter, all proposals from Omnicare provided for a purchase of NCS assets under a Section 363 bankruptcy sale at a price substantially lower than the amount of NCS's outstanding debt obligations and with no recovery for NCS equity holders. NCS and its advisers believed that this was not the appropriate method of maximizing value to all NCS stakeholders. At the time of the receipt of the letter on July 26, 2002, terms of an exclusivity agreement with Genesis precluded NCS from responding to the non-binding and conditional expression of interest from Omnicare. The lawsuit seeks, among other things, a preliminary injunction preventing Omnicare's tender offer from continuing until such time as Omnicare issues corrective disclosure. NCS HealthCare, Inc., is a leading provider of pharmaceutical and related services to long-term care facilities, including skilled nursing centers, assisted living facilities and hospitals. NCS HealthCare serves approximately 203,000 residents of long-term care facilities in 33 states and manages hospital pharmacies in 14 states. As of June 30, 2002, NCS HealthCare's balance sheet shows a total shareholders' equity deficit of about $108 million. NII HOLDINGS: Committee Taps Saul Ewing as Bankruptcy Co-Counsel ---------------------------------------------------------------- The Official Committee of Unsecured Creditors of NII Holdings, Inc., asks for authority from the U.S. Bankruptcy Court for the District of Delaware to retain Saul Ewing LLP as co-counsel, nunc pro tunc to June 14, 2002. Kilpatrick Stockton LLP and Saul Ewing assure the Court they will make every effort to prevent any needless duplication of effort. Because the members, counsel, and associates of Kilpatrick Stockton are not Delaware lawyers, the retention of Saul Ewing as Delaware counsel is necessary, the Committee points out. Saul Ewing will render services to the Debtors with their current hourly rates: Mark Minuti partner $365 Donald J. Detweiler special counsel $275 Tara Lattomus associate $260 Jeremy W. Ryan associate $250 Rebecca Street associate $150 Jason Kittinger paralegal $115 Veronica Parker case management clerk $ 65 Saul Ewing will: (a) provide legal advice with respect to the Committee's rights, powers and duties in these cases; (b) prepare on behalf of the Committee all necessary applications, answers, responses, objections, forms of orders, reports and other legal papers; (c) represent the Committee in any and all matters involving contests with the Debtors, alleged secured creditors, and other third parties; (d) assist the Committee in its investigation and analysis of the Debtors and the operations of the Debtors' businesses; and (e) perform all other legal services for the Committee which may be necessary and proper in these proceedings. NII Holdings, Inc., along with its wholly-owned non-debtor subsidiaries, provides wireless communication services targeted at meeting the needs of business customers in selected international markets, including Mexico, Brazil, Argentina and Peru. The Company filed for chapter 11 bankruptcy protection on May 24, 2002. Daniel J. DeFranceschi, Esq., Michael Joseph Merchant, Esq., and Paul Noble Heath, Esq., at Richards, Layton & Finger represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $1,244,420,000 in total assets and $3,266,570,000 in total debts. ONESOURCE TECHNOLOGIES: Equity Deficit Tops $623K at June 30 ------------------------------------------------------------ OneSource Technologies, Inc., (OTC BB: OSRC) reported consolidated revenues of $1.4 million for the six months ended June 30, 2002, a four percent (4%) increase compared to revenues of $1.3 million for the same period of 2001. Net Loss for the six months ended June 30, 2002 narrowed to $57 thousand (less than one cent per share) compared to a Net Loss of $369 thousand ($0.02 per share) for the six months ended June 30, 2001. Consolidated revenues of $721 thousand were also reported today for the three months ended June 30, 2002 and represent a six percent (6%) increase compared to consolidated revenues of $680 thousand for the same period in 2001. OneSource reported Net Income of $57 thousand (less than one cent per share) for the quarter ended June 30, 2002 compared to a Net Loss of $75 thousand ((less than one cent per share) for the three months ended June 30, 2001. In its June 30, 2002 balance sheet, the Company records a working capital deficit of about $1.2 million, and a total shareholders' equity deficit of $623,732. "Second quarter results continue to confirm the positive change in direction the Company has taken and documents continued improvement over results of prior years", said Jerry Washburn, CEO of the Company. "While revenues continued to increase in the quarter, turning the corner into profitability in this quarter finally validates the restructuring changes we have implemented to return the Company to profitable operations," continued Washburn. "The Company has made great strides in enhancing infrastructure, management and processes and is now staged to generate continuing positive cash flows and profits through the balance of 2002," concluded Washburn. OneSource is engaged in three closely related and complimentary lines of IT and business equipment support products and services, 1) equipment maintenance services, 2) equipment installation and integration services, and 3) value added equipment supply sales. Each segment also utilizes the Internet to facilitate distribution of its service and product offerings. OneSource is a leader in the technology equipment maintenance and service industry and is the inventor of the unique OneSource Flat-Rate Blanket Maintenance System(TM). This innovative patent pending program provides customers with a Single Source for all general office, computer and peripheral and industry specific equipment technology maintenance and installation services. OneSource's Cartridge Care division is a quality leader in remanufactured toner cartridge distribution in the southwest and is the supplier of choice for a number of Fortune 1000 companies in that region. OneSource has realigned this division and invested heavily in eCommerce initiatives to stage the division for substantial expansion over the next two years to enable Cartridge Care to extend its high quality reputation beyond its southwestern regional roots. OPSWARE INC: July 31 Working Capital Deficit Tops $20 Million ------------------------------------------------------------- Opsware Inc. (Nasdaq:OPSW), formerly Loudcloud, the leading provider of IT automation software for server and application management, reported results for its second quarter ended July 31, 2002. Results include operations of the managed service business, which was subsequently sold to EDS for $63.5 million in an all-cash transaction that closed on August 15, 2002. Financial and operating highlights for the second quarter included: -- Total revenue grew to $17.5 million, a 24% increase from the same quarter last year, and up slightly from the previous quarter. This marks Opsware's tenth consecutive quarter of sequential revenue growth. -- GAAP net loss narrowed to $0.24 per share, substantially beating the First Call consensus estimate of $0.45. EPS loss improved 80% from the year ago period and 48% from the previous quarter. -- The company's EBITDA loss narrowed sharply to $10.8 million (excluding restructuring costs and extraordinary items). This represents an improvement of almost $48 million from the same quarter last year and $4.1 million better than the prior quarter. -- Cash utilization declined sequentially to $19.4 million and fell within the $18-20 million target range provided by management in August of 2001. At July 31, 2002, the Company's total current liabilities exceed its total current assets by about $20 million. Marc Andreessen, Chairman of the Board, said: "The results from the managed service business this quarter again demonstrate the value of our automated approach to addressing IT management for enterprise clients. The technological advantages we have developed over the last several years combined with the demonstrated demand for our Opsware IT automation software have positioned us well for our new focus. EDS's minimum commitment to license our Opsware Automation Technology for $52 million over the next three years validates our competitive lead and provides an excellent foundation on which to build Opsware Inc." "We again showed strong results in the managed service business in the second quarter, and we are now focused on the Opsware software business," said Ben Horowitz, President and CEO. "Our sound financial position, combined with the strong demand we are seeing for our product, will allow us to reach cash flow breakeven earlier than we had anticipated, and positions us well to capitalize on the demand for IT automation software." Opsware's second quarter 2003 revenue of $17.5 million compares with $14.1 million in the same period a year earlier. The company reported an EBITDA loss (net loss before interest, taxes, depreciation, and amortization expenses, excluding restructuring charge and extraordinary items) of $10.8 million in the quarter, compared with an EBITDA loss of $14.9 million in the prior quarter ended April 30, 2002. The company reported a GAAP net loss of $16.7 million, compared to a loss of $30.4 million in the prior quarter ended April 30, 2002. Rod Sherwood, executive vice president and CFO, said, "We posted another quarter of solid financial results. With approximately $90 million net cash following the completion of the EDS transaction and a significantly lower cash utilization rate after transitioning from the managed service model, Opsware has the financial flexibility to execute on the operating plan for our new software business going forward." Opsware Inc., also announced that Rod Sherwood will be leaving the company for personal reasons. Sherwood will remain interim CFO to facilitate the smooth transition of his responsibilities. In addition, Sherwood will be certifying the company's financial statements in its upcoming Form 10-Q. "My decision to leave Opsware is based entirely on personal reasons. I plan to remain here on an interim capacity to ensure a smooth transition of responsibilities, and I will be certifying our financial statements. I have the utmost regard for the capabilities and integrity of Opsware management. I strongly believe in the prospects for the company and will be holding my stock," said Sherwood. Opsware Inc, formerly Loudcloud, is the leading provider of IT automation software, offering a complete solution for enterprises, government agencies and service providers looking to reduce costs and increase IT efficiencies. The Opsware System automates the complete IT lifecycle including provisioning, deploying, changing, scaling, securing, recovering, consolidating, auditing and reallocating servers and business applications. The Opsware System uniquely combines process automation with built in operations knowledge on over 200 technologies. Opsware was the foundation of Loudcloud's software-powered managed services business and has been proven to lower costs, accelerate change and increase service quality. For more information on Opsware Inc., please visit its Web site at http://www.opsware.com O'SULLIVAN INDUSTRIES: June 30 Balance Sheet Upside-Down by $55M ---------------------------------------------------------------- O'Sullivan Industries Holdings, Inc. (OTC Bulletin Board: OSULP), a leading manufacturer of ready-to-assemble furniture, today reported its fiscal 2002 fourth quarter and full year results for the period ended June 30, 2002. Fourth Quarter Results Net sales for the fourth quarter were $77.1 million, a decrease of 8.4% from sales of $84.2 million in the comparable period a year ago. Net sales for both periods have been adjusted to reflect the adoption of an accounting pronouncement that reclassifies certain selling expenses to a reduction of net sales. Operating income for the fourth quarter was $9.7 million, an increase of 7.8% from operating income of $9.0 million in the comparable period a year ago. Net loss for the fourth quarter was $250,000, compared to net income of $1.0 million in the comparable period a year ago. The current quarter's reduction in net income reflects an increase in tax expense related to the recent arbitration settlement with RadioShack. Adjusted EBITDA for the fourth quarter was $13.8 million, or 17.8% of net sales, a decrease of 4.1% from $14.4 million, or 17.1% of net sales, for the comparable period a year ago. The attached table reconciles net income to adjusted EBITDA. "We ended the fourth quarter of fiscal 2002 with mixed results. While our operating income improved, orders during the quarter were weaker than previously anticipated resulting in the decline in our sales results," said Richard Davidson, president and chief executive officer. "While we were disappointed in our fourth quarter sales performance, we feel this is largely a result of our customers' reducing orders related to a decline in their point of sale results. "During the fourth quarter, we continued to improve our operating results as a result of our focus on cost containment," continued Mr. Davidson. "Our operating capacity and cost structure have positioned O'Sullivan Furniture to capture market share when our retail customers return to historic sales levels." Fiscal 2002 Year End Results Net sales for fiscal 2002 fell to $349.1 million from $358.8 million in the comparable period a year ago, a decrease of $9.7 million, or 2.7%. Operating income for fiscal 2002 rose to $39.9 million from $21.9 million in the comparable period a year ago, an increase of $18 million, or 82.2%. Operating income in the prior year included a $10.5 million pre-tax restructuring charge. Net loss for fiscal 2002 was $7.8 million, compared with a net loss of $7.9 million in the comparable period a year ago. The current year net loss includes tax adjustments related to the RadioShack settlement. O'Sullivan paid $27.7 million for amounts due RadioShack through June 30, 2002. The prior year net loss included a $10.5 million pre-tax restructuring charge. On a comparable basis without these charges, net income would have been $7.6 million for fiscal 2002 compared to a net loss of $1.0 million for the prior year period. Net loss attributable to common stockholders for fiscal 2002 was $20.3 million, compared with a net loss attributable to common stockholders of $18.7 million in the comparable period a year ago. Adjusted EBITDA for fiscal 2002 was $55.5 million, or 15.9% of net sales, up from $49.8 million, or 13.9% of net sales, for the comparable period a year ago. The lower net income levels also reflect the increased level of debt and related interest expense associated with O'Sullivan's leveraged recapitalization in November 1999. However, a sizeable amount of income- reducing expenses are non-cash charges. These expenses include non-cash interest as shown on the attached schedule consisting of: -- O'Sullivan Holdings note, -- the change in market value of the interest rate collar, and -- the amortization of debt discount and loan fees. Note: The dividends and accretion on preferred stock line item is also non-cash. Working Capital For the fiscal year, net cash provided by operating activities was $25.9 million, compared to net cash provided by operating activities of $24.9 million in the comparable period a year ago. The current year amount included cash used by operating activities in the fourth quarter of $27.7 million for the payment to RadioShack related to our recent arbitration settlement agreement. Inventory levels at year-end rose to $52.4 million from $48.5 million in the prior year, an increase of $3.9 million, or 8.0%. Accounts receivable levels during the current quarter dropped to $37.0 million from $52.6 million in the prior year quarter, a decrease of $15.6 million, or 30.0%. Capital expenditures decreased for fiscal 2002 to $8.6 million from $16.8 million in the prior year, a reduction of $8.2 million. This fiscal year, O'Sullivan repaid $8.5 million of borrowings, of which $5.0 million was an optional prepayment. Cash on hand rose to $15.8 million at June 30, 2002 from $7.1 million last year. Conclusion Mr. Davidson concluded, "Our recent order trends combined with uncertainty in the general economy cause us to be less optimistic about improving sales levels during the last half of this calendar year. While we are currently not pleased with our top line, our operating performance demonstrates our potential once our sales levels return to more historical levels. Looking to the first quarter of our fiscal year 2003, we expect sales to be down in the upper single-digit range from last year's adjusted $82.2 million and EBITDA to be slightly higher than the prior year's $10.0 million." At June 30, 2002, the Company's balance sheet shows a total shareholders' equity deficit of about $55 million. OWENS CORNING: Prof. Francis McGovern Serving as Mediator --------------------------------------------------------- Owens Corning and its debtor-affiliates sought and obtained Court approval to appoint, nunc pro tunc to May 1, 2002, Professor Francis E. McGovern as Mediator. Professor McGovern will facilitate the resolution of various issues that must be addressed for the Debtors to successfully consummate a Reorganization Plan. He must periodically report to the District Court and Bankruptcy Court on the status of the mediation process. The appointment of Professor McGovern is touted as being in furtherance of the December 28, 2001 Order by Judge Wolin (then presiding judge of the Debtors' cases) appointing consultants and special masters. Professor McGovern had been one of the five individuals covered by the Order, that tasked them to "advise the Court and to undertake such responsibilities, including by way of example and not limitation, mediation of disputes, holding case management conferences, and consultation with counsel, as the Court may delegate. . . ." As mediator, Professor McGovern will be paid a Mediator's fee of $100,000 per month. This will also cover all of his out-of-the pocket expenses. The fee will be paid monthly in advance, on the first day of each month, and will require no Court approval prior to payment. The Mediator's fee is based on the Mediator's significant attention to the mediation process in the Debtors' cases. In the event that the level of the Professor McGovern's attention to the cases is reduced, the fee will also be reduced to the amount satisfactory to Professor McGovern and the Debtors, and subject to Court approval. (Owens Corning Bankruptcy News, Issue No. 36; Bankruptcy Creditors' Service, Inc., 609/392-0900) PACIFIC GAS: Will Continue Battle to Recoup $8 Bill. Power Costs ---------------------------------------------------------------- Pacific Gas and Electric Company can proceed with lawsuit in District Court to recoup power costs up to $8.1 billion from electricity users. District Court Judge Vaughn Walker denied requests by the CPUC and consumer group Utility Reform Network to dismiss the case. Judge Walker ruled that PG&E has a legal basis for its claim that the CPUC improperly refused to raise customer electric rates to cover soaring power costs during the state's energy crisis. "Wholesale costs of energy paid by Pacific Gas & Electric must be recognizable as recoverable costs by state regulators," Judge Walker said. PG&E argued that it would not be in bankruptcy had the state Public Utilities Commission ended a rate freeze and allowed it to charge the going rate for electricity. However, Pacific Gas and Electric Co. still must prove at trial that it's entitled to recover up to $8.1 billion from electricity users, Judge Walker ruled. Judge Walker said several factors would be weighed to assess PG&E's right to collect the money from ratepayers, including "reasonableness of PG&E's use of surplus revenues." (Pacific Gas Bankruptcy News, Issue No. 41; Bankruptcy Creditors' Service, Inc., 609/392-0900) PACIFIC GAS: Maintains Stand that Its Plan is Most Feasible ----------------------------------------------------------- Pacific Gas and Electric Company issued the following statement after the California Public Utilities Commission held a press conference on the utility's Chapter 11 case: "The CPUC's announcement [Thurs]day, weeks after the voting period ended, underscores the fact that its current plan is not feasible and cannot be confirmed. "Since many of the important details of the CPUC's arrangement have not been made public, PG&E will need to obtain and thoroughly review additional information in order to provide a detailed analysis. "PG&E continues to believe its plan of reorganization is the fastest, fairest and most feasible solution to resolve its Chapter 11 case. PG&E's reorganization plan is the only one that allows the utility to emerge from Chapter 11 as an investment-grade company, pays all valid claims in full with interest and gives the State of California a clearly defined path to exit the power buying business." PENTON MEDIA: Falls Short of NYSE Continued Listing Standards ------------------------------------------------------------- Penton Media, Inc., (NYSE: PME) has been notified by the New York Stock Exchange that its common stock is "below criteria" for continued listing because the average closing price of its common stock for a consecutive 30-day period prior to notification was below $1.00. Under NYSE guidelines, Penton Media must return its share price and average share price back above $1.00 by six months following receipt of the NYSE's notification. In the event that the Company fails to return to compliance during this time period, the NYSE has notified the Company that it will commence suspension and delisting procedures for the Company's common stock. The NYSE notified the Company that it may make an appraisal of, and determine on an individual basis, the suitability for continued listing of Penton's common stock based on other factors such as an abnormally low share price. The NYSE noted that the Company's common stock has recently traded as low as $.33, which is often viewed by the New York Stock Exchange as abnormally low. The NYSE informed the Company that continued trading at this price level may require the NYSE to make more immediate qualitative continued listing determinations. In accordance with NYSE rules, the Company has acknowledged to the NYSE receipt of this notification and its intention to cure this deficiency. There can be no assurance, however, that the Company will be able to do so. Penton Media is a leading, global business-to-business media company that produces market-focused magazines, trade shows and conferences, and online media. Penton's integrated media portfolio serves the following industries: Internet/broadband; information technology; electronics; natural products; food/retail; manufacturing; design/engineering; supply chain; aviation; government/compliance; mechanical systems/construction; and leisure/hospitality. PG&E NATIONAL: Lenders Extend Credit Facility Until October 21 -------------------------------------------------------------- PG&E National Energy Group, a unit of PG&E Corporation (NYSE: PCG), announced that a syndicate of 16 lenders extended the maturity date of a revolving credit facility from Aug. 22 to Oct. 21, 2002. Terms and conditions include reducing the size of the facility to $500 million and freezing the facility at its current outstanding levels of debt, which is $431 million. The agreement also limits another $500 million two-year facility to its current outstanding debt level of $279 million. "We're pleased with the lenders' agreement to extend the renewal date so that we can continue working together to renew the credit facility for the long term," said John Cooper, PG&E National Energy Group's senior vice president of finance. "We look forward to making progress in the weeks ahead." The period between now and Oct. 21, 2002, will be spent pursuing the debt restructuring effort now underway at PG&E National Energy Group. Options include, but are not limited to, sales of assets and businesses, debt restructuring and reorganization of existing operations. The administrative agent for the 16-bank syndicate is JP Morgan Chase Bank. Headquartered in Bethesda, Md., PG&E National Energy Group develops, builds, owns and operates electric generating and natural gas pipeline facilities and provides energy trading, marketing and risk-management services. PHOENIX GROUP: Taps Provost & Umphrey to Prosecute Claims vs DVI ---------------------------------------------------------------- The Phoenix Group Corporation (OTCBB:PXGPE), a Dallas-based company, has retained the services, subject to approval of the United States Bankruptcy Court for the District of Delaware, of former federal judge Joe Kendall, a partner in the law firm of Provost & Umphrey -- http://www.provostumphrey.com-- to prosecute claims for damages on behalf of Phoenix and its subsidiary, Americare Management, Inc., against DVI, Inc. (NYSE:DVI) and others. Phoenix and Americare each filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the Delaware court on August 21, 2002. qSERVE COMMS: Trustee Wants to Employ Mary Roach as Accountant -------------------------------------------------------------- George T. Johnson, the Chapter 11 Trustee of the qServe Communications, Inc. proposed to the U.S. Bankruptcy Court for the Western District of Missouri to engage the professional services of Mary L. Roach as his accountant. The Trustee relates to the Court that none of the remaining corporate accounting and office personnel has the formal accounting training or comprehensive knowledge of the company books, records and computerized accounting systems to prepare the necessary reports required by the United States Trustee. Mary Roach has agreed to: a) assume primary responsibility for bringing the books and records of the company branches and corporate offices current; b) consolidate all branch and corporate accounting and financial records; c) assume primary responsibility to complete the preparation of Chapter 11 reports required by the United States Trustee and in connection therewith maintain all necessary books and records for the administration period of this case; d) report to the Operating Trustee regarding the financial status of the debtor; e) supervise remaining bookkeeping personnel of the debtor; f) provide other accounting services as may be required by the Operating Trustee during the course of these Chapter 11 proceedings and the Successor Chapter 7 Trustee should this matter be converted to such; and g) assist the Trustee and Debtor's counsel with the preparation of Debtor's schedules, statement of financial affairs and supporting documents. The Trustee had a discussion with Ms. Roach, the company's previous Kansas City Branch and Corporate Controller, as to her availability to be employed in this case and to perform the wrap-up and closing services required by the estate. Ms. Roach's hourly rate is $75 per hour for these services. Ms. Roach determined that closing and reporting tasks will require between 100 and 120 hours of effort. qServe Communications, Inc. is an engineering and construction firm serving the wireless and broadband industries offering management, installation, erection, inspection, testing and maintenance services to the communications industry. The Company filed for chapter 11 protection on June 21, 2002. John Joseph Cruciani, Esq. at Lentz & Clark, PA represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed an estimated debt of over $10 million. QWEST: Baylock Recommends Purchase of Bonds at Current Levels ------------------------------------------------------------- Blaylock & Partners' analysts Rick R. Black, Ari M. Moses and David W. Utter have initiated coverage of Qwest Communications International (NYSE: Q) with a "sell" recommendation. They do, however, recommend purchase of Qwest's bonds at current levels. Blaylock issues "sell" ratings when its analysts expect a covered stock to underperform the generally recognized market indexes by a minimum of 20 percent. In their report titled "Sell the Equity, Buy the Bonds," Messrs. Black, Moses and Utter estimate minimal equity value for shares of Qwest stock even after accounting for the recently announced QwestDex directories business sale. The analysts say that although Qwest is in advanced negotiations to restructure its existing bank credit facility, the Company still faces numerous obstacles and the potential for a restructuring of its bank credit facility. Obstacles include the fact that the company is beset by a downturn in its local operations, worsening of its out-of-region long distance business, continued economic weakness, high debt levels, and investigations into its accounting practices. The analysts do not expect these issues to be resolved in the near-term. However, Messrs. Black, Moses and Utter recommend that aggressive investors consider purchasing the debt obligations of either U.S. West, Qwest Communications or Qwest Capital Funding. They base this recommendation on their positive view of new management, and the additional time and breathing room the QwestDex sale affords Qwest to turn around its business, restructure existing funding and obtain new sources of funding. The analysts say it's clear that management is attempting to turn Qwest around and position the company for long-term growth. Overall, Messrs. Black, Moses and Utter feel that the key to Qwest's maximizing its shareholder value lies in the gradual exit of its out-of-region long distance operations, a business that has seen reduced profitability over the last few years. The analysts see this situation worsening as the RBOCs begin to offer long distance services in their respective regions and as enterprise customers select long distance providers based on quality, rather than price. This shift in strategy should conserve cash, increase EBITDA, and better position the company to weather the current downturn in the market. Institutional investors interested in receiving more information should contact Mr. Black at 212/715-6671 (black@blaylocklp.com) Mr. Moses at 212/715-6644 (amoses@blaylocklp.com), or Mr. Utter at 212/715-6610 (dutter@blaylocklp.com). Mr. Black and Mr. Moses are equity analysts, Mr. Utter is a fixed income analyst. Reporters interested in receiving a copy of the research report should contact Kevin Foster at kfoster@starkmanassociates.com Based in New York, Blaylock & Partners, L.P., has been ranked by Black Enterprise magazine as the number one minority-owned investment banking firm for 1999 and 2000. The firm has co- managed four of the largest most recent IPOs - Travelers Property Casualty Corp., Prudential Financial, Inc., Kraft Foods Inc., and Agere Systems Inc. Blaylock & Partners is a member of the NASD and SIPC. Blaylock's ratings system consists of "buy," "hold" and "sell" recommendations. Investment banking stocks have a "not rated" designation. Blaylock & Partners, L.P., is a member of the National Association of Securities Dealers, CRD number 35669. RAILWORKS: Will Not Be Able to File June Quarter Report on Time --------------------------------------------------------------- On September 20, 2001, Railworks Corporation and 22 of its subsidiaries filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Maryland. As a result of this bankruptcy filing, the Company's management and personnel have been focusing on bankruptcy and reorganization-related matters, which have caused delays in the collection and review of information and documents relating to the preparation of Railworks' Quarterly Report for the quarter ended June 30, 2002. As a result, the Company will not be able to file its Quarterly Report for the quarter ended June 30, 2002 on a timely basis. Railworks anticipates that it will report a net loss for the quarter ended June 30, 2002 less than the $37.5 million loss for the quarter ended June 30, 2001. RailWorks Corporation (RWKS)is a leading supplier of rail system products, track construction, rehabilitation, repair and maintenance and installation of electrification, communication and signaling equipment for rail applications, and related products and services throughout North America. The company filed for Chapter 11 protection on September 21, 2001. Martin T. Fletcher, Esq., at Whiteford, Taylor & Preston L.L.P. represents the Debtors in its restructuring efforts. ROADHOUSE GRILL: Florida Court Confirms Plan of Reorganization -------------------------------------------------------------- Roadhouse Grill Inc., (OTCBB:GRLLQ.PK) announced the U.S. Bankruptcy Court for the Southern District of Florida Wednesday confirmed Roadhouse's reorganization plan and that the company will emerge from Chapter 11 within 30 days. An overwhelming majority of Roadhouse Grill's creditors voted to accept its reorganization plan. In addition, Roadhouse reached a settlement with the CNL creditors that had forced Roadhouse into reorganization in April by refusing to join other Roadhouse creditors in an out-of-court workout arrangement. "Our emergence from Chapter 11 in just four months is a major accomplishment," said Ayman Sabi, chief executive officer of Roadhouse Grill. "Now that we are free from the distractions of bankruptcy court, we are extremely excited to be able to totally refocus on our business, our guests and on continuing to implement our plans, which we had begun prior to being forced into this action. With the Chapter 11 behind us and with the overwhelming support of our creditors and shareholders, we are re-energized and positioned for continued success, and we are very optimistic about our future." Roadhouse Grill Inc., is based in Pompano Beach, Fla., and owns and operates 69 full-service, casual-dining restaurants and eight franchises. The company's restaurants, which offer a "rambunctious" style consistent with Roadhouse Grill's motto: "Eat, drink and be yourself," are located in Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, New York, North Carolina, Ohio and South Carolina. For more information or to find a Roadhouse Grill near you, call 954/957-2600 or visit http://www.roadhousegrill.com RUSHMORE FINANCIAL: Commences Trading on OTCBB Effective Aug. 23 ---------------------------------------------------------------- Rushmore Financial Group, Inc., (Nasdaq:RFGI), announced that The Nasdaq Stock Market had notified the Company that it no longer complied with its minimum continued listing requirements by maintaining a minimum closing bid price of $1.00 for at least 10 consecutive trading days. The Company was also notified by the Nasdaq Stock Market that, to comply with its minimum continued listing requirements, it must maintain a minimum balance of $2,500,000 in Shareholder's Equity and a minimum of $1,000,000 in market value in the public float. On August 5, 2002 the Nasdaq Stock Market notified The Company that its common stock had failed to maintain a minimum market value of publicly held shares of $1,000,000 as required. The Company has failed to maintain a minimum balance of $2,500,000 in Shareholder's Equity and is delinquent in payment of fees for listing of additional shares. Accordingly, the Company's securities were delisted from The Nasdaq SmallCap Market at the opening of business on August 23, 2002. The Company had determined that it qualified for automatic listing and inclusion on the OTC Bulletin Board Exchange and moved to the OTC Bulletin Board Exchange on August 23, 2002. In 2003 the OTCBB will be phased out, and replaced by a new, higher quality market, the BBX (Bulletin Board Exchange). Rushmore Financial Group, Inc., a Dallas-based technology development and financial services holding company that provides, through its subsidiaries, software and web based financial software applications, investment and insurance services and products. Its investment services business consists of direct access online brokerage, securities brokerage services, mutual funds, variable life insurance and annuity products, and other financial services. SERVICE MERCHANDISE: Baltimore Co. Balks at Tax Exemption Order --------------------------------------------------------------- The Taxing Authority of Baltimore County asks the Court for relief from the March 16, 2002 Order, which exempted Service Merchandise Company, Inc., and its debtor-affiliates from paying transfer taxes by way of Section 1146(c) of the Bankruptcy Code regarding a sale of a land in Baltimore County. Jeffrey Grant Cook, Assistant County Attorney, in Townson, Maryland, tells Judge Paine that under Rule 9006 of the Federal Rules of Bankruptcy Procedure, Baltimore County should be granted the relief sought for excusable neglect. Baltimore County never received the Debtors' motion filed on February 15, 2002. And Baltimore County objects to that motion. According to Mr. Cook, the Supreme Court addressed "excusable neglect", in the context of Bankruptcy Rule 9006(b)(1), as: "to give little attention or respect" to matter, or closer to the point for our purposes, leave undone or unattended to 'especially through carelessness." The Supreme Court stated that, "Congress plainly contemplated that the courts would be permitted, where appropriate, to accept late filings caused by inadvertence, mistake, or carelessness, as well as by intervening circumstances beyond the party's control". Furthermore, Mr. Cook adds, the Supreme Court held that "excusable neglect" encompassed "situations in which the failure to comply with a filing deadline is attributable to negligence". The Supreme Court instructed lower courts to consider: (a) the danger of prejudice to the Debtor; (b) the length of the delay and its potential impact on judicial proceedings; (c) the reason for the delay, including whether it was within the reasonable control of the movant; and (d) whether the movant acted in good faith. In light of these factors, Mr. Cook contends that there is no prejudice to the Debtors if the relief requested is granted because the plan has not been approved yet. Thus, there is no final judgment. The delay in this case is three months and the impact on this case is minimal. "If the Court were to revisit the exemption from transfer taxes issue and hold in favor of Taxing Authority Baltimore County, all it would mean is that the Debtors would have to pay taxes," Mr. Cook explains. In addition, Mr. Cook tells the Court that the delay is not even negligence since Baltimore County never received the Debtors' motion. Debtors Object Paul G. Jennings, Esq., at Bass, Berry & Sims PLC, in Nashville Tennessee, argues that the motion should be denied for these reasons: (a) Since the early stages of these cases, the Court has consistently authorized the Section 1146 Tax Exemption to pre-confirmation asset transfers. Specifically, the Debtors announced their intentions to wind-down their continuous business operations and pursue a wind-down plan under Section 1129 of the Bankruptcy Code. Obviously, the pre-confirmation disposition of the Debtors' assets is a necessary and integral part of any such wind-down plan. This necessity is especially present with respect to the Debtors' real estate assets, which were the Debtors' largest asset other than inventory; and (b) Baltimore County has not provided the Court any reason why it should: -- reverse its prior holdings since the early stages of these cases, and -- deny the Section 1146 Tax Exemption. Moreover, Baltimore County has not provided any evidence, nor could it, that that sale of the Debtors' real estate assets was not necessary or essential to their confirmation process. Accordingly, the Debtors ask the Court to deny the Motion. (Service Merchandise Bankruptcy News, Issue No. 36; Bankruptcy Creditors' Service, Inc., 609/392-0900) DebtTraders reports that Service Merchandise's 9.000% bonds due 2004 (SVCD04USR1) 5 and 8. For more real-time bond pricing, see http://www.debttraders.com/price.cfm?dt_sec_ticker=SVCD04USR1 SLI INC: Considering Chapter 11 Filing to Restructure Debts ----------------------------------------------------------- SLI, Inc., one of the world's largest lighting manufacturers, announced continuing negotiations with its senior lenders. The Company, while continuing negotiations with its senior lenders, continues to be unable to obtain an extension of the forbearance agreement with its senior banks with respect to the Company's current defaults, including its payment default. The Company is continuing to explore all available alternatives to restructuring its existing debt and addressing its current liquidity issues, including the possibility of filing voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code for its United States subsidiaries. In connection with the Company exploring various strategic alternatives, the Company has retained the services of a financial advisor. SLI Inc., based in Canton, MA, is a vertically integrated designer, manufacturer and seller of lighting systems, which are comprised of lamps and fixtures. The Company offers a complete range of lamps (incandescent, fluorescent, compact fluorescent, high intensity discharge, halogen, miniature incandescent, neon, LED and special lamps). They also offer a comprehensive range of fixtures. The Company serves a diverse international customer base and markets, has 35 plants in 11 countries and operates throughout the world. SLI, Inc. is also the #1 global supplier of miniature lighting products for automotive instrumentation. SOURCINGLINK.NET: Nasdaq Knocks Off Shares from SmallCap Market --------------------------------------------------------------- SourcingLink.net Inc. (Nasdaq:SNET), a leading provider of sourcing solutions to the retail industry, has received notification from Nasdaq that the company's common stock will be delisted from the Nasdaq SmallCap Market effective Aug. 22, 2002, because it does not comply with the minimum bid price requirement of $1.00 per share for continued listing set forth in Marketplace Rule 4310(C)(4) and it does not currently meet the continued inclusion requirements for the SmallCap market set forth in Marketplace Rule 4310(C)(2)(B). The company's common stock is immediately eligible to trade on the OTC Bulletin Board. The company will continue to provide information through filings with the Securities and Exchange Commission. SourcingLink -- http://www.SourcingLink.net-- is a leading provider of sourcing solutions to the retail industry. SourcingLink's complete sourcing solutions provide the best practices, sourcing tools and methodologies required to succeed at any type of online negotiations. SourcingLink has been concentrating exclusively on the retail industry for over eight years. Our customers include France's second largest home improvement retailer, Leroy Merlin; bauMax, the number one DIY retailer in central Europe; the world's second largest retailer, Carrefour; and the WWRE, the world's premier retail exchange. TELESPECTRUM: Search for New Auditors Delays Filing SEC Reports --------------------------------------------------------------- On June 30, 2002, TeleSpectrum Worldwide Inc. and Arthur Andersen LLP agreed to end Arthur Andersen's engagement as TeleSpectrum's independent auditors, and TeleSpectrum continued a search that had begun in the beginning of June 2002 for new auditors. As a result, TeleSpectrum is unable to timely file its quarterly report with the SEC for the quarter ended June 30, 2002 without unreasonable effort or expense. TeleSpectrum anticipates that its results of operations for the three-month and six-month periods ended June 30, 2002 will differ substantially from its results of operations for the comparable prior year periods. Revenues for the quarter and the six months ended June 30, 2002 are expected to decrease by approximately $32.4 million and $59.6 million, respectively, from the comparable periods in 2001. In addition, TeleSpectrum expects to report consolidated net income of approximately $8.7 million and a net loss of approximately $3.8 million for the three- and six-month periods ended June 30, 2002, respectively, compared to net losses of $24.7 million and $34.7 million for the three- and six-month periods ended June 30, 2001, respectively. The differences in revenues are primarily the result of the Company's loss of significant customers, the effects from the events of September 11 and the general economic downturn. The differences in net income/loss are primarily the result of a one-time gain of approximately $13.6 million from the recapitalization of Company debt in April 2002. TeleSpectrum Worldwide Inc. is a leading full-service provider of multi-channel customer relationship management (CRM) solutions for Global 1,000 companies in diverse industries, including financial services, telecommunications, technology, insurance, healthcare, pharmaceuticals and government. * * * As previously reported, in connection with the recent recapitalization of its balance sheet, Telespectrum Worldwide Inc., the sponsor of the Telespectrum Worldwide Inc. 401(k) Retirement Savings Plan, implemented a corporate restructuring plan pursuant to which Telespectrum's finance department moved to the executive offices of the Company. As a result of such move, the finance department and its auditors did not receive the trustee statements in a timely manner and, accordingly, were unable to begin the preparation of the Annual Report on Form 11- K until a recent date. Consequently the Company will not meet timely filing of such financial information. Once filed the Company expects that that its 401(k) Retirement Savings Plan market value for fiscal year 2001 will differ substantially from its fiscal year 2000 value. Net assets for 2001 are expected to decrease to $5.9 million from $7.8 million for 2000. This decline in market value is due to decreased stock values resulting from the weakening U.S. economy in 2001. THOMSON KERNAGHAN: IDA Permanently Suspends Company's Rights ------------------------------------------------------------ The Ontario District Council of the Investment Dealers Association has permanently suspended the rights and privileges of Thomson Kernaghan & Co., Ltd., as a Member of the Association. This suspension makes permanent the temporary suspension order made on July 11, 2002. Thomson Kernaghan was no longer able to maintain its risk adjusted capital at a level greater than zero and the Association determined that no reliance could be placed on any reporting by Thomson Kernaghan about their risk adjusted capital. On July 12, 2002, Ernst and Young was appointed trustee in bankruptcy and is presently on site at Thomson Kernaghan to ensure the orderly transfer of all client accounts. For a complete summary of facts, please see IDA Bulletin No. 3037 at http://www.ida.ca The Investment Dealers Association of Canada is the national self-regulatory organization and representative of the securities industry. The Association's role is to foster fair, efficient and competitive capital markets by encouraging participation in the savings and investment process and by ensuring the integrity of the marketplace. The IDA enforces rules and regulations regarding the sales, business and financial practices of its Member firms. The Enforcement Branch investigates complaints, conducts investigations and disciplines Members and their employees as part of the IDA's regulatory role. VERTEL CORPORATION: Commences Trading on OTC Bulletin Board ----------------------------------------------------------- Vertel Corporation (OTCBB:VRTL), a leading provider of convergent service management mediation solutions, announced that its common stock was delisted from The Nasdaq SmallCap Market at the opening of business Thursday because it did not comply with the $1.00 minimum bid price requirement for continued listing as set out in Marketplace Rule 4450(a)(5). Vertel's common stock is now trading on the OTC Bulletin Board under the stock symbol (OTCBB:VRTL). Vertel is a leading provider of convergent service management mediation solutions. Vertel's high-performance solutions enable customers to quickly and cost-effectively introduce new services, networks and OSSs while leveraging existing investments. Using the M*Ware-driven Development Environment, Vertel has created a full suite of mediation-based applications that can address protocol translation, data transformation, element and network management, OSS application integration and OSS exchange services. Vertel's product offerings allow seamless management in multi- technology and multi-vendor environments. Vertel also develops communications software solutions that fit individual customer requirements through its Professional Services organization. For more information on Vertel or its products, contact Vertel at 21300 Victory Boulevard, Suite 700, Woodland Hills, California 91367; telephone: 818/227-1400; fax: 818/598-0047; or visit http://www.vertel.com WEIRTON STEEL: Says Exclusions Have Less Effect on Current Ops. --------------------------------------------------------------- Weirton Steel Corp., reported the latest round of exclusions on certain types of steel products did not affect its current operations, but eventually could have an adverse impact on the company. The government announced it lifted tariffs imposed in March by the Bush administration on a final batch of 178 steel product types, bringing the total number of exclusions since the process began in June to 727. "The latest exclusions did not affect products we make today, with the exception of a small amount of GALFAN. However, we are very, very disappointed. [Thurs]day's exclusions ultimately will have an impact on us. U.S. mills that have been affected and lose business would fill their voids by producing greater quantities of products that we make, and/or, look toward our customer base," said John H. Walker, president and chief executive officer. "We will continue to closely monitor the situation and contact appropriate members of the Bush administration to lodge our concerns." The exclusion system is part of the World Trade Organization's safeguard process. It provides other nations and domestic steel-consuming companies to file for tariff exclusions under certain conditions. For the most part, exclusions have been granted because an affected product is neither produced in the U.S. nor domestically produced in significant quantities to meet demand. Last March, President Bush imposed three-year tariffs ranging from 8 to 30 percent on 16 types of steel imports after the U.S. steel industry cited unprecedented levels of such imports were harming its operations. Since December 1997, 35 domestic steel companies have filed for bankruptcy protection. During that period, the government found 14 countries have violated U.S. pricing and/or pricing subsidies laws. Weirton Steel is the seventh largest U.S. integrated steel company and the second largest domestic producer of tin mill products. WIDECOM: Auditor Zafar Husain Doubts Ability to Meet Obligations ---------------------------------------------------------------- Zafar Husain Siddiqui, WideCom Group's independent auditor, delivered its report to the Company's Shareholders and Board of Directors, saying: REPORT OF INDEPENDENT AUDITOR To the Board of Directors and Shareholders of The WideCom Group Inc.: I have audited the accompanying consolidated balance sheets of the The WideCom Group Inc. (incorporated in Ontario, Canada) as of March 31, 2001 and 2002 and the related consolidated statements of operations, cash flows and changes in stockholders' equity for the years ended March 31, 2001 and 2002. These consolidated financial statements are the responsibility of the management of The Widecom Group Inc. My responsibility is to express an opinion on these consolidated financial statements based on my audit. Except as discussed in the following paragraphs, I conducted my audit in accordance with generally accepted auditing standards in the United States of America. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion. Substantial doubts existed as at March 31, 2002 as well as on the date of this audit report, as to the Company's ability to continue to meet its obligations and commitments and also with regards to its ability to continue to generate sufficient amounts of cash flows from its operations to maintain its solvency for a reasonable amount of period of time without continued, substantial financial support from the personal resources of two of its directors and one key employee who is very closely related to those two directors. I was unable to obtain sufficient appropriate audit evidence as to the willingness and ability of the above-mentioned individuals to provide continued financial and personal support to the Company.. As more fully explained in Note 7(b), the Company's ability to continue as a going concern may also be jeopardized by a decision by a secured creditor (a financial institution) to enforce its demand for an immediate, full repayment by the Company of its indebtedness, even though such an action might be considered by management to be unlikely, extreme, unscrupulous, or unwarranted. In my opinion, except for the amendments to the contents of this audit report and/or adjustments to the financial statements or notes thereto, as might have been determined to be necessary had I been able to examine evidence regarding (a) the ability and willingness of the individuals referred to above to provide continued personal and financial support to the company for a reasonable amount of period of time, and (b) the present or future intended course of action of the secured creditor referred to above, the consolidated financial statements referred to above present fairly, in all material respects, the financial positions of The WideCom Group Inc. as of March 31, 2001 and 2002 and the results of its operations and its cash flows for the years ended March 31, 2001 and 2002, in conformity with generally accepted accounting principles in the United States of America. Since the accompanying consolidated financial statements have not been prepared and audited in accordance with generally accepted accounting principles and standards in Canada, they may not satisfy the reporting requirements of Canadian statutes and regulations. Mississauga, Ontario July 9, 2002 s/d CHARTERED ACCOUNTANT Note 7 to WideCom's financial statements reads: 7. Bank Indebtedness The Company has an operating line of credit available for approximately $100,000 which bears interest at prime plus 0.75%, is due on demand, and is secured by a general security agreement over all Company assets except real property. As at March 31, 2002 approximately $99,735 ($93,891 in 2001) was utilized. In February 2002, the Royal Bank of Canada (RBC) served through its attorneys a notice upon the Company demanding immediate repayment of the outstanding debt. A few weeks later RBC accepted a settlement offer made by the Company's management. Subsequent to the balance sheet date, however, RBC reneged, and Widecom threatened legal action against RBC for breach of contract. In response, RBC agreed to consider Widecom's revised offer (a) to make an initial payment of CAD20,000 followed by a monthly payment of CAD5,000 until the entire amount has been settled, and (b) a personal guarantee of CAD20,000 by one of the executives of the Company. As of the date of the audit report, the matter remains unresolved pending a response from RBC. In the event of non-acceptance by RBC of the Company's revised offer, management may have to resort to legal action against the bank, the outcome whereof, at this present time (the date of the audit report) is hard to predict." WideCom designs, assembles and markets high-speed, high- performance document systems that transmit, receive, print, copy and/or archive wide format documents, such as blueprints, schematics, newspaper layouts and other mechanical and engineering drawings. Its products include a 36" wide format scanner, a 54 inch wide scanner and a 72 inch wide scanner, a 36" wide format copier and a 36" wide format plotter/printer. It also markets a modular digital multi-function unit which incorporates a scanner module, a plotter module, optional internal modems and software to permit the unit to interface with a personal computer and combine scanning, printing, facsimile and copying functions in one unit. Since inception, WideCom has generated limited revenues from operations and has not yet achieved significant profitability. Revenues are primarily derived from product sales that are recognized for accounting purposes when products are shipped. The Company has limited revenue from operations, significant losses and has a significant deficit. Due to limited cash resources, it has often relied on cash infusions from management to meet ongoing obligations. There is no certainly that such access to funds will be available to it in the future. In order to reduce losses, the Company has significantly reduced selling, general and administrative costs. WideCom expects this to have a reduction on sales. Revenues for the year ended March 31, 2002 were $610,834, a 38% decrease, as compared to $1,584,388 for the year ended March 31, 2001. This decrease was attributable to a decrease in product sales as the Company reduced selling and related expenditures. Operating expenses for the year ended March 31, 2002 were $1,044,387, a decrease of $1,425,690, or 42%, as compared to $2,470,077 for the year ended March 31, 2001. The decrease in operating expenses, is primarily attributable to decreases in selling, general and administrative costs and management costs. In its affiliate NovImage, WideCom's share of loss in equity in this affiliate was $159,193 compared to $156,725 in the previous year. Amortization expense for the fiscal year ending March 31, 2002 was $118,966 compared to $215,603 for the year ending March 31, 2001. Management fees decreased from $258,090 for the year ending March 31, 2001 to $107,285 for the year ending March 31, 2002 as management was paid at reduced rates. In addition to the debaucle with the Royal Bank of Canada WideCom is in default on the interest payments on 12% debentures that are part of a private placement it conducted in 1999. Company cash requirements in connection with manufacturing and marketing will continue to be significant. It does not have any material commitments for capital expenditures. The Company thinks, based on its current plans and assumptions relating to operations, projected cash flow from operations may not be sufficient to satisfy contemplated cash requirements for the foreseeable future. It has relied on investments from management to cover short falls in the last fiscal year, such investment may not be available in the future. In the event that plans or assumptions change, or prove to be incorrect, or if the projected cash flows otherwise prove to be insufficient to fund operations (due to unanticipated expenses, delays, problems or otherwise), WideCom could be required to seek additional financing sooner than currently anticipated. There can be no assurance that this additional financing will be available when needed, on commercially reasonable terms, or at all. The Company's common stock was delisted from the Nasdaq Small Cap Market effective the close of business April 10, 2001 for failure to meet certain minimum net tangible asset requirements. The stock continued to trade on the OTC Bulletin Board. Further during the current year, due to non submission of Financial Statements the Company's common stock was delisted from the OTC Bulletin Board and was traded in the Pink Sheets. After the submitting of the Financial Statements, the Company's common stock has been again listed at the OTC Bulletin Board. The stock continues to trade on the OTC Bulletin Board. WILLIAMS COMMS: Committee Brings-In Houlihan Lokey as Advisor ------------------------------------------------------------- The Official Committee of Unsecured Creditors in the Chapter 11 cases of Williams Communications Group, Inc., and its debtor- affiliates, needs to retain a financial advisor to assist them in the critical tasks associated with analyzing and implementing critical restructuring alternatives, and to help guide them through their reorganization efforts. As a result of their careful deliberations, and through the exercise of their business judgment, the Committee selected Houlihan Lokey Howard & Zukin Capital as its financial advisor, nunc pro tunc to May 1, 2002. The Committee was able to obtain the Court's permission to retain Houlihan Lokey. Houlihan Lokey was financial advisor to the Ad Hoc Committee. According to Committee Chairperson Dave Gillespie, Houlihan Lokey is a nationally recognized investment banking and financial advisory firm with 9 offices worldwide, and more than 275 professionals. Houlihan Lokey provides investment banking and financial advisory services and execution capabilities in a variety of areas, including financial restructuring, where Houlihan Lokey is one of the leading investment bankers and advisors to debtors, bondholder groups, secured and unsecured creditors, acquirors, and other parties-in-interest involved in financially distressed companies, both in and outside of bankruptcy. Houlihan Lokey's Financial Restructuring Group, which has over 75 professionals, will be providing the agreed- upon financial advisory services to the Committee. Mr. Gillespie notes that Houlihan Lokey has served as a financial advisor in some of the largest and most complex restructuring matters in the United States, including serving as the financial advisor to the debtors in the Chapter 11 proceedings of Covad Communications, Inc., Galey & Lord, Inc., McLeod USA, Worldtex, Inc. and Stage Stores, Inc. Houlihan has also served as financial advisor to the official creditors committees in the Chapter 11 proceedings of Enron Corporation, Laidlaw, Inc., Polaroid Corp., The Loewen Group, Inc. and AMF Worldwide, Inc., to name a few of its representative engagements. In addition, Houlihan Lokey has provided financial advisory and investment banking services to over 100 telecommunications and media companies in both public and private sectors, including Global Telesystems, GST Telecommunications, American MetroComm Corporation, NorthPoint Communications and Pathnet Telecommunications, while representing the official creditors committee in ICG Communications. As the financial advisor to the Official Committee of Unsecured Creditors, Houlihan Lokey will: A. assist the Debtors in raising new capital; B. evaluate the sales process for any potential sale of assets of any the Debtors or their subsidiaries; C. evaluate the assets and liabilities of the Debtors and their subsidiaries; D. analyze and review the financial and operating statements of the Debtors and their subsidiaries; E. analyze the business plans and forecasts of the Debtors and their subsidiaries; F. evaluate all aspects of any Debtor-in-possession financing, cash collateral usage and adequate protection therefore and any exit financing in connection with any plan of reorganization and any budgets relating thereto; G. assist in the claims' resolution process and distributions thereto; H. if requested, evaluate intercompany accounts and transfers among the Debtors and their subsidiaries; I. provide specific valuation analyses as the Committee may require in connection with the case; J. devise appropriate strategies to maximize the value to be received by the unsecured creditors in this case; K. assess the financial issues and options concerning the Chapter 11 plan of reorganization; L. prepare, analysis and explanation of the Chapter 11 Plan to various constituencies; and M. provide testimony in court on behalf of the Committee, if necessary. Under the engagement letter agreed upon by the parties, Houlihan Lokey will receive, as compensation for its services: A. Subject to a 3-month minimum, a $200,000 Monthly Fee; B. a Deferred Fee equal to 0.75% of any unsecured creditor recoveries up to $600,000,000 and 0.65% of any additional recoveries over $600,000,000; and C. the reimbursement of all reasonable out-of-pocket expenses. The Debtors will indemnify and hold Houlihan Lokey harmless against any and all losses, claims, damages or liabilities in connection with the engagement, except to the extent they arise as a result of any gross negligence, willful misconduct, bad faith or self-dealing on the part of Houlihan Lokey in the performance of its services. Houlihan Senior Vice President Christopher R. DiMauro contends that the terms of Engagement Letter are similar to the terms, both financial and otherwise, agreed to by Houlihan Lokey and other financial advisors and investment bankers in similar engagements, both in and outside of bankruptcy. The terms of the Engagement Letter were heavily negotiated between the Committee, their legal counsel and Houlihan Lokey, and reflect the Committees' evaluation of the extensive work to be performed by Houlihan Lokey and the Firm's financial advisory expertise. Mr. DiMauro assures the Court that Houlihan Lokey does not represent any of the Debtors' creditors or other parties to this proceeding, or their respective attorneys or accountants, in any matter that is adverse to the interests of any of the Debtors. In addition, Houlihan Lokey does not hold any interest adverse to any of the Debtors as debtors-in-possession or their estates in the matters upon which Houlihan Lokey is to be engaged. However, Houlihan Lokey currently represents these parties in matters unrelated to these cases: A. Senior Secured Lenders: Bank of America N.A., Credit Suisse First Boston, Deutsche Bank, Lehman Brothers Inc., Merrill Lynch & Co. Inc., Morgan Stanley Capital Partners III Inc., and National Westminster Bank; B. Indenture Trustees: Wells Fargo & Company; C. Bondholders: City National Bank, Credit Suisse First Boston, Goldman Sachs & Company, John Hancock Financial Services Inc., LaSalle Bank, Merrill Lynch & Co. Inc., Oppenheimer, Pacific Gas & Electric, PPM America Inc., Prudential, Putnam Lovell Capital, Strong Capital Management, and US Trust Company of New York; D. Lessors: Ameritech Corporation, and First Union National Bank; E. Unsecured Creditors: 360 Networks, Ameritech Corporation, Corvis Corporation, Dupont Holding Corporation, FMA/E-Z Storage, Goldman Sachs & Company, Internal Revenue Service, Lehman Brothers, Level 3 Communications Inc., Lucent Technologies Inc., PPM America Inc., Skadden Arps Slate Meagher & Flom, TimeWarner Telecom, and XO Communications Inc.; F. Customers: Ameritech Corporation; G. Professionals: Bernstein Litowitz Berger & Grossman, Fulbright & Jaworski, Jones Day Reavis & Pogue, Kirkland & Ellis, and White & Case; H. Other Creditors: Aspen Systems Corporation, Cannon Energy Corporation, Capstone Turbine, Eagle Geophysical Inc., Realco/Consolidated HCI Holdings, and Texas Petrochemical Corporation. Mr. DiMauro informs the Court that prior to the Petition Date, the Debtors paid Houlihan Lokey $400,000 as compensation and $6,622 for the reimbursement of expenses for its services on behalf of the Ad Hoc Committee. These payments were for services provided prior to the commencement of these cases, and include full payment for all prepetition fees and expenses. Accordingly, Houlihan Lokey is not a prepetition creditor of the Debtors. (Williams Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 609/392-0900) DebtTraders reports that Williams Communications Group Inc.'s 10.875% bonds due 2009 (WCGR09USR1) are trading around 13. See http://www.debttraders.com/price.cfm?dt_sec_ticker=WCGR09USR1 for more real-time bond pricing. WILLIAMS CONTROLS: Recapitalization Deals Delay SEC Filings ----------------------------------------------------------- Williams Controls, Inc., could not prepare and file, by the filing deadline, without unreasonable effort or expense, its Quarterly Report for the quarter ended June 30, 2002 due to the diversion of time and effort by its management with respect to certain capitalization transactions which have delayed the Company's preparation and review of its quarterly report. Williams Controls completed a recapitalization transaction in which the Company sold shares of a new Series B Preferred Stock, 15% Redeemable Convertible Series, in exchange for cash and debt forgiveness totaling $15,000,000. On July 18, 2002, Williams Controls filed its report regarding the completion of the exchange of all of the outstanding shares of its Series A Preferred Stock, 7 1/2% Redeemable Convertible Series for shares of its Series A-1 Preferred Stock, Non-Redeemable Convertible Series. The Company intends to file the affected quarterly report on or prior to a prescribed extended date. Williams Controls is open to communication, but it's really into control. The company's 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. In its Form 10-Q filing for the quarter ended March 31, 2002, the Company recorded a total shareholders' equity deficit of about $15 million. WORLDCOM: Billing Concepts Wants Stay Relief to Withhold Payment ---------------------------------------------------------------- Billing Concepts Inc., asks the U.S. Bankruptcy Court for the Southern District of New York in connection with the Chapter 11 cases of WorldCom Inc., and its debtor-affiliates, for relief from stay to: A. continue to hold the Withheld Payments in accordance with the Billing Agreement; B. retain, deduct, and apply the Billing Concepts Adjustments arising from prepetition billing records to Billing Concepts Adjustments to the Debtors' obligations to Billing Concepts relating to prepetition billing records, and to apply the Billing Concepts Adjustments arising from postpetition billing records to the Debtors' obligations to Billing Concepts Adjustments relating to postpetition billing records; and C. otherwise operate under the Billing Agreement in the normal course of business while maintaining separateness of the Debtors' prepetition and postpetition accounts. Shalini Vohra, Esq., at Silverman Perlstein & Acampora LLP, in Jericho, New York, informs the Court that on May 22, 1995, the Debtors entered into a Zero Plus-Zero Minus Billing and Information Management Services Agreement. Under the agreement, Billing Concepts provides the Debtors with certain billing, collection, and management services which permit the Debtors to have charges for certain Telecommunications Services billed directly to end users through the applicable Local Exchange Company. The Billing Agreement expired on July 31, 2002. Under the Billing Agreement, Ms. Vohra explains that the Debtors regularly transfer its applicable billing records to Billing Concepts. Billing Concepts then processes the billing records and transfers them to the appropriate LEC for billing to the Debtors' end user customers. Subsequently, the LEC pays to Billing Concepts the applicable payments in accordance with each LEC's Billing Agreement with Billing Concepts. After Billing Concepts has been paid by the LECs, Billing Concepts deducts Billing Concepts' billing service fees, charges, chargebacks, assessments, and reserves as well as any other applicable deductions in accordance with the Billing Agreement. After applying the Billing Concepts Adjustments, Billing Concepts pays to the Debtors the amount due in accordance with the Billing Agreement. According to Ms. Vohra, Billing Concepts is one of only a few providers of the specialized billing software used to process the Debtors' billing records. Indeed, Billing Concepts handles much of the billing in the Debtors' industry. Without the specialized billing system that Billing Concepts provides, the costs to the Debtors to collect the revenues from the end user's usage of Debtors' Telecommunication Services would render alternatives to Billing Concepts impractical. Ms. Vohra relates that Billing Concepts first learned of the Debtors' Chapter 11 filing on July 22, 2002. As of July 22, 2002, Billing Concepts created separate accounts to segregate the Debtors' billing records created prior to the Petition Date from those created after the Petition Date. Pending entry of the relief sought in this Motion, Billing Concepts has maintained separateness of its accounting since July 22, 2002, so that the Billing Concepts Adjustments arising from prepetition billing records can be applied only to revenues arising from prepetition billing records, and similarly, Billing Concepts Adjustments relating to postpetition billing records can be applied only to revenues arising from postpetition billing records. In order to preserve Billing Concepts' rights of offset or recoupment with respect to the Billing Concepts Adjustments, Ms. Vohra admits that Billing Concepts has imposed an administrative hold on amounts Billing Concepts would otherwise pay after the Petition Date, and may in the future impose an administrative hold on additional amounts that may become payable to the Debtors under the Billing Agreement. As of July 30, 2002, Billing Concepts is withholding $1,003,214.48 of payments Billing Concepts would otherwise have paid to the Debtors. In addition, Billing Concepts currently holds a Bad Debt Reserve and a reserve for unbillable records both related to Telecommunications Services rendered prepetition. The amount of the Bad Debt Reserve and Unbillable Record Reserve may change from time to time in accordance with the Billing Agreement. Ms. Vohra points out that it can be several months after billing records are sent to the LECs for collection before Billing Concepts will learn the amount of all Billing Concepts Adjustments and bad debts relating to those billing records. As they become known, Billing Concepts applies any reserves and reduces amounts otherwise payable by Billing Concepts to the Debtors. Billing Concepts has determined that future collections relating to the Debtors' prepetition billing records will decrease because of recent publicity concerning the Debtors, because substantial collections relating to those prepetition billing records have already been made, and because Billing Concepts has made prepetition payments to the Debtors relating to those billing records. Thus, Ms. Vohra believes that it is possible that Billing Concepts Adjustments related to the prepetition billing records could in the future exceed the reserves held by Billing Concepts and the remaining payments due from Billing Concepts to the Debtors relating to those prepetition billing records. As a result, Billing Concepts must impose the administrative hold on amounts otherwise payable to the Debtors in order to retain Billing Concepts' setoff and recoupment rights and protect Billing Concepts against that exposure. Billing Concepts believes its rights under the Billing Agreement are in the nature of recoupment and not governed by the automatic stay. However, in an abundance of caution, Billing Concepts has filed this Precautionary Motion. (Worldcom Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392-0900) DebtTraders reports that Worldcom Inc.'s 11.250% bonds due 2007 (WCOM07USA1) are trading between 22.5 and 27. See http://www.debttraders.com/price.cfm?dt_sec_ticker=WCOM07USA1for more real-time bond pricing. WORLD HEART: June Quarter Balance Sheet Upside Down by C$21 Mil. ---------------------------------------------------------------- World Heart Corporation (NASDAQ: WHRT, TSX: WHT) released its unaudited consolidated financial results for the quarter and six months ended June 30, 2002, showing revenues up by 82% over the first six months of last year, and expenses reduced. WorldHeart announced an expanded marketing and sales program for its Novacor(R) LVAS (left ventricular assist system), and merging of the HeartSaverVAD(TM) and HeartSaverVAD(TM) II programs into a single release of an optimized HeartSaverVAD(TM) product. "Second quarter revenue growth from Novacor(R) LVAS in the important United States market was strong and more than offset the expected slowdown in sales in Europe prior to our release of the ePTFE inflow conduit," said Rod Bryden, President & CEO of WorldHeart. "We saw renewed European implant activity late in the quarter suggesting that sales there will strengthen our revenues in the second half of the year," he said. "In the second quarter, a total of 23 Novacor(R) LVAS were shipped, despite very limited shipments to Europe in the quarter," Bryden stated. "Four new clinics were added as Novacor(R) LVAS users and several others are now in discussion or undergoing training in expectation of introducing the device to their clinics," he said. "Operating costs were reduced during the first six months. Cash applied to operations in the second quarter was $6.3 million, compared with $11.3 million in the second quarter of last year, a drop of 44%," Mr. Bryden explained. "We expect that trend to continue through this year and next year, as costs are reduced for HeartSaverVAD(TM) research and development and the INTrEPID Trial (Investigation of Non-Transplant-Eligible Patients who are Inotrope Dependent), and contribution increases from Novacor(R) LVAS sales," he said. On Wednesday, August 14, 2002, WorldHeart submitted a Premarket Approval Supplement (PMA) to the US Food and Drug Administration (FDA) for use of Novacor(R) LVAS by end-stage heart-failure patients who are not candidates for heart transplantation. The company cannot provide any assurance of approval by the FDA. However, the data on which the submission is based, and the Bayesian methodology used in analysis of survival data, provide what the company believes is a compelling case for approval. Should approval be granted by the FDA, the patient population for which Novacor(R) LVAS could be used would increase very substantially. Effective immediately, operating expenditures will be rebalanced to increase capacity in marketing and sales and to reduce expenditures in research and development and related costs, through focusing the HeartSaverVAD(TM) program fully on delivery of the optimized HeartsaverVAD(TM) product. Total operating expenses will be reduced by an annual rate of $10 million from the rate actually experienced in the first half of this year, and net cash applied to operations will be further reduced by increased contribution from Novacor(R) LVAS revenues. This program will include staff reductions of approximately 25%, from a total employee base in Ottawa, Ontario and Oakland, California of 235 at June 30, 2002. Revenues for the first six months of 2002 were $5,142,248, compared with $2,821,651 for the same period last year. Gross margin for the same period was ($258,576) this year, compared with ($1,600,904) a year ago. Net loss for the six months was $23,002,843, or $1.31 per share, compared with $ 28,403,557, or $1.88 per share last year. Total cash applied to operations during the first six months of this year was $15,629,887, compared with $19,642,537 a year ago. For the quarter ended June 30, 2002, revenues were $2,523,164, compared with $2,218,995 a year ago, generating contribution in the second quarter of this year of ($297,668), compared with $337,879 last year. Revenues and contribution were reduced in the second quarter of this year by a charge of $348,149. This reflects a shortfall in earn out of guaranteed margins to WorldHeart's distributor in Europe, due to reduced sales in the quarter prior to the release of the company's new inflow conduit. Implants of Novacor(R) LVAS increased in the final month of the quarter after the European release of the enhanced ePTFE conduit and no further shortfalls are expected in sales required to fully earn the minimum distribution margins. Net loss for the second quarter this year was $9,853,918, or $0.55 per share, compared with $12,914,210, or $0.85 per share last year. Total cash applied to operations during the second quarter this year was $6,299,941, compared with $11,295,142 a year ago. Research and development expenses for the first half of this year were $13,284,467, compared with $16,850,870 for the same period last year, of which $5,907,163 were incurred during the second quarter of this year, compared with $9,454,878 in the second quarter of last year. Cash and near cash resources at June 30, 2002 totaled $6,108,466, compared with $12,555,440 at March 31, 2002. The quarter-end cash position does not include approximately $1,382,000 received early in the third quarter as part of contribution to research and development expenses by Technology Partnership Canada (TPC). A total of approximately $6.1 million is expected to be received from TPC over the balance of the year or early next year. Within the existing approvals in Europe, Japan, the United States and Canada, sales of Novacor(R) LVAS are increasing and new clinics are adopting the product as one of their options for end-stage heart-failure patients. The capacity to produce approximately 5 times current sales can be delivered with incremental additions within the Oakland, California facility. The capacity to provide excellent clinical support is already in place, both from internal staff and from Edwards Lifesciences, LLC (Edwards). WorldHeart will increase its sales force in the United States commencing immediately, and will expand its marketing activities in conjunction with Edwards in Europe, Japan and Canada during the second half of this year and into 2003. The intent is to focus on marketing, sales and support activities on Novacor(R) LVAS through 2005 before introducing the next generation HeartSaverVAD(TM). WorldHeart believes that this program will result in effective penetration of the market by Novacor(R) LVAS during the next three years. HeartSaverVAD(TM) is planned for commercial introduction outside of the United States in 2006, and in the United States in 2007. HeartSaverVAD(TM) is now completing a series of pre-clinical trials that have demonstrated outstanding performance in key attributes, including: device output; matching flow with body requirements; hematological response; and support of key organs including the brain, liver and kidneys. However, device durability has not been demonstrated to meet the standards already set by Novacor(R) LVAS, and the overall size of HeartSaverVAD(TM) has crept up during the development process to 580 ml. Although it is the smallest implantable pulsatile VAD, it is larger than the target for HeartSaverVAD(TM). Over the past two years, design enhancements were defined that were intended to be introduced in a second version of HeartSaverVAD(TM), known as HeartSaverVAD(TM) II. These enhancements will reduce the overall size of the device, reduce power requirements, increase reliability and durability, and reduce costs of production. Effective immediately, the development program for HeartSaverVAD(TM) will incorporate the enhancements previously planned for HeartSaverVAD(TM) II. The merged program will result in reduced overall research and development costs to bring the optimized HeartSaverVAD(TM) to clinical trials, and require a single program of trials. "As expected, additional capital will be required to bring the company to positive cash flow. With the reductions in cash usage already achieved, and the effects of the actions announced today to increase revenues and further reduce expenses, the total amount of capital required will be significantly reduced, " Mr. Bryden said. "Appropriate action will be taken to ensure that sufficient capital is available. Securities laws in the United States and Canada limit discussion of these actions prior to completion," he said. The company announced that it is in discussion with Edwards to exchange US$58 million of preferred shares in WorldHeart's United States subsidiary for 4,981,128 common shares in WorldHeart, as provided by the terms of the preferred shares, at an effective conversion price of US$11.64 per share. This conversion would not add cash to WorldHeart, but it would increase the equity attributable to common shares of the company. The company also announced that TPC has reconfirmed its intention, subject to formal approval, to provide an additional equivalent investment in support of the HeartSaverVAD(TM) research, development and trials program. World Heart Corporation, a global medical device company based in Ottawa, Ontario and Oakland, California, is currently focused on the development and commercialization of pulsatile ventricular assist systems. Its Novacor(R) LVAS is already well established in the marketplace and its next generation technology, HeartSaverVAD(TM), is a fully implantable assist device intended for long-term support of patients with heart failure. As of June 30, 2002, the Company reported a total shareholders' equity deficit of about CDN21 million. WORLD WIRELESS: Lancer Entities Extend Debt Maturity to Sept 30 --------------------------------------------------------------- World Wireless Communications, Inc. (Amex: XWC), a developer of wireless and Internet systems, technology and products, reported that the Company's existing secured creditors, Lancer Offshore, Inc., and Lancer Partners L.P., have extended the maturity date of their secured notes totaling $5,535,000 in principal amount outstanding on June 30, 2002 until September 30, 2002 and that such affiliates loaned the Company an additional $600,000 ($300,000 in each of July and August) due on September 30, 2002. Such action brings the total loans to the Company of $6,135,000 as of August 22, 2002. As consideration for such extension, the Company agreed to issue to such creditors 5,380,000 shares of common stock. The Company has previously agreed to issue 7,120,000 shares of common stock to these lenders in consideration for a prior extension of the due dates of the senior secured notes, which issuance of up to 12,500,000 shares of common stock was approved by the Company's stockholders at the Company's 2002 annual meeting held on June 28, 2002. The Company plans to file an amended listing application with the American Stock Exchange covering, among other things, the issuance of 12,500,000 shares to such creditors. David Singer, CEO of World Wireless Communications, Inc., commented: "We are pleased that our largest shareholder group again decided to extend the maturity date of the secured notes we issued to them and to increase their financing of our operations. This reflects their continued endorsement and support of the company and its technology." World Wireless also announced that the filing of its Form 10-Q for the quarter ended June 30, 2002 will be further delayed to approximately September 6, 2002 while the Company completes its inquiry regarding the facts surrounding an unrecorded transaction and seeks to resolve accounting issues relating to its correction. Any potential impact of the error's correction on the results of operations is not expected to exceed $212,000 in additional loss from operations and may only be about only $12,000, and the impact on loss per share is not expected to exceed $0.01 in additional loss per share. It has not been determined whether the correction of this error will impact the periods reported below. Greenwood Village-based World Wireless Communications, Inc., was founded in 1995 and is a leading developer of wireless and Internet systems, technology and products. World Wireless focuses on spread spectrum radios in the 900 Mhz band and has developed the X-traWeb(TM) system -- an Internet-based product designed for remote monitoring and control of devices. X- traWeb's many applications include utility meters, security systems, vending machines, assets management, and quick service restaurants. More information on X-traWeb(TM) is available at http://www.x-traweb.com More information about World Wireless Communications, Inc., is available on the company's Web site, http://www.worldwireless.com At March 31, 2002, World Wireless' balance sheet shows a total shareholders' equity deficit of about $5 million. * Leonard Berliner Joins Hilco Merchant Resources as Senior VP -------------------------------------------------------------- Len Berliner has joined Hilco Merchant Resources, America's leading retail inventory strategist, purchaser of retail businesses, inventories and excess stores. Mr. Berliner, as Senior Vice President of Marketing and Advertising, will assume responsibility for all media planning, production and purchasing in addition to the marketing initiatives of Hilco Merchant Resources. Mike Keefe, CEO of Hilco Merchant Resources stated: "Len is a seasoned advertising and marketing executive with extensive experience and responsibility for planning and managing hundred million dollar marketing budgets. Len brings a fresh perspective to the Hilco Merchant Resources team in an area critical to the success of all of our sales. Len is very well regarded and recognized in retailing for his accomplishments and innovative thinking." Prior to joining Hilco Merchant Resources, Mr. Berliner held senior marketing and advertising positions with major retailers including Heilig-Meyers and divisions of Federated and May Department Stores. Mr. Berliner holds a Bachelor of Arts degree from the State University of New York and also studied at New York University's Graduate School. Mr. Berliner said, "Hilco Merchant Resources (HMR) has a truly impressive record of highly successful initiatives on behalf of its clients. I am very pleased to have the opportunity to work with the associates and clients of HMR as that record of superb performance continues to expand." Based in Northbrook, IL, Hilco Merchant Resources provides retail inventory liquidation and store closing services. Over the years, Hilco principals have disposed of assets valued in excess of $30 billion. Hilco Merchant Resources is part of the Hilco Organization, a provider of asset valuation, acquisition, disposition and financing to an international marketplace through eight specialized business units. Hilco serves retailers, manufacturers, wholesalers, distributors and importers, direct and through their financial institutions and consulting professionals. Services include: retail store, warehouse and factory closings, and inventory liquidations, through sales and auctions; asset appraisals covering retail and industrial inventory, machinery, equipment, accounts receivables and real estate; disposition of commercial and industrial real estate and leaseholds; purchase and liquidation of distressed accounts receivables portfolios; acquisition and re-marketing of excess wholesale consumer goods inventories; and secured debt and equity financing. The Hilco organization, headquartered in Chicago, has offices in Boston; New York; Los Angeles; Miami; Atlanta; Flagstaff; Detroit; and London, England. For more information please visit Web site http://www.hilcotrading.com * Kasen & Shahon Join Clear Thinking Group Board of Advisors ------------------------------------------------------------ Clear Thinking Group, Inc., the retail, consumer products, and manufacturing turnaround consultancy, announced the appointment of two industry veterans to its Board of Advisors, Stewart Kasen and Laurie Shahon. Currently, Kasen is the President and CEO of S&K Famous Brands, and Shahon is the Founder and President of Wilton Capital Group. "With the appointments of Stewart and Laurie, we are fast approaching our goal of building a world-class Board of Advisors, ensuring the continued strategic growth of Clear Thinking Group. Stewart and Laurie each bring unique and valuable experience to our board; with Stewart's retail and turnaround experience and Laurie's finance and operations background, we will have a broad pool of knowledge to tap into as we make critical decisions about the direction of Clear Thinking Group," said Stuart Kessler, CEO of Clear Thinking Group. Mr. Kasen is an accomplished retail executive with broad experience in the department and specialty store business. He is currently the President and CEO of S&K Famous Brands, a menswear retailer traded on NASDAQ. He has served as President of Schwarzschilds Jewelers, Chairman, President and CEO of Factory Card Outlet, Chairman, President and CEO of Best Products, a catalog showroom retailer, President and CEO of Emporium Capwell, a department store division of Carter Hawley Hale stores, and President and CEO of Thalhimers, a department store division of Carter Hawley Hale Stores. Mr. Kasen has extensive experience as a director of companies operating under stressful business conditions, in the manufacturing, consumer products, and retail industries. He received a B.S., in Business Administration from Seton Hall University. Ms. Shahon is a seasoned executive with a strong focus on finance, operations and strategy, with a focus in the retail and consumer products industries. She is the founder and President of Wilton Capital Group, which was formed in 1994 to make private direct investments in later stage ventures and medium- sized buyouts, primarily in retailing, consumer products, distribution, financial institutions, and telecommunications. Prior to founding Wilton Capital she was a Managing Director of ``21' International Holdings. She was the founder and head of the retailing and consumer products group of Salomon Brothers Inc from 1985 to 1988. She also served as Chief Operating Officer of Color Tile, Inc. Ms. Shahon has extensive experience as a director of companies operating under stressful business conditions, including: One Price Clothing Stores, Homeland Holdings, Factory Card Outlet, and Safelite Auto Glass. She received her A.B. in English and Political Science from Wellesley College and her M.B.A. in Finance and International Business from Columbia University. Clear Thinking Group is a national consulting organization that provides trustworthy advice and actionable solutions to its clients. Their wide range of services help clients achieve their objectives with innovative operating and financial strategies. This side-by-side approach not only drives companies toward growth, it helps accelerate the turnaround process for Clear Thinking Group clients. Clear Thinking Group is based in Hillsborough, NJ with offices in Atlanta, and Florida. Clear Thinking Group is a wholly owned subsidiary of Liquidation World, Inc. (LQW-TSE/LIQWF- NASDAQ). * BOND PRICING: For the week of August 26 - August 30, 2002 ----------------------------------------------------------- Issuer Coupon Maturity Price ------ ------ -------- ----- AES Corporation 4.500% 08/15/05 26 AES Corporation 8.000% 12/31/08 35 AES Corporation 8.750% 06/15/08 37 AES Corporation 8.875% 02/15/11 31 AES Corporation 9.375% 09/15/10 60 AES Corporation 9.500% 06/01/09 59 Adelphia Communications 10.875% 10/01/10 24 Advanced Energy 5.250% 11/15/06 72 Advanced Micro Devices Inc. 4.750% 02/01/22 69 Aether Systems 6.000% 03/22/05 63 Alternative Living Services (Alterra) 5.250% 12/15/02 4 Alkermes Inc. 3.750% 02/15/07 44 Alexion Pharmaceuticals Inc. 5.750% 03/15/07 62 Amazon.com Inc. 4.750% 02/01/09 64 American Tower Corp. 9.375% 02/01/09 54 American Tower Corp. 2.250% 10/15/09 62 American Tower Corp. 5.000% 02/15/10 45 American Tower Corp. 5.000% 02/15/10 44 American Tower Corp. 6.250% 10/15/09 52 American & Foreign Power 5.000% 03/01/30 60 Amkor Technology Inc. 5.000% 03/15/07 45 Amkor Technology Inc. 6.250% 10/15/09 52 Amkor Technology Inc. 9.375% 02/01/09 64 Amkor Technology Inc. 10.500% 05/01/09 70 AnnTaylor Stores 0.550% 06/18/19 66 Armstrong World Industries 9.750% 04/15/08 45 AMR Corporation 9.000% 09/15/16 65 AMR Corporation 9.750% 08/15/21 66 AMR Corporation 9.800% 10/01/21 66 AMR Corporation 10.000% 04/15/21 68 AMR Corporation 10.200% 03/15/20 70 Atlas Air Inc. 9.250% 04/15/08 51 AT&T Corp. 6.500% 03/15/29 75 AT&T Wireless 7.875% 03/01/11 68 AT&T Wireless 8.125% 05/01/12 61 AT&T Wireless 8.750% 03/01/31 70 Best Buy Co. Inc. 0.684% 06?27/21 64 Best Buy Co. Inc. 2.250% 01/15/22 74 Bethlehem Steel 8.450% 03/01/05 14 Borden Inc. 7.875% 02/15/23 57 Borden Inc. 8.375% 04/15/16 53 Borden Inc. 9.250% 06/15/19 65 Borden Inc. 9.200% 03/15/21 53 Boston Celtics 6.000% 06/30/38 62 Brocade Communication Systems 2.000% 01/01/07 75 Brooks Automatic 4.750% 06/01/08 74 Browning-Ferris Industries Inc. 7.400% 09/15/35 68 Burlington Northern 3.200% 01/01/45 51 Burlington Northern 3.800% 01/01/20 71 CSC Holdings Inc. 7.625% 07/15/18 70 CSC Holdings Inc. 7.625% 04/01/18 74 CSC Holdings Inc. 7.875% 02/15/18 70 CSC Holdings Inc. 8.125% 07/15/09 74 Calpine Corp. 8.500% 02/15/11 50 Capital One Financial 7.125% 08/01/08 68 Case Corp. 7.250% 01/15/16 74 Centennial Cell 10.750% 12/15/08 57 Century Communications 8.875% 01/15/07 34 Champion Enterprises 7.625% 05/15/09 35 Charter Communications, Inc. 4.750% 06/01/06 39 Charter Communications, Inc. 5.750% 10/15/05 44 Charter Communications, Inc. 5.750% 10/15/05 41 Charter Communications Holdings 8.250% 04/01/07 54 Charter Communications Holdings 8.625% 04/01/09 58 Charter Communications Holdings 9.625% 11/15/09 65 Charter Communications Holdings 10.000% 04/01/09 56 Charter Communications Holdings 10.000% 05/15/11 62 Charter Communications Holdings 10.250% 01/15/10 55 Charter Communications Holdings 10.750% 10/01/09 70 Charter Communications Holdings 11.125% 01/15/11 68 Ciena Corporation 3.750% 02/01/08 59 Cincinnati Bell Telephone (Broadwing) 6.300% 12/01/28 69 Cincinnati Bell Inc. (Broadwing) 7.250% 06/15/23 69 CIT Group Holdings 5.875% 10/15/08 74 Coastal Corp. 6.375% 02/01/09 57 Coastal Corp. 6.500% 05/15/06 71 Coastal Corp. 6.500% 06/01/08 60 Coastal Corp. 6.700% 02/15/27 67 Coastal Corp. 6.950% 06/01/28 38 Coastal Corp. 7.420% 02/15/37 40 Coastal Corp. 7.500% 08/15/06 73 Coastal Corp. 7.625% 09/01/08 63 Coastal Corp. 7.750% 06/15/10 57 Coastal Corp. 7.750% 10/15/35 42 Coastal Corp. 9.625% 05/15/12 61 Coastal Corp. 10.750% 10/01/10 69 Coeur D'Alene 6.375% 01/31/05 73 Coeur D'Alene 7.250% 10/31/05 70 Comcast Corp. 2.000% 10/15/29 18 Comcast Corp. 10.625% 07/15/12 67 Comforce Operating 12.000% 12/01/07 55 Computer Associates 5.000% 03/15/07 72 Conseco Inc. 8.125% 02/15/03 24 Conseco Inc. 8.750% 02/09/04 5 Conseco Inc. 10.500% 12/15/04 26 Continental Airlines 4.500% 02/01/07 60 Continental Airlines 7.568% 12/01/06 74 Corning Inc. 3.500% 11/01/08 54 Corning Inc. 6.300% 03/01/09 56 Corning Inc. 6.750% 09/15/13 54 Corning Inc. 6.850% 03/01/29 37 Corning Inc. 8.875% 08/15/21 49 Corning Glass 7.000% 03/15/07 67 Corning Glass 8.875% 03/15/16 52 Cox Communications Inc. 0.348% 02/23/21 69 Cox Communications Inc. 0.426% 04/19/20 37 Cox Communications Inc. 3.000% 03/14/30 27 Cox Communications Inc. 6.800% 08/01/28 75 Cox Communications Inc. 6.950% 01/15/28 73 Cox Communications Inc. 7.750% 11/15/29 27 Critical Path 5.750% 04/01/05 63 Critical Path 5.750% 04/01/05 63 Crown Castle International 9.000% 05/15/11 52 Crown Castle International 9.375% 08/01/11 55 Crown Castle International 9.500% 08/01/11 54 Crown Castle International 10.750% 08/01/11 57 Crown Cork & Seal 7.375% 12/15/26 53 Crown Cork & Seal 8.375% 01/15/05 67 Cubist Pharmacy 5.500% 11/01/08 50 Cummins Engine 5.650% 03/01/98 63 Dana Corp. 7.000% 03/01/29 64 Dana Corp. 7.000% 03/15/28 64 Delta Air Lines 8.300% 12/15/29 63 Delta Air Lines 9.000% 05/15/16 75 Delta Air Lines 9.250% 03/15/22 71 Dillard Department Store 7.000% 12/01/28 70 Dobson Communications Corp. 10.875% 07/01/10 67 Dobson/Sygnet 12.250% 12/15/08 74 Dresser Industries 7.600% 08/15/96 60 Dynegy Holdings Inc. 6.875% 04/01/11 74 EOTT Energy Partner 11.000% 10/01/09 67 Echostar Communications 5.750% 05/15/08 74 El Paso Corp. 7.750% 01/15/32 56 El Paso Energy 6.750% 05/15/09 69 Enzon Inc. 4.500% 07/01/08 71 Equistar Chemicals 7.550% 02/15/26 60 E*Trade Group 6.000% 02/01/07 64 Finisar Corp. 5.250% 10/15/08 55 Finova Group 7.500% 11/15/09 30 Fleming Companies Inc. 5.250% 03/15/09 74 Foster Wheeler 6.750% 11/15/05 58 General Physics 6.000% 06/30/04 52 Georgia-Pacific 7.375% 12/01/25 67 Georgia-Pacific 8.125% 11/15/29 60 Georgia-Pacific 8.250% 03/01/23 74 Georgia-Pacific 8.875% 05/15/31 68 Goodyear Tire 7.000% 03/15/28 71 Gulf Mobile Ohio 5.000% 12/01/56 62 Hanover Compress 4.750% 03/15/08 72 Hasbro Inc. 6.600% 07/15/28 70 Health Management Associates Inc. 0.250% 08/16/20 67 Health Management Associates Inc. 0.250% 08/16/20 69 Human Genome 3.750% 03/15/07 68 Huntsman Polymer 11.750% 12/01/04 67 ICN Pharmaceuticals Inc. 6.500% 07/15/08 66 IMC Global Inc. 7.300% 01/15/28 75 IMC Global Inc. 7.375% 08/01/18 73 Ikon Office 6.750% 12/01/25 68 Ikon Office 7.300% 11/01/27 72 Inhale Therapeutic Systems Inc. 3.500% 10/17/07 46 Inland Steel Co. 7.900% 01/15/07 58 Juniper Networks 4.750% 03/15/07 68 Kmart Corporation 9.375% 02/01/06 26 Kulicke & Soffa Industries Inc. 5.250% 08/15/06 62 LTX Corporation 4.250% 08/15/06 71 Lehman Brothers Holding 8.000% 11/13/03 62 Level 3 Communications 6.000% 09/15/09 34 Level 3 Communications 6.000% 03/15/09 34 Level 3 Communications 9.125% 05/01/08 60 Liberty Media 3.500% 01/15/31 69 Liberty Media 3.750% 02/15/30 45 Liberty Media 4.000% 11/15/29 48 Lucent Technologies 5.500% 11/15/08 60 Lucent Technologies 6.450% 03/15/29 46 Lucent Technologies 6.500% 01/15/28 40 Lucent Technologies 7.250% 07/15/06 62 Magellan Health 9.000% 02/15/08 29 Mail-Well I Corp. 8.750% 12/15/08 49 Medarex Inc. 4.500% 07/01/06 69 Mediacom Communications 5.250% 07/01/06 67 Mediacom LLC 7.875% 02/15/11 64 Mediacom LLC 8.500% 04/15/08 75 Mediacom LLC 9.500% 01/15/13 68 Metris Companies 10.125% 07/15/06 71 Mirant Corp. 5.750% 07/15/07 62 Mirant Americas 7.200% 10/01/08 40 Mirant Americas 7.625% 05/01/06 55 Mirant Americas 8.300% 05/01/11 36 Mirant Americas 8.500% 10/01/21 30 Mission Energy 13.500% 07/15/08 75 Missouri Pacific Railroad 4.750% 01/01/20 67 Missouri Pacific Railroad 4.750% 01/01/30 62 Missouri Pacific Railroad 5.000% 01/01/45 58 Motorola Inc. 5.220% 10/01/21 53 MSX International 11.375% 01/15/08 65 NTL Communications 7.000% 12/15/08 16 National Vision 12.000% 03/30/09 60 Nextel Communications 4.750% 07/01/07 66 Nextel Communications 5.250% 01/15/10 60 Nextel Communications 6.000% 06/01/11 57 Nextel Communications 9.375% 11/15/09 63 Nextel Communications 9.500% 02/01/09 64 Nextel Communications 12.000% 11/01/11 74 Nextel Partners 11.000% 03/15/10 59 Noram Energy 6.000% 03/15/12 68 Northern Pacific Railway 3.000% 01/01/47 50 Northern Pacific Railway 3.000% 01/01/47 50 OSI Pharmaceuticals 4.000% 02/01/09 75 PG&E National Energy 10.375% 05/16/11 74 Panamsat Corp. 6.875% 01/15/28 72 Pegasus Satellite 12.375% 08/01/06 49 Primedia Inc. 7.625% 04/01/08 64 Primedia Inc. 8.875% 05/15/11 70 Providian Financial 3.250% 08/15/05 57 Public Service Electric & Gas 5.000% 07/01/37 71 Photronics Inc. 4.750% 12/15/06 69 Quanta Services 4.000% 07/01/07 48 Qwest Capital 7.625% 08/03/21 64 Qwest Capital 7.750% 02/15/31 61 RF Micro Devices 3.750% 08/15/05 74 Redback Networks 5.000% 04/01/07 33 Rite Aid Corp. 7.125% 01/15/07 60 Rockwell Int'l 5.200% 01/15/98 72 Royster-Clark 10.250% 04/01/09 70 Rural Cellular 9.625% 05/15/08 58 Ryder System Inc. 5.000% 02/25/21 69 SBA Communications 10.250% 02/01/09 49 SCI Systems Inc. 3.000% 03/15/07 58 Saks Inc. 7.375% 02/15/19 74 Sepracor Inc. 5.000% 02/15/07 42 Sepracor Inc. 7.000% 12/15/05 54 Silicon Graphics 5.250% 09/01/04 55 Solutia Inc. 7.375% 10/15/27 61 Sotheby's Holdings 6.875% 02/01/09 70 Sprint Capital Corp. 6.375% 05/01/09 69 Sprint Capital Corp. 6.875% 11/15/28 74 Sprint Capital Corp. 6.900% 05/01/19 61 TCI Communications Inc. 7.125% 02/15/28 74 Tenneco Inc. 11.625% 10/15/09 72 Time Warner Enterprises 8.375% 03/15/23 74 Time Warner Inc. 6.625% 05/15/29 69 Time Warner Inc. 6.950% 01/15/28 73 Time Warner Telecom 9.750% 07/15/08 54 Transwitch Corp. 4.500% 09/12/05 59 Tribune Company 2.000% 05/15/29 67 Triton PCS Inc. 8.750% 11/15/11 64 Triton PCS Inc. 9.375% 02/01/11 69 Trump Atlantic 11.250% 05/01/06 73 Turner Broadcasting 8.375% 07/01/13 74 US Airways Passenger 6.820% 01/30/14 71 US Airways Inc. 7.960% 01/20/18 75 Ugly Duckling 11.000% 04/15/07 60 United Air Lines 10.670% 05/01/04 26 United Air Lines 11.210% 05/01/14 24 Universal Health Services 0.426% 06/23/20 59 US Timberlands 9.625% 11/15/07 60 US West Capital 6.875% 07/15/28 67 US West Communications 6.875% 09/15/33 65 US West Communications 7.125% 11/15/43 66 US West Communications 7.200% 11/10/26 69 US West Communications 7.250% 09/15/25 69 US West Communications 7.250% 10/15/35 68 US West Communications 7.500% 06/15/23 72 Vesta Insurance Group 8.750% 07/15/25 73 Viropharma Inc. 6.000% 03/01/07 35 Weirton Steel 10.750% 06/01/05 70 Weirton Steel 11.375% 07/01/04 72 Westpoint Stevens 7.875% 06/15/08 44 Williams Companies 7.125% 09/01/11 64 Xerox Corp. 0.570% 04/21/18 55 Xerox Credit 7.200% 08/05/12 64 ********* 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 ***